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5 Important Tax Tips for 2020

Senior adult woman worries over her past due bills while sitting on home living room sofa.  A pile of invoices on coffee table in front of her.  She is calculating expenses versus budget income.  Frustration among middle-class people.   Great imagery for election season:  home finances, recession, past due bills, mortgage, debt, stress, worry, taxes.
By Andrew Leonatti on February 14, 2020 10:10 AM

If all the annoying commercials haven't made it clear yet, tax season is here, and there is no getting around it.

Tax-preparation services have done a good job making you feel like you need to use them, so they can take the burden off of your shoulders. While this is true, there is some work that you still need to do to make sure your filing is accurate (and you save some money).

Whether you're doing it yourself or heading to an accountant or tax service, you will want to keep the following tips in mind as you get your documents in order.

Get Your Information Right

It may seem simple, but you have to make sure that your Social Security number is correct, your name (and the name of your spouse, if you are married) is spelled correctly, and that you're putting the right numbers on the right lines.

Report All of Your Income

If you are one of the millions of people with a side hustle, such as an AirBnB or driving for Uber, then you have to report that income as well, not just the money from your day job.

If the company you earn money with on the side does not issue you a 1099 tax form, you still must report the income that you earned.

Consider Itemizing Your Deductions

Many people simply take the standard deduction on their taxes to lower their taxable income. However, if you donate a lot of money to charity, have significant out-of-pocket medical expenses, or own a home, you may save more money by itemizing your deductions instead of simply claiming the standard deduction.

 

Adjust Your Withholding if You Owed

A lot of people end up getting back a nice chunk of change from Uncle Sam, but the rest of us are often left grumbling about having to write that extra check.

The big tax reform law of 2018 may have put more money in your paycheck, but that change led to many people owing money comes tax time. If that happened to you, you need to ask your employer for a copy of your W-4 and have more money withheld from your paycheck. Unless, of course, you want to get an interest free loan from the government every year that you have to pay back all at once.

Give Yourself Time to Get It Done Right

The earlier you get to work on filing your taxes, the less likely you are to make a mistake that could cost you a lot of time and money trying to resolve. If you wait until April 1 to call around to tax preparation services, you may find that no one has time to help you. Being diligent will pay off. Good luck!

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