Now that the holidays are over and 2019 has started, have you thought about preparing for tax season? Probably, not. We have some steps to help you gather documents needed to ensure that you do not miss any tax benefits and make the entire experience of processing your tax return easier.
Organize Receipts Useful in Tax Preparation
What receipts you need depends upon whether you choose to itemize personal deductions instead of claiming the standard deduction. For the itemizing process, gather receipts from the year to begin processing numbers for various deductible expenses. Do not forget to include receipts for medical costs not covered by insurance (under updated tax laws, deduction threshold drops to 7.5% for 2018) or reimbursed by any other health plan. Business income and expenses will need to be reported by sharing books and records (i.e. Xero, QuickBooks or another accounting system, receipts for expenses, bank and credit card statements). The more organized these items are, the less time it will take your accountant to go through them and apply them correctly on your return.
Tax Law Changes for 2019
Several new laws will affect filing of personal and business income tax returns for the 2018 tax year. Beginning in the new year, there will be no penalty for failing to have health insurance. Additionally, the individual healthcare mandate brought new forms for claiming premium tax credit for eligible individuals who purchased coverage through a government marketplace, and for figuring the shared responsibility payment for those who failed to carry coverage and do not qualify for an exemption. Other changes that will continue through 2025 include: end of the home-equity loan interest tax deduction and deductions for job-related expenses, tax-preparation expenses, a drop in the home-mortgage interest deduction on new mortgages to $750,000 (down from $1 million), end of the personal exemption, state and local tax deduction (which includes state income, property and other taxes) now maxes out at $10,000, and the child tax credit is doubling, as is the standard deduction.
Gather Tax Documentation and Information
By the end of January, you should start to receive many of the forms that will be needed for tax return preparation from places such as employers, educational institutions, investment companies and Social Security, to name a few . A few of the most common forms needed to process tax returns are: W-2 Form, if you have a job; SSA-1099, if you received Social Security benefits; 1099s to document income such as cancellation of debt, dividends, interest and non-employee compensation paid to independent contractors; a 1095-A to report information from the government Marketplace from which you purchased health coverage; 1098s reporting mortgage interest (1098), student loan interest and tuition payments. Schedule K-1s from entities in which you have ownership interest, such as S corporations, partnerships, limited liability companies, trusts or estates. As these forms come in, begin to organize them into one folder or location.
Charitable Contributions
If you made donations to charity and itemize your deductions, specific records must show this to claim any write-off. If you did not receive a receipt or are lacking documentation on donations, contact the charity and ask for this information.
File Your 2018 Taxes with a CPA in Knoxville, TN
Filing your taxes this year may take longer than usual or be more involved with all the new tax laws taking effect. If you are looking for a qualified CPA who will work hard for you–look no further! Contact a Knoxville, TN, CPA by calling us at 865-212-4867 or contacting us online.
Already a Lawhorn CPA customer? As you begin to gather your tax records and documents for filing your 2018 tax return, you can drop them off at our office at any time. Alternatively, we also have our client portal that allows you to upload your documents safely and securely from wherever you are. We are available to begin assisting you with any questions that you have regarding this process by phone (865) 212-4867 or email.