25 Jun 5 Things You Can Do Now to Prepare for Your 2019 Tax Return
Most people don’t spend much time thinking about their taxes until January hits. But planning ahead and preparing well in advance of the tax year’s end can have enormous benefits for you. Not only will you likely find filing to be a lot simpler and easier, but you may even be able to reduce your tax liability when tax season rolls around. Here are five things you can do right now to start preparing for your 2019 tax return.
Review Your Withholdings
Many people were shocked by a high tax bill for the 2018 tax year. This was due, in large part, to certain changes made by the Tax Cuts and Jobs Act, which resulted in taxpayers keeping more of their paychecks—only to have to pay back that increase when they filed. A good way to avoid this for the 2019 tax year is to review your withholdings.
The IRS has a helpful withholding calculator to help you calculate just how many exemptions you should be taking on your paychecks. Once you’ve figured that out, simply request a new Form W-4 from your employer, update your exemptions, and turn it back in. It only takes a few minutes, but it can save you a lot of headaches when you file.
Make Scheduled Retirement Contributions
Retirement contributions are a great way to get additional deductions on your tax return and reduce your tax liability. But many people wait until the end of the year, and make large lump-sum contributions to their retirement accounts. While this may work well for some people, it is difficult for other individuals to find the liquid funds to make those large deposits. Instead, consider scheduling regular deposits to your IRAs or 401k.
By doing this regularly, you’ll be able to avoid the last-minute scramble to get those deductions. You may even be able to contribute more to these accounts by planning ahead, which will mean larger deductions on your tax return.
Start a Documents Folder
One of the major headaches associated with filing your taxes is finding all of the documents you need. Of course, most of the official forms aren’t sent to you until tax season is getting underway. And, of course, most people know to hold onto those recognizable IRS forms. However, there are many other types of documents you should be holding onto as well, including certain expense receipts, detailed documentation of charitable donations made, mortgage interest statements, and more.
Rather than having to dig through your paperwork or try to track down digital copies of these forms during tax season, create a folder for these items now. This can be a physical folder that you keep in a safe place, or a digital folder on your computer. Drop any paperwork you think might be important into this folder as you receive it. This will make filing much easier for you and your accountant.
Know the Deductions You Can Get
You’ve probably heard it since you were a kid, but knowledge is power, and knowing what deductions you can qualify for is extremely powerful. It’s worth taking the time to research common tax deductions and exemptions, so that you’re less likely to miss any potential tax savings.
Even if you’re working with a CPA for your tax return, we don’t know all the details of your personal situation, and may not be aware that you qualify for a specific deduction. Educating yourself on eligible tax deductions and credits allows you to ensure your CPA has all of the necessary information to secure that credit or deduction for you.
Have a Tax Planning Meeting
Finally, set aside some time to have a tax planning meeting with one of our CPA tax experts. We can go over your finances and personal situation in great detail, and help you to find other steps that you can take to potentially reduce your tax liability for 2019. Contact us to learn more about our tax planning services in Provo.
Doing these five things can’t guarantee you a larger refund when you file a return, but it can definitely make the filing process go a lot more smoothly. Take advantage of our tax planning services in Provo, and we can help you find even more things that you can do now to prepare for your 2019 tax return.