1. First, last year we had many changes to consider – tax brackets, deductions and credits were affected by the tax reform law of 2018. Are there any others? changes we need to prepare for this year?
• Tax brackets increased in 2019.
o The standard deduction has increased to $ 12,200 for single filers and to $ 24,400 for married couples filing jointly.
• There is no penalty if you did not have health insurance in 2019.
• You can no longer deduct support payments; nor is it considered taxable income.
2. What costly mistakes do you see when it comes to taxes?
• Missing tax savings by not reviewing the tax return. Human error could cost the customer dearly. So try to review the work and ask questions.
• Not preparing for next season. Maybe you could have contributed more to your 401k to help with taxes. Look to the future to save. We all want that instant gratification of saving today. But, it’s not necessarily what you do, it’s what you keep.
• Mix up your distributions. Whether you are buying an asset or removing assets from it for retirement, develop an exit strategy and mix your tax brackets to minimize your taxes.
3. What about refunds? Should we save everything or is it okay to spend some of that money?
• It’s a good idea to have a plan. Take a look at your finances and decide what could be beneficial for your financial situation. That could mean using 1/3 of it to pay off credit card debt, another 1/3 for retirement, and the remaining 1/3 to put in your savings account.
• Remember, we like to suggest that people save 3-6 months salary for unforeseen expenses. This might be a good time to replenish any savings that may have been tapped into during the holidays.
4. And finally, any advice for people waiting to prepare their taxes?
• First, organize yourself. It may be a good idea to have all of your documents together now.
• Start putting together those forms – W2 forms, everything you might need to start the process, whether you are filing yourself or working with a tax professional, sort through old papers and documents and put aside what you might need . April 15 is fast approaching!