With April 15 closing in, it’s time to focus on income tax preparation. Even though you have probably done it before, there are a slew of new rules on the books this year. To help guide you through tax season, Satty, Levine & Ciacco has prepared a list of basic tips for personal income tax filers.
5 Quick Tips for Income Tax Preparation
1) Collect all your Financial Documents
It may seem obvious, but a common mistake people make is losing or misplacing necessary documents and information. Before even sitting down at a computer, assemble all your relevant paperwork, including:
- 1099 forms
- Proof of other types of income
- Retirement income
- Investment income
- Charitable contributions
Once you have all your documents together, the real work of income tax preparation can begin.
2) Review Previous Filings
Before you submit your tax return to the IRS, it helps to look back at how the size of your refund check compares with previous years. Generally, the amount you get back from the government will not be that different each year, but looking at your old returns can still tell you a few things.
- You can see potential deductions you overlooked or forgot about
- Notice changes in amounts paid in income tax year over year
- Fix omissions on your tax return
3) Double Check your Income Tax Bracket
The Tax Cuts and Jobs Act made some changes to the Federal income tax brackets, which are worth noting. Currently, there are seven tax brackets, which range from a 10 percent tax rate to a 37 percent tax rate.
If you were close to the border of a tax bracket, it is possible that you will be placed in a different bracket this year. In 2019, individuals who earn above $510,300 in a year will fall into the top tax bracket.
4) Decided Whether or Not to Itemize
The recent tax overhaul increased the size of the standard deduction, which makes it a more attractive option for many taxpayers.
This year, the standard deduction for individuals is nearly double what is was just a year ago. In 2019, you may be eligible to deduct $12,000. If you are married filing jointly, that number increases to $24,000.
As a result, more people are expected to elect to itemize this year.
But remember, if you take the standard deduction, you will be ineligible to receive many other common deductions.
5) Think about Getting Help
Income tax preparation can be a complicated task. If you do it yourself, it requires a solid investment of your time and effort. Rather than stressing yourself out learning all the new rules, why not ask a local accounting firm for help? You will receive personal, professional tax prep help you can trust.