This is the time of year when most people start to panic about filing their taxes. As you know, April 15th is right around the corner. Why is this date important? It is the filing deadline for state and federal taxes. But never fear, in this blog, I will share some of the forms you need and provide you with resources to assist in preparing your taxes.
Let’s start with income. By now you should have all of your W-2s. This is the form you get from your employer indicating how much money you made last year. Employers are required to get this to you by January 31st. Guess what? The IRS gets a copy of this form as well.
The other income forms you will get are the 1099 forms. These are forms of income you receive such as interest on a savings account (1099-INT) or dividends you received on investment accounts (1099-DIV). A good way to know the difference is anything you receive beginning with 1099 are income from sources other than your paycheck.
Your next decision is to standardize or itemize your deductions. I am not an accountant and so I won’t tell you what to do but what you need to consider if itemizing your deductions will be greater than taking the standard deduction. The best advice I can offer is sharing a resource from the IRS titled “Should I Itemize?”
Here is the good news, there are free resources out there for you. The IRS site, Free File: Do Your Federal Taxes for Free can help. If your income is below $69,000 there are free online options by many of the companies you see on TV, just click here to see your options. If you make over $69,000, you have access to free fillable forms.
There are two other programs worth mentioning — Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). VITA is for people that make less than $56,000, have a disability, or limited English speaking. TCE is for those who are 60 years of age or older. To find the nearest provider click here. If you need a tax preparer, the IRS has some tips to consider. Check out this resource.
Some of you want to know what changed between last year and this year. I found two resources with that information: Michael Kitces has a nice blog that talks about changes with the SECURE Act. The other is Dave Ramsey’s article on Tax Season 2020.
Let me close with happy travels as you navigate your taxes this year!