Using the NEW IRS Tax Withholding Estimator now can make things easier next year. Douglas Hord with My Tax Guy Houston says the tool will help you avoid some pitfalls.
“Make sure you have the information that can be overlooked that causes delays in processing --- or even worse --- a letter from the IRS 6 weeks to 6 months after the return has been filed. I think the most common mistake is that when you take a withdrawal from your 401K or your IRA is that you don’t have enough money withheld.”
Another example of a totally avoidable mistake Hord mentions, “If you don’t keep your address updated with former employers you’re still expecting a W2 from – you won’t receive it.However, the IRS will get it!”
Giving your 2019 taxes a once-over now could avoid headaches in 2020.
Here's what Douglas Hord thinks your need to know or have before preparing your 2019 tax return.
- Be sure that your bank, mortgage company, employer, former employers, health insurance, financial accounts have your correct, current address so that you receive all of the tax reporting forms mailed to you
- Use the IRS estimator tool to be sure that you are having enough tax taken from your pay to cover what you might owe
- Be sure to use the IRS estimator tool if you’re making a withdrawal from a 401(k) plan or IRA; most people get a big tax bill as a surprise because they didn’t have enough withheld when making such a withdrawal
- If you are selling your home, be sure to have the information necessary to correctly report the transaction and take the tax exclusion if you qualify
- If you are donating to a charity, be sure to keep track of how much, and when – if it is a donation of something other than cash, keep a detailed record of exactly what was donated, how you got the donated goods, the date of donation, and the organization to which you donated
- If you are claiming vehicle mileage, you MUST have a mileage log
- If you are self-employed, you have to keep track of your business expenses. Receipts for items costing less than $75 are not needed.
- Entertainment expenses are no longer deductible