4 steps to prep for tax season
Tax season is upon us again, and this year there are some big changes. Use these strategies to help make your 2018 tax filing as stress-free as it can be.
1. Brush up on tax reform.
As you’ve probably heard, new tax reform went into effect on January 1, 2018. Here are some highlights:
- Tax bracket income levels and tax rates changed—so your bracket and tax rate may be different now.
- Standard deduction amounts were nearly doubled, but personal exemptions were eliminated.
- Several deductions were capped, including state and local taxes, mortgage interest, and medical expenses.
- The Affordable Care Act penalty for failure to buy health insurance was eliminated.
These are just a few of the changes that could impact your filing. Get the full list of changes.
2. Organize your tax forms and financial documents.
Start getting your tax-related forms and information pulled together, so everything’s organized in 1 spot when you’re ready to begin your return. Not sure what all to include? Here’s a starting list.
- Social Security Numbers for you, your spouse, and your dependents
- Wages and earnings statements like the Form W-2, W2G, 1099-R, and 1099-MISC
- Interest and dividend income statements (Forms 1099-INT and 1099-DIV)
- Your last year’s federal and state tax returns
- Forms and information on any credits or deductions you’re eligible for (the IRS has a handy list)
3. Check your withholdings.
Remember those tax reforms we mentioned earlier? They also included updates to income-tax withholding tables—which means the amount your employer withheld from your paycheck for taxes may have changed.
The updates took effect in early 2018, so your taxes filed in 2019 will reflect any changes. You’ll want to check your withholdings to make sure you don’t have an unexpected tax bill. This IRS Withholding Calculator only takes a few minutes to complete and will help you determine if you need to make changes.
4. Use your retirement accounts to save on your taxes.
Contributing more to a retirement savings account lowers your taxable income, because you don’t pay taxes on those contributions up front. The lower your taxable income, the lower your tax bill might be. Plus, saving in an employer-sponsored retirement plan or IRA might make you eligible for the Saver’s Tax Credit, which could also lower your taxes. Learn more about maximizing your savings while minimizing your taxes.
More tips to get started:
- Taxes are complicated, and everyone’s situation is a little different. Consult with your tax advisor before you make any final decisions.
- Consider increasing your contributions to a retirement savings account.
- Visit the IRS website for detailed information on when, where and how to file.
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