Your 2018 tax return will be affected by a major overhaul of the Internal Revenue Code. You can save time by looking at what information your tax preparer is asking for before getting all the usual information together.
Some items that were deductible before aren’t this year. Expenses for your job that your employer doesn’t reimburse, safety deposit box fees, the cost of having your taxes prepared and financial advisory fees are some of the most common expenses that are no longer deductible. It’s probably not a good use of your time to gather those expenses.
Mortgage interest, real estate taxes, vehicle taxes and charitable donations are deductible, with some restrictions. But if these items combine to less than the new increased standard deduction, you’ll have a more favorable tax outcome without itemizing them. Your tax professional can tell you what your standard deduction is in case you want to see if gathering potential deductions is worth your while.
Taxpayers tend to be divided mostly into two categories: those who feel as though taxes are complex and are concerned about having unintentional mistakes on their return and those who think taxes are easy. Folks in either category might use a professional tax preparer. If you’re using a tax pro , do your best to comply with your preparer’s requests.
Take time to put together the documents you receive: W-2s reporting wages, 1099s reporting other income, 1098s showing mortgage interest, 1095s reflecting health care coverage, K-1s from estates or trusts or other businesses, and other documents for taxes. Most of these documents must be generated and sent to taxpayers at the end of January. Gathering and organizing your documents might not be fun, but make every effort to meet the deadline your tax pro gives you to submit documents .
Whether you know your tax return is complex or you believe it is quick and easy, you are not your tax pro’s only client .
If your tax return is easy, your preparer will appreciate the opportunity to get it done and back to you in a timely manner. If your return is complex, your tax pro will need as much time as possible to prepare and check your return. Having documents reach you late is a legitimate reason for submitting those documents late to your tax pro. The fact that putting together your documents is depressing, confusing and/or boring isn’t.
If you’ve decided to do your own taxes with software, be careful and research anything you’re not sure about. These software programs are generally well-designed, but they require correct input to give correct returns. We’ll explore ramifications of tax return mistakes next week.
Linda Leitz is a certified financial planner and can be reached at firstname.lastname@example.org.