5 Tips to Prepare for Tax Filing Season

Now is the time to start reviewing your financials and getting your affairs in order to prepare for tax filing season. There has been a learning curve with the Tax Cuts and Jobs Act of 2017 for many tax preparers and filers alike. The IRS is now accepting 2019 tax returns with a filing deadline of Thursday, April 15, 2021.

Tip #1: Double-Check Your Income

Make sure your withholding amount is consistent with the current IRS withholding tables for any income derived from a salary or hourly wages. To confirm the correct rate, you can use the IRS withholding estimator tool.

Taxable income originates from other sources, not just paychecks. You may not have had taxes withheld from all sources or neglected to pay quarterly estimated payments. You will still owe taxes on this income.  Potential types of income include:

  • Pensions and annuities
  • Social security benefits
  • Scholarships and grants
  • Unemployment compensation
  • Unearned income from dividends, interest or annuities
  • Self-employment income
  • Income from sales of property

Confirm the amounts of income received from all taxable sources so that you can provide this information to your tax preparer.

Tip #2: Determine Whether You Can Reduce Taxes Owed on Your Income

The following adjustments can help reduce the amount of your income that is taxed, which can increase your tax refund or lower the amount you owe.

  • Making contributions to your IRA
  • Energy credits
  • Student loan interest
  • Medical Savings Account (MSA) contributions
  • Keogh, SEP, SIMPLE and other self-employed pension plans

Be sure to compile documentation of these income adjustments and provide it to your tax preparer.

Tip #3: Commit to Your Tax Preparer

Reach out to confirm with your chosen tax preparer that they have the resources needed to handle your tax preparation this year. Contact Murray Moyer, PLLC to inquire about our tax preparation services as soon as possible. We will partner you with one of our tax professionals for a quick intake to confirm the services and then start communicating about the documents you will need to compile and provide. We provide efficient, affordable tax preparation services for individuals and business owners.

Tip #4: Be on Alert for Scams

With cybersecurity a growing concern, it is more important than ever to protect yourself from online predators and unsolicited phone calls from scammers. The IRS and NCDOR will not contact via you phone or email. Their initial correspondence comes from the U.S. Mail. Any email or phone call indicating they are from a taxing authority should be viewed with a high level of scrutiny. Do not give out personal information.

You will also want to protect any money transfers to and from the IRS by setting up direct deposit for refunds and sending in your tax payments via IRS Direct Pay.

Tip #5: Time Payments with Deductions in Mind

With the current high standard deduction rates, fewer taxpayers are itemizing deductions. The standard deduction is a set amount of money on which you are not taxed. It is fixed by IRS regulations for each tax year and depends on your filing status. Currently, the deduction rates are $12,400 for single filers; $24,800 for married filing jointly and $18,650 for head of household.

In an effort to maximize your deductions, you may tailor your expenses in a manner that pushes you over the standard deduction rates so that you can itemize. This is done by paying for qualified expenses in advance, making charitable donations or postponing expenses to keep them consolidated in the tax year that you are attempting to qualify for itemizing.

At Murray Moyer, PLLC, our tax professionals can save you time and money this year with your individual, business, foreign or domestic tax return preparation. We review prior returns, provide comprehensive analysis and strive to reduce your tax liability to the full extent possible. For more information, call our office at (919) 846-6779 today.

Written by Justin Moyer on January 29, 2021.