Getting Ready for your 2019 Tax Filing
It is hard to believe that another tax filing season is upon us. I feel like I just got done with 2018!!
The IRS has announced that they will begin accepting Efiles on January 27, 2020.
So what do you need to do to get ready for your CPA and make this process as streamlined as possible???
Here are some helpful tips:
Have your records organized and complete
Make sure you look out for your tax related documents that will be coming in the mail. Be careful not to throw anything out or mistake it for junk mail. I always advise clients to look at last year's return and compare documents that they have received to last year's data to try and determine if they are missing anything. Also be aware that if you opted for online statements on your accounts, you may be responsible for logging into that account and printing your own tax documents. Also, some income reporting by various agencies, like New Jersey Unemployment, do not mail anything out and you will need to log in and print out your 1099. The last thing you want to do is to have your return filed and then need to amend it when your realize you were missing some information. This is an avoidable cost.
Tips for the self-employed entrepreneur
Put your best bookkeeping foot forward and organize your income and expenses. Your activity for the year should be concisely summarized and easy to follow. If you are going to use software to track your income and expenses such as QuickBooks, make sure you are using the software correctly so your results are not misleading or confusing. Using these types of programs incorrectly could make more work for your CPA and cost you more in fees in the long run. Oftentimes, a simple spreadsheet with organized columns for income and expenses is all that you need for a small business. The last thing you want to do is lose track of valuable expenses that can help you save on your tax bill.
A lot of small businesses have home offices, so don't be afraid to take advantage of this deduction if you have a portion of your home used exclusively for business purposes.. You will have to give your CPA details on the square footage related to your office verses the entire house, along with all of the expenses associated with the entire house that can be allocated accordingly.
Beginning in 2018, new tax legislation (Tax Cuts and Jobs Act), created a wonderful opportunity for small businesses to save in taxes called the "qualified business income" deduction. If qualified, as much as 20% of your net profit can be excluded from your taxable income. There are many factors that come into play to determine if your business is entitled to this, so be sure to discuss this with your tax preparer.
Maximize retirement savings
It's not too late to take advantage of income deferral by maximizing contributions to your self-employed retirement plans for 2019. Contact your CPA for your contribution amounts. Most self-employed plans give you until the due date of your return, with extensions, to fund your contribution. This will give you time to make a contribution for 2019 if the funds are not readily available by April 15, 2020.
If you are not covered under any type of plan, you can still make an IRA contribution by April 15th of up to $6,000 for 2019 or $7,000 if you are over the age of 50.
Be an early bird!
There is nothing better for you, as the client, than to be one of the first clients in your CPA's office. Even if you know you don't have every last piece of information, its a good idea to set up an appointment and bring in the bulk of your information. Most brokerage statements don't come out until mid-February to mid-March, but at least the rest of your information will already be available for your CPA to work with and come up with any other questions or open items.
Happy Tax Filing Everyone!!
Dianne Kelly CPA is a sole proprietor located in North Haledon, NJ
If you have any questions, feel free to contact Dianne at DK@diannekellycpa.com or 973-949-5533.
You can also visit her website at DianneKellyCPA.com