Bring Clarity to Your 2020 Taxes

Whether you just filed yesterday, filed earlier in 2019 , or have asked for an extension, as Policygenius.com says, you should “Start determining your 2020 tax strategy today.”  This is especially true if you filed an extension because you want to be better prepared next year: “Although Tax Day 2020 is a year away, remember that your taxes are a look back at the prior calendar year.”

This may seem like an obvious statement when you scramble to find receipts and documentation as the tax deadline approaches but have you considered that you do not have to struggle to account for an entire year at the very end of it? Instead, you can spend the year, laying the groundwork for a less stressful tax season.

Withholding

If you became aware that you did not withhold enough this past year, don’t let another year go by without adjusting. Policygenius offers a guide to the IRS withholding calculator if you need help understanding the actual IRS Withholding Calculator.

Documenting Deductions

It would be wonderful if all of us could carefully organize the documents we need for deductions in labeled folders throughout the year but some of us just are not there yet. What you can do is start somewhere—keep expense records together somehow: in the same folder or in a shoebox, for example. Find a method that works for you. If you like to do this electronically, scan all of your documents and save them to the computer. The idea is to eliminate the need to tear apart your office, home, car, closet, etc. each year at tax time looking for receipts and bills.

Retirement

Policygenius suggests that you check your retirement contributions when you check your W-4 because:

“Funding your retirement account comes with tax benefits. You can contribute to traditional retirement accounts tax-free, while you can withdraw from Roth accounts tax-free in retirement. Aside from the tax benefits, you’re also making it easier to reach your retirement goals.”

And remember, a Fee-Only financial planner can help you bring clarity to your 2020 taxes.

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©Bring Clarity to Your Finances. Bring Clarity to Your 2020 Taxes is a post from Bring Clarity to Your Finances

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Claire Emory, MBA, CFA, CFP®

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