Smart tax tips for 2020
It’s that time of year when everyone can agree on one thing: Paying taxes is a drag. As we progress into a new tax season, follow these tips to help avoid a heavy tax burden this year:
Adjust your withholdings as needed—The 2018 tax code overhaul lowered most individual tax brackets, which in turn put more money in many workers’ pockets. If you noticed a bump in your paycheck after the tax code changes went into effect, be sure that your withholdings have been adjusted appropriately to avoid any unwanted surprises come April.
Maintain organized records—Be sure to keep all your business-related expense documents organized and current. Deducting qualified expenses is a benefit of being self-employed. Maintaining solid records helps ensure you don’t miss out on eligible deductions as well as helps you avoid claiming the wrong deductions.
Keep up with your estimated payments—If you have side work that augments your income, make sure you are paying in throughout the year. You are responsible for making sure the IRS gets its fair share of your side hustle income.
Take advantage of pre-tax saving options—If you don’t contribute to a traditional IRA, 401(k) or HSA (health savings account), you are missing out. These tax-advantaged savings plans allow you to contribute pre-tax dollars, which can save you quite a bit during the year and lower your tax burden.
Work with a professional—Unraveling the tax code can be overwhelming. If you are not already, be sure to work with a tax professional who will ensure you receive the proper deductions, work to mitigate your tax obligation and ensure compliance.
If you have any questions, please reach out to our firm. We are here to help!