Five Tips for Tax Season 2020

Five Tips for Tax Season 2020

Here are a few things you may want to keep in mind before you file your 2019 taxes.

1. The deadline to file has been extended

The IRS recently announced that the deadline to file federal income taxes has been extended to July 15, 2020, but whether this extension applies to you depends on whether you owe taxes or are due a refund. If you owe taxes this year, you can automatically defer your payment until July 15, no forms needed. If you are due a refund, the IRS urges you to file as soon as possible. Visit this page for updates and more information from the IRS. 

Keep in mind that this extension applies to federal taxes, not state. Minnesota and Wisconsin have also extended their deadlines to July 15, but if you live elsewhere, check the website of your state’s Department of Revenue for information.

For information regarding the COVID-19 stimulus, please visit irs.gov.

2. You can now contribute to an IRA past 70 ½ years old.

Since the passing of the SECURE Act in December 2019, people who are older than 70 ½ can now make deductible contributions to a traditional IRA if they still have earned income. (Plus, the required minimum distribution age was raised to 72, so you no longer have to begin taking retirement distributions at age 70 ½.)

For everyone else—if you have an IRA that you haven’t fully funded for the 2019 tax year, you have until the tax deadline to meet your maximum contribution limits.

3. If you pay for childcare, see if you can get a deduction.

If you pay childcare costs for one of your dependents, you might qualify for a dependent care tax credit, depending on your income, custody arrangement and other factors. Reach out to your childcare provider and request a total of the costs you paid in 2019 as well as their tax ID.

4. You can deduct medical expenses, to an extent.

You may know that taxpayers can deduct qualified medical expenses. Just keep in mind that you can only deduct the portion of your qualifying medical expenses that exceeds 10% of your adjusted gross income (AGI)—which means your gross income minus certain adjustments, like student loan interest.

5. TruStone members get a discount on TurboTax®

Online filing services like TurboTax® are popular because they walk you through the filing process step by step and help you find deductions. Some services are free, but people with more complicated taxes may have to opt for the more advanced filing service, which often involves a fee. If you decide to use TurboTax® to file, keep in mind that TruStone Financial members enjoy a discount on federal products! Click here to learn more.

 

Please consult your tax advisor for details on how to apply specific tax advantages.

Editor’s note: some information from this article was sourced from the IRS, CNBC and The Motley Fool.