After the Treasury Department and the Internal Revenue Service provided special tax filing and payment relief to individuals and businesses in response to the COVID-19 Outbreak, the 2019 filing deadline for Federal tax returns is nearly here. Don’t worry if you’re not ready yet to file, individual taxpayers are eligible to request an extension to file their return.
For those of you who are wrapping up your returns please review these important items before you file:
Deductions help reduce your taxable income, which generally means a lower tax bill. If you’re still unsure whether the standard deduction or itemizing is best for your family, please consider these popular tax deductions:
- Retirement account contributions for you and your spouse;
- Educational expenses;
- Medical costs;
- Property taxes and mortgage interest;
- Charitable donations;
- Casualty and theft losses;
- State and local taxes (up to $10,000, including property taxes);
- Qualified business income deduction allows eligible self-employed and small-business owners to deduct up to 20% of their qualified business income on their taxes;
- Self employed filers can deduct any of your home office related expenses.
Credits provide dollar-for-dollar cuts in any tax you owe and can save you quite a bit of money. Here are some popular tax credits:
- Child Tax Credit. The standard Child Tax Credit is worth up to $2,000 per child dependent. If you added to your family through adoption, you might be eligible for additional tax credits;
- American Opportunity and Lifetime Learning credits. As with the tuition and fees deduction, Form 1098-T is required to claim either;
- Retirement savings contributions credit (also known as the Saver’s Credit). Contributions to a 401(k), similar employer-sponsored plan or an IRA might allow you to claim this credit;
- Energy-saving home improvements (solar panels, solar water heater).
Looking ahead to 2020:
- Required Minimum Distributions have been waived for traditional IRAs and inherited IRAs.
- Adjust estimated tax payments based on your expected income in the year ahead.
If you have questions smart tax planning, please do not hesitate to contact your team at Crestwood Advisors.