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Getting ready for tax time: Relax, Collect, Organize, Document

The holidays are over. It’s cold outside. And yes, the winter doldrums have set in. Just when you’re ready to hibernate in your Snuggie with a cup of hot chocolate, you go to your mailbox (virtual or otherwise) and there you see it, your W-2.  Oh no, it’s tax time!

The butterflies start their Pilates class in your stomach. You may need to sit down. Ok, you may even need to go back to bed and pull the covers up. We all hate tax time; we all hate the process. But, why? To most people, tax time means money coming to them. So it’s best to get ready early, and collect that door prize, otherwise known as, your tax refund.

Let’s start those relaxation exercises, take a deep breath and relax.  Next, collect yourself.  Gather the documents that have filled up your mailbox, your W-2s, 1099 forms from banks, brokerage accounts, IRAs, and your mortgage statement(s). Use our tax organizer or your previous tax return as a guide. If you did not receive an organizer, just ask us for one!

Next, organize your deductions. Remember that the primary deductions that generate refund dollars are the interest you pay on your mortgage and real estate taxes that you pay on your residence. So, if you’re not a homeowner, you are likely to use the standard deduction ($12,200 for single people, $24,400 for married couples filing jointly), so your $500 donation of used clothing amounts to zero tax savings.

Medical: Remember that medical expenses are only deductible in excess of the first 10 percent of your adjusted gross income (AGI), line 8b on your 2019 Form 1040. For example, if your AGI is $100,000, the first $10,000 spent on medical expenses is not deductible. And, if your medical premiums are paid pre-tax through a cafeteria plan, they are not deductible regardless of the amount. The same is true for expenses paid from a flex spending account. (However, keep in mind that cafeteria plan premiums and amounts contributed to flex spending have already been deducted from your W-2.)

Beginning in 2018, miscellaneous itemized deductions are no longer deductible. This includes employees’work-related expenses, business mileage, travel and entertainment, union dues, investment management fees and tax preparation fees. So if you’ve been accumulating a cache of receipts during the year for cleaning your uniforms and buying office supplies, those items are no longer tax deductible. Separate rules apply to those who are self-employed. We will be happy to review the differences with you.

Finally, document. Make sure all charitable contributions are documented, by receipt, cancelled check, and a letter from the charitable organization if the donation is $250 or greater. The IRS does not allow standard amounts for charitable contributions.  Same is true for donated goods.

Is it ok to give us a list of items, as opposed to the receipts themselves. In fact, it’s preferable. We don’t keep the receipts, nor do we keep copies of them. But you may need them, in case the IRS has any questions later.

One more item – if you have children in daycare, aftercare, preschool or summer camp, and both parents work full-time, you may be eligible for a child care credit. You need to know the facility’s address and tax identification number. Sometimes they provide this on the bill. Further, if you take advantage of dependent care benefits, you need to supply this information as well; otherwise the dependent care dollars could become taxable.


Here’s what not to do:

  • Don’t list out your bank 1099s or other income items. We take the numbers from the original documents.
  • Don’t write down the information from the original documents, instead of bringing them. Sometimes there are important codes listed, which you might miss. If you’re concerned about leaving your documents, give us copies of the originals. That’s fine.
  • Don’t bring a copy of last year’s return if we prepared it. If that’s the case, we have access to every return we’ve completed for you since 2009.
  • If you’re unsure of what to bring, or if you have any questions, or concerns, we are just a call or an email away!

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