Get Ahead of this Year’s Tax Changes
Now that the holidays are over, the weeks until the April tax filing deadline are going to fly by. Given that you should have all the information you need to file your 2018 tax return by the end of January, there’s no reason to procrastinate on pulling all of your documentation together. If you do it now and follow the tips below, you’ll be in good shape to file early in the season (which means receiving any potential refund sooner).
1) Designate one place where you can keep your tax information.
Having a dedicated folder (digital or paper) makes it easy to grab what you need when it’s time to organize your documents.
2) Maximize your retirement plan contributions.
There’s still time to contribute to an IRA and lower your 2018 tax bill. You can deduct up to $5,500 ($6,500 if you’re 50 or older) from your taxes if you and your spouse are not covered by a retirement plan at work. If you are covered by an employer-sponsored plan, you can claim a deduction for your IRA contributions as long as you are within income limits.
3) Take steps to protect your identity to avoid tax fraud.
For example, if you received an Identity Protection PIN (IP PIN) in the past, then be sure to provide this number on your tax return not only this year but on all future tax returns. This number changes every year, so look for an updated PIN from the IRS. Also, never send your sensitive financial information via email. Always use a secure sharing application instead.
4) Know the rules about your foreign bank account.
If the balance in the account(s) was greater than $10,000 in 2018, you’ll need to file an FBAR (Foreign Bank Account Reporting) form. Why, you might ask? The new name of the form might give you a hint: FinCEN Report 114. FinCEN stands for Financial Crimes Enforcement Network. Make sure you stay in compliance on this rule to avoid stiff penalties.
5) Contact our firm for help.
This tax season may be a challenging one because it’s the first with the new tax reform mandates. Schedule an appointment with our firm early so we can take care of any issues or documentation that you may need. Be sure to check out the tax reform infographic in this issue as well for some additional tips.
Tax season can feel overwhelming, especially if you leave filing your return until the last minute. Be proactive and use the tips above to tame any tax season stress.