Coming to a neighborhood near you is the 2020 tax season. This time of the year can seem like a tidal wave rolling over your little row boat if you don’t have all the right information and documents. On the other hand, this time period can be a pleasure cruise on clear blue calm waters if have you all the documents on file and understand the actions that need to be taken. It is important to get organized. Lakeesha Browne, CPA is providing a tax preparation checklist to anyone who needs or wants it. The IRS suggests some activities that you can do before the 2020 tax season.
One action that you can do before the tax season is to report any changes made to your personal information, like your name or address to the IRS. If you have decided to change your name or if you have moved within the year, then it is important to document those changes before tax season. Another activity that will reduce taxable income is to make a salary deferral into a retirement plan or a contribution to an IRA. Eligible individuals can also take a coronavirus-related distribution of up to $100,000 by December 30, 2020 and repay it over three years or pay the tax due over three years.
A third action that you should do is calculate your estimated taxes. It is wise to have a general sense of the amount of taxes that you need to pay for 2020. This way there are no surprises when your tax advisor computes your year-end tax obligation. The IRS lists some other activities that can be done before tax season.
Do you want to keep up to date with tax related news? We will keep you updated on any new information. If you want to know more information about what to do before 2020 tax season, please contact Lakeesha Browne, CPA. This information was brought to you by IRS COVID Tax Tip 2020-162, which was posted on November 30, 2020.
“Get ready to file taxes: What to do before the tax year ends.” IRS, 30 Nov. 2020, www.irs.gov/newsroom/get-ready-to-file-taxes-what-to-do-before-the-tax-year-ends. Accessed 2 Dec. 2020.