Get A Jump Start On Tax Season!

February 27, 2018 By

Tax season can be a stressful time of year as individuals and business owners scramble to file their tax returns accurately, and on time. Fortunately, if you’re ready and aware of what to anticipate, you can rest knowing that your filings will be handled as smoothly as ever. Please don’t hesitate to contact us with your mortgage related questions. Contact your CPA with questions about the upcoming tax changes, and how they will affect your finances. And if you need a referral to a reputable CPA, please let us know!

Here are a few of tips on how to get ahead of the curve:

1. Choose a Preparer & Schedule an Appointment

If you don’t have a tax preparer yet, now’s the time to find one. To find a preparer, ask friends and advisers to make a referral, or give me a call, and I can help get you connected. Be sure that the person you choose has a Preparer Tax Identification Number (PTIN). Only those authorized to prepare federal income tax returns will have one. Also ask about fees which will likely depend on the complexity of your return; steer clear of anyone taking a percentage of your refund. The IRS directory of preparers will help you search by qualification and location.

The sooner you meet with your preparer, the sooner you can begin the process and make the April 17th deadline. If you don’t get started early, you may miss out on actions that can lower your 2017 tax bill. Act quickly if you think you’ll get a refund so you can receive your refund payment earlier.

2. Gather Your Information

By the end of January, you should receive most, if not all of the information you need to complete your tax return. For each form you receive, verify that the information matches your own records.

Here are some of the most common forms: (Note: This is not a complete list; the IRS has information on the many other types of information returns you may need.)

  • Form W-2 – It’s filled out by your employer to document your earnings for the calendar year.
  • Form 1098 – Reporting mortgage interest (1098), student loan interest (1098-E) and tuition payments (1098-T).
  • Form 1099 – There are several of these forms report all income that isn’t salary, wages or tips.
  • Form 1095-A – To report information from the government marketplace from which you purchased health coverage.
  • Form W-2Gs – For certain gambling winnings.

3. Get Your Receipts Together

Which receipts you need depends on whether you choose to itemize your personal deductions instead of claiming the standard deduction. Most people will only choose to itemize their deductions if it will give them a better return. The only way to know for sure is to determine the amount of your itemized deductions and compare them with your standard deduction. (Note: This deduction will double for the 2018 tax year, but not for the year that just ended.)

For itemizing, get receipts together now by whatever system (or lack of system) used throughout the year to retain receipts for various deductible expenses. Look for receipts for medical costs not covered by insurance or reimbursed by any other health plan, property taxes, and job-related and investment-related expenses.

If you have business income and expenses to report, you’ll need to share your books and records with your tax preparer. The more organized you are, the less time it will take your preparer, which translates into lower fees and more money in your pocket.

4. Gather Records for Charitable Contributions

If you made donations to charity and want to itemize your deductions, you will need specific records to claim any write-offs. For example, for contributions of $250 or more, you need written acknowledgment from the charity stating the amount of your gift and that you did not receive anything in return. If you’re lacking acknowledgment, contact the charity and ask for it. You need it in hand by the time you file your return. Find details about the type of records needed for charitable deductions here.

5. Prepare for Tax Law Changes

You don’t have to all-of-a-sudden become a tax expert, but it knowing about new tax rules will help you prevent being caught off-guard while doing your own taxes. The individual healthcare mandate brought in a slew of changes: new forms for claiming the premium tax credit for eligible individuals who purchased coverage through a government marketplace (exchange). There are also new forms for figuring the shared responsibility payment for those who failed to carry coverage and do not qualify for an exemption. Find more information about the individual mandate and about exemptions from the mandate on the IRS website. Starting with the 2019 tax year, there will be no penalty for failing to have health insurance.

Other changes will start with the 2018 tax year and last through 2025. These include the end of the home-equity loan interest tax deduction and deductions for job-related expenses, tax-prep expenses and a number of other outlays; a drop in the home-mortgage interest deduction on new mortgages to interest on $750,000 from $1 million, and the end of the personal exemption. In addition, the state and local tax deduction (which includes state income, property, and other taxes) maxes out at $10,000; previously there was no ceiling on this deduction. On the other hand, the child tax credit doubles and so does the standard deduction (pretty much).

6. Decide What to Do About Your Refund

Your tax refund could be the answer to owning a new home, moving up in housing, or making the leap to a new adventure. We offer a broad portfolio of mortgage products to choose from including conventional loans, FHA, VA, and USDA loans. Let us help you put that tax refund to good use!

Here are ways you can use your tax refund for a home purchase:

  • Closing costs
  • Down payment
  • Moving costs
  • Future tax benefits

Start doing prep work early for your income tax so you’ll have a successful tax return experience. Whether you’re doing your own return, or having a preparer do it, thorough documentation and organized records will reduce the time (and therefore the expense if you’re using a paid preparer). Most of all, these preparation steps will ensure that you’re not missing out on any tax benefits.

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