12 Jul #AskAuthenticCPA: What can I do this summer to prepare for the 2020 tax season?
For many, summer happenings include heat/humidity, camp, vacation and pool parties. Add to this list the paying of taxes such as federal income, state income, sales, sales & use, ad valorem, property, self-employment and heavy highway vehicle use. Even though summer is associated with leisure activities, self-assessment tax compliance is expected by various regulatory bodies such as the Internal Revenue Service (IRS) throughout the year. Take note of the below action-items many people use to manage their tax responsibility:
Perform a paycheck checkup. The IRS tool, Tax Withholding Estimator, was designed to assess if taxpayers’ tax withholdings are correct. Per the IRS, the Tax Withholding Estimator works for most taxpayers and can be accessed on its official website. Taxpayers with complex tax situations are encouraged to review Publication 505, Tax Withholding and Estimated Tax, the Internal Revenue Code and other tax law with “substantial authority” or work with professionals such as Certified Public Accountants.
Monitor your life events. Several joyous events in life such as marriage, birth, home ownership, opening a business, etc. affect your taxes. Your accountant may request that you complete an interview questionnaire or client tax package (organizer) to compile your tax information. This process often goes more smoothly if you have a tracking/recordkeeping process within your tax household.
One goal of the pay-as-you-go self-assessment tax compliance program is for taxpayers to pay only the taxes owed. This outcome is more likely if you are attentive to your tax responsibilities regularly. Be mindful of your state’s tax requirements. For example, the taxes not paid on online purchases should be remitted to your state as Sales & Use Tax. Various tax software requires taxpayers to confirm if they owe this tax.
The 2019 tax season was a learning experience for taxpayers and tax professionals because of the Tax Cuts and Jobs Act (TCJA). Likewise, the TCJA affects the 2020 filing season. Be determined to support your claim for tax benefits by preparing for the 2020 filing season sooner than later. Best wishes!