Tips to Make Doing Taxes Easier in 2019
A survey from 2018 shows that 47% of Americans experience anxiety when dealing with the IRS. The sweeping tax reforms that will affect filers in 2019 will probably generate even more stress.
Even if you don’t feel anxious about doing your taxes, you may feel stressed by the process.
Use these four tips to make doing taxes easier in 2019. They will make you feel more confident and should help you avoid an audit.
Gather All of Your Documents in One Place
Most people need several documents to fill out their tax forms. Some of the most common materials for families include:
- W-2 forms that report how much money you earned and taxes you already paid in 2018.
- 1099 forms that report income earned from freelance and contract work.
- SSA-1099 that reports Social Security benefits.
- Forms showing how much you spent on health insurance and healthcare in 2018.
- 1098-T forms that report education expenses.
- 1098 forms that report home mortgage interest and points paid in 2018.
- Forms showing how much money you earned from investments.
- IRA contributions.
- Taxable alimony received in 2018.
- 1098-E forms that report student loan interest payments.
- Letters that report charitable giving to non-profits and other qualified organizations.
Depending on your unique circumstances, you may need more or fewer documents to complete your taxes. As a rule of thumb, if you receive any document related to your taxes, you should put it in a folder with your other materials.
Having all of these documents in one place will make it easier for you to answer questions on your tax forms. If you have the documents spread throughout your house, then you’ll probably waste a lot of time tracking down the items you need. You might also feel anxiety over whether you have the forms you need.
Use Apps That Help You Track Taxable Expenses
You might not get forms that document all of your taxable income and expenses. For example, small business owners can deduct travel expenses for things like hotel rooms, client dinners, airline tickets, and miles driven.
Make life a little easier by using an app that will help you track your taxable expenses. Some reliable options include:
- MileIQ, which will automatically track how many miles you drive.
- FileThis, which tracks your business expenses without requiring any uploads or pictures.
- Shoeboxed, which lets you take pictures of your receipts and keep them organized.
Learn About Some of the Most Recent Changes to Tax Laws
Congress recently passed laws that may affect your 2018 taxes. Depending on your situation, the changes may increase or decrease your refund. Regardless, it’s important to know the changes that will affect most people.
Congress increased the standard deduction for 2018. The standard deduction now stands at:
- $24,000 for married couples filing jointly.
- $18,000 for heads of households.
- $12,000 for single people and married couples filing separate returns.
Child Tax Credit
For 2018, the child tax credit increases from $1,000 to $2,000 per dependent.
State and Local Tax Deductions
Before 2018, you could deduct all of your state and local taxes from your federal tax. Now, the deduction has a $10,000 cap.
Mortgage Interest Deduction
Congress eliminated the deduction for home-equity loans for 2018. The deduction for mortgage interest falls from $1 million to $750,000.
ACA Individual Mandate Penalty
Previously, the Affordable Care Act forced adults to either purchase health insurance or pay a tax penalty. Congress eliminated the ACA individual mandate for 2018, so that rule no longer applies.
Find a Trustworthy Tax Filing Software or Service
No matter how much you read about cut law, you can’t know as much as a professional. Some tax preparers and software options do better jobs than others, though.
Professional Tax Preparers
When comparing tax preparation services in your area, make sure that they have an IRS Preparer Tax Identification Number (PTIN). Anyone without a PTIN doesn’t have the right credentials to give you tax advice or fill out forms. You can use the IRS website to find certified tax preparers in your zip code.
Generally, it’s best to choose a CPA or enrolled agent with a license from the IRS. Enrolled agents must pass a three-part exam to qualify. They also have to finish 72 hours of continuing education every three years. The continuing education helps ensure that enrolled agents understand current tax laws so they can give you accurate advice and complete the necessary forms.
Tax Prep Software
Many people turn to tax preparation software to avoid the expense of hiring a professional. Trustworthy tax prep software will ask you straightforward questions and use the answers to complete your tax documents.
Some of the most popular tax prep software include:
All four of these options have free versions that will help you file your state taxes. Depending on your financial situation, though, you may need to pay for upgraded versions that will let you include items like 1099s and profits from rental properties.
No matter which software you choose, you will have to pay to file your federal taxes.
Tax season doesn’t have to give you butterflies in your stomach. As long as you prepare your documents, do some research, and choose a reliable tax preparation service, you should find that you can complete your taxes without much difficulty.