Tax season is well underway and many Taxpayers are preparing to file their taxes. With the passage of the Tax Cuts and Jobs Act in December 2017, which was effective as of January 1, 2018, the 2018 tax filing season is going to look a little different for many taxpayers. In order to ensure you are not caught behind the eight ball, there are a few things you need to think about and prepare before you file your taxes.
- Gather The Necessary Documents
Before you file your tax return, gather all documents that will support any income items, or deductions that you will list on your return. These include your W-2s, 1098s, 1099s, and receipts for any deductions. If you are a business owner looking to take advantage of the new Section 199A Deduction, it will be crucial that you have the appropriate documentation from your bookkeeper to accurately calculate your deduction. Section 199A is a fairly complex calculation, so work with a professional if you have questions.
- Review Your Investment Portfolio
If you have investments, be sure to properly account for and report your investment income and/or losses. Due to the changes in the tax law, you should also consult with your financial advisor and analyze your investments to determine whether any re-balancing needs to be done based on 2018’s performance. Your financial advisor will be able to assist you in making sure that your financial objectives are being met and provide you with the best strategy for meeting your goals while minimizing taxes. Also, keep track of your basis (let your CPA or tax advisor guide you through that.)
- Gather Business Expense Documents
For business owners, if you want to take advantage of the new business expense deductions, be sure to gather all documents, invoices, and receipts for equipment purchases, investments, or expenses to provide to your tax professional. Due to the changes in the tax code, you should consult with a professional to ensure that all of the IRS requirements are met and that you’re properly reporting the transactions on your tax return. The last thing you want is for your tax planning to turn into an audit where you’re unprepared.
- Track and Review Your Charitable Contributions
With the standard deduction increasing as part of the Tax Cuts and Jobs Acts, fewer people are likely to itemize on their income taxes this year. However, if you find that your anticipated deductions, including your charitable gifts, are more than the standard deduction, it may still make sense for you to itemize. You will want to gather a list of all of your charitable contributions and have the appropriate documentation to substantiate the amounts that you are placing on your return.
As always, should you have any questions while preparing your taxes, we urge you to consult with your local tax attorney or CPA.
Berlin Patten Ebling, PLLC
Article Authored by Pamela Hernandez, Esq. firstname.lastname@example.org
This communication is not intended to establish an attorney client relationship, and to the extent anything contained herein could be construed as legal advice or guidance, you are strongly encouraged to consult with your own attorney before relying upon any information contained herein.
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