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Tax Season Checklist

Tax Season Checklist

With the conclusion of the holiday season and the start of the New Year, we finally find ourselves in the beginning of tax season. As the April 15 deadline for the 2018 tax year rapidly approaches, it is important to keep in mind these five key points that will help you to get organized and make this year’s tax filing process a little easier.

  1. Important Dates for 2019 to Keep in Mind
    The two most important dates that taxpayers and filers need to remember in 2019 is the actual tax filing deadline and the extension date. The tax filing deadline without an extension is April 15, 2019, which falls on a Monday. If a taxpayer or filer requests an extension, the new deadline is October 15, 2019. It is also important to remember that taxpayers and filers have until April 15, 2019 to contribute to an individual retirement account (IRA) for the 2018 tax year. For those under the age of 50, the maximum contribution for the 2018 tax year is $5,500. Those over the age of 50 are allowed a $1,000 catch up contribution for a total of $6,500.
  2. How Could the TCJAAffect You?
    The Tax Cuts and Jobs Act, which was signed into law in December 2017, made changes to the marginal tax brackets, child tax care credits, and increased the standard deduction to $12,000 for individuals and $24,000 to those who are married and filing jointly, among other things. The new tax reform law also put a cap limit on the deductibility of state and local taxes at $10,000, which were previously unlimited and uncapped. This new cap could largely impact residents of states with high state and local taxes such as New Jersey, New York and Connecticut. The new law also lowered the threshold for mortgage interest deductions. Despite the fact that the tax reform law did not affect 2017 tax year filings, there is still time left to incorporate these changes into your 2018 tax filing strategy, and possibly use it to your advantage. Contact your accountant or wealth advisor to discuss your individualized filing strategy.
  3. Keep an Eye on Your Mailbox and Inbox
    Investment providers and custodians, the government, and your employer will begin sending out tax forms laying out your activity for the year. You may receive a 1099 or W-2 reflecting your wages for 2018 or maybe a 1099-DIV showing investment income. By using the checklist we have included, you can keep track of your forms and anything else needed to complete your tax return.
  4. Corrections to Your Filings
    Taxpayers and filers may receive a corrected 1099 form from a variety of sources for many reasons. Some of the reasons might be:
    – A reallocation of income by the source (i.e. a mutual fund company)
    – Updated information in various investments in a mutual fund
    – An error in reporting, by the sourceThese corrected forms may arrive in your mailbox as early as February but can sometimes arrive as late as the middle of September. Regarding reallocation of income, this can happen because mutual fund companies or real estate investment trusts (REITS), for example, typically have such a variety of investments. If you receive a corrected 1099 – don’t panic. There is a chance you may need to file an amendment to your tax return, but to reduce that chance, consider waiting until closer to the deadline to file your taxes.
  5. Investment Activities
    If you sold an investment in the 2018 tax year and have capital gains or losses, you must file a Schedule D. To complete this, you must know the following:
    – Cost basis; the initial purchase price including any adjustments
    – Buy and sell dates to determine if the gain or loss is long or short term

The bottom line is that tax season can be a frustrating and chaotic time for many people due to the many moving parts involved in filing your return. By staying organized with our tax checklist, you might be able to reduce the amount of time you spend gathering documents and filing your return. For more information on filing your taxes, tax reform, or just to chat about financial planning, shoot me an email at [email protected].

Neil is the principal and founder of Sacks & Associates which he established in 2008, and a 40 + year veteran of the financial industry. His deep knowledge of industry best practices helps provide clients with a retirement and investment plan that best fits their needs. Additionally, he is extremely knowledgeable regarding the New Jersey Alternative Benefits Program where he worked exclusively with college professors for over 20 years and understands the nuances and details of the program.

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