Your 2020 Tax Information Checklist

January is the beginning of the 2020 tax season when you file your tax returns for the year 2019. Last year, the just-enacted Tax Cut and Jobs Act had taxpayers pretty confused, but filing could be easier this year for many individual filers. There are just a few additional changes, including higher standard deductions, and the IRS website is more user-friendly. Unless you’re a business owner or experienced significant life or financial changes, filing the short form may get you the “best return” from the IRS.

Are you filing a single or joint tax return?
Do you need a tax pro this year?
Keep reading to find out!

Your 2020 tax information checklist

Some basic detective work and organization on your part could save you time and money. You might discover you don’t have enough deductions to itemize, and that using the standard deduction is your best bet. On the other hand, if you file a Schedule C or separate business returns, there are too many tax benefits that are easily missed without professional help.

Changes this year

Income tax brackets increased in 2019 to account for inflation, but the tax rate is the same.
The standard deduction increased to $12,200 for single filers and $24,400 for married couples filing jointly.
There is no longer a penalty for not having health insurance coverage.
Estate tax exemption increases so you can inherit up to $11.4 million in your lifetime before the estate gets hit with the 40% tax (the limit was $11.2 million in 2018)

For more information on specific changes, here’s what the IRS says.

Individual TCJA changes aren’t permanent
Scheduled to end 2025
Plan ahead!

Whether you need a tax professional or you’ve set aside a weekend to file your returns, you need to know what information is essential.

Personal information

For every person included on your tax returns, you must provide identification and proof that you can claim that person as a dependent. For each person, you need specific information:

Full legal name
Birthdate
Social Security number
Drivers License or state-issued photo ID card
Divorced or separated and receiving or paying child support or alimony? Bring a copy of the decree or settlement agreement because laws changed relative to claiming deductions or credits.
Did you adopt a child during the year? Be sure to include documents since paperwork for foreign or domestic adoptions vary.

If you’re a new client, bring copies of your tax returns, including worksheets, for the past three years. Are you a newly-wed, or did you previously file separate returns? Bring those returns, too.

Newly-wed or engaged?
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479-478-6831

Legal documents prove you have the legal right to file these tax returns. Remember, the IRS is right until proven otherwise, and the clock keeps ticking and adding fines and penalties. You don’t want to mess with the IRS.

Income

Income comes in many forms, some taxable, some not, but you must report all income. Remember, the IRS probably received reporting documents, and your omissions could raise red flags. Here are some documents you need to bring:

Personal income statements include such documents as the W-2 forms received by you, your spouse, and dependents you claim. List all other gross income, including non-taxable money for which you did NOT receive a tax document.
Other income sources can include:
- Unemployment income or state or local refunds report on Form 1099-G
- Investment or interest incomes report on various forms: 1099-INT, 1099-DIV, 1099-B, and Schedule K-1
- Home or property sale which is reported on the 1099-S
- Pension, IRA or Annuity income report on Form 1099-R
- Social Security, RRB Income SSA, report on SSA-1099 and RRB-1099
- Trust, and estate beneficiary earnings are on Form 1041, Schedule K-1
- HSA and long-term care documented on Form 5498-SA (contribution tax document) and Form 1099-SA (distribution tax document)
Self-employed or working a gig? This business income reports on Form 1099-MISC, and chances are you report it on Schedule C of your tax returns. If you’re self-employed, I recommend professional tax services.

The Tax Cut and Jobs Act
make 2020 the year of
BUSINESS TAX PLANNING
Call me!
479-478-6831

Tax Deductions

Tax deductions are amounts to subtract from your income before figuring the amount of tax you owe. The standard individual deduction is $12,400 for singles and $24,800 for joint filers. Here are the most common deductions, and what is needed:

Education expenses include tuition statements, itemized receipts of qualified educational expenses, Form 1098-T, and student loan interest statements, 1098-E.
Homeowner expenses include mortgage interest statements, form 1098, property tax payment receipts, and energy-efficient upgrade receipts on Form 5695 if provided by the installer. There is no more home equity debt deduction, so interest and many home remodeling projects are not deductible expenses.
Charitable contributions require a detailed list of donations and receipts for contributions over $250. If you donate a vehicle, it’s Form 1098-C or a letter confirming the donation.
Child and dependent care expenses require name, address, and tax ID or Social Security number of the provider.
Health care expenses must be backed up with records of medical and dental costs. You can deduct unreimbursed medical expenses above 10% of your adjusted gross income (AGI), which is your total income minus other deductions you have already taken. This amount is up from 7.5%.
Job-related educational expenses require records of expenses.
IRA contributions report on Form 5498.
Health savings account contributions, Form 5498-SA
Self-employment expenses can get complicated, and for maximum tax benefits, I don’t recommend you make tax filing a do-it-yourself project! New tax laws provide benefits that many small business owners are unable to maximize without professional help.

Tax Credits

Tax credits are amounts subtracted from the amount of tax you owe. There are two types of tax credits:

A nonrefundable tax credit means you get a refund only up to the amount you owe.
A refundable tax credit means you get a refund, even if it’s more than what you owe.

Many tax credits are available and to determine if you are eligible, the IRS has details for these:

Family and dependent credits
Income and savings credits
Homeowner Credits
Health Care Credits
Education Credits

Tax identity theft

Are you or any dependent a victim of tax identity theft? If so, the IRS provides notice or a letter showing the unique Identity Protection PIN (IP PIN) assigned to the person. Each year the IRS will mail you a new notice or letter with your IP PIN, which is required to file your tax returns.

The bottom line

You can have the same opportunities as my clients have to control your financial tax future. I can become your CPA tax specialist and financial business and life goals adviser, and you can have the control you need and want.

Our goal is to become part of your overall life and business goal planning team so that you’ll be able to establish your own goals and know that you have a trusted professional on your side. We build and maintain a personal and business relationship with our clients. Your LIFE is your business, and your BUSINESS is your life. We’re here for YOU.

Call us at 479-478-6831 or you can email us

To schedule an appointment with Melanie Radcliff, you may also use our Online Appointment Scheduling option!

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