When the calendar shows January, it means a new year and a clean slate –the time for setting goals and making resolutions. It is also the time to start preparing your 2019 taxes.
While it’s pretty much a given that nobody enjoys doing their taxes, the earlier you begin preparing, the better off you are likely to be. Waiting until April increases the chances of missing out on any deductions or credits.
Here are a few reminders in preparing your 2019 taxes:
- If you experienced significant changes in your life during 2019 –such as the birth of a child, marriage or divorce–it is more than likely that it will have an impact on the complexity of your tax filing. If so, you may want to consider hiring a professional accountant.
- A few changes in 2019 that resulted from the new tax laws that could impact you are:
- Alimony payments that are part of legal agreements made in 2019 or after, including changes to existing agreements, are not deductible.
- There is no longer a penalty for not having health insurance.
- If it’s been a while since you reviewed your designated beneficiaries for your holdings –401k plans, IRAs, insurance, etc.– now is the time to do so.
- You have until April 15 to potentially lower what you owe for 2019 by maxing out what you contribute to a traditional individual retirement account. For the 2019 calendar year, the Internal Revenue Service allows individuals to contribute a maximum of $6,000 to an IRA, with that amount rising to $7,000 for people 50 or over. Deductions may be limited for higher-income taxpayers or those covered by employer retirement plans. Contributions to Roth IRAs for 2019 can also be made until April 15th, but since taxes on Roth contributions are paid up front, they won’t lower your 2019 taxes.
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