Want to minimize your taxable income, maximize your deductions and avoid the expense and hassle of amended tax returns — and reduce the risk of an IRS audit? A little organization and good record keeping goes far in making all of this happen. Here are some useful tips from your tax accountants at Maicher CPA Pllc:
- Proactively and Promptly Review Your W-2s and 1099s. Employees/contractors usually receive their W-2/1099s reports by the end of January. Don’t assume they’re correct because mistakes do occur! If you find a mistake, contact the payroll/payable department immediately and get the form corrected.
- Retain Proof of Common Deductible Expenses. Be sure to keep documents showing mortgage interest payments. Couples filing jointly may deduct interest up to $750,000 of qualified home loans in 2018. Concerning IRAs in 2018, taxpayers under 50 are allowed to contribute $5,500 per person and those 50 and over may contribute $6,500. To make sure these deductions aren’t missed, keep documents showing the contribution, i.e., cancelled checks or mortgage/brokerage statements.
- Charitable Donations. The tax code offers deductions for certain qualifying charitable donations. Be sure to provide receipts to your tax preparer to ensure your deductions are taken and to guard against IRS challenges.
- New Additions To Your Family. Provide your tax preparer with the social security number of additional children to get your tax credits for each dependent child.
- Business Expenses Generally. Keep receipts all items you purchased for your job and for which your employer did not reimburse you. Also, if you are self-employed, many items used to conduct/promote your business may be deductible. Examples include: computers, office furniture, marketing/advertising expenses and mileage (54.5 cents/mi.).
- 179 Election. As with all business expenses, keep receipts for all potential section 179 property (e.g. equipment/machines) for which you might elect the 179 deduction. Under section 179, you may deduct the property’s cost in the year the property is placed in service. In 2018, the maximum deduction is $1 million and the phase-out threshold is $2.5 million.
We recommend scheduling a meeting with one of our tax professionals at Maicher CPA Pllc as early as possible in 2019 to proactively move forward with the preparation of your tax returns.
“How Much Can You Contribute to a Traditional IRA for 2018?” Kiplinger (November 1, 2018).
“IRS Announces 2018 Tax Rates, Standard Deductions, Exemption Amounts And More,” Forbes (May 7, 2018).
“Interest on Home Equity Loans Often Still Deductible Under New Law,” IRS Bulletin (February 21, 2018).
“New Rules And Limitations For Depreciation And Expensing Under The Tax Cuts And Jobs Act,” IRS Bulletin (April 2018).