Tax Planning TIps to Maximize Your Return

ta returns

As you prepare to file your tax returns, you should also be planning to maximize them, reduce your tax bill and/or get the biggest refund you can. Many unseasoned tax payers are not sure how to do this and feel reluctant to make claims due to their lack of knowledge. For their benefit, we present some simple, key steps to planning and maximizing your return.

Know your bracket

The IRS has seven income tax brackets and which one you fall into depends on your level of income. First, know what percentage of your income you are required to pay, then understand that you will not actually pay those percentages on your full income. This is because you will be able to make deductions from your taxable income. So first determine your tax bracket, then break down your income into the prescribed income types that you earn. Each part of your income will be taxed differently.

Tax deductions and credits

Next, make sure that you know the difference between tax deductions and tax credits. Tax deductions are expenses you’ve incurred that you can subtract from your taxable income. Credits actually give you a dollar-for-dollar reduction on your tax bill. Once you understand how these work, you then need to find out which deductions and credits you are actually eligible for. Often people don’t even know that they can deduct certain expenses from their tax. You need to claim for each and every deduction you are eligible for, so make a point of knowing them all. There are hundreds and not all of them will be applicable to you. If you want to maximize your return, make use of every permissible, applicable deduction you can find.

Know when to take the standard deduction

The IRS offers a standard, no-questions asked deduction, which you can choose to take or you can opt for an itemized deduction that is calculated from your specific mix of deductions. Which one you choose to take will depend on the higher amount. If you can submit an itemized list of deductions and it comes up to more than the standard deduction, then you should itemize your deduction. If not, it’s best to opt for the standard one.

For additional, personalized assistance with your tax returns, contact Georgen Scarborough.

Important Tax Dates To Remember In 2020

tax deadlines

The New Year is already well underway and that means that a new tax year is here, as well the various deadlines for filing tax returns, etc. As providers of public accounting services, we at Georgen Scarborough always have our eye on the tax calendar. For your easy reference, we thought we would draw up a list of the key dates individuals will need to take note of for the coming years.

Tax Day

Tax Day for the 2019 tax year is April 15, 2020. You will need to have your returns filed on or before this date to avoid penalties.

If you are able to get an extension

If you are granted an extension, you will need to file your return by October 15, 2020. If you know that you will not be able to file your return on or before the official Tax Day, you will have to submit an IRS Form 4868, requesting an extension well before April 15.

State taxes

The above dates are only for federal taxes. You will need to find out when your filing deadlines are for your state (unless you live in Alaska, Florida, Nevada, South Dakota, Texas, Washington or Wyoming, where there are no state income taxes).

Estimated quarterly tax payments

For those people who do not have their taxes automatically withheld from their pay – such as people who are self-employed or those who are eligible to pay capital gains tax – payments need to be made to the IRS each quarter. January 15 is the deadline for the final quarterly payment of the 2019 tax year. After that, periodic payments will have to made each quarter: one in April, one in June and one in September.

These are the main dates you need to remember for in regard to your taxes in 2020. For more information on the filing of tax returns – or to engage the services of seasoned professional tax practitioners, contact Georgen Scarborough.