Tax Laws That Can Save You Thousands

Tax regulations

Tax laws are continually changing, and it’s essential to be aware of all the new regulations, so you file your income taxes correctly and efficiently. By taking advantage of all new tax laws, you can potentially save thousands of dollars on your next tax return. Here are three of the recent income tax changes for the 2020 tax year that will affect many American taxpayers when they file their next return.

Recovery Rebate Credits 

The first round of stimulus payments ($1,200 single, $2,400 for couples), along with the second round ($600 per person) are tax free. These Recovery Rebate payments will not add to your 2020 taxable income. As these payments were technically advanced payments, you will have to calculate the amount you should have received. If you are owed more, you can get the difference back in the form of a refund, or a lower tax bill. Best of all, if you were overpaid, you will not need to repay the difference!

Sick and Family Leave Credits for Self-Employed

The new Families First Coronavirus Response Act has tax relief for self-employed people who couldn’t work due to coronavirus. Self-employed people might qualify for tax credits if they were unable to work for a reason that would have allowed them to claim coronavirus-related sick or family leave had they been an employee.

Boost Your Retirement Savings 

For those saving for retirement, the IRS has increased the employee contribution limit for 401(k), 403(b), and most 457 plans to $19,500, from $19,000 in 2019. For those over 50, the catch-up contribution limit has been raised to $6,500, from $6,000 in 2019.

Not being aware of changes in income tax laws could have you leaving thousands of dollars on the table. To make sure you maximize your refund, consider having your taxes done by a professional tax expert who will know all the relevant tax laws for your situation.

At Georgen Scarborough Associates, PC, we provide various accounting and tax services to people in Virginia, Maryland, and District of Columbia (DC). We provide tax preparation services for individuals, families, estates and trusts as well as other accounting services. If you need help or advice filing your tax return, please contact one of our tax preparation experts today.

Tax Tips for First-Timers

tax filing tips

Whether you have just reached adulthood, or are a new resident in America, the first time you file your income tax return can be a daunting experience. Here are some tips to help you through the process.

Do I even need to file a tax return? 

It’s possible that if your income is below a certain amount, you will not need to file an income tax return. However, if you want to claim any refundable tax credits, or get a refund for any income tax withheld from your paycheck, you must file a tax return.

Make sure you have all your tax documents 

Before you start, make sure you have all your tax documents ready. These can include:

  • W-2 (Wage and Tax Statement)
  • 1099 (Income other than employment income)
  • Educational expenses
  • Supporting documents such as receipts

What forms you need will depend on your individual circumstances, so think about things that could impact taxes like any change in your job, selling stocks or other investments, opening retirement accounts, or medical expenses.

Remember all your side income

If you have earned income from freelancing work like rideshare driving or deliveries, don’t forget to report that income on your tax return. You can often deduct expenses related to your work like maintenance costs to your car, insurance, supplies etc.

Claim all your relevant deductions and credits 

Deductions and credits can lower the amount of tax you owe or increase your refund, but you must file and claim them to take advantage of these. Common deductions for first-time filers include:

  • Education credits
  • Student loan interest deductions
  • Home office deductions for self-employed people

Choose how to file 

There are many ways to submit your income tax return. You can go old-fashioned and file by paper through the post office, but if you want your refund quickly, you should consider filing online or having your taxes done by a tax preparation service.

At Georgen Scarborough Associates, PC, we provide various accounting and tax services to people in Virginia, Maryland, and District of Columbia (DC). We provide tax preparation services for individuals, families, estates and trusts, and other accounting services. If you need help or advice filing your tax return, please contact one of our tax preparation experts today.

Top 5 tax tips for Individuals

personal tax tips

None of us gets out of filing our taxes and dealing with the IRS – it’s one of life’s certainties. Taxes can be complicated and intimidating, so here are five expert personal tax tips to make them a little easier to manage.

1. Never ignore the IRS

People who ignore the IRS do so at their peril. If you don’t file or pay your taxes, or do either of these after the stipulated deadlines, you could face hefty penalties and the IRS can seize assets. If you receive any communication from the IRS, pointing out any errors or missed deadlines, respond immediately. The worst thing you can do is ignore it.

2. “Bunch” your deductions

To ensure you can take the maximum deductions applicable in a particular year, you can “bunch” them together. What this means is that you time your deductible expenses into the same calendar year. You can achieve this by moving forward certain deductions from the current year into the next, assuming that you meet the thresholds for the current year.

3. Max out your retirement plan contributions

Whatever you are paying into your 401k or other tax-deferred retirement scheme, do your best to increase your payments if you can. The money you pay into these accounts reduces your tax liability. You won’t have to pay taxes on it until you withdraw it. This excellent saving incentive is also a great way to lower your tax bill.

4. Be careful of tax scams

If you start getting phone calls or emails claiming to be from the IRS or the U.S. Treasury, do not respond to them. It is quite common for scammers to try these tactics as tax season approaches. Be careful not to fall into their trap. Don’t worry though; it’s pretty easy once you know that the two government institutions will never contact you in this way; they will only reach out to you by mail when necessary.

5. Get the help of a certified public accountant

Tax laws and procedures seem to get more complicated by the year. Even if you successfully manage to file your own taxes, you may very well not be getting the full benefits of the various deductions and tax breaks that might be available to you. Get the help of a professional when it comes to filing your taxes. It takes the burden off your shoulders, ensures that it gets done correctly, and may help you get more money back into your pocket.

Georgen Scarborough CPAs is based in Vienna, Virginia. Aside from offering expert personal tax tips, we can help you with your tax preparation and filing. Contact us today.

How to Check Your Tax Refund Status

In the current climate of uncertainty brought on by the COVID-19 pandemic, many taxpayers are eagerly awaiting their tax refunds to ensure that they have adequate liquidity for the challenging months ahead. If you have filed your tax return, this guide will provide more information on checking on the refund due to you. It also includes information about relief measures and announcements made by the federal government relating to the COVID-19 pandemic. 

Checking Your Tax Refund Status

Where do I check on my tax refund status? 

You can check on your tax refund status at this link or by visiting the IRS website and clicking on “Refunds” then navigating to “Where’s My Refund?”. These steps will take you to the “Get Refund Status” page, where you will supply your personal information to display your refund status. 

What do I need to check on my tax refund status?

  • Your Social Security Number (or IRS Individual Taxpayer Identification Number that is shown on your tax return)
  • Your filing status (choose between Single, Married-Filing Joint Return, Married-Filing Separate Return, Head of Household or Qualifying Widow(er))
  • The exact whole dollar Refund Amount that is shown on your tax return

If you are unsure of the information you need to provide, click on the links provided to get clarification and additional information on where to find the information required. 

When can I check on my tax refund status?

You can start to check your tax refund status within 24 hours of submitting your refund through e-filing and 4 weeks after mailing your paper return. 

“Where’s My Refund” tracker  

According to the IRS, more than 9 out of 10 refunds are processed within 21 days or less. If your refund is taking longer, we recommend using the “Where’s My Refund” tool to track the progress of your refund. The tracker displays the progress of your refund through 3 stages:

(1) Return Received

(2) Refund Approved

(3) Refund Sent

The tracker can also direct you to contact the IRS if your refund requires additional review and may take longer than 21 days to process. The tracker provides you with the most up-to-date information on your tax refund, giving you access to the information you need when you need it. 

Measures for Tax Payers during the COVID-19 pandemic

On March 21, 2020, the federal government extended the filing and payment deadlines for all taxpayers to July 15, 2020

For the latest information on the measures that are being taken during the COVID-19 pandemic, visit the U.S Department of the Treasury website and the IRS newsroom

If you have questions relating to your tax refund or need assistance with your tax preparation, contact Georgen Scarborough Associates, PC, now.