Planning matters

Steps to Take Now to Get Ready for Tax Season

Yes, we’re in the midst of the holiday season but it’s a great time to get organized for tax season. We have a few steps to take to help make your tax filing experience a smooth one in 2020.

Are your records in order?

It’s a good time to start gathering your tax documents. Review your medical expenses, state and local tax payments, and charitable contributions if you deduct them on your tax return. If you are self-employed or have rental property, organize your records and receipts. You may have additional records to gather if you sold a house, business, or other asset in 2019. Specific records may be required if you qualify for certain tax credits such as the electric vehicle credit. If you are unsure of the record-keeping requirements, check in with your financial planner or tax professional.

Is your contact information up to date?

Confirm that your employer, bank, and other payers who send you tax forms have your current address and other contact information to ensure that you receive all your tax documents. Forms W-2, 1099-R and others are sent at the end of January generally, but others may not arrive until as late as mid-March.

Is your tax withholding accurate and enough to cover your tax liability?

If your tax withholding during the year is too low, you might get a surprise tax bill in April. Use the IRS Tax Withholding Estimator to make sure enough taxes were withheld from your paycheck, pension, or other sources of income. Oregon taxpayers can go to Oregon Withholding Calculator to check their Oregon income tax withholding. Other states have similar calculators on their websites.

Make an estimated tax payment by January 15th to cover any shortfall. Paying Your Taxes at shows you how. Adjust your withholding for 2020 by submitting a new W-4 to your employer. Use W-4P if you have taxes withheld from your pension or retirement distributions.

Did you take your Required Minimum Distribution (RMD)?

Taxpayers 70 ½ and older, and some other taxpayers, must take a Required Minimum Distribution (RMD) from their retirement plan(s) by the end of the tax year. The penalties for not taking an RMD can be up to 50%, so it’s important to get it right. The details can vary by taxpayer and type of retirement account, so the IRS has created an RMD FAQ:

If you have an IRA, you may be able to contribute all or part of your RMD to charity via a Qualified Charitable Distribution (QCD). Funding your favorite charities via an RMD usually results in a more favorable tax result too.

If you have questions about any of the above steps, don’t hesitate give us a call.



This material is intended to provide general financial education and is not written or intended as tax or legal advice and may not be relied upon for purposes of avoiding any Federal tax penalties. Individuals are encouraged to seek advice from their own tax or legal counsel. Individuals involved in the estate planning process should work with an estate planning team, including their own personal legal or tax counsel. This material is for informational purposes only and is not an offer to sell or a solicitation to buy any securities.

Written By Johnson Bixby