Tax Season 2020
The 2020 tax filing season is in full swing, and individuals filing their 2019 tax returns will notice several important changes. Many of these changes are intended to streamline the tax filing process and reduce paperwork. Other changes are designed to capture information on taxes related to emerging streams of income. Our team at CG Tax, Audit & Advisory has been studying these changes closely so that we are prepared to answer every question as we navigate you through the 2020 tax season.
Changes to Form 1040
Beginning with tax year 2018, the IRS eliminated Forms 1040A and 1040-EZ. For 2019, they have introduced the new Form 1040-SR. Senior citizens who were age 65 or older on January 2, 2020 are eligible to complete the Form 1040-SR. The new form is very similar to Form 1040, but it allows for reporting that is only applicable to individuals over age 65.
The 2019 Standard Deduction saw an increase from 2018. Married couples filing jointly will have a standard deduction of $24,400, head of household filers will deduct $18,350, and the standard deduction for those who are single or married filing separately has increased to $12,200. The standard deduction nearly doubled from tax year 2017 to 2018, making it much easier for many tax filers to opt for the standard deduction rather than itemizing. If you believe that itemized deductions are right for your situation, please call us to review your records.
One other important change for 2020 is that there are fewer schedules associated with the Form 1040. In previous years, there were six numbered schedules to report various income, earnings, and deductions. The self-employment tax is on Schedule 2 for small business owners. Anyone engaging in transactions with virtual currency will need to file a Schedule 1 to pay the appropriate taxes on that income. While fewer schedules are good news for many individuals, the lettered schedules applicable to business owners and investors will remain in force. Our certified public accountants support the efforts to reduce paperwork, but our clients know that working with us assures them the most accurate tax return this filing season.
Filing Income Tax Returns in 2020
The IRS began processing 2019 tax forms on January 29, 2020. Filing an electronic tax return and utilizing direct deposit for any tax refund owed is still the most efficient and preferred method of both the IRS and taxpayers. Schedule your appointment to begin reviewing your tax year now so that our team can ensure your tax return will be filed by the April 15, 2020 deadline.
Many individual filers may be surprised to see a smaller tax refund in 2020. The Tax Cuts and Jobs Act of 2017 lowered tax brackets, and not everyone took time to update their withholding. Our team understands that many business owners value their employees’ financial wellness. We help our clients provide resources that improve employee education on taxes, withholding, credits, and deductions.
Our tax services team specializes in optimizing your profitability while satisfying your tax bill accurately. We review your business structure and your operations to make sure your taxes are being assessed on the right information. Our work with you is never focused solely on taxes. We strive to learn how your business works, your goals, and where you can increase profitability. With our comprehensive list of services, we can meet your current needs and help you plan for the future.
Our certified team of tax professionals provides assurance that you are meeting your tax obligations without leaving money on the table. You don’t need to navigate the process on your own. Contact us today or call 732-676-4100 to schedule an appointment with a member of our team.