Money Management Tips
Last Minute Tax Reminders for 2019
Where does the time go? Last I checked the year had only just begun. Now we’re deep into March and we’re only about four weeks away from Tax Day 2019.
This year’s edition of tax time has been interesting for me as it’s my second year completing my taxes on my own and my first time using TurboTax. Of course, even for those who have a bit more experience, this year has brought some changes via the Tax Cuts and Jobs Act. So, with taxes being top of mind, here are some last minute reminders as we race toward this year’s deadline.
You can still make retirement contributions
It’s almost as if the government knows how much its citizens like to procrastinate. That’s presumably why they allow you to make contributions to your 401(k)s or IRAs up until April 15th and have it apply toward your 2018 return. In my experience, when you go to make these contributions, you will be asked whether you’d like to retroactively apply it to tax year 2018 or toward the current year, making it easy to keep track of.
Beyond the benefits of being able to subtract these contributions from your taxable income, you may also qualify for what’s known as the saver’s credit. These credits could reward you with up to $1,000 ($2,000 for married couples filing jointly) just for adding funds to your retirement accounts. This even includes contributions to Roth IRAs, which aren’t tax deductible typically. The size of your credit will depend on your income, the amount you contributed, and other factors but it’s definitely worth looking into and attempting to maximize.
Compare your options and even file for free
As I mentioned, this is my second time going solo with my tax preparation. Last year, after researching different options, I ended up using the free Credit Karma tax option (more on that in a moment). However, being a Quickbooks Self-Employed user, this time around I thought I’d try TurboTax.
The reason I ruled out TurboTax last time around was that, as a self-employed individual, there was no free option available to me. But, with my wife also being self-employed this year, I decided to spring for the Quickbook Self-Employed Tax Bundle, which includes one free federal and state filing. Obviously this isn’t quite free but, at an extra $7 a month for 12 months, the $84 is still cheaper than buying TurboTax’s self-employed plan a la carte.
If you want something truly free, you may be limited depending on your tax situation. While many of the big guys now offer a free plan, typically those with deductions or who need to file a Schedule C for their business won’t qualify. That said, Credit Karma Tax is completely free regardless of your filing situation. I personally had a good-enough experience with them last year, although I will note that my friend found a flaw this time around: she was unable to enter a 1099 because the payer used a Social Security number instead of an EIN.
Something else to mention is that many online tax services allow you to start your return for free, only charging you when you actually file. Therefore, if you worry about a newbie service like Credit Karma Tax getting things wrong, you can always try another service to double check your work before finally filing on the free option. Obviously this will take a bit more time and effort on your part but could save you a decent amount of cash.
Make sure to organize your business expenses and deductions
Speaking of Quickbooks, I may or may not have fallen a little bit behind on categorizing my various transactions, labeling them as either “business” or “personal.” Thankfully my laziness set in after the new year so I should be set for tax time but it’s an important reminder to get my stuff in order. I’ll admit that the software’s customizable rules for transactions also came in handy in this regard as most of my business expenses had already been marked for me.
Even if you don’t have business expenses to deduct, you’ll likely want to stay on top of any personal deductions you may qualify for (mortgage interest, charitable donations, etc.). Of course markedly fewer Americans will need to itemize their this future thanks to an increase in the standard deduction for 2018. Nevertheless it certainly doesn’t hurt to check your books and do the math to see which is the better option.
Remember your healthcare paperwork
Ever since the Affordable Care Act was signed into law by President Barack Obama, tax time and health insurance have had an interesting connection. Because the ACA mandated that nearly all Americans retain some sort of coverage, your federal tax return included information about your policy to ensure you didn’t owe a penalty. Since then this aspect of the law has grown complicated but there’s still good reason to pull out your insurance premium paperwork when filing your return regardless.
First of all, if you purchased your insurance through an ACA marketplace such as Healthcare.gov, you’ll receive what’s known as a 1095-A. This will show how much you paid for your coverage and what subsidy (if any) you recieved. The good news here is that, if you overestimated your income when applying for coverage, you’ll get the difference in the subsidy you should have earned. So, in the event you didn’t get your 1095-A, be sure to log into your insurance marketplace account and locate the form for your return.
Meanwhile, if you’re self-employed, the premiums you did pay for yourself, your spouse, and any dependents can be deducted. This is admittedly something I nearly missed when working on my taxes this year, so I figured it was worth mentioning.
Don’t wait until the actual last minute
Finally, with only three weeks left before tax day, don’t wait much longer to get your taxes filed. A lot of things can go wrong when preparing your return and so waiting until mid-April is really just asking for trouble. This is especially true if, like me, you plan on trying out some of the free tax filing options and/or are new to this whole process. Let’s make a pact to grab some coffee, gather our documents, and bang our these returns this weekend, eh?
Tax Day 2019 is really just around the corner now. As someone who’s just starting to get the hang of this whole tax return thing, I now fully understand the stress that this time of year can instill in people. That said, with four weeks to go, now is the time to check up on your retirement contributions, organize your deductions, test out free filing options, pull out your health insurance paperwork, and (most importantly) stop procrastinating. Good luck!
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