North Mankato CPA offers tax advice for those beginning to file returns
NORTH MANKATO, Minn. (KEYC) — Sandy Buckley from Kitchenmaster, Klooster & Begalka CPAs joined Lauren Andrego on KEYC News Now at 6:30 to provide some insight into the changes between the 2019 and 2020 tax filing seasons, in addition to some tips if you plan to file your taxes yourself and some of the most common errors people make while filing their tax returns.
Some of the new tax laws that have changed between the 2019 and 2020 tax filing seasons include:
- Standard deductions have increased to:
- Tax tables have adjusted, moving income levels slightly upward for each tax rate.
- 401(k) contribution limits have increased by $500. The maximum contribution is now $19,500 with an additional $6,500 allowed for those who are 50 years old and older.
- Mileage rates increased for business and for medical or moving expenses:
- Earning subject to Social Security withholdings increased from $128,400 to $132,900.
- Estate/gift tax exclusion has increased to $11.58 million per person.
- Medical expenses from 2019 will still need to exceed 10% of AGI to be deductibles as an itemized deduction, but the threshold will return to 7.5% in 2020.
- Alimony payments are non-deductible, while alimony received is no longer taxable.
- The W-4 for employees has been significantly overhauled. Many individuals may need to seek the guidance of a tax professional to fill out these new forms.
- The passage of the Secure Act in December 2019 has changed many options for retirement, including:
In addition to these changes, tax filers won’t be penalized this year for not having health insurance. However, if you have received a subsidy, as is common with some MNsure plans, then you will still need to supply that information on your tax return. Furthermore, if your income was more or less than projected for the received subsidy, then you may be liable for a repayment or qualify for a refund.
Common Tax Filing Mistakes:
- Mathematical errors;
- Not knowing the new tax laws when preparing your return;
- Not keeping a copy of your prepared return for future reference;
- Reporting inaccurate account numbers on your return, such as bank account numbers, investment company account numbers and others;
- Missing out on applicable tax breaks;
- Filing the wrong tax forms;
- Filing the wrong status — single, MFJ, MFS, HOH or QW; and
- Not filing at all.
Prepping to Self Prepare Your Own Tax Return:
- Choose a software to help eliminate mathematical errors.
- Gather all documents needed and compare them to documents from the year prior to guarantee that you’re not missing anything.
- Learn about possible deductions and/or tax credits that could be applicable to you.
- Visit www.IRS.gov for more research and help with your tax returns.
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