You may not yet be thinking about the upcoming tax season, but now is the best time to start planning for it. Preparing early will help make things go smoothly once it comes time to have your taxes done. While most of your paperwork will not be available at this time, there are still a few things you can do now to get ready.
Check Your Withholdings
Now is the time to review your withholdings and make any last-minute adjustments. This is important for those who may have received a smaller refund when filing their 2019 taxes, owed more than they expected, or those who have had personal or financial changes that might affect their taxes. Do a quick paycheck checkup now!
Double-Check Your Address
Make sure your address is correct with your employer, bank, and any other institution you may be receiving tax paperwork from. Starting in January, you’ll begin to receive the necessary tax paperwork.
Collect Tax Documents
Gather and organize any paperwork that you can at this time. This will help you in the long run, and keep you from feeling stressed at the last minute. Also, you want to make sure that you keep your tax returns and any supporting documents for a minimum of three years. Documents you need to file your 2020 taxes include: 2019 tax return, W-2, 1099, 1095-A (marketplace form), 1099-NEC (nonemployee compensation), 1444 (economic impact payment), as well as any supporting documents and other income records.
Recovery Rebate Credit
Some taxpayers may be able to claim a recovery rebate credit as long as they meet the eligibility requirements. The requirements include:
- You didn’t receive an Economic Impact Payment in 2020.â?¨
- You are single and your payment was less than $1,200. â?¨
- You are married, filed jointly for 2018 or 2019 and your payment was less than $2,400.
- You didn’t receive $500 for each qualifying child.
More than ever, this is a year to prepare for your taxes. If you have any questions, don’t hesitate to reach out.
Ryder & Company is located in West Lawn, PA and offers a variety of accounting services, part-time CFO services, payroll preparation, and much more! We also offer tax preparation for individuals, as well as businesses and nonprofit entities. We assist many individuals and businesses in and around Wyomissing, Exeter, and Reading.