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December 2019

Five Expenses Not to Deduct from Your Taxes

When it comes to tax deductions, the IRS has strict rules and regulations regarding the type of expenses we can deduct and those that we cannot. With tax season being only a couple of weeks away, we might want to make sure we are not requesting a deduction we do not qualify for. Therefore, we have gathered five common expenses not to deduct from our income tax returns. These expenses include those for over-the-counter medicine, commuting and transportation, family pets, volunteer work, and plastic surgeries. Just remember that there may be some exceptions that could make these expenses eligible to be deducted from your tax bill.

Over-the-Counter Medicine Expenses

We know that deducting medical expenses is an important part of our tax return, however, we need to be careful when taking this deduction. Medicine for headaches and cold remedies we buy at pharmacies are not tax-deductible when they qualify as an over-the-counter medicine. The only medicine the IRS considers deductible is medicine prescribed by a doctor. Also, kits for pregnancy tests and blood sugar levels, breast-feeding pumps, and bottles can be deducted.

Commuting and Transportation Expenses

Despite popular belief, commuting and transportation costs of getting to and from work are not tax-deductible. Whether we take the bus, train, taxi, or drive our own car, these are an example of personal expenses not to deduct from your taxes. The only case on which you could get these costs deducted is if you have to work at two places on the same day. This applies regardless of working for the same employer or not. Also, we can deduct commuting expenses when we move to and from a temporary job, which shouldn’t last for more than one year.

Family Pet Expenses

Having a family pet can become quite expensive, especially when they get sick and we need to get them specialized care. These are expenses you shouldn’t deduct from your taxes since they still qualify as personal expenses. However, we can deduct the expenses of buying, training, and maintaining a service animal, like a guide dog. These expenses include food, grooming, and veterinary care that enable the service animal to perform properly.

Volunteer Work Monetary Value

If we do volunteer work for a non-profit organization, we might think that we would be able to claim the monetary value of the hours we spend with them. Yet, these expenses aren’t deductible, and we shouldn’t add them to our list of deductions for our tax returns. Nonetheless, we can deduct the miles we drive while doing charity work, as long as we use the rate of 14 cents per mile. Therefore, we need to make sure we keep an accurate record of the miles we drive for charity work.

Cosmetic/Plastic Surgery Expenses

Lastly, cosmetic and plastic surgery costs are also expenses you shouldn’t deduct from your taxes. This includes liposuctions, face-lifts, electrolysis, and other cosmetic procedures we might get to enhance our appearance. We can only deduct this type of expense when our doctor says we need plastic surgery if it’s necessary to improve a deformity from a congenital abnormality, an injury from an accident, trauma, or a disfiguring disease.

 

5 Tips for Tax Season 2020 You Should Consider Following

The year is almost over, and we should start preparing to file our income tax return if we haven’t already. This can be a very daunting task for many of us, especially when we are still not very familiar with the process. Thus, we have decided to share with you five tips for tax season 2020 that you should consider following. This way, you will make sure you are making the most out of the process, taking advantage of different benefits and deductions.

Make Contributions to Your Retirement Account

One of the best ways to take advantage of tax benefits is by making contributions to our retirement accounts. So, if we haven’t started a retirement account, we should consider opening one before April 15, 2020. These contributions come with many tax advantages, as deductible contributions can help us lower our tax bill. Besides, all the contributions we make will compound tax-deferred, which is an opportunity hard to pass on. Just remember that for 2019, the maximum IRA contribution is of $6,000, or $7,000 if you are 50 or older by the end of the year.

Consider Making an Estimated Tax Payment

One common scenario we might be facing is not having paid enough to the IRS during the year, which means we may have a large tax bill waiting. There are several reasons why this could happen, such as withholding on our paycheck not have been enough or having received a large gain from selling stock. In order to avoid owing any underpayment penalty, we must cover 100% of last year’s tax bill or 90% of this year’s. When you calculate your estimated tax payment, try not to pay too much, as the IRS might take long to issue the corresponding refund.

Take Advantage of Home Office Tax Deduction

Taking advantage of home office tax deductions is one of the most underrated but useful tips for tax season 2020. Whether we are self-employed, remote workers, or simply have the option of working from home, requesting this deduction is easier than we think. Writing off expenses linked to the portion of your house that is used exclusively for doing business can be quite simple. These expenses include rent, utilities, and insurance, for example. Before applying for this deduction, make sure you are eligible for it, as it tends to be considered as a red flag for an audit if we don’t legitimately qualify for it.

File Your Taxes Electronically

Many taxpayers prefer to send their income tax reports by mail out of tradition, but filing electronically might be more convenient. This is particularly true for the taxpayers who are expecting to receive a refund next year. When we file our taxes electronically, the IRS processes return faster than those sent by regular mail. Also, we are more likely to file an accurate return, since the IRS will check to make sure the documents are complete. Lastly, if you file your taxes electronically, you will get a confirmation where the IRS acknowledges they received your return, which doesn’t happen when we send paper returns.

Think About Getting Professional Help

If we want to make sure we follow these and other useful tips for tax season 2020, we should consider getting professional help. Hiring a tax advisor can help us file our returns accurately and in a timely manner. Besides, they can inform us of other deductions we might be eligible to request, and ensure we apply for them correctly. When looking for a tax advisor, make sure you do a bit of research before hiring someone. Asking for qualifications, credentials, and expertise is important to avoid hiring the wrong advisor.

 

This Is When You Can Expect your 2020 Tax Refund

t is the holiday season, and many already have started preparing for the coming tax season. One of the most common questions taxpayers have is when exactly will they receive their 2020 tax refund. First, we need to remember that there are several aspects that will have an effect on when we receive our refund.

Also, it is important to keep in mind that the tax reform law that took effect in 2018 can also have an impact on this date.  Lastly, if we are applying for the Earned Income Tax Credit (EITC) or the Child Tax Credit (CTC), we might see a slight delay on our 2020 tax refund.

As we mentioned above, there are several factors that can come into play when determining the date on which we will receive our tax refund. To begin with, the date on which we file our taxes will play an important role. Also, whether or not we are claiming certain credits can make the process last a bit longer.

Another reason that will determine our refund date is whether we file our tax electronically or by mail. Lastly, if we have existing debts to the federal government can also affect the date on which we receive our refund.

This is because the IRS will take more time to finish the process, depending on how many of the scenarios above apply to us. If we filed credits, they will make sure we are eligible to receive them. Sending our tax return by mail may sound like a safer idea, but the IRS will take longer to receive it and process it. And if we have existing debts, the IRS will try to determine the best way for us to settle such debt.

Another aspect we should keep in mind is that, during recent years, the start of the tax season has been delayed from January to early February. This is in part a result of significant changes and updates in different tax laws and regulations.

In addition, the IRS also delays the processing of our income tax returns when we file for the Earned Income Tax Credit or the Child Tax Credit. Both the EITC and CTC have often been misused and abused, so the IRS takes longer processing them in order to prove their validity.

Now, the most important factor that will help us know when we can expect our 2020 tax refund is the date on which we submit our tax returns. You can find a chart below with IRS Acceptance dates and expected refund dates. If the IRS accepts your tax return between the dates on the left, you can expect them to send a Direct Deposit or to send a check on the corresponding dates listed on the right.

1/20/20- 1/24/20                             Friday 1/31/20

1/27/20- 1/31/ 20                            Friday 2/7/20

2/3/20- 2/7/20                                  Friday 2/14/20

2/10/20- 2/14/20                              Friday 2/21/20

2/17/20- 2/21/20                              Friday 2/28/20

2/24/20- 2/28/20                              Friday 3/6/20

3/2/20- 3/6/20                                  Friday 3/20/20

3/9/20- 3/13/20                                Friday 3/27/20

3/16/20- 3/20/20                              Friday 4/3/20

3/23/20- 3/27/20                              Friday 4/10/20

3/29/20- 4/3/20                                Friday 4/17/20

4/6/20- 4/10/20                                Friday 4/24/20

4/13/20- 4/12/20                              Friday 5/1/20

4/20/20- 4/24/20                              Friday 5/8/20

4/27/20- 5/1/20                                Friday 5/15/20

5/4/20- 5/8/20                                  Friday 5/22/20

5/11/20- 5/15/20                              Friday 5/29/20

5/18/20- 5/22/20                              Friday 6/5/20

5/25/20- 5/29/20                              Friday 6/12/20

6/1/20- 6/5/20                                  Friday 6/19/20