We are less than two weeks apart from the start of this tax season, and we must start preparing to file our income tax return accurately and in a timely manner. However, it is common for people to feel overwhelmed by this process. If we feel stressed when we think about our taxes, these are 4 tax mistakes we should avoid in 2020. These mistakes include not adjusting our tax withholding and not keeping an accurate record of business expenses. Not including taxes for side and temporary jobs as well as not hiring a professional tax preparer on time are also examples of mistakes to avoid this year.
Not Adjusting Your Tax Withholding Properly
As a result of the 2018 new tax law, we saw a large number of taxpayers receiving bigger paychecks during the year by lowering most individuals’ tax brackets. Another change is that the IRS issued new withholding tables that allowed employers to know how much tax to withhold from the earnings of their workers. However, one of the tax mistakes to avoid in 2020 is not adjusting our tax withholding properly. If we make this mistake, we should expect the unpleasant surprise of owing money to the IRS.
Not Keeping an Accurate Record of Business Expenses
Business expenses represent an important and quite useful tax deduction that many taxpayers can take advantage of. In order to qualify and obtain this deduction, it is important that we track all our business-related expenses. Therefore, one of the most important tax mistakes to avoid in 2020 is not keeping an accurate record of these expenses. If we deduct less than what we spent, we won’t be fully taking advantage of this. If we deduct more, we might be subject to an IRS audit.
Not Including Taxes for Side and Temporary Jobs
In today’s economy, getting side and temporary jobs can be a great way to get additional income. Nonetheless, if we opted for one of these two options, we must remember to include all our earnings as part of our income when we file our tax returns. Working as a freelancer and self-employed means we are responsible for giving the IRS their part from what we earn. Failing to do so can result in costly penalties and audits in the long run.
Not Hiring a Professional Tax Preparer on Time
Lastly, one of the biggest tax mistakes to avoid in 2020 is not hiring a professional tax preparer on time. We might think we have a clear understanding of tax law and feel familiar with the income return process. Yet, having the help of a professional tax preparer can come with many benefits. They can help us fill out every form properly, maximize our savings and returns, and reduce our tax bill.