Tax moves to make in day-longer February 2020
Monday, February 03, 2020
The shortest month of the year is a little longer in 2020. It's a Leap Year.
What will we do with that extra day, Feb. 29?
Of course, we're going to devote those additional 24 hours to our taxes.
OK, maybe not.
For many, this first full week of February is getting off to a slow part, thanks to the annual Super Bowl Sunday hangover.
Others simply aren't ready to think taxes yet. It's not their fault. They, and that includes me, are still waiting for necessary tax-filing statements.
And some eager and on-the-ball taxpayers don't want to think about taxes anymore. They've already sent their 1040s to the Internal Revenue Service. Showoffs!
But even if you're through with or well into filing your 2019 tax return, there still are some tax things to think about this February.
Here are three quick ones.
1. Collect your tax statements.
Let's start with tax tasks for folks who've yet to file. Missing or late-arriving documentation is a big reason folks don't file early.
OK, the main reason is procrastination, but that's for another post; actually, this post.
You can get an idea of what statements you need by reviewing last year's filing. You also can check out this checklist, which details the common forms most of us need to finish filling out our forms.
If you haven't gotten some of them, the missing tax statements should be arriving this week. They were supposed to at least be on their way to you by Jan. 31.
The key income-related forms for most filers are the W-2, which you get when you're an employee, and 1099-MISC forms if you're an independent contractor. Other types of taxable income, such as interest on savings and other investment earnings, are reported on a variety of 1099 versions.
When these documents do arrive, check each to make sure it's correct. This includes not just amounts, but also your name, address and tax identification number (usually your Social Security number). If you find an error, contact the issuer to clear up any questions and/or give them the correct data.
Remember, too, that in the case of 1099 forms, you don't need them to file. If an investment didn't pay at least $10, the financial institution generally won't issue the reporting form. And if you didn't earn at least $600 from a freelance job, that contract employer isn't required to send you a 1099-MISC.
In those cases, though, you should rely on your own records. Remember, even without documentation, you're legally required to report those smaller earnings.
2. Get tax help.
For a short month, February is jam-packed with special commemorations.
The whole month is an annual celebration of African-American history. In the middle we have Valentine's Day and the federal Presidents Day holiday (and, for many of us, a Monday off!).
And, of course, there's Groundhog Day.
While we've come to discount the annual Feb. 2 weather forecasting tradition — really, a sleepy rodent has predictive powers? — it has been immortalized in pop culture thanks to the Bill Murray movie.
Here in Texas, we don't need no stinkin' groundhogs!
Armadillo says you can continue to wear shorts for the next 6 weeks. #ArmadilloDay#GroundhogDay pic.twitter.com/KoH3GR5MD2— TX Parks & Wildlife (@TPWDnews) February 2, 2020
But while it's always fun to watch the deadpan comic relive Groundhog Day over and over and over and … you get the idea, nobody wants to do their taxes more than once.
So that you don't make mistakes or overlook tax breaks that force you to amend your filing, consider getting help from a reputable tax professional.
It's still early in the tax season, so you should be able to find a tax professional to help you file last year's return.
Even if you're done with your taxes, if you had any trepidation about your filing, it could be worthwhile to consider a tax pro with whom you can work throughout the rest of the year to plan for future filings.
If cash is a concern when it comes to getting tax help, you have options.
Free File, the IRS' partnership with the tax software industry, is now in its 18th year. If your adjusted gross income (AGI) is $69,000 or less, you can use this no-cost online tax preparation and e-filing option.
Lower income and elderly taxpayers also might be able to get more personal help, again for free, from IRS-sanctioned Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) locations nationwide.
3. Find out what you owe early.
Every tax filing season there the distinct and distressing possibility that you'll discover you owe Uncle Sam. It happened in unexpected numbers a couple of years ago when many folks didn't adjust their withholding to better align with the Tax Cuts and Jobs Act (TCJA).
Even if you got the message and last year tweaked your payroll withholding to more accurately reflect your eventual 2019 tax bill, surprises still happen. By at least running your tax numbers early, you'll get an idea of any potential tax bill.
I know. Nobody wants to confront bad news before they absolutely must do so.
But if you owe taxes, it's better to know sooner rather than at the April 15 deadline. That way you can (1) get over the anger and shock and (2) figure out how you'll pay when the Tax Day due date does arrive.
The IRS, not surprisingly, offers us many ways to pay our due taxes.
As the tax agency becomes increasingly digital, it provides a variety of e-pay options. And if you can't cover the full bill, look into an installment plan.
More February tax moves: If any or all of these three tax considerations apply to your filing situation, they shouldn't take up too much time this February.
However, if you're looking for more tax-wise ways to fill out this year's full 29 days, you can find them over in the ol' blog's right column.
The tax tasks are listed under the February Tax Moves heading (like the one at left), just beneath the countdown clock that's keeping track of how many days until the April tax filing (and paying) deadline.
But don't wait too long. Even with an extra day, February will be history before you know it.
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