December 17, 2019
6 IRS Tax Tips To Do Before December 31
Before 2019 year ends, the IRS reminds all taxpayers to take these simple tips. Here are the IRS’s top 6 tips that can prove out to be the biggest time and money savers.
1. Donate to Charities
Any donation or contribution made by December 31 will impact your 2019 tax return. Be sure to save your receipts and itemize your deductions made throughout 2019. Credit card charges or checks mailed to a charity must be made by the last day of the year (even if the credit card bill isn’t paid until 2020).
2. Manage Your Retirement Plans: 401(K)s, Roth, and IRAs
Depending on your age and retirement accounts, there are specific rules the IRS requires you to follow.
If you’re over 70 ½, you’re generally required to take distributions from your individual or workplace retirement accounts by the end of 2019. However, you might be eligible for a special first time Required Minimum Distribution (RMD) that allows those who’ve reached 70 ½ in 2019 to wait until April 1, 2020, to take them. Keep in mind that by pushing your first RMD to 2020 you may have to take RMDs twice in one year, driving up your tax rates.
Still working? Contributions through your workplace retirement account should be made by the end of the year. However, 2019 IRA contributions can be made until April 15, 2020.
There are limits to contributions. For example,
- 401(K) contribution limit is $19,000, plus another $6,000 for those who are at least 50 years old.
- Traditional and Roth IRAs cannot exceed $6,000, unless you’re 50 years or older, then it’s $7,000.
3. Get Refunds Faster in 2020
Every taxpayer and their returns are different but the IRS recommends that you can get your refunds faster by filing electronically and using direct deposit.
The IRS issues most refunds in less than 21 days but it’s possible yours may take longer. There are different factors that can delay your return like errors, incomplete sections, or identify theft or fraud; the IRS will contact you via mail if they need more information to process your return. However, the IRS advises to not count on getting a refund by a certain date if you’re planning on paying other financial obligations.
4. Update Your Address or Name
Also, notify the Social Security Administration if your name (or your dependent’s name) has changed due to marriage or divorce. Your new name will need to match the IRS and SSA records. Mismatch names on tax returns and SSA records can cause refund delays.
5. Renew Individual Taxpayers Identification Number (ITIN) Before It Expires
The IRS issues an ITIN tax ID number for any taxpayer who does not qualify to get a Social Security number. If your ITIN is expiring, it’s best to submit your ITIN renewal application soon to avoid refund delays. By not starting the renewal process now, you may also be ineligible for some important tax credits. To see if your ITIN is about to expire, go to IRS.gov/ITIN.
6. Record All Tax Returns To Streamline Next Year’s Return
Keep copies of each year’s tax return whether it’s with yourself or your accountant. You can always reference last year’s return to make it easier to fill out 2019 return. The IRS gives you information of what you owe each tax year; you can view your tax account here.
Tip: Using a tax software preparer for the first time? You may need the Adjusted Gross Income (AGI) amount shown on Line 7 from your 2018 return to file electronically for 2019. Learn more about the process and how to validate your electronic filed tax return.