What You Need to Know About Filing Taxes in 2020
With the holidays in the rearview mirror, there’s another yearly event that’ll be here before we know it: tax season. With tax returns due on April 15, there’s still plenty of time left for you to file your taxes—but it doesn’t hurt to be prepared. While you may have to wait on your employer and investment broker to share the appropriate forms with you, you can stay ahead of the game by being informed of any changes to this year’s tax regulations and how they might impact you and change the way you file.
In this guide, we’ve put together some of the things you should know about filing your taxes in 2020, including some key dates and changes to the federal and state tax codes.
Tax Dates for 2020
As you get your forms together and ensure that you’ve made all your contributions, these are the dates you should look out for:
January 31, 2020: This is the last possible date for employers to mail W-2 forms to their staff. Your W-2 forms will indicate your taxable income for the year and should arrive in your mailbox by mid-February at the latest.
Note: If you don’t receive this form, you’re entitled to request it from your employer or contact the IRS if they refuse to send it to you.
February 18, 2020: For any brokered investments, this is the last day for your financial institution to send you Form 1099-B, which relates to the sale of stocks, bonds, or mutual funds through a brokered account.
April 15, 2020: Alongside being the deadline for submitting your individual tax return, April 15 is also the last day to make a contribution to your retirement funds and Health Savings Accounts for the 2019 tax year.
October 15, 2020: If for any reason you need to request an extension—and the IRS grants one—you’ll have an additional six months to submit your return. If you do this, however, the IRS might charge you for interest or late payments.
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Filing Taxes in 2020: What’s Different this Year?
Every year, when the federal and state governments release their budgets, they announce any changes to the tax code. Often, these changes don’t notably impact how we file our taxes. However, it’s worth being aware of the differences so that you can know what to expect once your return is processed.
In 2017, the government passed the Tax Cuts and Jobs Act, which lowered the income tax rate for 2018 through to 2025. This year, the tax rates have remained the same to 2018, but the IRS updated the tax brackets to adjust for inflation. To save yourself from any surprises, you should see where you stand so that you know how much of your income will go to the government. Remember: the higher the bracket, the higher the tax rate.
The Tax Cuts and Jobs Act also doubled the standard deduction for both individuals and joint filers. Since last year, this has gone up yet again to $12,400 for individuals and $24,800 for couples. It also eliminated personal exemptions, which means that families with many children will have to pay higher taxes than they’re used to.
Filing Your Return
Once you have all the forms necessary, there are two options for filling out your return: on paper or online. If you’re mailing in a paper copy, check the IRS’s Where to File page for the correct address. Processing centers do sometimes change location—it happened to Pennsylvania in 2018—so it’s important to check back every year to ensure you’re sending your return to the correct place.
Filing online is convenient, safe, efficient, and—according to the IRS—it’s the quickest way to receive your tax refund. To do this, you need to either have your taxes completed by a tax preparer or do them yourself using tax software or a free file web software program. A big benefit with filing online is that you receive confirmation of receipt from the IRS almost immediately and your refund is likely to be processed faster than the average three weeks it takes to process a paper copy.
Regardless of which approach you choose, a big thing to keep in mind for tax season is that it’s always better to be prepared. We recommend you stay on top of any federal and state tax code changes and get started early with filling out your submission.