Money 2020: 5 Tax Filing Tips For 2020
(Source: forbes.com)

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(Original link: forbes.com)

W hen Form 1040 debuted in 1914, the filing instructions were one page long. Today, they run 108 pages, not counting instructions for the more than 50 related forms and schedules. There are now seven tax brackets and five filing statuses, and the only constant about the tax code is change. After enacting the most sweeping tax reform in three decades in December 2017, Congress pounced again in December 2019, extending (sometimes retroactively) and modifying a slew of tax breaks and revamping rules about retirement accounts.
Given all that, it's easy to feel overwhelmed. Here are five tips to help reduce tax filing stress and to minimize the chance of future problems with the Internal Revenue Service.
If you're bummed out about writing a big check to the IRS, consider writing a check that benefits you—and your retirement—instead. While it's too late for employees to top up 2019 contributions to a 401(k), you might still be able to deduct 2019 contributions to an individual retirement account (IRA), a health savings account (HSA) or, if you're self-employed (or have side gig income), a SEP-IRA.
To qualify for an HSA, you must be covered under a high-deductible health plan. For 2019, you can contribute up to $3,500 to your HSA if you have single coverage or $7,000 if you have family coverage. Plus, if you're over age 55, you can kick in an extra $1,000. Not only are contributions to HSAs tax-deductible, but withdrawals for qualified health-care expenses are also tax-free. Even better, you can invest your HSA balance, allowing it to grow tax-free for future medical expenses, including in retirement.
Depending on your income and whether you have a workplace retirement plan, you may be able to deduct up to $6,000 in contributions to a traditional IRA for 2019 so long as you're under the age of 70½. (For 2020 and later, there is no age limit.) The catch-up rules apply to IRAs, too, to the tune of $1,000 in extra contributions if you're 50 or over.
You must make 2019 contributions to an HSA or IRA by April 15. If you're self-employed and file for a tax extension, you can contribute to your SEP-IRA until October 15 or the date you file your return, whichever is earlier.
The IRS eliminated Forms 1040EZ and 1040A in 2019 but has introduced a new form in 2020: Form 1040-SR, U.S. Tax Return for Seniors . It's designed for older taxpayers with bigger print and increased attention to the additional standard deduction for those 65 or older.
Meanwhile, there were a few notable changes to Form 1040. Among them? A question about cryptocurrency . You'll see the new language at the top of Schedule 1. Don't skip this question; the IRS has made no secret of its belief that taxpayers are not properly reporting their crypto transactions.
For 2019, there are only three numbered schedules, down from six in 2018. Schedules 2 and 4 were combined into a revised Schedule 2 (where you will report any additional taxes you may owe), while Schedules 3 and 5 were combined into a revised Schedule 3 (where you will report any credits that you didn't otherwise claim). It sounds confusing, but you won't notice the changes if you're using tax software.
And no, you're not missing a section: For 2019, you no longer need to make a shared responsibility payment or file Form 8965 if you didn't have health insurance for part or all of 2019.
Before you mail your return—or hit send to e-file—double-check to make sure that you didn't make any of these common mistakes.
Math mistakes. It's easy to misread a column or transpose a number—so double-check the numbers entered and the math, even if you use software or a tax professional. If you don't catch it, the IRS' computers will. Wrong or missing social security numbers or names. The names and Social Security numbers on your tax return should match the names as they appear on the respective Social Security cards. Filing status errors. There are five filing statuses to choose from: Single, Married Filing Jointly, Married Filing Separately, Head of Household and Qualifying Widow(er) With Dependent Child. For more on filing status, click here . Forms not signed. An unsigned tax return isn't a timely filed return. Keep in mind that for a joint return, both spouses must sign for it to be valid. E-filed tax returns also require a signature of sorts—you must include a Personal Identification Number (PIN); you can use your prior PIN if you e-filed last year.
Phishing scams and identity theft concerns remain atop the IRS' 2019 "Dirty Dozen" list of tax scams .
If you use tax or other software, make sure that it's secure and up to date, and don't transmit or enter financial information on websites that aren't secure (look for "https" in the web address). Use encryption programs and strong passwords to protect sensitive digital data, and, of course, back it up. Don't share passwords or PINs, and don't give this information out over the phone or via email. Remember, the IRS does not initiate calls or emails without sendin...