As we bring in a new year…
And a new decade, this new year seems a little bigger than others. A new year often brings emotions of reflection, challenges, successes and opportunities to start fresh.
At Root, we have seen many changes and challenges this past year including mastering the new tax laws The Tax Cut and Jobs Act), hiring a better and more client focused team member in Abigail Harper, making strategic connections and we are currently in negotiations for a new office space. Needless to say, we are growing and are incredibly thankful for your help and support in doing so!
To better help you get your new year started off right, here is a brief rundown of 2020 tax considerations you should be considering and thinking about.
- There is a new W-4 out for 2020. The form W-4 is filled out by employees to tell their employers how much tax to withhold from their paychecks. If you are an employer, you should request that all of your employees fill out a new form. If you are an employee, you do not need to wait for your employer. Just fill out the new form and submit it.
- The IRS has provided an estimator to help you fill it out https://www.irs.gov/individuals/tax-withholding-estimator
- January 31st is the due date for many informational tax forms to be filed including 1099s and W-2s. The government has been increasing the fines and enforcement of those fines to ensure more compliance. The fines can be up to $270 for each 1099 required to file. It just isn’t worth not filing. We at Root are happy to help if you need help gathering and issuing 1099s to those contractors.
- With the increased efficiencies of the IRS and other governments, they have created quicker responses and actionability on items that do not match records in their system. It is even more important to keep track of all tax documentation you receive, including notices and tax forms. Losing any of those will certainly result in notices for additional taxes from your Federal and State government agencies. We encourage you to upload each document you receive to your tax portal as soon as you get it so it doesn’t get misplaced or forgotten.
- Make your fourth quarter estimate for 2019. It may sound odd, but the final estimated tax payment deadline for 2019 is actually January 15, 2020. It is a great time to make sure all required taxes are paid.
- Consider a retirement contribution. Many retirement plans allow for a 2019 deduction for contributions made in 2020, some as late as October 15, 2020.
- Incorporate or un-incorporate. There are plenty of benefits to both, but if you don’t know which one is more beneficial to you in your tax situation, then let us know. We would be happy to discuss it and make sure you are maximizing the right company structure.
- Lastly, the Qualified Business Income Deduction has established itself as the most beneficial item of the recent tax changes. In its simplicity, a business owner gets an additional deduction against their business income of 20%. In its complexity, every business owner needs to be paying attention to wages of their employees, the business’ income streams, their business profit, as well as their combined household income and deductions. Not contemplating the entire picture early in your tax planning can literally cost you thousands of dollars in additional taxes paid to the Federal Government.
- If you are unaware of its implications, please reach out to us to schedule a consultation as soon as possible.
We are so excited for this year and what it will bring. Whatever it brings for you, we hope to be a part of it, supporting you and helping you grow.