Whether you’re an individual citizen, an aspiring startup, established small business or thriving corporation, you must always pay careful attention to your tax burden and responsibilities. Nevertheless, many American business owners and professionals are struggling to keep themselves aware of potential tax surprises which could beset them as 2020 begins to unfold. This could result in disastrous and unexpected financial developments which imperil the long-term prosperity of your business.
Luckily, you can carefully conduct research well ahead of time to ensure such tax surprises don’t catch you with your guard down. Here’s an analysis of the tax surprises we’ll face in 2020, and what business owners and private taxpayers alike should know about avoiding them.
Always check your bookkeeping
There’s one piece of useful advice which can apply to everyone, regardless of whether you’re a private taxpayer or a massive corporation: You must always check your bookkeeping to ensure that you’re properly documenting your finances. Those individuals or companies who have shoddy records to rely upon when the IRS comes calling will find themselves in a world of financial turmoil.
Besides being a financial headache, an audit from the IRS could also involve legal peril for individuals and major companies alike. It’s thus imperative to establish that nothing you do will prevent a 2020 tax surprise from accosting you unless you have pristine and accessible records which help you keep track of your financial dealings.
That being said, many business owners look to those who tell them that they need to up their bookkeeping game and accurately note that such a thing is easier said than done. While excellent bookkeeping entails some challenges, it’s not something to be shunned, as doing so will almost certainly come back to haunt you in the long run. Small business owners are highly encouraged to read up on the best bookkeeping techniques for commercial operations, whereas private individuals are strongly encouraged to contact a certified tax or financial professional in their nearby area.
Finding a tax attorney is never a small feat, and many private taxpayers refuse to do so because they think it’s not worth the money. What’s worse, those who can afford it deem it unnecessarily expensive, and insist that they can manage such things themselves. In reality, however, your taxes can be incredibly complicated and easy to mess up even if you’re an intelligent individual with certifications in other fields. There’s no tax attorney who’s best for everyone, so the best that you can do is familiarize yourself with tips on finding the best tax professionals in your nearby area.
Remember that these financial gurus can help you detect tax surprises in 2020 well before they actually threaten your finances or legal standing. It may seem expensive to rely on their help, but many everyday people simply lack the legal or financial expertise needed to detect minute changes to the tax code, let alone respond to them effectively and within the appropriate time frame.
You still have to pay attention
Even those businesses or individuals who rely on the certified professionalism of tax gurus need to realize that they still have to pay attention if they don’t want a tax surprise to catch them with their guard down in 2020. Sometimes, this is as simple as being a good citizen who frequently reads the news, especially when it comes to stories centered around taxation in the 2020 time period. This is because being a good citizen entails paying attention to what’s going on in your society, as does being a financially responsible person aware of the latest changes to the tax code.
The standard deduction swings upward in 2020 to about $12,400 for single filers, for instance, whereas married couples can expect it to rise to $24,800 if they’re filing jointly. Such things may take you by surprise if you’re not frequently perusing headlines or financial analyses, so ensure that you’re setting time aside to brush up on current events and financial developments as they occur. The tax professionals that you hire will also be far more capable of assisting you when it comes to achieving your financial milestones if you have some degree of financial literacy yourself.
They can also help you arrive at a comprehensive understanding of the 2020 tax brackets which will largely determine just how much money you actually owe to Uncle Sam. For many individuals, tax brackets are straightforward and easy to understand, but others naturally struggle with their complexity. It’s always okay to be confused, as you should never feel ashamed about not understanding our tax code – after all, it’s one of the most dizzying and comprehensive of such codes in the world. Familiarize yourself with helpful resources like the Tax Foundation which will provide you with insights and data pertaining to such things as tax brackets if you’re struggling in this area.
As you study up on all things related to our tax code, you’ll quickly realize why good and consistent bookkeeping is so essential. You can’t know which tax bracket you fall within if you don’t know how much money you earned. You can’t determine your 2020 deductible if you’re unfamiliar with your own finances. According to one study, failing to understand deductibles via shoddy bookkeeping and lackluster financial awareness is one of the leading causes of missed tax credits which taxpayers could otherwise take advantage of.
Know how to file an extension
Finally, you should understand that we’re all human and that people inevitably make mistakes. It’s only natural, and doesn’t mean you’re permanently going to be in the sights of the IRS. As a matter of fact, if you’re struggling to get your financial records in order, you can always file for an extension to give yourself more time when dealing with your taxes.
Some don’t file extensions because they think it’s some indication of wrongdoing. Nothing could be further from the truth. Sometimes, even tax professionals find themselves pressed for time and need to file for an extension, so don’t think this is a last-ditch effort that’s unusual or likely to land you in some hot water with the IRS.
When considering filing for an extension, you should solicit the help of a CPA or similar tax guru who possesses authoritative credentials. This is because such things as filing for an extension, while legitimate and acceptable, can be difficult for some everyday people or business owners to do successfully. By enlisting the help of these professionals, you’re effectively ensuring that the process will be carried out appropriately and that you’ll have all the time you need to get your financial ducks in a row.