Property Management Tips for Getting Ready for Filing Taxes
The official 2020 tax season doesn’t start until April 15th but for most business owners they are filing taxes right now so they don’t make the mistake of filing them at the last minute.
If you own Portland Oregon investment properties and want to get ready for tax season, this article will provide you with tips you can use for getting prepared for tax season like a pro.
Choose a Preparer
If you don’t have a tax preparer yet, a good way to find one is to ask friends and advisors (such as an attorney you know) for referrals. Be sure that the person you choose has a Preparer Tax Identification Number (PTIN) showing that they are authorized to prepare federal income tax returns.
You should also inquire about fees, which are likely to depend on the complexity of your return. Avoid using a firm that intends to take a percentage of your refund. The IRS website has tips for choosing a preparer and a link to the IRS directory of preparers, which you can search according to their credentials and location.
Schedule an Appointment
The sooner you meet with your preparer, the sooner you should be able to complete your return (even if you decide to file for an extension, as discussed later). If you anticipate a refund, you’ll get that sooner, too. If you wait too long to schedule an appointment with a tax preparer, it might not happen before April 15, and you could miss out on opportunities to lower your tax bills, such as making deductible contributions to an IRA or a health savings account.
Gather Your Documents
By the end of January, you should have received all the various tax documents that you need from your employer or employers, as well as from banks, brokerage firms, and others with whom you do business. For each form, check that the information matches your own records.
These are some of the most common forms:
- Form W-2, if you had a job
- The various 1099 forms that report other income you received, such as dividends (1099-DIV), interest (1099-INT), and nonemployee compensation paid to independent contractors (1099-MISC). Brokers aren’t required to mail Form 1099-B, which reports gains and losses on securities transactions, until January 31, so those may come a little later.
- Form 1098, reporting any mortgage interest you paid
- Form W-2G, if you had certain gambling winnings
Round-Up Your Receipts
Which receipts you’ll need to provide depends on whether you itemize your deductions or claim the standard deduction. You’ll want to choose whichever produces the greater write-off, but the only way to know for sure is to add up your itemized deductions and compare that with your standard deduction. In 2020, for example, the standard deduction for single taxpayers is $12,400; for married couples filing jointly, it’s $24,800.
In particular, look for receipts for medical costs not covered by insurance or reimbursed by any other health plan (like a flexible spending account or health savings account), property taxes, and investment-related expenses). These are all subject to limits, but if they’re substantial enough, it may be worth your while to itemize.
If you do itemize your deductions, you’ll also need to collect any back-up you have for charitable contributions. For example, contributions of $250 or more require a written acknowledgment from the charity stating the amount of your gift and that you did not receive anything (other than perhaps a token item) in return. If you don’t have such an acknowledgment, contact the charity and request it. You can find more details on charitable deductions in IRS Publication 1771.
If you have business income and expenses to report on Schedule C, you will need to share your books and records (for example, QuickBooks or any other accounting system you use, receipts for expenses, and relevant bank and credit card statements). The better organized your records are, the less time it will take a preparer to process your taxes, which translates into lower fees for their service.
List Your Personal Information
You probably know your Social Security number, but do you know the Social Security number of each dependent you claim? You’ll want to jot those down, along with any other information your tax preparer is likely to need. For example, if you own a vacation home or rental property, note their addresses. If you sold a property in the past year, note the dates you bought and sold, the amount you originally paid, and how much you received from the sale.
Decide Whether to File for an Extension
If you need more time to complete all of these tasks, you can request an extension to October 15 for filing your tax return. However, you’ll still have to estimate the amount of tax you owe and pay that amount by the regular April 15 deadline to avoid penalties.
You can request an extension for filing your tax return, but you still need to estimate how much tax you owe and pay that amount by April 15.
Plan Ahead for Any Refund
If you expect a tax refund, you have several options for how it’s handled.
- You can apply some or all of the refund toward next year’s taxes. If you normally pay estimated taxes throughout the year, that can help cover the first quarterly installment.
- The government can send you a check or deposit the refund directly into your checking or savings account.
- You can contribute some or all of your refund to certain types of accounts (IRAs, health savings accounts, education savings accounts) or buy U.S. Savings bonds through Treasury Direct.
You can also split your refund among the direct deposit choices by completing Form 8888. You’ll need to let your tax preparer know what you want to do, so that can be indicated on your return.
Find a Copy of Last Year’s Return
If you use the same preparer that you used last year, they are likely to have your previous information. If you use a new preparer, last year’s return can serve as a reminder to the preparer—and you—of some items you don’t want to overlook. Here are two examples:
- Interest and dividends. Last year’s return should indicate which banks, mutual funds, or other financial institutions sent you 1099 forms. Use that list to make sure you received 1099s from them again this year (unless you closed those accounts or sold the investments in the meantime).
- Charitable deductions. If you made small gifts, you may not have received any acknowledgment from the organization, but you can still deduct these contributions as long as you have a canceled check or other proof. Consult last year’s list of organizations you donated to and see whether you made similar gifts this year.
The Bottom Line
Whether you do your own taxes or hire someone else to handle it, keeping good records will save you time and, in the case of a paid preparer, money. The earlier you start, the more smoothly it should go, and the sooner you’ll have put the process behind you for another year.
Speak with the Right Financial Advisor for You
Finding the right financial advisor that fits your needs doesn’t have to be hard. Smart Asset’s free tool matches you with fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by Smart Asset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
Source – Investopedia
Don’t Sweat When It Comes to Filing Taxes – Hire A Property Management Company
Filing taxes can be a pain, especially if you’re trying to do everything else yourself. Thankfully, when you hire a property management company, you can have confidence in knowing that all of the documents related to your investment property that you need for filing taxes will be prepared correctly so that you won’t have to “scramble” at the last minute and prepare everything yourself.
To learn more about the property management services that we can offer you contact us today by calling (503) 447-7735 or connect with us online by clicking here> Rent Portland Homes Professionals.