What documents do I need to give my tax preparer?
1095-A if you had health care through the Affordable Care Act (Obamacare)
Investment statements and bank interest statements
Student loan interest statements or amount
Mortgage interest statement or amount
Property tax amount (may be on the mortgage interest statement)
Child care expenses (day care, after school care, summer day camp)
Include name, address and EIN/SS of provider.
If you don’t have the EIN/SS of provider, just make a note that you don’t have it
A list of any charitable donations
For the 2020 tax year, taxpayers will be able to deduct $300 of charitable
cash donations (not in-kind), even if they are not itemizing on Schedule A.
Our Business Expenses Worksheet, or some comparable compilation of your business expenses
If you had income from a rental property or hosted on AirBnB, our Schedule E Worksheet
Your tax returns for the past two years (unless we prepared them)
A voided check or bank routing and account number for direct deposit of refunds and possibly direct debit of payments
How do I get my documents to my preparer?
Now that all our appointments are virtual, the best way to give your documents to your preparer is electronically. Your preparer will send you a link to a secure folder, and you can upload scans or photos of your documents to the folder. Please make sure that photos of your documents are well-lit and not blurry! We need to be able to read the teeny-tiny numbers. If you prefer not to upload your documents, let your preparer know and make arrangements for a drop-off (or mail them).
I lost my job this pandemic year and went on unemployment. Do I have to pay taxes on my state unemployment/PUA benefits? How about the additional $600 from the federal government?
You must pay federal taxes on both your state unemployment benefits and the additional federal money. However, you don’t have to pay Social Security and Medicare taxes on this income like you do on wages. In PA and NJ, you do not need to pay state taxes on your unemployment benefits. In other states, you generally do.
What if I didn’t get the $1200 relief payment in 2020 or the recent $600 payment?
If you did not receive either covid relief payment, you will be able to claim it as a credit on your 2020 tax return. If your 2019 income level disqualified you from or decreased your payment, and your 2020 income qualifies you, you will get the credit when you file your 2020 taxes.
You can check the status of your stimulus on the “Get My Payment” page on the IRS’ website.
What if my preparer from last year isn’t available to work with me this year?
Please feel free to schedule an appointment with whomever suits you best. It’s great to keep continuity with your previous preparer, but we are all qualified tax preparers and share client files.
I heard there was a change in charitable contributions in 2020. What’s that about?
As part of the CARES Act, you will be able to deduct up to $300 in
cash contributions on your 2020 taxes. In-kind contributions (such as donating household items to Goodwill) do not qualify. When you prepare your documents before your appointment, please include a list with the names of the organizations and the amounts. We do not need receipt letters from the organizations - just a list.
Please note: This is in addition to any charitable contributions listed on your Schedule A if you itemize deductions.
Do you give discounts to clients who are low income? What about payment plans?
We have always kept our prices much lower than most tax preparation services as a way of demonstrating our commitment to serving our arts community. But if your income falls below a certain level (for example if you are on Medicaid), we are able to offer additional discounts. Please don’t hesitate to discuss your situation with your preparer.
You are always welcome to pay in installments. Just ask your preparer.
And if your taxes are simple, another option is to file them yourself. The IRS has a
free online filing service that is relatively easy to use.
I'm confused about deductions. What’s a standard deduction versus itemized deductions? Are business deductions the same as itemized deductions?
If you are self-employed or an independent contractor, you file a Schedule C in addition to the 1040 that everyone files. You deduct the expenses associated with your self-employment on this Schedule C. These are often referred to as your “business deductions.” Accurately calculating these deductions is one of the main services that we provide - we will work with you to find every possible legitimate expense to help reduce your tax burden.
The “standard deduction” and “itemized deductions” are what most folks think of when they hear “deductions” and “taxes.” These are separate from your business deductions. Every taxpayer can take the standard deduction from their income. This deduction is now $12,400 for a single person or $24,800 for a married couple.
Because the standard deduction is now so high, “itemized deductions” are becoming more rare. However, if the sum of your medical expenses (exceeding 7.5% of your adjusted gross income), state, local and property taxes (up to $10,000), mortgage interest, and charitable contributions exceeds the standard deduction, you can itemize these deductions on a Schedule A and get a tax benefit. Unreimbursed employee expenses are no longer deductible on Schedule A, so all business deductions should go on your Schedule C.
I heard something about a self-employment tax deferral. What’s that? Should I take it?
The CARES Act allows self-employed taxpayers to defer paying 50% of their Social Security taxes until later in the year. The process around this is a bit complicated and we don’t recommend doing it unless you have a substantial tax bill and cannot pay it at the time of filing. If that ends up being your situation, you can discuss it in more detail with your preparer.
What should I know about the Paycheck Protection Program re-opening?
You may be eligible to apply for a forgivable PPP loan if you had a net profit on your Schedule C in 2019 or plan to have one in 2020. Make your tax appointment by March 15 to make sure you have everything in order in advance of the March 31 PPP application deadline. Here’s an
article that spells out some of the details, but please do your own research including at the