Make This a Less Taxing Season

Published: February 13, 2020

Tax season is upon us. You have likely already received a tax planner or requests for tax information from your accountant. Few people enjoy the onerous process of gathering annual tax information. The more complex your financial life, the more difficult it can be to get your tax affairs in order. Here are some useful tips to help you have a (somewhat) stress-free tax season this year, and in the future.

Get organized
Now is the time to organize your paperwork. Set up a series of folders for different types of tax information, such as employment-related forms, charitable giving information, and financial tax documents, to help you keep everything straight. If you received hard copies of information for items like donations, keep them to use for itemizing deductions. If you have chosen electronic delivery of documents, your investment tax information is likely available online through your custodian. You can set up a matching online filing system and save forms into folders on your computer. For non-traditional investments, such as partnerships, you may receive documents such as K-1’s, depending on the structure of the investment. Getting everything sorted as it becomes available, whether in hard copy or electronically, saves a lot of scrambling in late March and April and also lets you more easily identify any missing information well before the filing deadline.     
 
Make sure you have maximized contributions
Some retirement vehicles, such as traditional IRA’s, spousal IRA’s, and SEP-IRA’s (for both you and your employees), allow you to contribute up until the April tax deadline for the previous tax year. In addition, if you or your spouse have a Health Savings Account (HSA) you can also contribute for the 2019 tax year until April 15, 2020. However, be aware of maximum contribution limits for individuals and families, which your tax accountant can clarify for you.  
 
If you file for an extension, you must still pay taxes!
There are times when, despite your (and your accountant’s) best intentions, you need to file for an extension. This may be because you did not receive all the information you needed to file, or there were complications from a late-in-the-year taxable event (an inheritance or sale of a business). Your accountant can help you determine if filing for an extension is appropriate and if Form 4868 should be filed on your behalf by the April 15, 2020 deadline. The extension is only for filing your forms, and you still need to pay estimated taxes due to the IRS by the deadline, or face substantial penalties.
 
It is not too early to plan for 2020 taxes
You may have discovered missed tax savings opportunities this year. Advance planning can help you uncover potential tax reductions and prepare for both the anticipated, and the unexpected. At KF Advisors, we are always here for you and your family to help ensure your plan continues to reflect your needs and goals. We can help you assess the impact potential actions may have on your wealth plan and tax situation and coordinate with your other advisors to create an integrated strategy for the years ahead.

Important Disclosures

This material is provided for informational or educational purposes only and should not be construed as investment, accounting, tax or legal advice. Always consult a financial, tax and/or legal professional regarding your specific situation. This communication is not intended as a recommendation or as investment advice of any kind. It is not provided in a fiduciary capacity and may not be relied upon for or in connection with the making of investment decisions. Nothing herein constitutes or should be construed as an offering of advisory services or an offer to sell or a solicitation to buy any securities or a recommendation to invest in any specific investment strategy. Investing involves risk, including the possible loss of principal. Past performance is not indicative of future returns. The views expressed herein are as of a particular point in time and are subject to change without notice. The information and opinions presented herein are general in nature and have been obtained from, or are based on, sources believed by Klingenstein Fields Advisors (“KF Advisors’) to be reliable, but KF Advisors makes no representation as to their accuracy or completeness. Although the information provided is carefully reviewed, KF Advisors cannot be held responsible for any direct or incidental loss resulting from applying any of the information provided. KF Advisors represents two investment advisers registered with the Securities and Exchange Commission: Klingenstein, Fields & Co., L.P. and KF Group, LP. If you are a KF Advisors client, please remember that it remains your responsibility to advise KF Advisors, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services.