Home > Taxes > 2019 Tax Tips for Understanding 2020 Income Tax Filing

Comments 0 Comments

Note: Due to the COVID-19 coronavirus pandemic, the IRS has extended the federal tax filing and payment deadline to July 15, 2020. The recent relief package passed by Congress may have additional tax implications. Please contact a tax adviser for information you may need to complete your taxes this year. Learn more.

Note: The following is for informational purposes only and should not be considered tax advice. Please contact a tax adviser for questions about your personal tax situation.

Tax time will be here again before you know it: Tax Day 2020 is Wednesday, April 15. We’re about two months away from one of the most stressful days for most Americans. Luckily, tax reform legislation in 2017 has simplified the tax code and changes for the taxes you file in 2020 may further increase your tax savings.

If you haven’t filed your taxes yet, review our tax tips for the 2019 tax year.

1. Check Your Information

The first thing to do is check that your employers have the right address. If you’ve moved without putting in a change of address, you may miss important tax document delivery. The IRS requires that W2s and other tax documents be postmarked by January 31, so you should have received all of your tax documents by now. If you didn’t receive something, start following up with them right away.

2. Get Ready

Gather and organize all your tax documents early. And by early we mean now. You’ll need personal information for you and your dependents, income and investment documents, business and self-employment records, receipts for medical bills and charitable donations and home ownership records. Make a checklist to be sure you cover everything.


STOP! Did you check your information and gather all your documents? Do this right now! If you wait until April 14 to see if you have all the documents you need, you’re really going to regret not taking our advice now.


3. Understand Your 2019 Tax Bracket for Filing in 2020

Tax brackets change regularly to keep up with inflation. A tax bracket is the range of taxable income you fall into. Your taxable income is your adjusted gross income (AGI) minus applicable tax deductions. In order to understand your tax bracket, you really need to understand what deductions are available to you.

4. Consider the Standard Deduction

Deductions work to decrease your taxable income. By bringing this number down, you may be able to fit into a lower tax bracket. That means you qualify for lower tax rates so you owe less in taxes.

The standard deduction is a preset dollar amount that’s subtracted from your AGI to help determine your taxable income. Your filing status—single, married filing together, married filing separately, head of household or widow(er) with a child—determines the amount you may deduct. With the higher standard deduction amounts established by the Tax Cuts and Jobs Act (TCJA) of 2017, this route may make more sense than itemizing.

Standard Deductions for Tax Year 2019

Filing Status

Standard Deduction Amount

Single

$12,200.00

Married Filing Jointly

$24,400.00

Married Filing Separately

$12,200.00

Head of Household

$18,350.00

Qualifying Widow(er) with a Dependent Child

$24,400.00

Like anything that has to do with taxes, though, there are some restrictions regarding who is eligible for the standard deduction. If you’re married filing separately and your spouse itemizes, for example, you are not eligible for the standard deduction.

5. Review Eligible Itemized Deductions

The TCJA changed and eliminated a lot of eligible deductions, including the personal deduction—which used to be $4,050! These changes may make it harder to itemize your deductions for bigger savings. To benefit from itemizing, your personalized deductions should be more than your standard deduction. For example, if you’re married and filing jointly, you must have more than $24,400 in itemized deductions. 

But if you pay a mortgage, have high medical bills and make charitable donations, itemizing may work for you. Here are some common eligible deductions that you can write off on your 2019 taxes.

  • Medical expenses
  • Charitable donations
  • Mortgage interest
  • Mortgage insurance premiums
  • State and local taxes
  • Personal property taxes

Most of these deductions are limited and must meet specific qualifications, so double check those qualifications before filing.

Note that if you’re married filing separately, you and your spouse must choose to either itemize your deductions or take the standard deduction. You cannot choose to do this differently.

6. Take Advantage of Available Credits

Tax credits are different from deductions. Deductions lower your taxable income. Tax credits directly impact the tax amount you owe. They reduce the amount dollar for dollar.

For nonrefundable tax credits, you can only reduce your tax liability to zero. With refundable tax credits, you can receive a refund of the excess amount.

Tax Credit Example

You file Head of Household with an adjusted gross income of $55,000. You take the standard deduction of $18,350, which makes your taxable income $36,650. That puts you in the 10% and 12% brackets.

  • The first $13,850 is taxed at 10%—$1,385
  • The remaining $22,800 is taxed at 12%—$2,736
  • Before applying any credits, you owe $4,121 in federal income tax.
  • You take a child tax credit of $500.
  • This credit lowers the tax amount you owe to $3,621.

Popular Tax Credits

Tax credits can lower the amount of tax you owe. But you must meet specific qualifications, including established AGI limits.

For example, if you’re a single filer, your AGI must be below $32,501 to qualify for the Saver’s Credit. Your AGI also determines whether you can claim 10%, 20% or 50% of your contribution. Other limits apply for Married Filing Jointly filers and Head of Household filers.

Be sure to review the criteria for eligibility to learn whether you qualify for any of these popular tax credits:

  • Adoption Credit
  • American Opportunity Credit and Lifetime Learning Credit
  • Child Tax Credit
  • Child and Dependent Care Credit
  • Earned Income Tax credit
  • Residential Energy Efficient Property Credit
  • Saver’s Credit

7. Remember Key Tax Cuts and Jobs Act Changes

The 2017 TCJA has only impacted two tax filing years so far. So, you may not remember all the TCJA changes that could affect you when you file taxes in 2020. This recap can help.

  • The standard deductions have nearly doubled.
  • There is no longer any personal exemption.
  • For itemizers, the 5% of your AGI spend on medical expenses has expired. The floor is back to 10% for 2019.
  • If you itemize, the maximum deduction for charitable cash donations to qualified organizations is 60% of your AGI. Some other eligible groups qualify, but you may only claim up to 30% of your AGI.
  • There’s no penalty for lack of health insurance coverage.
  • The child tax credit maximum is $2,000 per qualifying child.
  • When you itemize, your deductible mortgage interest is capped for loans up to $750,000.
  • You may no longer deduct moving expenses for job relocation, unreimbursed employee expenses or employer-subsidized parking and transportation reimbursement.
  • Deductions for casualty and theft loss, tax preparation costs and other miscellaneous deductions subject to the 2% AGI ceiling are no longer available.
  • You can no longer deduct alimony payments.
  • If you receive alimony, you don’t have to claim it as income anymore.
  • Capital gains taxes are lower for all but those in the highest income brackets.

8. Watch Out for Scams

As tax time approaches, be on the lookout for tax scams. A popular scam this year is robocalls from scammers claiming to be able to suspend or cancel your social security number. Ignore them and report the call! If you are concerned that you may actually owe taxes and be at risk, view your tax account information online or call the IRS at 800-829-1040.

Be wary of anyone who calls or emails you claiming to be from the IRS and demanding money. That’s not how the government operates.

9. Hire a Tax Professional

Taxes are complicated. If you want to get the most out of your tax return, consider hiring a tax preparation service that understands 2019 tax rules and regulations and can help you maximize your 2019 tax return.

10. File for Free

Some individuals may be able to file taxes for free through the IRS, including those whose adjusted gross income was $69,000 or less last year and active duty military personnel and their spouses.

Even if you don’t fall into one of those categories, there are many other ways to file your taxes for free as well, so do your research!

11. Don’t Delay

Don’t be a victim of tax identity theft. This kind of fraud is often only detected after you try to file your tax return but can’t—because someone else has already done it for you and claimed your tax return! To limit your susceptibility to this, file your taxes early.

If you owe taxes, don’t put off paying your tax debt. It’s not going away, and the IRS will come after you—one way or another. Unpaid tax bills can even hurt your credit eventually. If you need help paying your taxes, you have options. Request an extension, apply for an installment agreement, or use an alternate payment method.

Learn More about Filing Your 2019 Taxes in 2020

If you have questions, need more guidance or just want some helpful resources for 2019 tax tips, turn to the experts. Read these informative blogs and articles to learn more about your taxes and how you can make tax filing work for you.

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Credit.com receives compensation for the financial products and services advertised on this site if our users apply for and sign up for any of them.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.



Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team