The 2020 Tax Season Opens Today — What You Should Know
The 2020 tax season is officially upon us.
Today is the first day the Internal Revenue Service will begin processing individual tax returns.
The IRS is expecting more than 150 million returns to be processed during tax season. The deadline for 2019 returns to be filed and to pay any tax owed is April 15.
January 27 was set as the start of the season “to ensure the security and readiness of key tax processing systems and to address the potential impact of recent tax legislation on 2019 tax returns.”
Minor Changes to Know For Tax Season
There are some slight tax changes for 2020, including the standard deduction, tax bracket percentages, health savings account contribution limits, retirement account contributions and the penalty for not having health insurance.
The federal government zeroed out the individual mandate penalty for not having health insurance, but some states still have the penalty in place. Those states include Massachusetts, New Jersey, Vermont, California, Rhode Island and the District of Columbia.
The biggest thing for individual taxpayers to keep in mind is to make sure you have all your documentation before you start the process of filing.
“By the end of this month, everything should be there,” Cristina Gugilielmetti, a certified financial planner and owner of Future Perfect Planning in Brooklyn, New York, told CNBC. “Last year’s tax return is a good checklist for everything that you’ll need this year.”
Filing During Tax Season — The Forms
The most important document for individual taxpayers is the Form W-2. A W-2 comes from your employer and includes information like wages earned and income, social security and Medicare tax withheld.
Here are some of the other forms you may expect to receive as part of your taxes:
- 1095-A, 1095-B and 1095-C — Shows whether you or your family members had health insurance coverage (needed for state returns for states requiring health insurance coverage).
- 1099-B — Shows stock sales and capital gains.
- 1099-DIV/1099-INT — Shows dividends paid and interest earned over $10.
- 1099-G — Shows state and local tax refunds.
- 1099-K — Shows credit card payments for sharing economy income.
- 1099-MISC — Shows non-employee income, rental income (independent contractor).
- 1099-R — Shows distribution from an IRA or other retirement account.
- 1099-SA — Shows distributions from a health savings account.
- K-1 — Shows beneficiary’s share of income, deductions and credits.
- SSA-1099 — Shows Social Security income.
- W-2 — Shows wages and taxes withheld from employers.
There are also forms you can expect if you are looking for certain credits or deductions:
- 1098 — Indicates mortgage interest.
- 1098-E — Indicates student loan interest paid over $600.
- 1098-T — Shows tuition and education costs.
- Annual giving statement — Shows and amount and when you made a charitable gift.
- Childcare expenses — Shows the amount you paid to a childcare provider.
- Property tax statement — Shows the amount you owe on property taxes.
Filing During Tax Season
When you have your forms together, the next step — if you choose to do it yourself — is to file your taxes. The IRS has its Free File system that allows you to file your federal taxes for free.
Using this option means you will have to file your state tax returns separately.
Of course, there are other, third-party options out there that will allow you to file both your state and federal taxes together.
“The IRS encourages everyone to consider filing electronically and choosing direct deposit,” said IRS Commissioner Chuck Rettig said. “It’s fast, accurate and the best way to get your refund as quickly as possible.”