Here are 5 Things to Know About Filing Taxes in 2020

Ready or not, tax season is coming your way. But fear not! We’re here to help make tax season a little less scary and easier to understand. After all, we all have to file every year. So, you know the drill.  

The IRS has changed a few things this year. Keep reading and you’ll be up to date on five of the most important things to know about filing taxes in 2020.

 

1. The 2020 Standard Deduction Has Increased

Think back on when you did your taxes last year. Yes, purposefully going back to tax-time memories is a bit painful. But this memory shouldn’t be too painful. After all, the standard deduction allowed on your 2018 taxes was twice what was permitted in the year before.  

Wait, What Is a Standard Deduction?

Standard deductions are the government’s way of automatically lowering your taxes. Owe $1,000? If the standard deduction is $400, you only owe $600. It’s simple math. Well, the 2020 standard deduction has increased. No, it didn’t double, but the IRS did bump up standard deductions to account for inflation, which is more than a lot of paychecks did. The 2020 standard deduction is now $12,400 for people who file singly, $24,800 for joint married filers, and $18,650 for heads of household.

2. Tax Season Contributions Have Grown, Too

Your 2020 standard deduction isn’t the only thing that’s gotten bigger this year. Some other important items have as well. Among the most exciting are increased 401(k) contribution limits and increased health savings account (HSA) limits by the IRS.  

Tax Season Contributions Explained

This means you can contribute up to $19,500 in your 401(k) if you’re younger than 50 years old (that’s a $500 increase since last year). You can also contribute as much as $3,550 ($7,100 for a family) to your HSA. That’s a 1.5% growth since last year. In other words, these increased contribution limits mean you can put more of your pre-tax income where you want it.  

3. Not Everything Changes for Filing Taxes in 2020

While the growing standard deduction and 401(k) limit is exciting, everything can’t get better. But for now, a few things aren’t getting any worse. Two tax-time items that are staying the same when filing taxes in 2020 include child tax credit and charitable donation deductions. Courtesy of 2018 tax reform, you can instantly get $2,000 of tax credit for each qualified child in your home. And if you love using your finances to help others, you can deduct as much as 60 percent of your income for charitable donations. Give a little, and get a little in return.  

4. Know When to Start Filing Taxes in 2020

Know when to pay the piper. As always, your taxes have to be filed by April 15 every year, but that’s not the only date to keep in mind. If you eagerly await the day when you receive your W-2 or 1099-MISC from your employer, you’ll be pleased to know that it should reach you by January 31, 2020. And what’s even better, the first day to file your taxes is Monday, January 27, 2020.  

Can I File a Tax Extension?

Prefer to put your taxes off until the last possible minute? File a tax extension with the IRS, and your taxes will finally come due on October 15. That’s right—six sweet months of forgetting about your taxes. Or worrying about them until you finally do them. Either way, with an extension, you buy six months of time before having to wade through your tax documents. However, make sure you are fully aware of the implications of filing a tax extension.

Our Advice: File Right Away

Remember, the sooner you file your taxes, the quicker you’ll receive your tax refund. It’s best to get it done early and out of the way.  

5. e-Filing Taxes in 2020 Is Faster

In fact, want to receive your tax refund as soon as possible? Then forego the paper-and-pen tax return and do your taxes online this year.  

How Do I e-File My Taxes?

As long as you don’t own your own company, several leading companies offer free online tax return services, and you never have to do a single bit of math. Making it even better is that once you’re done, your taxes are e-filed and sent immediately to the IRS via the internet. And if you get a return, it’ll get to you faster when filed online than in paper. So grab those W-2s, hop online, and get a head start on filing taxes in 2020.  

Need a Loan for Tax Season?

Sometimes we owe on our taxes. If so, perhaps you need a loan to pay your taxes. Or, maybe you need a loan while waiting on your tax refund. We have loan options to hold you over until your tax return comes through. See what’s available in your area. Maybe you could use an Installment Loan for filing taxes in 2020. These offer more money, with more time to pay it back. Or, for short-term funds, try a Payday Loan for tax season.