Year-End Tax Moves To Make Now

Most people don’t think about taxes when it’s not tax season, but you absolutely should. 2020 has been unusual in every way, and the upcoming tax season will likely follow suit because there are tax moves you can make before the end of this year that will benefit you once you file. Here are a few that we suggest:

Track receipts

If you are self-employed and working from home, you can deduct your office space (it has to be used just for work) and any expenses you incur. If your income was lower than usual but your medical expenses were higher, you might qualify for deduction. Best practice for 2020? Save your receipts.

Don’t forget about other taxable income

Many people were furloughed or lost their jobs this year because of the stay-at-home order. If you picked up a side hustle to make ends meet, your earnings are considered taxable income, even if you don’t have official paperwork that details the money. Unemployment benefits are taxable, too. If you received any of those, you’ll have to fill out a 1099-G form and enter those amounts on your tax return. If withholdings weren’t taken out of those payments, you’ll have to make up for it when calculating your 2020 estimated tax payments.

Max out for retirement

If your income went up this year, it’s the perfect opportunity to reduce your tax liability by increasing your contribution to your retirement account.

Conversely, if your income went down and you had to borrow from your retirement account, you won’t pay penalties but you will have to account for that on your taxes for the next three years.

Make the most of your savings

If the stay-at-home order resulted in prepaid vacation refunds, fewer travel expenses or less spending in general, you may find yourself with a slightly larger wallet. If that’s the case, make the most of that money by investing it now in a long-term savings account, such as a 529 or Roth IRA.

Check your withholdings

If your income has changed, check your paycheck to make sure you are withholding enough for federal taxes to avoid penalties and interest to the IRS. The IRS has a tool to help you do this, but you will have to manually calculate it for your state withholdings.

Revisit your stimulus eligibility

If your income decreased in 2020, you might qualify for the stimulus payment made available from the CARES act, even if you didn’t qualify in 2019 or 2018. There will likely be extra documentation to fill out with the IRS Form 1040. The credit will automatically be applied if you are eligible.

We understand that tax filing can be overwhelming in the most normal of situations, so it will be especially challenging when filing for this year. We also know you have a life to lead and business to run, so let us handle your accounting issues and headaches. If you have any questions about what you should be doing now for the upcoming tax season, please reach out to Donohoo Accounting Services today at 513-528-3982 for a free consultation.

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Get Your Money in Order for the New Year

This year is quickly coming to a close. Get ahead of the game and get your money in order for the new year. Don’t know where to begin? No worries! Here are some helpful tips.

Get Organized

Organize Concept Metal Letterpress Word in Drawer

You can file taxes after the new year, so now’s a good time to get all your ducks in a row. In January and early February, you’ll be receiving important documents in the mail including your W2, mortgage interest statement (1098), or student loan interest statement (1098-E.)Most companies, by law, have until January 31 to mail statements, so keep an eye out.

Designate a single location where you’ll keep these documents so they are easily accessible when you’re ready to file taxes. You can use a folder, drawer, box or other container. Put a large “taxes” label on it and use the container for tax-related documents only, not other mail or bills. But you may want to keepit near where you sort mail, so you can immediately put the documents in their home.

Then start gathering other items you’ll need for filing taxes, including charitable contributionand expense receipts. Qualified expenses depend on your situation, but could include expenses related to childcare, medical, job (mileage, supplies, relocation) and education. Donohoo Accounting Services can help you navigate the complicated tax structure. In addition to income tax preparation, we handle payroll tax prep, tax levies and liens, back taxes, end tax penalties, estate tax return preparationand more.

Make Year-End Charitable Contributions

Many charities do a final fundraising push at the end of the year, so you’ll probably receive solicitations asking for support. If you want to help non-profit organizations while also possibly reducing your taxable income, make your donations by December 31. Contributions are deductible in the year made. Thus, donations charged to a credit card before the end of the yearwill count in that year – even if the credit card bill isn’t paid until later. You’ll want to make sure the charity is eligible. Many times, the charity will note its “501c3” status, which is IRS speak for tax-exempt. You can also use the IRS Tax Exempt Organization Search.

Take an Assessment of Where You Stand Financially

Magnifying glass showing assessment word on grey background

Now’s a good time to take a hard look at your income, debt, expenses, retirement funds, college and emergency savings. Are you on track to meet financial goals? If yes – great! If no – why are you falling short? To properly move forward into the next year, you need a realistic picture of where you are now. Put pen to paper and write down all the numbers. It helps to see everything in black and white.

Make a Financial New Year’s Resolution (Or Better Yet – Create APlan You’ll Stick With All Year)

Once you know where you stand currently, you can create a plan for the upcoming year. Perhaps you want an emergency savings fund. You never know when the furnace is going to go out, someone in your family has a medical issue or there’s a company layoff. Experts say you should have enough emergency savings to cover three to sixth months of expenses. Maybe you have all your financial bases covered but want to take an exotic vacation? Set the goal, create a plan and start saving for that overseas beach trip. Although it’s a busy holiday season, set aside time to get your money in order for the new year. Once you’re ready to file taxes, turn to Donohoo Accounting Services, locally owned and operated by Cincinnati native, Duane Donohoo.

Tips For Budgeting For The Holidays

The holidays are fast approaching and so are the bills associated with them.  Donohoo Accounting has a few tips for budgeting for the holidays.  We are going to start by making a list and then checking it twice, review your receipts from last year to judge spending habits, and shop for bargains once you have an idea of what you must buy and for who you are shopping for.  Should I pay cash or use credit?  Using our tips for budgeting for the holidays will help you decide.

Make a list and check it twice.

A list will help you budget!
A list will help you budget!

Professionals agree that it helps to write down a list of all the people for who you plan to shop before you venture to the stores or turn the computer on. Next, to each person’s name write down your gift idea for that person, and how much you can spend. By doing this you will have a clear idea of your total dollar amount needed to buy the gifts for your family and others.

Review your receipts and bills from last year.  

Don't forget to save your receipts!
Don’t forget to save your receipts!

Reviewing receipts will help give you an idea of the dollar amount you spent last year on the holidays and if you used a credit card how long it took you to pay them off.    Make sure to save your holiday receipts from this year if you do not have the ones from the previous year to watch spending for next year.  The holiday costs add up quickly and being able to see the totals will

Save your holiday receipts from this year and either total them daily or add them up two weeks before the actual holiday.  Expenses add up fast during this busy season.  Seeing your totals will surprise you with a reality check as to how much more you spent this past year on the holidays.

Using credit during the holidays?

Don't go overboard with your credit cards!
Don’t go overboard with your credit cards!

Think twice before you use your credit card this holiday.  If you do decide to use them take only the ones with the lowest interest rates or bonus offers.  After using the credit cards be sure to check for unauthorized charges.  If you do find charges not made by you report these changes to your credit card company immediately.

TIP: Before you go shopping label envelopes with everyone’s name on them and put the appropriate amount of cash into each envelope.  This will help you not to overspend.

Shopping for bargains.

Shopping for bargains can be done earlier than later.  Once you have decided what to buy each person on your list start watching online advertisements and ads.  Shopping from the same retailer can save you money on shipping costs. 

You may have been a last-minute holiday shopper last year, but planning now can help you have a happier, stress-free holiday season this year. If you follow some of these simple tips, you should have a successful and financial stress-free holiday season! Looking for more ways to save money than call Duane Donohoo at 513-528-3982 or visit our website at Donohoo Accounting Services.

 

 

Black Friday Deals and Steals

Black Friday is fast approaching, and this means huge sales at retailers everywhere.  Black Friday has been hyped as one of the best times of the year for buying anything from travel to electronics.  Don’t be surprised if not everything is a great deal, so we have prepared a what to buy on black Friday guide for you.

 

Black Friday is fast approaching, and this means huge sales at retailers everywhere.
Black Friday is fast approaching, and this means huge sales at retailers everywhere.

 

Buy: Electronic Products

Traditionally, major retail stores such as electronic stores, or stores that sell general merchandise but have an electronic department will discount Apple products and other major electronic names each year on Black Friday. These offers can include gifts with purchase, or free gift cards or a combination of both.

 

Traditionally, major retail stores such as electronic stores, or stores that sell general merchandise but have an electronic department will discount Apple products and other major electronic names each year on Black Friday.
Traditionally, major retail stores such as electronic stores, or stores that sell general merchandise but have an electronic department will discount Apple products and other major electronic names each year on Black Friday.

 

Skip: Barbie and G.I. Joe

Toys are one of the seasonal purchases you can’t avoid especially with kids and grandkids, but you might want to think twice before checking them off your list on Black Friday. Waiting until closer to the holidays is the best chance for better deals on the purchase of dolls, action figures and play sets. If you have a choice on the toys, then you can wait but you do run the risk of the hottest toys selling out.

Watch for sales as you get closer to the holidays.  Some retailer will offer 50% off some toys just to move them.

Buy: Gaming System Bundles

Gamers live for Black Friday specials maybe more than traditional shoppers.  Each year, sores offer big savings on video games and video game systems.   National retailers such as Best Buy, Walmart and GameStop run huge deals for gamers and is something to be watched. If you are looking for a new system this is the time to watch for great deals on gaming bundles.

Buy: Video games, CDs, DVDs

If you’re in need of some affordable stocking stuffers, look no further than the video game, CD, DVD and Blu-ray department at most major retailers this Black Friday.

 

If you’re in need of some affordable stocking stuffers, look no further than the video game, CD, DVD and Blu-ray department at most major retailers this Black Friday.
If you’re in need of some affordable stocking stuffers, look no further than the video game, CD, DVD and Blu-ray department at most major retailers this Black Friday.

 

Buy: Travel Deals

One advantage of Black Friday deals if you know you want to take a trip and are open to the location so amazing deals can be scored on airfare, tickets and packages. Don’t forget though these deals can also fall on Cyber Monday. Keep an eye out for this as they will be very limited.

Buy: Online Doorbusters

The ultimate combination of convenience and savings will come with the online doorbusters.  These items can make great last minute gifts.  Plenty of big box retailers will be bringing their doorbusters online this Thanksgiving, Black Friday and Cyber Monday.

That’s good news for shoppers. But you must take precautions when shopping on your phone or laptop, such as making sure you’re not on public Wi-Fi. Remember rot keep any receipts for items you are buying to donate.  Donohoo Accounting can help you get the most out of those receipts at tax time.  Contact us today at 513 528 3982!  Happy Black Friday Shopping!