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November 2019 Newsletter

Take the time to evaluate your paycheck tax withholding.

The Tax Cuts and Jobs Act of 2018 caused a tremendous amount of confusion and frustration due to inaccurate projections. Those issues have been resolved and the IRS encourages everyone to use the Tax Withholding Estimator to help you make sure that you have the right amount of tax withheld from your paycheck. The estimator automatically links to Form W-4, Employee’s Withholding Allowance Certificate, which you can then fill out and submit to your employer.

Gather your records.

Develop a recordkeeping system – electronic or paper – that keeps important information in one place. Add tax records to the files as you receive them. Having all the needed documents on hand before you start to prepare your return helps you file a complete and accurate tax return. This includes year-end Forms W-2 from employers, Forms 1099 from banks and other payers, other income documents, virtual currency transactions and Forms 1095-A from the Marketplace for those claiming the Premium Tax Credit. You should confirm that each employer, bank or other payer has your current mailing address. Typically, these forms start arriving by mail in January. Review them over carefully and, if any of the information shown is inaccurate, contact the payer right away for a correction.

Make sure you are up to date on estimated tax payments.

For those who pay quarterly estimated taxes (self-employed or investment income), make sure that you are up to date in order to avoid any late payment penalties. If you have lost your payment coupons and need replacements, please let us know. And remember that we recommend paying your 4th quarter Oregon estimated tax payment by 12/31/19.

If there has been a change in your life circumstances,

that would impact your tax liabilities, now would be a good time to check in with us. If you’ve had a change in salary or job, a new source of income, divorce, retirement, inheritance, a large capital gain or loss, children starting college, don’t hesitate to call for an appointment.

Keep track of your deductible expenses.

As part of the new tax bill that went into effect on January 1, 2018, the federal standard deduction for all filing statuses have increased significantly. This does mean that many of you will not need to itemize deductions on your federal tax return. However, the Oregon standard deduction did not increase, so Oregon residents should still keep track of deductible expenses, which include;

• medical and dental expenses above 10% of your income

• state and local taxes

• mortgage interest

• charitable donations

• casualty and theft losses

Consider giving through the Oregon Cultural Trust.

Charitable giving through the Oregon Cultural Trust offers a unique tax break for Oregon taxpayers. For those who have an Oregon tax liability, you can receive a tax credit of up to $500 (single) or $1000 (married filing jointly) for giving to the Oregon Cultural Trust. This is how it works. If you owe $500 in taxes to Oregon, and you’ve made cash donations of $500 to participating non-profits, you can donate $500 through the Oregon Cultural Trust and you will receive a $500 tax credit, and owe $0 in taxes to Oregon. Click here for more info.

Prepare to receive your Tax Organizer from us.

In early January, your 2019 Tax Organizer will help you gather what we need to prepare your 2019 tax returns. It will provide you with a detailed breakdown of what we need from you, along with your 2018 numbers for reference.

What is an Enrolled Agent?

Jeremy Watson has now completed all 3 Enrolled Agent Exams to move forward in adding these qualifications to Davidson & Watson Financial.

The Differences Between Enrolled Agents and Other Tax Professionals.

Only enrolled agents are required to demonstrate to the IRS their competence in all areas of taxation, representation and ethics before they are awarded unlimited representation rights to represent taxpayers before IRS. Unlike attorneys and CPAs, who are state-licensed and who may or may not choose to specialize in taxes, all enrolled agents specialize in taxation.

Ethical Standards.

Enrolled agents are required to abide by the provisions of the Department of Treasury’s Circular 230, which provides the regulations governing the practice of enrolled agents before the IRS. NAEA members are also bound by a Code of Ethics and Rules of Professional Conduct of the Association.

Business owners.

For those of you who are Sole Proprietors, Partnerships, or S Corporations, make sure to schedule a November or early December meeting with us for some year-end tax planning. We will evaluate your 2019 income and expenses, let you know of any tax-saving moves that you should make before the end of the year, consider the retirement saving options that you may have, and answer your questions.

Jeremy Watson, CFP®, EA

Contact us today to schedule your free consultation!

1 Comment

  1. Libby Boatwright

    Congrats to Jeremy! It’s an honor to work with you both! And more good news! My book on the Last Things We Talk About will be published next year. Have already set up a bank account with the advance and our son got married! Much to celebrate!!

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