INCOME TAX PREPARATION CHECKLIST

by Douglas Bauer

Guilderland, NY - We are coming up on the time of year when many of us will be busy preparing and gathering the information necessary for the completion of our 2020 income tax returns. Below are several items that you should be aware of as it relates to this process.

By the second week of February, you should have received your forms W-2 (employment wages) and any 1099R (retirement income), 1099-INT, or 1099-MISC (other income) statements for 2020, as well as your social security benefits statement, if applicable. You should also begin receiving forms 1099-DIV and 1099-B for any directlyowned investments such as mutual funds.

If you own a brokerage account, you may not receive your consolidated brokerage tax statement until the beginning of March at the latest. To reduce the possibility of having to send amended tax statements due to late or corrected reporting by various investment companies, many brokerage firms have opted to delay mailing these consolidated statements.

Other considerations may include real estate taxes paid, mortgage interest, medical expenses, forms K-1, estimated income tax payments, charitable donations (whether by check or in-kind), etc. The 2020 tax law and forms are very similar to the 2019 ones, which reflected new legislation under the Tax Cuts and Jobs Act of 2017. For 2020, standard deductions of $12,400 individual and $24,800 married-filing-jointly apply, after which begin marginal tax rates ranging from 10% to 37%. The child tax credit remains at $2,000 per eligible child, and the medical expense deduction remains set at 7.5% of Adjusted Gross Income (AGI) for all taxpayers for tax year 2020. You will also need to report the amount of any COVID Stimulus received during 2020, however this amount is neither taxable nor at risk of being “clawed back”.

We encourage you to consult your tax preparer to determine if you are eligible to make a 2020 contribution to a Traditional IRA or a Roth IRA. The maximum contribution limit to either type of account for 2020 is $6,000 ($7,000 if you had turned 50 by 12/31/2020). 2020 contributions to individual retirement accounts should be made no later than April 15, 2021.

Whether you elect to self-prepare your income tax returns or hire a professional, we suggest you make all efforts to determine that you are taking advantage of any available opportunities for tax savings or tax deferral. In particular, retirement account contributions may serve the dual benefit of helping to reduce income taxes now while providing additional income during retirement.

AllSquare Wealth Management

200 Great Oaks Blvd., Suite 219, Guilderland (518) 456-8900 • www.allsquarewealth.com

Douglas J. Bauer, President and CEO of AllSquare Wealth, began his career in the financial services industry in 1975 and is a Certified Financial Planner (CFP®) practitioner. His primary responsibilities include overseeing the direction of the firm, client development, and the servicing of existing client relationships.

As part of assisting clients with their overall wealth management needs, AllSquare Wealth offers income tax preparation services for individuals, estates, trusts, and small businesses.

AllSquare Wealth Management, LLC is a registered investment adviser.