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Ideas to Consider for Tax Time 2020

Reflecting Back. 

Tax time always is a chance for me to look back after the business of the holidays is behind me. I had a few thoughts that I figured I would jot down as I wrap up the end of this year. In short, the amount of time seems somewhat compressed. I'm surprised that when we get to March, it will be a full year of the pandemic life. Living at home, working at home, with minimal options for socialization and the like. 

Mental Health seems to be taking a real hit for many people, perhaps unsurprisingly in the wake of the pandemic, all while thousands of people continue to be dying. All of that serves as a stark reminder of how lucky those of us are that are blogging about money and personal finance who have not been harshly touched by this event. 

Taxes are important, but having some gratitude and reflection on the good things that have happened this year can be a good aspect of the process too.

Documents On Time

All that said, the tax documents arrived early this year and I find that doing the taxes is a nice distraction, even if it is something perhaps that other people should be doing for me so that I don't "miss out" on money. 

For me, there is something comforting about doing it myself. Like many other things, I think that it is a good exercise. The rules and regulations are designed to be simple enough to follow and anyone with good intentions and a high school diploma should be able to figure it out with any of the software that is out there. 

The big step is making sure that you have all of the documents you need on time. Any accounts you have that generated interest or investment gains should be sending you information. Any jobs should have receipts. A document for your health insurance and any previous refunds might be coming as well from your state. Make sure you have everything you need before you start and if you don't have it by the deadline, reach out early. 

Tips For Easier Filing

All of this goes to provide some basic tips that help me each year to make this an easy process:

1. Save your receipts throughout the year. If you think they are scattered, before you try to do the taxes, just invest some time in assembling all of the paperwork without any goal of doing the taxes. Job 1 is just to get the paperwork together.

2. Review your year in some detail. Did you have major life events? A birth. A death? Did you perhaps change jobs or move? Someone in your family go to college or graduate? All of these kinds of events can have an impact on your taxes. If there is any paperwork related to it, get that together. 

3. Use a professional or at least a software program if you have anything complicated. When I was in college I was a simple case of a 1040-EZ. Sure for that, do it yourself by hand. Otherwise, I think it is a very reasonable investment to use an online tool or professional, even if you think that you can do it better yourself.

4. Get your paperwork together and file for your reimbursements from HSA and other programs that have deadlines! Don't miss out on those benefits!

What Changed For Me This Year

On personal note I feel that the pandemic made things a bit strange. On the plus side I canceled my use of the tax advantaged deduction of my transit because it was not something that I was using. On the downside, I didn't have as many medical expenses as was expected since anything of that nature which was not absolutely necessary was deferred and many of the copays were canceled. 

As usual, I received a mortgage interest deduction and this was helpful but otherwise, the taxes were fairly normal for me and the things that were different probably only amounted to a few hundred dollars. 


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