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What You Need to File Your Taxes

Lively · June 25, 2019 · 13 min read


If you are like most people, the painful memories of tax season often fade by the summer. After making a payment or getting a return, taxes are no longer a priority. Several months later, taxes may re-enter your mind. By then, last year's trouble is a distant memory, making it easy to repeat past mistakes.

As difficult as it may be, it's critical to be proactive with taxes. There is no need for costly surprises, year after year. By taking action now, you can skip the tax version of Groundhog Day — here’s how.

Review your previous year’s tax return

For most of life’s mistakes, there are two ways to react. You can curse the sky, punch the wall, and hang your head in shame. Or, you can use your tax mistakes as a learning opportunity. Each new tax year is a chance to do better. Because laws often change, there may be new ways to save on taxes every year.

If you weren't happy with your last year's tax return, now is the perfect time to write down why. Be specific as possible: Did something about the new tax law confuse you? Or, did you overlook places to save? By knowing where you went wrong, it's easier to shift for this year.

Here's a list of questions to ask to get started:

  • Did you owe money because you withheld too little from your paychecks?Were overwhelmed by the changes from the prior year’s tax reform?

  • Did you overlook credits or deductions from major life events?

  • Were you scrambling to find missing forms as the deadline approached?

  • Did you regret not hiring a tax professional sooner?

Make sure nothing is missing from last year's documents You never know when the IRS may ask for supporting documentation or request an audit. Do yourself a favor by double-checking that everything is easy to access.

Important Deadlines, contribution limits, and withholdings

Having an organized approach to your taxes can help you cut down on stress. Tax planning should be a year-round activity — and knowing each of the key tax deadlines and guidelines is critical. Start by making a list of each one and set reminders for them.

Here are some common deadlines to keep in mind:

Tax withholding: If you owed a big tax bill this year, your tax withholding at work — or lack thereof — may have been the problem. It's never too late for updates. Find out where you stand with the IRS’ Withholding Calculator. You can make changes anytime by asking your HR department for a new IRS Form W-4.

Quarterly taxes: If you are self-employed or a 1099 form contractor, you need to plan for quarterly taxes. To play it safe, set aside 30% of every penny you earn. Put the money into a separate savings account. You can set reminders for deadlines and e-file. Keep track of each of your quarterly tax payments with your 1040-ES forms.

Saving for retirement: Different retirement plans have distinct contribution deadlines. For example, you have until the tax deadline for your IRA contributions. But for some plans, the cut-off may be at the end of the previous year. Your pre-tax contributions may impact your bottom line at tax-time, so make your decisions before it’s too late.

Open enrollment: Believe it or not, your company’s benefits package may have a big impact on your taxes. Perks like health savings accounts (HSAs) or flexible spending accounts (FSAs) may reduce your taxable income and make it easier to pay for necessities. Typically, there is a window in the fall to sign-up for new benefits. Don’t hesitate to ask your company’s HR department for details.

Retirement plan distributions: If you are 72 or older this year, you may have to take money out of your retirement account(s). Getting it wrong could cost you a whopping 50% excise tax, so if you aren't sure, speak with a financial advisor or tax professional.

Tax deadlines and extensions: You may have the best intentions of filing your federal tax return on time, but sometimes, life gets in the way. If you let the IRS know before April's deadline, they may approve a six-month extension. Either way, it's important to jot down both deadlines. The failure to file penalty is 5 percent per month — up to 25%.

Commit to getting and staying organized

As tax forms arrive, it's all too easy to misplace them. If you lose one, some companies have an online portal to download another copy. But not all do, so if you lose something you need, it may be a hassle to track down. To avoid unnecessary stress, create a personal tax paperwork filing system.

  • Pick a place for physical paperwork. These days, it's common to receive a mix of digital and physical tax forms. For the paper ones, it's important to keep them in a dedicated spot. A massive, intricate filing system may be overkill. But a single, labeled folder, stored upright on your desk, may be more than enough.

  • Start a digital filing system. If your computer's desktop is a mess, it may be difficult to retrieve digital files when you need them. Create a digital folder and get cozy with your scanner. By immediately scanning receipts, labeling, and filing, you may be less likely to misplace them.

  • Set dates for regular maintenance. Set regular dates for catching up. Even quarterly maintenance will make a huge difference at tax time.

You can file tax paperwork by category — like income, deductions, or credits. Or, you can be more specific. The most important thing is to create a system you can stick with. That way, you will be less likely to lose important tax documents before filing your return.

Make a tax forms and paperwork checklist

If you have ever had to stop mid-filing due to a missing tax form — and who hasn't? — you know the importance of tracking tax forms down early. Instead of scrambling for elusive forms, make a checklist before the end of the year.

By staying organized, you will be less likely to overlook a valuable tax adjustment, credit, or deduction. If drafting the tax checklist gives you hives, don't worry; we've got you covered.

A few examples in each category may include (but aren’t limited to):

  • Personal information: You need the personal information for you, your spouse — if filing jointly — and all dependents. This includes full name, birthdate, Social Security number (SSN) or Tax ID numbers (TIN), and bank account details for direct deposit.

  • Sources of income: You need to report all income including W-2s, unemployment, IRS form 1099 income, alimony received, rental property income, retirement plan income, and more.

  • Income adjustments: These adjustments lower your taxable income. They may include student loan interest, a health savings account (HSA) deduction, alimony paid, and more. If you are self-employed, you can also subtract health insurance premiums and half of your self-employment tax.

  • Itemized deductions: Itemized deductions also slash your taxable income, but ever since the recent tax reform, it's more difficult to claim itemized deductions because the standard deduction is now double the size for both single and joint filers. This means you are more likely to pick the standard deduction vs. itemizing because it saves you more. Even if you don’t expect to itemize, it’s still worthwhile to keep track of the paperwork. These may include healthcare expenses, state and local taxes, mortgage interest, property losses, and more.

  • Charitable donations: The higher standard deduction makes it more difficult to claim itemized deductions, but you may still be able to save on taxes through charitable giving. Some tax professionals recommend a bunching technique by combining multiple years of gifts in one year. This could push your total itemized deductions above the standard deduction — and may save you on taxes.

  • Tax credits: Credits may reduce your tax bill, too. Popular credits include adoption, childcare, dependent care, earned income, and education.

How to navigate the new Form 1040

  • The Tax Cut and Jobs Act (TCJA) was our country’s biggest tax reform of the past 30 years. One major change was the revamp of Form 1040. Although the form is shorter, there are now more schedules to wrestle with. Here's a brief rundown of what each one is for.

  • Schedule A: If you itemize deductions, Schedule A is where to tally them. It's fun to deduct things like medical expenses, mortgage interest, property taxes, or charitable gifts. But depending on your filing status and total deductions, you may be more likely to choose the standard deduction. That’s because the standard deduction is $12,000 if you are single — and $24,000 if you are married filing with your spouse.

  • Schedule B: This form is for your investments. If you have interest, dividends, foreign accounts and/or trusts, you need to include them on Schedule B.

  • Schedule C: If you are self-employed or work as a contract employee, you may already be familiar with Schedule C. You can figure out your net income by subtracting expenses from everything you earned — or gross income.

  • Schedule C-EZ: This form is exactly what is sounds like — a stripped down version of Schedule C — and only certain types of businesses qualify.

  • Schedule D: This is another form specifically for investments. Schedule D is for reporting profits and losses — depending on how long you have owned them.

  • Schedule EIC: This form deals with the Earned Income Credit (EIC). You may qualify for childcare.

  • Schedule F: The Schedule F form is similar to Schedule C, but it’s for farmers.

  • Schedule H: If someone works in your home, like a nanny, you need to calculate and pay their employment taxes with Schedule H.

  • Schedule J: This form deals with income averaging for farmers and fishermen.

  • Schedule R: If you are elderly or disabled, you may be eligible for a tax credit. To qualify, you must complete Schedule R.

  • Schedule SE: You can calculate self-employment tax with this form.

  • Schedule 8812: This form is for another type of child tax credit.

We get it — your 1040 is a lot more complicated than it looks at first glance. Even though it's only two pages, the schedules often feel like a maze, and it's easy to make mistakes. If these forms leave you stumped, don't be afraid to seek professional tax guidance.

Don’t overlook your state and local taxes

With all the fuss about your federal income tax return, it's easy to overlook local and state taxes. Depending on where you live, you may have to file a state tax return, too.

If you are not sure, check the Federal Tax Administrators website. They have a breakdown for all 50 states and the District of Columbia. Each state includes a link to the state's tax form — which should include local deadlines.

You should also check on local tax laws. Some places charge city and county taxes on top of state and federal, so check with your county clerk’s office or the city’s department of revenue.

Keep your personal information secure

Tax fraud is a growing concern. The IRS publishes a guide to combatting identity theft in order to help prevent tax-related identity theft. A few of their suggestions include:

  • Protect your family’s Social Security records.

  • Be on the lookout for scams.

  • Report ID theft promptly to law enforcement.

  • After filing a police report, complete an IRS Form 14039 Identity Theft Affidavit.

  • Be prepared for data breaches.

  • Consult the IRS' resources for additional assistance.

Ensure you protect your information and when sharing sensitive information ensure you use encrypted and secure methods.

Make a plan for your tax refund

Tax refunds sometimes feel like free money — especially if you weren't expecting it. You may be eager to blow it on a fancy vacation or your new summer wardrobe. But there may be better options. Before disappearing on a weekend-long shopping spree, consider one of these ideas:

  • Pay off high-interest debt. High-interest debt often feels like the mold growing in your shower. It may feel manageable, but before you know it, it's out-of-control again. A windfall like your tax return is the perfect opportunity to stomp it out for good.

  • Boost your emergency fund. No one is safe from flat tires, home repairs, and unexpected medical bills. To prepare, experts suggest saving three to six months of expenses in a dedicated emergency fund. Even $500 to $1,000 may prevent you from turning to credit cards in an emergency.

  • Save extra for retirement. If you're behind on this year's 401(k) or IRA contributions, your tax return could help. It may not be the sexiest way to spend the money, but we promise your future self will thank you.

  • Add to your health savings account (HSA). If you qualify for a health savings account, try to max it out. These accounts offer three tax benefits: 1) you can deduct contributions, 2) balance can grow tax-free, 3) withdrawals are tax-free for qualified medical expenses.

Do-it-yourself vs. hiring a tax professional

There is always the temptation to save a buck by filing federal taxes yourself. Depending on your level of tax expertise, this could be a good thing — or a complete nightmare. Before making a rash decision, consider all your options:

  • File your federal tax return for free with Free File. If you earn less than $66,000, IRS' Free File software may be exactly what you need. You can also use Free File to file for a tax extension.

  • Opt for paid tax software. here are also several tax software options to choose from. Some companies offer a “freemium” version for less complicated returns.

  • Seek free, local tax assistance. If you need a little more guidance, some cities offer free tax preparation services through the Volunteer Income Tax Assistance (VITA) program or Tax Counseling for the Elderly (TCE).

Flying solo or using a free service may work fine when you are a W-2 employee with a simple tax situation. But your finances grow more complicated with childcare, insurance coverage, or rental income from real estate. In some cases, it may be time to hire an expert.

To avoid costly tax mistakes, it's better to get it right the first time. As an added bonus, it may offer peace of mind you can’t get by trying to hack through it on your own.

It’s never too early to plan for your taxes

When you see money disappearing from your paycheck all year long, owing money can feel like a slap in the face. And when you owe penalties and fees, it's like adding insult to injury.

If your past experiences have been bad, it's normal to feel uneasy. You may even be dreading tax season already. But as tempting as it may be to ignore it, now is the best time to be proactive.

You have a lot more control over your tax year than you expect. A few smart moves throughout the year may reduce your taxable income. This could save a ton on your tax bill or lead to a bigger refund.



Lively is the modern HSA experience built for—and by—those seeking stability in the ever-shifting healthcare landscape. By harnessing modern innovation and deep industry expertise, Lively is committed to bridging today’s savings with tomorrow’s unknowns. Unlike traditional institutions hindered by bureaucracy, Lively’s commitment extends beyond initial set up to providing dedicated, ongoing support and education for every step. So each HSA can reach its maximum potential with minimal headache.

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