Tax Prep Checklist: What to Gather Before Filing

Tax season is upon us, and the experts at SD Associates want you to be prepared. We recognize this task can oftentimes be put off until the last minute, but sooner or later, that April 15th deadline will be here. To make your filing process go more quickly and smoothly this year, we’ve put together a checklist of necessary files and forms to gather before you begin.  Remember, a little advanced preparation can save you time, money, and less headaches in the long run.

Personal Information

Starting with the most obvious information, the IRS needs to know who’s filing and who is covered in your tax return. This information includes:

  • Social security numbers for yourself, spouse and all dependents.
  • Dates of birth for everyone listed on your return.
  • Did you move during the tax year or subsequent to year end?
  • Did you get married during the tax year?

Information About Your Income and Adjustments to Your Income

Gather all necessary documents that show where you received your income from in the past year, including investments. 

  • W-2 forms for you and your spouse.
  • Interest and dividend income for 1099’s.
  • Broker statements that include all sales of stock or other investment. Review these statements to ensure the cost basis is included on all sales.
  • Alimony received or paid and any unemployment compensation.
  • Other miscellaneous income, records including jury duty, gambling winnings, lottery payouts, etc.
  • Retirement income (form 1099R) and Social Security income (form SSA).
  • All self-employment business income and expenses (schedule C) or have rental properties, the income and related expenses (Schedule E).
  • All K’1 income from partnerships, trusts and S-corporations. 


The government offers several deductions and credits to help reduce your taxable income, which means more money in your pocket. Some common deductions include:

  • Childcare costs (providers name, address, EIN and amounts paid for each dependent).
  • Foreign taxes paid.
  • Medical bills ( health insurance premiums and co-pays and other medical costs).
  • Educational expenses (form 1098 T from the college or university).
  • Real Estate taxes paid.
  • Home mortgage interest (form 1098 from your mortgage company.
  • Charitable donations (separated into cash and non-cash contributions to charities).
  • Student loan interest paid.

Taxes You’ve Already Paid

Having this information available can prohibit you from overpaying when it comes time to file. This can include documents such as:

  • State and local incomes taxes paid
  • Estimated tax payments made for Federal, state or local 
  • Real estate taxes paid both personal and for rental properties

Our checklist covers some of the common documents and forms you will need to file your return. Taxes are different for everyone, so make sure you take the time to learn and gather all the correct documents unique to your situation. Please review your prior year return to make sure you don’t miss any income or expenses that might have been listed on the last years return.

Tax season can be confusing, and you don’t have to go through it alone. Our tax advisors at SD Associates are here to help. Whether you need help creating a financial strategy plan for your business, an easy way to maximize your tax deductions or you just need assistance preparing the necessary documents, contact us today for accurate and timely tax returns that can help you and your business save money.

2020 Tax Filing Season

2020 tax filing season promises slightly smoother than 2019.  There are still a number of changes that taxpayers should be aware of.

Tax Forms

Form 1040SR: U.S. Tax Return for Seniors
Form 1040SR was created for taxpayers age 65 and older. While these forms are similar to the standard Form 1040, the fonts are larger, and it includes a chart of the standard deduction and additional standard deduction amounts for taxpayers over 65 years old or blind.

Form 1040: Revised and Redesigned
Form 1040 has been updated for 2019 there are now three schedules instead of the six schedule that appeared in 2018. Some of the forms have been combined for ease of reading. The signature line was moved to the end.

Notable Tax Changes

Alimony is No Longer Deductible.
Alimony is no longer deductible to the payer and is no longer taxable to the payee for separation, divorce agreements or decrees that were effective on or after January 1, 2019.

Eliminated Health Insurance Mandate Penalty.
The IRS has eliminated the penalty for failing to obtain health insurance coverage under the Affordable Care Act. However, some states have their own health insurance mandates requiring coverage. To date, California, the District of Columbia, Massachusetts, New Jersey, Rhode Island, and Vermont have passed state individual mandates.

Medical Expense Deduction Threshold Remains at 7.5 Percent.
The medical expense deduction threshold was extended to 7.5 percent threshold through 2020 (including tax year 2019).

Standard Deductions.
The standard tax deduction is $12,200 for single filers and $24,400 for married couples filing jointly and $18,350 for head of household. If you’re 65 or older and married, you may increase your standard deduction by $1,300; as a single filer 65 or older, you increase will be $1,650.

10 Issues Taxpayers Should be Paying Attention to This Season

As Mark Twain once famously stated, “the secret to getting ahead is getting started.” This quote is applicable across all aspects of life, with the 2020 tax season being no exception. Whether you are unaware of the new changes being made to your next tax return or need a brief refresher on the details, the accounting & financial experts at SD Associates are shedding some light on the most common tax problems you could be facing in 2020:

1: Filing Late Penalties

Statistics show that 1 in 5 people file their taxes either after the due date or neglect to file altogether. While it’s common knowledge that avoiding to file will result in consequences with the IRS, there are expected to be just as many people making this mistake—if not more – this upcoming season. Avoid being penalized for filing late by getting ahead with our experienced accountants.

2: Retirement Contribution Limits Change

The new tax season brings new changes to the retirement contribution limits. Individuals are able to put away more money in their tax-advantaged retirement accounts, possibly decreasing their tax liability. Tax year 2020 contribution limits are as follows:

  • The IRS has raised the employee contribution limit for 401(k), 403(b) and most 457 plans to $19,500, up from $19,000 in 2019.
  • If you are 50 or older, you can put away another $6,500 in your workplace retirement plan. That’s up from $6,000 in 2019.
  • The contribution limit for individual retirement accounts, whether traditional or Roth, is holding steady at $6,000, plus another $1,000 for those that are 50 and over.

3: Estate and Gift Taxes

For 2020, the lifetime gift and estate tax exemption will be $11.58 million per individual, up from $11.4 million in 2019.

The annual gift exclusion (the amount you can give to any other person without it counting against your lifetime exemption) will hold steady at $15,000 for 2020.

 4: Alterations to Health Savings Account (HSA) Limit

These accounts allow you to put away pretax or tax-deductible money and have it grow free of taxes. You can take a tax-free withdrawal to cover qualified necessary health expenses.

 In 2020, you can save up to $3,550 if you’re an individual with self-only health coverage. That’s up from $3,500 in 2019. Account holders with family plans can save up to $7,100 in this account (up from $7,000 in 2019).

5: Threshold of Medical Expenses Deduction

In 2017 and 2018, the threshold for medical expense deductions was decreased to 7.5% by the Affordable Care Act. Effective January 1, 2019, the threshold will increase to 10%. For those taxpayers that itemize their deductions, this will make it a bit more difficult for them to qualify for the medical expense deduction, even though it may not seem like a drastic increase.

6: Confusion Over Alimony Deduction

The Tax Cuts and Job Act eliminates the alimony deduction this year, if  made under a divorce or separation agreement executed after Dec. 31, 2018. Being unaware of this change can cost people up to thousands of dollars, so taxpayers should keep an eye out for this change and/or speak with their accountant sooner rather than later.

7: No IRS Penalty for the Individual Mandate

Starting with the 2019 tax year and into 2020, the Shared Responsibility Payment no longer applies.

Some states have their own individual health insurance mandate, requiring you to have qualifying health coverage or pay a fee with your state taxes for the 2019 plan year. If you live in a state that requires you to have health coverage and you don’t have coverage, you’ll be charged a fee. Please consult with us if you have any questions or concerns.

8: Failure to Report All Income

The rapid rise in “under the table” jobs means there are more people that have been slipping by with unreported income. Most people receive penalties right off the bat, while some will be faced with penalties later on. As a resource, our website is equipped with financial calculators to help you understand your income breakdown to avoid leaving anything out.

9: No Quarterly Estimated Taxes

As our society fosters more freelancers and independent contractors, taxes must be paid as you earn or receive income during the year, through estimated tax payments. If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty. You also may be charged a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.

10: Underpaying Estimated Tax Payments

For a beginner or inexperienced freelancer or independent contractor, making sure that you report correct amounts is a necessity this tax season. Some advice to avoid underpaying your estimates includes being organized and overestimating the totals rather than underestimating. It’s recommended to allocate 22-25% of each payment you receive into a separate savings account in case of any estimated tax payments that must be made during the year.

Don’t fall victim to penalties or changes this upcoming tax season. SD Associates is here to support you with a variety of tax services to keep you focused on your business and less concerned about the little things in between. Contact us today for a successful tax season.

If you’re looking for assistance, our highly qualified shareholders at SD Associates offer consulting services that will steer you down the correct path towards a successful & uneventful tax season.

Tax Strategy: What’s New for the 2019 Tax Returns

A word to the wise: It’s never too early to start preparing for something! Whether it be out of excitement or fear of procrastinating, getting ahead of the game in most things in life makes everything a lot easier down the line, and preparing for the new tax season is no exception. Because the upcoming tax season is expected to bring some changes, the tax experts at SD Associates are here to fill you in, so you can know exactly what to expect for your 2019 tax filing.

New Year, New Forms
There will be at least three new forms making their debut in the 2019 tax season: the 1040-SR, 8995 and 8995-A. Here’s a quick breakdown of each:

  • 1040-SR: Equipped with a standard deductions chart, this form is meant to be easier to read and easier to navigate for seniors.
  • 8995: This form is a simplified computation of Qualified Business Income (QBI), Real Estate Investment Trust (REIT) dividends or have earned income from a Publicly Traded Partnership (PTP).
  • 8995-A: This form is for taxpayers who  have Qualified Business Income (QBI) from a Specified Service Trade of Business, Real Estate Investment Trust (REIT) dividends or have earned income from a Publicly Traded Partnership (PTP).

Whether we like it or not, taxes are something we all must deal with. If you’re a business owner who doesn’t have time learn the tax code, or deal with annual changes in the tax code, this may be the year to start utilizing the services from a tax professional.

NO more Affordable Care Act Penalties
Congress have thus far been unsuccessful in repealing the Affordable Care Act, the Tax Cuts and Jobs Act did eliminate the individual mandate — aka the “Obamacare penalty.” This is the penalty you pay for not having health insurance.

This penalty is only repealed in tax years 2019 and beyond. If you didn’t maintain qualifying health coverage throughout 2018, you still may face the penalty when you file your tax return in 2019.

Changes to the 1040 Form
Differing from 2018, this new season’s 1040 form has changed slightly to make things a bit easier. The IRS has combined schedules 2 and 4, and 3 and 5, to reduce the number of stand- alone schedules.

Sad Goodbyes to This Tax Break
The 2019 season is giving us something to “wine” about. The tax breaks on beer, wine and distilled spirits (a result from the Tax Cut and Jobs Act), are set to expire at the end of this fiscal year. This tax break—which once allowed small distilleries to fairly compete with wine and beer industries—will now cause owners, as well as customers, to pay more for alcohol. If you’re concerned about how the expiration of other tax breaks might impact your personal budget or business, SD Associates can help you estimate your taxes in preparation for your 2019 tax filing.

No matter what tax changes may occur from season to season, you can always count on the team at SD Associates in Elkins Park, PA to provide you with the most attentive, high-quality service. Contact us today to schedule an appointment with one of our tax experts!

Fall Tax Tips for the Small Business Owners

Whether your small business has a great fall season or slows down, thinking about tax preparation probably falls to the bottom of your to-do list faster than the leaves fall to the ground. But this new season means that the holidays will come and go, winter will be over and tax season will be here once again before you know it. Rather than putting your tax preparation off until the new year. There are some easy tax tips for small business owners that will make tax season much easier.

Create a Checklist

Leaving something out or having an error on your tax return can cause your small business to lose money and may result in you losing precious time. To avoid this, it’s best to write out or type up a list of all the items that are important for filing your business’s taxes. This will include, but is not limited to, the following:

  • Filing payroll forms
  • Submitting 1099 forms to certain employees
  • Putting together income and expense records
  • Collecting expense records

Get Everything Organized

Almost every business owner has dealt with the stress of taking care of business taxes at the last minute of tax season, but there’s no need to put this additional stress on your already full plate. Instead, now is the time to prepare yourself tax filing—you can do this by making sure your bookkeeping is up-to-date, putting all of your tax-related documents in the same place and organizing the receipts that have accrued over the course of the year. In addition making sure your accounting software is up to date including all bank reconciliations have been done timely.

Be Aware of Deductions Eligibility

Far too often, small business owners miss out on tax deduction opportunities, meaning they also miss out on the opportunity to put more money into their pockets. The following is a list of popular small business tax deductions that may apply to yours:

  • Expenses for your home office
  • Costs from starting up your business
  • Office supplies
  • Office furniture
  • Office equipment (may include cell phones used for business)
  • Mileage from transportation to job sites, client visits, etc.
  • Costs from business trips (flights, car rental, meals, etc.)

If you are unsure of which tax deductions your small business is applicable for, now is the time to contact a tax services professional.

Handle Things Early to Maximize Deductions

By “things” we mean spending more money throughout the fall to help maximize your deductions. If your small business is financially stable, then you may want to consider taking care of the following expenses prior to December 31, 2019:

  • Paying vendors
  • Paying advertisers
  • Leasing a vehicle
  • All employee bonuses paid before year end
  • Purchasing new equipment

Although all of these options will cost you, it will make a big difference in your tax refund (in a positive way).

Whether you need assistance with tax preparation by getting your bookkeeping in order, or you need the help of a tax services professional, the team at SD Associates in Elkins Park, PA is here for you. Contact us today to schedule your appointment!

The Dos and Don’ts of Saving for Retirement That Will Trim Down Your Tax Bill

There’s a lot to look forward to in retirement, but if you don’t make smart money moves while you’re working full-time, then you may end up paying more in taxes in your retirement than you had planned for. The tax planning experts at SD Associates have come up with some dos and don’ts of saving for retirement, so you can save yourself from having to deal with an expensive tax bill down the road.

DON’T Put All of Your Money Into a 401(k)

Far too often people make the choice to put all of their savings into a 401(k). Unfortunately, the money that you put into your 401(k) during your career years is tax-deferred, so when you retire, this type of savings account means you’ll have to pay taxes when this is withdrawn. In fact, the top marginal income tax rate is presently 37%, so if the majority of your savings—or all of your savings—are in a 401(k), you may want to rethink the account that you’re putting your hard-earned money into right now, because you’ll have less to enjoy in the future.

DO Utilize a Combination of Accounts

Rather than putting all of your (nest) eggs into one basket, putting money into tax-free, taxable and tax-deferred retirement accounts is the smartest option for your future self. By doing this, you’ll be able to have more control of your tax bracket when you retire. Plus, if you enlist the help of an accountant to create a strategy for your withdrawals, you’ll be able to keep your income low.

DON’T Withdraw Too Soon from Retirement Accounts

It may be hard to resist the urge to withdraw from your 401(k) or similar retirement accounts, but if you do so before your 59 ½, you’ll suffer from a 10% penalty. When your holdings are sold, these types of taxable accounts accrue capital losses, and to make up for this loss, you’re the one who has to pay for it. To avoid this, it’s best to wait to withdraw.

DO Let a Professional Guide You on How to Manage Multiple Accounts

Depending on your situation, knowing how to draw down on your income when you have multiple savings accounts can be tricky. For example, your marital status, income bracket and financial needs and goals all factor in when determining the best retirement saving options for you. If you want to enjoy as much of the fruits of your labor as possible when you retire, it’s best to contact a tax services professional to help you make the smartest financial decisions for your personal situation.

Whether you want help with your tax planning now or you want to prepare yourself for a better financial future, the experts at SD Associates in Elkins Park, PA can help! Contact us today to schedule your consultation.

Tax Deductions for Small Businesses

Filing taxes is tricky and time consuming enough, but because of the recent changes to the tax code, the 2017 Tax Cuts and Jobs Act (TCJA), there are deductions that small business owners shouldn’t overlook. Here at SD Associates, we’re always up-to-date on the latest changes on all things tax-related, so here are few tax deductions for small businesses that need to be considered during the next tax filing season.

Qualified Business Income Deduction
The Qualified Business Income deduction (also referred to QBI deduction, pass-through deduction, or section 199A deduction) is in effect for tax years 2018 through 2025.  With the QBI deduction, whether they itemize or not,  most self-employed taxpayers and small business owners can exclude up to 20% of their qualified business income from federal income tax. Self-employment taxes are excluded. Limitations are based upon taxpayer’s total taxable income. Once the taxable income reaches or exceeds $157,500 ($315,000 if filing jointly), the type of business may come into play. Calculations can get  very complicated. If you’re looking to claim this deduction or gain a better understanding, it’s best to reach out to SD Associates before the year end.

Business Vehicle Deduction
If you’re a business owner and use a vehicle, how and when you deduct for the business use those vehicles can have significant tax implications. There are many decisions such as is it better to use the standard mileage rate as your deduction or actual expenses; Who should own the vehicle? The business, the business owner or the employee; Should the business buy or lease the vehicle?   To get the most out of your business vehicle deduction, schedule an appointment with a tax expert to discuss the option right for you and your business.

Home Office Deduction
Although some small business owners are nervous to claim their home office as a tax deduction, when handled by an experienced tax professional, it can be a deduction on your next return. In order to qualify,  and you use part of your home regularly and exclusively to perform administrative or managerial activities for your business, you can claim a home office deduction. The IRS has criteria to help you determine if your space qualifies for the home office deduction. In addition, to an office in your home, garages and other types of free-standing structures may also qualify.

Retirement Plan Contributions
Far too often, small business owners think that setting up a retirement plan only results in serious tax savings if you’re a large corporation—this couldn’t be more wrong. For small businesses that have few to no employees you still have many options from defined contribution or a defined benefit plan. With the help of SD Associates, we can assist you to determine which retirement plan that works best for your business and will result in the most advantageous tax savings. 

Section 179 Deduction
Under TCJA A taxpayer may elect to expense the cost of any section 179 property (i.e. computers, equipment, machinery and vehicles) and deduct it in the year the property is placed in service. The law increased the maximum deduction to $1 million,  with certain limitations and adjusted for inflation.  The law also expands the definition of section 179 property to allow the taxpayer to elect to include the improvements made to nonresidential real property after the date when the property was first placed in service.

As a small business owner, you have enough responsibilities, so when it comes to your taxes, don’t take care of them alone—let the professionals at SD Associates take care of them for you! From planning to strategizing, we’ll help you maximize your deductions and make it easy to file your taxes. Contact us today!

Practices That Can Help Your Small Business Raise Capital

As a small business owner, you need to increase profits and maintain a healthy equity. But if you’re currently acting as your own accountant, you may be missing out on crucial ways to do this. The accountants at SD Associates are here to explain why an accountant will benefit your small business in more ways than one.

Manage Your Business’s Cash Flow

Cash flow is the lifeline for any business, but more often than not, small business owners don’t have the resources or time to effectively track cashflows properly. If you’re looking to apply for a business loan, the strength of your cash flow is one of the factors that lenders look, so you have the ability to repay a loan. Whether you need a loan to help cover your business’s working capital needs or a loan restructuring to help expand your business, our accountants will be able to assist you in tracking your cash flow and ability to provide the bank solid information when applying for that new loan.

Help Improve Your Business Credit

When you need apply for a business credit card or for a loan, having good (or great) credit is crucial for being able to access capital. But just because you’re excellent at running your small business doesn’t mean you know how to build your business credit—that’s where SD Associates comes in! Our accountants will guide you through best practices to build credit for your business, so you can get the funding you want when you need it. These practices may include:

  • Establishing a business entity separate from your personal finances.
  • Financing certain business purchases.
  • Registering with the credit bureau that is appropriate for your small business.

Assists with Borrowing Money Against Unpaid Invoices

As a small business owner, there may be times where you need cash fast or you are waiting for your clients to pay their outstanding invoices. SD Associates accountants have the financial and business acumen needed to identify these gaps for cash flow purposes. They can assist you to determine why your cash flow is negative.  If you have several clients who are not paying their invoices within the terms set forth in your policies, we can will assist you through the process of factoring these invoices. This practice enables you to borrow money against unpaid invoices so that you can quickly get the capital infusion you need to help you run your business efficiently.

Whether you are looking for an accountant to help you in the process of raising capital, or you need a bookkeeper to manage your monthly expenses and invoices, SD Associates in Elkins Park, PA can help! Contact us today to schedule an appointment with one of our financial experts.

Size Matters: Here are some Business Planning Tips for Small Businesses

Whether you are thinking of starting a business or purchasing an established one, proper business planning is a vital component for your success. From tracking your spending to analyzing your growth, establishing a budget and staying within it, to planning for your financial future, a strong business plan is the only way to achieve your short-term and long-term goals. With over 35 years in the accounting and business advisory world, the experts at SD Associates know that a business plan is not the same for a large corporation as it is for a small business—so here are four business planning tips for you and your small business!

Be Sure to Balance Your Business and Personal Goals

As a small business owner, your business and personal financial goals are closely aligned, and because of this, it is crucial for you to establish both short-term and long-term goals every year. For example, if you’re looking to expand your business into a new market or move into a larger space, these goals may impact a personal goal of saving for retirement or buying a new home. It is important to strike a balance between the two, and SD Associates can assist you with that.

Keep Costs Under Control

For any size business, the only way to avoid failure is to generate a profit, but as a small business owner, your business’ success directly affects your personal financial success. To help keep your small business successful, staying on top of all your expenditures is crucial.  This can make or break your business’ success.  Investing in a solid business advisor can pay off big in the end—not only will they assist you in tracking and analyzing your costs, they will also know to look for things such as operational deficiencies and redundancies, result-based compensation, economies of scale and ways to increase productivity.

Start with the End in Mind

Although you may be focused on having your business benefit your current financial situation, establishing a retirement plan will benefit you and your employees’ future stability. Retirement plans are a great way to save money long-term, but they can also help reduce your current taxes and increase the employees’ loyalty.  There are a number of types of retirement plans, but a few that be should considered are a 401(k), SEP IRA and SIMPLE IRA. Along with your financial advisor, SD Associates can assist you in determining the best option for you and your business.

Don’t Miss Out on Tax Opportunities

When it comes to filing and paying your taxes, it can be a stressful and complicated process, and as a small business owner, you are going to want to maximize your deductions as much as possible. To ensure you’re not missing any opportunities, be sure to start your year-end process early. Another important tip is to keep a detailed record of your expenditures, track all filing dates and remember to pay all federal, state and local taxes, payroll taxes, local permits and fees.  This is a lot of responsibility if you are doing this yourself, so it’s best to hire a small business professional.

Looking to improve—or implement for the first time—the business plan for your small business? Contact us today!

New Year, New Tax Season: Here’s Your Tax Prep To-Do List

Tax Prep To Do List

Tax documents, receipts, and updating personal information—there are a lot of tasks to check off for the tax season, but a checklist can help! Thankfully, the tax experts at SD Associates have come up with a helpful checklist to make your tax season much easier this year. 

Organize Your Tax Records
Although organizing your taxes won’t reduce your liability completely, there are some financial benefits you could experience if you get organized this month. However, with all the different tax documents, it’s hard to know which ones you need to gather and organize. Here’s a simple checklist:

  • Keep an eye out for tax documents that come in the mail, like W-2s, 1099s, mortgage interest statements, etc.
  • Gather all the receipts you accumulated over the past fiscal year and organize them by category.
  • Make sure you have the cost basis of those stock that you sold during 2018
  • Schedule out your income and related expense from those rental properties.

Once you have all the documents, make your life easier by grouping similar documents together. When it comes time to file, you’ll be glad you took this extra organizational step sooner rather than later!

Add Funds to a Retirement Account
Did you forget to contribute to your retirement account in 2018? Not to worry! You have until April 15, 2019 to do so—and if you have the funds available, you might want to make that a priority. Not only are you making smart choices for your future but contributing to an IRA or SEP account you are eligible for that tax deduction in 2018.

Make Sure Your Address is Up to Date
If you moved in 2018, it’s important to make sure you update your address with any organization that you know will be sending you tax-related documents. This includes:

  • Former employers for your W-2s
  • Banks for 1099-Int documentation
  • Brokerages for either a 1099-DIV or a 1099-B
  • Lenders for 1098 documents
  • IRS, state tax agency or clients for your 1099-MISC
  • Investments and trusts for K-1s

Name Change? Make Sure It’s Updated
When you get married, there are a lot of new and exciting things that happen, and if you became a newlywed in 2018 (congratulations!), a name change is one of them! Typically, newlyweds remember that they need to change their name on their driver’s license, passport and paychecks, but don’t always remember to notify the Social Security Administration. However, if your name doesn’t match your Social Security Record, you won’t be able to e-file your tax return, so now is the perfect time to review this.

Whether you want help filing your taxes, are looking to maximize your tax deductions or identify tax credits, SD Associates can help! Contact us today to make your upcoming tax season a breeze.