Tax Tips 2020
With tax day just a few days away, here are some tips that we hope will help you. Of course our best tip is using Plastiq to pay them. Good luck.
- Be prepared. Start off by organizing all your documents so your filing process is quick and easy. This will also reduce errors.
- File early. It’s no fun thinking about taxes, but filing early is the best way to minimize errors, manage your cash flow, and have peace of mind. Don’t leave it to the last minute, the stress isn’t worth it.
- Collect tax credits. There are tons of tax credit for the taking. And they reduce your tax bill on a dollar-for-dollar basis, not a percentage. So keep an eye out and reduce your bill with credits.
- Dig for deductions. There are deductions most people know, like charitable donations. But don’t forget about major medical expenses, which you can deduct. Also, if you are a business owner, you may be eligible for a 20% qualified business income deduction.
- Convert IRA to Roth IRA. If you haven’t made the switch, do it. Roth IRA withdrawals are not considered income for federal (and usually state) income tax purposes. Plus, you don’t have to take RMDs from them annually once you’re 70.5 years old.
- Don’t miss some common write-offs. Know which applies to you. Make sure to count some common cash-only write-offs which can be paid with Plastiq, including business services, insurance, and rent.
- Write off the Plastiq fee. Yes—we’re (partially) tax deductible. You can write off up to 33% of the Plastiq fee as a business expense. This is one of the many ways to offset the Plastiq fee and save on your taxes.
- Use separate cards for your business and personal expenses. Using one card for both your business and personal expenses makes figuring out what’s what even harder. Make it easy on yourself. Keep separate cards for your business and personal expenses to ensure you only deduct the Plastiq fee associated with ordinary and necessary business expenses.
- Pay with a credit card. Paying your taxes on credit with Plastiq gives you more days of cash float. Give yourself more time (and don’t forget tip #6).
- Check your withholdings. Employers generally withhold income tax from their employee’s paycheck and pay it to the IRS on their behalf. Make sure you know exactly what has (or hasn’t) been paid for you.
- Consider hiring a tax professional. Does this all sound like too much hassle? Hire a pro. They can help you maximize your return and make things easier on you.