Get Ahead of Tax Season: Smart Steps to Take Now

The holidays have ended, and you have likely packed the decorations back into storage for another year. However, it is not too early to start thinking about tax season. A well-organized approach to tax preparation can save you time, money, and stress. Here are some key steps to take to help facilitate a smooth tax filing.

First, create a dedicated folder for your tax documents. This can either be in physical or digital form. Employers must send W-2 forms by January 31st, and 1099 forms for items such as investment income, retirement distributions, and contract work will arrive soon after. Having a designated place for these documents as they arrive prevents time wasted searching for them later.

Review last year’s tax return now. It serves as an excellent checklist of what to expect this year and reminds you of deductions or credits you might qualify for again. If you utilize the services of a paid tax preparer, request they send you an organizer showing all the items that were included in your prior year return. While not all inclusive, this will serve as a good starting point.

It is not too late to fund your retirement, potentially. You still have time to make IRA contributions for 2024 until April 15, 2025. This applies for traditional and Roth IRAs for those eligible to contribute. For 2024, you can contribute up to $7,000 ($8,000 if you are 50 or older) to traditional and Roth IRAs combined.

Gather documentation for major life changes. Did you buy or sell a home? Change jobs? Welcome a new child? Get married or divorced? These events can significantly impact your tax situation and may require additional documentation.

For business owners and gig workers, now is the time to organize those receipts and review business expenses. Consider using accounting software to categorize expenses if you have not already. At minimum, consider inputting these items into an Excel spreadsheet. Remember to gather documentation for home office expenses if you qualify for that deduction.

Monitor your mail and email carefully in January. Missing tax documents can delay filing and potentially lead to errors. Many documents are now delivered electronically, so check your spam folder regularly and ensure financial institutions have your current email address and mailing address.

Deliver your tax documents to your preparer as soon as possible. Tax filing windows and deadlines continue to grow shorter and shorter even though tax filing continues to increase in complexity. Allowing your tax professional to have the maximum amount of time will help to ensure a timely and correct filing.

Taking these steps now can help you avoid the stress of last-minute tax preparation. Whether you plan to file yourself or work with a professional, being organized and prepared will make the process smoother and potentially help you identify additional tax-saving opportunities.

 

Published in the Victoria Advocate. 

Kyle W. Noack, CPA/CFP® is the Chief Executive Officer for Keller & Associates CPAs, PLLC and Keller Wealth Advisors.