Four Tasks to Complete Now for Tax Season
It’s not tax time yet, but that doesn’t mean you should sit idly by waiting for taxes to peak in March or April. It’s important to gather important documents and meet year-end deadlines so you’ll be ready to hit the ground running when application season begins.
Collect and organize documents
It’s not too early to start getting your tax documents in order. Although tax forms from employers and financial institutions won’t be issued until the end of January, you can start making a list of the documents you’ll need to file your return now so you can review them once you receive them. This may include the previous year’s return, income statements (W-2 forms and various types of 1099 forms), and documentation of credits and deductions such as expenses related to child care, health care and education, and also charitable contributions and mortgage interest. Download your pay stubs and bank statements and save them in one folder.
If you’re self-employed or a contract worker, start collecting receipts for deductible expenses and estimated tax payments, as well as business income statements.
Assess changes to your tax situation
If you’ve made any major life changes this year, you may need to do some last-minute tax planning and possibly adjust your tax item in the new year. Some examples of events that may affect your taxes include the following:
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You’ve gotten married or divorced (and your tax status is changing).
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You have a child or a dependent.
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You bought a house (or moved).
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You changed jobs (or lost your job).
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Your income has increased or decreased significantly.
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You have retired.
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You have declared bankruptcy.
You can use the IRS Tax Withholding Estimator to determine whether you need to adjust your withholding with your employer (if you’re a W-2 employee, you’ll need to file an updated Form W-4) or otherwise get ahead of any surprises with your tax bill. You can also start planning for changes expected in 2025, such as a bonus, promotion, or any of the life events listed above.
Set a reminder for your fourth quarter billing payment.
Self-employed taxpayers, including contractors and freelancers, must make quarterly estimated tax payments —the final estimated payment for the 2024 tax year is due January 15, 2025. Failure to pay within a year may result in penalties unless you owe a lesser amount. more than $1,000 when filing a return or paying the lesser of 90% of your current year tax liability or 100% of the tax on a prior year’s return.
TL;DR: Don’t miss the fourth quarter deadline and make sure you complete enough to avoid penalties.
Schedule a call with your tax professional
If you are working with a tax professional, schedule a year-end planning meeting to discuss any changes to your tax situation and discuss strategies for optimizing your profits, such as making additional contributions to tax-advantaged accounts, increasing charitable donations, or seeking additional credit or deductible expenses.
Your tax professional may be able to offer these classes at low or no cost along with your return preparation fee, and while you’re at it, schedule any necessary appointments between now and the April filing deadline.