Preparing for tax season is an often-dreaded time of the year; but it is a time that we must all get through. In most instances, the dread stems from the fact that we lack organization. The holidays have passed, spring is quickly approaching and so is the April 15th deadline. Procrastination could result in many complications. These include having to file for an extension, forgetting to include essential paperwork, and possibly even having to pay fees. All this can be avoided by simply making preparations now. In this guide, we will expound on how to prepare for tax season quickly and easily.
Filing Deadline
This year, the filing deadline for taxes is April 15 th 2025. The goal should be to get ready for this filing date way ahead of time. If you earned any type of income for the year of 2025, you will need to file a tax return on a federal level and a state tax, if your state requires taxes from residents.
You Need to Learn What Your Filing Status is before you file taxes. The IRS has five statuses that taxpayers may qualify as. These include:
- Single
- Head of Household
- Married Filing Jointly
- Married Filing Separately
- Qualifying Widow/Widower with Dependent Child
Each filing status has different requirements when filing and actually qualify for different types of deductions and even credits. It is important to note that for the 2024 tax year, Married couples who are filing jointly will be allowed a standard deduction of $29,200.
Updated Personal Information
If you have recently gotten married, divorced, moved, or legally changed your name, you must report this information to the IRS and the Social Security Administration. If you have undergone a legal name change, you will need to contact the Social Security office nearest to you.
You will need to provide proof of your identity, a life insurance policy or a marriage license. You may then contact the IRS directly and update your information, such as your address. If you wait to do this until you file your return or later, you may miss important information that they attempt to send you.
Adjust Withholding
If you perform work in a traditional W-2 job, each January, your employer will request that you fill out a W-4 form. This determines how much your employer will hold back from your earnings throughout the year based on the number of dependents that you are claiming, your tax status, and other types of nonemployment income and/or deductions.
If you get a larger refund on your return for last year, it could mean that too much is being withheld from your earnings. If you find that you owe taxes, you may discover that you actually need to adjust how much you have withheld.
Organize Tax Documents
Now, it is time to get together all of the necessary documents to do the filing. The following outlines some of the most common documents:
Last Year’s Return – This will let you figure out what deductions you claimed and credits that you received. The information may assist you in helping you file the current year’s return.
Letter 6419 – This details the amount of child tax credits you received in the past. By evaluating this form, you may be able to claim the credit on your current return if you have a dependent that is aged 17 years or younger.
W-2 Forms – These forms detail exactly how much was earned with that particular employer. You will receive these forms in the mail by the end of January.
1099 Forms – If you were self-employed, the clients that you have performed work for will send you these forms, which outlines how much you were paid during the year. If you have not set up quarterly taxes on that income, you will be required to pay all that you are required to pay in full when you file your return in the Month of April. Form 1095-A – This is the Health Insurance Marketplace statement. It allows those who are enrolled in a health plan that qualifies to get either the tax credit or reconcile the credit on their returns with any payments received.
Form 1098 – If you own a home, this form outlines the amount of interest you have paid on your mortgage throughout the year.
Form 5498 – This form outlines the amount that you have contributes to an individual retirement account or “IRA”. The firm that holds your account will provide you with this form at the end of the year or in January. The contribution amount you made may actually be tax-deductible as long as your income does not exceed the limit that has been imposed by the IRS.
Form 1099-DIV – This report allows you to report any type of income that you have received from dividends or distributions that are directly associated with the investments that you have made. If you have a rental property, stocks, bonds, or another type of investment – such as cryptocurrency – that actually generated a profit, you will receive this form.
1098-E – This is a student loan statement that outlines the loan interest. It shares how much interest that you paid throughout the year.
Deductions – You should get together receipts and other documents that verify the deductions.
Business Expenses – If you are self-employed or you have a small business, you should gather credit card statements, receipts, and or statements that show how much you spent. You should strive to keep this information all year long before filing so that you may maximize the deductions you are claiming and you can reduce your overall tax liability.
Max Out Those IRA Contributions
If you have an IRA, you should contribute as much as possible before the filing deadline. If you are under the age of 50, you may contribute as much as $7000 for the year. If you are over 50, you an contribute up to $8000.
Will You Use a Tax Preparer?
You need to determine if you will prepare and file the taxes yourself or if you will be using a professional tax preparer. This is especially helpful if you own a business or are self-employed. An accountant can help to make sure that all of the information on the filing is correct and is properly filed with the IRS.
Programs
If you decide to file your taxes on your own, you should use a program that will guide you through the process so that errors are not made. The best programs available today include the following:
H&R Block
TurboTax
FreeTaxUSA
Jackson Hewitt
TaxAct
TaxSlayer
Other Documents of Interest
In addition to the documents that we have previously outlined, there are other documents of interest that should be gathered. These include the following:
Alimony
Individual Retirement
Account distribution
Rental Property Income and Expenses
Scholarships
Gambling Winnings
Investment Income
Jury Duty
Social Security Benefits
Student Loan Interest
Mortgage Points
Moving Expenses
Child and Dependent Care Tax Credit
Filing an Extension
If you have yet to gather all that you need to or You are still waiting on tax documents, you may want to give yourself a little buffer and file for an extension. This gives you an automatic six months extension. Then, your tax return will need to be turned in in the Month of October.
To request an extension, you will need to complete and mail Form 4868 or you may ask the preparer that you use for your taxes to do this. The extension is free, but if you end up owing, the interest will continue to add up and you may find yourself getting penalties.
Where’s My Refund?
Once you file your return, you may find that you are curious as to where it is in the process. The IRS has a Where’s My Refund tool that will provide you with the status of your return 24 hours after it is filed. That is, if you filed electronically. If you file a paper return, it will take longer to see any information on the tool. You may access this tool online on the IRS website, or you may access it through the app at 1RS2Go mobile app. In addition to the tool, it provides free help on tax topics and allows you to make payments on what you owe the IRS, if you owe anything.
Refunds
If you are expecting a refund, it should arrive to you within 3 weeks. You will receive it more quickly if you file electronically and opt for direct deposit into your bank. If you do not have a bank to get the deposit, we here at Somervile Bank are ready to assist you. Just browse our website and use our location tab to determine which branch is closer to you. If your refund is delayed, it could be because your return was wrong or it had inaccurate information on it. Corrections may need to be made regarding the child tax credit or the earned income tax credit. For more information, click the following link to see our locations: https://somervillebank.net/locations/
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