Tax Season Is Here: 10 Practical Steps to Prepare Early and File with Confidence

Tax season is upon us, and even though the filing deadline is months away, now is a good time to start organizing and preparing.  Below are some tips to help successfully navigate tax time:

• Locate your previous year’s tax return and set reminders. Your 2024 tax return is the best place to start because it can be used as a “cheat sheet” for what you need to gather for your 2025 tax return.  Set a reminder in your calendar for the filing deadline and reminders throughout the month to start gathering documents.
• Prepare a central location to organize your tax documents. It’s probably a good idea to have two files: one electronic file for documents that come in electronically through email or you download online and a paper file to accumulate documents that you receive in the mail.  Once you’ve received all of the required documents, you can consolidate electronically or in paper format—whatever way your tax preparer prefers.
• Gather Personal Information. Your tax preparer will need the Social Security numbers for all people listed on the tax return as well as driver’s licenses for all taxpayers.  If you want a refund direct deposited into your checking account (for fastest tax refund receipt), your tax preparer will need the bank account and routing number for the account.  Most tax preparers prefer to file electronically, and it’s the quickest way to get your refund.  Your tax preparer will need an updated email address for you as well.
• Pay attention to health insurance forms. Any taxpayer or dependent that purchased health insurance through the Exchange will need to provide a Health Insurance Marketplace Statement, Form 1095-A, to file a return.  You no longer need to provide proof of health insurance coverage as they have in the past, but you should keep these forms with your tax documents.
• Gather main income documents. If you are a salaried employee, this means you’ll need to provide your W-2.  Self-employed individuals will need to provide their 1099s.  If you own rental property, you’ll need to provide rental income and any expenses related to that property.  If you collect Social Security or pension income, you’ll need to provide those statements as well.  Any withdrawals from retirement accounts (IRAs, 401(k)s, etc.) must be provided to your tax preparer.  If you own any taxable accounts, the income generated from that account (dividends, capital gains, interest, etc.) will need to be included.  Taxpayers involved in a partnership will be issued K-1s.  Sometimes these K-1s are the last documents you receive, so they are often forgotten.  Use your previous year’s tax return as a cheat sheet and go from there.
• Don’t forget other income. Did you buy or sell property?  Include closing documents and capital gain information.  Do you gamble?  Remember your W-2G form for gambler income.  Do you contribute to or withdraw from a HSA?  You’ll need to provide statements for both contributions and withdrawals.  Do you have a 529 Plan?  You’ll need to provide end-of-year statements showing contributions and withdrawals from the 529 Plan.  Although 529 Plan contributions are never deductible for federal taxes, many states offer tax deductions for 529 contributions up to certain amounts.
• Gather a list of deductions. Remember your home mortgage interest, property taxes, ad valorem taxes, medical expenses, charitable contributions, and business interest.  If you paid college tuition for yourself or any dependent, be sure and include the 1098-T form and a list of books, fees, etc. paid for college.  If you contributed to an IRA (either deductible or nondeductible), Roth IRA, or any other retirement account, those amounts should be included.  You may be able to deduct some of these items for state tax purposes (if you live in a state with income tax) even if you cannot deduct them for federal tax purposes.
• Be aware of new 2025 deductions. There is a higher deduction for seniors in lower tax brackets, new deductions for interest paid on qualifying new American-Made vehicles purchased in 2025, and deductions available for qualifying tips and overtime pay.
• Remember to include foreign financial accounts and digital assets. If you had any interest in foreign financial accounts in 2025, you must disclose that on your tax return.  There are severe penalties for not reporting all information regarding foreign financial assets.  You must also disclose any digital assets (Bitcoin, cryptocurreny, etc.) on your tax return.
• Prepare your checking account for possible tax payments.   If you traditionally receive a tax refund and have not had many income changes from last year to this year, you will likely get a refund again.  However, if you have higher income items, and withholdings have not changed, you might end up owing taxes for 2025.  Make sure you know what account you want to use to make those tax payments and make sure you have enough funds to cover your taxes.  A larger tax bill is much easier to deal with if you are not scrambling at the tax filing deadline to come up with the funds.

Tax season does not have to be a stressful time for you.  Just start early, check these items off your list, and file your taxes with confidence.