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How to Prepare for 2025 Tax Season

Anifath Okanla

The IRS officially announced that we can officially start filing 2024 tax returns on January 27, 2025. So it’s time to get a jump on organizing your financial information. Preparing your taxes can seem daunting, but with the right strategies and a little foresight, you can navigate it with ease. Here's how you can get yourself ready and potentially even save some money in the process.


Start Early and Organize

One of the most efficient ways to ease the stress of tax season is to start as early as possible. Gather all necessary documents such as W-2s, 1099s, and any other applicable forms. Ensure you have correct records of your income and deductions. Here’s a quick checklist to help you get organized:

  • Income Statements: W-2s, 1099s, K-1s if applicable.

  • Deduction Documentation: Mortgage interest statement, education expenses, medical expenses.

  • Investment Information: 1099-DIV, 1099-INT, and records of stock transactions.

  • Personal Records: Social Security numbers and dates of birth for you, your spouse, and dependents.

  • Charitable Contributions: Receipts or proof of donation.


Understand Tax Law Changes

Tax laws can change from year to year, affecting deductions, credits, and income brackets. Whether it's adjustments in tax credits or updated brackets due to inflation, staying informed is key. Consult the IRS website or a tax professional to understand how new regulations affect your filing. Consider the introduction of new tax policies like increased child tax credits or adjustments to retirement savings incentives.


Utilize Tax Software or a Professional

Decide whether to use tax software or hire a professional. Tax software has become increasingly intuitive with user-friendly interfaces and guided questions that ensure you don’t miss important details. This option is generally cost-effective and efficient for simpler returns. For complex situations involving investments, self-employment, or real estate, hiring a professional might save you more in the long run, ensuring all deductions and credits are utilized.


Maximize Contributions and Deductions

Consider the tax law that allows you to make IRA contributions for the previous tax year in 2025. You can contribute to your IRA for the 2024 tax year until the deadline of April 15, 2025. Increasing your contributions may lower your taxable income and enhance your financial stability.


Review and Adjust withholdings

Use this time to review your current tax withholdings. If you have consistently received a large tax refund, it might be worthwhile to adjust your withholdings to increase your paycheck. Keep in mind that while a refund might feel like a bonus, it's essentially an interest-free loan to the government.


Plan for Estimated Taxes if Self-Employed

If you are self-employed, ensure you are making estimated tax payments throughout the year. Use your previous year’s tax return as a guide to estimate your income and determine how much to pay each quarter. Failing to pay estimated taxes on time can result in penalties and extra charges, adding unnecessary complications.


By paying attention to these key points, managing your finances throughout the year, and keeping abreast of current tax law changes, you can approach the 2025 tax season with confidence and ease. Embrace the habit of staying organized early on. It will save you valuable time and energy as tax day approaches.


For a list of #inflation adjusted deduction and limits, visit the IRS website



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