Tips for the 2025 Tax Filing Season

As we enter the 2025 Tax Filing Season, we may find ourselves wondering how to navigate the complexities of filing our taxes. Below are some practical tax preparation tips that may help you optimize your taxes and improve your tax filing experience.

Start Early and Get Organized

You may have already begun receiving your important tax documents such as W2s and 1099s. You can expect to receive documents from your employers, banks, financial institutions, Venmo, etc. Many of these providers release electronic documentation in lieu of physical documents if you have signed up for paperless document delivery in which case you may have to look for the documents proactively. As you start to organize these forms, you will also want to gather documentation and receipts for potentially deductible expenses incurred during the prior year such as unreimbursed medical expenses or charitable donations. Give yourself plenty of time to collect and file all tax documents in a secure location so you can provide all relevant information to your tax preparer quickly and efficiently. Filing early will also reduce the risk of someone else filing under your name, which you can read more about here.

Be Aware of Filing Deadlines

Many of us will be subject to the standard April 15th federal filing deadline. However, the IRS extended the deadline for taxpayers impacted by certain natural disasters, such as Hurricane Helene and the LA Wildfires. Those impacted by Hurricane Helene will have until May 1, 2025 to file their federal income tax returns and pay any tax due for the 2024 tax year, and those impacted by the LA fires will have until October 15, 2025. You can determine eligibility for tax relief by visiting the IRS Tax Relief in Disaster Situations page. Finally, if you are unable to file your taxes on time, be sure to file for an extension to avoid late fees and penalties.

Take Advantage of Deductions and Credits

Deductions reduce your taxable income, while credits reduce your actual tax bill. Knowing which deductions and credits you are eligible for will help you to maximize your savings. A tax professional such a Certified Public Accountant (CPA) or Enrolled Agent (EA) can help identify which deductions and credits are appropriate for you to claim.

• Some common deductions include mortgage interest, qualifying medical expenses (above a certain threshold), charitable donations, state and local taxes (up to $10,000).
• Some common credits include the Child Tax Credit, Child and Dependent Care Credit, and the American Opportunity Credit.

Collaborate with Professionals

CPAs, EAs, and financial advisors serve complementary roles in your financial life. Coordinating their efforts can help maximize tax optimization while ensuring tax strategies are aligned with your financial plan. Here are some ways that utilizing a financial advisor in tandem with a tax preparer can add value to your tax planning:

• Making contributions to retirement accounts: You still have time to make potentially tax-deductible contributions to a retirement plan for 2024. Making a deductible contribution will defer some income and help lower your current tax bill.
• Strategizing charitable gift giving: Your tax preparer and financial advisor can work together to implement strategies like donor-advised funds, which allow you to bunch donations for greater tax savings while maintaining control over when and where the funds are distributed. Your tax preparer may advise on how much to give to maximize the tax benefit, while the financial advisor helps determine which assets to donate. This strategy only applies to the tax year you are currently in, not the tax year for which you are filing.
• Ensuring you pay adequate estimated taxes: Income taxes are pay-as-you go, meaning you need to pay most of your tax during the year as you receive income. If you don’t pay enough during the year through withholding or estimated payments, you may be subject to a penalty plus interest on the amount of the underpayment. Your tax professional can help you determine the amount and timing of safe harbor payments to avoid underpayment penalties.

File Electronically & Choose Direct Deposit

The safest and most efficient way to receive your refund is to file electronically and elect to receive your refund by direct deposit. Refunds are typically issued within 21 calendar days and taxpayers can check the status of their refunds on the IRS Where’s My Refund page within 24 hours of e-filing.

Tax preparation can be overwhelming, but staying organized and utilizing the resources available to you will allow you to navigate tax season with confidence.