Creating a Tax Season Checklist: A Step-by-Step Guide

This is one of the worst times during the tax season, but with the proper checklist and step-by-step approach, it should be manageable. This blog will show you how to come up with an even more detailed checklist for tax season so you are prepared when things arise.

We will guide you step by step on what documents you need, how to maximize your deductions, key deadlines, and why you want to keep accurate records year-round.

What Documents Do You Need to Gather for Tax Season?

The very first step in preparing for tax season is getting the right documents together. If you do not get the right stuff, it can lead to delay, inaccuracies, or missing out on potential deductions.
Here’s a checklist of essential documents you’ll need:

Income Statements: Assemble your W-2s which are for the employee or 1099 forms which are for the freelancer or contractor or side job. These documents were usually retained to prove how much one earned and how much of the amount was taken for tax.

Investment Income: If you own investments it is advisable to gather 1099 DIV, 1099 INT, or 1099 B, which I report on dividends, interests, and stock sales respectively.

Retirement Contributions: Here most taxpayers making contributions to their IRA 401 (k) or other plans will use Form 5498 to report the amount of such contributions.

Mortgage Interest and Property Taxes: Your mortgage company should have given you form 1098 it shows the interest you paid that is tax deductible and the property taxes.

Health Insurance Documents: If you got health insurance from the marketplace, then you’ll require form 1095-A. Other forms could be required, for example, 1095-B or 1095-C could be required for employer-sponsored plans.

Receipts for Deductible Expenses: These can be medical bills, charitable contributions or tuition fees for education expenses that the law allows an individual to offset.

How Can You Maximize Your Deductions and Credits?

Maximizing deductions and credits is essential to reducing your tax bill and potentially increasing your refund. Here’s how you can take advantage:

Itemize Deductions vs. Standard Deduction: Determine whether itemizing or taking the standard deduction makes more financial sense. In 2024, the standard deduction is $13,850 for single filers and $27,700 for married couples filing jointly. If your itemized deductions (like mortgage interest, medical expenses, and charitable contributions) exceed these amounts, it’s worth itemizing.

Look for Tax Credits: Credits like the Earned Income Tax Credit (EITC), Child Tax Credit, and education credits directly reduce your tax liability dollar for dollar. For example, the Child Tax Credit in 2024 can be worth up to $2,000 per qualifying child.

Maximize Retirement Contributions: Contributions to a traditional IRA or 401(k) can lower your taxable income. For 2024, you can contribute up to $6,500 to an IRA, or $7,500 if you’re 50 or older, which can result in significant tax savings.

Deduct Home Office Expenses (if eligible): If you’re self-employed and use part of your home for business, you may be eligible to deduct home office expenses, such as utilities, rent, or mortgage interest.

State and Local Taxes (SALT): If you live in a state with income tax, don’t forget that state and local taxes can be deducted up to $10,000.

When Is the Best Time to Start Preparing for Tax Season?

Generally, the earliest start you may make in preparing for tax season will be as early as possible. IRS typically accepts returns after mid-January:

Starting in December: You can gather all your documents at the end of the year when your annual income, expenses, and investments are more defined.

Prepare a Timeline: Break up the tax preparation process into action items. Collect your income forms by mid-January, and by the end of January, collect receipts for deductible expenses.

Make an Appointment with Your Tax Preparer: For those who are considering hiring a tax professional, make an appointment early, ideally in February. This way, you will not be among those rushing to prepare your taxes at the last minute.

When Are the Key Deadlines for Filing Your Taxes?

It’s crucial to know the key tax deadlines to avoid penalties or missed opportunities for deductions.

• January 15, 2025: The final due date for the fourth-quarter estimated tax payments for self-employed individuals.
• March 15, 2025: Deadline for S corporations and partnerships to file their tax returns.
• April 15, 2025: The standard filing deadline for individual tax returns. If you need more time, you can file for an extension, which gives you until October 15, 2025.
• June 17, 2025: U.S. taxpayers living abroad must file their taxes by this date if they did not request an extension.

Who Is Eligible for Free Tax Assistance Programs?

There are several free tax assistance programs available for certain groups:

• Volunteer Income Tax Assistance (VITA): VITA offers free tax help for people who generally make $60,000 or less, those with disabilities, and limited English-speaking taxpayers.
• Tax Counseling for the Elderly (TCE): This program provides free tax assistance to individuals aged 60 and older, focusing on issues such as pensions and retirement-related tax concerns.
• IRS Free File: If your income is below $73,000, you can use IRS Free File, which provides free online tax preparation software.

Why Is It Important to Keep Accurate Records Year-Round?

• Keeping accurate records throughout the year can significantly simplify your tax season preparation. 
• Avoid Missed Deductions: If you’re not keeping track of deductible expenses as they occur, you could easily forget them by tax season.
• Fewer Errors: Accurate record-keeping helps ensure that your tax return is correct, reducing the risk of an IRS audit or having to amend your return later.
• Prepare for an Audit: In the rare case of an audit, having organized and accurate records will make the process much smoother and faster.
• Year-Round Tax Planning: Consistent records allow you to plan for tax season more effectively. You can strategize your deductions, investments, and retirement contributions based on accurate financial data.

What Common Mistakes Should You Avoid During Tax Season?

Even with preparation, common mistakes can happen. Here are some to avoid:

1. Missing the Filing Deadline: Filing late can result in penalties, so be sure to file by April 15 or request an extension.
2. Filing with Incorrect Information: Double-check Social Security numbers, names, and bank details to ensure they’re correct.
3. Overlooking Tax Credits and Deductions: Don’t leave money on the table. Make sure you’re taking advantage of all credits and deductions you’re eligible for.
4. Not Reporting All Income: Forgetting to report freelance income or investment earnings could result in penalties down the line.
5. Filing with Last Year’s Forms: Always make sure you're using the most up-to-date IRS forms and guidelines.

What Happens If You Miss the Tax Deadline?

If you miss the tax deadline, don’t panic, but act quickly. 

• Penalties and Interest: The IRS imposes a failure-to-file penalty (5% of unpaid taxes per month, up to 25%) and a failure-to-pay penalty (0.5% of unpaid taxes per month).
• File as Soon as Possible: The sooner you file, the lower the penalties. If you owe taxes, paying them as quickly as possible will minimize interest charges.
• Apply for an Installment Plan: If you can’t pay your full tax bill, the IRS offers installment agreements to spread payments over time.

Who Should You Consult for Tax Preparation Help?

If your taxes are complicated or you’re unsure about filing, consult a professional. 

• Certified Public Accountants (CPAs): CPAs are highly qualified professionals who can handle complex tax situations and give you personalized advice.
• Enrolled Agents (EAs): EAs are licensed by the IRS and specialize in tax issues. They can represent you if you’re audited.
• Tax Attorneys: If you’re dealing with significant tax issues, such as disputes with the IRS, tax attorneys are legal experts in this field.

How Can Outsourcing with Global FPO Help?

Outsourcing your tax preparation to Global FPO can simplify your life in several ways:

Expert Knowledge: Global FPO’s tax professionals are well-versed in both domestic and international tax laws, ensuring compliance with ever-changing regulations.

Time-Saving: Outsourcing saves you valuable time, allowing you to focus on your business or personal responsibilities while we handle the tax complexities.

Accuracy and Efficiency: Our team ensures your return is prepared accurately, minimizing the risk of errors and audits.

Year-Round Support: Global FPO offers year-round tax support, helping you maintain accurate records and providing advice to reduce your tax liability in the future.

Get Ahead of Tax Season with Global FPO

Tax season doesn’t have to be stressful. By following this step-by-step guide and creating a thorough tax season checklist, you can ensure you’re well-prepared. Start gathering your documents early, maximize your deductions and credits, and stay mindful of key deadlines.
For personalized, expert assistance, consider partnering with Global FPO. Our experienced team can handle your tax preparation, ensuring accuracy, compliance, and efficiency. Get in touch with Global FPO today and make this tax season stress-free!