Tax Season Preparation: Key Steps to Begin the Year Confidently
As the new year begins, this is an ideal time to prepare for the upcoming tax season and ensure your financial information is well organized. Taking a proactive approach now helps reduce stress later and allows you to identify planning opportunities that may benefit your overall financial strategy.
Start by gathering the key documents you will need for filing, including W-2 and 1099 income forms, investment statements, mortgage interest records, charitable donation receipts, and any materials related to business or freelance income. Having these documents ready early will streamline the process once tax filing officially opens.
This is also an appropriate time to review your retirement contributions. Confirm whether you should make additional IRA contributions for the prior year and ensure your workplace retirement plan contributions align with your goals for 2025. Early adjustments can enhance long-term savings outcomes.
If you realized capital gains or harvested losses last year, reviewing these transactions now will help you understand their impact on your return. Likewise, organized charitable giving records can help determine whether itemizing deductions may be beneficial for you this year.
For clients who receive irregular income or make quarterly estimated payments, it is important to confirm that payments made last year are accurately documented. W-2 employees may wish to review their paycheck withholding to avoid significant over- or under-payment as the year progresses.
Finally, the beginning of the year provides a valuable opportunity to consider tax-efficient strategies for 2026, such as maximizing HSA or FSA contributions, evaluating Roth conversion opportunities, or reviewing the tax efficiency of your investment allocations.
Preparing now ensures a smoother tax season and positions you to take full advantage of available planning strategies. If you would like assistance reviewing your documents or evaluating tax-efficient opportunities for the year ahead, please feel free to contact our office.
