End-of-Year Tax Prep Checklist
It’s never too early to start preparing for tax season. Being proactive now can save you time, stress, and potentially even money when it’s time to file. Here are some key tasks you can tackle to ensure you’re ready:
Check Your Withholding
Did you receive a larger-than-expected tax refund or owe more than you anticipated this year? If so, it’s a good idea to review your withholding. Adjusting your withholding ensures you’re paying the correct amount of taxes throughout the year to match your tax liability.
While making changes to your withholding at the end of the year won’t significantly impact your tax return for this year, it can help set you up for better results next year. Use the IRS Tax Withholding Estimator or consult with a tax professional to determine the right amount to withhold.
Verify Your Address
If you moved this year, confirm that all employers, financial institutions, and issuing agencies have your correct mailing address. Tax documents such as W-2s, 1099s, and other forms are typically mailed in January. Ensuring they have the correct address can help avoid delays in filing your return.
Review Credits and Deductions
Taking some time to identify which credits and deductions you may qualify for will help you be prepared with the necessary documentation and receipts to avoid scrambling during tax season. Examples include:
Childcare Expenses: Collect receipts or statements from childcare providers to claim the Child and Dependent Care Credit.
Charitable Donations: Gather proof of cash or non-cash charitable contributions to eligible organizations. For non-cash donations, ensure you have a detailed list of items and their fair market value.
Other common deductions include medical expenses if you itemize on your tax return, education costs, and home office expenses if you’re self-employed.
Maximize Retirement Contributions
Tax-advantaged retirement accounts like Individual Retirement Arrangements (IRAs) and 401(k)s offer valuable deductions. Consider contributing the maximum allowable amount before the year ends. For traditional IRAs, you can deduct contributions (subject to income limits), which may reduce your taxable income.
Take Required Minimum Distributions (RMD)
If you’re 73 or older and have certain retirement accounts, you must take your Required Minimum Distributions (RMDs) by December 31. Failing to withdraw the required amount could result in a steep 25% excise tax on the undistributed portion. Check with your financial institution to calculate and process your RMD in time.
Organize and Store Relevant Documents
Start a dedicated file folder (physical or digital) to collect all necessary tax-related documents as they arrive. This includes:
W-2s from employers
1099s for freelance work, interest, or investments
Proof of deductible expenses
If you’re itemizing deductions, keep receipts and documentation for expenses like medical bills, property taxes, or large purchases subject to sales tax. A little organization now can prevent major headaches later.
Simplify Your Tax Season
Preparing for tax season doesn’t have to be overwhelming. By tackling these tasks now, you’ll be in a great position to file your return accurately and on time. Whether it’s reviewing your financial documents or making last-minute contributions, every small step counts toward a smoother tax season.
Need assistance with your taxes? We’re here to help! Whether you prefer in-office appointments, drop-off services, or the convenience of online tax filing, we’ve got you covered. Contact Northside Tax Service at (360) 922-0235 today to get started and experience a hassle-free tax season!
