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How to Prepare for Your 2024 Tax Season: Your 8-Step Checklist

How to Prepare for Your 2024 Tax Season: Your 8-Step Checklist

February 12, 2024

As the 2024 tax season approaches, it's time to start preparing. Here are eight steps you can take to prepare for the 2024 tax filing deadline on Monday, April 15. 

1. Understand Your Filing Status

Knowing your filing status is crucial, as it determines your 2024 tax rates, standard deduction, and eligibility for various credits and deductions. The IRS has five main filing statuses that all taxpayers fall under:

  • Single
  • Head of household
  • Married filing jointly
  • Married filing separately
  • Qualifying widow/widower with dependent child

If you’re not sure, the IRS offers a helpful tool to help you figure out your filing status. Answer a few questions, and it will determine the filing status that aligns with your situation.

2. Ensure Your Personal Information is Updated

It can be easy to overlook the importance of keeping your personal information up-to-date with the IRS and the Social Security Administration. If you've recently moved, gotten married, divorced, or legally changed your name, don’t forget to update this information promptly. 

Keeping your information updated ensures you’re able to receive important communication and helps you avoid any complications.

3. Gather and Organize Your Tax Documents

While not necessarily tax documents, it can be helpful to have the following documents on hand to make filing easier: 

  • Last year’s taxes: Both your federal and — if applicable — state return. This can give you a refresher on what deductions and credits you took last year.
  • Social Security and/or tax ID numbers: Have these tax identification numbers ready for yourself, your spouse and all dependents (which can include children, elderly parents, or disabled adults in your care). If anyone you’re filing for has been issued an identity protection PIN by the IRS, have this handy as well.
  • Bank account numbers: If you opt to receive a refund or pay your tax bill directly through your bank account, have your routing and account numbers ready.

Income Documents

These are some of the most common income documents you might need for the 2024 tax season, depending on your financial situation. 

W-2 forms: A W-2 details the income from your job during the last tax year. If you were employed full- or part-time in 2023, your employer should have sent your W-2 by January 31.

1099 forms: 1099s detail additional income you received throughout the year. There are many types of 1099s, ending with different suffixes to indicate the type of payment you received. If you didn't pay quarterly estimated taxes on this income in 2023, you'll have to do so when you file your return in April. Common 1099s include:

  • A 1099-NEC for contract work.
  • A 1099-MISC, which summarizes income from gameshow winnings, royalties or rentals.
  • A 1099-K records income of $20,000 or more for goods and services via a third party (like PayPal or Venmo).
  • Investment earnings show up on 
    • 1099-INT for interest
    • 1099-DIV for dividends 
    • 1099-B for broker-handled transactions

Form 1098: If you're a homeowner, this form will include information about the mortgage interest you paid in 2023.

Form 1098-E: A student loan interest statement, which includes the amount of student loan interest you paid in 2023.

Form 5498: This details the amount you contributed in 2023 to an individual retirement account (IRA).

Form 1095-A: The Health Insurance Marketplace statement, which allows individuals who enrolled in a qualified health plan in 2023 to either

  1. Get the premium tax credit to offset their healthcare costs
  2. Reconcile the credit on their returns with any advance payments they've received

Letter 6419: Provides the total amount of advanced child tax credits an individual or couple received so they can claim the remaining credit. Only applicable if you have a child or dependent under 17.

Business expenses: If you're self-employed or own a small business, keep receipts and credit card statements to track your expenses accurately. There are a couple of easy ways to get this information:

  1. If you use bookkeeping software that is linked to your business bank account, you can export this information and use it to file your return. 
  2. You can download your monthly business credit card statements or create a spreadsheet to list all your annual business expenses. 

4. Will You File Yourself or Hire a Tax Preparer?

The decision to file your taxes independently or seek professional help depends on the complexity of your financial situation and whether or not you can afford professional help. Tax filing software can be a cost-effective and efficient option for straightforward cases. If you aren’t sure, consider the help of a tax professional this 2024 tax season. 

5. Maximize Your IRA Contributions

Contributing to Individual Retirement Accounts (IRAs) can lower your taxable income in the 2024 tax season, so be sure to maximize your contributions before the filing deadline in April. 

The IRA contribution limits for 2024 are $7,000 for those under age 50 and $8,000 for those age 50 or older.

6. Understand Where You Can Claim Deductions and Credits

Understanding Deductions

Deductions help reduce your taxable income, which generally means a lower tax bill. Potential deductions are the main reason documentation is so important; clear records not only protect you if you’re audited but can help you cut your tax bill by helping you remember what to claim.

Here are some popular tax deductions that you might be eligible for in the 2024 tax season:

  • Retirement account contributions: You can deduct IRA or self-employed retirement account contributions, as long as you stay within the contribution limits.
  • Educational expenses: Students can claim deductions for tuition and fees, as well as interest paid on student loans.
    • Form 1098-T shows your education transactions.
    • Form 1098-E has details on your student loan.
  • Medical bills: If medical costs total more than 7.5% of adjusted gross income, then they can be claimed for deductions.
  • Property taxes and mortgage interest
    • Form 1098 will detail if you have an amount of your mortgage escrowed for property taxes, which can be deducted.
  • Charitable donations
  • Classroom expenses: School teachers and other eligible educators can deduct up to $300 spent on classroom supplies.
    • This amount can be up to $600 if both spouses are educators and filing jointly.
  • State and local taxes: You can deduct various other taxes, including either
    • State and local income tax 
    • Sales taxes (up to $10,000, including property taxes)

Understanding Credits

Tax credits are similar to deductions, but they provide dollar-for-dollar cuts in any tax you owe. You still need documentation to claim them. Here are some popular tax credits:

  • American opportunity and lifetime learning credits: Similar to the tuition and fees deduction, these education-related credits require Form 1098-T.
  • Child tax credit: The standard child tax credit is worth up to $2,000 per child for tax year 2023. You might also be eligible for credits if you adopted a child in 2023.
  • Retirement savings contributions credit: Also known as the saver's credit, this credit requires contributions to a 401(k), similar employer-sponsored plan or an IRA to be claimed.

7. Consider If You Might Need to File an Extension

Life can get busy, and important tax documents might be delayed. Filing for an extension in the 2024 tax season can provide you with a six-month buffer, allowing you time to gather all necessary information and file your return accurately. 

However, keep in mind that interest may accrue on owed taxes during the extension period.

8. Adjust Your Withholding for 2024

Review your W-4 withholding to ensure you're withholding the correct amount from your paycheck. The IRS Tax Withholding Estimator can help you determine the appropriate withholding for your situation.

Step into the 2024 Tax Season with Confidence

By following these steps and staying proactive, you can navigate this tax season with confidence. Starting early and staying organized can make the process much smoother and less stressful. 

If you have any questions, don't hesitate to reach out to a tax professional or visit our office. We can help you incorporate tax-efficient strategies into your financial plan in 2024. 

Reach out today: