Make Filing Taxes in 2025 Easy by Doing These Four Things Now

As the year comes to a close and we all reflect on the good and bad in 2024, the Tax Ladies of the ABA are here with four tax tips to help you and your clients start 2025 off right.

1. Gather Your Tax Records

Don’t wait to prepare your documents until the day you sit down to file. We, as tax professionals, see the downfall of this habit day in and day out. We can tell you this ultimately makes your life harder when it’s time to file your taxes and our life harder when it’s time to help you after you’ve been audited for not filing them correctly. Please, help us help you. Start gathering your information now so that everything will be organized later (when you may or may not be calling us after receiving an audit notification). Make sure you include your W-2 forms from employers, 1099 forms from banks and other payers (including any income you earned as an independent contractor), and other documents, such as receipts and mileage records. Remember, most income is taxable, including unemployment benefits, refund interest, virtual currencies, and rents. Having everything organized may also help you discover tax deductions you may not have remembered.

2. Verify Your Personal Information and Individual Taxpayer Identification Number (ITIN)

Use this time at the end of December and the start of January to verify the contact information that the IRS has on file for you. For example, if you moved in 2024, make sure the address on file is updated. You should also notify the Social Security Administration of any legal name change (e.g., after marriage or divorce). We get so many calls from people whose employer or 1099 issuer did not correctly capture their legal information, so an important tax document is generated with an incorrectly issued name or Social Security number. This just delays things—and creates flags for potential fraud—at the IRS. Correctly setting up your contact and personal information will also help you and your clients get any relevant refunds issued quickly.

3. Consult with a Tax Professional or Attorney Now

Every CPA and tax attorney will be increasingly busier as the year goes on. If you have questions about your tax obligations, the independent contractor or employee status of the people working for you, or any other tax situation, take the time to meet with your tax professionals now while they are not in the midst of their busy season. This will also give you plenty of time to remedy any situation that may come up as a red flag. We, as professionals, may not be able to help you if you come to us right before the filing deadline, which can delay getting you a timely or accurately filed tax return.

4. Make Sure You’ve Withheld Enough Tax

Use the Tax Withholding Estimator to determine the right amount of tax to have withheld from your paycheck. You may find you need to adjust your withholding and submit a new W-4 form to your employer. It’s best to do that now rather than wait until you’re into 2025. You may also consider making estimated tax payments so that you are not saddled with money owed to the IRS in April. If you or a client owe prior liabilities or do not have the cash flow to make a large lump sum payment at the end of the year after you file the tax return, we always suggest paying in estimated taxes. Also, be aware that if you file a tax return and cannot fully pay the liability, you can always create a collection resolution with the IRS, whether that be via an installment agreement or an offer in compromise if you qualify.

Don’t Wait!

Don’t wait until just weeks or days before April 15, 2025, to prepare your tax information for 2024. Use the year-end downtime or the beginning of January to gather records, update your contact details, and review the IRS website for necessary information. Doing this now will make the 2025 tax season a little easier. We want 2024 to go out on a high note, and we want you to start off 2025 with a bang.