Although tax season is still on the horizon, it’s wise to avoid procrastination. Taking proactive steps now can alleviate the last-minute rush that often occurs as the deadline approaches. Gathering essential documents and adhering to year-end schedules will set you up for a smoother filing experience.

Gather and Organize Your Financial Documents

Now is a great time to kickstart your organization for tax-related paperwork. While official forms from employers and financial institutions won’t be available until late January, compiling a checklist of required documents can streamline the process. This list should include last year’s tax return, income summaries like W-2s and assorted 1099s, along with documentation for credits and deductions—such as childcare, healthcare, and educational expenses—as well as records of charitable donations and mortgage interest. Download and store relevant pay stubs and account statements in a designated folder for easy access.

If you are self-employed or a freelancer, begin collecting receipts for tax-deductible expenses, estimated tax payments, and documentation regarding business income.

Evaluate Any Changes to Your Financial Situation

Significant life alterations can necessitate last-minute tax adjustments, particularly with regards to your withholding as the new year approaches. Some common life events that can impact your taxes include:

• Entering or exiting a marriage (which may change your tax filing status).
• Welcoming a new child or dependent into the family.
• Purchasing a home or relocating.
• Changing jobs or experiencing job loss.
• Significantly altering your income level.
• Retiring from the workforce.
• Declaring bankruptcy.

Utilize the IRS’s Tax Withholding Estimator to assess whether adjustments to your employer withholding are necessary (if you are a W-2 employee, this could involve updating your Form W-4). Additionally, consider planning for anticipated changes in 2025, such as bonuses, promotions, or similar significant life events.

Remind Yourself About the Final Q4 Estimated Payment

For those who are self-employed, including contractors and freelancers, it’s required to make quarterly estimated tax payments. The last payment for the 2024 tax year is due by January 15, 2025. Missing payments throughout the year could lead to penalties unless you owe less than $1,000 when filing or have already settled either 90% of your tax obligation for the current year or 100% of the tax owed from the previous year.

Plan a Consultation with Your Tax Professional

If professional tax assistance is part of your strategy, it’s wise to arrange an end-of-year consultation to review any modifications in your tax landscape. This meeting can also help strategize ways to enhance your return, such as making further contributions to tax-sheltered accounts, boosting charitable donations, or uncovering additional credits or deductions that might apply.

Your tax advisor may offer these consultations at little to no cost as part of their service. While scheduling these discussions, consider setting up any needed appointments prior to the April filing deadline.