As is the case almost every year, tax day is apt to sneak up in a hurry. Whether you use tax preparation software or outsource your tax prep to a certified public accountant, here are some key strategies to ensure a smooth and worry-free tax season.<\/p>\n
Check out Morningstar’s tax guide for more information ahead of Tax Day.<\/a>Strategy 1: Use a Tax Checklist or Organizer<\/p>\n Using some type of tax checklist or organizer can help you avoid that paper chase and assemble all the key documents you need in advance; completing your return is then a matter of filling in data. Tax checklists<\/a> abound online.<\/p>\n If you outsource your tax preparation to an accountant, it\u2019s a good bet they send you a tax organizer to work from, either paper or digital; such forms often come prepopulated with your tax data from the previous year. Comparing the current tax year\u2019s numbers to those of the year prior can be a handy way to track trends in your income, interest earned on your investments, and charitable giving, among other items.<\/p>\n Strategy 2: Determine if You\u2019ll Be Itemizing or Taking the Standard Deduction<\/p>\n A key next step in gearing up is to determine whether you\u2019ll be itemizing your deductions or taking the standard deduction.<\/p>\n If you employ a tax advisor to help with your tax return, they may have provided some guidance on this issue based on your 2024 return. If you do your taxes on your own, you can probably get a pretty clear view of whether you\u2019ll itemize or use the standard deduction by taking stock of the major deductible items. For the 2025 tax year, your itemized deductions would need to be greater than the standard deduction amount of $15,750 for single taxpayers and $31,500 for married couples filing jointly for itemizing to be worthwhile. People over age 65 can take advantage of a new senior deduction of $6,000<\/a> that\u2019s available to both itemizers and nonitemizers. (It\u2019s $12,000 for married couples filing jointly if both partners are over age 65.) However, the deduction phases out at modified adjusted gross incomes of more than $75,000 for singles and double that amount for married couples filing jointly.<\/p>\n For most households, the biggest-ticket deductible items include state and local taxes (including property taxes), home mortgage interest, and medical expenditures in excess of 7.5% of adjusted gross income. The good news on the state and local tax deduction is that the maximum deductible amount jumped from $10,000 to $40,000 following the passage of the tax and domestic policy bill last year. Here again, income limits apply: The higher deduction amount phases out for people with modified adjusted gross incomes of more than $500,000, and people with MAGI over $600,000 are stuck with a cap of $10,000 on the amount of state and local taxes that are deductible.<\/p>\n Armed with information about whether you\u2019ll itemize or claim the standard deduction, you can then know whether you need to round up supporting documentation. If you\u2019re claiming the standard deduction, you won\u2019t need to bother, but if you\u2019re itemizing, you will.<\/p>\n If you\u2019re aiming to find documentation of your deductible expenses but can\u2019t track down all of the receipts you need, don\u2019t despair. The previous year\u2019s credit card statements, which you can retrieve online, can help you identify expenses you incurred over the past year; if your credit card company prepares an annual accounting of your expenditures organized by category, that can provide an invaluable tool for your deductible expenses. Healthcare providers and pharmacies are also usually happy to prepare a year-end statement documenting your out-of-pocket outlays over the previous year.<\/p>\n Strategy 3: Round Up Your Investment Documentation<\/p>\n Around this time of year, W-2s and 1099s, which report various types of income you may have received, begin to roll in. Some of these documents may come to you via email, but in other cases, it\u2019s self-serve. Investment firms typically maintain \u201ctax centers\u201d where you can download and\/or print out the relevant forms, including 1099s. Don\u2019t just stuff your 1099s in a folder; take a moment to see if you can learn anything that might help you improve your portfolio. For example, if you owe significant capital gains taxes and you haven\u2019t sold anything, that\u2019s a red flag that you should pay closer attention to \u201casset location\u201d\u2014housing tax-efficient assets like equity exchange-traded funds in your taxable brokerage account.<\/p>\n Strategy 4: Make Your Contributions as Soon as Possible<\/p>\n Your deadline for contributing to an IRA<\/a> or health savings account<\/a> is the same as your tax-filing deadline. But that doesn\u2019t mean you need to wait until you get your taxes in to tackle those tasks. In fact, if you want to deduct your health savings account or IRA contribution on your tax return, you\u2019ll need to make that contribution before you file your return. Ditto if you\u2019re taking advantage of the Saver\u2019s Credit. Note that these deductions are available to you whether you itemize your deductions or not. However, you can\u2019t make an IRA contribution unless you have earned income. You can\u2019t make an HSA contribution unless you\u2019re covered by a qualifying high-deductible healthcare plan; an HSA is also off-limits if you\u2019re covered by Medicare.<\/p>\n Even if you\u2019re not deducting your contribution (you\u2019re making a Roth IRA contribution, for example), there\u2019s an opportunity cost to waiting until the last minute to make these contributions. And those opportunity costs can add up if you\u2019re a serial procrastinator and are a number of years away from retirement. Assuming you invest in something that goes up more often than it goes down, you\u2019ll lower your return by waiting until your tax-filing deadline each year.<\/p>\n Of course, from a practical standpoint, some investors wait to make those contributions because they want to see what their tax bills are first. If that describes your situation, consider an automatic investment program for your future IRA contributions so you\u2019re not at the mercy of your tax bill each year. For the 2026 tax year, investors under age 50 can hit their full $7,500 maximum IRA contribution by putting in $625 a month; those over 50 can max out with a $716 monthly contribution.<\/p>\n","protected":false},"excerpt":{"rendered":"As is the case almost every year, tax day is apt to sneak up in a hurry. 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