Five tips to get ready for tax season

Tax season can seem daunting, but with the right preparation, it can be a hassle-free process. Whether you're filing your taxes for the first time or you've been doing it for years, staying organized and informed is key.

Use these top tips to get ready for the 2024 tax season.

Tip 1: Start early

 One of the best ways to avoid stress during tax season is to start early. Don't wait until the last minute to gather all the necessary documents. Start collecting your W-2s, 1099s, and any other necessary tax forms as soon as they come in. This will leave less room for errors and give you ample time to review and correct anything if needed before you file.

Tip 2: Organize your documents

Keeping your financial documents organized is crucial for a smooth tax filing process.  Consider creating a dedicated folder for all your tax-related documents. Having everything in one place will make it easier when it's time to file.

Here’s a checklist to get you started:

• Social Security number for yourself, and if needed, your spouse and dependents
• W-2 form
• 1099 form
• Retirement account contributions
• Property taxes and mortgage interest
• Charitable donations
• State and local taxes you paid
• Educational expenses
• Unreimbursed medical bills
• Last year’s federal and state tax returns

 Tip 3: Be aware of any changes

 Each year brings potential changes to tax laws that can affect how you file and what you owe. One significant change this filing season is the increase in standard deductions. For single taxpayers, the standard deduction has increased to $13,850, while for married couples filing jointly, it's now $27,700.

Another change to be aware of is the restart on student loan payments after the pandemic pause ended in 2023. The interest for most student loans is tax-deductible, so if you resumed making payments, check your student loan tax information statement for the total amount of interest paid up until December 31, 2023.

Additionally, if you purchased an electric vehicle in the past 12 months, you can claim a federal tax credit of up to $7,500 for a new electric vehicle, or up to $4,000 for a used one. To qualify, your modified adjusted gross income must be below the following thresholds:

• $300,000 for married couples filing jointly
• $225,000 for heads of household
• $150,000 for all other filing statuses

Understanding these changes can help you maximize your deductions and credits.

Tip 4: Decide if you need professional help

Assess whether you want to do your taxes yourself or hire a professional. If you do it yourself, there are plenty of tax preparation options available, including software programs. If your adjusted gross income is $79,000 or less, you may be eligible to use the IRS Free File program.

For complex situations or more tailored guidance, you may choose to hire a tax professional, such as an accountant, enrolled agent, or tax lawyer. Tax professionals stay up to date on the latest tax laws and can provide expert assistance for your specific situation.

Tip 5: Mark your calendar

Know the tax filing deadline and aim to submit your taxes well before this date. The deadline for 2024 is Monday, April 15. If you’re a resident of either Maine or Massachusetts, you’ll have until April 17 to file, because April 15 and April 16 are both state holidays.

If you file for a tax extension, the deadline is October 15 for both individual and self-employed filers. But remember, an extension to file is not an extension to pay any taxes owed. You’ll still need to make at least an estimated tax payment by April 15.

Preparation is key

Doing your taxes doesn't have to be a source of stress. By starting early, getting organized, and staying informed, you can navigate tax season with ease. Remember, planning ahead isn’t just about meeting deadlines. It's about ensuring you're taking all the necessary steps to minimize your tax liability and maximize your potential refund. So why wait? It’s never too early to start prepping.

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