How to Prep for Tax Season

Tax season can feel like a daunting time of year, but with a little preparation, it doesn’t have to be overwhelming. Getting your documents organized, understanding important deadlines, and maximizing your deductions and credits are key steps toward a smoother, less stressful filing experience. 

Whether you're filing on your own or working with a tax professional, a little planning ahead can help ensure you’re fully prepared to file accurately and on time—while also minimizing your tax liability. In this guide, we’ll walk you through essential steps to take now to get ready for tax season and set yourself up for success.

Get Your Documents in Order Ahead of Time

Keep track of documents as they come in—have your docs ready to go before it's time to file. Stay organized by promptly tracking incoming tax documents, and ensure a smooth filing process by having all necessary documents ready in advance.

Use a checklist to help you get organized: Leverage a tax document checklist to help you get organized and stay on track.  If you're working with a tax preparer, share the checklist with them.

Some common documents you’ll likely need include:

• Social security number or tax ID number

• Foreign reporting and residency information—if applicable

• Copy of your previous tax return

• Routing and account numbers: If you're owed a refund, you’ll need this to receive it by direct deposit. If you owe taxes, you’ll need this to pay your balance. 

• W-2: For the overwhelming majority of Americans, their income statements come in the form of a W-2, which is the document used to report wages paid to and taxes withheld from employees. If you had more than one job in 2023, you'll need your W2 from each of those employers. 

• For those self-employed, things like 1099s, Schedules K-1, records of estimated tax payments made (Form 1040-ES), and income records to verify amounts not reported on 1099-MISC or 1099-NEC are important to have. 

• If you had interest income or capital gains, you'd need: Forms for interest and dividend income (1099-INT, 1099-OID, 1099-DIV)

• For retirees: Pension/IRA/annuity income (1099-R), traditional IRA basis (i.e., amounts you contribute to the IRA that were already taxed), Social Security/RRB income: SSA-1099, RRB-1099

Make Time to Maximize Contribution Limits and Deadlines

Making contributions to tax-deferred accounts is one of the simplest ways to reduce your tax liability while also investing or saving for health-related expenses. However, not all of these account types are created equal, and they come with different deadlines. 

• For pre-tax retirement accounts like 401(k), 403(b), and 457s, Dec 31st is the last day to make contributions and maximize up to the limit of $23,000.  For IRAs, the contribution deadline extends up until next year’s tax filing deadline. 

• HSAs also come stamped with a Dec 31st deadline, as do charitable contributions. 

Know Your Deductions, Credits, and Write-Offs

Broadly speaking, tax deductions come in two flavors — the standard deduction and itemized deductions. The standard deduction is a set amount by which all filers can reduce their taxable income. For 2023, that amount is $14,600 for single filers, $21,900 for heads of households, and $29,200 for those married filing jointly. Next year, those deductions increase to $15,000, $22500, and $30,000.

Itemized deductions, on the other hand, are exactly what they sound like. Instead of taking the lump-sum standard deduction, filers can choose to itemize certain eligible deductions based on their tax situation and expenses.

It's estimated that about 90% of filers choose to take the standard deduction. This is because you can't take both the standard deduction and itemized deductions, and unless your itemizations exceed the SD, they are simply not worth it.

If you think your tax situation might be on the fence, though, it's important to give yourself enough runway to prepare and do some math to figure out which option is best for you.

What About Tax Credits?

Deductions also aren't to be confused with tax credits, which they can coexist with. Filers can take tax credits for certain eligible events or expenses, and these credits reduce their taxes owed in direct proportion to their value. I.e., a $1,000 credit is good for a $1,000 reduction in taxes owed. In many cases, this can help facilitate a refund.

The same applies here—while tax credits are different, giving yourself time to research and understand what you might qualify for can help reduce your tax bill or increase your tax refund.

Here are some of the most common tax credits you might qualify for.

• Saver’s Credit

• Solar Tax Credit

• Electric Vehicle (EV) Tax Credit

• American Opportunity Tax Credit

• Energy Efficient Home Improvement Tax Credit

• Child Tax Credit or Child and Dependent Care Credit

• Earned Income Tax Credit: The Earned Income Tax Credit (EITC)

Charitable Donations 

For itemizers who donated, you have the potential to deduct the value of your charitable contributions—whether in cash or property, like clothing or a car—from your taxable income. As per the IRS guidelines, you can typically deduct up to 60% of your adjusted gross income. Make sure your donations are worth it, though. In general, you won't get a tax deduction for donations that are less than your standard deduction unless you have enough total itemized expenses to exceed your SD.

Retirement Contributions

Arguably the most important and most common method of lowering your tax bill, contributions made to tax-deferred retirement accounts are not to be overlooked. For the tax year 2024, filers can deduct up to:

• 401(k), 403(b), 457: Standard contribution limit: $23,000; catch-up contribution (age 50+): $7,500; total limit with catch-up: $30,500; employer contributions are additional, with a combined limit of $66,000 ($73,500 with catch-up).

• Traditional IRAs: Standard contribution limit: $7,000; catch-up contribution (age 50+): $1,000; total limit with catch-up: $7,500; no employer contributions and deductibility may be limited by income if covered by a workplace retirement plan.

Don’t Wait Until The Last Minute

According to the IRS, almost a quarter of Americans wait until the last two weeks to file their taxes. This can easily create an atmosphere of stress and rush around filing taxes, often forcing filers to make less-than-optimal decisions that cost them money. 

But also, don’t file too early: “Many taxpayers want to file quickly to get their return quickly. Sometimes that leads to accidentally filing before important paperwork arrives - paperwork regarding charitable deductions, student loan interest, etc. Without these documents, you may end up getting a smaller refund than you deserve and have to amend your return later to get the full refund.” — Matt Shapiro, Origin Certified Financial Planner®

Basically—balance is key. Start preparing as early as you can, make sure everything is in order, and then be prepared to file ahead of the due date. 

Other Considerations

• Make sure you don’t qualify for free filing before you pay: Many tax services are advertised as free, but many filers quickly find themselves disqualified when they mention a 1099 or the sale of stocks. Some people do qualify, though, but it’s best to be sure before you start the filing process and come up against a fee you weren’t prepared to pay. If you’re looking for a tax preparation service without the hidden costs, you can file your federal and state returns with Origin for just $12.99/mo. We accept all tax scenarios and even let you talk to our team of tax experts at no additional cost.

• Take some time to learn: Understanding taxes reduces financial anxiety and helps individuals confidently navigate tax season. By learning about tax strategies, deductions, retirement plans, and other financial topics, tax filers can make more informed decisions and maximize their tax benefits.

• Consider working with a financial planner: If navigating taxes and maximizing deductions feels overwhelming, working with a financial planner can provide valuable support. A professional can offer personalized advice, help you understand complex tax laws, and ensure you're making the most of available opportunities, giving you peace of mind during tax season.

• A bonus tip for next year’s tax preparation: Make proactive decisions throughout the year. As you become more aware of the impact taxes have on your finances, make sure to use that knowledge to make prudent money moves in 2025 that lend themselves to tax advantages.

How Origin Can Help

If you're looking for an easier, more affordable way to file your taxes, Origin has you covered. 

In addition to all the features and services that help you track your money and grow your wealth, Origin has also teamed up with Column Tax to bring members free federal and state tax filing. All you need to do is upload last year’s returns, follow the guided flow, and rest easy knowing your returns are backed by our maximum refund and 100% accuracy guarantee.

Looking for some additional help filing your taxes? For the 2024 tax season, our members can purchase expert-guided assistance to reduce the burden of filing and get a professional stamp of approval before you submit. 

But that’s just the start—Origin also offers a comprehensive Learn portal where you can explore tax-related topics and financial education at your own pace. Along with that, our platform provides a holistic view of your finances, giving you the tools to budget, save, invest, and plan for a more secure financial future.