No one loves tax season; pulling together the forms and information is drudge work and not particularly fun. However, the sooner you start pulling everything together, the more time you and your accountant, if you work with one, have time to ensure your return is thorough and you receive the deductions you qualify for.

organize your information

Many accountants have an online portal such as Tax Caddy, with questions and prompts to upload the documents needed to complete your return. It’s helpful to store that information in one place so it’s easy to upload. Here are some of the documents you should be gathering:

Employment compensation

• W-2s and any other earned income-related forms.

Retirement income and savings

• 1099-R forms reflecting income from retirement plans and annuities.
• SSA-1099 if you receive Social Security income.
• Records of contributions to retirement accounts and health savings accounts.

Investment and business income

• 1099s and other statements for investment income, dividends, and capital gains.
• K-1s from trusts or businesses.
• Business income and expense documents if you own a business or rental or are self-employed.

Real Estate

• Property tax bills and 1098 form showing mortgage interest paid.
• 1099-S and cost basis documentation if you sold real estate during the year.

Deductions

• 1098-C – you should receive this if you donated an automobile, boat, or airplane.
• Charitable receipts
• 1098 mortgage interests

Other income and deductions

• Information on alimony paid or received (for a divorce finalized prior to 2019).
• State and local taxes. This is capped at $10,000 for 2024, but this may change as part of negotiations over the extension of the Tax Cuts and Jobs Act.
• Casualty and theft losses, though they must meet specific criteria.
• In some states, contributions to state 529 or other college savings plans are deductible.
• Childcare and adoption costs may be deductible.
• Medical bills, although only the amount over 7.5% of your adjusted gross income is eligible for deduction.

Review everything with your accountant

If you’re unsure whether your income is taxable or your expenses may be deductible, check in with your accountant. It’s helpful to do this as soon as possible, as the closer they get to the April 15 deadline (or October 15 if you’re extending) the more difficult it will be for them to make adjustments and answer questions.

Schedule Time to Plan for the Current Year

If possible, have your accountant provide a rough estimate of what, if anything, you might owe on April 15 for your 2024 return and the first quarterly estimated payment for 2025. Your accountant will generally provide you with vouchers for the remaining quarterly estimated payments due throughout the year on June 16, September 15, and January 15. Avoid last-minute scrambles and make sure you have cash set aside to cover these payments.

While there are many things you can’t adjust retroactively to change your 2024 tax outcome, there are things you can do to manage your tax bill in the current year, including:

• Work with your advisor to review your investment portfolio to ensure it’s allocated across accounts in the most efficient manner possible.
• Gift positions with high gains to charity or to someone in a lower tax bracket.
• If you are likely to have an event that will generate significant capital gains this year, such as the sale of an asset, review other investments for opportunities to harvest losses that can be used to offset those gains.
• If you’re in a high tax bracket, place assets that produce taxable income in a tax-deferred account.
• Confirm that you are maxing out your retirement plan contributions and see whether you may be eligible for a mega Roth conversion contributions.

Schedule time to review your 2024 return with your advisor or accountant to look for opportunities to reduce taxable income in the future. Save receipts and other documentation in a Tax folder so it’s all easily accessible this time next year.

Plan for the future

Think ahead and work with your advisors to determine whether there are planning techniques that could help reduce your – and your estate’s – taxes in the future. This could include estate planning and planning for changes in tax legislation with trusts, gifting, and other strategies.

By staying organized throughout the year, maximizing tax-advantaged accounts, and planning with your professional advisors, you can mitigate both the hassle and expense of tax season.

If you have any questions about tax season and additional preparations, the Fulcrum team is here to help you.