We’re in a new year. Maybe that’s a huge sigh of relief for you – you finally made it through 2024 (crawling on hands and knees, but you made it).
Or maybe, a new year is daunting to you. Memories of past failed resolutions make you dread this time of year.
Wherever you’re at, I think it’s important (as in all things) to keep gratitude as our grounding source: Gratitude for what 2024 held, and for what 2025 will bring. And to make the most of this new year, one day at a time.
So, let’s talk about how you can make the most of today, starting with the newly adjusted tax brackets:
I know what you’re probably thinking: Aren’t tax brackets a bit peripheral right now, with 2024 tax filing coming? No. Not really. Here’s why.
If you are pushed into a higher tax bracket this year because of a pay raise, a new job, or even secondary income (Congratulations!), you want to be making smart tax moves now to help lower your tax owed this year. And that’s something we can discuss and plan for at your 2024 filing appointment.
Which you should schedule soon, as I currently have space available in my calendar (and I can’t promise how long that will last). Come a few weeks from now, and we may not be able to have the “2025 tax planning” conversation until after the tax deadline.
But before we meet, I want to assign you a bit of homework as I do with all my Harris County clients: Assembling your filing documents for your taxes. I know, chasing down last year’s paperwork can be tedious. But it will make our meeting (and your entire tax season experience, really) go far more smoothly.
Documents for Taxes My Houston Clients Need to Gather NOW
“You don’t have to see the whole staircase, just take the first step.” – Martin Luther King Jr.
My hope for you for this first quarter of 2025 is simple: That you have the most stress-free tax season possible. And in order for that to happen, you have to start NOW – primarily, get a jump start on gathering your documents for your tax filing.
I’m aware that the IRS won’t start processing forms for another few weeks still (though the exact date is still TBD as I’m writing this). But, I’m sure you’re aware that life tends to get away from you – there’s the kids’ basketball games, and the work deadlines that keep piling up, and so many loads of laundry, and suddenly it’s April 15th.
The IRS won’t take kindly to those excuses (however valid). It’s better not to risk it.
But before you start assembling your documents for taxes, here’s what NOT to do: Don’t just pile papers on your desk and hope for the best. Make a (simple) organizational system – maybe a folder on your computer or a dedicated app. As long as it works for you.
Sort by these basic categories:
– Income documents
– Deduction and credit records
– Personal information
– IRS correspondence
Now that you have a system, you can start assimilating everything into a system.
- Income Documents
These include:
Employees? Your W-2 (sent by your employer by January 31). If you had more than one job, you’ll get multiple.
Self-employed? Form 1099-NEC. If you’ve worked with several clients, you’ll have multiple.
Investors? Income from dividends, interest, or the sale of assets is reported on a series of 1099 forms (1099-DIV, 1099-INT, 1099-B). For example – if you sold stock in 2024, Form 1099-B will show the sale price, but you’ll also need purchase records to calculate your gains or losses.
Retirees? Received Social Security, expect Form SSA-1099. If you withdrew from a retirement account, look for Form 1099-R.
Gig workers? Platforms like Uber, Etsy, or Airbnb may issue a 1099-K if you earned over 600 dollars.
A common mistake here is assuming a form will automatically land on your (physical or digital) doorstep. If you worked a side hustle or sold items online, be proactive about checking with the payer or platform to get all the forms you need.
- Deductions and Credits
Unless you own your own Houston business (or are self-employed), you probably won’t itemize many deductions for personal taxes. Most people claim the standard deduction. BUT… you do want to get together receipts and other records for what you paid in mortgage interest, student loan interest, charitable donations, and medical expenses, among other things.
Specifically for self-employed taxpayers, deductible expenses can include everything from home office costs to internet bills (though there are parameters around these). You’ll definitely want to collect itemized receipts, invoices, and mileage logs with your documents for taxes. Every dollar documented is a dollar you could save.
- Personal Information
Generally, this includes Social Security numbers, birth dates, and bank account details handy for you, your spouse, and dependents. And last year’s tax return too.
Also, consider what life events you went through in 2024. Did you get married (or unmarried)? You’ll need supporting documents for taxes on hand (marriage certificate or divorce decree). Did you grow your family? Having a child, adoption, or even full care of a relative might qualify you for credits like the Child Tax Credit or the Earned Income Tax Credit.
- IRS Correspondence
Bring any and all letters from the IRS (NEVER throw these away). This could include, but isn’t limited to, notices about credits or stimulus payments, IRS Computer Paragraph (CP) notices, audit or exam letters, or state or local tax correspondence.
I know it might seem early to get started on this, but I promise it’s worth it. Because while filing an extension can give you until October 15 to submit your return, it doesn’t delay payment.
But, getting started now can get you faster refunds and make you less likely to get delayed. Plus, you get the bonus of peace of mind going into tax season.
And that’s my goal for you. Pulling together your filing documents for your taxes is the first step towards that calm, AND getting your refund sooner. Now, let’s get your tax filing appointment scheduled. It’s never too early:
calendly.com/postalplustax
Doing tax season right,
Dominic Nguyen