Many Americans despite paying taxes, which should come as no surprise. Even still, Ben Franklin’s adage from more than 200 years ago, “Nothing is certain except death and taxes,” still holds true today: taxes are unavoidable. The sooner you begin, the more prepared you will be for this year’s tax season as well as future years.

1. Double-check that you’ve paid enough tax so far

The IRS anticipates that you will have paid the majority of your entire tax liability before filing your return. Most people’s taxes deducted from their paychecks are sufficient to meet the amount of tax they owe, with some money left over to receive as a refund. However, certain life events, such as marriage or divorce, can cause your old tax withholding to become out-of-date.

Furthermore, if you earn a lot of money from sources other than your work, such as a business, investments, or other sources, any withholding you have may not be sufficient to cover your taxes. If you don’t take care of that, you might as well give up.

You have a few options for resolving the matter. If you’re an employee, you can ask your HR department to increase the amount withdrawn to cover any additional tax liability. If not, you can make up the shortfall by making quarterly anticipated tax payments. In either case, making sure you pay the required amount of tax on time can help you avoid any additional IRS trouble.

2. Gather all of your tax records and documentation

You won’t start receiving tax information for the 2024 tax year until well after 2025 begins, such as a W-2 salary statement or 1099s from investment accounts. However, you may prepare for the avalanche of tax information by ensuring that your address with your employment and investment providers is right. This will ensure that forms arrive on schedule, allowing you to prepare your return faster.

Examining your old tax records to identify who has previously sent you papers can provide you with a checklist to utilize throughout tax season to ensure you’ve received all you need before filing.

Your most recent pay stub may not be an accurate statement of your annual earnings, and it may be missing information that you need to file a complete tax return. You may be forced to file an updated return if you file a return with incorrect or missing information. This might increase the expense of tax preparation and lengthen the time it takes for the IRS to provide a refund.

Get your paperwork in order

Unfortunately, tax season can result in a pile of paperwork. Before you start filing, make sure you have all of your crucial documents available so you can avoid mistakes and claim all of the deductions you’re eligible for. You may need to submit the following documents and information:

• W-2 forms, 1099 forms, and other tax forms that reflect earned income
• Keeping track of charitable donations
• Returns from the previous fiscal year
• Mortgage interest and property taxes paid records
• Expenses for daycare or medical treatment

Consult a tax specialist to establish the specific documents you’ll require to finish your taxes.

3. Renew any tax identification numbers that are about to expire

The majority of taxpayers use their Social Security numbers to file their taxes throughout their lives, but those who do not qualify for one must obtain an individual taxpayer identification number, or ITIN. These numbers expire in groups, with the 83 through 87 middle digits expiring at the end of 2024. ITINs also expire after three years if they haven’t been used on a tax return.

If your ITIN is about to expire, you can renew it today by filling out Form W-7. Once you’ve filed the proper form, the process usually takes seven to eleven weeks to complete. The sooner you begin, the sooner you will have a number that will assist you in obtaining your goal.

4. Prepare to file and receive your reimbursement via electronic means

Every year, the IRS promotes its automated services, which are currently used by the great majority of taxpayers. Electronic filing is quick and secure, and it improves accuracy and efficiency. You’ll obtain your refund money faster if you use direct deposit to have refunds sent directly into your bank account.

For taxpayers with incomes under $66,000, free electronic filing programs are available. Anyone with a bank account can use direct deposit. If at all possible, use e-filing and direct deposit to avoid the longer delays associated with paper return processing and refund check distribution.

Make Provisions for Future Tax Seasons

It’s never too late to begin implementing tax-saving tactics into your long-term financial strategy. Active tax management throughout the year may enable you to save more for your goals and keep more of what you’ve earned. Consider the following scenario:

• Tax-loss harvesting is a strategy for offsetting capital gains by selling shares or assets strategically to register losses, some of which can be carried over from previous years. 5
• Allocating higher-yield assets to a tax-deferred or tax-exempt account is referred to as tax-aware asset location, and it can assist in reducing your current taxable income while also increasing your after-tax returns.
• Municipal bonds, for example, are normally tax-free at the federal level (and, in some situations, at the state and local level). Consider tax-advantaged exchange-traded funds (ETFs) or separately managed accounts as well.

As the year draws to a close, getting a head start on tax season may not seem like the best way to spend your time. However, it will be time well spent, and it may help you prevent some unpleasant surprises in the future.