11 January Tax Prep Steps To Do Now To Make Filing Easier

As we celebrate a new year, it’s important to remember that something else is right around the corner: tax time.

Prepping now for the new tax season is crucial to helping you eliminate some money stress.

There are some obvious things you should do — like getting your paperwork together — as well as more nuanced preparation moves. Here are some things you should do in January to prepare for filing a return.

The tax filing deadline for 2025 is April 15. That might feel like it’s a ways off, but it’s really just around the corner.

Do you plan to file as soon as possible? Or will you need to ask for an extension beyond April 15?

Don’t wait until the last minute to decide.

Not everyone needs a tax professional, but many of us find it’s a good idea to hire one. A pro generally knows more than mere mortals when it comes to the tax code.

They’re also likely to be in increasing demand as the tax deadline looms. As such, it makes sense to reach out to your tax professional, check their timeline, make sure you know what documents they need, and confirm how to deliver them.

Miscommunication can lead to frustration on both sides. Setting expectations early helps avoid issues later.

You don’t need to be Indiana Jones to track down sought-after artifacts. In this case, that would be your tax returns from last year.

It’s not strictly necessary to find them, but these returns can offer helpful reminders of what you filed last year. Plenty of tax software providers can upload prior-year returns, saving you from having to manually enter information.

Having your returns on hand ensures a smoother, more efficient filing process.

Make sure you have important personal numbers at your fingertips as you prepare your return.

These include your Social Security Number (SSN) and your individual taxpayer identification number (ITIN). In regard to your ITIN, it has to be renewed if it has expired.

Don’t forget about your bank account numbers — especially if you plan to get your refund directly deposited or to pay any tax you owe through the account.

The numbers on your W-2 can be either a bummer or reassuring when it comes to career choices, since it shows you how much you’ve made over the last year.

In most cases, your employer has to file Form W-2 if they paid you more than $600 over the course of the year. So, watch for this form in the mail.

Expect to receive a Form 1099 if you earned miscellaneous or additional income. For example, you will likely get this type of form if you worked as an independent contractor and earned at least $600 from a company.

There are several types of these forms, which can be related to dividends that were paid to you, debts you settled for less than you owed, and more.

Tax deductions offer a great opportunity to reduce your tax bill. Fortunately, the IRS offers a lot of them. So, make sure you take and document them.

Some deductions, like retirement contributions or educator expenses, can be listed directly on Form 1040. Others require itemizing on Schedule A. Popular deductions include medical expenses exceeding 7.5% of adjusted gross income, property taxes, mortgage interest, charitable donations, and state/local taxes.

Always keep receipts or required forms, such as the 1098-T for qualified educational expenses or the 1098 for mortgage interest. Proper records ensure smooth filing and help reduce your tax bill.

Tax credits are the more valuable counterparts to deductions, since they directly reduce your tax bill dollar-for-dollar. However, documentation is essential.

Popular credits include:

• American Opportunity Tax Credit and Lifetime Learning Credit related to education costs
• Child Tax Credit for children who are your dependents
• Saver's Credit for contributions to a 401(k), IRA, or similar plan

If you feel like April 15 is creeping up fast, there is no reason to panic: Filing for an extension is perfectly acceptable.

It’s wiser to submit a thorough, accurate return later than a rushed, error-filled one in the spring. Review your tasks and decide if filing by April is realistic. If not, plan for an extension now.

The IRS calls direct deposit the “best way” to get your refund. It’s also safer, as there is no way someone can steal your refund check from the mail.

Provide your bank account information when filing your tax return to ensure you get your refund quickly and safely.

Who doesn’t like getting some money back from Uncle Sam? If you expect a tax refund, you will have several options for what you can do with that money.

For example, you can pay it forward toward next year’s taxes, or get it as a mailed check or direct deposit.

You can also split the refund across multiple direct deposit accounts simply by filling out Form 8888. Just make sure you talk to your tax pro if you have any questions.

Filing taxes requires a good strategy, whether you use a professional or file on your own. Tax time isn’t necessarily fun for many of us, but it doesn’t have to be a hassle, either.

You can look at the season as a chore, or you can view it as a good opportunity to make smart money moves.

This checklist outlines common preparation steps, but everyone’s taxes are unique. Customize the list so it fits your circumstances and helps ensure a smooth tax season.