Free Tax Prep Checklist: 7 Things to do Before You File

Tax season is upon us once again. While it may not be the most thrilling time of the year, being prepared can make the process smoother and potentially save you money.

Here’s an updated checklist to help you navigate your 2024 tax return:

1. Retrieve Last Year’s Tax Return

Start by locating your 2023 tax return. This document serves as a valuable reference, reminding you of the forms you filed and the deductions or credits you claimed.

If you’re e-filing this year, you’ll need your prior year’s Adjusted Gross Income (AGI) to validate your return. Most tax software can import this information automatically if you used them previously.

If you can’t access your return, you can request a transcript from the IRS for free, though obtaining a full copy will cost $50.

2. Confirm Your Filing Status

Your filing status significantly impacts your tax bracket and eligibility for certain deductions and credits. The five filing statuses are:

• Single
• Married Filing Jointly
• Married Filing Separately
• Head of Household
• Qualifying Widow(er) with Dependent Child

Life events such as marriage, divorce, or having a child can change your filing status. For instance, if you were married or divorced in 2024, your status might have changed. Tax software typically guides you through a series of questions to determine the correct status.

3. Stay Informed About Tax Law Changes

Tax laws evolve, and staying updated ensures you take advantage of new benefits and remain compliant. Notable changes for the 2024 tax year include:

• Standard Deduction Increase: The standard deduction has risen to $14,600 for single filers and $29,200 for married couples filing jointly.irs.gov
• Retirement Contributions: Contribution limits for retirement accounts have increased. For example, the IRA contribution limit has risen, allowing you to save more pre-tax dollars.
• 1099-K Reporting Threshold: If you received payments over $5,000 through third-party platforms like PayPal or Venmo, you’ll receive a 1099-K form, and this income must be reported.wsj.com

4. Reflect on Life Changes

Major life events can influence your tax situation:

• Having a Child: You may now qualify for the Child Tax Credit.

• Buying a Home: Mortgage interest and property taxes might be deductible.

• Education: Tuition payments or student loan interest could offer deductions or credits.

Tax software will prompt you about such events to ensure you don’t miss potential benefits.

5. Maximize Retirement Contributions

Contributing to a Traditional IRA or 401(k) reduces your taxable income. For the 2024 tax year, you have until April 15, 2025, to make contributions.

If you haven’t maxed out your contributions for 2024, consider doing so before filing your return.

6. Gather Essential Documents

Organize all necessary documents, including:

• Personal Information: Social Security numbers for you and your dependents, and your bank account details for direct deposit.

• Income Documents: W-2s, 1099s, investment income statements, and records of any other income sources.

• Deduction Records: Receipts for charitable donations, medical expenses, mortgage interest statements, and records of state and local taxes paid.

• Tax Payments: Documentation of any estimated tax payments made during the year.

Related: Commonly Overlooked Tax Deductions

7. Choose the Right Tax Preparation Method

Depending on the complexity of your tax situation, you can:

• Self-Prepare: If your return is straightforward, consider using IRS Free File or fillable forms.

• Use Tax Software: Platforms like TurboTax or H&R Block offer guided assistance and can handle moderately complex returns.

• Hire a Professional: For complex situations, such as owning a business or significant investments, consulting a CPA or enrolled agent might be beneficial.

By following this updated checklist, you can approach tax season with confidence, ensuring you’re well-prepared and positioned to maximize your potential refunds or minimize any taxes owed.