7 Tax Questions to Help You Stay on Track
Tax season can feel overwhelming, but staying organized and informed can help make the process much smoother. Whether you’re filing as an employee, a freelancer, or a business owner, understanding key tax deadlines, gathering the right documents, and knowing which deductions or credits you qualify for can help you maximize your return and avoid penalties. The following checklist can help you have a successful and stress-free tax season.
1 – Do you have all your proper tax forms?
By now, you should have received several tax forms, either electronically or by mail. If you’re an employee, you’ll receive a W-2 summarizing your earnings and the taxes already withheld. If you do contract or freelance work, you’ll likely receive a 1099-NEC. Other common forms include the 1099-DIV and 1099-INT, which report dividends and interest earned. Students will receive a 1098-T form detailing tuition payments and any grants received, while student loan interest will be reported on a 1098-E form.
For a complete list of IRS forms, visit the IRS website.
2 – Do you know the tax deadline?
For most people, the typical deadline is April 15th. However, those filing for an extension can submit Form 4868, which extends the deadline to October 15th. Common reasons to file for an extension include needing more time to gather missing forms and avoiding a failure-to-file penalty. Remember that if you’re expecting a refund, filing an extension will delay it.
3 – Have you reviewed your withholdings?
Your withholdings determine how much is deducted from each paycheck to cover your yearly taxes. While many people enjoy receiving a large refund, it essentially means you’ve been lending money to the government interest-free. On the other hand, not withholding enough could result in a hefty tax bill and potential underpayment penalties. If you are either getting a large refund or facing a significant tax bill, it’s a good idea to work with your employer or a tax professional to adjust your withholdings using a W-4 form. The IRS also offers a free withholding estimator for your convenience – https://www.irs.gov/individuals/tax-withholding-estimator.
4 – Have you been self-employed at any point?
You may be surprised to discover just how many people are self-employed without realizing it. Common examples include earning money through social media, offering tutoring services, running a dog-walking business, or driving for a rideshare company. Regardless of the source, you’re required to pay taxes on all income earned, and in many cases, taxes are not automatically withheld throughout the year. However, you may be able to deduct job-related expenses. The IRS provides a dedicated tax center for self-employed individuals – you can visit the website through this link.
5 – Should you take the standard deduction or itemize?
When filing your taxes, you must choose between taking the standard deduction and itemizing your deductions. The main difference is that the standard deduction is a fixed amount, while itemized deductions include specific eligible expenses, such as capital losses, charitable donations, mortgage interest, and medical costs, to name a few. You can select the option that provides the greatest reduction to your taxable income, but you can’t claim both.
6 – Did you experience any major life events?
Did you get married or divorced last year? Have a baby or move to a new home? Major life events can significantly impact your tax situation. Be sure to notify Social Security of any name changes due to marital status and apply for Social Security numbers for newborns, as your tax return will require one when claiming a dependent.
7 – How do you plan on filing and what are the associated costs?
There are several options for filing your taxes, each with its own cost. The IRS offers free tax preparation software for qualified taxpayers. The adjusted gross income limit for tax year 2024 is $84,000 for families and individuals. This service helps identify available deductions and tax credits and includes free electronic filing. For those with incomes above that limit, the IRS also provides electronic versions of paper forms that perform basic calculations, though the guidance on deductions and credits is limited. Many Americans also use tax preparation software, such as H&R Block or TurboTax by Intuit, which charge a fee to guide you through the process and handle your filing. Finally, if your tax situation is complex or you prefer working with a professional, many tax preparers can manage your return from start to finish. It’s important to choose your tax professional carefully, as they will handle sensitive financial information and keep client records for years.
We wish you a smooth and stress-free tax season. If you’d like to learn more about Savant’s advisory or tax services, please feel free to contact us.
Jonathon D. Merickel
Portfolio Advisor
CFP®, MBA