Tax season checklist: Preparing your finances for a stress-free tax time

Allworth financial advisor Jeremy Murray, CFP®, AIF®, CRPS®, provides a simple, actionable checklist to help you prepare for tax season with confidence.

 

Tax season. Just hearing those two words can make a lot of us feel anxious. Whether you’re already retired, nearing retirement, or somewhere in between, this time of year doesn’t have to be stressful. With a little preparation, you can approach tax season feeling organized, confident, and ready to move on with life.

Here’s a simple checklist to help you get your finances in order and tackle tax time with ease:

1. Gather All Your Important Documents

The first step to a smooth tax season is getting your documents together. You’ll need forms and statements that outline all your income, deductions, and credits. Common documents include:

• Income Forms:
  • W-2s (if you’re still working).
  • 1099-Rs for retirement account withdrawals.
  • SSA-1099 for Social Security benefits.
  • 1099-INT or 1099-DIV for interest or investment income.
• Retirement Contributions: Records of any IRA or Roth IRA contributions for 2024.
• Tax Deduction Records:
  • Charitable donations.
  • Property tax statements.
  • Mortgage interest (1098 form).
  • Medical expenses (if they’re substantial enough to itemize).

Quick Tip: Keep a folder or digital file throughout the year for receipts and records so you don’t have to scramble at the last minute.

2. Confirm You Took (or Planned) Your RMDs

If you’re 73 or older, the IRS requires you to take Required Minimum Distributions (RMDs) from your retirement accounts like 401(k)s and traditional IRAs. If you don’t, you could face a penalty of up to 25% of the amount you were supposed to withdraw.

If you missed it in 2024, let’s address it now so you don’t face issues. And if you’re new to RMDs, we can create a simple system to make sure you never miss another deadline.

3. Make Charitable Contributions for Tax Benefits

If giving back is important to you, charitable donations can help reduce your taxable income. For those over 70½, a Qualified Charitable Distribution (QCD) is a great way to give directly from your IRA to a charity. It counts toward your RMD and won’t increase your taxable income.

If you’re not using a QCD, donations of cash, stocks, or other assets made before December 31 still qualify for a deduction on your 2024 tax return.

4. Review Your Tax Withholding and Estimated Payments

If you’re retired, chances are your income comes from multiple sources like Social Security, pensions, or withdrawals from retirement accounts. While this is great for flexibility, it can make taxes more complicated.

Ask yourself:

• Do I need to adjust my tax withholding? Too little withholding might mean a big tax bill, while too much could mean you’re giving the IRS an interest-free loan.
• Did I make estimated tax payments? If you’re self-employed, or you’ve taken significant withdrawals, make sure you’re meeting the IRS’s quarterly deadlines to avoid penalties.

Quick Tip: If you’re unsure where you stand, let’s take a look together to ensure you’re on track for 2025.

5. Take Advantage of Tax-Efficient Strategies

Now is a great time to consider tax-smart moves that can benefit you now and down the road:

• Tax-Loss Harvesting: If you sold investments at a loss this year, those losses can help offset capital gains or reduce taxable income by up to $3,000.
• Roth Conversions: Moving funds from a traditional IRA to a Roth IRA could lower your taxable income in future years. It’s worth considering if you’re in a lower tax bracket now.
• Gifting Strategies: Annual gifts up to $18,000 per person (as of 2024) are tax-free and don’t count toward your lifetime estate exemption.

These strategies are unique to every situation, so it’s always a good idea to review them with your advisor.

6. Double-Check Your Beneficiaries and Estate Plan

Tax time is also a good reminder to ensure your estate plan and beneficiary designations are up to date. Life happens—whether it’s a new grandchild, a family event, or simply a change in your wishes, these updates are easy to overlook.

• Review your beneficiaries on retirement accounts, life insurance policies, and other financial assets.
• Check that your will and trusts still align with your current goals.

Taking a few minutes now can save your loved ones time, stress, and money down the road.

7. Don’t Hesitate to Ask for Help

Taxes can be complicated, especially as your financial life grows. From managing multiple income sources to navigating tax-efficient retirement withdrawals, having a trusted advisor in your corner can make all the difference.

If you have questions or need help reviewing your plan, I’m always here to walk you through it. Whether you’re already retired or preparing for it, the goal is the same: to make tax season less stressful and help you keep more of what you’ve worked so hard for.

Final Thoughts: A Little Prep Goes a Long Way

Tax season doesn’t have to feel overwhelming. With a little preparation now, you’ll be in great shape when April rolls around. If you’d like to go over any of these steps or talk through strategies for minimizing taxes, let’s connect.

Here’s to a stress-free tax season and a strong financial 2025!

Jeremy Murray, CFP®, AIF®, CRPS®

Partner Advisor

As a self-proclaimed “numbers guy”, I truly enjoy helping people make sense of something that can feel complicated and overwhelming. Most people don’t grow up learning financial literacy and wealth management. Yet, getting your finances in order is critical as you prepare to transition to retirement—a phase in life where you’ll be entirely financially independent.

 I believe money is a tool that can be leveraged to provide the freedom you what. And I always strive to meet clients where they are in life, focus on educating them about their choices, and work to build a plan that’s achievable, comforting, and aligned with their goals.

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