January flew by. February will be over before you know it. Tax season is upon us, and weโre here to let you know that starting early can save you time and money and prevent stress.
Early preparation helps you maximize deductions, avoid errors, and ensure a smooth filing process. We put together a step-by-step process to help you get your finances and documents in order before Tax Day.
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Gather Your Documents ASAP
Before you do anything else, gather up all the documentation youโll need to make the filing process smooth and uninterrupted. Last-minute scrambling to find forms, receipts, or statements adds a lot of stress to the process.
Collect the following:
- Income Forms: W-2s, 1099s, investment income statements.
- Deductions & Credits: Charitable donations, mortgage interest, student loan interest, medical expenses.
- Personal & Banking Info: Social Security numbers, direct deposit details for refunds.
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Know Whatโs Changed for This Year
- New tax laws can offer helpful benefits. Research to find out if anything has changed, or if there have been credit adjustments or deduction limits that might affect your return
- Mark the filing deadline (April 15, 2025) on your calendar.
- Follow or check the IRS for updates.
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Choose the Best Filing Method
There are a lot of different scenarios for filing for individuals, and much of it depends on how you are generating your income.
Following are some ways to file:
- E-filing: This can speed up refunds and reduce errors.
- Professional tax consultants: These professionals can help if you have complex tax situations, such as self-employment, investments, etc.
- Early is best to avoid stress: Avoid last-minute stress and refund delays by filing well ahead of the filing. deadline.
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Maximize Deductions & Credits
Deductions and credits are often available to individuals across the income spectrum and can be helpful to those with dependents, unique situations, etc.
- Take advantage of common deductions (mortgage interest, student loans, medical expenses).
- Check for available tax credits (Earned Income Tax Credit, Child Tax Credit, education credits).
- If self-employed, deduct business expenses like home office costs and equipment.
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Plan for Refunds or Payments
Whether you end up owing taxes or getting a refund, plan for it ahead of time.
- If you owe taxes, explore payment plan options.
- If youโre getting a refund, consider using it to boost savings, pay down debt, or invest.
- Whether you owe or are getting a refund, consider how it affects your financial goals for the year.
- Review your withholding for next year to avoid surprises.
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Watch Out for Tax Scams
Predators often prowl for how to take advantage of the unsuspecting filer. Know the signs of a scam to avoid getting caught in its trap.
- The IRS never calls or emails demanding immediate paymentโbeware of fraudsters.
- File early to protect against tax identity theft.
- Use secure tax software or professionals to safeguard your information.
Start Now for a Stress-Free Tax Season
Yes, it can be scary when tax season rolls around. But getting a head-start on tax preparation can save you money, time, and frustration. Whether itโs organizing documents, researching tax law changes, or planning deductions, the earlier you act, the smoother the process. Tax season doesnโt have to be painful and stressful. You can do this!
Need a place to deposit your refund or want financial planning advice? Penn Community Bank is here to helpโcontact us or visit a financial center near you!
