Tax Season Prep: What You Need to Know Before Filing in 2025

Preparing for tax season is essential to ensure a smooth and stress-free filing process. By getting organized early, you can avoid last-minute scrambling, minimize the risk of errors, and maximize potential refunds. Proper preparation also helps you stay on top of deadlines, gather all necessary documents, and take full advantage of deductions and credits. Whether you're a first-time filer or a seasoned taxpayer, proactive tax planning saves time, reduces financial stress, and ensures you meet your obligations accurately and efficiently.

As you prepare for the 2025 tax season, there are a few key dates to keep in mind and note. Wednesday, January 15, 2025, is the final day to pay any Q4 taxes for 2024. April 15, 2025, is tax day, and October 15, 2025, is the tax extension deadline.

By taking the time to properly prepare to file your taxes this year, you can maximize your refunds and avoid common errors. This article can serve as a guide to help you make the most of this tax season.

Key Tax Filing Deadlines for 2025

As mentioned above, there are a handful of key dates that you should keep in mind this tax season. Important dates to make a note of include:

• Wednesday, January 15, 2025: This is the final day that taxpayers with non-wage income need to pay their estimated taxes for Q4 of 2024. This includes taxes on income sources such as unemployment benefits, self-employment income, annuities, etc.
• Tuesday, April 15, 2025: Tax Day. This is the deadline for taxpayers to pay any taxes that they owe, as well as either submit their tax return or file for an extension.
• Wednesday, October 15, 2025: Extension Deadline. If the IRS grants you an extension to file your 2025 tax return, this is the deadline to do so. It should be noted that this extension only applies to filing your return and is not an extension to pay any taxes you owe.

What Happens if You Fail to File Taxes On Time?

If you miss the tax filing deadline or your extension deadline (if you are granted an extension), you will receive a Failure to File penalty. This penalty applies when you do not file your tax return by the due date and is 5% of the taxes you owe, charged each month your taxes are unpaid. The Failure to File penalty will not exceed 25%. This means that if you fail to file on time, you will be charged a penalty for up to 5 months. To minimize potential penalties, it’s important to file your taxes on time and stay on top of the deadlines.

Gathering the Essential Tax Documents

As you prepare to file in 2025, it's important to ensure you have all necessary documents ready and available. Use the list below as a reference for important documents you should have ready when filing your tax return.

Income Related Documents

Your income-related documents are essential for filing your taxes, as they provide details about the taxable income you earned throughout the year. Key income-related documents to have on hand include:

• W2 Form (Wage and Tax Statement): This form is provided by your employer and details your annual wages and taxes withheld from your paycheck.
• 1099 Forms: 1099 tax forms can be used to provide details on self-employed income, freelance income, income from investments, unemployment compensations, or other miscellaneous income.
• Business Income Statements (if self-employed): These statements include income records, invoices, and receipts.
• Rental Income Records: These records show your earned rental income (if applicable), including receipts and bank statements.
• Gambling or Lottery Winnings: If you have won significant prizes or jackpots, you will need Form W-2G to report your winnings.

Deduction and Credit Records

In addition to your income-related documents, you will need to have your deduction and credit records available when filing your taxes. These include, but are not limited to:

• Medical and Dental Expense Records: These records include receipts for out-of-pocket medical expenses, insurance statements showing premiums paid, mileage records for medical-related travel, etc.
• Education Expenses: This includes Form 1098-T (tuition statement from your educational institution), receipts for textbooks and other qualifying supplies, and Form 1098-E (records of student loan interest paid).
• Mortgage and Property Records: These records include Form 1098 (mortgage interest statement), property tax payment receipts, and records of home improvement costs for energy-efficient upgrades, as these may qualify you for credits.
• Charitable Contributions: These include receipts or acknowledgment letters for cash donations, documents for non-cash contributions (such as clothing or household items), and mileage logs for volunteer work-related travel.
• Retirement Contributions: This includes records of contributions to traditional IRAs, Roth IRAs, and other qualifying plans, as well as employer 401(k) contribution statements.
• State and Local Taxes Paid: These include records of state income tax or sales tax paid and vehicle registration fees (if applicable).

Personal Information

When completing your tax return, you will also need to have personal information documents available to ensure that your return is processed accurately and without any delays. These documents include but are not limited to:

• Identification Documents: This could be your social security number (SSN) for yourself, your spouse (if filing jointly), and any dependents, your Individual Taxpayer Identification Number (ITIN) if you do not have an SSN, and, in some cases, a valid government-issued ID.
• Dependent Information: This information includes names, birth dates, and SSNs or ITINs for all dependents that you plan to claim on your taxes.
• Bank Account Information: You will need your bank account and routing numbers for direct deposit of your tax refund or electronic payment of any taxes that you owe.

Choosing the Right Filing Method

When filing your tax return, there are a few different filing methods that you can choose from. Depending on your skill level and needs, one option might be better suited for you than the others. In this section, we'll provide information to help you decide which filing method is right for you.

Filing Online vs. Paper Filing

Filing taxes online versus using paper forms each has its own advantages, but filing online tends to be the preferred method for many taxpayers. Online filing offers speed, convenience, and accuracy, often with built-in error checks and immediate confirmation that your return has been received. Many online platforms also offer step-by-step guidance, making it easier to claim deductions and credits that you might otherwise miss.

Paper filing, on the other hand, can feel more time-consuming and requires mailing in physical forms, which can result in longer processing times and a higher risk of error due to manual entry. Still, some individuals prefer paper filing for its simplicity or if they are uncomfortable with digital tools. Ultimately, the method you choose depends on your personal preferences, tax situation, and comfort level with using technology.

If your income is below the IRS threshold, you may qualify for the IRS Free File program, which offers no-cost tax filing options through approved providers. This option can help eligible taxpayers avoid filing fees while still benefiting from guided online tax preparation.

Using Tax Software

You can simplify the filing process even more by using tax software that offers step-by-step guidance tailored to your financial situation. These filing tools can automatically calculate your taxable income, deductions, and credits, which reduces the likelihood of errors. Tax software offers convenient, cost-effective solutions for individuals and small business owners alike, especially those who do not have extensive tax knowledge.

Hiring a Tax Professional

Working with a tax professional can be a smart choice for those with complex financial situations or those wanting to ensure their returns are accurate and optimized. Tax professionals bring expertise in navigating complicated tax laws, maximizing deductions and credits, and avoiding common mistakes. While hiring a tax professional may cost more than filing on your own, the peace of mind and potential savings often outweigh the expense.

What to Do If You Can't File on Time

If you are unable to file on time, you should apply for an extension. To apply for an extension, you will need to file Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return). This form can be filed by mail, online with an IRS e-filing partner, or through a tax professional. There is no penalty for filing a tax extension; however, not paying on time or enough, or failing to file altogether, may cost you.

Understanding Refunds and Payments

After your taxes are filed, the next step is to understand any refunds you may be receiving or to pay any taxes owed. While most hope for a refund of some kind after filing their federal income tax return, it is also possible that you will owe money to the IRS after filing.

Qualifying for a Tax Refund

You may qualify for a tax refund if you have paid more in taxes throughout the year than you owe based on your income and eligible deductions or credits. You can track your refund using the "Where's My Refund" tool on your IRS online account.

Payment Plans for Outstanding Taxes

If you end up owing taxes and cannot pay the full amount upfront, the IRS does offer payment plans to help manage the balance over time. Payment plans allow you to make monthly payments, but it should be noted that interest and penalties may still apply until the balance is paid in full.

Final Thoughts

As you prepare for the 2025 tax season, keep the information outlined in this article in mind. We understand that filing taxes can be an overwhelming process, and we hope that the information provided here can be used to help ease any worries. By proactively preparing to file, you can enter this tax season with confidence and make 2025 your best financial year yet.

Disclaimer: The information provided in this blog post is for educational and informational purposes only and should not be considered as financial, legal, investment, or tax advice. Symple Lending is not responsible for any financial outcomes resulting from following the information or ideas shared in this blog.  Every individual's financial situation is unique, and we strongly encourage readers to take their own circumstances into consideration and consult with a qualified financial, legal, tax, and investment advisor before making any financial decisions. Symple Lending does not provide financial, legal, tax, or investment advice.