6 Steps to Prepare for Tax Season

Staying organized may even help you reduce tax season stress, avoid errors, file more accurately, and find additional deductions and credits. For example, if you think you will get a refund, you may want to file as early as possible so you can use that cash. If you think you’ll need to pay, it’s best to plan early to avoid owing back taxes.

To prepare for tax season at any point during the year, follow this six-step tax prep checklist.

Tax preparation checklist

1. Determine your filing status
2. Update your contact information
3. Gather all your tax documents
4. Max out your IRA and HSA contributions
5. Decide how to file your taxes
6. Check your withholding

1. Determine your filing status

Your filing status affects your tax rate. It also affects which tax deductions and credits you may claim, so it’s important to choose correctly.

These are the five tax filing statuses available to you.¹

• Single—unmarried people who aren't supporting a child or dependaent adult
  
• Head of household—unmarried people who pay at least half of their housing costs and support one or more individuals
• Married filing jointly—married couples who file a joint return
• Married filing separately—married couples who file separate tax returns
• Qualifying surviving spouse

You may want to consult the IRS website or contact a tax professional to help make sure your tax filing status is right for you. The IRS has specific rules around who qualifies as a dependent; when married couples can file jointly or separately; and when an adult relative can qualify as a dependent. To determine your filing status, refer to this online questionnaire from the IRS. If you’re still not sure, consult a tax professional.

2. Update your contact information

If you moved in the past year, you’ll need to update your contact information with the IRS and the state. You can do this when you file your return. But it’s better to make the change before Tax Day so you don’t miss important information. To change your address with the IRS, fill out the form you’ll find here.

A name change is a bit more complicated. You will need to notify the Social Security Administration (SSA) of your name change before you file your taxes. If the name on your tax return doesn't match SSA’s records, it may delay your refund.

If you are expecting a refund, you might need to be patient. Most refunds are issued in less than 21 calendar days if you file electronically. But if you sent your return through the mail rather than filing online and you expect a refund, it may take four weeks or more.²

If your contact information is current, consider setting up an online account at irs.gov. You can use this online account to pay tax balances, set up payment plans, and more.

3. Gather all your tax documents

Gathering all your paperwork just before April 15 may be stressful. Think about building a file now to keep track of what you need to file taxes.

You won’t have much of your paperwork for the previous year until the months before tax prep starts. But having a file can help you remember to save receipts from donations or a move, freelance invoices, personal business expenses, or anything else that you want to remember at tax time. The IRS provides a list of documents that may be helpful to collect. It's also a good idea to have a copy of your previous year’s tax return on hand.

As you gather your tax documents, think about all your income: paychecks, interest from savings accounts, dividends from other investment accounts—everything. Your employer and financial institutions are required to send you documents that report all this income, either by mail or email.

These are some common tax documents you might receive during the year:³

• W-2s from companies where you worked as an employee
• 1099s from freelance income
• Other 1099s from unemployment compensation, dividends, pension, annuity or retirement plan distributions, and interest from any savings accounts and certificates of deposit (CDs)
• Form 1095-A, which is a Health Insurance Marketplace statement
• Form 5498-SA to report health savings account (HSA) contributions
• Form 5498 from your individual retirement account(s) (IRA)
• Form 1098, for mortgage interest

If you’re self-employed or you have tax-deductible expenses that exceed the standard deduction, you’ll want to prepare a detailed list of your income and expenses. For the 2024 tax year, the standard deduction for single filers and married couples filing separately is $14,600. That figure is $29,200 for married couples filing jointly.⁴

These numbers typically change from year to year. So if you’re looking to get a head start on your 2025 taxes, know that the standard deduction for single filers and married couples filing separately will increase to $15,000, while the deduction for married couples filing jointly will be $30,000.⁵

4. Max out your IRA and HSA contributions

If you have some extra money to invest, consider making extra contributions to your retirement accounts as one of your good money habits.

Making extra payments may help reduce your tax bill. It may also get you closer to your retirement goals. You have until Tax Day to max out your traditional or Roth IRAs and your HSA. These are the maximum contributions for the 2024 and 2025 tax years.

• Traditional IRAs—$7,000, or $8,000 if you’re age 50 or older (for both tax years)⁶ 
• HSAs—$4,150 for individuals for 2024 ($4,300 for 2025) and $8,300 for families ($8,550 for 2025)⁷

Depending on your situation, some of these limits may be different. It may be a good idea to consult a tax professional.

5. Decide how to file your taxes

If your finances are straightforward, you may be able to file your own return. And if your adjusted gross income (AGI) is $84,000 or less in the 2024 tax year, you can take advantage of the IRS Free File program. Free File walks you through tax preparation with guided prompts.

If your AGI is over $84,000 or your financial situation is more complex, you can want to try tax preparation and filing software, or you may want to try tax preparation and filing software or consult with a tax professional.

If you’re self-employed, own rental property, sell a home, or otherwise have a more complicated tax situation, you might also consider hiring a licensed tax preparer or certified public accountant (CPA). Both types of tax professionals must meet specific educational and licensing requirements to prepare and file your tax returns on your behalf.

To find a tax pro, start by asking friends and family for recommendations. You might also search state and national professional associations. Good places to start include the National Association of Tax Professionals and the Accounting and Financial Women’s Alliance.

6. Check your withholding

When you first start a job, your employer usually gives you a form that asks how much tax you want taken out of your paycheck. This is your withholding.

The correct withholding depends on your filing status, how many dependents you have, and other factors. If you received a big refund last year, you may be withholding too much. If you owed taxes, you may not be withholding enough.

Use the IRS Tax Withholding Estimator to determine your withholding. Then, if you need to adjust yours, contact your company’s HR department so you get the right amount taken out of your paycheck.

Other tips to help tax season go smoothly:

• Set up direct deposit to get your refund faster.
• If you need more time to file your taxes, file for an extension. An extension gives you until October 15 to file your return.⁵ The deadline to file your extension request is usually Tax Day. If you need help, the IRS website explains how to file for a tax extension. Keep in mind, you will still have to pay any taxes you owe by April 15. Otherwise, you’ll accrue penalties and interest charges.
• To get a head start on your tax return preparation, also make note of everything you sell through online platforms or receive through payment apps. If you exceed a certain threshold, you may need to report it as income. Read the guidance from the IRS here, or ask a tax professional for assistance with filling out forms for this type of income.
• Check and bookmark the IRS Tax Alert page to stay informed of other changes that could affect your return.
• Consider a personal loan if you think you will owe a large amount in taxes and need help paying it. The funds from a personal loan are not considered taxable income.

Take the stress out of taxes

Preparing for tax season involves some paperwork and math, but it doesn’t have to be stressful. If you want to make sure you file your taxes correctly, consider hiring a professional who knows all the ins and outs of tax season.

Are you expecting a big tax bill? Find out how you  could use a personal loan to pay your taxes.

Articles may contain information from third parties. The inclusion of such information does not imply an affiliation with the bank or bank sponsorship, endorsement, or verification regarding the third party or information.

The information provided herein is for informational purposes only and is not intended to be construed as professional advice. Individuals should consult a tax professional. Nothing contained in this article shall give rise to, or be construed to give rise. to, to any obligation or liability whatsoever on the part of Discover Bank or its affiliates.