4 Strategies for an Organized Tax Season

<p>Every year, tax day sneaks up in a hurry. Whether you use tax preparation software or outsource to a certified public accountant, <a href="https://www.morningstar.com/personal-finance/4-strategies-an-organized-tax-season-2">here are some key strategies to ensure a smooth and worry-free tax season</a>.</p>
<h2>Strategy 1: Use a tax checklist or organizer</h2>
<p>Using a tax checklist or organizer can help you avoid that paper chase and assemble all the key documents in advance; completing your return is then a matter of filling in data. <a href="https://turbotax.intuit.com/tax-tips/tax-planning-and-checklists/tax-preparation-checklist/L7LHiDqGJ">Tax checklists</a> abound online.</p>
<p>If you use an accountant, it’s a good bet they send you a tax organizer, either paper or digital; such forms often come prepopulated with your tax data from the previous year. It’s a handy way to track trends in your income, interest earned on your investments, and charitable giving.</p>
<h2>Strategy 2: Determine if you’ll be itemizing or taking the standard deduction</h2>
<p>If you employ a tax advisor, they may have provided some guidance on whether to itemize based on your 2024 return. If you do your own taxes, you can get a pretty clear view of whether to use the standard deduction by taking stock of the major deductible items.</p>
<p>For the 2025 tax year, itemizing could be worthwhile if your deductions are greater than the standard deduction of $15,750 for single taxpayers and $31,500 for married couples filing jointly. People over 65 can take advantage of <a href="https://www.morningstar.com/retirement/ed-slott-what-you-need-know-about-new-tax-deduction-seniors">a new senior deduction of $6,000</a> that’s available to both itemizers and non-itemizers. (It’s $12,000 for married couples filing jointly if both partners are over 65.) However, the deduction phases out at modified adjusted gross incomes of more than $75,000 for singles and double that amount for married couples filing jointly.</p>
<p>For most households, the biggest-ticket deductible items include state and local taxes (including property taxes), home mortgage interest, and medical expenditures in excess of 7.5% of adjusted gross income. The good news on the state and local tax deduction is that the maximum deductible amount jumped from $10,000 to $40,000 following the passage of the tax and domestic policy bill last year. Here again, income limits apply: The higher deduction amount phases out for people with modified adjusted gross incomes of more than $500,000, and people with MAGI over $600,000 are stuck with a cap of $10,000 on the amount of state and local taxes that are deductible.</p>
<p>If you decide to itemize, you’ll need to round up supporting documentation on your deductible expenses. If you can’t track down all the receipts, don’t despair. The previous year’s credit card statements can help you identify those expenses. Healthcare providers and pharmacies are also usually happy to prepare a year-end statement documenting your out-of-pocket outlays over the previous year.</p>