Author: Mike Intaglio

Start Early by Organizing Your Documents

One of the easiest ways to reduce stress during tax season is to start gathering your documents early. This includes income statements like W-2s and 1099s, as well as mortgage interest forms, student loan interest documents, and investment or retirement account summaries. If you’ve had significant medical expenses, keep receipts for bills that exceed 7.5% of your adjusted gross income (AGI). For self-employed individuals, be sure to document business-related expenses like office supplies, internet usage, and travel costs.

Charitable contributions are another area to track carefully. If you donated goods or money to qualified organizations, ensure you have receipts. The IRS allows you to claim up to $300 for charitable donations even if you take the standard deduction, or up to $600 if you’re married filing jointly. Organizing these documents in a folder—physical or digital—can make filing much smoother.ithout guilt. Plus, understanding where your money goes helps you identify wasteful spending, freeing up funds for what really matters.

Know Your Taxpayer Rights

The IRS Taxpayer Bill of Rights exists to protect and empower you during the filing process. Some key rights include:

• The Right to Be Informed: You’re entitled to clear explanations of IRS notices and tax laws.
• The Right to Privacy: The IRS must act within the law and respect your confidentiality.
• The Right to Challenge the IRS: If you disagree with a decision, you have the right to appeal or request a review.

These rights ensure that taxpayers are treated fairly and can confidently address any issues that may arise. To learn more, visit the IRS’s Taxpayer Bill of Rights. Knowing these rights can provide peace of mind during tax season.

Maximize Deductions and Credits

Tax deductions and credits are powerful tools that can save you money, but they’re often underutilized. Deductions lower your taxable income, while credits reduce the taxes you owe. Common deductions include student loan interest, home office expenses, and significant medical costs.

Some of the most valuable credits include:

• Earned Income Tax Credit (EITC): Designed to benefit low- to moderate-income earners, this credit can be worth up to $7,430 depending on your income and family size.
• Child Tax Credit: Eligible families can receive up to $2,000 per qualifying child under 17.
• Education Credits: The American Opportunity Tax Credit (AOTC) allows eligible students to claim up to $2,500 annually for qualified educational expenses.

Keep an eye out for energy-efficient home improvement credits as well. For example, installing solar panels can qualify you for a credit worth up to 30% of the system cost. Don’t overlook state-specific deductions and credits, which can further reduce your tax liability.

Plan Ahead for Next Year

Tax season is also a chance to plan ahead and adjust your finances. If you received a large refund or owed more than expected this year, consider revising your W-4 form. This form determines how much your employer withholds for taxes, helping you balance your payments throughout the year.

Self-employed individuals should ensure they’re making quarterly estimated payments to avoid underpayment penalties. Setting aside 25-30% of your income in a dedicated savings account can make these payments more manageable.

Additionally, take advantage of tools like Health Savings Accounts (HSAs) and retirement contributions. Contributions to an HSA are tax-deductible and reduce your taxable income, while retirement accounts like a 401(k) or IRA can provide both immediate and long-term tax benefits.

Start Investing for Your Future

You don’t need a lot of money to start investing—what matters most is starting early. Investing allows your money to grow over time, helping you achieve long-term goals like retirement or your child’s education.

Simple Steps to Begin:

• Take Advantage of Employer Plans: If your workplace offers a 401(k) with matching contributions, start there—it’s essentially free money for your future.
• Open a Roth IRA: A Roth IRA allows your money to grow tax-free, making it a great option for young investors. You can start with as little as $50 a month.
• Start Small, Think Big: Investing apps like Acorns or Betterment let you invest spare change or small amounts to get you started.
• Learn as You Go: Investing can feel intimidating, but there are countless resources (and Pathwise advisors) to help you get comfortable.

The earlier you start investing, the more time your money has to grow, thanks to the power of compound interest. By investing even small amounts regularly, you’re laying the foundation for long-term financial security—giving yourself and your family more options and freedom in the future.

Seek Help When Needed

If you’re unsure about how to proceed or feel overwhelmed by the complexity of your taxes, consider seeking professional help. Tax preparers, enrolled agents, and certified public accountants (CPAs) can guide you through the filing process, especially if you have unique financial situations. For simpler returns, reputable tax software provides step-by-step assistance and error-checking features.

Pathwise offers tailored tax support to employees in the groups we manage, helping you navigate the filing process with confidence. Whether it’s answering specific questions or providing tips to maximize your return, our team is here to help. Don’t hesitate to reach out for personalized guidance.

By organizing your documents, understanding your rights, maximizing deductions, and planning ahead, you can approach tax season with confidence. For additional support and resources, visit Pathwise Tax Support.

Investment advice offered through Integrated Partners, doing business as Pathwise Financial Group, a registered investment advisor.