2025 is upon us. A clean slate once again. If, like many, you welcome the coming of the new year with the intent to make positive changes, you might consider adding few of these tax-related gems to your list as we embark upon a fresh tax year.
Resolution 1: Prepare for the 2024 tax filing season. Moving forward often involves looking back, and taxes are no exception. One of the first major tasks of the new year for individuals is to file their 2024 tax returns. Starting in mid-January, you should start receiving your official tax documents, such as W-2s, 1099s, K-1s and 1098s, among others. A tip for managing all of these items is to place a folder or envelope near where you sort your mail and drop all of these documents in one place as they arrive, so you are not scrambling to find them later.
Additionally, if you have your taxes prepared by a professional tax preparer, chances are you will receive a document from them, often called an organizer or systemizer, that summarizes your 2023 tax return and gives you a guide as to what documents you should be expecting for 2024. This is a handy tool for checking off items as they arrive. Most organizers also have a list of questions. Even if you don’t complete the organizer in full, it is important to answer the questions as there may be new things in 2024 that your tax professionals need to know.
Unfortunately, not all of the information your tax professional needs is provided to you in a nice, summarized document like a W-2. Some of these items you, the taxpayer, must aggregate. Items such as business books and records, rental property income and expenses, charitable contributions, etc. Make it part of your tax year resolution to start this early and allow plenty of time to get it completed before the deadline. The earlier you can get your information submitted to your tax professional, the easier your tax filing process is going to go. No one wants to be stressed out on April 15th…least of all you! If this all feels overwhelming, just let us know. We can help!
Resolution 2: Set reminders to pay your 2025 estimated tax payments. The federal government requires taxpayers to pay-as-you-go. Most taxpayers do this through withholdings from wages, but if you are an investor, self-employed, retired or any other taxpayer who had 2023 taxes in excess of withholdings, you are required to make quarterly estimated tax payments. These should be provided by your 2023 tax professional. They’re due, for federal purposes on April 15, 2025, June 16, 2025, September 15, 2025, and January 15, 2026. Making these estimated tax payments will not only be easier on the budget by spreading the tax out into more manageable amounts, but it will also save you from being assessed an underpayment penalty for not making them. Most states have a payment structure, but there may be timing differences. Please check with us if you are unsure. We can help!
Resolution 3: Maximize 2025 retirement contributions. This is one of the best tax planning opportunities for individual taxpayers. It reduces your current tax burden, and you get to keep the money for your future post-retirement needs. If you are an employee, you can contribute up to $23,500 to your employer’s traditional 401(k), 403(b) or 457 retirement plans, which will reduce your taxable income by that amount. It will sometimes trigger matching contributions from your employer as well if they have such a benefit in place. Taxpayers ages 50 to 59 can utilize the catch-up provision and contribute up to $31,000. New in 2025, taxpayers ages 60 to 63 can super-size their catch-up and contribute up to $34,750. In some cases, you can also contribute to an Individual Retirement Account, an IRA, but whether or not you can deduct that amount from your taxable income depends on your income levels and other factors.
Self-employed individuals are not left out. There are many different retirement plans that you can implement to defer even more income and reduce your current tax burden. Again, the right plan for you will depend on many factors, but in general a self-employed taxpayer can contribute up to $70,000 (with an additional catch-up of $7,500 for taxpayers ages 50 to 59 and $11,250 for taxpayers ages 60 to 63).
As with all retirement savings there are rules on when the funds can be withdrawn, who must be included in the plan if you are self-employed, etc. We suggest making an appointment to discuss this with us because guess what? We can help! We can provide the information you need, and we can coordinate with your financial advisor or other plan administrators to make sure you are maximizing both your tax benefits and retirement savings. Tax savings today and more financial security tomorrow? Now that’s a resolution worth making!
Resolution 4: Estate and legacy planning in 2025. None of us like to broach the subject of our mortality, but somehow embarking on each new year is a good reminder that they are not infinite in number. While it is easy to put off planning for that inevitable time when we no longer need to make resolutions, it is so important that we do not. None of us knows when exactly that time will be upon us. Let’s resolve to get that done in 2025. Step one: check the beneficiaries on your life insurance policies and retirement plans to make sure they are an accurate reflection of your wishes today. You’d be surprised at the number of people who forget to do this after a loss or a divorce.
Next, if you don’t have a plan or if you haven’t updated your plan in a number of years, make an appointment with an estate planning attorney. If you need a referral, we can help! Having a well-crafted plan in place is a gift you can give to those who survive you.
Speaking of gifts, if you have charitable intent, there are several opportunities for giving that can provide a tax benefit, including charitable trusts and donor-advised fund (also known as a DAF). If this is something you are interested in, we can help! We connect you with the right team to help you accomplish your gifting goals.
Resolution 5: Make life easier in 2025. Ahhh. Isn’t this something we all hope to achieve each year? Work-life balance. Self-care. More time for family, friends, and fun. Whatever you call it, we can all agree that it is a worthy goal. At SingerLewak, we are here for it! We want to support this goal in any way we can. If this means you want to do less administrative work for your business or rental properties, or you want to discuss when and how you can begin to scale back work and prepare for retirement, or just having the peace of mind in knowing your tax, estate and legacy planning are complete and in place, we can help with all of it! Whatever is on your mind, reach out. Let’s talk it through.
Whatever resolutions you make, we at SingerLewak wish you a happy, healthy, and peaceful 2025!
