How to Prepare For Tax Season 2025

FINANCIAL ADVICE | GUIDANCE | INSIGHTS | OBSERVATIONS 

Tax season is here again, and while it might not be anyone’s favorite time of year (except perhaps for CPAs), a little preparation can make a big difference. Whether you’re looking to minimize your tax burden, maximize deductions, or just avoid as much stress as possible, understanding the latest tax laws and deadlines is key.

That’s why we’ve written this guide – to help you get your ducks in a row by providing the necessary info in one place & tips on how you can set yourself up for success.

Of course, remember that this guide is for informational purposes only and is not a replacement for real-life advice, so consult your tax, legal, and accounting professionals before modifying your strategy.

Table of Contents

  Click to quickly jump to the section of the guide you need!
  1. What’s New This Tax Year?
  2. What Are the 2024 Tax Brackets?
  3. How Do Tax Brackets Work?
  4. What Are the Standard Deductions for 2024?
  5. What Is the Child Tax Credit for 2024?
  6. How Is Taxation on Equity Compensation Handled?
  7. Important Tax Deadlines for 2025
  8. What Financial Records Should You Keep?
  9. How Long Should You Keep Tax Documents?
  10. How to Prepare for a Smooth Tax Season

What’s New This Tax Year?

Tax laws change frequently, and 2025 is no exception. There may be new deductions, credits, or rate adjustments that could impact your filing. Staying informed and consulting with a tax professional can help ensure you’re taking advantage of all that’s available to you.

What Are the 2024 Tax Brackets?

Here’s a look at the federal income brackets for the 2024 tax year1:

2024 Tax RateSingleMarried Filing Jointly
10%$0 to $11,600$0 to $23,200
12%$11,601 to $47,150$23,201 to $94,300
22%$47,151 to $100,525$94,301 to $201,050
24%$100,526 to $191,950$201,051 to $383,900
32%$191,951 to $243,725$383,901 to $487,450
35%$243,726 to $609,350$487,451 to $731,200
37%$609,351+$731,201+

Changes to the tax brackets mean that wage earners may fall into lower brackets this tax year. For example, a single filer at $100,000 in taxable income would have fallen into the 24% bracket for tax year 2023, but would be in the 22% bracket for 2024.

How Do Tax Brackets Work?

Remember that your income isn’t taxed at a single rate; instead, the tax brackets represent how much you will pay for each portion of your income.

For example, if you’re married filing jointly and make $125,000 for the 2024 tax year, you will:

  • Pay 10% on the first $23,200
  • Pay 12% on the next $71,100, and
  • Pay 22% on the final $30,700.

You will not pay 22% on the entire $125,000 of your annual income. Understanding this structure can help with tax planning and estimating your liability.

What Are the Standard Deductions for 2024?

Standard deductions help reduce your taxable income, potentially lowering your tax bill.

Here is an overview of the standard deductions over the past two years1:

Filing Status2023 Deduction2024 Deduction
Single$13,850$14,600
Married Filing Jointly$27,700$29,200
Married Filing Separately$13,850$14,600
Head of Household$20,800$21,900

What is the 2024 Child Tax Credit?

For 2024, parents can claim a Child Tax Credit of up to $2,000 per child.  The credit is partially refundable and phases out at income thresholds of $200,000 (or $400,000 for married couples filing jointly).2

How is Taxation on Equity Compensation Handled?

Equity compensation might not look like a regular paycheck, but that doesn’t mean the IRS won’t want its share come tax time. These attractive benefits also come with their own set of challenges – and limiting your taxes owed and avoiding penalties rank high on the list.

Read our blog on the subject for an overview of seven common mistakes that you can easily avoid!

Click to Read

How Equity Comp Earners Can Avoid Paying More Tax than Necessary

Key Tax Deadlines for 2025

April 15th, 2025 Deadlines

  • 2024 Individual Tax Returns Due

Most taxpayers have until April 15 to file tax returns. E-mail or postmark your returns by midnight on this date.

  • Individual tax return extension form due

If you cannot file your taxes on time, file your request for an extension by April 15 to push your deadline back to October 15, 2025.

  • Last day to make a 2024 IRA contribution

If you haven’t already fully contributed to your retirement account for 2024, April 15 is your last chance to fund a traditional IRA or a Roth IRA.

  • 1st Quarter estimated tax payment due

Other Important Dates

  • January 15, 2025: 4th Quarter 2024 estimated tax payment due
  • June 16, 2025: 2nd Quarter estimated tax payment due
  • September 15, 2025: 3rd Quarter estimated tax payment due
  • October 15, 2025: Extended tax return deadline

*Tax deadlines on weekends or national holidays will be delayed until the following business day. Also, the IRS can adjust federal tax deadlines on short notice based on its assessment of financial or economic conditions. If you live in a federally declared disaster area, check with the IRS, as your tax filing deadline may have been adjusted.

What Financial Records Should You Keep?

During the first few months of 2025, ensure you receive your W-2 and 1099 forms and other tax documents. You should track and store your tax and other financial records to avoid delays or frantic preparations as the filing deadline approaches.

Here’s a list of items to start gathering:

  • Your 2024 W-2(s)
  • 1099 forms for dividends or other income
  • 1099-G forms for state and local taxes
  • 1098 student loan interest statements
  • Records of charitable giving and donations
  • Receipts for other items or services you may want to claim as itemized deductions
  • 1095-B proof of health insurance
  • Mortgage payment records
  • Business travel receipts & mileage logs
  • Medical bills or claims report
  • Closing paperwork on home purchases
  • Credit card & bank statements to verify deductions

How Long Should You Keep Tax Documents?

The IRS recommends holding onto tax-related records for different periods3:

3 Years: Standard retention time for most returns

4 Years: Employment tax records

6 Years: If you underreported income by more than 25%

7 Years: If you claimed a bad debt deduction or a loss from worthless securities

Indefinitely: If you didn’t file a return

Digital backups of your records can help to ensure that you have what you need in case of an audit or amendment.

How to Prepare for a Smooth Tax Season

Being proactive may help you better prepare for the unexpected. You can make changes throughout the year to ensure your tax preparations go smoothly. Here are some additional ways to tighten the nuts & bolts and prepare this year for next year’s tax season:

    • Review Last Year’s Return: This can highlight deductions or credits you may qualify for again.
    • Check State & Local Tax Laws: Monitor local and state government requirements that may affect your tax situation.
    • Adjust Withholdings If Needed: Avoid surprises next year by ensuring your tax withholdings match your expected liability.
    • Evaluate Your Contributions: In the months ahead, you may still have the opportunity to contribute more to your retirement plan(s), which may lower your taxable income.
  • Track Capital Gains & Losses: Consider deducting capital losses on your investments. You can claim deductions if you experience losses, but you can claim losses only if they exceed capital gains. You can claim a difference of up to $1,500 per year, or $3,000 if you are married filing jointly. Net losses that exceed $3,000 can be carried over into future years.4

Deductions for capital losses can only apply to investment property sales, not to the sale of investment property held for personal use.

  • Consider Charitable Donations: How about “bunching” your charitable donations? Bunching allows you to optimize your deduction allowances by making two or more years’ worth of charity donations in one year.

Let’s say you are married, expect to itemize your deductions, and anticipate making $15,000 in annual donations. By donating $30,000 in one year and skipping the next, you may be able to qualify for a higher deduction.5

  • Get Organized Early: Find a place to store your tax documents until it is time to prepare to file. If you store your documents or prior returns on your computer, back them up on a thumb drive or other device or system in case your computer is hacked or stolen.

Need Help? We’ve Got You Covered.

At WestStar, we are happy to introduce our clients to trusted CPAs to ensure that their tax planning and preparation is in experienced hands, and gets the same level of care as their financial and investment planning does with us!

If you have questions about lowering your tax bill, or want to talk further about what to do to best manage your stock program, please get in touch. We’d love to help you navigate this tax season with confidence and clarity.

We wish you every success in the future and hope to hear from you soon.

Sam Gullette & Erik Alexander

Sam Gullette, CFP®, CLU®
Certified Financial Planner™

‘My mission in life is to help people take control of their money and avoid financial stresses. My clients are successful professionals and executives, many of whom are compensated heavily with company stock. Together we maximize their wealth-building opportunities, minimize taxes, and make sure their family is protected if life throws them a curveball.’

Erik Alexander
Financial Consultant

‘I work with professionals and executives who are compensated through various forms of company stock.  They have more money than time and struggle to balance the key aspects of their lives. Their decisions affect others, and they feel a huge responsibility towards making them wisely. I enjoy helping them solve their complex problems, and being counted on for their and their families’ financial wellbeing.’

Citations
  1. IRS.gov, 2025
  2. IRS.gov, 2025
  3. IRS.gov, 2025
  4. IRS.gov, 2025
  5. IRS.gov, 2025

This Special Report is not intended as a guide for the preparation of tax returns. The information contained herein is general in nature and is not intended to be and should not be construed as legal, accounting, or tax advice or opinion. No information herein was intended or written to be used by readers for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions. Readers are cautioned that this material may not be applicable to or suitable for their specific circumstances or needs and may require consideration of non-tax and other tax factors if any action is to be contemplated. Readers are encouraged to consult with professional advisors for advice concerning specific matters before making any decisions.

Information is provided by Sam Gullette & Erik Alexander and written by Ian Davidson Communications, a non-affiliate of Cetera Advisor Networks LLC. The opinions contained in this material are those of the author, and not a recommendation or solicitation to buy or sell investment products. This information is from sources believed to be reliable, but Cetera Advisor Networks LLC cannot guarantee or represent that it is accurate or complete.