Tax Preparation Checklist: Avoid Errors and Maximize Deductions

Tax season can be stressful, especially if you start just a few weeks before the filing deadline. Avoid tax-time panic by gathering required documents, such as W-2s and 1099s, and making a list of any charitable donations (both cash and noncash).

Starting the process sooner rather than later can help ensure a stress-free tax season and may expedite your refund. According to the IRS, 25-30% of taxpayers wait until April to file their return.

Beat the rush by pulling together the documents your tax preparer needs and reviewing your retirement accounts. Here’s a quick tax preparation checklist:

#1 Gather Required Documents

Start by collecting all the paperwork needed to complete your tax return. Below is a list of the most common required documents. But, because everyone’s tax situation is different, it’s a good idea to pull out your 2024 tax filing to see what documents were submitted last year.

Income Documents

• W-2 Forms
• 1099 Forms
• Any other documents showing taxable income (rental income, side job, etc.)

Employers typically issue W-2s by the end of January. Most custodians, including brokerage accounts, provide 1099s in early to mid-February.

#2 Identify Deductions

The standard deduction for tax year 2025 is $31,500 for married couples ($15,750 for single filers). Many taxpayers who take the standard deduction don’t realize they may still be eligible for deductions.

For example, the new deduction for car loan interest is an “above-the-line” deduction, meaning it can be claimed by taxpayers even if they don’t itemize. Long-term care insurance premiums are typically an above-the-line deduction for self-employed individuals and business owners.

A “below-the-line” deduction only benefits taxpayers who itemize their deductions. Also, some deductions have income limits. The car loan interest deduction mentioned above starts phasing out for higher-income taxpayers ($200k for couples, $100k for single filers).

A tax professional can help ensure you receive deductions you’re eligible for and advise you of any documentation that may be required. Be sure to tell your tax preparer about any charitable donations you may have made.

You may need to file additional paperwork (Form 8283) for non-cash charitable contributions, such as:

• Art
• Collectibles
• Property
• Publicly-traded securities
• Vehicles

#3 Review Retirement Accounts

It is not too late to make retirement contributions for 2025. The deadline to make contributions for the 2025 tax year is April 15, 2026. If you’re making a contribution for tax year 2025, be sure to instruct your custodian to code that contribution as a 2025 contribution and not a 2026 contribution.

Any contributions made for the 2025 tax year to a pre-tax retirement account may reduce your taxable income for 2025. Consult your financial advisor or tax planner to find out if making an additional contribution could significantly reduce your tax liability (by dropping you into a lower tax bracket, for example).

Confirm QCDs Were Not Classified as Taxable Income

(only applies to taxpayers 70 ½ or older)

In 2025, taxpayers 70 ½ or older could donate up to $108,000 from their IRA to a qualified charity as a Qualified Charitable Distribution (QCD). QCDs are not subject to income taxes and a great way to minimize the tax impact of required minimum distributions (RMDs).

If you made a QCD in 2025, double-check your 1099-R and your tax return to ensure your charitable distribution wasn’t reported as taxable income. Custodians may add a code to Box 7 on Form 1099-R to denote QCDs, but this is optional for tax year 2025. It’s up to the taxpayer to note on their 1040 if an IRA distribution is not taxable because it was a QCD.

#4 Review Any Health Savings Accounts

If you have a high-deductible health insurance plan, you may qualify for a Health Savings Account (HSA). Like retirement accounts, the deadline to contribute to an HSA for tax year 2025 is April 15, 2026. Any HSA contributions for 2025 may reduce your taxable income for 2025.

#5 Check Investment Income for State Tax Applicability

Interest payments from US Treasury obligations and some US Agency obligations are taxable at the Federal level but are generally exempt from state and local taxes. This includes income from ETFs and money market funds where the underlying investments are Treasuries.

Unfortunately, most custodians do not specify the percentage of income derived from a certain fund that came from US Treasuries on a taxpayer’s 1099. It is up to each individual taxpayer (and their tax preparer) to determine this amount. Fund companies will typically post the necessary tax documents with this information on their website early in the year.

For example, if a taxpayer received $1,000 in interest income from a multi-asset bond fund and 40% of the fund’s income was from US Treasuries (according to tax documents from the fund), the taxpayer would typically not owe state or local income taxes on $400 of that $1,000 income.

Note that some states, such as California, New York and Connecticut, require a fund to have at least 50% of its holdings from Treasuries or other state-tax-exempt Agencies to qualify for the full state tax exemption.

#6 Additional Tax Forms

Not all tax forms will arrive prior to April 15th. If you have any alternative investments, you may receive a tax form known as a K-1. Many alternative investment vehicles, such as hedge funds and private equity funds, can be structured as partnerships, which typically distribute K-1s.

It is not uncommon for a K-1 to arrive after April 15th since the partnership needs to complete its own tax return before generating K-1s. Work with a tax professional to help navigate a situation where not all of your tax forms are available by April 15th. Also, consider consulting a financial advisor to help determine if investing in alternative investment vehicles is a good fit for your investment portfolio in the first place.

#7 Review Your Return with a Financial Advisor

Before filing, it’s a good idea to have a financial advisor review your tax return — someone who knows your financial goals, can advise you on optimal tax strategies and review the return for any missed opportunities. For example, a second set of eyes from a financial advisor could help catch errors, such as a QCD incorrectly reported as taxable income.

A good financial advisor will welcome the opportunity to help double-check your tax return before filing. Your advisor can also use the information on your tax return as part of the process to provide holistic financial planning.

Feel free to reach out to a Wealth Manager at Assembly Wealth who can assist you in reviewing your tax return. We’re available online and by phone: (415) 541-7774.

Related Reading:

• What Taxpayers Need to Know About the 2025 Budget Reconciliation Bill
• Tax-Smart Strategies for Gifting Money to Family and Donating Stock to Charity
• Tax Loss Harvesting and 5 Other Ways to Minimize Taxes
• Tax Planning Strategies for Non-Taxable Estates