Tax Season: How to Prepare for Optimum Savings, Benefits

Tax forms at the start of the tax season rush, in the offices of tax preparation firm Infinite Tax Solutions, in Boulder, Colo., in this file photo. Brennan Linsley/ AP Photo

From organizing documents, to scheduling a meeting, to stressing over whether you will be owing money or claiming a refund, filing annual taxes can be draining for many individuals and business owners.

But the 2025 tax season can also be easier and a lot less stressful with some simple steps and approaches.

“The subject of taxes is bothersome to most people, but it doesn’t have to be,” Charles Ford, a certified public accountant (CPA) in Greenville, South Carolina, told The Epoch Times.

“Whether you are a new filer or someone who has been filing for decades, there are a number of ways and considerations that can save you money and avoid mistakes.”

If you haven’t already filed your taxes, here are items to consider, both now and going forward:

Basics

While tax laws are subject to change each year, these five preliminary steps in the filing process remain the same:

Determine If You Need to File. The IRS has different conditions for who needs to file. You must file if you are single, under the age of 65, and earned $14,600 or more in gross annual income; married and filing jointly with $29,000 or more in income; or enrolled in a Healthcare Insurance Marketplace plan.

For all requirements and exemptions, check with your local IRS office or visit the IRS website.

Choose a Reliable Preparer. According to a report by Taxpayer Advocate, an organization within the IRS, more than 54 percent of all individual income tax returns were prepared in 2023 by paid return preparers.

Ford advised using either someone local to you or a reputable firm that has been handling taxes for years, such as H&R Block.

“You hear a lot on advertisements about these tax-savings organizations who say they’re going to save you hundreds of thousands of dollars,” he said.

“We’ve seen a lot of fly-by-night people come up with those amounts, whether it’s right or not, and they’re gone after they get their money. So it’s important to have a CPA who can cut through all the gains and losses and represent what’s really happening.”

If cost is an issue, one solution for people earning a household income of less than $60,000 per year is to use the Volunteer Income Tax Assistance, a free service provided by the United Way.

Gather All Pertinent Documents. An accurate tax return includes all W-2s, 1099 forms, statements of interest and dividends, and relevant receipts. Omitting a form or part of your income in an effort to save money upfront can cost you IRS penalties later or a delayed refund.

Ford said a trusted professional, especially one you have worked with long-term, can ensure you include all the necessary documents.

“A lot of clients don’t know the questions to ask,” he said. “In some cases, if they just drop off the information, I’ve done their work for so long that even if they haven’t given me all the information, I know what to look for.”

File Early If You Are an Individual. Early filing not only lets you avoid crowds and allows for faster refunds, but it also saves you from having to scramble to find an available professional and from having to know upfront how to apply new information.

“Right now, you may be more focused on what you’ll owe or receive as a refund,” Ford said. “However, as you work through your annual tax filing, you should familiarize yourself with amounts that may have changed for 2025 due to inflation adjustments.”

Plan Early If You Own a Business. Ford said tax planning for business clients should start in November so that preparers can analyze the first 10 months and predict where the company’s profits, losses, and tax standing will be for the entire 12 months. This allows them to identify more options for deductions and tax savings.

“Come February, it’s too late, except for some retirement plan contributions,” Ford said. “That’s why tax planning is so important.”

New Business Ventures

Suppose you are considering opening a furniture store, beginning a construction firm, or providing a service to help families navigate senior living choices.

You could choose a sole proprietorship, partnership, limited liability corporation (LLC), C-corporation, or S-corporation.

C-corporations are taxed on corporate income, and shareholders are taxed again for the dividends they receive from the corporation.

S-corporations avoid double taxation by passing their taxable credits, income, losses, and deductions directly to their shareholders.

Ford advised using a lawyer or a tax professional to choose the right setup, as it will affect not only your taxes, but also the structure of your business.

“The first tax return for an entity is the most important because that’s where you elect to have accrual or cash as the basis for your business,” he said. “Whichever way you choose to classify, whether accrual or cash basis, it can’t be changed later unless you get IRS permission.”

While most of Ford’s business clients are cash-based, he strongly advised against new businesses choosing an LLC “because the majority of LLCs are set up wrong.”

“We recommend that you don’t set up an LLC on your own, that you get counsel from an attorney,” he said.

Investment Choices

Whether your assets are in stocks, bonds, annuities, mutual funds, 401(k) plans, profit-sharing plans, real estate, IRAs, or even Social Security supplements to some degree, knowing how best to position these funds alone and with respect to each other is critical to personal and business tax planning.

Since rules governing all investments are subject to annual change, Ford recommends checking with a financial adviser or a tax preparer in order to realize optimal savings.

For instance, the limit for 401(k) or 403(b) plans is currently $23,500, with an additional $7,500 for people 50 and older.

“And new in 2025, employees age 60 through 63 can make enhanced catch-up contributions of up to $11,250, including the $7,500 standard catch-up contribution,” Ford said.

Plus, as the business landscape has noted in the past few years or so, many baby boomers are at retirement age but still in the workforce.

ResumeTemplates.com, a platform for free professional resume templates and examples, reported last month that 22 percent of U.S. seniors are still working, and a growing number plan to return to the workforce this year.

For seniors trying to figure how Social Security benefits affect their total-income taxes, the Social Security tax wage base is now $176,100—which means you don’t owe tax on amounts earned above this threshold.

“But Medicare tax must be paid on all amounts earned,” Ford said.

For younger taxpayers, he suggested three long-term, tax-saving investment strategies:

Traditional IRA. This type of retirement savings account offers the advantage of tax-deferred growth, meaning that taxes on untaxed earnings or contributions don’t have to be paid until age 73. Contributions are made with pre-tax dollars and allowed to grow tax-deferred. Withdrawals later in retirement are taxed as ordinary income.

The combined contribution to traditional (and Roth) IRAs is limited to $7,000 for the 2025 tax year for everyone under age 50. If you’re 50 or older, you can also contribute an additional $1,000.

“These amounts are the same as for 2024,” Ford said.

Roth IRA. This account carries the advantage of putting after-tax dollars into a retirement plan.

“When you get the money out, those contributions under current tax law will not be taxed, and it grows tax-free,” Ford said. “And at age 59 1/2, you can withdraw contributions and earnings without penalty as long as the Roth IRA has been open for at least 5 years.

The 2024 contribution deadline for both traditional and Roth IRAs is April 15, 2025.

“Roth contributions won’t save on income taxes, but the traditional will,” Ford said. “And if you’re contributing to a traditional IRA, you get a deduction on your taxes for that.”

Converting Traditional IRA Money to a Roth. In 2010, the federal government began allowing people to convert accounts from traditional IRAs to Roth IRAs, regardless of their income.

Ford said that while this strategy can be beneficial if you expect to be in a higher tax bracket later in life, or if you wish to leave a tax-free inheritance to heirs, he advised to always be aware of the annual limitation on money contributed to the Roth.

“But if you can live with that limitation, then it’s a pretty good thing,” he said.

Other suggestions for tax filing include knowing whether to itemize expenses or take a standard deduction.

The standard deduction is currently $14,600 for single or married taxpayers filing separately; $29,200 for married couples filing jointly or qualifying surviving spouse; and $21,900 for the head of a household.

But whichever options or avenues you choose, Ford said the most important consideration is to use a professional tax preparer, whether paid or free of charge, to realize optimal tax savings. Put another way, don’t try to go it alone.

“Don’t pay more in taxes than you have to,” he said. “Take full advantage of all deductions and credits with tax planning, compliance, and preparation services.”