Tax season is here

It's that time of year again. The first quarter of every year is unofficially known as "tax season," when accountants disappear into long hours of number crunching, and people scramble to collect 1099s and W-2s plus all of the documentation needed to file taxes.

We have assembled a checklist to help get all your ducks in a row as the tax collector cometh.

“While you should rely on a tax professional for specific recommendations, tax time is also a logical time to run through your personal financial checklist," said Karla Salinas, financial planner at BOK Financial®.

Annual financial checklist
"I use tax time as my annual reminder to review my financial situation to consider what's changed from last year," said Salinas. "It keeps me accountable for any adjustments I want to make, like increasing my retirement and other savings—to coincide with a raise, perhaps—adjusting withholdings and even updating beneficiary designations."

Salinas offered seven areas for you to consider:
1. Tax withholding. Maybe you realize you didn't get 2024 quite right, and you're going to have to pay more than anticipated, so now is the time to fill out a new withholding form with your employer (also known as a Form W-4) or increase estimates to get it adjusted for 2025, Salinas said.

2. Retirement contributions. If you contribute to a 401(k), are you getting the full benefit of an employer match? "Check your contributions along with your allocations to ensure they still align with your goals," Salinas recommends.

If you have earned income and an individual retirement account (IRA) or Roth IRA , you can contribute up to $7,000 if you are under 50 years old, and $8,000 if you are 50 or older for 2024 (and the same for 2025), and you can make that contribution up to April tax deadline for the previous year. You also may be able to contribute the same amount in your spouse's name if they don't have a retirement plan through their employer.

While Roth IRA contributions are never tax-deductible, contributions to traditional IRAs may be deductible, depending on income, tax filing status and access to an employer-sponsored plan. In addition, certain taxpayers may qualify for a "Saver's Credit" for making eligible contributions to a retirement plan.

3. Educational savings. Families contributing to a 529 plan may be able to reduce taxable income on their state income taxes. More than 30 states offer a deduction or credit for 529 plan contributions with a December 31 deadline, but a few have an April deadline to benefit the previous year's taxes.

Oklahoma offers a generous state income tax deduction on 529 plans of up to $20,000 for a married couple filing jointly—and typically gives them until April 15 to contribute. "Make sure you know the rules for your state," cautions Salinas. "Some require use of the state's own 529 plan to receive the deduction."

4. Savings check. This is also a good time to check in on your budget. What are you spending money on? How have rising costs impacted your personal spending? What's the state of your emergency fund? Does it need replenishment?

"If you didn't do so at the start of the year, I encourage you to look at your spending and savings plan," Salinas said. "February and March are popular months for bonuses and raises to kick in, creating an ideal opportunity to increase your savings."

5. Medical expenses. If your company offers a high deductible health plan and a health savings account (HSA), are you fully funding that savings vehicle? Contributions to an HSA are tax-deductible and tax-deferred and can be made up until April 15.

"If you have access to an HSA, it's a great savings tool," Salinas said. "Medical expenses can add up quickly. Having that pool of funds available to cover insurance deductibles, co-payments and out-of-pocket expenses is a nice perk to a high-deductible plan. Many people also choose to save those funds for medical expenses in retirement, opting to pay current expenses with after-tax dollars to benefit from tax-free compound earnings in their HSA."

In addition, if you itemize your deductions and incurred medical or dental expenses last year, you may qualify for a deduction for expenses paid for you, your spouse or your dependents—but only if they exceed 7.5% of your adjusted gross income. You must not have paid these expenses out of your HSA to qualify.

6. Charitable donations. If you're philanthropically minded, you can generally deduct up to 60% of your adjusted gross income (AGI) for cash donations to public charities and up to 30% of AGI for non-cash items.

• For 2024, standard deductions are $14,600 for single and married individuals filing separately and, $29,200 for married filing jointly and $21,900 for heads of household.
• For 2025, standard deductions will be $15,000 for single filers, $30,000 for married filing jointly and $22,500 for head of household.

For those who have already reached retirement and are receiving the required minimum distributions (RMD), you should note that:

• Qualified charitable distributions can satisfy the RMD requirement of up to $105,000 per individual for 2024.
• Qualified charitable distribution can satisfy the RMD requirement of up to $108,000 per person for 2025.

"Taking the route of a qualified charitable distribution can help accomplish your philanthropic goals while helping to keep your required minimum distribution from being included as income for tax purposes," said Salinas.

7. Gifting money. In addition, if you plan to gift money to someone (as opposed to making a charitable donation), you:

• Could give up to $18,000 for 2024.
• Can gift up to $19,000 in 2025 (per individual, which is the limit to avoid the need to file a gift tax disclosure).

Gifts have both an annual exclusion and a lifetime exclusion. You'll need to disclose the gift by filing an IRS Form 709 if you exceed the limit.

If all of this is making your head spin, Salinas reminds you, "The yearly ritual of meeting tax deadlines may not be a favorite annual occurrence, but your financial advisors and tax professionals are there to support you through the process in keeping it all straight."

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Information in this article should not be construed as tax advice and is offered for general informational purposes only.