A no-stress guide to tax season: Planning now for a smoother filing

Tax season has a way of creeping up before you know it, leaving many scrambling for deductions and ways to trim their tax bill at the last minute. But the most effective tax strategies aren’t last-minute — they start months in advance. Whether you’re an individual filer, a business owner, or managing wealth, these smart strategies can help you make the most of your return and avoid costly mistakes.

Common tax mistakes to avoid

Many taxpayers — both individuals and business owners — fall into common traps when filing their returns. From overlooking key deductions to making simple filing errors, these mistakes can lead to missed savings, delays or even audits. Understanding where people commonly go wrong can help you take proactive steps to avoid these pitfalls and ensure a smoother tax filing process.

• Overlooking deductions and credits: Individuals often miss key tax credits, such as the Child Tax Credit, education credits or deductions for medical expenses. Business owners sometimes overestimate what they can deduct, mistakenly assuming personal expenses qualify as business expenses.

• Making simple errors: Incorrect Social Security numbers, mathematical miscalculations or missing tax documents can delay returns and lead to unnecessary IRS scrutiny.

• Underestimating tax liability: Capital gains, freelance income or under-withholding from paychecks can lead to a surprise tax bill. Proper tax planning throughout the year can help avoid this issue.

Key tax strategies for individuals and businesses

A little tax planning throughout the year can go a long way in helping individuals and businesses maximize deductions and keep more money in their pockets. While avoiding mistakes is important, taking proactive steps can help taxpayers improve cash flow, build long-term wealth and avoid unnecessary surprises — including ensuring compliance with evolving tax laws. Here’s how:

Tax planning for individuals

How to keep more cash in your bank account.

• Maximize retirement contributions: Contributing the maximum allowable amounts to 401(k)s or IRAs can reduce taxable income.

• Utilize health savings accounts (HSAs): HSAs allow for tax-free growth and withdrawals for qualified medical expenses, making them a valuable long-term tax planning tool. Many individuals make the mistake of using HSA funds immediately instead of allowing them to accumulate and grow tax-free. By treating an HSA as a supplemental retirement account, taxpayers can take advantage of long-term compounding while preserving funds for future medical expenses.

• Leverage charitable giving: Structured charitable giving, such as donating to a donor-advised fund or setting up a charitable trust, can provide tax benefits while supporting philanthropic goals.

• Plan for capital gains taxes: Long-term capital gains are taxed at lower rates, and strategies like tax-loss harvesting can help offset gains and reduce overall tax liability.

Tax planning for business owners

Staying strategic is just good business sense.

• Home office deductions: Think you can claim your home office because you work remotely? Not so fast. This deduction is only for self-employed business owners with a dedicated workspace — W-2 employees don’t qualify. Using the simplified deduction method, which calculates based on square footage, can make the process easier and minimize record-keeping headaches.

• Leverage Section 179 deductions: Business owners can deduct the full cost of qualifying equipment and software purchases rather than depreciating them over time. This deduction can be particularly beneficial for businesses making large capital investments, but it’s important to ensure that purchases qualify under IRS guidelines. Planning equipment purchases strategically before year-end can help maximize deductions while aligning with business cash flow needs.

• Review business structure: Depending on income levels and tax law changes, switching from an LLC to an S-corp (or vice versa) may provide tax advantages.

• Optimize business expenses: Tracking and categorizing expenses like travel, home office and professional services ensures legitimate deductions while avoiding unnecessary audit risks. However, business owners should be cautious about over-deducting expenses that may not fully qualify, as excessive deductions can increase audit risk. Consulting with a tax professional can help determine which expenses are legitimate and how to document them properly.

Charitable giving for tax efficiency

Ways to save while giving back.

• Donor-advised funds: These allow donors to contribute now and distribute to charities later while claiming an immediate deduction.

• Bunching donations: Taxpayers who don’t itemize every year can group multiple years’ worth of donations into a single year to exceed the standard deduction threshold.

How recent tax law changes impact this year’s filings

While there haven’t been significant tax law changes for 2024, the tax provisions from the 2018 Tax Cuts and Jobs Act are set to expire at the end of 2025. If no new legislation is passed, taxpayers could see higher tax rates, a reduction in standard deductions, and changes in estate and corporate tax structures.

Planning ahead is crucial — adjusting financial strategies now can help mitigate potential tax increases and ensure a smoother transition if changes take effect. Keeping an eye on tax law changes helps taxpayers adjust early and avoid last-minute surprises.

How to prepare for tax season

Thoughtful preparation for tax season can help individuals and businesses avoid last-minute stress while making the most of available savings. By staying ahead of deadlines, taxpayers can maximize deductions and credits without the last-minute rush. Strategic planning helps manage cash flow and prevents unwelcome surprises when filing deadlines roll around.

Last-minute tax-saving strategies

While most tax savings require planning, a few last-minute moves can still help lower your bill before the deadline.

• Contribute to an IRA: Contributions can be made until the tax filing deadline (April 15) for the previous tax year.

• Make an HSA contribution: If eligible, contributing to an HSA before the filing deadline can provide additional tax savings.

• Check withholding and estimated payments: Adjusting withholdings for the upcoming year can prevent underpayment penalties and large tax bills.

Longer-term tax preparation

Getting ahead of your taxes now means fewer headaches later. The earlier that individuals and businesses can start planning, the more opportunities they may have to reduce their tax burden, take advantage of available credits and deductions, and avoid rushed decisions that could lead to errors or missed savings.

• Stay organized: Maintain a tax folder (physical or digital) to track receipts, deductions and important documents throughout the year.

• Adjust withholdings: Reviewing your withholdings early in the year can help avoid a surprise tax bill next April.

• Bring in the pros: Tax laws can get tricky, and a professional can help you navigate the details while maximizing your savings.

Tax season can be stress-free with the right approach. By taking advantage of available deductions, staying informed on tax law changes and planning ahead, individuals and business owners can minimize their tax liability and avoid common pitfalls. Start preparing now to ensure a smooth and stress-free filing experience next year.

• Doug Throneburg is head of wealth management at Byline Bank.