Tax season is upon us, and while it’s a yearly ritual, it often sneaks up on many of us. Whether you’re feeling overwhelmed, unsure, or just plain procrastinating, preparing for tax season doesn’t have to be stressful. With some planning and the right resources, you can confidently tackle your taxes and even find ways to save money. In this blog post, I’ll share expert insights from my podcast conversation with Paul Allen, a tax pro with decades of experience, to help you prepare for tax season 2024.
Podcast Guest: Paul Allen
Paul Allen retired from the US Navy in 2010 and is now a Founding Member of PIM Tax Services, APFORIA, the Military Financial Advisors Association, and the Military Qualified Financial Planner Certification Program. Paul holds an MA in Financial Planning and Law, is an enrolled agent of the IRS, and holds the CFP® and MQFP® certifications.
Why Prepare for Tax Season Early?
The key to a smooth tax season is preparation. As Paul explains, being proactive not only minimizes stress but also ensures you take advantage of every tax benefit you’re entitled to. For individual taxpayers, this usually means gathering all necessary documents, like W-2s, 1099s, mortgage interest statements, and investment reports, as soon as they’re available. Staying on top of bookkeeping throughout the year is essential for business owners.
Key Steps to Prepare for Tax Season 2024
Organize Your Documents
Set up a system for collecting tax-related documents. Use a folder, box, or digital storage solution to keep track of everything you’ll need, such as:
- W-2s and 1099s
- Mortgage interest statements (Form 1098)
- Investment income reports
- Receipts for deductible expenses
Keep Accurate Records Year-Round
For business owners, regular bookkeeping is critical. Use tools like QuickBooks, Wave, or even Excel to maintain an income statement and track expenses. Waiting until the last minute can lead to missed deductions and unnecessary stress.
Understand “Ordinary and Necessary” Expenses
If you’re self-employed or own a small business, only claim deductions that are both ordinary (common in your industry) and necessary (essential for your business). For example:
- Travel expenses for business trips
- Equipment or software used for work
- Be cautious about gray areas, like clothing or makeup. Paul advises that unless the expense is exclusively for business (e.g., specialized makeup for on-camera work), it may not qualify.
Take Advantage of Tax Credits
If you’re purchasing an electric vehicle, consider using the Clean Vehicle Credit at the dealership. This $7,500 credit can be applied directly to your purchase price, maximizing its value. Be sure to keep the dealer’s paperwork for your tax return.
Use Free or Low-Cost Resources
Many military families can access free tax preparation services through Military OneSource or base tax centers. If your return is simple, these resources can save you time and money.
What to Do If You Make a Mistake
Mistakes happen, but they’re fixable. If you receive an additional tax document or notice an error after filing, you can amend your return using Form 1040X. Most tax professionals, like Paul, will correct mistakes at no extra cost if they’re at fault. Always review your return carefully before filing to avoid common errors.
Tax Law Changes for 2024
There are a few updates you should be aware of:
- Clean Vehicle Credit: As mentioned, you can now apply this credit directly at the dealership.
- 1099-K Threshold: Payment processors like PayPal and Venmo will issue 1099-K forms for transactions exceeding $5,000. If these transactions are not business-related, include the 1099-K on your return but adjust it to reflect non-income purposes.
Pro Tips for Military Families
Military spouses often face unique tax challenges, especially when working in states different from their legal residence. Paul stresses the importance of using forms like the VA-4 (or your state’s equivalent) to ensure the correct withholding. This avoids unnecessary filings and refunds in non-resident states.
Final Thoughts: Make Tax Season Easier
Tax season doesn’t have to be a source of stress. By staying organized, understanding key tax rules, and seeking professional help when needed, you can make the process smoother and even uncover opportunities to save money.
For more tips and resources, check out my podcast episode with Paul Allen, available now on the MILMO Show. And if you’re ready to level up your tax game, subscribe to the MILMO newsletter for exclusive updates and expert advice.
Paul’s past episode: How to be Better Prepared for Tax Season
Episode 314 Time Stamps
01:06 Preparing for Tax Season 2024
03:59 Understanding Business Expenses
12:53 Tax Deductions and Record-Keeping
18:13 Handling Tax Mistakes and Changes
20:49 Maximizing the Clean Vehicle Credit
21:44 Understanding the 1099-K Form Changes
23:40 End-of-Year Tax Planning Tips
24:36 Military Spouse Taxation Issues
27:20 Preparing for Tax Season
28:01 Quickfire Questions and Recommendations
31:10 Fun Fact or Fiction Game
34:50 Conclusion and Resources
Related: Military Spouse Entrepreneurs and Taxes
Resources From Preparing for Tax Season 2024
- PIM
- MFAA
- MQFP
- Military OneSource MilTax
- Military Spouse Residency Relief Act
- Quickbooks for small Businesses
- Thinking, Fast and Slow by Daniel Kahneman
- Alchemy by Rory Sutherland
MILMO Show Sponsor
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