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Get organized before tax season: avoid common tax mistakes with a year-end financial audit

As the 2024 tax season approaches, you might be wondering how you can get your finances in order. It’s always a good idea to start gathering the information you need ahead of time, to avoid common tax mistakes and maximize your refund. Many taxpayers overlook deductions and credits they’re eligible for, leading to over $1 billion in overpaid taxes each year. A year-end financial audit can help you review your income, expenses, and potential tax savings to ensure you don’t miss out.

Simply follow our step-by-step guide to organize your finances, claim every deduction, and prepare yourself for a stress-free tax season.

Want an easy way to track deductions? Download our free Tax Planner and try the Refund Estimator for a head start on tax season!

1. Gather all your financial documents

Begin by collecting all essential documents for a thorough end-of-year financial audit. These may include:

• Income records, like W-2s, 1099s, and bank statements
• Receipts for deductible expenses, such as medical bills and charitable donations
• Tax forms for education, mortgage interest, and/or retirement contributions

Stay organized with our Tax Planner, which can help you track key documents and deductions to maximize your refund.

2. Review your income and expenses

Next, analyze your income and expenses:

• Check for overlooked deductions, like work-from-home or unreimbursed expenses.
• Compare your actual vs. expected income to identify any discrepancies or unexpected sources (like bonuses or investment gains)

Need help adjusting your withholding? Our Tax Planner includes a Paycheck Optimizer to calculate the best deductions for your financial goals.

3. Maximize retirement contributions

Maximize contributions to tax-advantaged accounts to reduce taxable income. (In other words, put as much money as you can into accounts that help you save on taxes, which can lead to paying less in taxes overall):

• Traditional IRA and 401(k) contributions are deductible and lower your tax bill.
• Health Savings Accounts (HSAs) offer tax benefits while covering medical expenses.

Failing to contribute the maximum amount is a common mistake, which results in paying more taxes than necessary.

4. Audit your tax deductions

Don’t miss commonly overlooked deductions in your financial audit:

• Charitable donations: Claim cash and non-cash donations, like household items.
• Medical expenses: Deduct eligible medical and dental costs over 7.5% of your AGI.
• Home office deduction: Deduct rent, utilities, or mortgage interest if you work from home.

Capture all your deductions with our Tax Planner tool—helping you organize receipts and maximize refund opportunities!

5. Claim all applicable tax credits

Tax credits are valuable because they directly reduce your tax bill. There are several tax credits that may apply to you, such as: 

• Earned Income Tax Credit (EITC) for low- to moderate-income earners
• Child Tax Credit up to $2,000 per child
• Education Credits (American Opportunity Credit or Lifetime Learning Credit)

With the Refund Estimator in our Tax Planner, you’ll see how these credits can increase your refund and help reduce your overall tax liability.

With the Refund Estimator in our Tax Planner, you’ll see how these credits can increase your refund and help reduce your overall tax liability.

6. Adjust your withholding after major life changes

Another common mistake is not adjusting your tax withholding after experiencing significant life changes. If you’ve had a change in income, marital status, or dependents, you may need to update your withholding to avoid the possibility of owing more taxes than anticipated or receiving a smaller tax refund than expected. Major life events can affect the taxes you owe, so adjusting now can help you better manage your tax liability.

Learn more about tax savings during major life stages in our blog post, “How to Maximize Your Tax Savings after Major Life Changes”, to ensure you're maximizing deductions and benefits.

7. Double-check for tax filing mistakes

Simple errors like mismatched Social Security numbers or incorrect filing statuses are common and can delay your refund. Ensure that:

• Your names and Social Security numbers match exactly
• You select the correct filing status, especially if you've had life changes like divorce

These small checks can save you from frustrating delays.

These small checks can save you from frustrating delays.

8. Plan for Next Year

Taking time to complete a year-end financial audit will ensure you don’t miss any deductions or credits this year and sets you up for a financially strong new year. Use these insights to stay organized, review your finances regularly, and maximize tax savings for the year ahead.

Maximize your refund with smart planning

Completing a year-end financial audit helps you take control of your finances and ensures you’re ready for tax season. By maximizing deductions and tracking your contributions, you’re setting yourself up for a stress-free tax filing experience.

Maximize your refund and make tax season stress-free with Percapita’s free Tax Planner. Download the app now to access tools like the Refund Estimator and Paycheck Optimizer to help you prepare for the biggest refund possible!

FAQs

Common tax write-off questions

What documentation do I need for charitable donations?

How can I claim the home office deduction if I work remotely?