Mastering Tax Preparation: Key Updates and Tips for the 2024/2025 Season

The tax season is one of the busiest for accountants throughout the year. Besides sending out reminders to clients to organize their tax documents, accountants must think of how to get ahead of recent IRS tax law updates. The thought of the work involved in all of that can be daunting.

However, by taking the right measures, there is no way that the large volume of work during the current tax season can overwhelm accountants. This article discusses several ways to make tax preparation more straightforward with precise tax tips. Keep reading.

Familiarization with 2023/2024 Tax Law Updates

Before anything else, you should stay on top of the tax law updates that have taken place in the 2023/2024 season. It is only by getting prepared for the tax season that you will properly prepare your clients for the same. Tax preparation begins with accountants and other tax experts understanding exactly what they are up against.

The following are the major tax law updates that will affect accountants and their clients in 2024:

1. Increase in Income Tax

As tax preparation gathers steam, accountants must remain abreast of the recent increase in income tax by 5.4 percent. By increasing the income tax rate, the IRS was reacting to the increase in inflation over the last year.

The purpose of this increase in income tax was not to elevate the taxpayer’s burdens but to keep them within their current tax brackets. As such, a married couple, a single taxpayer, and a household head will pay at least $1,500, $750, and $1,100 more, respectively. Accountants need to know these changes in tax regulations to ensure their clients understand how much they should pay.

2. Implementation of the Inflation Reduction Act, 2022

The federal government instituted the Inflation Reduction Act of 2022 to reduce inflation by promoting clean energy, reducing the cost of prescription drugs, and investing in the production of domestic energy. It has a provision for tax credits that came into effect in the 2023/2024 tax season.

Based on these tax law updates, taxpayers who buy energy-efficient residential property such as a house with solar water heaters or solar panels from 2022 to 2032 will receive solar energy tax credits of up to 30 percent. Those who improve their homes to make them energy-efficient will get a 30 percent tax credit up from 10 percent. 

The largest claim amount for home improvement is $1,200. Homeowners buying qualifying biomass boilers and heat pumps get tax credits of up to $2,000. Previously, there was a $500 lifetime limit which the new tax law updates have removed.

These tax regulations also affect electric vehicle (EV) buyers will be eligible for credits of 30% or $4,000, whichever is lower. Eligibility for the tax credits depends on factors such as income, the EV price, and whether the assembly of the vehicle was in North America.

3. Resumption of Student Loan Payments

In 2023, there was a proposal for Congress to extend the pause on student loan payments. Congress declined to extend the pause, leading to the resumption of student loan interest payments in September 2023.

Thus, in the 2024/2025 tax season, accountants should expect to inform their clients about the need to factor student loan payments into their finances. The tax deductions towards student loans could be up to $2,500 to cover the entire year.

4. IRS Paperless Tax Processing

Beginning the 2024/2025 tax season, taxpayers will have the choice of e-filing 20 more tax forms. There will also be amendments to tax forms 940, 941, 941(PR), and 941-S. This follows the move by the IRS to move tax filing from a lengthy manual process to a snappy digital-based system.

In 2023, the IRS launched the Paperless Processing Initiative, which sought to make tax compliance more efficient. Taxpayers will also be able to send digital responses to IRS notices and correspondence using the Document Upload Tool.

Get a Suitable Tax Software

To prepare for the 2024/2025 tax season, you must also consider getting suitable tax software such as QuickBooks. The software will help you to do the calculations for each of your clients. That way, you will be able to meet all the tax deadlines without serious issues.

Besides QuickBooks, you should also get software to help you manage your clients more efficiently. A good example is the Basil Practice Management software, which is a cloud-based solution for accountants, CPAs, and tax professionals.

The platform has attractive features, including a client portal, tasks & workflows, client dashboards, calendar, and email integration. Clients can access all their details and other crucial information via the client portal. 

There is also a centralized database where the accountant keeps all client information. Through an intuitive interface, you can keep track of all tasks and projects, including tax filing and tax audits. Thus, you can easily ensure tax compliance for all your clients.

Get Familiar with the IRS Website

Since you will mostly be working on the IRS website for the 2024/2025 tax season, you should familiarize yourself with the latest changes. Proper tax preparation involves knowing the kind of e-forms you will be filing for your clients. Read instructions concerning each e-form to understand how the latest tax law updates affect your work.

To stay up to date with your tax preparation, keep checking the IRS website to avoid surprises once you start filing. Also, familiarize yourself with the tax law updates and tax deductions discussed above. You also need to know the new 20 forms you will need to fill out online.

Importantly, the IRS updates its website often throughout the tax season. Therefore, as part of your tax preparation, you should check the website at least once every month. With that, you will ensure your tax planning conforms with the latest tax regulations. 

On the IRS website, you will also access various tools for a more accessible tax filing. For example, with the Tax Withholding Estimator, you can help your clients estimate how much tax to withhold from paychecks.

First-time tax experts will benefit from reading Publication 17 on how tax filing works. As they go into the new tax season, they will know the latest tax law updates, tax deductions, tax credits, and other interesting topics.

Gather all Your Clients’ Paperwork

As part of your tax preparation, you should collect all your clients’ relevant paperwork. This is one of the tax strategies that looks obvious but easily gets overlooked even by seasoned accountants. So, before or at the beginning of the tax season, ask your clients to provide you with documents such as 1099s, W-2s, receipts, investment records, and bank statements.

Also, ask your clients to provide the previous year’s tax returns for an accurate comparison of the information. Since tax filing is a complex process, you should always ensure that you have all the relevant forms and documents on hand. Luckily, with Basil's cloud-based document management system, you can store client information in folders and easily retrieve it whenever necessary.

The Role of Technology in Effective Tax Preparation

While it is possible to conduct tax planning without technology, you can easily get bogged down by the large volumes of paperwork involved. That is why you can no longer neglect technology as you prepare for the new tax season..

With the Basil Practice Management software, accountants, CPAs, and other tax professionals can have a more efficient tax planning process. They can communicate directly with their clients and ensure they complete all projects before the end of the tax season.

Unfortunately, most accountants have problems getting the right technology to manage their work. That is where Basil comes in. The platform allows accountants to organize their work and communicate with clients via email and chat. They can also store all the client’s documents in the cloud and access them from anywhere across the world.

Any accountant or tax professional can sign up with Basil and enjoy all the benefits that it brings to them and their clients in the new tax season. Therefore, if you are looking for an affordable, efficient, all-in-one, and simple client management system for accountants, try Basil for free now.