Comprehensive Tax Prep Checklist for Individuals, Business Owners, and Expats

In today’s complex financial landscape, staying on top of your tax obligations is more crucial than ever. Whether you’re a high-earning tech professional navigating equity compensation, a finance executive with international investments, or an expat managing cross-border tax implications, proper tax preparation can make a significant difference in your financial health.

At George Dimov CPA, we understand the unique challenges faced by professionals in the tech and finance sectors, especially those with international backgrounds. This comprehensive tax prep checklist is designed to help you navigate the intricacies of tax season with confidence, ensuring you maximize your deductions and comply with all relevant regulations.

General Tax Prep Tips for All Filers

Before we delve into specific checklists for different types of filers, let’s cover some universal tax prep tips that everyone should keep in mind:

Gather Your Basic Documentation

Start early and collect all necessary documents. This includes:

• W-2 forms from all employers
• 1099 forms for freelance or contract work
• 1098 forms for mortgage interest
• 1095 forms for health insurance coverage
• Investment income statements (1099-DIV, 1099-INT, 1099-B)
• Records of charitable donations
• Last year’s tax return

Pro Tip: Create a dedicated folder (physical or digital) for tax documents as they arrive throughout the year. This simple habit can save hours of frantic searching come tax season.

Know Your Important Deadlines

Mark these key dates on your calendar:

• April 15: Standard deadline for filing individual tax returns
• June 15: Deadline for U.S. citizens living abroad
• October 15: Extended deadline if you file for an extension

Remember, if you owe taxes, payment is still due by April 15, even if you file for an extension.

Consider Your Filing Status

Your filing status can significantly impact your tax liability. Options include:

• Single
• Married Filing Jointly
• Married Filing Separately
• Head of Household

For our high-earning clients, especially those in dual-income households, the choice between filing jointly or separately can have substantial financial implications. We’ll discuss this in more detail in the individual filer section.

Tax Prep Checklist for Individuals

As a high-earning professional in the tech or finance sector, your tax situation likely involves more than just a simple W-2. Let’s break down the key areas you need to consider:

Wage Earners: Maximizing Your Employment Benefits

• 401(k) Contributions: Ensure you’re maximizing your 401(k) contributions. For 2024, the limit is $23,000, with an additional $7,500 catch-up contribution if you’re 50 or older.
• Health Savings Account (HSA): If you have a high-deductible health plan, max out your HSA contributions. These offer triple tax benefits: tax-deductible contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses.
• Flexible Spending Accounts (FSAs): Don’t forget to use the funds in your FSA before they expire.

Investment Income and Equity Considerations

For many in the tech sector, equity compensation forms a significant part of the total compensation package. Here’s what you need to consider:

1. Stock Options (ISOs/NSOs):

• Review your vesting schedule and consider the tax implications of exercising options.
• For ISOs, be aware of the Alternative Minimum Tax (AMT) implications.
• For NSOs, remember that the spread at exercise is taxed as ordinary income.

2. Restricted Stock Units (RSUs):

• Keep track of vesting dates and the fair market value at vesting.
• Consider tax withholding strategies to avoid underpayment penalties.

3. Employee Stock Purchase Plans (ESPP):

• Review your ESPP purchases and any dispositions during the year.
• Understand the tax implications of qualifying vs. disqualifying dispositions.

4. Capital Gains:

• Review your investment portfolio for tax-loss harvesting opportunities.
• Consider the timing of sales to optimize between short-term and long-term capital gains rates.

Relocation and State Taxes

In the dynamic tech and finance industries, relocation is common. If you’ve moved states this year:

1. Update your state tax withholdings promptly.
2. Be prepared to file part-year resident returns in both your old and new states.
3. Keep detailed records of your move date and changes in residency status.

Remember, overpayment to the wrong state can be challenging to rectify, so it’s crucial to get this right.

Charitable Contributions

For our high-earning clients, charitable giving can be both personally rewarding and tax-advantageous. Consider these strategies:

1. Donor-Advised Funds: These allow you to take an immediate tax deduction while spreading out your charitable giving over time.
2. Qualified Charitable Distributions: If you’re over 70½, you can make tax-free charitable donations directly from your IRA.
3. Appreciated Stock Donations: Donating long-term appreciated stocks can allow you to avoid capital gains tax while still claiming the full market value as a deduction.

Previous Year Tax Returns

If you haven’t filed returns for previous years, now is the time to catch up. The IRS generally only allows you to claim refunds for the past three years, so don’t leave money on the table.

Special Considerations for Individuals in the 2024 Tax Season

Covid-Related Distributions: If you took a Covid-related distribution from your retirement account in 2020, remember that you have the option to repay it within three years for a tax refund.

Remote Work Deductions: With the rise of remote work, ensure you’re tracking any eligible home office expenses.

Tax Prep Checklist for Business Owners

For our entrepreneurial clients, tax preparation involves an additional layer of complexity. Here’s what you need to focus on:

Business Income and Expenses

Gather all income records, including:

• Gross receipts from sales or services
• Sales records
• Returns and allowances
• Business checking/savings account interest

Compile expense records:

• Advertising
• Vehicle expenses and mileage
• Commissions and fees
• Depreciation
• Employee benefit programs and insurance
• Office expenses and supplies
• Rent or lease payments
• Travel, meals, and entertainment

Pro Tip: Consider using accounting software to streamline this process and ensure accuracy.

Deductions and Credits

As a business owner, maximizing your deductions is crucial. Some often-overlooked deductions include:

1. Home office deduction (if you use a portion of your home regularly and exclusively for business)
2. Professional development expenses
3. Bank fees for business accounts
4. Subscriptions to professional publications

Don’t forget to explore available tax credits, such as the Small Business Health Care Tax Credit or the Research and Development Tax Credit, which can be particularly relevant for tech startups.

Retirement Contributions

As a business owner, you have access to powerful retirement savings tools:

1. SEP IRA: You can contribute up to 25% of your compensation or $69,000 (for 2024), whichever is less.
2. Solo 401(k): This option allows for both employee and employer contributions, potentially allowing you to save more for retirement and reduce your current tax liability.

Remember, you have until the tax filing deadline (including extensions) to make these contributions for the previous tax year.

Year-End Planning

Before the year ends:

1. Review your business structure (sole proprietorship, LLC, S-Corp) to ensure it’s still the most tax-efficient option.
2. Consider accelerating expenses or deferring income to manage your tax liability.
3. If you’re planning major equipment purchases, look into Section 179 deduction limits and bonus depreciation rules.

Tax Prep Checklist for Expats

For our international clients or U.S. citizens working abroad, tax preparation comes with unique challenges. Here’s what you need to focus on:

Foreign Income Reporting

1. Foreign Earned Income Exclusion (FEIE): If you qualify, you can exclude up to $120,000 (for 2024) of foreign earnings from U.S. tax. You’ll need to file Form 2555.
2. Foreign Tax Credit: If you’ve paid taxes to a foreign country, you may be able to claim a credit on your U.S. taxes using Form 1116.
3. Foreign Housing Exclusion or Deduction: Don’t forget to claim this if you qualify. It can provide additional tax savings beyond the FEIE.

FBAR and FATCA Compliance

1. FBAR (FinCEN Form 114): Required if you have foreign financial accounts with an aggregate value exceeding $10,000 at any time during the year.
2. FATCA (Form 8938): Required for U.S. taxpayers with specified foreign assets that exceed certain thresholds.

Failure to file these forms can result in severe penalties, so ensure you’re compliant.

Tax Treaties and Double Taxation

The U.S. has tax treaties with many countries to help prevent double taxation. Familiarize yourself with the treaty between the U.S. and your country of residence to ensure you’re taking advantage of all available benefits.

State Residency Considerations

Even if you’re living abroad, you may still have state tax obligations. Some states are particularly aggressive in maintaining tax residency. Consider:

1. Severing ties with your former state of residence (e.g., driver’s license, voter registration)
2. Establishing ties with your new country of residence
3. Keeping detailed records of your time spent outside the U.S.

Advanced Tax Planning and Consulting Services

For many of our high-earning clients in the tech and finance sectors, particularly those with international ties, basic tax preparation isn’t enough. Advanced tax planning can help you:

1. Optimize your equity compensation strategy
2. Plan for liquidity events (e.g., IPOs, company sales)
3. Structure your international investments tax-efficiently
4. Develop a comprehensive estate plan that considers both U.S. and international assets

At George Dimov CPA, we offer specialized consulting services for these complex situations. We recommend scheduling a consultation well before year-end to implement effective tax-saving strategies.

Getting Ready for Tax Season

Navigating the complexities of tax preparation can be daunting, especially for high-earning professionals in the tech and finance sectors with international ties. This comprehensive checklist is designed to give you a head start, but remember that every tax situation is unique.

At George Dimov CPA, we specialize in providing tailored tax solutions for clients just like you. Our expertise in handling complex tax situations, including equity compensation, international tax issues, and advanced tax planning, allows us to optimize your tax position while ensuring full compliance.

Don’t leave your tax preparation to chance. Book a consultation with us today to develop a personalized tax strategy that aligns with your financial goals and unique situation. With our help, you can turn tax season from a stressful ordeal into an opportunity for financial optimization.

Remember, in the world of taxes, proper preparation isn’t just about avoiding problems—it’s about seizing opportunities. Let’s make this your most financially rewarding tax season yet.