Preparing for the October 15 Deadline: Essential Steps for Your Tax Return

Make Sure You Have All Your Tax Documents

One of the most common reasons taxpayers file extensions is that they are still waiting for information. Before filing, review your records to ensure you have received all applicable tax documents. Depending on your situation, these could include:

• W-2s and 1099s

• Brokerage and investment statements

• K-1s from businesses, partnerships, trusts, or investments

• Mortgage interest statements

• Retirement account distributions

• Social Security income

• Rental property income and expenses

• Business or self-employment records

• Records of estimated tax payments

• Documents related to charitable contributions or other potential deductions

  
  

Tax documents can sometimes arrive late or be corrected after the original version was issued. Investment accounts and K-1s are common examples. It is generally better to take the time to prepare an accurate return than to rush and discover later that income, deductions, or other important information was omitted. Filing an amended return later can create additional work and potentially delay refunds or other tax matters.

Review What Has Changed Since Last Year

A tax return is not necessarily going to look the same every year. Changes in employment, compensation, investments, business activity, real estate, retirement, or family circumstances can significantly affect the return.

For example, during 2025 you may have:

• Changed jobs or had multiple employers

• Started consulting or self-employment work

• Purchased or sold a home or rental property

• Sold stocks or other investments

• Received additional interest or dividend income

• Taken money from a retirement account

• Started receiving Social Security or pension income

• Made significant charitable contributions

• Experienced changes in your household or dependents

  
  

Even when each change seems relatively small, several changes together can have a meaningful impact on the final tax result. Comparing the current return with the prior-year return can often help identify items that may have been overlooked.

Take a Closer Look at Investment Activity

Taxpayers with brokerage or investment accounts may have capital gains, capital losses, dividends, interest income, or other investment activity that needs to be reported. If investments were sold during the year, it is also important to review the cost basis associated with those transactions. In certain situations, the information reported by a brokerage firm may be incomplete or may require additional review.

Investors with several accounts should also make sure they have received statements from every financial institution they used during the year. Tax preparation can also provide an opportunity to look beyond the return itself. Understanding how investment income is affecting your taxes may help with future decisions about asset allocation, realized gains and losses, and the types of accounts in which investments are held.

Business and Self-Employment Income May Require Additional Review

More individuals today have income outside of a traditional paycheck. This could include consulting, freelance work, a small business, rental activity, or other sources of income. If you operate a business or receive self-employment income, make sure your income and expenses are reasonably complete before the return is prepared.

Bank accounts and credit cards should be reviewed, business expenses should be properly categorized, and personal expenses should be separated from business activity. Good accounting records can make the tax preparation process significantly easier and can also provide a clearer picture of how the business is actually performing. This is also a good time to review estimated tax payments and determine whether adjustments may be appropriate for the current year.

Review Any Tax Payments You Have Already Made

If you made an extension payment or quarterly estimated tax payments, make sure those amounts are properly reflected on your return. Taxpayers sometimes make payments at different times during the year and then forget to provide the complete payment history when the return is prepared. It is helpful to compare your own records with the amounts being reported on the tax return before filing.

Also, remember that an extension provides additional time to file the return, but generally does not provide additional time to pay the tax that was originally due. If the final return shows a balance due, there may be interest or penalties depending on how much was paid and when payments were made.

What If You Owe Taxes?

Discovering that you owe taxes can sometimes cause taxpayers to postpone filing. In most situations, continuing to delay the return does not solve the underlying problem. Filing the return and then addressing the outstanding balance is generally a better approach than leaving the return unfiled.

Depending on the circumstances, taxpayers who cannot immediately pay the entire balance may have options available for addressing federal or state tax liabilities. The appropriate approach depends on the amount owed, the taxpayer's financial situation, and whether prior-year tax issues also need to be resolved.

Don't Automatically Assume Last Year's Tax Strategy Still Works

Financial circumstances change. A taxpayer who previously had primarily W-2 income may now have investments, rental property, business income, retirement distributions, or several different sources of income. Likewise, someone approaching retirement may need to think differently about withholding and estimated taxes than they did while working.

Reviewing the completed return can help identify whether the current approach is still appropriate or whether adjustments should be considered.

Use Your 2025 Return to Start Planning for 2026

One of the most useful aspects of completing an extended return is that there is still time remaining in the current year to make adjustments. Once your 2025 return is completed, consider whether your withholding or estimated tax payments are appropriate for 2026.

Business owners may want to review their projected income and expenses. Investors may want to understand the tax impact of investment activity. Individuals approaching retirement may want to evaluate retirement distributions, investment income, Social Security, and other sources of income.

There may also be opportunities to review retirement contributions, charitable giving, investment gains and losses, and other financial decisions before the end of the year. Tax preparation should not only be about reporting what happened last year. Your tax return can also provide valuable information for making better-informed financial decisions going forward.

Getting Ready for the October Deadline

If you filed an extension, now is a good time to begin gathering your remaining documents rather than waiting until the final days before the deadline. Take a few minutes to compare your current financial situation with the prior year, confirm that you have received all your tax documents, and make sure any extension or estimated tax payments are accounted for.

For taxpayers with investments, businesses, rental properties, retirement income, or other financial activity, additional review can be particularly valuable.

At Pacific Tax and Investments, we work with individuals, families, business owners, investors, and retirees on tax preparation and tax planning. Our approach is to understand the complete financial picture and look beyond simply preparing the tax forms. If you still need to complete your 2025 tax return or would like professional assistance reviewing your tax situation, we would be happy to help.

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