This guide walks you through what you’ll need to file your federal return (Form 1040) and Schedule C, plus the tasks to complete before the end of 2025.
Tasks to Complete Before the End of 2025
1. Organizing your Year-End finances in Heard
- Review any messages from your Heard team awaiting your reply.
- Go to Transactions>Needs review to action on any transactions your bookkeeping team has flagged as needing your input.
- If you have business transactions in personal accounts, add those to your Heard books now.How to add business transactions charged to a personal card
- Collect and upload receipts for any purchases over $2,500.
- Go to Taxes > Quarterly to complete the checklist for the Q4 estimate due January 15th, 2026.
2. Deduction Documentation Cleanup
- Complete your Home Office Deduction: Using Heard's Home Office Deduction Tracker for Sole Proprietors
- Complete your mileage log: If you used a personal vehicle for business, gather all records from a mileage-tracking app or logbook. The IRS requires detailed logs to claim the standard mileage rate or actual expenses. Deducting business mileage
3. Maximize Retirement Contributions
Review and maximize contributions to plans like:
- SEP IRA (Simplified Employee Pension Plan): Easy to set up and allows for high contribution limits based on your net income.
- Solo 401(k): Allows you to contribute both as an "employee" and an "employer," potentially offering the highest deduction.
- SIMPLE IRA: Another alternative, though generally less flexible than the SEP or Solo 401(k).
Remember: Contributions can be made until the filing date - April 15, 2026.
Annual Taxes with Heard
In late December, we’ll open our 2025 Annual Tax Season. Go to Taxes>Annual to let us know about your filing needs this year.
This is where you can let us know if you need to file 1099-NECs for contractors you hired this year. You’ll need to submit a 1099-NEC to the IRS for contractors you paid $600+ or more and provide them with a copy by January 31st.
What tax forms will I need?
You can expect to begin receiving tax forms for the 2025 tax year in January 2026.
Decide now to create a new folder on your computer to store all the tax forms as you begin to receive them. Or upload them directly to the Tax Questionnaire of your Heard account.
The IRS generally recommends keeping tax records (including supporting documentation like receipts, invoices, and bank statements) for a minimum of three years from the date you file your return.
Business Income and Expense Documentation (For Schedule C)
- 1099-NEC forms from clients who paid you $600 or more
- 1099-K forms from payment processors (PayPal, Venmo, Square, etc.)
- 1099-NEC forms you issued
- Form 1095-A/B/C Health Insurance
- Purchase receipts for equipment, furniture over $2,500
| Document Type | Purpose | Key Items to Supply |
|---|---|---|
| Income Records | Proof of all business revenue received. |
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| Expense Records | Documentation for all business deductions. |
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| Vehicle Use Records | To claim mileage or actual expenses |
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| Home Office Deduction | To claim expenses related to a dedicated home workspace |
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Personal and Joint Filing Documentation (For Form 1040)
- Identity documents for you and all individuals on the return
- Income forms: W-2s, 1099s
- Deductions and credits
- Taxes paid receipts
- Mortgage and property tax records
| Document Type | Purpose | Key Items to Supply |
|---|---|---|
| Identity and Prior Year | Foundational information for the current filing. |
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| Wages and Non-Business Income | Income received by you or your spouse from employers or investments |
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| Deductions and Credits | Records used to calculate itemzied deductions or claim credits |
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| Taxes Paid | Proof of taxes already remitted |
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| Morgage/Housing | To claim deductions for homeownership |
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