Tax Provision New Year’s Resolutions: Start 2025 off Right with these Game-Changing Habits

Sure, you plan on hitting the gym regularly in 2025, but what about launching great habits beyond New Year’s no-brainers like diet and exercise? The income tax provision presents many opportunities to improve reporting processes, ensure accurate calculations, and make your work life a whole lot better. In fact, we are so determined to improve how professionals approach ASC 740 that we’ve rounded up a few New Year’s resolutions promising to make the tax department’s most complicated calculation easier, more efficient, and, of course, accurate.  

Are you looking to make the tax provision calculation painless in the new year? Feel free to adopt any (or all) of these game-changing habits for a smooth 2025.   

Make tax provision education a priority. 

“Knowledge is power, so in the months leading up to year-end, seek out webinars, articles, whitepapers, etc., highlighting year-end provision reminders, such as changes in tax law or accounting guidance.  These resources are an excellent way to keep current on what has changed and what changes lie ahead. You can recognize the most impactful areas based on your company’s situation and explore them further.  By doing this, you’ll be well-informed and better prepared to provide a technically correct provision for the audit.  As a bonus, you can often obtain significant CPE credit hours just for taking the webinars.
– Arianne Dalay-On Financial Analyst  

Update tax attribute carryforward schedules before the books close. 

Why wait until close to update tax NOLs, credits, and contributions? Before the books close, when there’s more time, review carryforward schedules to ensure they support all filed original and amended tax returns. Be sure to include pertinent details such as vintage year, carryforward period, expiration period, limitations (e.g., §382/SRLY for NOLs), etc., so that you can incorporate them into your provision and footnote disclosures easily. 

— Diego Zapanta, Financial Analyst 

Review your trial balance before year-end.   

Use the VLOOKUP function in Excel to compare last year’s chart of accounts to the most recent version, going in both directions, to discover both new accounts and accounts that have been deleted.  Request detailed descriptions of new accounts so you can accurately determine whether any are tax-sensitive and, if so, how best to add to your existing processes.  For accounts that have been deleted, determine if there is any effect on deferred tax items. 

— Gary Kell, Director, Tax Provision Solutions 

Review and streamline your tax provision processes.   

Start by assessing how your tax provision workflow is functioning. Identify any bottlenecks or inefficiencies that might impact accuracy. Establish clear timelines and assign specific responsibilities to team members, creating a detailed schedule of key deadlines for each phase. This clarity will help avoid last-minute rushes and ensure all necessary information is gathered and reviewed on time.  Regular check-ins can keep everyone aligned and on track.  By setting clear expectations, you’ll enhance collaboration and improve overall efficiency.  Documenting your review will also serve as a valuable reference for future audits and support ongoing improvements. 

— Cherrie Bautista, Financial Analyst 

Complete the full return-to-provision (RTP) analysis in conjunction with filing your tax returns.  

Before filing your tax returns, you should thoroughly understand changes to your current calculation occurring after the tax provision was finalized. Thus, complete the full return-to-provision (“RTP)” analysis in conjunction with filing your tax returns, and not months later during year-end crunch time when the details are no longer fresh. Make notations and document why each material RTP variance occurred and analyze temporary differences on a post-RTP basis. This allows you to anticipate auditor questions (change in accounting estimate vs. error), estimate the impact on your ETR, and jumpstart analysis for deferred balances needing further reconciliation. 

— Xander Jones, Director, Tax Provision Professional Services 

Use technology to enhance efficiency and accuracy. 
Technology can simplify the provision process. Automating tasks like data entry and calculations reduces errors and saves time, especially when handling different rules for state and federal taxes.  Advanced reporting tools make creating clear, detailed tax reports easier, which helps manage federal and multi-state provisions. Using cloud-based platforms ensures real-time access to accurate data (such as automation of statutory rates), improving teamwork and consistency. Analytical tools can help forecast tax liabilities, identify potential risks, and provide insights for more strategic planning. 

–Jinal Hira, Senior Manager, Tax Provision 

Start the work paper rollover process before year-end.   

This process can be tedious and lengthy, especially in an Excel environment, but you can make significant progress well before the books close. Updating beginning-of-year deferred balances and dates is just the tip of the iceberg. Consider known changes to your organizational structure, such as newly formed/acquired entities, mergers/dissolutions of entities, and entering new taxing jurisdictions. Start gathering details for applicable statutory rates in your taxing jurisdictions. For provision, if your state apportionment relies heavily upon the prior-year tax returns, you can update sooner.  These efforts will free up your time during the critical close period. 

— Jai Prakash Agarwal, Manager, Tax Provision 

Want to make your tax provision easier, more efficient, and accurate in 2025? Schedule time with an expert to get started.