With the 2025 tax filing season quickly approaching, the Internal Revenue Service (IRS) encourages taxpayers to take essential steps now to prepare to file their 2024 federal income tax returns next year. By planning ahead and using available tools, taxpayers can streamline the process, reduce stress, and avoid delays. The IRS is continually improving its services, and there are now more digital options available than ever to help make tax season easier.
Here's a guide to key actions you can take now to prepare for the 2025 tax filing season:
Sign up for an IRS online account
One of the most important steps taxpayers can take now is to create or access an IRS online account. With an IRS online account, you can:
- View key details from your most recent tax return, such as your adjusted gross income.
- Request an IDENTITY PROTECTION PIN (IP PIN).
- Access account transcripts, including wage and income records.
- Sign tax forms such as powers of attorney or tax information authorizations.
- View and change your language preferences and media options.
- Receive over 200 IRS e-notices.
- Make, view and cancel payments.
- Set up or change payment plans and check your balance.
Having an IRS online account helps protect your tax information and can simplify the process of filing your return.
Obtain an Identity Protection Personal Identification Number (IP PIN)
An IP PIN is a six-digit number that helps protect taxpayers from identity theft. It prevents someone else from filing a federal tax return using your Social Security number or Individual Taxpayer Identification Number (ITIN). The best way to register for an IP PIN is through the IRS online account. If you are unable to create an account, there are alternative methods available, such as in-person authentication at a Taxpayer Assistance Center.
Please note the January 15, 2025 deadline for the last quarterly estimated payment
Taxpayers with non-wage income, such as unemployment benefits, self-employment income, annuity payments, or digital asset gains, may need to make estimated or additional tax payments. To avoid an unexpected tax bill, use the Tax Withholding Estimator available on IRS.gov to determine if you need to make an additional payment.
Be on the lookout for Form 1099-K Reporting Changes
If you receive more than $5,000 in payments for goods and services through an online marketplace or payment app, you should expect to receive Form 1099-K in January 2025. While the IRS is gradually implementing new reporting thresholds, remember that all income, including earnings from part-time work or side jobs, is taxable. Be sure to report all income on your tax return, regardless of whether you receive a Form 1099-K.
Report Digital Assets on Your Tax Return
Taxpayers must continue to report all income related to digital assets when filing their 2024 federal income tax returns. Digital assets include cryptocurrencies, stablecoins, non-fungible tokens (NFTs), and other electronically stored property. When filing, taxpayers will be asked if they received or disposed of any digital assets during the tax year. Be sure to keep detailed records of any digital asset transactions, including fair market value, as this will be important when reporting income or calculating capital gains or losses.
Understand the refund time and avoid delays
While most refunds are issued within 21 days, factors such as errors, missing information, or identity theft can cause delays. Refunds from tax returns claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will be held until mid-February due to the PATH ActAvoid relying on a specific refund date, especially for large purchases or bill payments.
Gather and organize your 2024 tax documents
To prepare for filing, set up an efficient record-keeping system, whether electronic or paper, to organize important documents. This includes year-end income forms, such as W-2 forms, 1099 forms and digital asset transaction records. Having everything in order will help you file an accurate return and reduce the chance of delays or errors.
Use direct deposit for faster refunds
File electronically and choose the direct deposit is the fastest and most secure way to receive your refund. Direct deposit ensures faster access to your refund than receiving a paper check. If you don't have a bank account, there are resources available to help you open one or use prepaid debit cards or mobile payment apps for your refund.
Take advantage of free presentation options
The IRS offers free filing options for many taxpayers. IRS Free File provides free, branded tax software for taxpayers with an income of $73,000 or less. For all taxpayers, Free File Fillable Forms are available. Additionally, some taxpayers may qualify for free tax return preparation and filing through the IRS. Volunteer Income Tax Assistance (VITA) programs y Tax Advice for Seniors (TCE).