Prepare for Tax Season: Crucial Information Before You File
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Navigating tax season can be a breeze or a beast, depending on your filing deadline and situation. So, whether you're eager to receive your refund or looking to postpone your return, let's delve into the details.
Understand your Filing Deadline
The traditional IRS filing and payment deadline is April 15. However, factors such as residing in a federally declared disaster area or wishing to extend your filing date can affect your obligations.
For residents and businesses in disaster-struck areas, the IRS often grants extensions for both filing and paying income taxes, alongside other federal tax obligations. For instance, the tax deadlines were pushed to October 15 for those in the Los Angeles area wildfire-affected counties.
On the other hand, if you can't or don't want to file by April 15, you're still in the clear so long as you apply for an automatic six-month extension shortly before April 15. This extension primarily extends your filing time for the 2025 return, but it does not extend your payment deadline for any tax year 2025 balance owed.
Discover the Possibility of Free Filing
The IRS Direct File program allows eligible filers to submit their taxes directly to the IRS for free in 25 states, significantly expanded from the original 12 states during the 2024 pilot[3][4]. The participating states include:
- Alaska
- Arizona
- California
- Connecticut
- Florida
- Idaho
- Illinois
- Kansas
- Maine
- Maryland
- Massachusetts
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- Oregon
- Pennsylvania
- South Dakota
- Tennessee
- Texas
- Washington State
- Wisconsin
- Wyoming
Beyond the above states, some private-sector tax preparation software firms also offer free filing for qualifying filers, usually those with an adjusted gross income of $84,000 or less. Each firm establishes its own eligibility criteria based on factors like age, state residency, and income.
Review your 2024 Income Tax Return
Your earlier tax returns can serve as a handy guide, helping you gauge what documentation you may require to file your 2025 return. Tom O’Saben, the National Association of Tax Professionals' director of tax content and government relations, advises doing just that.
identify key changes in 2025
Various life events or income changes can impact your tax obligations. Examples include marriage, divorce, childbirth, starting a side gig, selling a home or major investment, collecting Social Security or inheritance, and receiving unemployment benefits.
Gather All Your 2025 Tax Documents
While you may receive tax documents via mail, others might only be delivered electronically. Ensure you've collected all W2s, 1099 forms, donation receipts, and other income tax information from your banks, brokerages, employers, charities, and so on, both in paper and digital formats.
Watch for New 1099-K Forms
If you received income through mobile payment apps or online marketplaces like Venmo, CashApp, Airbnb, and Etsy, and your transactions exceeded $5,000, you should receive a 1099-K form reporting those transactions. Some states set the threshold as low as $600, so you might receive a 1099-K form even if your transactions fall below the $5,000 mark.
Upon receiving a 1099-K form, ensure it correctly represents your activities. If it contains inaccurate data, consult this IRS document for correction tips.
Bought an EV? Keep an Eye for this Form
If you bought an electric vehicle that qualifies for the clean vehicle energy credit or used clean vehicle credit, your dealer should send a Form 15400, also known as a Clean Vehicle Seller Report. This document will help you claim or reconcile the credit on your 2025 return.
Separate Fiction from Fact on the State and Local Tax Deduction
There's a lot of speculation regarding an increased state and local tax deduction, but for 2025, the limit remains at $10,000. Itemized deductions that surpass your standard deduction may still be worth considering if they add up to more than the $10,000 cap.
Assess Your Potential Refund
Most taxpayers eagerly file returns to receive their refunds. The majority of filers in the US typically receive refunds, with the IRS usually issuing them within 21 days after accepting the return. However, filers claiming the Earned Income Tax Credit should anticipate a mid-February delay for their refunds.
To track your refund status, use the IRS's 'Where's My Refund' tool.
Businesses in disaster-struck areas may also be granted extensions for filing and paying income taxes by the IRS. If your income is below a certain threshold, some private-sector tax preparation software firms offer free filing services for qualifying businesses.
