IRS Issues Reminder to Start Preparing for 2025 Filing Season

The Internal Revenue Service (IRS) in Washington on Nov. 18, 2024. Madalina Vasiliu/The Epoch Times

The U.S. Internal Revenue Service (IRS) asked Americans on Friday to start preparations for the upcoming filing season next year, suggesting steps to ease the process.

The reminder is part of IRS’s “Get Ready” outreach campaign that aims to help people file their returns, according to a Nov. 22 statement from the agency.

“We’ve added more digital tools to help taxpayers,” said IRS Commissioner Danny Werfel. “But as tax season quickly approaches, the IRS reminds taxpayers there are important steps they can take now to get ready for 2025. From reviewing withholding to signing up for an IRS Online Account, there are multiple ways for people to help make the 2025 filing season easier.”

An IRS Online Account allows individuals to access all important tax-related information they need for the 2025 season. This includes obtaining details about their most recent tax returns, requesting identity protection PIN, receiving and viewing more than 200 IRS electronic notices, making and canceling payments, setting up payment plans, and signing tax forms like powers of attorney.

The agency recommended taxpayers to organize documents to make “filing a complete and accurate return easier and help avoid errors that can delay refunds.” In addition, “this may also help identify deductions or credits that may have been overlooked.”

The IRS noted that most incomes are taxable, including earnings from the gig economy and digital assets, unemployment income, and interest earned on delayed tax refunds.

Some of the key records that taxpayers should organize prior to preparing their returns include W-2 from the employer, Form 1099 issued by banks, Form 1099-K for income from gigs, Form 1099-INT related to interest receipts, Form 1095-A related to health insurance, and CP01A notice that contains information on the taxpayer’s new identity protection PIN.

The agency asked taxpayers to ensure that the amount of tax withheld from their paychecks is sufficient. The deducted amount is mentioned in the employee pay stub, and the overall annual amount in Form W2.

If the withheld amount is inadequate, the IRS can charge a penalty. The agency recommends the usage of Tax Withholding Estimator tool to determine the appropriate amount.

“This tool is especially useful for individuals who owed taxes or received large refunds last year, or those who have experienced life changes such as marriage, going through a divorce, or the welcoming of a child.”

“Taxpayers who need to adjust their withholding can update their information with their employer using Form W-4, Employee’s Withholding Allowance Certificate,” the IRS said. “Time is running out to make changes for 2024, as only a few pay periods remain in the year. Taxpayers need to act quickly to make any adjustments.”

IRS Collections

The agency recently reported it has collected around $5.1 trillion in taxes for fiscal year 2024. This was more than 8.5 percent higher compared to the previous year.

Meanwhile some of the agency’s practices have come under criticism from the Government Accountability Office. In a recent report, the watchdog noted there were certain issues in IRS systems used to account for federal taxes receivable. In some cases, taxpayer accounts had errors, it noted.

The IRS has been pushing for strengthening collections, pointing to the large tax gap estimated by the agency. For tax year 2022, the agency reported a gap of nearly $700 billion.

A report by the Treasury Inspector General for Tax Administration (TIGTA) cited underreporting of incomes and ensuring corporations and wealthy people comply with tax regulations as two key challenges the IRS faces in fiscal 2025.

The IRS is facing difficulty in plugging the tax gap because of “sophisticated tax evasion schemes” and the rising complexity of tax administration, the report claimed.

Meanwhile, the agency asked taxpayers last month to sign up for an identity protection PIN for the upcoming filing season. The “simple yet crucial step can provide an added layer of security, helping protect against tax-related identity theft,” it said.

Signups must be done before Nov. 23. After this date, the IP PIN system will go under maintenance and will only be available beginning January.