IRS Reminds Taxpayers of Key Tax Updates as 2025 Filing Season Nears

The IRS in Washington on Nov. 18, 2024. Madalina Vasiliu/The Epoch Times

The IRS is recommending that taxpayers prepare for the 2025 tax filing season by taking certain key steps to make filing easier and help safeguard their tax information.

“There are a number of things taxpayers can do to get ready as the end of 2024 nears and the start of the 2025 tax season approaches,” a Dec. 19 statement from the agency says. The latest reminder is part of the “Get Ready” series, in which the IRS publishes key updates as the start of the next tax season approaches.

The IRS encouraged taxpayers to sign up for an IRS Online Account. The account helps individuals view key information from their recent returns, make and cancel payments, get electronic notices from the agency, set up payment plans, and sign forms such as powers of attorney, among other items.

Besides the online account, the IRS recommended getting an Identity Protection Personal Identification Number, or IP PIN.

“An IP PIN is a six-digit number that prevents someone else from filing a federal tax return using an individual’s Social Security number or Individual Taxpayer Identification Number,” the agency states.

“It’s a vital tool for ensuring the safety of taxpayers’ personal and financial information.”

For the 2025 filing season, the IRS has made an update regarding dependents on tax forms.

Taxpayers claim dependents when filing returns in order to receive certain deductions and credits such as the child tax credit, earned income tax credit, medical expense deductions, and education credits.

Sometimes, multiple people claim the same individuals as dependents on tax forms.

The IRS processes tax returns in the order it receives them. As a result, if the agency has already processed a return involving certain dependents, another return seeking to claim the same individuals will be rejected.

However, starting from the 2025 filing season, returns claiming the same dependents will be accepted by the agency, provided the taxpayer includes a valid IP PIN.

The IRS says the new update “will reduce the time for the agency to receive the tax return and accelerate the issuance of tax refunds for those with duplicate dependent returns.”

“The best way to sign up for an IP PIN is through the IRS Online Account,” the agency states. However, “if an individual is unable to create an Online Account, alternative methods are available, such as in-person authentication at a Taxpayer Assistance Center.”

The IRS also highlighted the upcoming estimated tax payment due date.

“Taxpayers with non-wage income—such as unemployment benefits, self-employment income, annuity payments or earnings from digital assets—may need to make estimated or additional tax payments,” said the agency.

The deadline to make these payments for the September–December quarter of 2024 is Jan. 15.

1099-K Reporting, Digital Assets

Taxpayers who sold goods or services and collected over $5,000 in receipts via payment apps or online marketplaces in 2024 “should expect to receive a Form 1099-K,” the IRS said.

The form details payments received by taxpayers engaged in such transactions. Taxpayers must now account for this income when filing their returns.

Previously, this form was issued if the total transaction value in a year exceeded $20,000, but the current threshold is now set at $5,000. This reduction is part of a plan to eventually reduce the limit to $600.

The IRS clarified that “taxpayers must report all income on their tax return unless it’s excluded by law, whether they receive a Form 1099-K or not.”

“The law doesn’t allow taxpayers to avoid taxes on income earned just because they didn’t get a form reporting the payments received.”

Form 1099-K income threshold reduction has come under criticism from lawmakers.

Rep. Carol Miller (R-W.Va.) introduced the “Saving Gig Economy Taxpayers Act,” which seeks to revert the total transaction value to $20,000. She called the reduction “a tax hike on Americans and gig workers who use online payment platforms.”

Meanwhile, the IRS also reminded taxpayers to report all income related to digital assets such as cryptocurrencies when filing the 2024 returns.

“If a taxpayer had digital asset transactions last year, they should be sure to keep records that prove their purchase, receipt, sale, exchange or any other disposition of the digital assets,” the IRS stated. This includes the fair market value of such assets measured in U.S. dollars.

The IRS received about $5.1 trillion in tax revenues in fiscal year 2024, roughly $400 billion more than in the previous year.