
Tax season is just around the corner, and getting ready for the IRS Tax Season 2025 doesn’t have to be overwhelming. Whether you’re an individual taxpayer or a business owner, a bit of preparation can make the process smoother, quicker, and stress-free. Let’s dive into the steps you need to take to ensure you’re well-prepared.
5 Important Steps to Prepare for IRS Tax Season 2025:
Topic | Details |
---|---|
IRS Tax Season Start | January 23, 2025 |
Filing Deadline | April 15, 2025 |
Key Changes | New 1099-K thresholds, digital asset reporting requirements |
Official Website | IRS.gov |
Estimated Payments | Fourth-quarter payment due January 15, 2025 |
Preparing for the IRS Tax Season 2025 doesn’t have to be daunting. By setting up your online account, organizing your documents, adjusting withholding, understanding new reporting requirements, and planning for digital asset disclosures, you’re setting yourself up for success. Don’t wait until the last minute—start today!
Why Preparing for the IRS Tax Season Matters
Tax preparation is about more than just avoiding penalties. Accurate and timely filing can save you money through deductions, reduce the chances of an audit, and even expedite your refund. The IRS has introduced new rules and updates for 2025, so staying informed is more important than ever.
Step 1: Set Up or Access Your IRS Online Account
The IRS Online Account is a game-changer for taxpayers. It provides access to:
- Your tax history, including prior filings and payments.
- Your Adjusted Gross Income (AGI) for easier e-filing.
- A secure platform to set up an Identity Protection PIN (IP PIN).
How to Set It Up:
- Visit the IRS Online Account page.
- Follow the prompts to create an account or log in.
- Verify your identity using personal details and documents.
Pro Tip: This account is especially useful for accessing Forms 1099 or W-2 if your employer files them electronically.
Step 2: Organize Your Tax Documents
Gathering all required documents ahead of time can save you hours of frustration. Here’s a quick checklist:
- Income Records: Forms W-2, 1099-MISC, or 1099-NEC.
- Digital Asset Records: If you’ve engaged in cryptocurrency transactions, maintain detailed records.
- Deduction Documentation: Mortgage interest (Form 1098), medical expenses, charitable contributions.
- 1099-K Forms: If you received over $600 through online platforms.
Example: If you sold items on Etsy or eBay in 2024 and earned over $600, you’ll receive a Form 1099-K. Make sure the income matches your records.
Step 3: Adjust Your Tax Withholding
Tax surprises can be avoided by ensuring the correct amount is withheld from your paycheck. Use the IRS Tax Withholding Estimator to adjust your Form W-4 if necessary.
Steps to Adjust Withholding:
- Visit the IRS Tax Withholding Estimator.
- Enter your income, deductions, and tax credits.
- Update your Form W-4 with your employer based on the estimator’s results.
Why It Matters: Adjusting your withholding now can prevent underpayment penalties or large refunds.
Step 4: Understand 1099-K Reporting Changes
The IRS has lowered the 1099-K reporting threshold for 2025. If you’ve earned over $600 through platforms like Venmo, PayPal, or Square, you’ll receive this form. Ensure these earnings are correctly reported to avoid discrepancies.
Tip: Even if you don’t receive a 1099-K, you must still report all income, including side gigs or freelance work.
Step 5: Prepare for Digital Asset Reporting
Digital assets, including cryptocurrencies and NFTs, must be reported if you bought, sold, or traded them in 2024. Here’s what you’ll need:
- Purchase and Sale Records: Include dates, amounts, and asset types.
- Fair Market Value (FMV): For any trades or conversions.
Example: If you traded Bitcoin for Ethereum in 2024, you’ll need to report the transaction, including any capital gains or losses.
Resources: For guidance, check out the IRS Virtual Currency Guidelines.
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Frequently Asked Questions (FAQs)
1. When does the IRS start accepting returns for 2025?
The IRS will begin accepting tax returns on January 23, 2025.
2. What is the deadline to file taxes in 2025?
The deadline is April 15, 2025. If you need more time, request an extension to avoid late penalties.
3. What’s new for the 2025 tax season?
- Lower 1099-K thresholds for online transactions.
- Expanded reporting requirements for digital assets.
4. How do I know if I’m eligible for credits like the EITC?
Eligibility depends on income, filing status, and number of dependents. Use the EITC Assistant to check.
5. What if I’m self-employed?
You’ll need to file a Schedule C and may have to pay quarterly estimated taxes. The final 2024 payment is due on January 15, 2025.