UNITED STATES (TXAN 24) — As we enter the new year, tax season is officially upon us, and for millions of Americans, it’s time to prepare for filing their 2024 taxes.
While the tax process can be complex, understanding the latest changes, important deadlines, and strategies for minimizing your tax liability can help make the filing process smoother and less stressful.
This year, several important changes are affecting both individual and business taxpayers, from shifts in tax brackets to updates on deductions and credits. Here’s what you need to know as you navigate tax season in 2025.
Key Tax Changes for 2025
Updated Tax Brackets and Inflation Adjustments: The IRS has made inflation adjustments for 2024 tax rates, meaning the tax brackets have shifted slightly. This year, the standard deduction has increased, and income thresholds for various tax brackets have been adjusted to help combat the effects of inflation. For example, the top tax rate of 37% now applies to income over $578,400 for single filers and $693,400 for married couples filing jointly. This adjustment aims to help prevent "bracket creep," where taxpayers find themselves pushed into higher brackets due to inflation.
Increased Standard Deduction: For 2024, the standard deduction has risen significantly. Single filers can claim a deduction of $14,600, while married couples filing jointly can deduct $29,200. This increase allows taxpayers to save more on their taxable income without needing to itemize deductions, which is a benefit for many households, especially those with fewer deductible expenses.
Expanded Child Tax Credit: The Child Tax Credit has undergone some changes for 2024. Families with children under 18 may be eligible for up to $2,000 per child, with the credit phase-out thresholds also increasing. This expansion is expected to provide relief for many families and help offset rising costs.
Changes to Retirement Contributions: There are also changes for those contributing to retirement accounts like IRAs and 401(k)s. The contribution limit for 401(k)s has increased to $23,000 for individuals under 50, and $30,000 for those over 50 who are eligible for "catch-up" contributions. IRA contribution limits have also increased to $7,500 for those under 50, and $9,500 for those over 50. These changes allow taxpayers to save more for retirement while reducing their taxable income.
Tax Incentives for Green Investments: As part of the government’s continued push for sustainability, there are new tax credits for individuals and businesses that invest in green technologies. From energy-efficient home improvements to electric vehicle purchases, there are additional opportunities for taxpayers to take advantage of eco-friendly incentives, including a new federal tax credit for EV buyers worth up to $7,500.
Filing Deadlines and Key Dates
While the deadline to file taxes is typically April 15, 2025, taxpayers should be mindful of key dates leading up to that deadline.
Here are some important dates to keep in mind:
January 31, 2025 – Employers must send out W-2 and 1099 forms to their employees and contractors. These forms are necessary for accurately filing taxes.
April 15, 2025 – This is the last day to file your taxes for 2024. If you can’t file by this date, you can apply for an extension, which gives you until October 15 to file, but any owed taxes are still due by April 15.
October 15, 2025 – Deadline for individuals who requested an extension on their tax returns to submit their final filings.
Common Mistakes to Avoid
As taxpayers gear up to file, here are some common mistakes to avoid during tax season:
Incorrect Information: Make sure all personal information, including your Social Security number, is correct on your tax return. Small errors can delay processing and potentially lead to fines.
Failing to Report All Income: It’s essential to report all sources of income, including wages, freelance earnings, dividends, and any side business revenue. The IRS has sophisticated systems in place to cross-check income, and failing to report everything can lead to penalties.
Missing Deductions or Credits: Many taxpayers miss out on tax credits or deductions they qualify for, such as education credits or charitable contributions. Working with a tax professional or using tax software can help ensure you don’t leave money on the table.
Overlooking Retirement Contributions: If you contributed to an IRA or 401(k) in 2024, don’t forget to account for those contributions when filing your taxes, as they can help reduce your taxable income.
Waiting Until the Last Minute: Waiting until the final days before the April 15 deadline can lead to mistakes or missed opportunities for deductions. Getting started early is key to avoiding unnecessary stress.
Tax Filing Tips for 2025
Consider E-filing: Electronic filing (e-filing) is the fastest and most secure way to submit your tax return. Plus, if you’re owed a refund, you can receive it in as little as two weeks when you file online with direct deposit.
Keep Good Records: If you itemize your deductions, make sure to keep detailed records of receipts, invoices, and documentation for any charitable donations, medical expenses, or business-related expenses. Good record-keeping can prevent headaches later if you’re audited.
Consult a Tax Professional: If your tax situation is complicated—such as owning a business, having multiple sources of income, or navigating major life changes like marriage or a new home purchase—it might be worth consulting a tax professional. A certified tax preparer can help you find deductions and credits you might not have realized you were eligible for.
Consider Tax Software: For those with relatively simple tax situations, using tax software can be an easy and cost-effective way to file. Many programs now include built-in error-checking, personalized tips, and step-by-step guidance to help you navigate the process.
Don’t Forget About State Taxes: In addition to federal taxes, remember that you may also need to file state taxes depending on where you live. Tax rates and regulations vary from state to state, so make sure to check your state’s filing requirements.
What to Do if You Owe Taxes
If you owe money to the IRS, it’s important to file your tax return on time to avoid penalties and interest. If you cannot pay the full amount, there are options such as setting up a payment plan or requesting an extension for payment. However, failing to file your tax return on time can result in severe penalties, so be sure to submit your return by the April 15 deadline, even if you cannot pay immediately.
Looking Ahead
Tax season 2025 promises to be a year of significant change, with new opportunities for taxpayers to save and adjust their filings. Whether you’re taking advantage of increased tax credits, making sustainable investments, or navigating new deductions, planning ahead and being mindful of deadlines will ensure you’re ready for tax season.
For those who may feel overwhelmed, remember that help is available—whether it’s through professional tax preparers, online resources, or the IRS itself. With careful attention to detail and a little preparation, filing your 2024 taxes can be a smooth and manageable process.
For more information, visit the IRS website or speak with a tax professional to ensure you're fully prepared for the 2025 tax season.
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