As the nation’s tax season approaches, the Internal Revenue Service is reminding people of simple steps they can take now to prepare to file their 2024 federal tax returns.

This reminder is part of the IRS’s “Get Ready” campaign to help everyone prepare for the upcoming filing season in early 2025.

“Our focus at the IRS continues to be on making tax filing easier and more accessible for everyone,” said IRS Commissioner Danny Werfel. “We’ve added more digital tools to help taxpayers. 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.”

As the IRS continues its historic transformation work, the agency continues introducing new online tools as well as expanding and updating other digital tools. These are designed to help taxpayers and make tax filing easier.

Access IRS Online Account for helpful information

Taxpayers can create or access their IRS Online Account, where they can find all their tax related information for the 2025 filing season. New users will need to have a photo ID ready to verify their identity. Through their IRS Online Account, taxpayers can:

• View key details from their most recent tax return, such as adjusted gross income.
• Request an Identity Protection PIN.
• Get account transcripts to include wage and income records.
• Sign tax forms like powers of attorney or tax information authorizations.
• View and edit language preferences and alternative media (such as braille, large print, etc.).
• Receive and view over 200 IRS electronic notices.
• View, make and cancel payments.
• Set up or change payment plans and check their balance.

Gather and organize tax documents

Having well-organized tax records can make filing a complete and accurate return easier and help avoid errors that can delay refunds. This may also help identify deductions or credits that may have been overlooked.

Most income is taxable, including unemployment compensation, refund interest and income from the gig economy and digital assets. Taxpayers should watch for and gather essential forms, such as Forms W-2, Wage and Tax Statement, and other income documents.

It’s also important to notify the IRS of any address changes and the Social Security Administration of any legal name changes.

Check withholding before the end of 2024

The IRS Tax Withholding Estimator on IRS.gov can help taxpayers make sure the correct amount of tax is withheld from their paychecks. 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.

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.

Get refunds faster with direct deposit

The fastest and most secure way to receive a tax refund is through direct deposit. Taxpayers can direct their refund to a bank account, banking app or reloadable debit card by providing their routing and account numbers. If the routing and account number cannot be located, taxpayers should contact their bank, financial institution or app provider.

According to Treasury’s Bureau of the Fiscal Service, paper refund checks are 16 times more likely to be lost, misdirected, stolen or uncashed compared to those paid using direct deposit.

Individuals without a bank account can explore options for opening one through FDIC-insured banks or a credit union using the National Credit Union Locator tool. Veterans can use the Veterans Benefits Banking Program to find participating financial institutions.

Volunteer to help others with their taxes

The IRS and its community partners are seeking volunteers from around the country to join the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. These programs offer free tax preparation services to eligible taxpayers. Interested individuals can learn more and sign up by visiting IRS.gov.

Helpful IRS resources and online tools

IRS.gov is a valuable resource for taxpayers, offering a variety of online tools like the Individual Online Account available 24/7. These tools help individuals file and pay taxes, track refunds, access account information and get answers to tax questions. Taxpayers are encouraged to bookmark these resources for easy access.

Choosing a tax professional

Tax professionals play an essential role in the U.S. tax system. Certified public accountants, Enrolled Agents, attorneys and others without formal credentials are just a few of the professionals who help taxpayers file their returns accurately. It is important to choose a professional who is skilled and trustworthy.

Most tax return professionals provide great service but picking the wrong one can hurt taxpayers financially. The IRS offers tips for choosing a tax preparer.

People can use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications to find qualified professionals.

Source: IRS-2024-297, Nov. 22, 2024

The Internal Revenue Service announced today that the amount individuals can contribute to their 401(k) plans in 2025 has increased to $23,500, up from $23,000 for 2024.

The IRS today also issued technical guidance regarding all cost‑of‑living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2025 in Notice 2024-80 PDF, posted today on IRS.gov.

Highlights of changes for 2025

The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $23,500, up from $23,000.

The limit on annual contributions to an IRA remains $7,000. The IRA catch‑up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost‑of‑living adjustment but remains $1,000 for 2025.

The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan remains $7,500 for 2025. Therefore, participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $31,000 each year, starting in 2025. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.

The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2025.

Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Here are the phase‑out ranges for 2025:

• For single taxpayers covered by a workplace retirement plan, the phase-out range is increased to between $79,000 and $89,000, up from between $77,000 and $87,000.
• For married couples filing jointly, if the spouse making the IRA contribution is covered by a workplace retirement plan, the phase-out range is increased to between $126,000 and $146,000, up from between $123,000 and $143,000.
• For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000.
• For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
• The income phase-out range for taxpayers making contributions to a Roth IRA is increased to between $150,000 and $165,000 for singles and heads of household, up from between $146,000 and $161,000. For married couples filing jointly, the income phase-out range is increased to between $236,000 and $246,000, up from between $230,000 and $240,000. The phase-out range for a married individual filing a separate return who makes contributions to a Roth IRA is not subject to an annual cost-of-living adjustment and remains between $0 and $10,000.
• The income limit for the Saver’s Credit (also known as the Retirement Savings Contributions Credit) for low- and moderate-income workers is $79,000 for married couples filing jointly, up from $76,500; $59,250 for heads of household, up from $57,375; and $39,500 for singles and married individuals filing separately, up from $38,250.
• The amount individuals can generally contribute to their SIMPLE retirement accounts is increased to $16,500, up from $16,000. Pursuant to a change made in SECURE 2.0, individuals can contribute a higher amount to certain applicable SIMPLE retirement accounts. For 2025, this higher amount remains $17,600.
• The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most SIMPLE plans remains $3,500 for 2025. Under a change made in SECURE 2.0, a different catch-up limit applies for employees aged 50 and over who participate in certain applicable SIMPLE plans. For 2025, this limit remains $3,850. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in SIMPLE plans. For 2025, this higher catch-up contribution limit is $5,250.

Details on these and other retirement-related cost-of-living adjustments for 2025 are in Notice 2024-80 PDF, available on IRS.gov.

Source: IRS-2024-285, Nov. 1, 2024

The IRS is processing 400,000 claims from the pandemic-era employee retention credit (ERC) that represent about $10 billion of eligible filings, the agency said Thursday in a news release (IR-2024-263).

“In recent weeks, the IRS has made substantial progress in separating eligible claims from the wave of ineligible claims that have come in, and we continue working to refine our models to identify more eligible claims,” IRS Commissioner Danny Werfel said in the release.

To help speed processing, the IRS announced last month the opening of a consolidated claim process to help third-party payers and their clients resolve incorrect ERC claims.

In addition to processing valid claims, the IRS said it is denying improper ERC claims, intensifying audits, and pursuing civil and criminal investigations of potential fraud and abuse. The findings of an IRS review, announced in June, confirmed concerns raised by tax professionals and others that there was an extremely high rate of improper ERC claims in the IRS inventory.

ERC background

The ERC was designed to help certain businesses continue paying employees during the COVID-19 pandemic while their operations were either fully or partially suspended due to a government order or when they had a significant decline in gross receipts during the eligibility periods. It was generally available to eligible businesses from March 31, 2020, to Sept. 30, 2021, and to Dec. 31, 2021, for recovery startup businesses.

Voluntary disclosure program remains open 

The IRS reminded businesses that already received ERC payments to recheck eligibility requirements and consider the second Employee Retention Credit (ERC) Voluntary Disclosure Program (VDP) to resolve incorrect claims without penalties or interest.

The second VDP, which runs through Nov. 22, allows businesses to correct improper payments at a 15% discount and avoid future audits, penalties, and interest.

By Martha Waggoner