With the turn of the calendar, taxpayers should be preparing to file their 2024 tax returns. The Internal Revenue Service (IRS) has come up with a few ways to streamline the process.
For starters, the IRS suggests individuals create an IRS Online Account. This platform provides users with access to crucial details from their recent tax returns, the ability to request an Identity Protection Personal Identification Number (IP PIN), and options to manage various aspects of their tax affairs, including payments and account preferences.
The IP PIN is a vital security measure designed to prevent unauthorized individuals from filing a tax return using someone else's Social Security number.
In preparation for the 2025 filing season, the IRS has updated its procedures to accept Forms 1040, 1040-NR, and 1040-SS, even if a dependent has been claimed on a previously filed return, as long as the primary taxpayer includes a valid IP PIN. This change aims to expedite the processing of returns and the issuance of refunds for those with duplicate dependent claims.
The IRS also reminds taxpayers with non-wage income, such as earnings from digital assets or self-employment, to make their final quarterly estimated tax payments by January 15, 2025. The Tax Withholding Estimator is available to help determine if additional payments are necessary to avoid unexpected tax bills.
Significant changes are in place for Form 1099-K reporting. Taxpayers who received over $5,000 in payments for goods and services through online platforms in 2024 will receive a Form 1099-K in January 2025. While the IRS is gradually implementing this reporting threshold, it is crucial for taxpayers to report all income, regardless of whether they receive a Form 1099-K.
Digital assets
Digital assets remain a focal point for the IRS, with taxpayers required to report all digital asset-related income on their 2024 tax returns. This includes transactions involving cryptocurrencies, stablecoins, and non-fungible tokens (NFTs). Accurate record-keeping is essential for correctly reporting these transactions.
To ensure a smooth tax filing process, the IRS advises taxpayers to gather and organize all necessary documents, such as W-2s, 1099s, and records of digital asset transactions. Filing electronically and opting for direct deposit is recommended for faster refunds. Additionally, free filing options are available through IRS Free File and the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.
By taking these preparatory steps, the IRS taxpayers can reduce stress and ensure a more efficient filing experience in 2025.