As of January 27th, the IRS has officially opened its doors for the 2025 tax season, marking the start of filing for your 2024 tax returns. This year brings a series of important updates to tax deductions, credits, and reporting rules that you need to know. Staying informed on these changes can help you avoid filing errors, maximize your refund, and ensure compliance with updated regulations. Here’s what’s new:
The Child Tax Credit remains at $2,000 per qualifying child under 17, but there are key adjustments for 2025:
Refundable Portion Increased: The refundable portion of the credit has increased from $1,600 to $1,700, meaning families with low tax liabilities can claim a larger refund.
Phase-Out Thresholds: The credit begins to phase out at $200,000 for single filers and $400,000 for joint filers.
No Advance Payments: Unlike in previous years, the IRS will not issue advance payments for the CTC.
Future Outlook: While discussions in Congress about expanding the credit continue, no changes have been enacted for 2024. However, if no legislative action is taken, the credit could drop to $1,000 per child starting in 2026.
Third-party payment platforms like PayPal, Venmo, and Cash App now have a lower reporting threshold of $5,000 for issuing 1099-K forms.
What This Means: Platforms will issue a 1099-K if your total payments exceed $5,000, regardless of the number of transactions.
Taxpayer Action: Ensure your records align with the information reported on your 1099-K to avoid discrepancies and penalties.
Looking Ahead: The reporting threshold is expected to decrease to $2,500 in 2025 and potentially $600 in 2026, so it’s important to stay ahead of these changes.
Inflation adjustments mean larger standard deductions for 2024:
Married Filing Jointly: $27,700
Single Filers: $13,850
Head of Household: $20,800
Additional Deduction: Taxpayers aged 65 and older qualify for an additional deduction. These increased amounts can lower taxable income for many households.
If you live in an area affected by natural disasters, the IRS has extended tax deadlines to provide additional time for filing and payment.
Penalty-Free Extensions: These extensions allow you to file and pay taxes without incurring penalties.
Check Eligibility: Visit the IRS disaster relief page to confirm if you qualify.
The IRS has adjusted federal tax brackets for inflation, which could lower your effective tax rate.
Taxpayer Tip: Review the updated tax brackets to see how they impact your tax liability. Small adjustments may result in significant savings.
File Early: Submitting your return early not only expedites your refund but also reduces the risk of tax identity theft. Direct deposit is the fastest way to get your money.
Double-Check Your Documents: Ensure you have all necessary forms, such as W-2s, 1099s, and 1098s, before filing.
Stay Updated: Monitor ongoing discussions in Congress and IRS announcements for any mid-year updates or additional changes. Additional updates may emerge later this year.
Tax Day: April 15, 2025
Extension Deadline: October 15, 2025
Note: Disaster-related deadlines may vary. Check IRS.gov for details specific to your area.
The 2025 tax season brings significant updates that could impact your filing. Staying organized and proactive is the best way to ensure a smooth tax experience. If you’re unsure about how these changes affect you, CapriCPA is here to help.
Fill out our tax questionnaire today and let our expert team guide you through the filing process. Don’t wait—get started early and make the most of the 2025 tax season!