January 2025: Your Comprehensive US Tax Update [links included]

IRS Announces Extended Deadlines for Disaster-Area Taxpayers to File 2023 Returns 

The IRS has reminded disaster-area taxpayers that 2023 returns are due by Feb. 3, 2025, for some regions, and by May 1, 2025, for others. Affected taxpayers automatically receive extensions. Payments on 2023 returns are not included 

Read the article here- IRS reminder to disaster area taxpayers with extensions: All or parts of 14 states, 2 territories need to file 2023 returns by Feb. 3; others have until May 1 | Internal Revenue Service 

IRS Free File Service Opens January 10, 2025 

The IRS Free File service opens on January 10, 2025, offering free tax filing for taxpayers with an AGI of $84,000 or less. Taxpayers can access free tax software on IRS.gov to file returns and claim credits like the Earned Income Tax Credit. 

Read the article here- IRS Free File opens Friday: Free tax filing service available to millions on IRS.gov | Internal Revenue Service 

Final IRS Rules Identify Certain Partnership Related-Party Transactions as Reportable 

The U.S. Treasury and IRS issued final regulations identifying certain partnership related-party “basis shifting” transactions as transactions of interest (TOIs), subject to reportable transaction rules. The final rules increase the threshold for basis increases in a TOI from $5 million to $25 million (for pre-2025 tax years) and $10 million thereafter. 

Read the article here- Treasury and IRS issue final rules identifying certain partnership related-party “basis shifting” transactions as transactions of interest | Internal Revenue Service 

 

Treasury and IRS Propose Regulations on Roth Catch-Up Contributions and SECURE 2.0 Provisions 

The Treasury and IRS issued proposed regulations on SECURE 2.0, including rules for Roth catch-up contributions for higher-income participants and increased catch-up limits for employees aged 60-63 and in SIMPLE plans. 

Read the article here- Treasury, IRS issue proposed regulations on new Roth catch-up rule, other SECURE 2.0 Act provisions | Internal Revenue Service 

 

Treasury and IRS Propose Automatic Enrollment Rules for 401(k) and 403(b) Plans 

The Treasury and IRS issued proposed regulations requiring automatic enrollment in newly established 401(k) and 403(b) plans starting in 2025. Employees will be automatically enrolled at a 3% contribution rate, which increases annually until reaching 10%. The rule applies to plans established after Dec. 29, 2022, with exceptions for certain businesses and plans. 

Read the article here-  Treasury, IRS issue proposed regulations on new automatic enrollment requirement for 401(k) and 403(b) plans | Internal Revenue Service 

 

IRS Tax Relief for Southern California Wildfire and Wind Disaster Victims 

The IRS has announced tax relief for individuals and businesses in southern California affected by wildfires and straight-line winds starting on January 7, 2025. Affected taxpayers in Los Angeles County, and potentially other counties added later, now have until October 15, 2025, to file and pay various taxes. 

Read the article here- IRS: California wildfire victims qualify for tax relief; various deadlines postponed to Oct. 15 | Internal Revenue Service 

 

IRS Proposes New Regulations and Reporting Requirements for Corporate Separations 

The IRS and Treasury have proposed new regulations for corporate separations and reorganizations, including a new Form 7216 for multi-year transactions. The regulations aim to improve tax administration for stock distributions and ensure compliance with tax-free treatment. 

Read the article here- Treasury, IRS request comments on proposed regulations and a draft form for certain corporate separations and reorganizations | Internal Revenue Service

 

IRS and CASST Announce Changes to Combat Scams and Protect Taxpayers for the 2025 Filing Season 

The IRS and Coalition Against Scam and Scheme Threats (CASST) introduced changes for the 2025 tax season to protect taxpayers from scams. Key updates include a new Fuel Tax Credit statement, increased review of “Other Withholding” claims on Form 1040, and efforts to identify “ghost preparers” who submit unqualified tax returns. 

Read the article here- IRS, CASST announce 2025 filing season changes aimed at preventing spread of scams, schemes; new Fuel Tax Credit statement and increased review of “other withholding” claims among highlights | Internal Revenue Service 

 

IRS Launches Pilot Programs to Improve Alternative Dispute Resolution for Tax Disputes 

The IRS has launched three pilot programs to improve Alternative Dispute Resolution (ADR) for tax disputes. These include expanding Fast Track Settlement (FTS) to single issues, ensuring transparency in ADR denials, and a “Last Chance FTS” pilot to increase taxpayer awareness. 

Read the article here- IRS initiates Fast Track Settlement pilot programs in effort to make Alternative Dispute Resolution faster and easier | Internal Revenue Service 

 

IRS Opens 2025 Tax Season, Launches New Features and Resources for Taxpayers 

The IRS has opened the 2025 tax season, accepting 2024 returns. More than 140 million returns are expected by April 15. The IRS offers free filing options like IRS Free File and VITA. New features include scam alerts, redesigned notices, and mobile-friendly forms.  

Read the article here- 2025 tax filing season starts as IRS begins accepting tax returns today; taxpayers have many options for help | Internal Revenue Service 

 

IRS Reveals Tips for a Smooth 2024 Tax Filing Season 

The IRS offers helpful guidance for a smooth 2024 tax filing process. For faster refunds, the IRS encourages taxpayers to file electronically with direct deposit. Free filing options are available, such as IRS Free File for those earning $84,000 or less, and Direct File, which allows direct filing with the IRS in select states.  

Read the article here- IRS offers top tips to make tax time easier | Internal Revenue Service 

 

IRS Reminds Taxpayers to Choose Trusted Tax Professionals 

The IRS urges taxpayers to carefully choose their tax preparer to avoid scams and identity theft. To ensure reliability, taxpayers can use the IRS Directory of Federal Tax Return Preparers and check credentials. Free tax assistance is also available through programs like VITA and TCE.  

Read the article here- IRS urges taxpayers to choose tax preparers carefully to protect their personal information | Internal Revenue Service 

 

IRS Offers Free E-Filing for 1099 Forms 

Business taxpayers can now file Form 1099 series information returns for free online using the IRS Information Returns Intake System (IRIS) Taxpayer Portal. Businesses with 10 or more returns must file electronically. First-time users can refer to Publication 5717 for guidance on accessing the portal. 

Read the article here- File Form 1099 series information returns for free online | Internal Revenue Service 

 

IRS Increases Standard Mileage Rate for Business Use in 2025 

The IRS has announced a 3-cent increase in the standard mileage rate for business use in 2025, raising it to 70 cents per mile. This rate applies to expenses incurred by employees or self-employed individuals for using their vehicles for business purposes 

Read the article here- File Form 1099 series information returns for free online | Internal Revenue Service