New Changes by the IRS to Look Out for in the 2025 Filing Season

January 28th, 2025 | Business Tax Services | Tax | High Net Worth | Small & Midsize Businesses
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By Caroline Huffman  The filing season starts January 27, 2025, and a few changes were made just in time for the start of this new season.   The IRS expects more than 140 million individual tax returns for tax year 2024 to be filed before the federal deadline of April 15. With the tax filing season being only 78 days long, the IRS has made improvements to the filing process since last season. Those improvements include more accessibility to tax account information, such as text and voice virtual assistants, expanded IRS Individual Online Account features, more access to dozens of tax forms through cell phones and tablets, and expanded alerts for scams and schemes that threaten taxpayers.  In addition, the IRS Free File Guided Tax Software began accepting individual tax returns on Friday, January 10. 

Free File Program is Now Open 

The IRS Free File program provides millions of taxpayers nationwide access to free software tools offered by trusted IRS Free File partners. The Free File program has been available for 23 years and has provided free tax preparation software from eight companies.  These companies are in a public-private partnership between the IRS and Free File Inc., and part of the partnership entails tax preparation and filing software partners to offer their online products to eligible taxpayers for free. This year, eight private-sector partners will provide online guided tax software products for taxpayers with an Adjusted Gross Income of $84,000 or less in 2024, with one of the available partners offering a product in Spanish.  

Other Changes to Help Taxpayers 

The IRS continues to add more functionality to the Individual Online Account. These changes include viewing your most recent tax return details, requesting an Identity Protection PIN, getting account transcripts to include wage and income records, and signing tax forms.   Taxpayers can also now access 67 forms on cell phones and tablets. This includes “saving and drafting” on their cell phones and tablets. The IRS will also offer virtual assistance with refunds with services like voice bots in English and Spanish.    Creating an Individual Online Account can simplify matters with your tax professional, too.  Taxpayers are able to make same-day payments, view copies of IRS notices, and set up an online payment plan. A taxpayer can also approve and electronically sign a Power of Attorney, eliminating the need to print, sign, and scan the form back to the professional.  

New Scam Alert Available on Individual Online Accounts 

A new banner on the Online Account homepage alerts taxpayers of potential scams and schemes, including a link to the Digital Notices and Letters page to view correspondence from the IRS. Another feature the IRS added to help taxpayers avoid scams is the Fuel Tax Credit form, designed to make it harder for taxpayers to be misled by promoters into claiming credit.   This credit is intended to be for off-highway business and farming use, and taxpayers need a business purpose and a qualifying business activity to qualify for the credit. If the Fuel Tax Credit is claimed erroneously, the taxpayer is subject to the Internal Revenue Code 6702(a) penalty.   The IRS is also reaching out and sending letters to taxpayers who have potentially been using “ghost preparers” to prepare tax returns. These preparers don’t identify themselves on the tax return, which is a red flag for a potential scam or scheme. These ghost preparers dupe taxpayers into filing inaccurate tax returns for bigger refunds, then vanish, leaving the taxpayer exposed to incorrect claims. 

Charitable Contribution Scams

Another scam on the rise is charitable contribution scams. The IRS is warning taxpayers to avoid promoters of fraudulent tax schemes involving donations of ownership interests in closely held businesses marketed as “Charitable LLCs.”   These schemes typically encourage higher-income taxpayers to create LLCs, put cash or other assets into the LLCs, and then donate a majority percentage of non-voting and non-managing membership units to a charity. The taxpayer maintains control of the voting units and reclaims the cash or assets directly or indirectly for personal use. The promoter sometimes has control over the charity that receives the donation. The promoter then executes an “exit strategy” for the taxpayer to buy back their contributions at a discounted price after a period of time.   Generally, taxpayers cannot deduct a charitable contribution of less than their entire interest in property. Retaining rights to control the donated interests or buy back assets will disqualify the transaction as a deductible charitable contribution.  The IRS and CASST (Coalition Against Scam and Scheme Threats) members anticipate that misinformation spread by influencers and scammers will increase around the 2025 tax season. Avoid looking for information on social media or from shady tax return preparers who present themselves as reputable tax professionals. Instead, learn what scams are trending and speak to a trusted tax professional. 

Work with Trusted Tax Professionals 

While the IRS has expanded its offerings and services to help individuals with their tax returns, businesses and individuals will benefit from professional advice. Tax professionals’ attention to detail also helps make the most of every available tax credit and return opportunity.   The tax experts at Maner Costerisan are among the most trusted in the business and can help you understand what steps to follow for your 2025 taxes. Contact us at maner@manercpa.com or give us a call at 517.323.7500.