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The big news this week is that the IRS has announced that tax season will open on Monday, January 27, 2025.
As a tax pro, this is kind of my run-up to the Super Bowl playoffs (perhaps it’s not a coincidence that they happen around the same time). I assumed that everyone got this excited until one of my editors asked me exactly what opening the season meant. That got me thinking that perhaps I should explain it a little bit more. So here goes: the tax season open is the date when the IRS will begin accepting paper and electronic tax returns. Even if returns are prepared before that time, that’s the first day that returns can be processed–if you’re waiting for a refund, the clock doesn’t start ticking until this date.
Of course, you always hear chatter about early processing and early returns. Some of it is simply taxpayer optimism, but it is true that the IRS starts processing some returns a little early–kind of a soft launch. However, most taxpayers can expect their returns to be processed beginning on or after January 27, 2025. According to IRS Commissioner Danny Werfel, the entire IRS has been working to get ready for this day.
Tax professionals have been working hard, too. This could be a tight year for tax prep–the accounting talent shortage combined with rising costs is causing a tax preparer crunch in some areas. If you don’t already have a trusted preparer, I recommend finding one earlier rather than later. Some preparers won’t be accepting new clients as the season rolls on.
And while it makes the most sense to file and pay on time, here’s a quick reminder that you should file your return on time this year (or file for an extension, keep reading!)–even if you can’t pay.
Free tax preparation is available for eligible taxpayers, including Direct File and Free File options.
Help is also available, including Volunteer Income Tax Assistance (VITA)/Tax Counseling for the Elderly (TCE) programs. You can find organizations in your community with IRS-certified volunteers who provide free tax help for eligible taxpayers, including seniors, people with disabilities, and those who speak limited English. According to Werfel, the goal is to increase VITA support by 5% during the tax season.
(Speaking of VITA, my training for my Alaska trip has been eye-opening–for those of you who missed out on my big announcement last week, I will be joining a handful of other tax attorneys to travel to Alaska and prepare tax returns for taxpayers living in remote parts of the state. As part of the project, we must get VITA-certified and brush up on certain skills. In addition to learning that polar bears can travel at speeds up to 25 mph, I was reminded that recalling a vast set of tax law rules contemporaneously as you’re entering taxpayer information can be really daunting. Consider this my plea to be kind to your tax professional this year.)
Taxpayers who are in the military can also benefit from a Department of Defense program called MilTax. MilTax e-filing software is free for service members, eligible family members, survivors, and recent veterans up to 365 days from their separation or retirement date.
There will be lots more tax news–and a surprise or two with our Forbes coverage–heading your way as the season gets closer.
Enjoy your weekend,
Kelly Phillips Erb (Senior Writer, Tax)
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Questions
This week, a reader asks:
I’m going on an extended trip to Europe in the spring. Can I request a filing extension in advance?
It’s pretty common to assume that you must file for an extension at the last minute, but that’s not true. You simply need to file by the deadline. If you need more time to file your taxes, request an extension by the tax filing due date—that’s April 15. So long as you meet the deadline, the extension is automatic—you’ll have six additional months (until October 15) to file without penalties. Remember, however, that an extension only extends the time to file, not the time to pay. If you’re going to owe on April 15, make arrangements to pay in advance—you can schedule online payments ahead of time.
If you pay what you owe using an online payment option, check the box that you are paying as part of filing for an extension—you won’t have to file a separate extension form.
Otherwise, you can file Form 4868 by mail, online using software, or have your tax professional file for you.
(I’m assuming that your extended trip is just a vacation, but if you are a U.S. citizen or resident alien living and working outside of the U.S. on Tax Day, you are entitled to an automatic two-month extension—no form required!)
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Statistics, Charts, and Maps (Oh My!)
With tax season opening soon, it’s a good time to look back at statistics from the 2024 filing season:
The IRS received and processed more returns in 2024 than it did in 2023, but issued fewer and smaller tax refunds. Trips to IRS.gov were up an impressive 10%.
The IRS announced that it expects more than 140 million individual tax returns for tax year 2024 to be filed ahead of the Tuesday, April 15 federal deadline. More than half of all tax returns are expected to be filed this year with the help of a tax professional.
A Deeper Dive
The beginning of the year is always a good time to look back at what happened last year—and think about what things might look like in the new year.
In December, I posted my picks (☆) for the top tax and accounting storylines of 2024. Those included a ramp up in IRS enforcement as part of a larger effort (☆) targeting large corporations, large partnerships, and high-income individual filers to pay the taxes they owe, and the unauthorized disclosure of tax return and return information by an IRS contractor that eventually resulted in a public apology from the IRS. (☆)
I also highlighted some legal issues, including a closely watched case at the Supreme Court (☆) which eventually was resolved in favor of the government. In Moore, taxpayers had argued the mandatory repatriation tax (MRT)—which attributes the income of an American-controlled foreign corporation to the entity’s American shareholders and then taxes the American shareholders on their portions of that income—exceeded Congress’s constitutional authority. The Supreme Court disagreed.
Also on my list? The shrinking pool of available CPAs and the rise of private equity in the accounting world. Investment firms are lining up (☆)—as of November 2024, five of the largest 25 U.S. accounting firms, ranked by revenue, had taken private equity money.
At the top of my list are those controversial beneficial ownership information (BOI) reporting requirements. A recent lawsuit—now at the Supreme Court (☆)—really shook things up. In Texas Top Cop Shop, Inc., et al. v. Garland, et al., a U.S. district judge initially granted a request for a preliminary injunction, blocking the government from enforcing the reporting requirements nationwide. On appeal, the same judge ruled (☆) that the injunction would stand—a unanimous Fifth Circuit bench subsequently granted the government’s emergency motion (☆) for a stay. A last-minute ruling from a different Fifth Circuit panel then vacated the stay. After all of that back and forth, BOI reporting is on hold for now.
But that was just my take. In a recent episode of Tax Notes Talk, Tax Analysts Chief Operating Officer Jeremy Scott reviews the 2024 developments in U.S. tax legislation and speculates what may lie ahead in 2025. Scott noted that there weren’t too many significant changes in U.S. tax policy because it was a presidential election year with a divided government. There were changes, however, on the tax administration side, including the introduction of the Direct File program. Direct File, Scott notes, is not popular with Republicans, even as IRS Commissioner Daniel Werfel cited it as a success.
Also noteworthy in 2024? The employee retention credit. These credits got paused in 2023 because the IRS found a high incidence of fraud—that resulted in a lot of tension in D.C.
Scott also cited two Supreme Court cases with massive tax implications—Moore, which was on my list, and Loper Bright. Loper Bright isn’t exactly a tax case, but it does have the potential to make a big impact on tax administration. Specifically, it’s likely to make it harder for Congress to delegate a lot of authority to agencies to write regulations without some legislative guidance. That’s key because traditionally, Congress will pass tax bills and the IRS and Treasury are allowed to interpret these bills. That may prove to be problematic following Loper Bright.
You can hear—or read (transcript available)—more about what happened in 2024 and what it could mean in 2025 here.
Howard Gleckman engaged in a little crystal ball gazing, too, examining reports that suggest President-elect Trump may support raising the state and local tax (SALT) deduction cap from $10,000 to $20,000 for married couples who file jointly, if blue state Republicans agree to back a massive tax and spending bill later this year. A new Tax Policy Center analysis finds that raising the cap to $20,000 would increase the federal debt by about $225 billion from 2025 to 2034, assuming all expiring provisions of the 2017 Tax Cuts and Jobs Act are extended permanently. Nearly all the benefit would go to households making about $200,000 or more.
And as the new administration takes shape, it’s not certain whether Congress will address President-elect Donald Trump’s ambitious policy agenda in one bill or two. Extending the TCJA alone would add more than $4 trillion to the federal debt over the next decade—building consensus on how to pay for tax cuts will be a heavy lift.
Looking forward in 2025 isn’t all about spending, tax cuts, and court cases. Tax rates matter, too. If you’re looking for 2025 tax brackets and rates, you’ll find them here. Beyond the brackets, there are three sets of tax figures in 2025 that all employees should know. They relate to compensation from work: paycheck withholding, the potential need for estimated taxes, and your retirement savings. Here’s a look.
Tax Filings And Deadlines
📅 January 15, 2025. 4th quarter estimated payments due (for 2024).
📅 January 27, 2025. Tax season opens! The IRS will begin accepting paper and electronic tax returns (for individual taxpayers).
📅 February 3, 2025. Due date for individuals and businesses affected by Hurricanes Beryl and Debby (more info here (☆) and here (☆)), those in South Dakota affected by severe storms, straight-line winds and flooding that began on June 16, 2024, taxpayers in Puerto Rico affected by Tropical Storm Ernesto, and those individuals and businesses in Connecticut and New York affected by severe storms and flooding from torrential rainfalls that began on August 18, 2024.
📅 April 15, 2025. Due date for most taxpayers to file an individual tax return—or apply for an extension.
📅 May 1, 2025. Due date for individuals and businesses in the entire states of Alabama, Georgia, North Carolina and South Carolina and parts of Florida, Tennessee and Virginia affected by severe storms and flooding from Hurricane Helene (☆) and Hurricane Milton.
📅 September 30, 2025. Due date for individuals and businesses impacted by recent terrorist attacks in Israel.
Tax Conferences And Events
📅 February 19-25, 2025. ABA Tax Section 2025 Midyear Tax Meeting. JW Marriott Los Angeles L.A. Registration required.
📅 May 13-14, 2025. National Association of Enrolled Agents 2025 Capitol Hill Fly-In, Washington, DC. Registration required (NAEA members only).
📅 July 21-23, 2025. National Association of Tax Professionals Taxposium 2025, Caesars Palace, Las Vegas. Registration required.
Trivia
When was the first Tax Day (the first deadline in the modern era) for individual taxpayers to file their federal income tax return?
(A) February 1
(B) March 1
(C) April 1
(D) April 15
Find the answer at the bottom of this newsletter.
Positions And Guidance
The IRS has published Internal Revenue Bulletin: 2025-2.
Noteworthy
CLA (CliftonLarsonAllen LLP), a professional services firm delivering wealth advisory, digital, audit, tax, outsourcing, and consulting services, announced several significant adjustments to the firm’s leadership team and regional management. CEO Jen Leary has appointed James Watson as Chief Solutions Officer and Paul Bailey as Chief Growth Officer. Additionally, Kirthi Mani has been named Chief People Officer, Josh Enger has been named Chief Outsourcing Officer, Chastity Wilson has been named Chief Tax Officer, and Kelli Roberts was named Regional Managing Principal (RMP) of the Sunbelt region.
The Tax Foundation announced that Erica York will serve as the next Vice President of Federal Tax Policy, where she will oversee the organization’s entire federal tax policy agenda. William McBride, previous Vice President of the federal practice, will serve as Chief Economist & Stephen J. Entin Fellow in Economics, where he will oversee major research projects related to pro-growth and fiscally sustainable tax policy. Scott Hodge, who served as president of the Tax Foundation from 2000 to 2022, has transitioned away from being a full-time employee, and will continue to serve as President Emeritus.
CohnReznick LLP, an advisory, assurance, and tax firm, announced that it has elected additional professionals to its partnership, effective February 1, 2025. They are Travis Butler (National Tax), Whitney Coombs (Tax), Arvinder Kaur (National Tax), Jonathan Maakestad (Tax), Mark Papa (Tax), Endri Pasholli (Tax), and C. Logan Robertson (Tax).
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In Case You Missed It
Here’s what readers clicked through most often last week:
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Trivia Answer
The answer is B.
The first Tax Day was on March 1 (1914). A few years later, Tax Day was moved to March 15 (1918). In 1955, the deadline was pushed to April 15, where it has remained ever since (unless it falls on a weekend or holiday, in which case it moves to the next business day).
(It’s never been April 1—April Fool’s Day—but that would make for a fun deadline!)
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