With the 2025 tax season in full motion, the Internal Revenue Service (IRS) published a guide with top tax tips for taxpayers.

The IRS reminds taxpayers they are required to file their tax return by April 15, 2025. Before filing, you should be certain you have all the required documents. It may be helpful to create an IRS Online Account. This gives you secure access to your prior tax returns and other key information. The IRS also encourages taxpayers to retain their tax documents in a digital format to facilitate tax filing.

Some taxpayers have an Individual Taxpayer Identification Number (ITIN). If an ITIN remains unused for three consecutive years and expires, the taxpayer should renew it through IRS.gov.

There are many tax changes and updates that will benefit taxpayers. The Additional Child Tax Credit (ACTC) has increased to $1,700 for each qualifying child. The IRS cannot process ACTC refunds until mid-February, but that deadline has passed, and refunds may now be issued.

The standard deductions for 2024 have increased. The deduction is $14,600 for a single person, $21,900 for a head of household or $29,200 for a married couple or a qualifying surviving spouse. The Child Tax Credit (CTC) is $2,000 for qualifying children. The credit is phased out for upper-income individuals with income over $200,000 ($400,000 with a joint return). A child must be age 17 or under on December 31, 2024 to qualify for the CTC.

The Earned Income Tax Credit (EITC) is available to taxpayers without a qualifying child if they are between age 25 and 65 as of December 31, 2024.

There is an adoption credit of $16,810 per eligible child. This phases out with a modified adjusted gross income (AGI) over $252,150.

The Clean Vehicle Credit (CVC) is allowed up to $7,500 for a qualifying new vehicle. It is reported on IRS Form 8936. The clean vehicle credit for new vehicles is phased out for incomes over $150,000 for single filers and $300,000 for a married couple. For used clean vehicles, the CVC is $4,000 and is phased out for incomes over $150,000 for joint filers and over $75,000 for single filers.

An IRA contribution may be made up until April 15, 2025. The IRA limit for 2024 is $7,000 ($8,000 for individuals age 50 or older). The Roth and traditional IRA limits are phased out for many upper-income taxpayers.

The IRS reminds taxpayers that there are several no-cost filing options for many individuals.

1. IRS Free File — The IRS Free File program offers commercial tax software at no cost to the taxpayer. It allows a free federal and, in some cases, state tax return. It is available for individuals with incomes under $84,000. You can use IRS.gov to review the Free File programs and select one of the commercial software vendors.
2. Direct File — The federal government developed the Direct File software, which is available for taxpayers in 25 states. The Direct File program options are listed on IRS.gov. It has been expanded for the 2024 tax year. Options include the Earned Income Tax Credit (EITC), Child Tax Credit (CTC), Child and Dependent Care Credit (CDCC) and other credits. Direct File taxpayers may not itemize but must use the standard deduction. They also may include student loan interest, education expenses or health savings account (HSA) contributions.
3. MilTax — MilTax is a free program through the Department of Defense. It is available to all active-duty military individuals. The software includes specific information for military members who are deployed in combat or have housing allowances. It allows the filing of a federal tax return and up to three state tax returns.
4. VITA and TCE — The IRS supports a free tax return preparation service for qualified individuals. The Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs are available in many locations. You can use the VITA Locator Tool on IRS.gov to find the best location.

FinCEN BOI Deadline Set for March 21, 2025

The Beneficial Ownership Information (BOI) reporting requirement by the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has been “on and off” multiple times in 2025. The initial deadline for reporting was set for January 1, 2025. While several U.S. District Courts have ruled on the BOI reporting, two Texas courts issued injunctions blocking the reporting requirement.

On January 7, 2025, the U.S. District Court for the Eastern District of Texas issued an order that blocked FinCEN from requiring BOI reporting. However, the Department of Justice filed a notice of appeal and requested a stay of the order until the appellate court makes a determination. On February 18, 2025, the District Court agreed to stay the injunction pending the appeal. As a result, the FinCEN website indicated BOI reporting would be required within 30 days from February 19, 2025. Therefore, the reporting deadline has been reinstated and is set for March 21, 2025.

FinCEN also indicated it may issue further guidance that will reduce the reporting burden for low-risk entities, such as many U.S. small businesses.

Editor's Note: FinCEN BOI reporting is estimated to apply to 32 million entities. These are generally small businesses, trusts and similar entities. However, on February 10, 2025, the House of Representatives passed a bill (H.R. 736) that would delay the reporting until January 1, 2026, for companies formed or registered before January 1, 2024. If the Senate passes this bill and the President signs it, reporting for these companies will be delayed until next year.

Tax Drama — Current Law or Current Policy?

The Tax Cuts and Jobs Act (TCJA) includes many tax provisions that sunset at the end of 2025. As a result, it is very likely there will be a major tax bill in 2025. The House of Representatives and the Senate are both moving forward with plans for the new tax bill. The House is planning to pass a single bill with tax provisions and other laws that affect areas such as immigration, national security and energy. The Senate is currently proceeding with a two-bill strategy.

On February 20, the Senate held an all-night "vote-a-rama” as an initial step for the first of two bills. The bill passed around 5:00 a.m. on Friday morning by a vote of 52 to 48. The non-binding budget blueprint prepares for potential use of the Senate reconciliation process to pass a bill with 51 votes.

The House bill is also proceeding and is far more comprehensive. The plan in the House is to have a single bill that addresses tax policy plus the other Senate provisions.

Senate leaders have suggested the tax bill could be passed with current policy scoring. Senate Finance Committee member Bill Cassidy (R-LA) filed an amendment to the bill before it headed to vote on February 20. His amendment strikes "references to current policy accounting." This amendment would be consistent with statements by Senate Finance Committee Chair Mike Crapo (R-ID) and Senate Majority Leader John Thune (R-SD) who both have indicated the Senate could use a current policy scoring method. This would value the tax extensions at zero, rather than the $4.5 trillion estimate of the Congressional Budget Office.

House Ways and Means Committee Member David Schweikert (R-AZ) and other members have stated that current policy scoring is not acceptable and believe that a current law scoring method should be used. The current law scoring method requires consideration of costs and offsets. One House plan is to estimate the current law scoring cost at $4.5 trillion over a decade and to offset part of that cost with approximately $2 trillion in budget cuts.

Editor's Note: There will be a major tax bill in 2025. The debate over the scoring method will have a huge impact on the number of TCJA provisions that are extended and the level of budget reductions. Congress will be making substantial decisions that impact all Americans. If there is current law scoring, there will be a strong debate on both the number of tax provisions to be extended and the extent of the budget reductions. Your editor and this organization do not take a specific position on these discussions and the applicable tax provisions. This information is offered as a service to our readers.

Applicable Federal Rate of 5.4% for March: Rev. Rul. 2025-6; 2025-11 IRB 1 (19 February 2024)

The IRS has announced the Applicable Federal Rate (AFR) for March of 2025. The AFR under Sec. 7520 for the month of March is 5.4%. The rates for February of 5.4% or January of 5.2% also may be used. The highest AFR is beneficial for charitable deductions of remainder interests. The lowest AFR is best for lead trusts and life estate reserved agreements. With a gift annuity, if the annuitant desires greater tax-free payments the lowest AFR is preferable. During 2025, pooled income funds in existence less than three tax years must use a 4.0% deemed rate of return. Charitable gift receipts should state, “No goods or services were provided in exchange for this gift and the nonprofit has exclusive legal control over the gift property.”