5 Essential Steps to Prepare for IRS Tax Season 2025: Eligibility Criteria and Payment Schedule Explained

The 2025 IRS tax season is rapidly approaching, and whether you’re filing for the first time or you’re a seasoned taxpayer, it’s essential to get your finances in order.

Early preparation not only minimizes stress but also ensures that your tax filing is accurate and helps you maximize your potential refund.

With several updates to tax laws for this filing season, staying informed is more crucial than ever.

In this guide, we’ll walk you through five key steps to get ready for the 2025 IRS tax season, whether you are filing as an individual or managing a small business.

Overview of Key IRS Dates and Tax Information

Topic	Details
Start of Filing Season	Expected opening: January 27, 2025
Estimated Tax Payment Deadline	Fourth-quarter payment due: January 15, 2025
Key Tax Credits	Earned Income Tax Credit (EITC), Child Tax Credit (CTC)
Filing Options	E-file with direct deposit for faster refunds
Official IRS Website	Visit IRS.gov for the latest updates and resources

By following these steps, you can navigate the 2025 tax season with confidence, ensuring you avoid penalties and maximize your refund.

From gathering the necessary documents to opting for e-filing with direct deposit, each step simplifies the process.

Tax Law Changes for 2025 to Keep in Mind

Before diving into the preparation process, it’s important to note some key updates for the 2025 tax season:

• Standard Deduction Increase: Single filers will see the standard deduction rise to $14,000, while married couples filing jointly will benefit from a deduction of $28,000.
• New Retirement Contribution Limits: The contribution limit for IRAs has increased to $7,000, with an additional $1,500 catch-up option for taxpayers aged 50 and older.
• Expanded Clean Energy Credits: Taxpayers who install solar panels or purchase electric vehicles may qualify for enhanced energy credits.

These updates could potentially impact your filing, so staying informed is crucial for maximizing your return.

Step 1: Organize and Gather Your Tax Documents

The first step to a smooth tax season is ensuring that you have all the required documentation. Below is a breakdown of the essential documents to collect:

• Income Records: Gather all W-2s from employers, 1099 forms for freelance or contract work, and any income from investments or rental properties.
• Expense Records: Keep receipts for deductible expenses like charitable donations, medical bills, and educational costs.
• Tax Credit Documentation: Be sure to collect evidence for credits like childcare expenses or tuition payments.
• Cryptocurrency Records: If you engage in cryptocurrency trading, ensure you have a detailed transaction history to report accurately.

Using an organizational system—such as labeled folders or digital storage—will keep everything in one place, minimizing errors and saving you time.

For freelancers, this might mean organizing both 1099-NEC forms and receipts for business-related expenses like office supplies or travel.

Step 2: Review Your Eligibility for Tax Credits and Deductions

Tax credits and deductions can substantially reduce the amount you owe or increase your refund. Here’s a breakdown of key credits and deductions to review:

Popular Tax Credits

• Earned Income Tax Credit (EITC): Designed for low-to-moderate-income individuals and families. In 2025, a family with three or more qualifying children could claim over $7,000.
• Child Tax Credit (CTC): Families with eligible children can claim up to $2,000 per child, subject to income limits.
• American Opportunity Tax Credit (AOTC): This credit helps reduce the cost of higher education, offering up to $2,500 annually per student for qualified expenses.

Common Deductions

• Mortgage Interest Deduction: Homeowners can deduct interest on mortgage payments, which is especially beneficial for new homeowners.
• Health Savings Account Contributions: Contributions made to an HSA are tax-deductible, lowering your taxable income while covering medical costs.
• Retirement Savings Contributions Credit: Also known as the Saver’s Credit, this deduction encourages retirement savings by reducing taxable income based on your contributions.

Step 3: Verify Your Tax Withholding and Make Estimated Payments

Many taxpayers overlook the importance of ensuring their tax withholding is correct. If you’re employed, use the IRS’s Tax Withholding Estimator to verify that the right amount is being deducted from your paycheck.

For those with non-wage income, such as freelancers or small business owners, making estimated payments is crucial. The deadline for the fourth-quarter payment for 2024 is January 15, 2025.

Pro Tip: Avoid penalties by paying at least 90% of your expected tax liability or 100% of last year’s tax amount. Keep track of all estimated payments, as these can be deducted when calculating your final tax bill.

If your income fluctuates throughout the year, you may want to use the annualized income installment method to determine your estimated tax payments based on actual earnings for each quarter.

Step 4: Opt for E-Filing and Choose Direct Deposit

Filing electronically is the quickest, safest, and most efficient way to file your taxes. Pairing e-filing with direct deposit ensures that your refund arrives faster.

Benefits of E-Filing:

• Accuracy: Built-in checks in e-filing software can spot errors before submission.
• Speed: E-filed returns are processed much faster than paper returns, which can take up to 12 weeks.
• Convenience: You can file from the comfort of your home using trusted tax software or a professional preparer.

Setting Up Direct Deposit

To set up direct deposit, provide your bank’s routing number and account number when you file. Be sure to double-check this information to prevent delays.

For those who wish to split their refund into multiple accounts (e.g., checking and savings), the IRS allows this using Form 8888.

Refunds typically arrive within 21 days for e-filed returns with direct deposit.

Step 5: Create or Access Your IRS Online Account

An IRS Online Account simplifies managing your taxes. With this account, you can:

• View your payment history and account balance.
• Access prior year’s Adjusted Gross Income (AGI).
• Request tax transcripts.
• Update your mailing address or bank account details.

For those concerned about identity theft, the IRS provides an Identity Protection PIN (IP PIN), which adds an extra layer of security to your tax filings.

Small Business Tax Considerations for IRS Tax Season 2025

If you’re a small business owner, ensure you take full advantage of tax deductions designed for businesses:

• Home Office Deduction: If you work from home, you may be able to deduct business-related expenses for your home office.
• Business Equipment: Items like computers, software, and office furniture may qualify for Section 179 deductions.
• Travel Costs: Expenses for business-related travel, such as airfare, lodging, and meals, may be deductible.

Common Tax Filing Mistakes to Avoid

To avoid delays or penalties, make sure to:

• Double-check personal information, such as your Social Security number and contact details.
• Verify all math calculations or use e-filing software to avoid common errors.
• Ensure that you sign your return if filing by paper, as unsigned returns are invalid.
• Be mindful of deadlines to avoid penalties for late filings or payments.

Preparing for the 2025 IRS tax season doesn’t have to be overwhelming. By following these steps—gathering your documents, reviewing tax credits, checking withholding, e-filing with direct deposit, and setting up an IRS online account—you can ensure a smooth and efficient filing process.

Stay updated on new tax laws and credits, and if you have a complex financial situation, don’t hesitate to consult with a tax professional.

FAQs

What is the deadline for filing taxes for 2025?

The filing season for 2025 opens on January 27, and the deadline for filing your return is April 15, 2025, unless you file for an extension.

Can I file taxes without a tax professional?

Yes, you can file your taxes on your own using e-filing software. However, if your financial situation is complex, it might be beneficial to consult a tax professional.

How can I check if I qualify for the Earned Income Tax Credit (EITC)?

The IRS provides an online tool to help determine eligibility for the EITC. Ensure you meet the income requirements and other conditions.