Preparing Your Tax Returns in 2025? Here’s What the IRS Wants You to Know

Each year, the Internal Revenue Service (IRS) publishes resources to help U.S. taxpayers prepare their annual returns. It recently published several resources for 2025. Here is a look at what the IRS wants taxpayers to know this tax season from New Jersey IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group.

Changes to the Standard Deductions and Certain Tax Credits

In a February 19, 2025 News Release, the IRS highlighted several changes that taxpayers will need to take into account when preparing their annual returns in 2025. Some examples of these changes include:

• Standard Deductions – The standard deductions have increased for the 2024 tax year. The standard deduction for single filers is $14,600 (or $21,900 for heads of household), while the standard deduction for married couples filing jointly is now $29,200.
• Child Tax Credits – The child tax credit starts at $2,000 for the 2024 tax year, with the phase-out beginning at an adjusted gross income of $200,000 (or $400,000 for married couples filing jointly). The maximum additional child tax credit (ACTC) has increased to $1,700.
• Adoption Credit – The maximum federal adoption credit has increased to $16,810 for the 2024 tax year, with the phase-out beginning at an adjusted gross income of $252,150. The adoption credit phases out completely for taxpayers with an adjusted gross income of $292,150 or more.

Other Important Changes for the 2024 Tax Year

Along with these changes, the IRS’ February 19, 2025 News Release highlights some other important changes as well. These include:

• IRA Contribution Limit – The individual retirement account (IRA) contribution limit is increasing for the 2024 tax year. When preparing their returns in 2025, U..S. taxpayers can claim up to $7,000 in contributions if they are under the age of 50, or up to $8,000 in contributions if they are age 50 or older.
• 1099-K Reporting Requirements – For the 2024 tax year, payment apps and other third-party settlement organizations (TPSOs) are required to file Form 1099-K for any U.S. taxpayers who conducted more than $5,000 in transactions during the tax year. If a taxpayer does not also report income disclosed on a TPSO’s Form 1099-K, this can trigger an IRS audit and the potential for substantial interest and penalties.

U.S. Taxpayers Must Report All Income from All Sources

In a January 30, 2025 News Release, the IRS issued a reminder that U.S. taxpayers are required to report their worldwide income from all sources. This includes, but is by no means limited to, income from investments (including cryptocurrency), gig work, part-time or seasonal work, self-employment, and goods or services provided through mobile apps or online platforms.

U.S. Taxpayers Are Responsible for Their Returns Even if They Hire a Tax Preparer

Finally, in a News Release issued on February 3, 2025, the IRS advised U.S. taxpayers to be careful when choosing their tax preparers. While the News Release provides warnings and identifies red flags for potential tax preparer fraud, it also makes clear that “[t]axpayers are legally responsible for the accuracy of their income tax return, even if someone else prepares it.”

Request a Confidential Consultation with New Jersey IRS Lawyer Kevin E. Thorn

New Jersey IRS lawyer Kevin E. Thorn, Managing Partner of Thorn Law Group, represents taxpayers in all federal tax-related matters. If you need advice on how to deal with the IRS in 2025, you can call 201-842-7696 or contact us online to request a confidential consultation.