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New Changes on Tax Return in 2025

The landscape of tax regulations is ever-shifting. Significant modifications are on the horizon for the upcoming tax year in 2024 when filing tax return in 2025. Notable adjustments, such as revisions to the standard deduction and tax brackets, will introduce fresh limits and thresholds. These modifications are set to impact income generated in 2025, ultimately reflecting on tax filings for the year 2026. 

Major Changes For Filing the 2024 Tax Return in 2025

A variety of tax incentives are available to those interested in acquiring eco-friendly vehicles. These incentives include tax credits for the acquisition of plug-in electric and fuel-cell vehicles. These credits encompass a new clean vehicle credit, a pre-owned clean vehicle credit, and a commercial clean vehicle credit, each with specific criteria and credit thresholds.

In the upcoming tax year of 2024, there are notable adjustments to be aware of regarding tax credits that were initially implemented in 2023. A fresh feature introduced for the year ahead allows individuals to exchange these credits with the dealer for a purchase made in 2024 and necessitates the inclusion of extra details in the reporting process.

When it comes to credit transferability within green energy incentives, some tax credits are transferrable for monetary value. An excellent illustration is the credit for alternative fuel refueling property, which involves setting up charging stations and then selling the credit to gain immediate cash. The IRS FAQs provide clarity on the necessary steps to facilitate these transfers.

In the event that pass-through entity owners incur losses in the year 2024, they potentially qualify for a deduction known as a net operating loss (NOL) when filing their individual tax return. A recently introduced tax form, Tax Form 172, specifically for Net Operating Losses (NOLs), has been created to accommodate this situation.

tax return 2025

Adjustments for Inflation for Tax Return in 2025

Each year, the IRS makes various adjustments to tax items to account for inflation. One notable change is the adjustment of tax brackets for individuals, which directly influences the amount owners of pass-through entities contribute towards their share of business income.

Some other items affecting businesses due to cost of living adjustments (COLAs) include:

Standard Mileage Rate From Driving for Business.

Exploring the impact of the cost of living adjustments (COLAs) on businesses reveals a variety of factors, one of which is the Standard mileage rate for business driving. In the absence of deducting actual expenses, the rate set by the IRS amounts to 67¢ per mile for the year 2024.

Health Insurance Credit for Small Businesses and Employers.

Within the realm of business impacts related to cost of living adjustments (COLAs), another noteworthy factor to consider is the Small employer’s health insurance credit. This credit’s eligibility criteria, which takes wage levels into account, has recently been updated to reflect inflation rates for the year 2024.

Gross Receipts when Filing Tax Return in 2025

Test for annual gross receipts. A crucial assessment to determine a business’s eligibility for employing the cash method of accounting, opting out of inventory accounting, and meeting other specific criteria. For the fiscal year 2024, the benchmark under the annual gross receipts test stands at an average of $30 million over the preceding three years.

First Year Expensing

Beginning in 2024, the Sec. 179 tax deduction offers businesses the opportunity to deduct the full cost of eligible property, such as machinery and equipment, when placed in service. This deduction allows for an immediate expensing of up to $1,220,000, with a reduction for purchases exceeding $3,050,000.

Retirement Plan Contributions.

In addition to the impact of cost of living adjustments (COLAs), there are several other factors that influence businesses, such as contributions to retirement plans. The limits for qualified retirement plan contributions have been raised for the year 2024.

Limitation on Losses for Non-Corporate Taxpayers.

Among the factors influencing businesses as a result of adjustments in the cost of living, there is the consideration of limitations on losses for non-corporate taxpayers. The current restriction on losses for the year has been raised, with any surplus losses being integrated into a net operating loss that may be utilized in upcoming years.

QBI (Qualified business income) Tax Deduction.

In addition to the cost of living adjustments (COLAs), businesses are impacted by various factors, such as the Qualified Business Income (QBI) tax deduction. For the tax year 2024, the threshold for taxable income at which the QBI deduction may be restricted or excluded has been raised.

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E-File My 2025 Business Tax Return

In the process to E-File the 2025 business tax return, businesses must complete and submit income tax returns to federal, state, and local authorities for both the business and its owners. This is a vital responsibility that cannot be overlooked. The best strategy is to strategize in advance and begin preparations promptly. Year after year, businesses are tasked with the annual chore of filing their tax returns.

Why E-File 2025 Business Tax?

During the fiscal year that closed on September 30, 2023, there was a notable shift towards electronic filing in business tax returns. Information extracted from the IRS Data Book reveals that a substantial portion of S corporation and partnership returns, approximately 91% and 89%, respectively, were E-Filed, submitted electronically. This trend underscores the growing inclination of businesses towards online tax filing.

E-Filing with RapidTax with the guidance of a complimentary dedicated Tax Professional from RapidTax provides a quick and effective way to complete your filing and transition into the next fiscal year.

Choosing to E-File taxes electronically can greatly speed up the process of receiving a tax refund for business owners who include their business earnings on their personal tax returns. The efficiency of this method is especially noticeable when opting for direct deposit of the tax refund into their account.

As we approach the tax filing season of 2025, it will be mandatory for tax return preparers to E-File Business Taxes electronically to submit their 2024 tax returns once they have filed ten or more information tax returns.

How to E-File My 2025 Business Taxes?

Gather Your Tax Records. When it comes to filing your taxes, it’s crucial to have a clear record of your income and expenses from the year. Whether you manage this data on your computer or through an online accounting platform, it should be easily reachable for you or a tax advisor to ensure your tax return is accurately completed.

Consider, as an illustration, the importance of readily locating payroll details within your accounting system. This includes data on wages, compensation, and employment taxes, all essential components that impact your tax return.

Make sure to keep a variety of records and additional information readily available to assist with tax return preparation, along with the annual income and expenses already tracked in the accounting system.

Information on Prior Year Business Tax Returns:

Looking back at the prior year’s tax filings reveals valuable information that may be carried over to the current year’s returns, leading to potential tax savings. This includes carryovers of various deductions such as net operating losses, general business credits, and capital losses. If past tax returns are not accessible, obtaining a duplicate or a transcript from the IRS is an option to explore.

Information About Investments:

In order for owners of partnerships and S corporations to understand the financial implications of their investments, it is crucial for them to be aware of their basis in the company. This basis determines the extent to which deductible losses can be applied to the owners’ tax returns.

Consider the instance where a proprietor of an S corporation calculates their basis, which represents the capital invested in stock or provided as loans to the corporation. Essential basis details should be disclosed in the tax filing through the utilization of Form 7203 (S Corporation Shareholder Stock and Debt Basis Limitations). Furthermore, if losses are being declared, this information should also be reported on Schedule E of either Form 1040 or 1040-SR.

When calculating their basis, partners refer to a worksheet found in the Schedule K-1 instructions. It is also necessary for partners to document a partner’s initial and final capital account on Schedule K-1 of Form 1065.

In every fiscal year, the capital account reflects the total capital infusion by partners into the partnership, individual shares of the partnership’s annual net income or loss based on tax calculations, all disbursements to partners, and any adjustments to the capital account. The capital account serves as a comprehensive record of the financial activity within the partnership.

Information on Business Assets:

For entities other than sole proprietorships, it is essential to prepare a balance sheet and disclose the total assets when filing their tax returns (some small partnerships might be excluded from this requirement). Understanding the basis of assets sold by the business is crucial for calculating any gain or loss.

In the case where the company decides to sell a property, the calculation of profit or loss takes into account various factors, including the initial purchase price, depreciation expenses, any capital upgrades made, and additional modifications. Supplemental Tax Documents and Information

Prepare Supplemental Tax Documents and Information

When it comes to proving expense amounts for tax purposes, it’s not just receipts and paperwork that matter. The tax law may also call for extra documentation under certain circumstances. This can include special record-keeping for travel, meals, vehicles, and business gifts, as well as substantiation for charitable donations.

Expense Record-Keeping From Meals, Travel, Vehicles, and Gifts:

Maintaining detailed records is essential for documenting expenses related to travel, meals, vehicles, and business gifts. Simply holding onto receipts is not enough to support deductions associated with these costs. The specific record-keeping requirements can be found in IRS Publication 463.

Substantiation for Charitable Giving:

To ensure proper acknowledgment of charitable contributions, it is essential for businesses that donate $250 or more to obtain written confirmation from the recipient organization. IRS Publication 526 outlines various rules regarding the substantiation of charitable donations.

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2024 Remaining Tax Days: Tax Filing by October Deadline

As of Tax Day, which fell on April 15, 2024, individuals were expected to file their federal income tax returns. However, there are exceptions to this deadline. If an extension was requested by April 15, the new deadline for tax filing is October 15, 2024. Most taxpayers were required to file their 2023 federal income tax returns by the original Tax Day. While the mid-April deadline applies in most cases, there are exceptions to be aware of. Additionally, it is important to familiarize yourself with other significant tax deadlines and the timeline for receiving any refunds owed to you. Find your free dedicated tax professional from Rapid Tax who will walk you through from start to finish for tax filing in October.

Can I E-file Taxes Electronically Even After April 15?

Filing tax returns electronically is allowed until November each year, with the specific deadline usually confirmed in October. An extension can be requested through Form 4868, granting a filing deadline of October 15. In cases where this date falls on a weekend or holiday, the filing deadline extends to midnight of the following business day.

Can I File My Tax in October?

If you missed the 2024 tax deadline or could not complete your tax return on time, opting for a six-month extension using Form 4868 shifted your filing deadline to October. It is crucial to note that tax extensions extend the filing deadline but not the payment deadline.

tax october

What If I Haven’t Filed for a Tax Extension Already?

Should you be entitled to a refund, you won’t face any penalties from the IRS for submitting your return after the deadline. Nevertheless, it is advisable to file promptly to expedite the refund process. It’s essential to be aware that while there may not be repercussions for filing late, it is probable that you are still required to submit a return. The IRS establishes clear criteria for individuals obligated to file a tax return, including annual income thresholds and other considerations.

In the event that you find yourself in debt to the IRS without having requested an extension and are now approaching your tax obligations belatedly, it is important to be aware that penalties and interest will start accumulating. The IRS advises promptly making an initial payment toward your owed amount to minimize the impact of penalties and interest. Should you be unable to settle your tax liability in its entirety, the IRS suggests making a partial payment and arranging for an installment agreement.

Can I File My Tax in October?

Upon obtaining an extension on Tax Day, the revised deadline for tax filing your taxes is now set for Tuesday, October 15, 2024. Extending the deadline allows additional time to complete the filing process but does not extend the time frame for tax payment. It is important to note that any outstanding tax obligations or a reasonable estimation of the owed amount were originally due by April 15.

What Are The Other 2024 Tax Deadlines Remaining To Know?

Tax Deadline by October 15:

Deadline extension for taxes. By submitting a request for an extension before the initial April 15 deadline, you gain an extra six months until October 15 to complete and submit your tax returns. Failure to meet this extended deadline will result in the IRS viewing your return as tardy, subsequently triggering penalty accrual.

The deadline for making contributions to SEP and Simple IRA, Solo 401(k) retirement plans is approaching. Individuals who have set up any of these self-employment retirement plans and requested a filing extension in April can take advantage of the extended deadline until October 15 to make their last contributions for the 2023 tax year.

Tax Deadline by December 31:

As the year draws to a close, it’s important to note the upcoming deadline for 401(k) contributions. When you invest in a company-backed retirement scheme such as a traditional or Roth 401(k), December 31 marks the usual cutoff date for making a valid contribution. In the fiscal year 2024, the maximum allowable contribution stands at $23,000.

RMD deadline Charitable donations deadline: in order to meet the deadline for Required Minimum Distributions (RMDs), it is essential to complete the process by December 31. For individuals who choose to itemize deductions and aim to make charitable contributions to lower their taxable income, December 31 marks the final opportunity for the 2024 tax year to do so.