As we approach the 2025 tax season, staying organized and informed is more important than ever. Recent tax law changes and IRS updates mean there are new opportunities—and new requirements—to consider. Here is your comprehensive checklist to help you prepare for filing your 2025 individual income tax return.
1. Confirm Your Filing Status and Dependents
- Review your filing status (single, married filing jointly, head of household, etc.) to ensure you are using the most beneficial option.
- Verify Social Security Numbers or ITINs for yourself and all dependents. These must be valid and issued by the return due date to claim certain credits.
- List any new dependents for 2025.
- If you are a noncustodial parent claiming a child, ensure you have Form 8332 signed & attached.
- Consider whether you can claim parents or other relatives as dependents this year. You will need to supply names, birthdates & social security numbers.
2. Gather and Report All Income
- Collect all W-2s, 1099s, and other income statements, including gig economy and digital asset income.
- For 2025, there is a new “Other earned income” line on Form 1040—be ready to specify the type and amount.
- Watch for new checkboxes on the 1040 for special circumstances (combat zone service, deceased taxpayer, late elections, etc.).
- Do not forget to report all investment income, including dividends, capital gains, and net investment income.
- Also, do not forget to supply supporting documentation for all federal and state tax payments made during 2025 (estimates).
- Make sure to include a voided check for tax payments and/or refunds. For 2025, the IRS will require most individual income tax payments to be made electronically if processed after September 30, 2025. Exceptions are limited! The easiest way to make these payments (Due with return and estimates) are with the transmittal of the 2025 tax return.
3. Tax Correspondence during 2025-2026
- Review your records & supply all Federal & State correspondence during 2025-2026. This will enable HBC CPAs to correctly reflect any changes on the 2025 income tax returns.
4. Take Advantage of New Deductions and Adjustments
- Standard Deduction: Increased for 2025—$31,500 (joint), $23,625 (head of household), $15,750 (single or married filing separately).
- Charitable Contributions: Only contributions exceeding 0.5% of your contribution base are deductible.
- New Above-the-Line Deductions: For 2025, you may deduct up to $25,000 in qualified tips, up to $12,500 ($25,000 joint) in overtime pay, certain car loan interest, and (for seniors) a new deduction up to $6,000. All are claimed on the new Schedule 1-A.
- Review eligibility for IRA, HSA, and student loan interest deductions.
- Remember to let HBC CPA know about any possible Virginia Specific Deductions:
- Military Benefits
- National Guard Pay
- Combat Pay
- Disability Income
- Government Employee Pay
5. Maximize Credits
- Child Tax Credit: Now permanent & increased to $2,200, with up to $1,700 refundable.
- Other Credits: Check eligibility for the earned income tax credit (EITC), child and dependent care credit, education credits, adoption credit (now $17,670), and clean energy vehicle credits (vehicle must be purchased by September 30, 2025).
- New questions and checkboxes on the 1040 help screen for EITC and other credits, especially for married taxpayers living apart or legally separated.
- Virginia Credits: Let HBC CPAs know if you receive any information concerning possible credits.
6. Stay on Top of Other Key Changes
- Social Security Wage Base: Increased to $176,100 for 2025.
- Foreign Accounts: Ensure proper reporting of foreign bank accounts & financial assets.
- Estimated Tax Payments: Review underpayment penalties & prepare 2026 estimates if needed.
- Deceased Taxpayers: Follow new procedures & checkboxes for returns of deceased individuals.
7. Prepare for State-Specific Updates
- Check for changes in your state, such as increased retirement income subtractions, college savings account limits, or child tax credits (notably in Wisconsin, New Jersey, and DC).
8. Best Practices for a Smooth Filing Season
- Start Early: Gather all tax documents as soon as they are available.
- Organize Records: Keep receipts & supporting documents for deductions & credits.
- Verify Information: Double-check names, Social Security numbers, and addresses.
- File Electronically: E-filing is faster and more accurate; use direct deposit for refunds and electronic funds transfer for taxes owed.
- Wait for All Documents: Do not file until you have everything to avoid errors & delays. Use HBC CPAs Organizer supplied to you.
- Keep Copies: Retain your filed return & supporting documents for at least six years.
- Understand Payment Options: If you owe, review payment alternatives & pay on time.
- Leverage IRS Online Tools: Use your IRS online account to access records & manage payments.
Final Thoughts:
The 2025 tax year brings new deductions, permanent tax rate changes, and important updates to credits and reporting. By following this checklist and staying organized, you will be well-prepared for a smooth and successful tax season. If you have questions about any of these changes or need help organizing your documents, our HBC CPA team is here to assist!
The HBC CPA team will keep you up to date with any new tax developments BUT if you have specific questions then please reach out to us.