March 2025
Barbara O’Neill, Ph.D., CFP®, AFC®
Distinguished Professor and Extension Financial Management Specialist Emeritus
Rutgers Cooperative Extension
We are about halfway through 2025 tax season, where 2024 income tax returns are being filed with the Internal Revenue Service (IRS). The tax filing deadline is April 15, 2025. In a previous post, eight recommendations were provided about how to prepare for tax season. Below are eight additional action steps to consider:
Mark Your Calendar- April 15 is not only the 2025 tax filing deadline but it is also the deadline to file for an extension if you need more time to prepare your tax return. Use Form 4868 to make a tax filing extension request (until October 15, 2025). Note that an extension to file does not extend the time to pay. Any owed taxes are still due by April 15. In addition, April 15 is the deadline to make a tax-deductible contribution for 2024 to a traditional IRA or SEP-IRA (for small business owners).
Choose How You Will File- Tax-filing options include: tax software (e.g., TurboTax, H&R Block, Free File through the IRS), hiring a tax professional (CPA, enrolled agent, or tax preparer), and filing manually with IRS forms (not recommended for complex returns). Over 90% of taxpayers now file tax returns electronically. E-filing is more secure and processes refunds faster (typically within 21 days) than mailing a paper return.
Line Up a Tax Preparer- If you are using a tax preparer, especially a CPA or enrolled agent, book an appointment early and organize all your documentation so your tax pro can get started on your tax return without any delays. Tax preparers get very busy as the tax filing deadline approaches. Be sure to check their credentials (e.g., a PTIN number) and reviews to ensure they are reputable and ask about fees and turnaround time for filing.
Consider Using an IRS Tax Filing Program- The IRS Free File program is available for taxpayers with a 2024 adjusted gross income (AGI) of $84,000 or less. AGI is determined by subtracting certain tax breaks from total, or gross, income. Another IRS tax preparation program is Direct File, which is available in 25 states. With Direct File, taxpayers prepare and file their federal income taxes directly with the IRS.
Update Your Tax Withholding- If you owe too much or receive a large refund on this year's tax return, say $500 or more either way, update your W-4 form or do a new calculation of quarterly estimated tax payments (if self-employed). Use the IRS Tax Withholding Estimator tool to accurately estimate your future tax liability. Your withholding should be compared to the IRS safe harbor rules to determine if it is sufficient. Pay at least 90% of current year tax OR at least 100% of tax owed for the previous tax year (110% with an AGI over $150,000).
Decide How to Pay Your Taxes- Payment options for taxpayers who owe money to the IRS include an electronic funds transfer from a bank account (IRS Direct Pay), payment with a credit or debit card or digital wallet such as PayPal (a processing fee applies), a check or money order via U.S. mail, and a same-day wire transfer (bank fees may apply). The IRS also has payment plans such as installment payments and offer in compromise for people who cannot immediately pay all that they owe.
Track and Plan Your Refund- If you are receiving a refund, use the IRS website "Where's My Refund?" tool to track progress on your payment. While you are waiting, develop plans for how you will use this money. Wise uses of a tax refund include saving for emergencies, paying down debt, investing in a Roth IRA or taxable account, charitable gifting, a human capital investment (e.g., college course or conference), and funding "bucket list" goals.
Start Planning for Next Year- It is wise to plan for next year's taxes as you complete this year's tax return. Adjust tax withholdings, project 2025 income, and organize tax records by category to avoid tax season stress in 2026. You might also consider a bunching strategy for itemized deductions in 2025; i.e., grouping sufficient itemized deductions into a single tax year (e.g., state and local taxes, medical bills, and charitable donations) to exceed the standard deduction.