NEWS
The Internal Revenue Service is urging taxpayers and businesses to review year-end tax planning steps as new electronic filing requirements take effect for information returns. Households are also reassessing taxable income, reporting obligations, and deductions that may influence their tax bill and tax refunds heading into the next tax season.
The Internal Revenue Service now requires more filers to submit W-2s, 1099s, and other information returns electronically as part of broader efforts to modernize the tax system. These documents influence how individuals prepare a tax return, calculate income taxes, and determine whether they owe a tax payment or qualify for a refund.
Filers must total all forms they expect to issue. If the combined number meets the threshold, electronic filing becomes mandatory under current tax laws. Paper filings from those who meet the requirement may face delays or rejections.
The expanded mandate affects gig workers, sole proprietors, and partnerships that issue multiple income statements each year. The Internal Revenue Service recommends early verification of filing obligations to prevent errors tied to federal taxes or investment income.
Taxpayers are also reviewing year-end financial decisions that affect their taxable income and tax bracket. Adjustments involving retirement accounts, tax-deferred accounts, and tax-saving strategies, such as tax-loss harvesting, may affect how you file your taxes next year.
Households preparing wage records, charitable contribution documentation, or retirement plan statements should ensure their paperwork aligns with the Internal Revenue Service's expectations. Clean documents reduce the risk of mismatches that could delay refunds or result in follow-up notices during tax season.
Qualified charitable distributions, charitable donations, and other year-end giving can reduce taxable income for tax year 2025. Taxpayers adjusting investment strategies involving mutual funds, digital assets, crypto transactions, or non-fungible tokens must maintain accurate records, particularly as new forms, including the upcoming Form 1099-DA, become part of the reporting landscape.
Those reviewing credits and deductions, including the standard deduction, itemized deductions, income tax credits, or a specific tax credit, should evaluate how year-end actions influence their final tax bill. Home mortgage interest, property taxes, and eligible medical expenses may also affect the calculation of credits and deductions.
Taxpayers with foreign income may need to consider whether the Foreign Earned Income Exclusion applies. Individuals making year-end gifts should review the annual gift exclusion, as well as the estate and gift tax exemption rules, as part of their overall tax-saving strategies. Although personal exemptions are no longer applicable under current law, similar factors continue to influence how some families plan their tax filings.
Retirees must confirm that all required minimum distributions have been completed and accurately recorded. Withdrawals from a traditional IRA, Roth IRA, or other retirement accounts remain essential for accurate income tax reporting, especially for those coordinating Social Security benefits or other income sources.
Taxpayers with alimony payments, medical savings accounts, or flexible spending accounts should verify year-end balances and deadlines. Some households also discuss long-term tax-saving strategies with a financial planner, particularly those considering opportunity zone investment decisions or evaluating potential exposure to the Alternative Minimum Tax.
Employers issuing wage and contractor statements should verify that their electronic filing systems are up to date. Preparing worker copies and Internal Revenue Service submissions early helps prevent delays close to Tax Day.
Individuals finalizing their year-end review should gather documents related to retirement accounts, charitable giving, property taxes, investment income, and other factors that affect taxable income. Accurate and complete records reduce delays, particularly for those expecting tax refunds or adjusting their tax payment schedule.
Taxpayers who handle multiple reporting obligations or navigate complex filing rules may want to consider meeting with a tax professional. Early review helps ensure accurate reporting of income, investments, charitable donations, retirement plan activity, and other income tax–related records before the filing window opens.
By William Mc Lee, Editor-in-Chief & Tax Expert—Get Tax Relief Now
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