As the 2025 tax season approaches, small business owners are encouraged to start preparations now to make filing their 2024 federal income tax returns smoother and less stressful. The Internal Revenue Service (IRS) has rolled out key updates and digital tools that can streamline this process while highlighting important considerations that tax filers should be aware of.
One of the most significant advantages for taxpayers is the IRS Online Account, which allows users to manage their tax information more efficiently. According to the IRS, an account provides access to critical information from your most recent tax return—including adjusted gross income—as well as features like the ability to make payments, set up payment plans, and receive electronic notices. This tool is particularly useful for small business owners who often juggle various tax-related tasks.
“Establishing an IRS Online Account will not only ease the tax filing process but also protect your sensitive tax information,” stated an IRS spokesperson. Small business owners should take advantage of this digital implementation to keep all relevant documentation in one secure location.
Preparing for the 2025 Tax Season: Key Steps
The IRS has launched a “Get Ready” page on IRS.gov that outlines essential actions taxpayers can take to prepare for filing. Below are critical steps that owners of small businesses should consider:
- Identity Protection Personal Identification Number (IP PIN): New for the upcoming filing season, the IRS will accept returns even if a dependent has already been claimed on a previously filed return, given the primary taxpayer includes a valid IP PIN. This six-digit number is vital for safeguarding an individual’s Social Security number from fraud.
- Quarterly Estimated Payments: Small business owners with non-wage income may need to make estimated tax payments. The deadline for the last quarterly payment for 2024 is January 15, 2025. Using the IRS Tax Withholding Estimator can help determine if additional payments are necessary.
- Understanding 1099-K Forms: From 2024, any taxpayer receiving over $5,000 in payments for goods and services via online platforms should prepare for a 1099-K form, which the IRS also receives. It’s important for small business owners to track all income, including side jobs or freelance work, as all earnings are taxable.
- Digital Assets Reporting: Taxpayers engaged in digital asset transactions—whether buying, selling, or receiving cryptocurrencies and NFTs—must report this income. Maintaining meticulous records of all digital transactions will ease the tax filing process.
Potential Challenges to Consider
While technology and new IRS policies aim to streamline the tax process, small business owners may still face challenges:
- Navigating New Regulations: New tax rules can be complex. For example, understanding the implications of 1099-K forms and IP PIN requirements may be a learning curve for business owners. Engaging a reliable tax professional can provide clarity.
- Record Keeping: The responsibility lies with the taxpayer to maintain accurate and comprehensive records. Small business owners may find the transition to digital asset tracking particularly cumbersome, making effective record-keeping systems essential.
Ensuring Timely Refunds
Understanding the factors influencing tax refunds is crucial. While most refunds are issued within 21 days, issues such as potential errors or identity theft could delay processing. Moreover, those claiming the Earned Income Tax Credit or Additional Child Tax Credit will experience an even longer wait due to mandatory review processes instituted by the PATH Act.
To expedite refunds, filing electronically and opting for direct deposit is recommended. Taxpayers seeking faster access to funds can also consider prepaid debit cards or banking mobile apps as delivery options.
Utilizing Free Filing Options
The IRS provides free tools for taxpayers, including IRS Free File, which is available to about 70% of users, regardless of income level. Additional options, including the Direct File program for simpler returns and free tax return preparation through trained volunteers, further ease the filing burden for eligible taxpayers.
With proactive preparation and understanding of the available resources, small business owners can navigate the complexities of tax filing for 2024 more effectively. For more information on how to get started, visit the IRS’s Get Ready page.
