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Issue Number:    IR-2025-37

Inside This Issue

IRS: Free File provides quick and easy way to file taxes

WASHINGTON — As the end of tax season approaches, the Internal Revenue Service reminds taxpayers that IRS Free File is a quick and easy way to file federal tax returns for free. 

IRS Free File lets qualified taxpayers get free tax preparation, free electronic filing and free direct deposit of their federal tax refund, if they’re owed one, using guided tax preparation software available only at IRS.gov. 

IRS Free File is available to taxpayers and families whose 2024 total adjusted gross income (AGI) was $84,000 or less. A taxpayer’s AGI includes wages, tips, business income, retirement income and other forms of taxable income. Through a public-private partnership between the IRS and the Free File Alliance, tax preparation and filing software providers make their online products available to eligible taxpayers. Each provider sets its own eligibility rules based on age, state residency and income. IRS Free File will guide taxpayers through choosing the provider that’s right for their needs 

Benefits of IRS Free File 

• Using IRS Free File can help taxpayers find and calculate valuable tax credits like the Earned Income Tax Credit, Child Tax Credit and the Child and Dependent Care Credit.
• Any individual or married couple that meets the income limitation is potentially eligible, and IRS Free File can also handle complex tax returns.
• IRS Free File partner companies cannot disclose or use tax return information for purposes other than tax return preparation without the taxpayer’s informed and voluntary consent.
• Taxpayers can use IRS Free File to file their taxes on any personal computer, tablet or smart phone.
• All products are available in English, and one guided tax product is available in Spanish.

Easy way to file an extension 

Need more time to file? IRS Free File is one of the easiest ways to request an extension. A tax filing extension guarantees the taxpayer six additional months to file, with an extended deadline of Oct. 15.  

Although an extension grants extra time to file, it does not grant taxpayers extra time to pay if they owe. Taxpayers are still obligated to pay taxes due on April 15, 2025, to avoid penalties and interest. Taxpayers who owe should either pay their full tax bill or at least pay what they can afford by the April 15 deadline. 

Other free tax filing options 

In addition to IRS Free File, the IRS reminds taxpayers that there are other free programs available to help: 

Free File Fillable Forms. All taxpayers regardless of their income can use the IRS’ Free File Fillable Forms. These are the electronic versions of IRS paper forms and are best for people who are comfortable preparing their own taxes using IRS forms and instructions. 

Direct File. Taxpayers who lived and worked in one of 25 participating states for all of 2024 may use IRS Direct File to file federal tax returns online—for free—directly and securely with the IRS. Go to IRS Direct File to find more information, including eligibility requirements and updates to the list of tax situations added to IRS Direct File for the 2024 tax year. 

VITA and TCE. People who generally make $67,000 or less, persons with disabilities, limited English-speaking taxpayers and those who are 60 years of age and older, can also find free one-on-one tax preparation help around the nation through the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs. VITA/TCE sites are operated by IRS partners and staffed by IRS-certified volunteers who provide a trusted source for preparing tax returns. 

MilTax. Offered through the Department of Defense, MilTax is a free tax resource available to members of the military, as well as qualifying veterans and family members. It is a suite of tax services designed to address the realities of military life—including deployments, combat and training pay, housing and rentals, and multi-state filings. MilTax includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free. 

For more on IRS Free File or other filing methods, check out the File your return page on IRS.gov.

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Issue Number:  Tax Tip 2025-20

How to file when taxpayers have incorrect or missing documents

Taxpayers should make sure they have all their documents before filing a federal tax return. Those who haven’t received a W-2 or Form 1099 should contact the employer, payer or issuing agency and request the missing or corrected documents.

If a taxpayer doesn’t receive the missing or corrected form in time to file their tax return, they can estimate the wages or payments made to them, as well as any taxes withheld. To avoid filing an incomplete return, they may need to use Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, Etc.

If they receive the missing or corrected Form W-2 or Form 1099-R after filing their tax return and the information differs from their previous estimate, they must file Form 1040-X, Amended U.S. Individual Income Tax Return.

Most taxpayers should have received their documents by Jan. 31. These may include:

• Form W-2, Wage and Tax Statement
• Form 1099-MISC, Miscellaneous Income
• Form 1099-INT, Interest Income
• Form 1099-NEC, Nonemployee Compensation
• Form 1099-G, Certain Government Payments, like unemployment compensation or state tax refund
• Letter 6419, 2021 Total Advance Child Tax Credit Payments
• Letter 6475, Your 2021 Economic Impact Payment

Incorrect Form 1099-G for unemployment benefits

Taxpayers must report unemployment compensation on their tax return as it is taxable income.

Taxpayer’s who receive an inaccurate Form 1099-G should contact the issuing state agency to request a revised Form 1099-G showing their correct benefits. Taxpayers who are unable to get a timely, corrected form from states should still file an accurate tax return, reporting only the income they did receive.

If the taxpayer didn’t receive unemployment benefits but did receive a Form 1099-G for unemployment compensation, this may be a sign that the taxpayer’s identity was stolen.

More information
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Issue Number:  2025-5

Inside This Issue

• Tax relief for West Virginia storm victims
• IRS shares FAQs to help businesses with Employee Retention Credit and income tax returns
• Tax filing resources
• Other tax news 

  Tax relief for West Virginia storm victims

The IRS announced tax relief for businesses and individuals in parts of West Virginia affected by severe storms, straight-line winds, flooding, landslides and mudslides that began on Feb. 15.

These taxpayers have until Nov. 3 to file various federal business and individual tax returns and make tax payments.

The same relief is available to any counties added to the disaster area later. Visit the Tax Relief in Disaster Situations page on IRS.gov for the current list of eligible locations.

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  IRS shares FAQs to help businesses with Employee Retention Credit and income tax returns

The IRS shared a set of frequently asked questions on the Employee Retention Credit and income tax. The information explains how businesses can resolve issues with income tax returns if the business:

• Didn’t reduce its wage expense and their ERC claim was allowed, or
• Reduced its wage expense and their ERC claim was disallowed.

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  Tax filing resources

Free options available for preparing and filing taxes

The IRS encouraged taxpayers who still need to prepare and file their tax returns to check out the many free options available.

IRS Free File offers free tax preparation software through IRS partners on IRS.gov. Also, the IRS offers free in-person help through its Volunteer Income Tax Assistance and the Tax Counseling for the Elderly programs.

Check out the latest IRS Tax Time Guide

The IRS encourages taxpayers to file a tax return or pay taxes they owe using electronic options on IRS.gov by April 15. These digital tools can help taxpayers avoid owing late filing and interest fees.

Act now to claim refunds from tax year 2021

More than 1.1 million people across the nation have unclaimed refunds for tax year 2021 but face an April 15 deadline to submit their tax returns.

The IRS estimates that more than $1 billion in refunds remain unclaimed by taxpayers who haven’t filed their Form 1040, Federal Income Tax Return, for the 2021 tax year. Those who need to file their 2021 tax return should start preparing now so they can file by the deadline.

Current and prior year tax forms, such as the tax year 2021 Forms 1040 and 1040-SR and instructions are available on the IRS.gov Forms and Instructions page or by calling toll-free 800-TAX-FORM (800-829-3676).

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  Other tax news

These topics may be of interest to small businesses and their partners:

• April 1 final day to begin required withdrawals form IRAs and 401(k)s
• Myth-busting federal tax refunds

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Issue Number:    IR-2025-36

Inside This Issue

Follow key filing guidelines to speed refunds, avoid errors

WASHINGTON – The Internal Revenue Service issued a series of tips and reminders to speed taxpayer refunds and avoid errors on their federal tax returns as the April 15 filing deadline approaches.

Collect all tax-related paperwork

Taxpayers should gather all documents including W-2s, 1099s and other information returns, as well as any supporting paperwork for tax deductions or credits such as educational credits or mortgage interest payments. Having the previous year’s tax return accessible is also advised as it may be required. Taxpayers can also check their IRS Individual Online Account to view their Form W-2, Wage and Tax Statement, and Form 1095-A, Health Insurance Marketplace Statement, under the Records and Status tab in the taxpayer’s Individual Online Account.

Ensure filing status, names, birthdates and Social Security numbers are correct

Taxpayers must accurately provide the name, date of birth and SSN for each dependent listed on their individual income tax return. The SSN and individual’s name should be entered precisely as indicated on the Social Security card. In cases where a dependent or spouse lacks an SSN and is ineligible to obtain one, an assigned Individual Tax Identification Number (ITIN) should be listed instead of an SSN.

Use electronic filing

The IRS advises taxpayers and their tax advisors to use electronic filing methods such as IRS Free File, Free File Fillable Forms or with Direct File. lectronic filing decreases mathematical errors, identifies potential tax credits or deductions for which the taxpayer qualifies and prompts taxpayers for missing information. Opting for electronic filing and selecting direct deposit is the fastest and safest way to receive a refund.

While taxpayers and tax professionals are urged to choose electronic filing when filing individual tax returns, there are taxpayers who must submit a paper tax return. It is essential that paper filers verify the accurate mailing address either on IRS.gov or in the instructions provided with Form 1040 to prevent processing delays.

Report all taxable income

Most income is subject to taxation. Failing to accurately report income may result in interest and penalties. Taxable income includes various sources of income such as interest earnings, unemployment benefits and income derived from the service industry, gig economy and digital assets. For further details, consult Publication 525, Taxable and Nontaxable Income.

Answer the digital assets question

Everyone who files Forms 709, 1040, 1040-SR, 1040-NR, 1041, 1065, 1120 and 1120S must check one box answering either “Yes” or “No” to the digital asset question. The question must be answered by all taxpayers, not just by those who engaged in a transaction involving digital assets in 2024.

Taxpayers must report all income related to digital asset transactions. Visit the Digital Assets page on IRS.gov for details on when to check “yes” and how to report digital asset transactions.

Make sure banking routing and account numbers are correct

Taxpayers have the option to request direct deposit of a federal refund into one, two or even three accounts. For taxpayers who do not have a traditional bank account, some mobile apps and prepaid debit cards have routing and account numbers that allow for direct deposit of tax refunds. When expecting a refund, ensure the routing and account numbers provided for direct deposit are accurate to avoid delays or misdirected refunds.

Remember to sign and date the return

When submitting a joint return, both spouses must sign and date the return. If taxpayers are preparing their taxes independently and filing electronically, they need to sign and authenticate their electronic tax return by inputting their adjusted gross income from the prior year. For more guidance, visit Validating Your Electronically Filed Tax Return.

Need to make a payment

Tax payments are still due on April 15 for most taxpayers. Payments can be made using Individual Online Account, Direct Pay, the Electronic Federal Tax Payment System (EFTPS) or with a debit/credit card or digital wallet. By doing so, taxpayers avoid the necessity of filing a separate extension form and receive a confirmation number for their records.

Request an extension if needed

Taxpayers requiring more time to file their taxes can easily request a six-month extension until Oct. 15. The IRS offers three options to request an extension to file:

• Pay what you owe using an online payment optionand check the box that you are paying as part of filing for an extension. 
• Requested at no cost either through IRS Free File regardless of income, or
• By submitting Form 4868, Application for Automatic Extension of Time to File U.S. Individual Income Tax Return, by April 15.

While an extension avoids late filing penalties and provides extra time for filing, an extension of time to file is not an extension of time to pay. Taxpayers can seek an extension to file by making a full or partial payment of their estimated income tax and indicating that the payment is for an extension.

Many taxpayers may have more time to file if they were affected by a disaster situation. Visit tax relief in disaster situations for information on the most recent tax relief provisions based on FEMA’s declarations.

Keep a copy of the tax return

Taxpayers should maintain copies of their signed return and any accompanying schedules for their personal records and to help them prepare future tax returns and figure mathematical computations in the event they have to file an amended return. Typically, taxpayers should retain records supporting income, deductions or credits claimed on their tax return until the period of limitations for that specific tax return expires.

For more information, check out the File your tax return page on IRS.gov.

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Issue Number:  Tax Tip 2025-19

ABLE savings accounts and other tax benefits for persons with disabilities
 

People with disabilities and their families can use Achieving a Better Life Experience accounts to help pay for qualified disability-related expenses. ABLE accounts are savings accounts that don’t affect eligibility for government assistance programs. Here are some key things people should know about these accounts.

Contribution limit
The contribution limit for 2025 is $19,000. Certain employed ABLE account beneficiaries may make an additional contribution. The additional amount is the designated beneficiary’s compensation for the tax year or, for 2025, the amount of $15,650 for residents in the continental U.S., $19,550 in Alaska and $17,990 in Hawaii. 

Saver’s Credit
ABLE account designated beneficiaries may be eligible to claim the Saver’s Credit for a percentage of their contributions. This is a non-refundable credit for people who:

• Are at least 18 years old at the close of the taxable year,
• Are not a dependent or a full-time student, and
• Meet the income requirements.

The beneficiary can claim this credit using Form 8880, Credit for Qualified Retirement Savings Contributions.

Rollovers and transfers from Section 529 plans
Families may roll over funds from a 529 plan to another family member’s ABLE account. The ABLE account must be for the same beneficiary as the 529 account or for a member of the same family as the 529 account holder. Rollovers from a Section 529 plan do count toward the annual contribution limit. 

Rollovers from a 529 to an ABLE account, plus the annual contribution to the ABLE account, cannot exceed the maximum contribution amount for the year. For example, the $18,000 annual contribution limit for 2024 would be met by parents contributing $10,000 to their child’s ABLE account and rolling over $8,000 from a 529 plan to the same ABLE account.

Qualified disability expenses
States can offer ABLE accounts to help people who become disabled before age 26 or if their families pay for disability-related expenses outlined in Publication 907, Tax Highlights for Persons with Disabilities. Though contributions aren’t deductible for federal tax purposes, distributions – including earnings – are tax-free to the beneficiary if the taxpayer pays for a qualified disability expense. 

More information

• Form 1099-QA, Distributions from ABLE Accounts
• Form 5498-QA, ABLE Account Contribution Information
• Instructions for Forms 1099-QA and 5498-QA

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