Don’t get confused, taxes are due.
The Trump administration has said its goal is to “abolish” the Internal Revenue Service, the US agency responsible for tax collection. But that doesn’t mean you can skip filing your 2024 income taxes. Wealth advisers say taxpayers should prepare their documents — as they’ve always done — and that there is few changes ahead of the April 15 deadline.
Most notably, it might be easier to file. After last year’s pilot program, some 30 million Americans in 25 states can now file online to the government for free with the rollout of Direct File, an initiative from the Biden administration.
Additionally, business owners using payment apps like Venmo and PayPal will now receive a tax form called a 1099-K to assist in filing. And in sad news for fans of I bonds: You can no longer use your tax returns to buy more than the $10,000 annual limit.
Here’s more on what’s new this tax season:
Direct File Available in 25 States
At last, millions of Americans can electronically file their taxes directly to the government for free.
If you live in one of the 25 states with Direct File and you meet the eligibility requirements, you can simply go to the IRS website and start filling in your information. Those who work a traditional job with a W-2 form and make less than $200,000 are likely able to use the program — it’s more complicated for those with jobs in the gig economy or rental income.
“There are a lot of people out there who don’t need at lot of bells and whistles,” said Craig Toberman, partner at Toberman Becker Wealth in St. Louis. “It expands what the everyday person can do with their taxes and makes people more involved in their tax picture.”
Obviously, if your tax situation is more complicated, it’s best to either hire a tax professional or use a software service like TurboTax. But for those with straightforward tax returns, it can save both time and money. Direct File even lets you import some of your information — like employment and wage — directly from the IRS. If you choose this option, Toberman recommends giving yourself plenty of time, in case you find it difficult to switch software interfaces after years of using a different tax service.
Payment Apps Will Issue 1099-K Forms
Starting this year, payment apps and e-commerce firms like Venmo, PayPal, Etsy and CashApp will send out 1099-K forms to anyone with $5,000 in business transactions, a steep drop from the prior $20,000 threshold.
This change — which has been delayed several times — has sparked confusion among app users who send cash to each other for rent or covering a restaurant bill. Importantly, only people using services like Venmo and PayPal for business transactions will receive the form. Payment apps have a setting where you can label your account as personal or business.
Charles Thomas, founder of Intrepid Eagle Finance in South Carolina, is telling clients with businesses that use payment apps to make sure they’re keeping accurate records, and that the apps have up-to-date contact information.
There actually isn’t any change in who does or doesn’t owe taxes. All business owners and regular citizens are required to report any income they receive, whether it’s through cash or a payment app or a credit card. However, because payments apps have been a new and uncharted territory, some may have felt they could get away with not reporting income from them. But the new 1099-K forms mean the IRS is more closely monitoring transactions on payment apps.
Not reporting the income information on the 1099-K that you receive could put you at risk of an audit. In the future, the threshold will decrease to $2,500 for the 2025 reporting year and $600 for 2026.
“If you do get a form, you will want to report that on your tax return in some fashion,” said Manny Dominguez, program manager at H&R Block. “Now it may or may not be taxable, depending on the situation. But just leaving something off your tax return, you’re likely to get a letter from the IRS come May and June.”
Extra I Bond Purchases Now Blocked
Another change for tax filers is you can longer use your return to buy up to $5,000 in extra Series I savings bonds, beyond the $10,000 annual limit.
Previously, filers could tell the IRS they wanted to use part or all of their tax refund to purchase I bonds, a savings tool designed to protect Americans’ savings from rising prices. That brought the yearly purchase limit to $15,000 for individuals or $25,000 for married couples filing jointly.
However, the Treasury’s elimination of paper I bonds means the IRS can no longer mail purchases to tax filers and savers can only purchase I bonds through the TreasuryDirect system.
I bonds gained popularity in 2022 with an all-time high yield of 9.62%. But as inflation declined, the yield on I bonds fell in lockstep, now boasting only 3.11%. That’s lower than the rate on many high-yield savings accounts, which are easier to use and more liquid.
Deadline Pushed for Wildfire Victims
Those affected by the California wildfires last month now have longer to get their tax documents in order. The IRS pushed the filing deadline to Oct. 15 for both individuals and businesses.
Check the website (irs.gov) to see if you qualify based on where you live. If you do, the IRS will automatically apply the extension. In the meantime, taxpayers can add an extra layer of fraud protection by registering for an identification pin number, as a delay can make filers more vulnerable to identity theft.
And regardless of personal circumstances, anyone can file for an extension on their tax return. That pushes the deadline to Oct. 15.
By Claire Ballentine and Dina Katgara Feb. 28, 2025 © 2025 Bloomberg L.P.