The Internal Revenue Service (IRS) has officially announced that the 2025 tax season will begin on January 27, 2025. This news comes as the agency continues its modernization efforts, aiming to improve the tax filing experience for individual taxpayers and enhance the services offered by tax professionals. As we approach the start of the new tax season, let's explore the potential implications of these developments for both taxpayers and tax professionals.



Improved Access to Tax Account Information

One of the key improvements taxpayers can expect this year is expanded access to their tax account information through the IRS Online Account. This feature allows taxpayers to view key details from their most recent tax return, request an Identity Protection PIN, get account transcripts, sign tax forms, and more. By providing taxpayers with easy access to their tax information, the IRS aims to help them better understand their tax situation and make informed decisions.



Direct File Expansion

The IRS is also expanding its Direct File program, which allows taxpayers to calculate and submit their returns directly to the government without using commercial tax preparation software. This year, Direct File will be available to taxpayers in 25 states, up from 12 states in the 2024 pilot program. The expanded Direct File program covers more tax situations, including the Child and Dependent Care Credit, Premium Tax Credit, Credit for the Elderly and Disabled, and Retirement Savings Contribution Credits. This expansion could make the tax filing process more accessible and convenient for millions of taxpayers.



Potential Impact on Tax Preparation Services

The expanded Direct File program may have implications for tax preparation services offered by commercial software and tax professionals. As more taxpayers opt for the free Direct File service, there could be increased competition for commercial software providers and a potential reduction in demand for their services. Additionally, tax professionals may experience a shift in their client base, with some clients opting for the Direct File program instead of paying for professional services. However, this could also create an opportunity for tax professionals to offer more advisory services, as clients become more aware of potential expiring provisions of the TCJA and seek guidance on future financial plans.

Looking Ahead

As the 2025 tax season approaches, taxpayers and tax professionals can expect improved access to tax account information, an expanded Direct File program, and other enhancements aimed at streamlining the tax filing process. While these changes may have implications for tax preparation services, they ultimately aim to provide taxpayers with a more convenient and efficient tax filing experience. By staying informed and adapting to these changes, both taxpayers and tax professionals can make the most of the upcoming tax season and beyond.

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