MFS Tax Pros

Federal Tax Filing Season Opens on January 27, 2025

The IRS has announced that the filing season for 2024 tax returns will officially begin on Monday, January 27.
On that date, the IRS will begin accepting tax returns for processing, and begin preparing and issuing refunds.
Note that you may file your return before January 27, but the IRS will not take any action with the return until that date. Except in regions where the IRS has issued deadline extensions due to federal disaster declarations, 2024 individual tax returns must be filed by April 15, 2025.
After January 27, people who have filed their 2024 returns will be able to use the IRS Where's My Refund portal (link below) to check the status of their tax refunds. For most returns filed electronically, status updates will become available within 24 hours after filing. For paper returns, it can take up to four weeks for the portal to provide refund status information. The IRS issues most tax refunds within 21 days after processing the return. However, refunds related to the Earned Income Tax Credit cannot be issued before mid-February.
A tax professional can help you e-file your return with direct deposit of your refund, for the fastest possible processing.
IRS Refund Status Portal: https://www.irs.gov/wheres-my-refund

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Standard Business Mileage Rate to Increase for 2025 - Did You Know?

The IRS has announced that the standard mileage rate for business use of a vehicle will be 70 cents per mile in 2025, an increase of 3 cents over the 2024 rate. Note that this rate applies only to business miles driven on or after January 1, 2025. Self-employed people and small business owners who use the standard mileage rate must use the previous rate of 67 cents per mile to figure their 2024 vehicle expense deductions.
In most cases, using the standard business mileage rate is optional. You may instead figure your deduction by tracking actual expenses like repairs, depreciation, auto loan interest, and fuel or charging expenses. Make sure to prorate each expense based on the percentage of your mileage traveled solely for business reasons. Also note that if you report actual expenses for the first year when you put a vehicle into service for business, then you generally must track actual expenses for all subsequent years as well.
A tax professional can help you determine whether you qualify to deduct business vehicle expenses, and if so, help you find the most advantageous strategy to figure your deduction.

Tax-related Gift Card Scams During the Holidays – Did You Know?

The holiday season can bring a lot of joy, but unfortunately, it also brings a new wave of scammers trying to cheat Americans out of their hard-earned money. Many scammers impersonate the IRS or other government agencies and demand payment in gift cards.

In one common version of the scam, a caller posing as an IRS agent threatens a person with tax and/or criminal penalties if the person does not immediately pay off a fictitious tax debt. The scammer may also send threatening text, email or voice messages with a callback number. Ultimately, the scammer demands that the person make payment by purchasing gift cards and sharing the card numbers and PINs.

If you get a call or message from anyone demanding payment in gift cards, hang up or do not reply. The IRS will never call a taxpayer to demand payment in gift cards, prepaid debit cards or wire transfers. If you have legitimate concerns about your tax situation, including back taxes you may owe, a tax professional can help you handle the problem in a safe, secure way.

'Tis the Season to Prepare for Tax Time – Start Assembling Important Documents Now

With a New Year fast approaching, tax filing season cannot be far behind. Taking a few simple steps to prepare over the next several weeks can significantly reduce stress when you complete your return. First, make sure you have important records readily at hand, like last year's return and receipts for deductible expenses or donations. Second, keep your eyes out for year-end income statements in January and early February. These documents may include:

- W-2 forms from employers
- Forms 1099-NEC and/or 1099-MISC showing your income from sources like rents, self-employment activities (such as gig work) and royalties
- Forms 1099-INT and 1099-DIV showing interest, dividends and other investment income

If you accept payments for goods or services through a payment app or online payment platform, you might also receive Form 1099-K showing that income. The filing threshold for these forms was lowered for 2024, so you may receive one even if you never have in the past.

Other important forms you might receive include Forms 1095-A (Health Insurance Marketplace Statement) and 1098-T (Tuition Statement). Also remember that you must answer questions about your involvement with digital assets like crypto on your tax return, and report any resulting income. Make sure you have complete records of all your 2024 digital asset transactions, so you can meet these reporting requirements. A tax professional can help you organize your records, and help you file your return electronically to get your refund as quickly as possible.

Giving Tuesday and Charitable Donations - Did You Know?

Giving Tuesday is an annual event that highlights charitable giving after Thanksgiving.

If you are considering charitable donations, you may be able to donate to a Donor-Advised Fund (DAF) every two or three years instead of every year. This may qualify you to receive tax benefits now, allow the amount to grow tax-free, and the decision on which qualified charity to fund can be made later.

If you are 70.5 years or older, you may also be able to make a qualified charitable distribution (QCD) directly from your IRA this year. QCDs may allow the donation to be deducted from your income. A tax advisor can help you structure your charitable giving.

The IRS has released a tool to make it easier to get information about qualified charitable organizations. The Exempt Organizations Select Check tool can be found at: https://www.irs.gov/charities-non-profits/tax-exempt-organization-search.

Tax Exempt Organization Search | Internal Revenue Service Search information about a tax-exempt organization’s federal tax status and filings.

IRS: Healthcare FSA reminder: Employees can contribute up to $3,300 in 2025; must elect every year

WASHINGTON — The Internal Revenue Service reminds taxpayers that during open enrollment season for flexible spending arrangements (FSAs) they may be eligible to use tax-free dollars to pay medical expenses not covered by other health plans.

An employee who chooses to participate in an FSA can contribute up to $3,300 through payroll deductions during the 2025 plan year. Amounts contributed are not subject to federal income tax, Social Security tax or Medicare tax.

If the plan allows, the employer may also contribute to an employee's FSA. If the employee's spouse has a plan through their employer, the spouse can also contribute up to $3,300 to that plan. In this situation, the couple could jointly contribute up to $6,600 for their household.

For FSAs that permit the carryover of unused amounts, the maximum carryover amount to 2025 is $660, increasing from $640 in tax year 2024. The carryover doesn’t affect the maximum amount of salary reduction contributions that can be made.

It's important for taxpayers to annually review their health care selections during health care open enrollment season and maximize their savings.

Eligible employees of companies that offer a health flexible spending arrangement (FSA) need to act before their medical plan year begins to take advantage of an FSA during 2025. Self-employed individuals are not eligible.

Expenses to consider
Throughout the year, taxpayers can use FSA funds for qualified medical expenses not covered by their health plan. These can include co-pays, deductibles and a variety of medical products. Also covered are services ranging from dental and vision care to eyeglasses and hearing aids. Interested employees should check with their employer for details on eligible expenses and claim procedures.

Before enrollment (if an employer offers an FSA), review any expected health care expenses projected for the year. Participating employees should plan for healthcare activities when they calculate their contribution amounts. Consider:

Updating medicine cabinet with necessary supplies.
Big ticket expenses.
Seasonal needs such as allergy products, sunscreen or warm steam vaporizers.
Routine checkups or visits with specialists that regular insurance plans do not cover.
Many over-the-counter items that are FSA eligible.
Eye exams or dental visits: Out-of-pocket costs for dental and vision care are also covered by an FSA.
Employers are not required to offer FSAs. Interested taxpayers should check with their employer to see if they offer an FSA. Also, all FSAs are subject to plan terms which may be more restrictive than the maximums allowed under the law, including both the maximum dollar amounts and the expenses covered. More information about FSAs can be found at IRS.gov in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans.

Internal Revenue Service | An official website of the United States government Pay your taxes. Get your refund status. Find IRS forms and answers to tax questions. We help you understand and meet your federal tax responsibilities.

2025 Healthcare Open Enrollment - Did You Know?

The 2025 open enrollment period for Marketplace health insurance starts on November 1, 2024, and ends December 15, 2024. Plans will start January 1, 2025. During this period, you will be able to enroll in, renew, or change health plans for the coming year.

Once the Open Enrollment period is over, you will only be able to enroll if there's a qualifying life event for the Special Enrollment Period.

Enrollment can be done at https://healthcare.gov, and a simple checklist of documents you'll need can be found here: https://marketplace.cms.gov/outreach-and-education/marketplace-application-checklist.pdf.

www.cms.gov

TAS Tax Tip: Small business tax highlights


small business tips
The form of business you operate determines what taxes you must pay and how you pay them. There are four general types of business taxes:

Income
Self-employment
Employment
Excise
Income Tax

All businesses must file annual income tax returns, except partnerships which file annual information returns. The form you use depends on your business structure; see Publication 583, Starting a Business and Keeping Records, to decide what forms you should file to report your business income. Publication 509, Tax Calendars, explains when to file returns and make tax payments.

Self-Employment Tax

Self-employment (SE) tax is a social security and Medicare tax primarily for individuals who work for themselves. It is like the social security and Medicare taxes withheld from most employees’ wages by their employers. Your SE tax payments contribute to your coverage under the social security system. This coverage provides you with retirement, disability, survivor, and hospital insurance (Medicare) benefits.

You must file Schedule SE, Self-Employment Tax, with your federal income tax return, Form 1040 or Form 1040-SR, and pay SE tax if either of the following applies:

Your net self-employment income was $400 or more; or
You had church employee income of $108.28 or more.
Self-employed individuals in Puerto Rico use Form 1040-PR to compute self-employment tax.

Note: Self-employed individuals generally must pay SE tax as well as income tax.
Employment Tax

When you have employees, you have certain employment taxes you must pay and forms you must file. Employment taxes include the following:

Social security and Medicare taxes;
Federal income tax withholding; and
Federal unemployment (FUTA) tax.
You must also withhold Additional Medicare Tax from wages you pay to an employee in excess of $200,000 in a calendar year.

For additional information, refer to Employment Taxes for Small Businesses and Publication 15, (Circular E), Employer’s Tax Guide.

Excise Tax

You may be subject to Excise Tax if you do any of the following:

Manufacture or sell certain products;
Operate certain kinds of businesses;
Use various kinds of equipment, facilities, or products; or
Receive payment for certain services.
Excise taxes may be imposed on the manufacturer, retailer or consumer, depending on the specific tax.

For additional information, see Publication 510, Excise Taxes.

Estimated Tax

Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. Estimated taxes are used to pay not only income tax, but other taxes such as self-employment tax.

Individuals, including sole proprietors, partners, and S corporation shareholders, generally must make estimated tax payments if they expect to owe at least $1,000 in tax after subtracting withholding and tax credits. Use the worksheet in Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax.

Corporations generally must make estimated tax payments if they expect to owe at least $500 in taxes.

Note: S corporations must also make estimated tax payments for certain taxes, but instead use the instructions for Form 1120-S, U.S. Income Tax return for an S Corporation, to figure their estimated tax.
If you pay too little or pay late, you may have to pay an estimated tax penalty even if you are due a refund when you file your tax return. For more information, see Publication 505, Tax Withholding and Estimated Tax.

Payment Options

You generally must deposit certain excise taxes, corporate income tax, and S corporation taxes before you file your return. You must use an electronic funds transfer (EFT) to make all federal tax deposits (FTDs). Generally, an EFT is made using the Electronic Federal Tax Payment System (EFTPS). If you don’t want to use EFTPS, you can arrange for your tax professional, financial institution, payroll service, or trusted third party to make EFT on your behalf.

For estimated tax purposes, the year is divided into four payment periods. It’s important to remember that the payment periods are not spread evenly throughout the year. In general, estimated payments are due on April 15, June 15, September 15, and January 15 of the following year. You can mail your estimated tax payments with Form 1040-ES, pay online, or pay by phone or from your mobile device using the IRS2Go app. Visit IRS.gov/payments to view all payment options.

Ten Federal Tax Tips to Help Small Business Owners

April shouldn’t be the only time you’re thinking about taxes. Keep these tax tips in mind throughout the year so you’re prepared to maximize your deductions and credits.

Know your limitations and know when you need to ask a professional for help: There are many Online Learning and Educational Products available to help you learn about taxes. For example, the IRS Tax Calendar has important tax dates for businesses. However, if you choose to hire a professional, it is important to choose carefully because you are trusting them with your personal information and relying on them to have the knowledge to help you file an accurate tax return. You are responsible for all the information on your tax returns, no matter who prepares them.
Note: ALL tax return preparers MUST sign their name and enter a preparer tax identification number on your tax return. For your protection, please check that they do this before submitting any documents.
Keep adequate records: Accurate recordkeeping throughout the year will save you time and help ensure your tax return is correct. Set up a system for receipts. This can be a paper file, or you can use an app to scan and store them; just make sure you are saving them in some way.
Separate your personal and business finances: Set up a separate bank account and credit card for your business and run only business expenses through those accounts. See Publication 583, Starting a Business and Keeping Records.
Correctly classify your business: Some business structures enjoy more tax advantages than others. It’s important to choose the business structure that best suits your business. If you’re not sure which to choose, a tax attorney or certified public accountant can help.
Manage payroll: You can take an online class to learn how to handle payroll. But if you don’t have the time, desire, or knowledge to manage payroll, hire someone to do it for you. To help make sure the company is reputable, see Outsourcing Payroll and Third Party Payers.
Subscribe to e-News for Small Businesses: The IRS e-News for Small Businesses is a free electronic mail service that offers tax information for small business owners and self-employed individuals, including reminders, tips and special announcements.
Research small business tax deductions: There is a long list of tax deductions for small business owners. See Publication 535, Business Expenses. A tax deduction is an item you can subtract from your gross income to lower the amount of taxes you owe.
Self-employment tax deduction: You can deduct one-half (50 percent) of your SE tax as an adjustment to income on your federal income tax return. For tax years after 2017, you will also need to report the amount on Form 1040 Schedule 1, Part II.
Make your tax payments timely: Anyone who files federal income tax returns and expects to owe more than $1,000 needs to pay estimated tax If you don’t pay enough tax through withholding and estimated tax payments, you may be charged a penalty. You also may be charged a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.
For faster processing, file your returns electronically: Electronic Filing Options for Business and Self-Employed Taxpayers.
TAS resources

Getting an EIN
Third Party Arrangements for Employment Taxes
Choosing a Tax Return Preparer

Payments | Internal Revenue Service Make payments, view your account or apply for a payment plan with the IRS.

Hurricane Relief Charity Scams

Natural disasters like Hurricanes Helene and Milton bring out the best in American generosity, as millions of people seek to help those affected by the storms. Unfortunately, these tragedies also attract scammers looking to steal the money and identities of people who wish to donate to relief efforts.

If you get a phone call, text message or email from someone claiming to represent a hurricane relief charity, verify the legitimacy of the organization before providing any personal information. Request the organization's official name, mailing address and website address, and keep in mind that scammers use fake organization names that sound similar to real charities. You can use the IRS Tax Exempt Organization Search tool (TEOS, link below) to verify that you are dealing with an authentic charity, authorized to receive tax-deductible donations. If you cannot find the organization in the database or the person who contacted you refuses to answer your questions, do not donate or share sensitive information like your Social Security number (SSN) or credit card number. Instead, hang up immediately or delete the message.

TEOS tool:

Search for tax exempt organizations | Internal Revenue Service Search information about as organization’s tax-exempt federal tax status and filings.

October 15 is the 6-month Extension Deadline
With the exception of those eligible for tax deadline relief due to a federally declared disaster, everyone who requested a 6-month extension to file a 2023 tax return must file by October 15.
If you owe tax, remember that the automatic 6-month extension applies only to filing your return, not to paying tax. Generally, after the standard April filing deadline, unpaid tax balances begin accumulating interest charges that increase daily. Filing and paying as soon as possible will keep those charges to a minimum.
People who cannot pay their full tax balance now should still file as soon as possible. By proactively setting up a payment plan with the IRS, they can minimize late payment penalties.
Disaster Relief Eligibility:

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Low Income Taxpayer Clinics

LITCs are independent from the IRS and the Taxpayer Advocate Service (TAS). LITCs represent individuals whose income is below a certain level and who need to resolve tax problems with the IRS. LITCs can represent taxpayers in audits, appeals, and tax collection disputes before the IRS and in court. In addition, LITCs can provide information about taxpayer rights and responsibilities in different languages for individuals who speak English as a second language. Services are offered for free or a small fee. For more information or to find an LITC near you, see the LITC page at www.taxpayeradvocate.irs.gov/litc or IRS Publication 4134, Low Income Taxpayer Clinic List. You can also request Pub. 4134 by calling 800-TAX-FORM (800-829-3676).

Low Income Taxpayer Clinics (LITC) - Taxpayer Advocate Service Low Income Taxpayer Clinics (LITC), assist individuals who have a tax dispute with the IRS, provide education & outreach to taxpayers.