News & Updates

Two RMD payments are possible in the same year

The April 1 RMD deadline is for the first year only. For subsequent years, the distribution is due by December 31.

Taxpayers receiving their first required distribution for 2024 in 2025 (by April 1) must take their second RMD for 2025 by Dec. 31, 2025. The first distribution is taxable in 2025 and reported on the 2025 tax return, along with the regular 2025 distribution.

Retirement plans needing RMDs

RMD rules apply to owners of traditional, Simplified Employee Pension (SEP) and Savings Incentive Match Plan for Employees (SIMPLE) IRAs while the original owner is alive, and to participants in 401(k), 403(b) and 457(b) plans. Roth IRAs are not subject to required minimum distributions.

An IRA trustee must inform the IRA owner of the RMD amount or, alternatively, offer to calculate the distribution amount. The RMD amount will typically appear on Form 5498, IRA Contribution Information, in Box 12b. For a 2024 distribution due by April 1, 2025, the amount is shown on the 2023 Form 5498, usually issued early in 2024.

Some individuals can defer RMDs

The April 1 deadline applies to all traditional IRA owners, as well as most workplace retirement plan participants. Some individuals with workplace plans, however, may be able to delay their RMD.

Most participants can wait until April 1 after retiring to receive distributions if their workplace plan allows it. This exception does not apply to 5% business owners or to participants in SEP and SIMPLE IRA plans. See Publication 575, Pension and Annuity Income, for information regarding the tax on excess accumulation.

Public school employees and certain tax-exempt organization staff with pre-1987 403(b) plan accruals should consult their employer, plan administrator or provider for guidance on handling these accruals.

IRS online tools and publications are available for assistance

Many answers to questions about RMDs can be found at Required Minimum Distribution FAQs on IRS.gov. To determine their distribution amount, most taxpayers can use Table III (Uniform Lifetime) on that page, while Table II should be used by married taxpayers whose spouse is more than 10 years younger and is their sole beneficiary.

For a 2024 required minimum distribution (due April 1, 2025), refer to the life expectancy tables in Appendix B of Publication 590‑B, Distributions from Individual Retirement Arrangements (IRAs). Table III shows that the RMD for an individual who is 73 years old in 2024 is typically based on a distribution period of 26.5 years. The Dec. 31, 2023, balance should be divided by 26.5 to calculate the RMD for 2024.

IRS Publication 590-B, Distributions from Individual Retirement Arrangements, also includes worksheets, examples, and additional information that can assist anyone in determining their RMD. Publication 590 provides additional RMD information and resources for use in preparing 2024 federal tax returns.

For further details on RMDs and other changes impacting retirees and retirement plan participants, visit Tax information for seniors & retirees on IRS.gov.

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For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the new rates:

• 7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
• 4.5% for the portion of a corporate overpayment exceeding $10,000.
• 7% for underpayments (taxes owed but not fully paid).
• 9% for large corporate underpayments.

Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus three percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus three percentage points and the overpayment rate is the federal short-term rate plus two percentage points. The rate for large corporate underpayments is the federal short-term rate plus five percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during January 2025. See the revenue ruling for details.

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This announcement marks the commencement of the Tax Time Guide series. The IRS uses this guide to provide updated information to assist taxpayers in filling an accurate return. A wealth of resources and tools is also available on IRS.gov, including a dedicated special free help page accessible 24/7.

The IRS encourages taxpayers to read Publication 17, Your Federal Income Tax (For Individuals), for additional guidance and updates.

Tips for filing an accurate tax return

The deadline for submitting Form 1040, U.S. Individual Income Tax Return, or 1040-SR, U.S. Tax Return for Seniors, is April 15, 2025. To avoid mistakes and potential processing delays, taxpayers should refrain from filing until they have received all necessary tax documents. Taxpayers should always carefully review documents for inaccuracies or missing information. They should immediately contact their employer or payer to request a correction if issues arise.

The IRS recommends taxpayers create an IRS Online Account, which provides secure access to their tax information, including payment history, tax records and other key information. Maintaining digitally organized tax documents can streamline the preparation of a complete and accurate tax return and may help identify overlooked deductions or credits.

Taxpayers who have an individual taxpayer identification number or ITIN may need to renew it if it has expired. The IRS can accept a tax return with an expiring or expired ITIN, but there may be processing delays.

Updates to Additional Child Tax Credit for tax year 2024

The maximum Additional Child Tax Credit (ACTC) amount has increased to $1,700 for each qualifying child.

Bona fide residents of Puerto Rico are no longer required to have three or more qualifying children to be eligible to claim the ACTC. Bona fide residents of Puerto Rico may be eligible to claim the ACTC if they have one or more qualifying children.

The IRS cannot issue refunds before mid-February 2025 for returns that properly claim the ACTC. This time frame applies to the entire refund, not just the portion associated with the ACTC.

Other changes for tax year 2024

Standard deduction amount increase. For 2024, the standard deduction amount has been increased for all filers. The amounts are:

• Single or married filing separately — $14,600.
• Head of household — $21,900.
• Married filing jointly or qualifying surviving spouse — $29,200.

Child Tax Credit enhancements. Taxpayers eligible for the Child Tax Credit should not wait to file their 2024 tax return. If Congress changes the CTC guidelines in the future, the IRS will automatically adjust for those who have already filed. No additional action will be needed by those eligible taxpayers.

Under current law for tax year 2024, the following currently apply:

• The initial amount of the CTC is $2,000 for each qualifying child. The credit amount begins to phase out where adjusted gross income (AGI) income exceeds $200,000 ($400,000 in the case of a joint return).
• A child must be under age 17 at the end of 2024 to be a qualifying child.

Changes to the Earned Income Tax Credit (EITC). To claim the EITC without a qualifying child in 2024, taxpayers must be at least age 25 but under age 65 at the end of 2024. If a taxpayer is married filing a joint return, one spouse must be at least age 25 but under age 65 at the end of 2024.

Taxpayers may find more information on various child tax credits in the Instructions for Schedule 8812 (Form 1040).

Adoption Credit. The Adoption Credit and the exclusion for employer-provided adoption benefits are both $16,810 per eligible child in 2024. The amount begins to phase out if taxpayers have a modified AGI in excess of $252,150 and is completely phased out if their modified AGI is $292,150 or more. For more information, see Form 8839 PDF and Instructions for Form 8839.

Clean Vehicle Credit. The Clean Vehicle Credit is reported on Form 8936 and Schedule 3 (Form 1040), line 6f. For more information, see Form 8936, Clean Vehicle Credit.

Previously owned Clean Vehicle Credit. This credit is available for previously owned clean vehicles acquired and placed in service after 2022. For more information, see Form 8936, Clean Vehicle Credit.

More information on these and other credit and deduction changes for tax year 2024 may be found in Publication 17, Your Federal Income Tax (For Individuals), taxpayer guide.

IRA contribution limit increased

Beginning in 2024, the IRA contribution limit is increased to $7,000 ($8,000 for individuals aged 50 or older) from $6,500 ($7,500 for individuals aged 50 or older) the prior year.

1099-K reporting requirements have changed for tax year 2024

The reporting threshold for 2024 has changed. Third-party settlement organizations (TPSOs), also known as payment apps and online marketplaces, are now required to report transactions when the amount of the total payments for those transactions in 2024 was more than $5,000. The IRS has issued Notice 2024-85 providing transition relief for TPSOs. To understand what to do, taxpayers should become familiar with Form 1099-K.

Free filing options

IRS Free File, available only through IRS.gov, offers eligible taxpayers brand-name tax preparation software packages to use at no cost. Some of the Free File packages also offer free state tax return preparation. The software does all the work of finding deductions, credits and exemptions.

Taxpayers who are comfortable preparing their own taxes can use Free File Fillable Forms, regardless of their income, to file their tax returns either by mail or online.

Direct File is an option for taxpayers to file federal tax returns online—for free—directly and securely with the IRS. Direct File is a filing option for taxpayers in participating states who have relatively simple tax returns and report only certain types of income and claim certain credits and deductions. Go to IRS Direct File to find more information, including updates to the list of states who have joined and the new tax situations Direct File has added to the service for the 2024 tax year.

MilTax is a free tax resource available to the military community, offered through the Department of Defense. There are no income limits. MilTax includes tax preparation and electronic filing software, personalized support from tax consultants and current information about filing taxes. It is designed to address the realities of military life—including deployments, combat and training pay, housing and rentals, and multi-state filings. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.

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Most of the information below is also available on the IRS.gov Let us help you page. Taxpayers should follow these handy suggestions as they prepare to file:

1. Gather all important and necessary tax paperwork and records needed for filing a complete and accurate tax return. Errors and omissions can lead to missing a deduction or credit and slow down tax return processing and refunds.
   
   Before filing , taxpayers should have their:
   
   • Social Security numbers for everyone listed on the tax return.
     
   • Bank account and routing numbers.
     
   • Tax forms such as W-2s, 1099s, 1098s, records of digital asset transactions and other income documents.
     
   • Form 1095-A, Health Insurance Marketplace statement.
     
   • IRS letters they may have citing an amount received for a certain tax deduction or credit.
     
2. Report all types of income on the tax return to avoid receiving a notice or a bill from the IRS. Include income from:
   
   • Goods created and sold on online platforms.
     
   • Investment income.
     
   • Part-time or seasonal work.
     
   • Self-employment or other business activities.
     
   • Services provided and paid through mobile apps.
     
3. Avoid paper returns. Filing electronically with direct deposit is the fastest way to get a refund. Plus, tax software helps taxpayers avoid mistakes. It does the math and guides people through each section of their tax return.
   
4. Consider IRS free resources to help eligible taxpayers file.
   
   • IRS Free File provides a free online alternative to filing a paper tax return to any individual or family who earned $84,000 or less in 2024.
     
   • Direct File is available in 25 participating states for eligible taxpayers to file online directly with the IRS for free. This year, Direct File supports reporting more income types and claiming more credits and deductions. The free web-based service – available in English and Spanish – provides access to IRS customer service representatives through a live chat feature and works on mobile phones, laptops, tablets or desktop computers. Direct File guides taxpayers through a series of questions to prepare their federal tax return step-by-step and automatically guides taxpayers to state tools to complete their state taxes.
     
   • People who make over $84,000 can use the IRS' Free File Fillable Forms. These are the electronic version of IRS paper forms. This product is best for people who are comfortable preparing their own taxes.
     
   • 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.
     
   • The Department of Defense provides MilTax as a free tax resource for the military community. MilTax is a suite of tax services available for members of the military, as well as qualifying veterans and family members. There are no income limits. Eligible taxpayers can use MilTax to electronically file a federal tax return and up to three state returns for free.
     
5. Choose tax filing options based on personal situation and comfort level with tax preparation
   
   • Personally file taxes.
     
   • Use online filing services.
     
   • Hire a tax professional and choose carefully. Most tax return preparers are professional, honest and provide excellent service to their clients. However, dishonest tax return preparers who file false income tax returns do exist. The IRS has a Directory of Federal Tax Return Preparers with Credentials and Select Qualifications and more on choosing a tax pro on IRS.gov.

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Filing the required forms by deadline and without errors not only helps payers and recipients avoid penalties, it also helps the IRS fight fraud by making it easier to verify income information.

The Jan. 31 deadline applies to:

• Employers filing Form W-2, Wage and Tax Statement, and Form W-3, Transmittal of Wage and Tax Statements, with the Social Security Administration.
• Payers filing Form 1099-NEC, Nonemployee Compensation, with the IRS.

Jan. 31 is also the deadline to:

• Furnish copies of W-2, Form 1099-NEC and other information returns to the recipients. See each form’s filing instructions for the due dates to furnish copies to recipients.

E-filing

Filing electronically is the fastest, most convenient way to accurately submit forms.

As of last year, W-2s and certain other forms must be filed electronically if submitting 10 or more information returns during a calendar year. For more details, including a list of information returns subject to the new e-filing rules, see E-file information returns.

The IRS also offers free e-filing for the 1099 series using the Information Returns Intake System (IRIS), an online portal where users can prepare copies of forms to furnish, file correction and request automatic extensions.

Requesting extensions

While employers and payers may request a 30-day extension to file W-2s or certain information returns, approvals of extensions are not automatic. To request extra filing time, submit Form 8809, Application for Extension of Time to File Information Returns PDF, by Jan. 31 or by the due date of the returns being requested.

Please note that filing a Form 8809 does not extend the deadline for furnishing wage statements to employees or information returns to the payees. Those requests must be faxed to IRS in letter form by Jan. 31. Please see About Form 8809, Application for Extension of Time to File Information Returns, for more information.

Potential penalties

If employers and payers haven’t already, start preparing filings now so there is time to double check the accuracy of the forms and file and furnish them by Jan. 31.

Penalties may apply filings are untimely, inaccurate and/or improperly submitted to the federal government on paper. For more information, including a breakdown of potential penalties and interest, visit the Information Return Penalties page at IRS.gov.

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