With the opening of e-filing season on January 27, 2025, the folks here at WATAX wanted to cover new developments in IRS collections and for filing for this year.
Naturally, the biggest development this year is a radical change of Presidential administrations. But as we alluded to in our last month's podcast, while Trump 2.0 might dramatically affect many sectors of the USA, it is safe to say that tax administration might be the least affected. Rest assured, Intuit-TurboTax paid a million to the inauguration (wink wink) and the government is very reliant on business and taxes, $4.7 trillion in 2024, volumes that the collection of tariffs can't offset. In fact, the high watermark of IRS collections was in 2019 during Trump 1.0! Nonetheless, here's what we are seeing and expecting:
1. Trump 1.0 Tax Cuts for Business remain intact - The 20% income tax cut for sole props, S corps and partnerships should remain intact as well as the 21% corporate tax rate for C corps.
2. No Taxes for Tips? - Lots of lip service on the campaign trail for no taxes on tips... this should likely be implemented.
3. US Expat tax simplification? - US Expats do have 130k exclusion of foreign income free from taxation in 2025, but the returns are complicated. Perhaps some simplification is ahead. Ironically, Trump 1.0 passed the GILTI tax regimen/form 5471 to capture taxes from US owners of foreign corporations. Don't see that going away, you would think?
4. Private tax collection continues - Although these folks like CBE group and others have no power to levy or garnish for taxes, they did make a profit last year for the government and should be again pursuing older tax debts in 2025.
5. IRS Collections in 2025 - The high watermark of IRS collections was in 2019 during Trump 1.0 with $121b collected...with a good economy could it climb back to that? In 2023, the IRS assessed $25.6 billion in taxes from non-filers thru SFRS, collecting $2.8 billion of that. $14 billion was paid thru installment agreements. About $104 billion was collected in total. 2024 should be similar. 2025?
6. Don't Miss the Final Pandemic Relief for Year 2021! Your 2021 return if NOT already filed will need to be postmarked before April 15, 2025 for you to get the $1400 stimulus payment per person (if you qualify). This return can NOT be electronically filed. Make sure that you mail it with tracking information before 4/15/25!
7. WATAX will fax to the IRS older returns for select clients (2017 to 2020)* and will be e-filing 2022 2023 and 2024 returns! * As we hinted above you will want to mail 2021 if you have refunds (pandemic ones and elsewise).
