27 January 2025 to 15 April 2025 is the annual tax season again, with 15 April as the official tax day. Individuals will be required to file their 2024 returns during this time.
Expectations run high that an estimated 140 million Americans would comply with this regulation. But statistical data paints another picture. By the end of March 2025, there were approximately one million fewer returns filed.
This can be ascribed to various factors, including the current economic situation in the US and the current uncertainties with the state of the Internal Revenue Service (IRS).
What is the relevance of the deadlines set by the IRS?
Taxes seem to be a necessary evil within society. The whole process has a set of deadlines by which it operates. These seem fairly pointless overall, but do have relevance. If you consider the purpose behind taxes, it does make a little more sense.
Working on a deadline allows these departments and projects to run seamlessly without interruption. In layman’s terms, this just helps them to plan better. Allowing them to know when money would become due and how it can then be allocated to the relevant departments. Another relevant consideration here is that it just ensures compliance with specific tax laws. Helping to keep everyone to the same standards.
Requesting an extension versus an automatic extension
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Those individuals unable to meet the tax deadline can request an extension. If approved, this allows a grace period until October. In certain instances, automatic extensions can be granted. This has become valid in a few states. Individuals are allowed to file returns until 1 May 2025, while others are being allowed a grace period until the fall to ensure that their tax returns are submitted.
Individuals situated in the “disaster areas” as designated thereto by FEMA have until 1 May to file their returns. These states have been affected by natural disasters during the past year. The specific states that were granted this extension are:
- New Mexico (Chaves County)
- Alabama
- Florida
- Tennessee (Counties such as Washington, Unicoi, Sullivan, Sevier, Johnson, Jefferson, Hawkins, Carter, Claiborne, Cocke, Grainger, Greene, Hamblen, and Hancock)
- Georgia
- North Carolina
- South Carolina
- Virginia (Counties such as Botetourt, Albemarle, Bland, Bedford, Appomattox, Charlotte, Dickenson, Floyd, Madison, Montgomery, Nelson, Pulaski, Pittsylvania, Wise, Wythe, Washington, Tazewell, Smythe, etc)
- Alaska (The City and Borough of Juneau)
Ways to reduce the inevitable taxes due on income
According to the IRS official website, certain things can be done to reduce the amount of taxes owed on a personal and business level. Bunching business expenses together as much as possible can reduce the annual income tax. A good example here can be to do employee bonus payments at year’s end.
A debatable option to follow is deferring your income from one year to the next. This will reduce the taxes payable for the current year.
One way of doing this is by asking your employer to push the year-end bonus into the next year, where possible. One consequence of this is that it may push you into a higher tax bracket for the coming year. Arranging it to benefit both years is a balancing act.
Contributions made to a retirement account are tax-deductible within the year in which it is made. If the individual is not covered by a retirement plan at work, the full contribution amount is tax-deductible. Contributions may be limited and based on adjusted gross income in the instance where the individual and their spouse are both covered.
IRA contributions can be made up from 1 January of the previous year up until the tax day of the following year. If you are aware of your options, it could mean more money in your pocket.
