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Frequently Asked Questions (FAQ)
Tax brackets are adjusted annually for inflation. The IRS has announced updated brackets, and they will be applied to income earned in 2024 (filed in 2025) and income earned in 2025 (filed in 2026). Check the IRS website or consult with a tax professional for specifics.
The IRS typically adjusts contribution limits for 401(k), IRA, and other retirement plans annually. Check updated limits to maximize contributions.
- 2024 tax year: The filing deadline is April 15, 2025 (or the next business day if it falls on a weekend/holiday).
- 2025 tax year: The filing deadline is April 15, 2026.
Child tax credit amounts, eligibility, and phase-out limits may be updated. Stay informed about legislative changes impacting this benefit.
The IRS adjusts standard deductions to account for inflation. For 2024, these amounts are likely higher than in 2023, and 2025 adjustments will reflect economic changes.
New or revised tax credits may include credits for energy-efficient home upgrades, electric vehicles, or dependent care. Verify eligibility criteria for these credits.
The premium tax credit is a refundable tax credit designed to help eligible individuals and families with low or moderate income afford health insurance purchased through the Health Insurance Marketplace, also known as the Exchange.
The Health Insurance Marketplace, also called simply the Marketplace, is the place where you will find information about private health insurance options, purchase health insurance, and obtain help with premiums and out-of-pocket costs if you are eligible.
Any alteration of a Form W-4 (e.g. crossed out penalties of perjury statement above the signature) will cause the Form W-4 to be invalid. If an employer receives an invalid Form W-4, the employee will be treated as failing to furnish a Form W-4; the employer must inform the employee that the Form W-4 is invalid, and must request another Form W-4 from the employee. Until the employee furnishes a new Form W-4, the employer must withhold from the employee as from a single person claiming no allowances.
If, however, a prior Form W-4 is in effect for the employee, the employer must continue to withhold based on the prior Form W-4.
There is no change in the requirement that employees have adequate income tax withholding.
The IRS Tax Withholding Estimator is available to help employees determine the proper amount of federal income tax withholding. Another useful resource, Publication 505, Tax Withholding and Estimated Taxes is available on the IRS website or can be obtained by calling 800-TAX-FORM (800-829-3676).
Individuals who do not have sufficient income tax withholding are subject to penalties. The IRS will be making more effective use of information contained in its records along with information reported on Form W-2 wage statements to ensure that employees have enough federal income tax withheld.
The IRS may direct your employer to withhold federal income tax at an increased rate to ensure you have adequate withholding by issuing a lock-in letter.
At that point, your employer must disregard any Form W-4 that decreases the amount of withholding. You will receive a copy of the lock-in letter. You will be given a period of time before the lock-in rate is put in effect to submit for approval to the IRS a new Form W-4 and a statement supporting the claims made on the Form W-4 that would decrease your federal income tax withholding.
You should send the Form W-4 and statement directly to the address on the lock-in letter. Once a lock-in letter is issued, you will not be allowed to decrease your withholding unless approved by the IRS.
Your employer is required to withhold income tax from your wages as if you are single with zero allowances if you do not submit a Form W-4.
You must continue to file returns and pay your taxes due. If you timely meet all your filing and payment obligations for three consecutive years, you can request that we release you from the Withholding Compliance Program.
Yes, but an actual copy of your Form W-2 is only available if you submitted it with a paper tax return:
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- You can get a wage and income transcript, containing the Federal tax information your employer reported to the Social Security Administration (SSA), by visiting our Get your tax records and transcripts page. Refer to Transcript types for individuals and ways to order them and About tax transcripts for more information.
- You can also use Form 4506-T, Request for Transcript of Tax Return. Check the box for Form W-2, specify which tax year(s) you need, and mail or fax the completed form. Most requests will be processed within 10 business days from the IRS received date.
Yes, the IRS continues to refine reporting requirements for cryptocurrency. Starting in 2024, brokers may issue 1099 forms for certain crypto transactions.
Inflation affects tax brackets, standard deductions, contribution limits, and thresholds for deductions or credits. These adjustments ensure taxpayers aren’t pushed into higher brackets solely due to inflation.
The ERC primarily applies to earlier tax years. However, you may be able to file amended returns to claim it retroactively if you were eligible.
The IRS updates standard mileage rates annually for business, medical, and charitable use. Verify the rates for accurate expense deductions.
Student loan interest deductions remain in place, subject to income limits and caps. Check whether your loans and AGI qualify.
Yes, the IRS imposes penalties for late filing or payment. Extensions can help avoid late filing penalties, but interest will accrue on unpaid balances.
Contact an IRS customer service representative to correct any agency errors by calling 800-829-1040 (see telephone assistance for hours of operation). Unfortunately, this may result in you receiving a paper check.
To claim your child as your dependent, your child must meet either the qualifying child test or the qualifying relative test:
- To meet the qualifying child test, your child must be younger than you or your spouse if filing jointly and either younger than 19 years old or be a “student” younger than 24 years old as of the end of the calendar year.
- There’s no age limit if your child is “permanently and totally disabled” or meets the qualifying relative test.
In addition to meeting the qualifying child or qualifying relative test, you can claim that person as a dependent only if these three tests are met:
- Dependent taxpayer test
- Citizen or resident test, and
- Joint return test
If you lost your refund check, you should initiate a refund trace:
Use Where’s My Refund, call us at 800-829-1954 and use the automated system, or speak with an agent by calling 800-829-1040 (see telephone assistance for hours of operation).
- However, if you filed a married filing jointly return, you can’t initiate a trace using the automated systems. Download and complete the Form 3911, Taxpayer Statement Regarding Refund PDF or the IRS can send you a Form 3911 to get the replacement process started.
Your claim for a missing refund is processed one of two ways:
- If the check wasn’t cashed, you’ll receive a replacement check once the original check is canceled.
- If the refund check was cashed, the Bureau of the Fiscal Service (BFS) will provide you with a claim package that includes a copy of the cashed check. Follow the instructions for completing the claim package. BFS will review your claim and the signature on the canceled check before determining whether they can issue you a replacement check. The BFS review can take up to six weeks to complete.
Although these forms are called information returns, they serve different functions.
Employers use Form W-2, Wage and Tax Statement to:
- Report wages, tips, or other compensation paid to an employee.
- Report the employee’s income, Social Security, and Medicare taxes withheld and other information.
Employers furnish the Form W-2 to the employee and the Social Security Administration (SSA). The SSA shares the information with the Internal Revenue Service.
Payers use Form 1099-MISC, Miscellaneous Information and/or Form 1099-NEC, Nonemployee Compensation to:
- Report any amount of federal income tax withheld under the backup withholding rules (Form 1099-MISC or Form 1099-NEC).
- Report payments of $10 or more made in the course of a business in royalties or broker payments in lieu of dividends or tax-exempt interest (Form 1099-MISC).
- Report payments of $600 or more made in the course of a business in rents, prizes and awards, other income and for other specified purposes, including gross proceeds paid to an attorney (Form 1099-MISC).
- Report payments of at least $600 in the course of a business to a person who’s not an employee for services, including payments to an attorney (Form 1099-NEC).
- Report sales totaling $5,000 or more of consumer products to a person on a buy-sell, a deposit-commission, or other commission basis for resale (Form 1099-MISC or Form 1099-NEC).
Payers file Forms 1099-MISC and 1099-NEC with the IRS and provide them to the person or business that received the payment.
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To determine if the sale of inherited property is taxable, you must first determine your basis in the property. The basis of property inherited from a decedent is generally one of the following:
- The fair market value (FMV) of the property on the date of the decedent’s death (whether or not the executor of the estate files an estate tax return (Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return)).
- The FMV of the property on the alternate valuation date, but only if the executor of the estate files an estate tax return (Form 706) and elects to use the alternate valuation on that return. See the Instructions for Form 706.
For information on the FMV of inherited property on the date of the decedent’s death, contact the executor of the decedent’s estate. In 2015, Congress passed a law that, in certain circumstances, requires the recipient’s basis in certain inherited property to be consistent with the value of the property as finally determined for Federal estate tax purposes. If you receive a Schedule A to Form 8971 from an executor of an estate or other person required to file an estate tax return, you may be required to report a basis consistent with the estate tax value of the property. For more information, see Publication 559, Survivors, Executors, and Administrators.
If you or your spouse gave the property to the decedent within one year before the decedent’s death, see Publication 551, Basis of Assets.
Report the sale on Schedule D (Form 1040), Capital Gains and Losses and on Form 8949, Sales and Other Dispositions of Capital Assets:
- If you sell the property for more than your basis, you have a taxable gain.
- For information on how to report the sale on Schedule D, see Publication 550, Investment Income and Expenses.
An accuracy-related penalty may apply if an individual reporting the sale of certain inherited property uses a basis in excess of that property’s final value for Federal estate tax purposes.
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A minister’s housing allowance (sometimes called a parsonage allowance or a rental allowance) is excludable from gross income for income tax purposes but not for self-employment tax purposes.
If you receive as part of your salary (for services as a minister) an amount officially designated (in advance of payment) as a housing allowance, and the amount isn’t more than reasonable pay for your services, you can exclude from gross income the lesser of the following amounts:
- the amount officially designated (in advance of payment) as a housing allowance;
- the amount actually used to provide or rent a home; or
- the fair market rental value of the home (including furnishings, utilities, garage, etc.).
The payments officially designated as a housing allowance must be used in the year received.
Include any amount of the allowance that you can’t exclude as wages on line 1h of Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. Enter “Excess allowance” and the amount on the dotted line next to line 1h.
If your congregation furnishes housing in kind as pay for your services as a minister instead of a housing allowance, you may exclude the fair market rental value of the housing from income, but you must include the fair market rental value of the housing in net earnings from self-employment for self-employment tax purposes.
For more information on a minister’s housing allowance, refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers.
If by the end of February, your Form W-2, Wage and Tax Statement has not been corrected by your employer after you attempted to have your employer or payer issue a corrected form, you can request that an IRS representative initiate a Form W-2 complaint. Call the IRS toll free at 800-829-1040 or make an appointment to visit an IRS taxpayer assistance center (TAC).
- The IRS will send your employer a letter requesting that they furnish you a corrected Form W-2 within ten days.
- The IRS will send you a letter with instructions and Form 4852, Substitute for Form W-2, Wage and Tax Statement, or Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. You can use the Form 4852 in the event that your employer doesn’t provide you with the corrected Form W-2 in time to file your tax return.
Depending on the time of year, the IRS may have federal wage information in the form of a wage transcript. See Topic 159 for more information on how to get a transcript of W-2 information.
When you call the IRS or visit a TAC office, please have the following information available:
- Your employer’s or payer’s name and complete address including ZIP code and
- Your name, address including ZIP code, and Social Security number.
If you file your return and attach Form 4852, you’ll need to estimate the wages you earned, taxes withheld, and the period for which you did not receive or received an incorrect Form W-2. You should base the estimate on year-to-date information from your final pay stub, if possible. When filing a Form 4852 instead of a Form W-2, there may be delays processing your refund while we verify the information you gave us.
To help protect your Social Security benefits, keep a copy of Form 4852 until you begin receiving Social Security benefits, just in case there’s a question about your work record and/or earnings in a particular year. After September 30 following the date shown on Form 4852 line 4, use a my Social Security online account or contact your local SSA office to verify wages reported by your employer.
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