As the clock ticks down to Tax Day, Americans are reminded that the deadline to file federal income tax returns is Tuesday, April 15, 2025. This year, despite ongoing economic challenges, including layoffs and cuts in various sectors, the Internal Revenue Service (IRS) is processing returns and refunds at a pace comparable to previous years.
Timothy Wingate Jr., a tax expert from Intuit, noted, "We haven't felt any major impact from refund delays" this year due to IRS staffing cuts. However, the Treasury Department and IRS officials have projected a significant decrease in tax receipts, estimating a loss of more than 10% or over $500 billion in federal revenue compared to last year.
April 15 has been the traditional tax filing deadline since 1954, with exceptions made when the date falls on a weekend. The IRS had previously delayed the deadline in 2020 and 2021 due to the COVID-19 pandemic, but this year marks the first time since 2019 that Tax Day falls on April 15.
For taxpayers in federally declared disaster areas, the IRS has extended filing deadlines. Residents in Alabama, Florida, Georgia, North Carolina, and South Carolina have until May 1, 2025, to file their returns. Parts of Virginia and all of Tennessee, Kentucky, and Arkansas have extended deadlines until November 3, 2025, due to severe weather events.
As of April 4, 2025, the IRS had received 101.4 million tax returns, a slight decrease of 0.4% from the previous year. However, the total number of returns received has increased by 0.2%, totaling 100.3 million. Refunds processed so far amount to $211.1 billion, reflecting a 5% increase from $201.1 billion last year. The average refund has risen by 3.5% to $3,116, compared to $3,011 last year.
This year, the IRS has expanded its Direct File program, allowing about 30 million taxpayers in 25 states to file their taxes online for free. This is a significant increase from the 12 states that had access to the program last year. The Direct File system is designed to be mobile-friendly and is available in both English and Spanish.
During the 2024 filing season, over 3 million users checked their eligibility for Direct File, and more than 140,000 taxpayers utilized it, exceeding the agency's goal of 100,000 users. The Treasury Department reported that Direct File users saved an estimated $5.6 million in tax preparation fees.
The future of the Direct File program remains uncertain. Treasury Secretary Scott Bessent, during his confirmation hearings, assured that the program would be available this year but did not commit to its continuation in the future.
For those needing more time to file, the IRS allows taxpayers to request a six-month extension until October 15, 2025, but payments must still be made by the April 15 deadline to avoid penalties. Taxpayers can request an extension using IRS Free File or by submitting Form 4868.
Michael Frost, a senior wealth strategist at Truist Wealth, advised taxpayers to be conservative in estimating their tax liability and extension payment to avoid penalties. The failure-to-file penalty is 5% per month, with a maximum penalty of 25% of the balance due. In contrast, the failure-to-pay penalty is 0.5% for each month, also capping at 25%.
For those wondering about their refund status, the IRS's "Where's My Refund" tool provides updates typically 24 hours after e-filing a current-year return. For paper returns, taxpayers should expect to wait about four weeks for an update.
Additionally, the IRS estimates that over $1 billion in refunds remain unclaimed due to taxpayers not filing their 2021 returns, which are related to $2.4 billion in stimulus payments from the COVID-19 recovery efforts. More than 1.1 million individuals may still be eligible for a refund if they file by the April 15 deadline, with special payments reaching as high as $1,400 per individual.
Taxpayers who are self-employed, retirees, investors, or part of the gig economy must also meet the April 15 deadline for their first quarter estimated tax payments for the 2025 tax year. Those who do not have taxes withheld from their income must make these estimated payments quarterly.
For individuals impacted by natural disasters, the IRS automatically provides filing and penalty relief. Taxpayers in areas with FEMA disaster declarations will receive additional time to file, with specific extensions available for states affected by hurricanes and wildfires in 2024.
In conclusion, as Tax Day approaches, it is crucial for taxpayers to be aware of their filing obligations, potential extensions, and the resources available to them. Whether filing on time or seeking an extension, understanding the deadlines and available assistance can help avoid penalties and ensure compliance with federal tax laws.
