It’s official: Tax season is open for individual filers and the IRS has started to process 2024 tax returns.

If you’re expecting a refund, there are key things to know, according to tax experts.

“There are some very simple tips to get the fastest refund possible,” said Mark Steber, chief tax information officer of Jackson Hewitt Tax Services.

For most filers, the federal tax deadline this year is April 15 for returns and balances. The agency expects more than 140 million individual returns before the due date. 

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Typically, you’ll receive a tax refund if you overpaid taxes the previous year. But you could owe money if you didn’t withhold enough from your paycheck or didn’t make payments throughout the year. 

As of Dec. 27, the average refund was $3,138 for the 2024 filing season, which was slightly lower than 2023, according to the IRS.

You can check the refund status of your current-year, electronic filing with the IRS 24 hours after submitting your return.

Paper refund checks are 16 times more likely to have an issue, such as theft or misdirection, according to the U.S. Department of the Treasury’s Bureau of the Fiscal Service.

However, it’s also important to enter banking details correctly when selecting direct deposit for payment, experts say. You should always double-check routing and account numbers.

During fiscal year 2023, more than 90% of individual taxpayers filed electronically, the IRS reported.  

While many taxpayers are itching to file early, it’s important to wait until you have all the necessary tax forms, according to Elizabeth Young, director of tax practice and ethics for the American Institute of Certified Public Accountants.

You want a “complete and accurate tax return,” she said. Otherwise, the IRS could flag your filing for mistakes, which causes delays.

While many tax forms arrive in January, others won’t be ready until mid-February to March or later.

Some common tax return errors include missing or inaccurate Social Security numbers, misspelled names, entering information wrong and math mistakes, according to the IRS.

Millions of Social Security beneficiaries have now received their first benefit checks for 2025.

The new 2.5% cost-of-living adjustment — which adds $50 per month to retirement benefits on average — marks the lowest increase since 2021, when inflation spiked shortly thereafter.

With prices still high, many beneficiaries are likely feeling the increase “wasn’t quite enough,” though “every little bit helps,” said Jenn Jones, vice president of financial security at AARP, an interest group representing Americans ages 50 and over.

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“When you’re living on a fixed income, when even what some might think are small or mild increases to everyday expenses happen, they can create a real financial burden for older Americans,” Jones said.

One measure, the Elder Economic Security Standard Index — also known simply as the Elder Index — developed by the Gerontology Institute at the University of Massachusetts in Boston, evaluates just how much it costs older adults to pay for their basic needs and age in place.

As a record number of baby boomers turn 65, research from the Alliance for Lifetime Income has found 52.5% of that cohort will rely primarily on Social Security for income in retirement since they have assets of $250,000 or less.

The Social Security cost-of-living adjustment aims to track inflation. Yet because those adjustments are made annually, they come with a lag, according to Laura Quinby, associate director of employee benefits and labor markets at the Center for Retirement Research at Boston College.

As inflation spiked, reaching a peak in 2022, Social Security’s COLAs also reached four-decade highs. In 2022, Social Security beneficiaries saw a 5.9% boost to benefits, which was followed by a higher 8.7% increase in 2023. That subsided to a 3.2% increase in 2024, followed by a more modest 2.5% bump for 2025.

The Social Security COLAs largely made up for the inflation surge that happened in 2022, Quinby said. However, inflation is now ticking up again, she said. The consumer price index rose 0.4% in December, slightly above what had been estimated for the month, and was up 2.9% for the year.

“We’re in another period where prices might be rising faster than the Social Security COLA,” Quinby said.

How much retirees are affected by inflation varies based on three factors — how much their assets keep up with rising prices, the amount of debt they have at fixed interest rates and whether they change their savings, investment or work behaviors, the Center for Retirement Research has found.

Mary Johnson, a 73-year-old independent Social Security and Medicare analyst, said her Social Security cost-of-living adjustment for 2025 has mostly been consumed by rising costs. While Social Security represents about 40% of her income, much of her other retirement assets are invested in stocks, which saw record growth last year.

Still, Johnson said she’s grappling with increases to her homeowner’s insurance, home heating and cooling bills, food costs, and drug plan premiums. One bright spot is that she did see her auto insurance decline last year.

A notable change retirees have to look forward to in 2025 is a new $2,000 annual cap on out-of-pocket Medicare Part D prescription drug costs, that was enacted with the Inflation Reduction Act under President Joe Biden.

“That’s the biggest game changer this year for older Americans,” said AARP’s Jones.

More than 95% of Medicare Part D beneficiaries will benefit from that new out-of-pocket cap, AARP’s research has found.

Before the change, the amount of money Medicare Part D beneficiaries spent on their medications was unlimited, with potentially thousands of dollars in out-of-pocket costs, according to Juliette Cubanski, deputy director of the program on Medicare policy at KFF, a provider of health policy research.

The change provides real financial relief and peace of mind, she said.

“If they’re not taking expensive medications now, but they do in the future, they won’t have to potentially go bankrupt or just simply not fill their prescriptions because they cannot afford the out-of-pocket cost,” Cubanski said.

To be sure, Medicare beneficiaries still face other rising costs, particularly with regard to monthly Part B and Part D premiums. Because those payments can be deducted directly from Social Security checks, they may affect just how much of a COLA increase beneficiaries see.

In 2025, the standard monthly Part B premium is $185 per month, while the average standard Part D premium is $46.50. Notably, higher-income beneficiaries pay more expensive rates, though that may not be as noticeable in their household budgets, Cubanski said.

“For others, the fact that they’re paying premiums for Medicare coverage certainly takes away from the amount of money that they have for other essentials,” Cubanski said.

For 2025, investors can save more with higher 401(k) plan limits. Employees can defer $23,500 into 401(k) plans, up from $23,000 in 2024. The catch-up contribution limit is $7,500 for workers ages 50 and older.

But thanks to Secure 2.0, there’s a “super catch-up” for investors ages 60 to 63, said certified financial planner Michael Espinosa, president of TrueNorth Retirement Services in Salt Lake City. 

The catch-up contribution for employees ages 60 to 63 jumps to $11,250 for 2025. That brings the total deferral limit to $34,750 for these workers.

“This could be huge” for deferring taxes in 2025, Espinosa said.

Some 15% of eligible participants made catch-up contributions in 2023, according to Vanguard’s 2024 How America Saves report, based on data from 1,500 qualified plans and nearly 5 million participants.

An inherited individual retirement account could boost your nest egg. However, some heirs may face an IRS penalty for missed required withdrawals in 2025, experts say. 

With more focus on shifting economic policy, “it’s easy to see how this one could get buried,” said CFP Edward Jastrem, chief planning officer at Heritage Financial Services in Westwood, Massachusetts.

Since 2020, certain inherited accounts must follow the “10-year rule,” meaning heirs must empty inherited IRAs by the 10th year after the original owner’s death. This applies to heirs who are not a spouse, minor child, disabled, or chronically ill, and certain trusts.

Starting in 2025, the IRS will enforce the penalty on heirs for missed required minimum distributions, or RMDs. The penalty is 25% of the amount that should have been withdrawn. But it’s possible to reduce that penalty if your RMD is “timely corrected” within two years, according to the IRS.

Heirs must take yearly withdrawals if the original IRA owner had reached their RMD age before death.

If you or your spouse work in public service and expect to receive a pension, new legislation could mean higher Social Security benefits in retirement.

Enacted by former President Joe Biden in January, the Social Security Fairness Act ended two provisions — the Windfall Elimination Provision and Government Pension Offset — that lowered benefits for certain government employees and their spouses.

“This change is significant for many retirees who had their benefits eliminated or reduced,” said CFP Scott Bishop, partner and managing director of Presidio Wealth Partners, based in Houston.

The Social Security Administration is working on the timeline for the new legislation and will update its website when more details are available.