After much back and forth and with a great deal of consternation, Trump’s Big Beautiful Bill passed through both houses of Congress on July 4, 2025.

Sigh.

As with all tax legislation, it’s smoke and mirrors. Helping some, taking away from others. But along with the Bad and Ugly is the Good. So perhaps there are few nuggets in there that will help you, Joe Sixpack, in your tax situation. Most of the provisions begin in either 2025 or 2026 and extend only through 2028, although some will become permanent. Check with your tax advisor.

CAVEATS
Most of the new tax provisions are only provided if you, your spouse, and/or your dependents have a valid SSN. Those holding an ITIN cannot enjoy the new tax benefits, such as tax-free overtime pay and tax-free tips. Also note that most of the new deductions may be phased out for those with higher incomes. Most of the new deductions will be effective in 2026, although many are available for 2025. And most deductions can be claimed if you are Single, Married Filing Joint (MFJ) but not allowed if you are filing Married Filing Separate (MFS) Check with your tax professional to see how these laws apply to you and your tax situation.

BUY A CLEAN VEHICLE BEFORE SEPTEMBER 30, 2025
This tax credit is expiring. If you are planning on buying a new car and want to enjoy the electric vehicle (EV) or fuel cell vehicle (FCV) tax credit of up to $7,500 you must purchase the vehicle by September 30, 2025.

THE STANDARD DEDUCTION is increased which means your tax bill may be a bit smaller.

TAX BREAK FOR AGES 65 AND OLDER
Beginning in 2025. If you’re 65 or older, you get an extra deduction (exemption) of $6,000. That means if you are married filing joint, you enjoy an extra $12,000 if both spouses qualify, but it phases out at $75k single, $150k MFJ. If you’re MFS, you lose the deduction altogether! Plan your filing with your tax pro. To enjoy the exemption, you must have a valid SSN. Those with an ITIN are out of luck.

1099 THRESHOLD will be increased from $600 to $2,000 beginning in 2026.

THE CHILD TAX CREDIT is increased from $2,000 to $2200. DEPENDENT CARE CREDIT increased from 35% to 50%. Check with your tax pro as there are income phaseouts. Again, you, your spouse and your dependent must have a valid SSN. If you only have an ITIN you do not qualify.

EDUCATION CREDITS can only be enjoyed if you and your dependent have a valid SSN, no ITINs allowed.

NO TAX ON TIPS
This is limited to the first $25,000 of tip income. If you are self-employed all tips are still subject to the self-employment tax. For example, you’re a hair dresser, dog walker, masseuse, etc. Check with your tax pro as there are income phaseouts. Also, if you file as MFS there is no deduction for tips, you must still include them in your total income. Must have valid SSN, with ITIN there is no deduction.

TAX FREE OVERTIME is limited to $12,500 per person.
You do not enjoy this benefit if you are filing as MFS. Again, no ITINs; you must have a valid SSN. It isn’t the grand total of your overtime that is deductible; it is only the amount that’s in excess of the hourly rate. For example, if you are paid $20/hr., in CA your overtime rate is $30/hr. The tax-free portion is only on the $10/hr. difference. Income phaseouts apply, so check with your tax professional. Also, if you own 20% or more of the business paying the overtime, you get no relief, no benefit. All overtime pay is still subject to FICA.

DEDUCT YOUR CAR INTEREST
Up to $10k interest deduction is now available on new vehicles, 2 wheels, less than 14,000 lbs. with final assembly in US. Leased vehicles are not eligible. There are lots of exceptions and limitations, so check with your dealership and tax pro to find out if you qualify.

THE SALT LIMITATION INCREASED TO $40K through 2028
If you itemize deductions, this may apply to you. This is that deduction on Schedule A for taxes paid to your state, property taxes, DMV license fees, etc. Prior to 2018, the amount you could deduct was unlimited. Beginning in 2018, the deduction became limited to $10,000. The deduction phases out if your income is more than $500k.

PMI will be deductible again beginning in 2026.

CASUALTY LOSSES
The only personal casualty loss allowed previously was for Federal disaster losses. The new bill allows a deduction for State declared losses if they occurred beginning July 4, 2025.

GAMBLING LOSSES were previously allowed to the extent of 100% of winnings, now they will be allowed at up to only 90% of winnings.

CHARITABLE CONTRIBUTIONS
During COVID you were allowed to deduct $600 charitable contributions even if you didn’t itemize deductions. The IRS is bringing that back and increasing the amount you can deduct to $1000 Single and $2000 MFJ

SOLAR AND CLEAN ENERGY CREDITS EXPIRING
Solar and residential clean energy systems must be up and running by 12/31/25.

Naturally, Congress will be passing numerous tax law changes. Below are tidbits that we already know that you might find useful:

IRS Online Account enhancements. You can now access your Online Account at the IRS where you can view tax owed and payment history and schedule payments. You can also do the following: request tax transcripts, view or apply for payment plans, see digital copies of some IRS notices, view key data from your most recently filed tax return and validate bank accounts and save multiple accounts, eliminating the need to re-enter bank account information every time they make a payment.

Avoid refund delays and understand refund timing. Many different factors can affect the timing of a refund after the IRS receives a tax return. Although the IRS issues most refunds in less than 21 days, the IRS cautions taxpayers not to rely on receiving a 2023 federal tax refund by a certain date, especially when making major purchases or paying bills. Some returns may require additional review and may take longer to process if IRS systems detect a possible error, the return is missing information or there is suspected identity theft or fraud.

Also, the IRS cannot issue refunds for people claiming the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) before mid-February. The law requires the IRS to hold the entire refund – not just the portion associated with the EITC or ACTC. The IRS expects most EITC and ACTC related refunds to be available in taxpayer bank accounts or on debit cards by Feb. 27, 2024, if the taxpayer chose direct deposit and there are no other issues with the tax return.

Last quarterly payment for 2023 is due on Jan. 16, 2024. You may need to consider estimated or additional tax payments due to non-wage income from unemployment, self-employment, annuity income or even digital assets. The Tax Withholding Estimator on IRS.gov can help wage earners determine if there’s a need to consider an additional tax payment to avoid an unexpected tax bill when they file. Or give us a call so we can help you determine the amount to pay. We can also provide you with a payment voucher or direct you to pay online.

Gather 2023 tax documents. It’s a good idea to develop a record keeping system − electronic or paper − that keeps important information in one place. This includes year-end income documents like Forms W-2 from employers, Forms 1099 from banks or other payers, Forms 1099-K from third party payment networks, Forms 1099-NEC for nonemployee compensation, Forms 1099-MISC for miscellaneous income or Forms 1099-INT for interest paid, as well as records documenting all digital asset transactions and stock sales.

I maintain a file folder marked with the tax year and all year long I put in tax documents including DMV renewals, acknowledgment letters from charities, etc. When it’s time to do my taxes, I just swoop it up and enter my data.

IRA INFO Form 8606. Review IRA basis this year. If you have traditional or ROTH IRA, please be sure to provide your tax pro with Form 5498 (which you likely received in May of 2023). Ask your plan manager for a total of all nondeductible contributions and a figure which represents the basis of your IRA.

Understand energy related credits. As usual, the IRS has made tax law extremely complex and difficult. If you bought a vehicle in 2023 please review the changes under the Inflation Reduction Act of 2022 to see if it qualifies for the credit for the new clean vehicles purchased in 2023 or after. To claim a credit, you must provide the vehicle’s VIN so we can file Form 8936, Qualified Plug-in Electric Drive Motor Vehicle Credit, with your tax return.

If you made energy improvements to the home, tax credits are available for a portion of qualifying expenses. The Inflation Reduction Act of 2022 expanded the credit amounts and types of qualifying expenses. To claim the credit, we must file Form 5695, Residential Energy Credits, Part II, with your tax return.

Speed tax refunds with direct deposit. Filing electronically and choosing direct deposit is the fastest way for you to get your tax refund. Direct deposit gives you access to your refund faster than a paper check. And it’s proven to be more secure. Average time for a refund is 21 days from filing. Although if you are expecting a refund from an amended return the wait may be several months or longer. Note if you are claiming the EITC, your refund will not be available until after February 27.

New mileage rates for 2024 are increased to 67 cents per mile up 1.5 cents for 2023. Charitable remains at 14 cents per mile and will never increase as it’s set by statute. Medical and moving mileage (for Armed Forces only) has been decreased a penny to 21 cents per mile. Wonder what the logic is behind that? After all, we did have a surge in inflation!

Best wishes to you and yours for a Happy, Healthy, and Prosperous New Year from all of us at Taxpertise!

The holidays are behind us and thoughts of organizing finances and getting ready for taxes are now on our agendas. Here are a few things you should know as you venture forward in these tasks:

Organize: If you haven’t done so already, set up a file folder marked 2022 taxes. As the various documents come in–W2s, 1099s, K-1s, Forms 1098 for mortgage interest, etc., place them in the folder so you aren’t scrambling the day before your tax appointment to retrieve your documents. It’s also a good idea to set up a file folder right now for 2023 taxes, then as various taxable events occur during the year: DMV and property tax payments, receipts and acknowledgment letters from charitable organizations, etc., you can file them there to ease the pain of tax season in the upcoming year.

The tax organizer that you receive from your preparer will show the names and amounts of taxable entries from the prior year. Even if you don’t use the organizer, it’s a good reference to ensure that you include all tax data for the current year.

Filing Deadlines: The IRS currently has no plans to expand the filing dates as they have in the past due to COVID. Therefore, the due dates for individual income tax returns will be April 18 (April 15 is a national holiday: Emancipation Day, celebrated on Monday, April 17) with extensions allowable to October 16, 2023. The due date for partnerships and corporations remains March 15 with extensions to September 15.

REMEMBER: An extension is only for additional time to file, not additional time to pay. Your taxes must be paid by the initial due date and if the return is not filed by that date, you must estimate your liability and pay it with the extension form to avoid penalties and interest.

The IRS is issuing a warning for 2023: You likely won’t receive as large a tax refund as you have in the past and that is because there were no stimulus payments in 2022.

As always, Congress has passed changes to the tax law:

1. Taxpayers may only take the charitable deduction if they itemize deductions. In 2021, the IRS temporarily allowed non itemizing individuals $300 per person, up to $600 per family in charitable contributions. That won’t be allowed this year. Don’t let that dissuade you from giving. You may be able to use the deduction on your state income tax return.
2. The IRS has also lowered the reporting threshold for third-party networks that process payments for doing business, such as Venmo or CashApp. Note that money received via a third-party app from friends and relatives as a gift or reimbursement for personal expenses is not taxable.
3. The standard deduction increased slightly.
4. Itemized deductions remain mostly the same. Employee business expenses are still nondeductible, but list them anyway as they are allowed on your state income tax return if you can itemize.
5. IRA contribution limits remain the same and 401(k) limits are slightly higher.
6. You can save a bit more in your health savings account (HSA) now: $3,650 for single and $7,300 for family coverage.
7. New mileage rate for 2022 income tax returns is $.625, up from $.575 in 2021. For 2023, it has increased to $.655

Naturally there are caveats, exceptions, special circumstances and other complications involved in all tax law. If you have questions, please consult your tax advisor for more information.

Wishing you and yours a healthy, happy, and prosperous New Year.

On the evening of December 27, President Trump signed into law the $900 billion stimulus bill, a second round of bailout for the American people suffering through this pandemic. This bill provides for stimulus payments of $600 subject to income phaseouts of $75,000 single and married filing separately (MFS), $112,500 head of household, and $150,000 married filing joint. The phaseouts will be based on 2019 income. $500 will also be paid out for dependents under the age of 17.

Stimulus checks and direct deposits began flowing to Americans on Wednesday, December 30.

The IRS is recalibrating its website to allow those who have had address changes or did not file tax returns for 2019 to provide their contact data for receipt of their checks.

The other provisions in this bill are as follows:

• Allowing the deduction of business expenses paid for with forgiven Paycheck Protection Program loans. This is a biggie for anyone who received the PPP loan for their small business. Initially, the deductions claimed against the PPP income were not to be allowed. This new provision will save small business owners thousands of dollars in taxes.
• Extension of the special charitable contribution provisions enacted for 2020 through 2021. If you do not itemize deductions, you will be able to write off $300 (single and MFS) or $600 (married filing joint)
• Restoration of the 100 percent business meals deduction for meals purchased in a restaurant for two years to help the restaurant industry. Normally, only 50% of the expense is deductible. This deduction does not apply to 2020 but to 2021 and 2022 tax years
• Allowing COVID-19-related expenses to qualify for the above-the-line educator expense deduction.
• Clarification that certain financial aid received by college students and forgiveness of Economic Injury Disaster Loans to small businesses are excluded from income,
• Extension of the credit for paid sick and family leave enacted as part of the Families First Coronavirus Response Act through March 31, 2021.
• Extension of the employee retention credit through June 30, 2021.
• Extension of the time allotted for repayment of employee Social Security taxes deferred under a presidential memorandum through the end of 2021.
• Extension of ability to take penalty-free distributions or loans of up to $100,000 from a retirement plan.
• A new round of PPP lending will soon be available for businesses with fewer than 300 employees, less than $2 million in revenue, and whose gross receipts are 25% lower than in 2019.

Naturally there are caveats, exceptions, special circumstances and other complications involved in all of the above. If you have questions, please consult your tax advisor, or call my office for more information.

The IRS predicts a normal tax season this year with the due date of April 15 and extensions allowed for filing to October 15 for individual returns. Corporate and partnership returns are due on March 15.  REMEMBER: the extension is for additional time to file, not additional time to pay. Your taxes must be paid by the initial due date and if they are not yet filed, you must estimate your liability and pay it with the extension form.

Many of you collected unemployment during 2020. Bear in mind that this is taxable income which must be reported on your 2020 income tax return.

The big question is whether or not Congress will pass the bill to increase the stimulus payments to $2000. According to ABC news, Despite continued support, Mitch McConnell is holding up discussion of this bill. It’s likely no action will taken. Reasoning behind this is that Trump slipped into this bill a provision to set up a committee to investigate election fraud and the repeal of Section 230 of the Communications Decency Act, which shields internet platforms such as Twitter and Facebook from liability for user-created content.

We are hopeful for a healthy, happy, and prosperous New Year for us all. And I believe there is every reason for optimism.

According to Spidell Publishing, an educational resource for tax professionals, on Saturday, August 8, the President signed four executive actions providing additional COVID-19 relief.

The three memorandums and one executive order signed by the President do the following:

• Direct the Secretary of the Treasury to use his authority to defer the withholding, deposit, and payment of the employee’s portion of Social Security taxes paid from September 1, 2020, through December 31, 2020. The deferral will be available to any employee whose wages are generally less than $104,000 per year;
• Authorize an additional $44 billion from the Department of Homeland Security’s Disaster Relief Fund to assist states to continue to pay expanded unemployment benefits of up to $400 per week, with the federal government paying $300 and states paying up to $100. States are called upon to use amounts allocated to them out of the Coronavirus Relief fund to pay their $100 share of the expanded unemployment benefits. Each state will manage this individually, so at this time it is unclear how each state will handle it;
• Provide for the continued temporary cessation of student loan payments and a waiver of all interest on student loans held by the Department of Education until December 31, 2020; and
• Direct various administrative agencies to take all lawful measures to prevent residential evictions and foreclosures resulting from the COVID-19 pandemic. The order does not contain any specifics for these directives.

The President may not have the authority to enforce the above actions. I will keep you posted if things change.

According to accounting.com “Trump also ordered continued eviction protection and student-loan relief.”

The moves could jeopardize negotiations with congressional Democrats over an additional coronavirus relief package, with the two sides trillions of dollars apart on key issues, including aid to state governments and the amount of supplementary unemployment benefits. The president, though, said he’d continue to negotiate with Democrats — who said Saturday’s measures “provide little real help to families.”

The text of the memorandums and order can be found at:

www.whitehouse.gov/news

This just in from the IRS:

Nearly four million people are being sent their Economic Impact Payment by prepaid debit card, instead of paper check. The determination of which taxpayers receive a debit card was made by the Bureau of the Fiscal Service, another part of the Treasury Department that works with the IRS to handle distribution of the payments.

These Economic Impact Payment Cards arrive in a plain envelope from Money Network Cardholder Services.  The Visa name will appear on the front of the card; the back of the card has the name of the issuing bank, MetaBank®, N.A. Information included with the card will explain that the card is an Economic Impact Payment Card. 

Those who receive Economic Impact Payment by prepaid debit card can do the following without any fees:

   •  Make purchases online and at any retail location where Visa is accepted
•  Get cash from in-network ATMs
•  Transfer funds to their personal bank account
•  Check their card balance online, by mobile app, or by phone

This free, prepaid card also provides consumer protections available to traditional bank account owners, including protection against fraud, loss, and other errors.

The card will come with instructions on how to activate and use it. Learn more at www.eipcard.com.

People have questions about the Stimulus Payments. And the IRS is attempting, short-staffed as they are, to provide answers. This just in from the IRS:

Is this payment considered taxable income?

No, the payment is not income and taxpayers will not owe tax on it. The payment will not reduce a taxpayer’s refund or increase the amount they owe when they file their 2020 tax return next year. A payment also will not affect income for purposes of determining eligibility for federal government assistance or benefit programs.

Can people who receive a Form SSA-1099 or RRB-1099 use Get My Payment to check their payment status?

Yes, they will be able to use Get My Payment to check the status of their payment after verifying their identity by answering the required security questions.

If someone’s bank account information has changed since they filed their last tax return, can they update it using Get My Payment?

To help protect against potential fraud, the tool also does not allow people to change direct deposit bank account information already on file with the IRS.

If the IRS issues a direct deposit based on the account information that the taxpayer provided on their tax return and the bank information is now invalid or the account has been closed, the bank will reject the deposit. The agency will then mail payment as soon as possible to the address they have on file. Get My Payment will be updated to reflect the date a payment will be mailed. It will take up to 14 days to receive the payment, standard mailing time.

Where can people get more information?

Taxpayers who are required to file a tax return, can go to IRS Free File to file electronically. If they aren’t required to file, they should go to the Non-Filers: Enter Payment Info Here tool and submit their information to receive an Economic Impact Payment.

For the complete lists of FAQs, visit the Economic Impact Payment and the Get My Payment tool pages on IRS.gov. The IRS updates these FAQs regularly.

The IRS encourages people to share this information with family and friends.

Special alert for VA, SSI recipients who don’t file a tax return and have dependents

VA, SSI recipients with eligible children need to act by May 5 to quickly add money to their automatic Economic Impact Payment; ‘Plus $500 Push’ continues

If you didn’t file a 2018 or 2019 income tax return, please read this. The IRS may have your banking information because you receive a direct deposit of either your VA benefits or your SSI benefits. However, there is no way they know if you have a dependent child  under the age of 17 unless you tell them. Click on the link below to provide them with this information so you can get that extra $500 stimulus check:

https://www.irs.gov/coronavirus/non-filers-enter-payment-info-here

Every answer to every possible question you may have about your stimulus payment check, can be found here:

https://www.irs.gov/coronavirus/get-my-payment-frequently-asked-questions#bank