Tax Season Tips and Updates
NEW YORK — Tax season has officially begun, and you’ll need to submit your return to the IRS by April 15th. To alleviate the stress of last-minute filing, it’s wise to start getting organized as soon as possible.
“You don’t want to procrastinate, but rushing isn’t necessary either,” shared Tom Oseven, who heads tax content and government relations at the National Association of Tax Professionals.
Gathering all necessary documents, opting for direct deposit, and keeping a copy of your return are essential steps in tax preparation. This year, there’s a noteworthy new deduction available due to a tax and spending legislation signed by President Trump last summer.
Miguel Burgos, a CPA and TurboTax expert, mentioned some of the highlights: tax-free tips, tax-free overtime, a deduction for car loan interest, and another for individuals aged 65 and older as of December 31.
Last year, the typical refund was about $3,167, and analysts expect it could potentially increase by $1,000 this time around because of changes in tax regulations. Over 165 million individual tax returns were processed in the previous year, with 94% submitted electronically.
If the process feels overwhelming, there are numerous free resources to assist you.
Key Documents to Prepare
The specific documents needed can differ based on personal circumstances, but generally, you should have:
- Social Security number
- W-2 form if you’re employed
- 1099-G if you’re unemployed
- 1099 forms for self-employed individuals
- Records of savings and investments
- Various deductible items like education and medical expenses, as well as charitable donations
- Tax credits such as the child tax credit and retirement savings contribution credit
For a comprehensive list, consider visiting the IRS website.
Oseven advises that you gather everything in one location before filing and to keep copies of documents from the previous year as well. Additionally, obtaining a personal information protection PIN from the IRS can help prevent identity theft. Once you have it, you’ll need it to file your taxes.
Changes to Standard Deduction
The standard deduction for individuals this year is set at $15,750. For married couples filing jointly, it rises to $31,500, while heads of household see a standard deduction of $23,625.
Adjustments to SALT Deduction
The limit on the state and local tax deduction has increased from $10,000 to $40,000, effective July 2025. This enhancement, known as the Working Household Tax Cut, is particularly beneficial for residents of states with higher income taxes, such as California, New York, and New Jersey, according to Keith Hall, a CPA and president of the National Association of Self-Employed Workers.
The SALT credit has been capped at $10,000 since it began in 2018, allowing for some federal tax relief for certain state and local taxes paid throughout the year.
If you haven’t itemized your SALT deductions before, it might be worth considering this year. Oseven suggests asking yourself whether you’ve paid state taxes, property taxes, mortgage interest, or made charitable donations as a guide.
Understanding the Tip Deduction
The term “no tax on tips” might be misleading. This deduction is only available for qualified tips and has certain income thresholds.
“It could be cash or electronic but it has to be given voluntarily,” Burgos emphasized.
The annual limit for this deduction stands at $2,500, with phase-outs beginning for modified adjusted gross incomes exceeding $150,000 for individuals or $300,000 for joint filers. It’s also specific to industries where tips are customary, such as hospitality and entertainment.
To take advantage of this deduction, you’ll need to complete a new form called Schedule 1-A.
Additional Schedule 1-A Deductions
Schedule 1-A is utilized to claim and calculate four relevant tax credits, covering updates to state and local tax credits, qualified tips, auto loans, and credits for seniors.
This year, the IRS Direct File electronic filing system for free returns is unavailable. However, those earning $89,000 or less can access IRS Free File for guided tax preparation through various partners, including TaxAct and FreeTaxUSA.
Besides TurboTax and H&R Block, taxpayers might consider hiring professionals, such as CPAs. The IRS offers a taxpayer directory across the country.
The IRS also supports two initiatives for free tax assistance: Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). Individuals earning under $69,000, those with disabilities, or non-English speakers may benefit from VITA, while TCE is available for those 60 and older. You can find hosting organizations through the IRS site.
Many individuals worry about potential errors with the IRS. Here are some tips for avoiding common pitfalls:
Verify Your Social Security Name
Oseven encourages clients to ensure their numbers and legal names are correct, especially if there have been life changes, like marriage.
“If you got married last year and want to use your marital name, but haven’t updated it with Social Security, it might not be recognized,” he noted.
Check Online Tax Statements
Although many people prefer digital communications, some documents may still be sent physically or could be available online.
“You may want to collect your documents if you opted for a paperless option,” Oseven advised.
Report All Income
If you take on an additional job, you’ll need W-2 or 1099 forms for each position.
Be aware that if there are discrepancies in your tax records, it could lead to an audit, where additional information may be requested.
Currently, the tax credit stands at $2,200 per child, with $1,700 being refundable through the Additional Child Tax Credit, accessible to those earning at least $2,500 annually.
If you meet certain criteria with incomes of $200,000 or less ($400,000 if filing jointly), you’re eligible for the full child tax credit. Those with higher incomes may qualify for a partial credit.
For more details about the child tax credit, you can explore the IRS link.
As of last September, the IRS has started phasing out paper tax refund checks. If you expect a refund, it’s recommended to enroll in direct deposit.
Oseven warned that tax fraud tends to spike during the season, manifesting through phone calls, texts, emails, and social media. The IRS won’t contact taxpayers through these channels.
If you suspect something is amiss with your tax office, it’s prudent to ask questions. If your tax professional promises a larger refund than in previous years, that could be concerning, Oseven cautioned.
If uncertainty looms regarding what your tax advisor is doing, request a copy of your tax return and clarify every entry.
It’s advisable to maintain records of your tax returns, especially in case of an audit several years down the line. Oseven suggests holding onto these for five to seven years.
