Tax Season Changes Could Affect Refunds and Bills

As tax season gets closer, some significant updates may lead to bigger refunds or smaller tax bills. David Kembel, of Kembell Tax Office, mentioned, “That’s very possible. We’re looking at a new deduction this year that we haven’t seen before.”

One notable change is a new tax deduction for seniors aged 65 and older. Kembel explained, “There’s a fresh deduction for seniors that should normally provide a higher refund or reduce tax debt.” If you’re 65 or older, you can claim an extra $6,000 deduction in addition to your standard deduction. For married couples, both qualifying spouses can combine for an extra $12,000.

Families with children under 17 will also benefit with an increase in the child tax credit, now up to $2,200 per child from the previous $2,000, offering an extra $200 per eligible child.

Overtime pay regulations have also changed. Kembel noted, “When you work overtime, you’re paid time and a half. Half of that is deductible. So, if you earn $20 an hour and work an extra hour, you’re at $30 an hour, but you can deduct just $10.”

For service industry workers, new tipping rules have been introduced. Kembel stated, “Tips aren’t taxable as long as you claim them yourself.”

Other significant changes include:

• Interest deduction for U.S. auto loans
• Elimination of certain credits, like those for electric vehicles, solar energy systems, and improvements to home energy efficiency

On the procedural side, the IRS is moving away from paper checks. “They want everything electronic,” Kembel mentioned. This shift means that direct deposits will be necessary for refunds.

To get a pulse on local reactions to these changes, we spoke to some residents. Becky Harman shared her thoughts: “It’s been a tough year for everyone. So, getting a little unexpected cash back would be a nice surprise.” Conversely, another resident expressed skepticism, saying, “I already know I’m not getting anything back.”

Tax professionals suggest some steps to ensure a smooth filing. First, make sure to gather all essential documents beforehand—don’t overlook student loan interest statements, unemployment documents, and retirement distribution records. Kembel emphasized, “The key is to have everything ready.”

Another tip from Kembel is to file early, but not too early. The sooner you file, the sooner you’ll know your tax situation. He advised, “If you find out in February that you might owe more than you expected, you can adjust your plans between February and April.”