CINCINNATI

As tax season draws near, various changes to federal tax legislation could impact refunds, deductions, and the methods taxpayers use to pay the IRS, say tax professionals.

Importance of Record-Keeping

Gary Friedhoff, an adjunct lecturer at the University of Cincinnati College of Business, emphasizes that preparation and maintaining organized records are crucial. “Having your records in order supports your deductions, which is vital if you ever face an audit,” he notes. “If you can’t back up your claims, you risk losing credibility.”

Changes in Charitable Donations

A significant alteration involves charitable contributions. Starting in 2026, taxpayers will be allowed to claim an “above-the-line” deduction for cash donations, regardless of whether they itemize. Singles can deduct up to $1,000, while married couples filing jointly can deduct up to $2,000. However, those with higher incomes may see reduced benefits due to new limits.

Tax experts suggest that those planning to make substantial charitable donations might benefit from doing so in 2025, while smaller donors could find more advantages by waiting until January.

Potential Break for New Car Buyers

Taxpayers purchasing a new vehicle this year might be eligible for the auto loan interest deduction. To qualify, the car must be new, made in the U.S., and financed with fresh debt.

Expiration of Green Energy Credits

Green energy tax credits are also set to lapse at the end of the year. Home improvements that qualify, like energy-efficient furnaces, windows, and solar installations, must be completed by January to be eligible.

Digital Payments to the IRS

Another significant change is in how taxpayers can pay the IRS. From October 1, the agency no longer accepts payments by mailed check. All payments need to be made electronically, with refunds issued via direct deposit. Tax experts caution that attempting to pay by mail could lead to delays and potential penalties.

Dealing with Missing Documents

If taxpayers have misplaced documents such as W-2s or 1099s, they can request records from the IRS that reflect their reported income. However, these records may not be immediately accessible, which means some filers might need to file for an extension.

Final Thoughts

Experts recommend that by staying informed about these changes, keeping organized records, and adhering to deadlines, taxpayers can avoid unwelcome surprises and possibly lower their tax bills. For further information, taxpayers should visit IRS.gov.