Key Tax Tips to Consider
Miguel Burgos, a CPA and TurboTax expert, highlights a few key benefits this year. These include tax-free tips, tax-free overtime pay, a deduction for auto loan interest, and deductions for individuals aged 65 or older as of December 31.
Last year, taxpayers received an average refund of $3,167, and this year, analysts suggest it could grow by $1,000 due to tax law changes. In total, over 165 million individual income tax returns were processed, with a staggering 94% submitted electronically.
If navigating these changes feels daunting, don’t worry—there are plenty of free resources available to guide you through the process.
Here’s what you might need:
- Social Security number
- W-2 form (if employed)
- 1099-G (if unemployed)
- 1099 form (if self-employed)
- Records of savings and investments
- Deductions for education, medical expenses, and charitable donations
- Relevant tax credits, like the child tax credit and retirement savings contribution credit
For a more comprehensive list of required documents, check the IRS website. It’s a good idea to keep all your documents organized in one place, and to retain last year’s files too. Additionally, taxpayers can create an identity protection PIN with the IRS to safeguard against identity theft, which is mandatory for filing your tax return.
Understand the Updates This Year
— Changes to the standard deduction
This year, the standard deduction is set at $15,750 for single filers, $31,500 for married couples filing jointly, and $23,625 for heads of household.
— Changes to SALT deductions
The limit for state and local tax deductions has increased from $10,000 to $40,000. This significant change, known as the Working Household Tax Cut, took effect in July 2025. Keith Hall, a CPA and president of the National Association of Self-Employed Workers, noted that this is particularly beneficial for taxpayers in high-tax states like California, New York, and New Jersey.
— Tip deductions
The so-called “no tax on tips” is a bit misleading. This new deduction applies only to certain qualified tips, with some income limits. Burgos explains that the annual deduction cap is $2,500 and phases out for modified adjusted gross incomes exceeding $150,000 (or $300,000 for joint filers). Only certain industries where tipping is common, such as hospitality and entertainment, qualify.
— Additional Schedule 1-A Deductions
Schedule 1-A will help you claim four types of tax credits on your return. This includes updates related to state taxes, qualified tips, auto loans, and senior citizen credits. Note that IRS Direct File, the free e-filing option, won’t be available this year. However, IRS Free File will still offer free guided services for those earning $89,000 or less through various IRS partners.
In addition to services like TurboTax and H&R Block, hiring a qualified professional could be a good option. The IRS also offers two programs providing free tax help: Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE), aimed at low-income individuals and those aged 60 and up. You can find more about them on the IRS website.
Avoid Common Tax Return Mistakes
It’s understandable to worry about mistakes when dealing with the IRS. Here are some common pitfalls to avoid:
- Double-check the name on your Social Security card. If your name changed due to marriage or another reason, make sure it’s updated with the Social Security Administration.
- Look for online versions of your tax statements. Many people choose paperless billing, so those documents might only be available online.
- Be thorough in reporting all income. If you have multiple jobs, make sure you have the necessary forms for each one.
Understanding the Child Tax Credit
Currently, the tax credit stands at $2,200 per child, with $1,700 being refundable as the Additional Child Tax Credit. To qualify for the additional credit, a minimum income of $2,500 is required. Full eligibility for the credit applies to those with an annual income of $200,000 or less ($400,000 for joint filers), while partial credits might be available for higher incomes.
Direct Deposit for Tax Refunds
The IRS is moving away from paper checks for tax refunds, urging taxpayers to sign up for direct deposit instead. This shift is important since tax fraud tends to increase during tax season. Be cautious about communications that seem suspicious; the IRS won’t reach out via phone, text, or social media.
If something seems off with your tax professional’s claims regarding refunds, don’t hesitate to ask for clarification. Always request a copy of your tax return to understand every detail.
Keep Your Tax Returns Organized
It’s wise to keep copies of your tax returns in case the IRS needs to verify anything from past years. Keeping records for five to seven years is generally recommended.
