Latest from Kiplinger in Tax-filing

Ask the Tax Editor, April 24: How Can I Resolve My IRS Tax Debt?

joy.taylor@futurenet.com (Joy Taylor) — Fri, 24 Apr 2026 10:50:00 +0000

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four questions relating to how individuals can resolve their IRS tax debt. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. IRS alternatives for resolving tax debt

Question: When I filed my 2025 federal tax return this month, I unexpectedly owed taxes. But I don't have the money to pay the bill. What can I do to resolve my IRS tax debt?

Joy Taylor: Try not to worry too much because you are not alone. Millions of individuals owe tax debt to the IRS. The agency has a number of alternatives to help individuals resolve their tax debt.

If you have a financial hardship, you can contact the IRS to request a temporary collection delay until your financial condition improves. Also, look into submitting an offer in compromise to settle your tax debt at less than what you owe or applying for an IRS online payment plan.

The IRS has a new online tool for individuals and businesses with federal tax debt. The tool provides them a simple way to explore payment options for unpaid taxes and to identify next steps based on their circumstances. If you decide to use the tool, you will need to answer a series of questions about your financial situation and your tax debt, and the tool will guide you to potential payment alternatives.

2. Should I submit an offer in compromise?

Question: I owe tax debt to the IRS. A friend told me I should submit an offer in compromise to the IRS, and it will automatically reduce the taxes that I owe. Is it really that easy?

Joy Taylor: Unfortunately, no. Your friend is correct that the IRS accepts offers in compromise (OIC) to settle tax debt at less than what the taxpayer owes. But the process isn't automatic. The key factor that the IRS takes into account when reviewing an OIC application is the taxpayer's ability or inability to pay the balance in full, and whether full payment would result in financial hardship. That's why you must disclose your income and your assets to the IRS in your OIC application.

If you're thinking of submitting an OIC to the IRS, you will want to review the IRS's Offer in Compromise Form 656 Booklet for the rules and the forms. There are two payment options you can choose from when submitting your OIC. The lump sum cash option requires you to pay 20% of the total offer amount up front, with the remaining balance to be paid in five or fewer installments within five months of the date your offer is accepted. There is also the periodic payment option, which requires that you make your first payment with the offer, with the remainder remitted monthly over a period of six to 24 months.

Here are some more tips if you're thinking about making an OIC:

Be sure you have filed all required federal tax returns. Otherwise, the IRS will return your application and the filing fee, and apply any initial payment included with your submission to your tax debt.
Continue to timely file your tax returns and pay taxes even after the IRS accepts your OIC.
Individuals or businesses in bankruptcy cannot apply for an OIC.
There is a $205 application fee. Low-income individuals are exempt from paying this.
The IRS has an online tool for individuals to check preliminary eligibility for filing an OIC with the IRS.

3. Avoid offer-in-compromise "mills"

Question: I owe tax debt and I'm thinking of submitting an offer in compromise. Can I prepare the OIC application myself or should I use a tax professional?

Joy Taylor: It is up to you whether you want to try preparing the OIC application yourself and submitting it to the IRS or use a tax professional. It depends on your knowledge of taxes and finances. Note that a reputable tax professional who is familiar with submitting OICs and dealing with IRS collection employees can help guide you through the process, which may make it less stressful for you. You can also ask for IRS assistance with the process.

Whatever you do, avoid offer-in-compromise "mills," the IRS's term for companies and promoters that hawk tax-debt relief plans with promises to settle your debts at steep discounts. I'm sure you've seen the commercials on TV or heard ads on the radio from firms promising to settle your tax debt for pennies on the dollar. These companies charge big up-front fees and churn out applications for offers in compromise that most of their clients cannot qualify for, the IRS says.

4. The IRS used my refund to offset taxes I owed

Question: I owe tax debt to the IRS from prior years. I filed my 2025 tax return this year, and the IRS took my refund and applied it against my prior-year taxes. Is this legal?

Joy Taylor: Yes. If you owe back income taxes, the IRS can grab your current-year refund and apply it against the amount you owe. The same can happen if you owe nontax debts to a federal agency, state income taxes, certain unemployment compensation debts owed to a state or past-due child support. The IRS can take your current-year federal income tax refund and apply it against any of these past-due obligations.

About Ask the Editor, Tax Edition

Subscribers of The Kiplinger Tax Letter, The Kiplinger Letter and The Kiplinger Retirement Report can ask Joy questions about tax topics. You'll find full details of how to submit questions in each publication. Subscribe to The Kiplinger Tax Letter, The Kiplinger Letter or The Kiplinger Retirement Report.

We have already received many questions from readers on topics related to tax changes in the One Big Beautiful Bill, retirement accounts and more. We will continue to answer these in future Ask the Editor roundups. So keep those questions coming!

Not all questions submitted will be published, and some may be condensed and/or combined with other similar questions and answers, as required editorially. The answers provided by our editors and experts, in this Q&A series, are for general informational purposes only. While we take reasonable precautions to ensure we provide accurate answers to your questions, this information does not and is not intended to, constitute independent financial, legal, or tax advice. You should not act, or refrain from acting, based on any information provided in this feature. You should consult with a financial or tax advisor regarding any questions you may have in relation to the matters discussed in this article.

Ask the Tax Editor, April 17: Questions on Tax Refunds and Penalties

joy.taylor@futurenet.com (Joy Taylor) — Fri, 17 Apr 2026 10:20:00 +0000

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four questions on tax refunds, how to get the IRS to abate a penalty and related topics. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Erroneous bank account information for tax refund

Question: I helped my granddaughter prepare her tax return and claim a refund. I filed her 2025 Form 1040 using the same bank account information shown on her 2024 Form 1040. However, I was unaware that my granddaughter had changed banks. How do I notify the IRS of her correct bank account information?

Joy Taylor: The best answer to your question comes directly from the IRS. The IRS has a web page that answers the question "what should I do if I entered an incorrect routing or account number for direct deposit of my refund?"

For example, if a taxpayer omits a digit in the account or routing number of an account and the number doesn't pass the IRS's validation check, then the IRS says it will send you a notice asking for more information. Note that if you catch the bank account error early enough, before the return has been posted to the IRS's system, then you can call the IRS on their 1-800 line and ask the agency to stop the direct deposit. Here is more information directly from the IRS on what you can do:

"Generally, if the financial institution recovers the funds and returns them to the IRS, the IRS will send you a notice providing the next steps."

"If you have contacted the financial institution and 5 calendar days have passed with no deposit, you will need to file IRS Form 3911, Taxpayer Statement Regarding Refund, to initiate a trace. This allows the IRS to contact the bank on your behalf to attempt recovery of your refund. Banks are allowed up to 90 days from the date of the initial trace input to respond to our request for information, but it may take up to 120 days for resolution."

"If funds aren't available or the bank refuses to return the funds, the IRS cannot compel the bank to do so. The case may then become a civil matter between you and the financial institution and/or the owner of the account into which the funds were deposited."

2. Refunds by paper check delayed

Question: I have a bank account, but I don't like using it for electronic payments or receipts. I filed my 2025 Form 1040, which claimed a refund. I didn't include my bank account information on the return because I want to receive my refund as a paper check. I got a letter from the IRS asking for my bank account information. What can I do if I still want a paper check?

Joy Taylor: The IRS is in the process of phasing out paper refund checks in accordance with President Trump's March 2025 executive order. Individuals who request paper refund checks when filing their Form 1040 are seeing their refunds delayed. The IRS is mailing letters to filers whose 1040s claim a refund but omit bank account details for direct deposit. These notices ask the filers to supply their bank account information within 30 days or say why they can’t. I am guessing this is the letter that you received from the IRS.

If you don't respond to the IRS notice, you will eventually get your refund check in the mail, but it will take time. According to the IRS, it will issue a paper check to nonresponders six weeks after the date it sent the original notice.

3. How the IRS calculates the underpayment penalty

Question: I am filing my 2025 Form 1040, and I know I am going to owe an underpayment penalty. How does the IRS calculate this penalty?

Joy Taylor: Generally, taxpayers will escape the underpayment penalty if they prepay, through estimated tax payments or withholding, at least 90% of their current-year total tax bill or 100% of what they owed for the prior year (110% if prior-year adjusted gross income exceeded $150,000). Taxpayers who owe an underpayment penalty use IRS Form 2210 to calculate the amount owed. I am aware that calculating the underpayment penalty can be confusing.

The IRS calculates the underpayment penalty based on the tax shown on your original return or on a more recent return that you filed on or before the due date. The tax shown on the return is your total tax minus your total refundable credits. The IRS calculates the penalty based on: (1) the amount of the underpayment, (2) the period when the underpayment was due and underpaid, and (3) the unpublished quarterly interest rates for underpayments.

Note that the IRS also charges interest on the underpayment penalties.

4. First-time penalty abatement

Question: For the first time ever, I am going to have to file my Form 1040 late. I know I will end up owing taxes when I file the return. Will the IRS be lenient in assessing penalties since I have always been tax-compliant?

Joy Taylor: You may be in luck. The IRS has a little-known first-time penalty abatement policy. It will approve a waiver of the late-filing and late-payment penalties for filers who pay or arrange to pay the tax due and have been tax-compliant for the past three years. The penalties for late payroll-tax deposits and delinquent returns of S corporations or partnerships are also eligible for the waiver if the conditions are satisfied. But the estimated-tax penalty (also called the underpayment penalty) doesn't qualify for this penalty abatement program.

You may have to request the waiver. If you get a notice from the IRS showing a late-payment or late-filing penalty due but not abated, follow the instructions in the letter or call the phone number on the notice. The IRS has said that it will begin to automatically provide first-time penalty abatement to taxpayers who qualify for relief, starting with 2025 tax returns filed this year. But I am not sure whether the IRS has yet implemented this automatic procedure.

About Ask the Editor, Tax Edition

Tax Day 2026 Deals: Food Discounts and Freebies at Subway, Krispy Kreme, TurboTax, and More on April 15

Gabriella Cruz-Martínez — Tue, 14 Apr 2026 16:17:00 +0000

Tax Day is finally here, and unless you’ve filed for free, tax prep can take quite a bite out of your wallet.

To celebrate the end of tax season, which falls on Wednesday, April 15, this year, many restaurants nationwide will offer deals, discounts, and freebies to sweeten your civic duties as a taxpayer.

Whether you are waiting until the last minute to file your taxes, need to file an extension, or have already filed your taxes and are waiting on a refund, don’t miss out on these limited promotions to toast off Tax Day.

Here’s where you can score deals on Wednesday (or even after the 15th in some cases) and make your tax obligations a bit more appetizing.

Burgers and Sandwiches

Shake Shack free burger

Shake Shack is the fastest growing fast casual food chain. (Image credit: Deb Cohn-Orbach, for UCG, Universal Images Group via Getty Images)

From now through April 27, 2026, customers can enjoy a free single Black Truffle Burger, Black Truffle Shroom, or Black Truffle Parmesan Fries with a $10.40 or more order.

To score this deal, enter promo code TRUFFLETAX at checkout

Potbelly bogo tax day

Need to take the edge off of Tax Day? On April 15, if you purchase one Big or Original sandwich at Potbelly, you can get an Original free sandwich with the promo code BOGO.

You can claim your Potbelly deal in-store, online, or by ordering via the app or website.

Burger King

Since Tax Day falls on a Wednesday this year, BK is highlighting "Whopper Wednesday."

Royal Perks members can grab a Whopper for $3.99. Also, check the app for a BOGO Original Chicken Sandwich deal.

Subway "Tax Day Refund"

Subway is turning the dreaded 1040 tax form into something much more appetizing this year with a "Tax Day Refund" for its loyalty members. Through April 28, Sub Club members can use the promo code FLBOGO on Subway.com or the Subway app to buy one footlong and get another for free.

However, the real "refund" happens on Wednesday, April 15, when 1,040 randomly selected members who use that code will receive an extra surprise footlong coupon deposited directly into their account.

"Tax Day can be tough, especially for folks who are getting a bill this year instead of a break when they need it most," Dave Skena, Subway’s Chief Marketing Officer said in a release. "Whether you are using our Buy One Get One Free footlong offer or are one of the 1,040 footlong 'refund' recipients, we hope a freshly made, handcrafted and delicious sandwich from Subway provides some relief."

Sweet Treats

Krispy Kreme tax day special

Krispy Kreme announced a tax day special you don't want to miss if you're a fan of their original glazed donuts. (Image credit: Getty Images)

Need a sweet treat on Tax Day? On Wednesday, April 15, 2026, purchase a dozen Krispy Kreme doughnuts at regular price and receive a second dozen Original Glazed for just the cost of sales tax in your state.

"Finishing your taxes is a big accomplishment, and we think that deserves a reward,” Alison Holder, Krispy Kreme’s Chief Brand and Product Officer, stated in a release. “Our Tax Day offer is a simple, joyful way to celebrate crossing that last thing off your to-do list – and enjoying something sweet once it's finally done.”

For online orders, use code TAXBREAK.

Paris Baguette tax day deal

Are you a rewards member at Paris Baguette? If so, you can get a free pastry with the purchase of any beverage on April 15.

That should make Tax Day a little sweeter this year.

Cool off with a drink

Kona Ice tax day

David Schow hands off a shaved ice to a customer at the Kona Shaved Ice truck in Denver, Colorado. Kona sells shaved ice and has a limited-time deal on Tax Day. (Image credit: Seth McConnell for The Denver Post via Getty Images)

If you want to save your hard-earned money, make sure to stop by Kona Ice on April 15 and celebrate their “National Chill Out Day.”

You can get free shaved ice on Tax Day, just visit your nearest Kona Ice location.

Smoothie King

Meanwhile, if you want to cool off, Smoothie King is offering Healthy Rewards members $3 off on purchases worth $15.

You can also get $4 off if you spend $20 or more.

STK

Some folks may want to top off Tax Day with a drink. At STK, you can enjoy a signature cocktail all day for just $10.40.

The deal is only available at the bar and on the patio at select locations and excludes Boston, Salt Lake City, and Toronto.

Italian and Mexican Food and Pizza

Olive Garden free entree

Olive Garden has a buy-one-get-one-free deal on certain entrees. (Image credit: Getty Images)

At Olive Garden, starting at the price point of $14.99, you can order from a select menu of entrees and choose a salad or soup of your choice. The deal also comes with unlimited breadsticks.

The promotion is available until May 4 and comes with a free entree for you to take home, which can be spaghetti with meat sauce, fettuccine alfredo, or five-cheese ziti al forno.

Customers at Grimaldi's pizzeria chain can receive $10.40 off any order of $40 or higher with the promotion code TAXDAY26 on Wednesday, April 15.

This offer is valid for dine-in, to-go, and online orders, but it cannot be used at locations in Brooklyn (DUMBO) or the Las Vegas Palazzo.

Unlike last year, Tax Day falls on a Wednesday. So, while Grimaldi's famous half-off glasses and bottles of wine deal (Tuesday Tastings) happens the day before, on April 14, military members and veterans can still enjoy their 15% discount every day of the year, including Tax Day, with a valid ID.

Fazoli’s

At Fazoli’s, customers can get a buy-one-get-one-free deal if they order their classic Baked Spaghetti on April 15. Just use the code TAX26, available at select locations.

QDOBA tax day 'Guac Relief'

(Image credit: Getty Images)

QDOBA is leaning into its "free guacamole" policy this year with a Tax Day Guac Relief campaign.

To claim your relief, sign up for QDOBA Rewards and head to www.TaxDayGuacRelief.com to complete a quick survey about a time you were overcharged for guac at another restaurant.

If you "file" your survey by the 11:59 p.m. ET deadline on Wednesday, April 15, you will unlock a $5 Reward toward any full-sized entrée.
The credit will be automatically deposited into your Rewards wallet on Monday, April 20, and will be available for redemption through Sunday, April 26.

"At QDOBA, we want guests to enjoy their meal without paying unnecessary charges for guac. That's why we're proud to offer free guac made with fresh Avocados From Mexico® on our create your own entrees. This tax season, we're offering our Rewards Members real Guac Relief they can taste," Jon Burke, Chief Marketing Officer at QDOBA stated in a release.

More savings

White Castle

At White Castle, you can get 15% off your order with the coupon code WC15OFF on April 15.

Hooters

On April 15, participating Hooters locations will be offering select appetizers for $4.15.

These are dine-in specials available at participating locations to help customers celebrate the end of tax season.

BJ’s Restaurant & Brewhouse

Need a break after crunching those numbers? BJ’s Restaurant & Brewhouse is offering a discount for diners on Wednesday, April 15.

Customers can take $10 off any purchase of $40 or more when they dine in or order takeout.

If you’re ordering through the BJ’s app or website, simply use the promo code TAXDAY at checkout to claim your savings.

TurboTax Uber discount

(Image credit: Eilon Paz/Bloomberg via Getty Images)

TurboTax is offering a $25 Uber ride credit to, or from, a local TurboTax in-person office for tax filing. The offer, available only in select cities, is valid through April 15, 2026.

To take advantage of the deal, you must book an appointment with a local tax expert via the Uber app or the TurboTax booking page.

Free Tax Filing

Tax Day deals: You can still file your taxes for free

The national deadline to file taxes is here, but don’t fret.

The IRS expects more than 140 million taxpayers to file their taxes by the April 15 deadline; however, you can still request an extension to pay or file if you need extra time. Keep in mind that some states and counties may have an extension to file due to recent natural disasters.

While these sweet deals can make your Tax Day a little better, don’t overlook tax credits and deductions on your return if you are eligible for them.

From family tax breaks for dependents and children to new deductions on car loan interest and overtime pay — follow our coverage to make your 2026 tax season easier.

Finally, you can still save on your tax prep and filing.

The IRS Free File tool is eligible for taxpayers with an adjusted gross income (AGI) of $89,000 or less for 2025.
IRS Direct File is no longer available.
More free filing options are available through partnerships with the IRS.

More About Tax Day

Filing Taxes Last Minute? 8 Things to Double-Check to Avoid IRS Issues and Refund Delays

Chrissy Paradis — Tue, 14 Apr 2026 12:37:00 +0000

If you’re still finishing your taxes in April, you’re not alone. The IRS expects about 164 million individual returns this year, and as of early April, tens of millions of taxpayers were still finalizing returns ahead of the deadline.

Filing close to the tax deadline doesn’t automatically lead to penalties or problems — but it does leave less time to catch and fix issues before you submit.

Here’s what to watch for and how to stay on track as the April 15 Tax Day deadline approaches.

1. Missing tax forms?

One of the most common issues in this phase is missing paperwork. With the IRS processing more than 150 million returns each year, forms like 1099s from freelance work, investment accounts, or side income can arrive late or be corrected close to the deadline.

Filing before you have all the required forms can lead to errors or require an amended return (Form 1040-X) later.
And that can create a processing bottleneck, delaying any refund you’re expecting.
Often, a rushed return results in more work and a longer refund wait than simply holding off until you're ready.

So before you file, take a few extra minutes to review your accounts and income sources to make sure nothing is missing.

And if you’re still waiting on tax records, it may be better to bide your time or file for an extension than submit an incomplete return.

2. Personal information errors

Small tax return mistakes can cause big problems at the Tax Day deadline. Surprisingly simple issues can lead the IRS to potentially reject your return or delay processing.

Some common examples include:

A misspelled name
● An incorrect Social Security number
● An outdated address
● Incorrect direct deposit details

These kinds of errors are easy to miss when you’re moving quickly, but they can slow things down more than you might expect. So before submitting your return, double-check your personal information and make sure what's on your return matches your official records.

Tip: Be sure to double-check your filing status, especially if your situation changed during the year due to a marriage, divorce, or the loss of a spouse.

3. Direct deposit information

Entering your banking information is one of the last steps when filing, and one of the easiest places to make a mistake when you’re moving quickly.

An incorrect routing or account number can cause delays. If the account doesn’t match, the bank may reject the deposit and return it to the IRS — or worse, send your tax refund to the wrong place.

According to the IRS, most refunds are issued within a few weeks when direct deposit information is correct, but missing or invalid details can delay the process. As Kiplinger has reported, that's especially been true since the IRS is phasing out paper checks.

Before submitting your return, confirm your payment details are correct.
Also, keep a record of your submission and confirmation from the IRS or your tax software.

4. IRS verification flags on your return

The IRS may flag a return for identity verification, especially if something doesn’t match prior filings or looks unusual. This doesn’t necessarily mean there’s a serious issue.

But if your return is flagged during verification, it won’t be processed until the issue is resolved, which can delay any refund you were expecting.
If the IRS initiates contact after you file, it will typically do so by mail sent to the address on your most recent return.
If you receive a legitimate IRS notice, follow the instructions carefully and respond promptly to avoid further delays.

Note: The IRS has also warned that some scam notices appear legitimate, so verify any communication by checking your IRS online account or calling the IRS directly.

5. Waiting too late on Tax Day to file

IRS systems handle a surge of traffic on Tax Day, which is April 15 for most filers. While that usually isn’t an issue, last-minute filing can lead to technical problems or longer upload wait times.

If you run into a technical issue close to the deadline, you may not have enough time to fix it before the cutoff.

Filing earlier in the day can give you more time to deal with any issues if something doesn’t go through on the first try.

6. Payment deadlines If you owe taxes

If you owe taxes, an extension gives you more time to file, but it doesn’t change your payment deadline.

You can pay online through IRS Direct Pay, a debit or credit card, the Electronic Federal Tax Payment System (EFTPS), or by setting up a payment plan if needed.

Make sure to double-check your information and keep a record of your payment confirmation.

7. Missed or incorrect tax credits and deductions

Tax credits and deductions can lower your tax bill or increase your refund, but they’re also easy to overlook when you’re rushing to file.

Missing a credit you qualify for — or entering incorrect information — can affect your final numbers and potentially delay processing if something doesn’t match IRS records.

Common areas to double-check include education credits, child-related tax benefits, and deductions tied to self-employment or business expenses.

Before you file, review the tax breaks you’ve claimed and make sure they’re accurate and complete based on your records. Consulting with a tax professional is a good idea if you're uncertain.

8. State tax deadlines that differ from federal Tax Day

While most states stick to the April 15 deadline, not all do. In Virginia, for example, state tax returns are typically due May 1, while Hawaii filers usually have until April 20.

Depending on where you live, your state deadline may not match the federal timeline.

And in some cases, deadlines can shift even further. The IRS and state tax agencies may extend filing and payment deadlines for taxpayers in areas affected by natural disasters, such as hurricanes, wildfires, or severe storms.

Already Filed Your Taxes but Need to Make a Change? Mistakes the IRS Will Fix and Red Flags That Could Delay Your Refund

Chrissy Paradis — Mon, 13 Apr 2026 13:47:00 +0000

As the April 15 tax deadline approaches, it’s common to take a second look at your return and spot a few things you wish you’d done differently.

But before you panic, it’s important to know that while some errors are easily fixed, others are much harder to change once your return is in the hands of the IRS.

The key is knowing which mistakes are worth correcting. In some cases, rushing to change a minor detail can stretch your processing time out for months, only to lead to the same outcome. Here's more to know.

What you can change on your taxes after you've filed them

Some updates can be made after your return is submitted. However, in many cases, the IRS requires filing an amended return using Form 1040-X.

Common triggers for needing to amend include:

Reporting Missed Income: This is common if a 1099 or W-2 arrived late or was updated after you hit submit.
Life Events: Significant changes, like a marriage, birth, or adoption, or the death of a loved one, can fundamentally shift your filing status and eligibility.
The Qualifying Relative: Realizing after filing that you provided more than half the support for an aging parent could unlock the $500 Credit for Other Dependents.
Maximizing Credits: A minor oversight on a child's residency or age could mean missing out on the $2,200 Child Tax Credit. Or if you filed before your school sent the final 1098-T form, you might have missed the American Opportunity Tax Credit (AOTC), which can shave up to $2,500 off your tax bill.

Example: When to amend your return

The Situation: You filed in February, but in March, you realize you forgot to claim the new deduction for your car loan interest or your qualified overtime pay.

The Result: Because these new 2025 deductions could directly lower your taxable income, filing a 1040-X is likely worth the wait. It could increase your refund by hundreds of dollars.

Note: This is a simplified example. Whether you should amend your return will depend on your specific tax situation.

Overall, if a change affects what you owe the IRS or how much money you get back, it’s typically worth correcting. However, if you're uncertain, consulting a tax professional can help you decide if the math justifies the extra paperwork.

What’s harder to change after you submit your return

Some decisions are effectively locked in once your return is filed, especially after the Tax Day deadline passes.

Certain tax elections and filing choices are only available up to the original filing deadline. However, once that window closes, your ability to change direction is limited, even if new information comes to light.

Some examples:

The Joint to Separate Rule: If you and your spouse filed a joint return, you generally cannot change your mind and switch to "Married Filing Separately" once the April 15 deadline has passed.
Irrevocable Elections: Certain technical choices, like electing to forgo a "net operating loss carryback" or specific business accounting methods, are often permanent once submitted on an original return.
The 65-Day Rule for Trusts: If you are a trustee, the window to "push" 2025 income out to beneficiaries to lower the trust's tax bill (known as the 65-day election) closes in early March. If you missed that window, you can't "amend" your way back into it later.

When to fix a tax mistake — and when to leave it alone

Notably, not every mistake requires you to file an amended return. Often, the IRS catches and corrects simple math errors for you.

As Kiplinger has reported, under the recently enacted IRS MATH Act, the agency is now required to be much more transparent about these "automatic" fixes.

If the IRS adjusts your return, they must send you a detailed notice explaining exactly which line they changed and why, giving you a clear 60-day window to disagree with their assessment.

Example: When to leave it alone

The Situation: You realize you accidentally typed "$5,200" instead of "$2,500" for a single line of income, but your tax software already caught the discrepancy in your final total.

The Result: If it's a "transposition error" that doesn't change your final tax owed, the IRS will likely reconcile it during processing. Filing an amendment for a $0 change only puts your return at the back of a 20-week line for no reason.

For more information, see Kiplinger's report: Made a Tax Return Mistake? A New IRS Law Could Help You Fight Back.

Overall? If the mistake doesn't change your tax liability or your refund, filing an amendment may not be worth the potential processing delay.

But keep in mind, the above is a simplified example. Your specific tax situation will determine whether an amended return makes sense.

What happens when you file an amended return

Amended returns take longer to process than standard filings.

While some electronic amendments move faster, the IRS officially presents a timeline of 16 to 20 weeks for full processing.

In some cases, tax pros recommend waiting until your originally filed return has been processed and you’ve received your initial refund (if any) before filing an amended return.

What can trigger the IRS to flag your return for review?

If your reported income doesn’t match what’s on file with the IRS (from employers or banks), the system may flag your return. This "mismatch" is a key cause of delays and often occurs with freelance work or investment accounts.

When a return is flagged for inconsistency or identity verification, it moves to a manual review queue.

Taking a few extra minutes to ensure your 1099s match your filing can prevent your refund from being stuck in a months-long backlog.

Changing your tax return after filing: Bottom line

Filing your taxes is a major step, but it’s not always the final one for everyone.

By understanding what the IRS fixes automatically and what requires a 1040-X, you can avoid unnecessary IRS processing delays and make more confident decisions about your money.

Don’t Make These 5 Common Mistakes on Your Tax Return

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IRS Tax Refund Schedule 2026: When Will Your Refund Arrive?

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Ask the Editor, April 3: Questions on Tax Return Filing Deadline

joy.taylor@futurenet.com (Joy Taylor) — Fri, 03 Apr 2026 13:15:00 +0000

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at five questions on the due date for filing your federal tax return and related queries. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Form 1040 due date

Question: What is the due date for filing the 2025 Form 1040?
Joy Taylor: April 15 is the general filing deadline for Form 1040. If you can't file by then, you can request a six-month filing extension to file by October 15.

Some taxpayers get more time without having to file an extension.

Members of the military on duty outside the United States have until June 15 to file returns (but they must still pay taxes they owe by April 15).
U.S. citizens who live and work outside the United States have until June 15 to file returns (but they must still pay taxes they owe by April 15).
Active-duty military serving in combat zones have at least 180 days after leaving the combat zone to file and pay taxes.
Taxpayers in certain federally declared disaster areas have more time to file and pay taxes as set by the IRS.
This year, employees of the Dept. of Homeland Security who are impacted by the partial government shutdown have until May 15 to file returns and pay their taxes.

2. Tax return filing extension

Question: I think I will owe taxes this year when I file my Form 1040. If I file for an extension, can I delay paying my taxes until October 15?

Joy Taylor: Unfortunately, no. If you file for a six-month extension, the extra time extends only to filing your return, not to paying any taxes you owe. If you opt for a filing extension, you will have to estimate your tax liability to the best of your knowledge and pay the taxes that you think you will owe when you submit the filing extension on or before April 15.

You can get a filing extension in multiple ways, such as the following:

Use Free File on the IRS's website.
Pay through the Electronic Federal Tax Payment System or Direct Pay service and mark "extension."
Mail or electronically file IRS Form 4868 with your payment.

3. Getting a refund

Question: I have delayed filing my 2025 Form 1040, even though I know I will be getting a refund this year. If I'm not ready to file by April 15, do I have to request a filing extension?

Joy Taylor: No. Filing a refund return late will not subject you to penalties. That's because taxpayers owe late-filing or late-payment penalties only if they owe tax, not if they get a refund from the IRS.

4. Can't pay my taxes

Question: I haven't yet filed my 2025 tax return. That's because I know I will owe taxes, and I don't have the money to pay the tax bill. Should I just delay filing my tax return until I can come up with the money to pay my taxes?

Joy Taylor: No, you don't want to do that because the IRS will hit you with penalties. If you cannot pay the tax you owe by April 15, timely file your tax return anyway and pay what you can. Look into applying for an IRS online payment plan or submitting an offer in compromise with the IRS. If you have financial hardship, you can contact the IRS to request a temporary collection delay until your financial condition improves.

The IRS has a simple payment plan for individuals who owe $50,000 or less in taxes, penalties and interest. To set up a plan, you can use your IRS online account if you have one or call the IRS's main number. There are also options for other short-term and long-term payment plans.

5. One-time penalty abatement

Question: For the first time ever, I will have to file my tax return late and pay my taxes late. Does the IRS have any penalty relief for first-time offenders?

Joy Taylor: Yes. The IRS has a first-time penalty abatement policy for taxpayers who file a late return or pay their taxes late. The IRS will approve a waiver of the late-filing and late-payment penalties for filers who pay or arrange to pay the tax due and have been tax-compliant for the past three years. The penalties for late payroll-tax deposits and delinquent returns of S corporations or partnerships are also eligible for the waiver if the conditions are satisfied. But the estimated-tax penalty doesn’t qualify for this penalty abatement program.

You have to request the waiver. Currently, the IRS doesn’t give it automatically. If you get a notice from the IRS with tax due and penalty charges, follow the instructions in the letter or call the phone number on the notice.

We understand that the IRS may have begun, or will soon, automatically provide first-time penalty abatement to taxpayers who qualify for relief.

About Ask the Editor, Tax Edition

Ask the Editor, March 27: Questions on the Tax Filing Season

joy.taylor@futurenet.com (Joy Taylor) — Fri, 27 Mar 2026 10:30:00 +0000

Each week in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week, she's looking at four questions on the IRS and how the 2026 tax filing season is going so far. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Calling the IRS

Question: I have been trying to reach the IRS on its main toll-free number (800-829-1040), but I can't reach a live person. Is this the norm?

Joy Taylor: Yes. Unfortunately, taxpayers and tax professionals are having a difficult time trying to reach the IRS by telephone. The agency just doesn't have enough workers to handle the volume of calls. So there are a lot of disconnects, and the wait times are very long.

I was recently in a meeting with an individual who was on hold with the IRS's main 1-800 number for 91 minutes before she got disconnected. She never was able to speak with a live person.

If you have a question on whether you qualify for a specific tax break or other type of tax law query, you might try using the IRS's interactive tax assistant online tool. All you need to do is enter some basic facts, and it will give you an answer. There are nearly 60 topics, including whether you need to file a tax return, who qualifies as dependents, exceptions to the 10% excise tax on early IRA distributions, amended returns and much more.

2. Delayed paper refund checks

Question: I am a tax return preparer, and I have filed returns for clients without bank accounts. These clients are now receiving letters from the IRS asking them to provide bank account information so that the IRS can deposit their refunds directly into their bank accounts. Is this normal?

Joy Taylor: Unfortunately, yes. It's part of the IRS's process of phasing out paper refund checks in accordance with President Trump's March 2025 executive order.

Individuals who are requesting paper refund checks when filing their Form 1040 are seeing their refunds delayed. The IRS is mailing letters to filers whose 1040s claim a refund but omit bank account details for direct deposit. These notices ask the filers to supply their bank account account information within 30 days or say why they can’t. Nonresponders will eventually get refund checks by mail, but they’ll have to wait at least six weeks past the 30 days until they see their money.

As of mid-March, the IRS mailed more than 1 million of these notices to taxpayers.

3. Finding a tax return preparer

Question: I am looking for someone to help me prepare my Form 1040. Do you have any thoughts on where I should look to find a reputable tax preparer?

Joy Taylor: You probably want a credentialed tax return preparer, meaning someone vetted by the IRS, a state or a regulatory board. The most common are CPAs, lawyers and enrolled agents. One way to find a credentialed preparer near you is to use the IRS's online Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. It lists the following tax professionals who have active preparer tax identification numbers:

CPAs
Lawyers
Enrolled Agents
People who completed the requirements for the IRS's voluntary annual filing-season program

4. IRS online individual accounts

Question: I have heard a lot lately about IRS online individual accounts. Can you explain what they are and how to create one?

Joy Taylor: Yes. Individuals can sign up for an online IRS account that could make their tax dealings with IRS easier and faster, many tax professionals say. Among the features of these accounts:

Pay estimated taxes
Access tax transcripts and other records
View digital notices from the IRS
Check the status of your tax refund or a filed amended return
Make tax remittances
Apply for a payment plan if you owe back taxes to the IRS

The IRS has a web page for setting up an online account for individuals. Note that before you create the account, you will first need to have an ID.me account so that the IRS can verify your identity. You will have to either submit a photo of your government ID and a selfie or participate in a live video chat with an ID.me representative. The process can be a bit burdensome, but it does add extra security.

About Ask the Editor, Tax Edition

Tax Changes That Could Lower Your 2025 and 2026 Bills

kiplinger@futurenet.com (Sandra Block) — Fri, 20 Mar 2026 13:30:00 +0000

Filing your taxes as early as possible has always been a good idea. It’s the most effective way to thwart crooks from submitting a fraudulent return in your name, claiming a refund. And if you are due a refund, the sooner you file, the sooner you’ll have the money in your pocket.

This year, it’s even more important than usual to get a head start on preparing your return. As a result of tax legislation enacted in July 2025, known by some as the One Big Beautiful Bill (OBBB), you’ll need to navigate a thicket of new provisions, covering everything from car loans to property taxes to an extra deduction for those 65 and older.

The good news is that thanks to the OBBB, reductions in federal income tax rates that were included in the 2017 Tax Cuts and Jobs Act — and that were set to expire at the end of 2025 — are now permanent, so taxpayers won’t face a tax hike in 2026.

In addition, the OBBB made permanent an enlarged estate tax exemption that was included in the TCJA. In 2026, estates worth up to $15 million, or $30 million for a married couple, won’t be subject to federal estate taxes. With an exemption of that size, the vast majority of taxpayers won’t have to worry about paying federal estate taxes at rates that range from 18% to 40%.

The exemption will be adjusted annually for inflation; without congressional action, it would have dropped to about $7 million per person in 2026.

Along with extending TCJA provisions that are favorable for many taxpayers, the OBBB contains several tax breaks, expiration dates and other changes that you might miss if you wait until the last minute to file.

Here’s a look at provisions in the bill that could increase your 2025 refund or lower the amount you owe, along with other information to keep in mind as you prepare your return — including ways to make sure you get all the tax breaks you’re owed.

New and noteworthy

Below are some of the most significant tax-related changes from the 2025 tax and spending bill.

Senior bonus deduction

Many taxpayers who are 65 or older will be eligible to claim an additional deduction of $6,000 on their 2025 tax return. This senior bonus deduction, which is scheduled to expire at the end of 2028, comes on top of an existing increase in the standard deduction of $2,000 for single filers who are 65 or older or, for married couples who file jointly, $1,600 for each spouse who is 65 or older.

The expanded deduction means a single taxpayer who is 65 or older will be able to deduct up to $23,750 from taxable income, while a married couple who files jointly will qualify for a deduction of up to $46,700, assuming both are 65 or older. You can claim this additional deduction whether you itemize or take the standard deduction on your 2025 tax return.

The bonus deduction will apply only to taxpayers whose income exceeds the amount of the deduction, so low-income seniors won’t benefit from this tax break.

At the other end of the spectrum, high-income taxpayers could see the amount of the bonus deduction reduced or eliminated altogether. The deduction starts to phase out for married couples with modified adjusted gross income (MAGI) of more than $150,000 and is fully phased out at MAGI of $250,000 ($75,000 and $175,000, respectively, for single filers). Your MAGI is your adjusted gross income with certain deductions added back.

The additional deduction won’t affect how your Social Security benefits are taxed. Taxes on Social Security benefits are based on your combined (or provisional) income, which consists of half of your benefits, your adjusted gross income and any tax-exempt interest, such as interest from municipal bonds. Depending on the amount of your combined income, up to 85% of your benefits are taxable.

The senior bonus deduction is a so-called below-the-line deduction, which means it reduces your taxable income but doesn’t lower your AGI.

"Taxation of Social Security hasn’t changed, but your overall tax bill may be lower because of this deduction," says Catherine Valega, a certified financial planner and enrolled agent with Green Bee Advisory in Burlington, Mass.

Likewise, the bonus deduction won’t shield high-income Medicare beneficiaries who pay a surcharge, known as the income-related monthly adjustment amount (IRMAA), on their Part B and Part D premiums. The surcharge is based on your MAGI, which is also calculated before the deduction applies.

Higher deduction for state and local taxes

Those who itemize will be able to deduct up to $40,000 in state and local taxes (SALT), up from a cap of $10,000 in 2024. The cap will be increased by one percentage point each year through 2029, then returns to $10,000 in 2030.

The SALT deduction allows taxpayers who itemize to deduct property taxes, including personal property taxes on cars and boats. You can also deduct either state and local sales taxes or state and local income taxes, but not both. The increased SALT cap will primarily benefit taxpayers in states with high property taxes, such as New Jersey and New York.

But like the senior bonus deduction, the cap is phased out for higher-income taxpayers. It’s gradually reduced for taxpayers with MAGI above $500,000 ($250,000 for a married individual filing separately), and taxpayers with MAGI of $600,000 or more will be limited to deducting $10,000 on their tax returns.

Since the 2017 Tax Cuts and Jobs Act expanded the standard deduction, only about 10% of taxpayers have itemized. However, the higher cap for state and local taxes will likely increase the percentage of taxpayers who are better off itemizing, says Laurette Dearden, a CFP and certified public accountant in Laurel, Md.

If your 2025 property taxes exceeded the $10,000 cap, it’s worth taking the time to track down your 2025 spending on charitable contributions, mortgage interest, unreimbursed medical expenses that exceed 7.5% of your AGI, and other expenses that qualify as itemized deductions to see whether it makes sense to itemize instead of taking the standard deduction.

Expanded tax breaks for families

For 2025, eligible parents can claim a tax credit of $2,200 per child, up from $2,000 for 2024. The child tax credit (CTC) phases out for singles with modified adjusted gross income of $200,000 or more and married couples who file jointly with MAGI of $400,000 or more.

Eligible taxpayers can claim a credit of up to $500 for other dependents, such as an aging parent or another adult relative whom you support and claim as a dependent on your tax return.

If you adopted a child in 2025, you can claim a credit of up to $17,280 of eligible expenses, and up to $5,000 of the adoption tax credit will be refundable. That means taxpayers with a tax liability of less than $5,000 can still claim that portion of the credit, and some of that amount could be returned as a refund.

A deduction for car buyers

A $7,500 tax credit to buy or lease qualified electric vehicles, along with a $4,000 credit for eligible used EVs, ended September 30, 2025. (You can find the complete list of vehicles that qualify for the credit here.)

If you purchased an eligible vehicle before September 30 and claimed the credit when you bought the vehicle — meaning, basically, that you transferred the credit to the dealer, who passed it on to you in the form of a discount — you must report the transaction on Form 8936.

The seller should have given you a document that shows the vehicle’s eligibility for the credit, which you’ll use to complete the form. You can also use Form 8936 to claim the credit if you didn’t receive it when you purchased your EV.

Prices for cars and trucks rose in 2025, pushing the average monthly loan payment to $748 for a new car and $532 for a used car, according to Experian. However, depending on the type of vehicle you bought, you may be able to deduct up to $10,000 of loan interest. You don’t have to itemize to claim this deduction, but it’s available only for loans taken out to buy new cars assembled in the United States, which rules out many popular models.

The location of final assembly should be located on the vehicle-information label attached to the car or truck at the dealer’s lot; you can also find out where the vehicle was assembled by plugging the vehicle identification number (VIN) into the National Highway Traffic Safety Administration’s VIN decoder website.

The deduction, which is available for qualified vehicles purchased between 2025 and 2028, phases out for individuals with a modified adjusted gross income higher than $100,000 or married couples making over $200,000.

Taxes on your winners

Last year was a great year for investors in the stock market, with the S&P 500 index rising 18%. If you sold investments held for one year or less, your gains will be taxed at your ordinary income tax rate, which tops out at 37% for high earners. Assets held for more than a year are taxed at long-term capital gains rates, which range from 0% to 20%, depending on the amount of your income.

But stocks, mutual funds and exchange-traded funds weren’t the only big winners in 2025.

If you cashed in on any of these assets or activities, you may also owe the IRS a piece of the pie:

Cryptocurrency

Bitcoin hit a record high in 2025, attracting professional and mainstream investors alike. If you invested in bitcoin or other cryptocurrency and took some of your profits off the table, those gains are taxed the same way that gains from the sale of stocks, bonds and other capital assets are taxed.

You’ll owe taxes on your gains even if you used your bitcoin to buy something. When you fill out Form 1040, you’ll be asked whether you received, sold, exchanged or otherwise disposed of a digital asset in 2025, which indicates that the IRS takes these transactions seriously.

Gold

If you took advantage of record gold prices to sell shares of gold-mining companies, or mutual funds and ETFs that invest in gold-mining companies, you’ll pay the same capital gains tax you’d pay for any investment. But the IRS treats profits from the sale of physical gold — such as gold bars and coins — differently.

Those assets are taxed as collectibles, with a top long-term capital gains rate of up to 28%, depending on your income. If you invested in an ETF that’s backed by physical gold, such as SPDR Gold Shares, you’ll also pay the higher collectibles rate for long-term capital gains.

While you’re supposed to report the profits from any sale of gold, the IRS is unlikely to come after you if you sold your grandfather’s cuff links for a couple of hundred dollars to a "We Buy Gold for Cash" retailer. But dealers are required to report sales of gold bars and coins on Form 1099-B if certain conditions related to purity and quantity are met.

If you receive a Form 1099-B, you’ll owe taxes on the difference between the amount you paid for the items — known as the basis — and the amount you received in the sale. If you received the items as a gift, the basis is the amount the gift-giver paid for the items; for inherited collectibles, the basis is the fair market value of the items on the date of the donor’s death. Tracking down the basis is critical, because otherwise the IRS will tax you on the entire proceeds of the sale, says Miklos Ringbauer, a CPA in Los Angeles.

Gambling

The rapid growth of online sports gambling has made it possible to bet on everything from the outcome of a college basketball game to the length of the national anthem at the Super Bowl. Nearly 60% of Americans participated in some form of gambling in the past year, according to the American Gambling Association.

If your bet paid off, your winnings are taxable. If you received at least $600 and your payout was at least 300 times the amount of your wager, you’ll probably receive a Form W-2G, which you’ll use to report your payout as "other income" on Form 1040. In most cases, if you win more than $5,000 and the payout is at least 300 times the amount of your bet, the IRS requires the payer to withhold 24% of your winnings for income taxes.

You can reduce taxes on your winners by deducting your losses — but only if you itemize, and you can’t deduct losses that exceed the amount of your winnings. For example, if you won $100 and lost $300 at the casino, you can deduct only $100. A provision in the new tax law adds another wrinkle: Starting in 2026, you will be allowed to deduct only 90% of your losses, Valega says.

Last-minute tax savers

Before you send your tax return to the IRS (or instruct your tax preparer to do the same), make sure you’ve made the most of tax-advantaged contributions that could lower your 2025 tax bill while enhancing your retirement and health care security.

IRAs

You have until April 15, 2026, to contribute to a tax-deductible IRA. Deductible contributions to a traditional IRA will reduce your adjusted gross income on a dollar-for-dollar basis, which could also make you eligible for other tax breaks tied to your AGI.

If you’re not enrolled in a workplace retirement plan, for 2025 you can deduct IRA contributions of up to $7,000, or $8,000 if you were 50 or older. Workers who have a company retirement plan but earn less than a certain amount may qualify to deduct all or part of their IRA contributions.

For 2025, this deduction phases out for single taxpayers with AGI between $79,000 and $89,000 and for married couples who file jointly with AGI between $126,000 and $146,000. If one spouse is covered by a workplace plan but the other is not, the spouse who isn’t covered can deduct the maximum contribution as long as the couple’s joint AGI doesn’t exceed $236,000. A partial deduction is available if the couple’s AGI is between $236,000 and $246,000.

If you worked for yourself in 2025 or had a side gig, you can sock away even more money. You have until April 15 — or October 15 if you file for an extension — to set up and contribute to a SEP IRA, a retirement plan designed for self-employed workers, small businesses and sole proprietors. For 2025, you can deduct contributions of as much as 20% of net income, up to a maximum of $70,000.

You also have until April 15 to contribute to a Roth IRA for 2025. Contributions to a Roth are after-tax, so they won’t lower your tax bill. But as long as you’re 59½ or older and have owned your Roth for at least five years, withdrawals are tax-free.

Here, too, there are income limits. For 2025, single taxpayers with modified adjusted gross income of less than $150,000 can contribute the full amount; those with income between $150,000 and $165,000 can make a partial contribution. Married couples who file jointly can make the full contribution if their MAGI is less than $236,000; those with MAGI between $236,000 and $246,000 can make a partial contribution.

In the past, you could make only pretax contributions to a SEP, but legislation enacted in late 2022 allows SEP providers to offer a Roth option.

Health savings accounts

You have until April 15 to set up and fund an HSA for 2025. An HSA offers a triple tax break: Your contributions are tax-deductible (or pretax if made through payroll deduction), the money grows tax-deferred, and withdrawals used to pay qualifying medical expenses are tax-free.

To contribute to an HSA, you must have had an eligible high-deductible health insurance policy that went into effect no later than December 1, 2025. The deductible must have been at least $1,650 for individual coverage or $3,300 for family coverage. You can contribute up to $4,300 to an HSA for 2025 if you had single coverage, or $8,550 if you had family coverage.

Those who were 55 or older in 2025 can stash away an additional $1,000. The money in your account will grow tax-free, and withdrawals to pay medical expenses are also tax-free.

Planning for 2026

Once you’ve filed your 2025 tax return, we wouldn’t blame you for taking a hard-earned break. Walk the dog, go to a movie, or do something else that’s more relaxing than poring over your Form 1099s.

But after that, carve out some time to plan ways you can lower your 2026 taxes. With your tax information readily available, this is the ideal time to do it. Some new provisions could affect your 2026 tax bill:

New rules for charitable contributions

If you usually claim the standard deduction, you may have fallen out of the habit of tracking your charitable contributions. But starting in 2026, taxpayers who don’t itemize can deduct up to $1,000 in charitable contributions, or up to $2,000 for married couples who file jointly. Donations to donor-advised funds and private foundations aren’t eligible for this new deduction.

Meanwhile, those who itemize on their tax returns will be subject to a new limit on the amount of charitable contributions they can deduct. That amount has long been limited to a percentage of their adjusted gross income, ranging from 20% to 60%, depending on the type of gift and the recipient. The amount of cash gifts donors can deduct will remain at 60% of AGI in 2026.

However, the deduction will be limited to the amount of charitable contributions that exceeds 0.5% of your adjusted gross income. For example, a couple with an AGI of $300,000 can only deduct charitable donations in excess of $1,500.

If you’re 70½ or older, one way around this new cutoff is to use qualified charitable distributions to benefit your favorite charities, says Tim Steffen, director of advanced planning at Baird.

In 2026, taxpayers who are 70½ and older can transfer up to $111,000 from a traditional IRA directly to charity. QCDs can be done only from an IRA, either one that you own or an inherited IRA. A QCD will reduce your adjusted gross income, and it isn’t subject to the 0.5% haircut on charitable contributions.

Larger catch-up contributions for workplace retirement accounts

The total employee contribution limit to all 401(k) and 403(b) plans for those younger than 50 will increase from $23,500 in 2025 to $24,500 in 2026. The limit for catch-up contributions will rise from $7,500 in 2025 to $8,000 in 2026, so if you’re 50 or older, you can contribute up to $32,500 in 2026.

Participants who are between ages 60 and 63 in 2026 are eligible for a special catch-up contribution of $11,250, meaning they can contribute a total of $35,750.

Changing requirements for high earners who contribute to a 401(k)

Starting in 2026, if you earn more than $150,000 in the previous calendar year, all catch-up contributions at age 50 or older will need to be made with after-tax dollars to a Roth 401(k), 403(b) or 457(b).

There are a lot of good reasons to add a Roth to your retirement portfolio. Withdrawals are tax-free as long as you’re at least 59½ and have owned the account for five years. And you won’t have to take required minimum distributions from a Roth account.

But if you’re a high earner and lose the ability to deduct catch-up contributions to a traditional 401(k), that may cause your 2026 adjusted gross income to increase, which could make you ineligible for tax breaks tied to your AGI. You may want to consult with a tax professional about strategies to offset the loss of this deduction.

Where to get free help

The Trump administration shut down the IRS Direct File program, which allowed taxpayers in more than two dozen states to file their 2024 tax returns directly with the IRS at no cost. However, IRS Free File, a partnership between the IRS and private tax-preparation companies, will still be available to eligible taxpayers.

This year, taxpayers with 2025 adjusted gross income of $84,000 or less can prepare and electronically file their federal tax returns for free through one of the participating Free File programs.

If you need help preparing your return, the AARP Foundation Tax-Aide service provides free assistance from IRS-certified volunteers at more than 3,600 libraries, malls and other locations around the U.S., with a focus on taxpayers older than 50 who have low to moderate income. Use the AARP Tax Locator to find a site near you.

Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.

7 Bad Tax Habits to Kick Right Now

Kate Schubel — Tue, 10 Feb 2026 15:27:00 +0000

Does the idea of filing your tax return make you wait until the last minute? Do you only start gathering your tax documentation at year-end? You aren’t alone.

Every year, taxpayers can fall into "bad tax habits" that seem convenient in the short run but may later lead to significant refund delays or even a dreaded IRS audit. Fortunately, there are simple, strategic shifts you can make right now to kick these bad habits to the curb.

From tracking your "sweat equity" to staying informed through tax podcasts, here are several ways you can avoid common bad tax habits in 2026.

1. Disorganized tax documents

We're all disorganized from time to time, especially when it comes to something as mundane as filing income taxes.

But when you don't keep track of your itemized receipts or fail to maintain proper tax records, you risk filing an inaccurate return, which could lead to lost deductions, expensive penalties, and a higher risk of an IRS audit.

How to kick the "feels poorly organized" tax habit:

The 15-minute review. Set aside 15 minutes weekly to organize your tax documents. By breaking tax file preparation into smaller chunks, you'll feel less daunted by the task and more prepared come the April 15th tax deadline.
Digitize your tax records. Ditch the physical folder for a secure, encrypted cloud database or dedicated tax-scanning app. Most tax software now allows you to upload photos of receipts and other documentation directly from a digital folder.
"Disaster-proof" your plan. Maintain one or two backup copies of all tax documentation. That way, if a disaster occurs (like hardware failure, fire, or flood), you won't have to start your tax filing all over again.

2. Waiting until the last minute to file taxes

Are you delaying your filing because you're convinced you don't have every single piece of paperwork?

Although waiting for a final 1099 or Form W-2 to arrive in the mail is prudent, procrastinating simply because you can "do it later" is another common bad tax habit. Left unfettered, this practice can lead to filing errors, tax refund delays, and even increase the risk of identity theft, since criminals often file earlier in the season.

How to kick the "wait until the last minute" tax habit:

Reframe the task. View taxes like you would a medical check-up. This is your opportunity to assess your economic health, ensure your withholding is correct (more on that later), and maximize your tax breaks.
Remember that you're beating the fraudsters. Data shows that early filers are significantly less likely to be victims of tax-related identity theft. That's because the IRS accepts returns on a first-come, first-served basis. So if a criminal steals your Social Security number and files before you, your return could get rejected.

Tax Tip

Never file your income taxes before you have verified that all information is accurate and complete.

Working on your income tax return early can help you avoid costly mistakes. (Image credit: Getty Images)

3. Accidentally forgetting or misreporting income

According to a recent survey conducted by Finder.com, roughly 33% of Americans with side gigs fail to report that income.*

That's a problem, considering the IRS receives copies of your 1099s (where side income is often reported), and can tell when an amount isn't reported. This may result in automatic notices, penalties, and interest owed on the unreported income.

How to kick the "unreported income" tax habit:

Don't rely on your memory. Log in to your third-party payment processors (PayPal, Venmo, Uber, etc.) and ensure you're reporting all your income.
Go on a tax scavenger hunt. Search places you normally wouldn't for any spare income you need to report. For instance, you might check your email inbox for keywords like "1099" or "Tax Statement," or you might scroll through your bank account for unexplained checks, transfers, or deposits.
Log as you go. Use a simple spreadsheet or app to log every payment that you find during your tax scavenger hunt. By tracking income in real-time, you'll eliminate the need for a "hunt" next tax year.

*The survey was conducted in 2017 on 2,245 Americans, ages 18 to 88.

4. Mixing personal and business expenses

While we're on the subject of side gig income, it's incredibly important to remember that your business and personal expenses should be kept separate. The IRS strictly disallows any personal items to be counted on your federal income tax return.

Consistently failing to keep business and personal finances separate can lead to unclaimed tax breaks, an increased risk of an IRS audit, and even expose a taxpayer's personal assets to business lawsuits or debts.

How to kick the "mixing personal and business" tax habit:

Maintain separate accounts. You should have dedicated business accounts for credit cards, banks, and third-party payment processors. These should be different from the ones you use to split dinner checks with friends.
Pay yourself a "draw." Don't use your business account as a personal ATM. Instead, regularly transfer a set amount from your business account to your personal account. This creates a clean "salary" trail to help protect the integrity of your business structure.
Monthly reconciliation. Set aside time at the end of each month to "reconcile" your accounts — tracking every expense in your business folder. If you see a charge for a hair salon or grocery haul in your business ledger, correct the error immediately.

5. Missing cost basis

For many, the "cost basis" of a stock, cryptocurrency, or piece of real estate may sound confusing, but ignoring this crucial tax topic can be a costly bad habit.

Simply put, the cost basis of an asset is typically the purchase price plus any commissions, fees, or (in the case of your house) home improvements. You use the cost basis to determine your taxable gain or loss when you sell the asset.

Only using the purchase price (and not any of the additional factors) can cause you pay more in capital gains tax when you sell. Basically, you'd pay tax on profit that doesn't exist.

How to kick the "miscalculated cost basis" tax habit:

Track your "sweat equity." Homeowners should maintain a permanent file for new additions and other renovations. These costs increase your basis and can significantly lower your taxable gain if you sell your home.
Audit your 1099-B and 1099-DA. Don't assume your brokerage or crypto exchange has the right numbers, especially for assets transferred between platforms. Cross-reference your 1099-B (for stocks) and the new 1099-DA (for digital assets) with your own records.
Watch your "wash sale" rule. If you sold a stock at a loss but bought a "substantially identical" one within 30 days, your loss is disallowed for now and instead added to the basis of the new stock.

Carefully review your income tax return to ensure you are claiming all eligible tax deductions, credits, and exemptions. (Image credit: Getty Images)

6. The "same as last year" filing trap

It's easy to feel overwhelmed by tax law changes, especially this year.

The 2025 Trump/GOP tax and spending bill introduced a wave of new temporary breaks, like the overtime and tip deductions, the car loan interest deduction, and the "senior bonus" deduction.

Trapped by choice paralysis, you might think it's easier to just go with what you did last year and ignore the new tax law changes. However, you could miss out on new tax breaks you might be eligible to claim, resulting in a higher income tax liability than required.

How to kick the "same as last year" tax habit:

The 20-minute rule scan. Instead of cramming into one weekend what the new tax bill might mean for you, dedicate 20 minutes per week throughout the tax season to read through reputable tax news. Look for any updates that apply to your lifestyle.
Leverage "smart" newsletters. Subscribe to reputable tax-focused alerts or listen to policy podcasts during your commute. The IRS and state agencies typically ramp up their recent social media presence during tax season.
Perform a comparison check. Before you hit submit, do a side-by-side comparison of last year's return with your current draft. If your "other deductions" line looks identical, double-check that you didn't miss any 2026 tax season updates.

Subscribe to Tax Tips: A no-cost weekly newsletter to help you navigate the shifting federal and state tax landscape, news, and policy changes that matter most.

7. Federal tax withholding mistakes

Although a large tax refund may feel like a bonus, getting a big deposit from filing taxes is often the result of another bad tax habit: over-withholding.

Essentially, a big tax refund means you gave the government an interest-free loan of your money, when those funds could've been invested elsewhere. Alternatively, withholding too little tax from your paycheck can result in a large, unexpected tax bill at year-end.

How to kick the "fail to optimize withholding" tax habit:

Use the 2026 estimator. The IRS tax withholding tool allows you to determine how much tax should be withheld from your paycheck. (Though the tool does not yet have all the recent tax policy changes from the new Trump tax law.)
Look for "life events." If you got married, had a child, or started a side hustle, you should immediately update your withholding elections with your employer on Form W-4.
Review your pay stubs. Check your payroll portal regularly to be sure your elections were applied correctly by your employer. You can do this through a quarterly check against your projected 2026 tax liability.
Aim for zero. The gold standard of tax planning is owe nothing and get nothing back come tax time. This means your money stayed in your pocket all year, where it could earn interest or pay down debt.

Getting better at filing your income tax return

Kicking the seven bad tax habits isn't just about avoiding an audit — it’s about reclaiming control of your finances during tax time.

Even though the 2026 tax landscape is more complex than it has been in recent years, breaking these bad habits can turn a season of "tax dread" into a manageable, routine check-up.

Start with one habit today, and by the time April 15th rolls around, you won't just be filing 2025 taxes — you'll have a head start on next year's income return.

Should You Do Your Own Taxes This Year or Hire a Pro?

Roxanne Bland — Tue, 03 Feb 2026 16:17:00 +0000

It’s tax season again. But this year, as you gather your W-2s and 1099s, you’re also navigating the first filing season impacted by the recently enacted 2025 Trump tax law, also known as the "big beautiful bill."

With new deductions for things like overtime pay, tips, and car loan interest, plus a new Schedule 1-A, the "simple" return you filed last year might suddenly feel a lot more complicated.

You sit in your chair, eyeing the mounting pile of documents, and think: "Should I just hire someone to prepare my return?"

Deciding whether to do them yourself or outsource your taxes depends on your situation. While filing on your own is budget-friendly and gives you a clear view of your finances, a mistake, especially given the new tax rules, could mean leaving a larger-than-usual refund on the table. And for some, there's the perennial fear of a potential IRS audit.

Do you have a complex return with different forms and schedules? Are you facing major life changes? Do you have the time to do your taxes? Here is what you should consider before making your choice.

The case for filing your own taxes

Some tax returns are relatively simple and can be done on your own without a tax professional’s help. For example, you might be fine filing yourself if you are:

Single with one income source
Claiming the standard deduction
Not eligible for special tax credits
Comfortable navigating tax software

With a relatively "simple" return, it would likely take little time for you to prepare your own. Tax preparation software will guide you through the forms.

Pro Tip

If you had $89,000 or less in income in 2025, you can file your taxes for free through the IRS Free File program. (But note that IRS Direct File, a newer program available to some taxpayers for the past two tax seasons, has been eliminated by the IRS and is not available as a way to file taxes for free this year.)

Some people may be able to handle working through a more complicated return without a tax professional's help.

If you're in that boat, there are advantages to preparing your own tax return besides cost. Doing your own taxes forces you to analyze the financial moves you took during the year. that can give you insight into:

How much money you spent
Whether you saved money
Your financial well-being and financial goals

And a person tackling their taxes themselves isn’t without resources.

For example, the IRS has an Interactive Tax Assistant on its website. The tool asks a series of questions and provides responses to common tax-related issues, like the tax treatment of mortgage debt forgiveness or work-related education expenses.

There can be some disadvantages to preparing your own taxes, however.

When you prepare your own return, you might not get all the tax deductions and credits to which you’re entitled.

Maybe you didn’t know about a particular tax break because it was recently enacted.
Or a tax break was buried in the federal tax code, where a layperson would have a hard time finding it.
Perhaps the tax prep software you chose didn’t explain the tax deduction or credit well, or didn’t include the correct tax form.

In these and other instances, you could end up overpaying your taxes or getting a smaller tax refund.

Additionally, there’s always a possibility the IRS will flag your return for an audit (a low risk, but not zero). Most IRS audits are correspondence audits conducted by mail, but you’ll have to handle the process yourself unless you hire a tax professional to help you.

What makes a tax return complicated?

A good way to tell if you need tax help is to think about the time you’ve spent preparing your return in the past. Did it take hours and hours? Was it complicated? If so, that’s a sign you might need a tax professional.

Your return could be complex if:

You own a business or are self-employed: Navigating the now-permanent 20% Qualified Business Income (QBI) deduction and the return of 100% bonus depreciation requires precise record-keeping to maximize your savings.

You’ve experienced major life changes: Events like marriage, divorce, or a new child change your filing status and eligibility for the expanded Child Tax Credit or the adoption tax credit.

You sold major assets or investments: Selling a home, a business, or stocks triggers capital gains rules that may be offset by 2026 inflation-adjusted thresholds or specific asset write-offs.

You manage rental properties or diverse income streams: Collecting rent or receiving income from "side gigs" can involve complex expense tracking.

You earned significant tips or overtime pay: Under the 2025 law, you may be eligible to exclude up to $25,000 in tip income or $12,500 in some overtime pay from your federal taxes — but only if you meet specific occupation and income phase-out rules.

*These are just some examples; many factors can make a return "complicated."

Choosing the right tax professional

A tax professional is someone who specializes in understanding tax laws and helping individuals or businesses meet their tax obligations accurately and efficiently.

However, if you’ve decided to hire help, it’s important to know that "tax professional" isn't just one job title. Depending on their credentials, different pros offer different levels of service and protection.

Certified Public Accountant (CPA): Licensed by state boards, these pros must hold an accounting degree and pass a rigorous national exam. They provide comprehensive tax preparation and year-round financial planning. Representation: They have unlimited rights to represent you before the IRS.

Enrolled Agent (EA). Licensed by the United States Treasury Department, EAs must pass a three-part federal exam covering all aspects of the tax code. They are tax-law specialists who focus specifically on preparation and tax resolution. Representation: They have unlimited rights to represent you before the IRS.

Tax Attorney. Licensed by state bars, these professionals hold law degrees and specialize in high-level legal complexities, such as corporate taxation or estate law. Representation: They have unlimited rights to represent you and are the best choice for legal disputes or Tax Court cases.

Non-Credentialed Preparer: These preparers generally handle basic tax returns and often work seasonally. Unlike the professionals above, they are not licensed by a state or federal board. Representation: They have limited or no rights to represent you before the IRS in the event of an audit.

These professionals are trained to know the ins and outs of the federal tax code and stay abreast of new law changes that take effect in any year.

Tax Tip

To verify a tax professional, the best place to start is the Treasury Department's Directory of Federal Tax Return Preparers. This is a searchable database that allows you to confirm if a professional is currently in good standing with the IRS.

How to find a tax pro

When searching for a tax professional, think about your circumstances. Sometimes you need a nuanced approach to your financial life.

For example, your tax situation can change as you hit different milestones.
Parents may need help maximizing child and family tax credits, while retirees often benefit from an expert eye to manage the complex tax rules surrounding pensions and RMDs (Required Minimum Distributions).
If you’re a self-employed business owner, your tax needs are different from those of a business owner who elected a corporate structure.

Ask your candidate where they concentrate their practice.

As for where to find a tax professional, you may have family, friends, and acquaintances who use one. Ask them. As mentioned, you can also search official, trusted directories, like:

IRS Federal Tax Return Preparer Directory
Your state’s Board of Accountancy
Your state’s CPA societies

Reminder

Never use a "ghost preparer" who refuses to sign your return. If they don't sign it, the IRS considers it self-prepared, and you are liable for any mistakes.

Bottom line? Hiring a tax professional comes with a price, but filing a timely, accurate tax return that could save you money could be worth it.

Ask the Editor, January 16: Tips for Filing Your Form 1040

joy.taylor@futurenet.com (Joy Taylor) — Fri, 16 Jan 2026 14:30:00 +0000

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week she's looking at four questions on preparing and filing your 2025 Form 1040. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. Any tips for getting my refund faster?

Question: I am generally due a refund when I file my tax return. Do you have any tips on how I can get my tax refund faster?

Joy Taylor: The fastest way to get your tax refund is to file your tax return early, file it electronically, and request that the money be deposited directly into your bank account.

E-filing your tax return early can also help protect you from tax-related identity theft. Thieves who use stolen taxpayer identification numbers on fraudulent returns to seek improper refunds typically file the phony returns early in the filing season so that the IRS receives them before legitimate taxpayers file their returns. If you e-file your Form 1040 early, your return will likely arrive at the IRS before a fake return does.

2. Will my refund be delayed if I claim the earned income credit?

Question: For the past couple of years, I claimed the earned income tax credit on my Form 1040, and my refund was delayed. Will this happen again this year?

Joy Taylor: Yes. Filers claiming the earned income tax credit and taxpayers claiming the refundable child tax credit will have to wait, probably until at least late February, before their refunds are directly deposited into their bank accounts. The wait time will be longer for paper-filed returns sent by snail mail.

3. Do you expect a smooth tax filing season?

Question: I have read that many tax professionals are expecting a rough tax filing season this year. What are your thoughts on this issue?

Joy Taylor: The IRS says it will begin accepting tax returns on January 26. Some tax professionals thought that the filing season would be delayed because of all the work the IRS had to do to implement the tax changes in the "One Big Beautiful Bill" (the OBBB), many of which apply to 2025 federal tax returns. But instead, IRS employees worked diligently to open the filing season pretty much on time.

We generally expect a smooth filing season. But that doesn't mean there won't be some rough patches ahead, primarily caused by the IRS's diminished workforce. The IRS has lost 25% of its workers over the last 12 months. The departures represent all experience levels and functions within the IRS, including taxpayer service, collection, IT support and enforcement.

Taxpayers and tax preparers will have questions on how the OBBB changes apply in a wide range of scenarios, and they're not likely to get much assistance from the IRS. Yes, there will be people answering the phones at the agency, after a long wait. But getting answers to substantive tax questions is a bit of a pipe dream.

Taxpayers who file amended returns for prior years will likely be waiting a long time before the IRS processes their filings. That's because IRS employees will be laser-focused on processing 2025 tax returns.

Also, look for IRS responses and actions on taxpayer correspondence to be slower than normal. For example, if you're replying to an IRS automated letter or other IRS inquiry, it will probably take a long while before you hear back from anyone at the IRS. We expect the IRS will reassign some employees to answer the phone lines or assist with other filing season tasks. These workers' other duties will be put on hold.

4. Will tax refunds be bigger?

Question: I have heard in the news that many people expect tax refunds to be larger this year than in past years. What is the reason for this?

Joy Taylor: Experts are saying that this year's tax refunds will be bigger than in years past. You can thank the OBBB for this. Many of the new tax breaks for individuals in the OBBB begin in 2025, more specifically on the 2025 returns that taxpayers are filing this year. Here's a partial list of these tax breaks:

Higher standard deductions
Slightly higher child tax credits
The $6,000 write-off for filers age 65 or older ($12,000 on joint returns if both spouses are 65 or older)
The deduction for up to $25,000 of qualified tip income
The deduction for up to $12,500 of qualified overtime compensation ($25,000 on joint returns)
The deduction for up to $10,000 of interest paid on loans to buy a new vehicle for personal use
The larger $40,000 cap on deducting state and local taxes on Schedule A

We'll monitor the IRS's website over the filing season to see if this forecast for larger tax refunds pans out.

About Ask the Editor, Tax Edition

A Free Tax Filing Option Has Disappeared for 2026: Here's What That Means for You

Roxanne Bland — Thu, 15 Jan 2026 14:37:00 +0000

If you were counting on filing your 2025 taxes directly with the IRS for free, you’ll have to change your plans.

That's because IRS Direct File, a program launched two tax seasons ago, was ended by the U.S. Treasury Department late last year despite the U.S. Government Accountability Office (GAO) and a majority of taxpayers who utilized the service hailing the two-year pilot program a success.

According to a report to Congress, the Treasury Department said that Direct File had a low participation rate (fewer than 0.5% of the 146 million tax returns filed in 2025). The Treasury also pointed to the program’s cost (about $138 per return through Direct File) as being relatively high compared to other IRS free tax filing options.

So, the Treasury and IRS eliminated Direct File and it is not available for the 2026 filing season. But thankfully, some other free tax filing options are alive and well. Here's more to know.

Does Direct File Still Exist? Can you still file directly with the IRS for free in 2026?

The Treasury Department report issued last November on IRS Direct File concluded that the tax agency should focus on other priorities, like enhancing and expanding its longstanding Free File program.

As Kiplinger has reported, Direct File has been a lightning rod for controversy since its pilot launch during the Biden administration.

The program came about after the IRS found that 70% of taxpayers surveyed expressed interest in a free IRS-provided tool for preparing and filing taxes.
At the time, IRS data revealed that people spent an average of about $250 to prepare their taxes.
The IRS-run tax prep and filing service was supposed to be available to a wider range of taxpayers with generally uncomplicated returns and incomes up to around $200,000.

The IRS initially touted the program as easy or easier to use than traditional tax prep software, while still being electronic and free.

Still, tax preparation companies, including H&R Block and Intuit TurboTax, opposed the IRS getting into the tax preparation business and lobbied against the idea for years.

And, the Republican-led U.S. House Ways and Means Committee, which has oversight over the IRS, has argued that the IRS lacked explicit congressional authorization to make the Direct File program permanent.

So, Direct File is not available for the 2026 tax filing season. (This change primarily affects taxpayers with simple returns who were eligible for Direct File.)

But…despite the end of the program, the tax agency still offers other longstanding free file options for some taxpayers.

How to file your taxes for free with the IRS in

Launched more than 20 years ago, IRS Free File allows eligible taxpayers to use guided software to file their tax returns with IRS "trusted tax prep service partners" at no charge.

Taxpayers whose adjusted gross incomes (AGI) are $89,000 or less are eligible to use Free File.

Note: You can browse the IRS’s eight trusted partners for the 2026 season on the IRS Free File website. However, partner Free File portals can only be accessed from the IRS website. If you go directly to a partner’s general commercial website, you won't see the Free File portal.

Also, be attentive to the partners’ Free File eligibility rules, as those vary:

Some have age restrictions.
Several partners have income floor and ceiling limits.
Some limit free filing availability to taxpayers with relatively simple returns. That means returns with schedules, like those for itemized deductions, for example, might not be accepted.

If you meet the criteria for filing a free federal return through IRS Free File, state filing availability depends on which Free File partner you choose.

IRS Free File opened on January 9 and will run through October 15, 2026.

Does the IRS use Free Fillable Forms?

There's another way to file your federal income tax return for free with the IRS.

If your AGI is higher than $89,000, you can file your tax return using the IRS’s Free Fillable Forms.
Unlike IRS Free File, however, Free Fillable Forms doesn’t use guided software.
So, only choose this option if you are comfortable preparing your own tax return.

IRS Free Fillable Forms opens on January 26 (the official IRS 2026 tax season start date for accepting returns) and will run through October 15.

Can military file taxes for free?

People who serve often wonder if there are free tax-filing apps specifically for the military.

MilTax is a feature of MilitaryOneSource, a program funded by the U.S. Department of Defense (DOD) that provides various services, including tax services, to members of the military, their spouses and dependents, survivors, and some veterans.

MilTax provides free online tax prep and filing software and trained personalized support tailored to military-specific tax circumstances.
You can file up to three state returns along with your federal return.
You can find out if you’re eligible to file with MilTax by visiting the MilitaryOneSource website.

Note: Intuit TurboTax offers free federal and state tax filing for eligible active-duty and reserve enlisted members. TaxSlayer also offers free federal filing for eligible active-duty members, but state filing incurs an extra cost.

MilTax will begin accepting tax returns on January 15 and through October 15, 2026.

Free in-person tax preparation and assistance

Volunteer Income Tax Assistance (VITA): VITA is a longstanding IRS public-private partnership providing free tax preparation services to low- and moderate-income taxpayers.

Principally staffed by volunteers, VITA operates out of community centers, schools, libraries, churches, and similar facilities. VITA serves taxpayers with incomes of $67,000 or less, those with disabilities, and taxpayers whose English-speaking skills are limited.

Find out more about VITA, including VITA locations, by visiting the IRS website or by calling 800-906-9887.

VITA sites post their own schedules, but most open in late January and run through April 15, 2026.

Tax Counseling for the Elderly (TCE): TCE is also a longstanding public-private partnership between the IRS and the AARP Foundation’s Tax-Aide program, providing free tax help particularly to those aged 60 or older. TCE volunteers specialize in questions about pensions and other retirement-related issues pertaining to seniors.

TCE services are available from February 1 through April 15. You can find the nearest TCE provider using the AARP site locator tool or by calling 888-227-7669.

Free tax filing 2026: Bottom line

In addition to the options mentioned above, some private tax software companies also offer free filing options for simple returns.

However, keep in mind that these offers may be limited, for example, in that state returns or additional forms could potentially trigger extra charges.

So review the "fine print" of what’s included in a free-file option before you start filing your return.

This 2026 tax filing season also brings significant changes due to the sweeping 2025 Trump/GOP tax bill enacted last summer.

New tax deductions and tax rule changes make it more important than ever that you seek professional tax advice if needed, so that you can prepare an accurate return and claim all the tax breaks you're eligible for.

When Do W-2s Arrive? 2026 Deadline and 'Big Beautiful Bill' Changes

Kate Schubel — Tue, 13 Jan 2026 14:57:00 +0000

For millions of Americans, the start of the year brings one urgent question: "When will I get my W-2?"

While the legal mailing deadline for employers is typically January 31, that date falls on a Saturday in 2026. Consequently, the official IRS deadline for W-2 access has shifted to Monday, February 2, 2026.

Beyond the calendar, the 2026 tax filing landscape has transformed. The IRS is entering this season with a 26% reduction in staff, causing uncertainty about taxpayer support and whether tax refunds will be delayed.

Furthermore, this year marks the first full filing season under the 2025 Trump/GOP tax and spending bill, often referred to by President Donald Trump as the "big beautiful bill" (BBB). As W-2s arrive, taxpayers may be anxiously wondering if the promised "pay bump" from the Trump administration will materialize in a 2026 tax refund.

We'll break down the 2026 W-2 delivery timeline, how the latest legislative tax changes may impact your filing, and what to do if your W-2 forms are late or missing.

Read on.

W-2 deadline 2026: Key dates to know

When will the W-2 be released in 2026?

The IRS W-2 arrival date for 2026 is February 2. Your IRS Form W-2 is an essential tax document for return filing, capturing every dollar earned and every cent of federal, state, and local taxes withheld from your paychecks throughout the year.

The legal deadline for employers to furnish the W-2 is January 31st.

But since that date falls on a weekend this year, you might experience a slight arrival delay, particularly if your W-2 is sent through the mail. Yet many employers often distribute W-2s well in advance of the deadline.

W-2 release date and schedule for 2026

Your W-2 arrival date depends largely on your delivery preference: digital access or postal mail. However, the following schedule provides an estimate for when your W-2 may be ready for the 2026 tax season.

Estimate of 2026 W-2 Delivery and Deadlines
Date estimate	Event	What You Should Do
January 12 to January 16	Digital W-2s may be available	Begin checking your employee portal (ADP, Workday, Paylocity, etc.) daily. Many employers release digital forms early.
January 19	Martin Luther King Jr. Day (federal holiday)	No mail delivery on this day. If you opted for a physical copy of your W-2, it won't arrive until at least the 20th.
January 26	Tax season 2026 opening date	The IRS will start accepting federal returns in the last week of January. But ensure you have your W-2 and all necessary 2026 tax information before you start your return.
January 31	W-2 mailing deadline	This is the legal postmark deadline for employers to physically mail your W-2 (if you opted for that method of delivery).
February 2	Official IRS deadline for W-2	Because Jan. 31 falls on a weekend, Feb. 2 is the official final day for your employer to provide access to your 2026 W-2.
February 14	Troubleshooting date	If you still don't have your W-2 by mid-February, the IRS typically recommends you begin following up with your employer.

*Note: This table is based on IRS deadlines and historical trends. Some projections and delivery times may vary.

2026 tax changes: How the Trump tax bill impacts tips, overtime, and more

For the 2026 tax season (your 2025 income tax return), employers are not required to separately report tips or overtime from your wages on your W-2. Yet that doesn't mean you can't still claim the "no tax on tips" deduction or the deduction for overtime pay when you file (if you're eligible).

The so-called BBB created several new temporary tax breaks that you might be eligible to receive this year when filing your federal income tax return, including:

The car loan interest deduction, worth up to $10,000 on new, qualifying vehicles.
The "senior bonus deduction," worth up to $6,000 for taxpayers 65 and older who meet certain eligibility requirements.

What should you do? The IRS advises reviewing the 2025 Trump/GOP tax and spending bill for any new deductions you may qualify for this year (you can also do this by going to a trusted tax professional). It's also a good time to update your 2026 Form W-4 (if you haven't already) to ensure your withholding accurately reflects these legislative changes.

For more information on what a Form W-4 is and how to update it, check out Kiplinger's report, Things Every Worker Needs to Know About the W-4.

The IRS W-2 arrival date for the 2026 tax season is February 2. (Image credit: Getty Images)

IRS staffing cuts: Will your 2026 tax refund be delayed?

Last year was an unprecedented year for the IRS. The Trump administration cut roughly 26% of the tax agency's workforce — amounting to approximately 26,000 employees. When paired with high IRS leadership turnover, these reductions have led many to speculate that the 2026 filing season will be understaffed and consequently lead to tax refund delays.

According to a recent report from the National Taxpayer Advocate (NTA), filers may need to prepare for:

Extensive call wait times. Reaching a human representative may be more difficult than in previous years.
Refund processing lags. Manual reviews for complex BBB claims might take longer to process.
Identity theft backlogs. Resolution times for fraud-related cases are projected to increase.

However, current IRS leadership maintains a confident posture for success. Frank Bisignano, Commissioner of the Social Security Administration and also appointed in October as the first-ever IRS Chief Executive Officer, recently stated in a press release that IRS information systems have been successfully updated for the new tax laws and that the IRS "is ready to help taxpayers meet their filing and payment obligations during the 2026 filing season."

U.S. Treasury Secretary and Acting IRS Commissioner Scott Bessent also expressed confidence in the "ability to deliver results and drive growth for businesses and consumers alike," in the release.

Regardless of the debate, the IRS has cautioned taxpayers to prepare early this filing season by reviewing tax law changes, gathering all pertinent tax records, and verifying direct deposit information as the federal agency phases out paper checks this year.

2026 W-2 FAQs

W-2s are getting sent out a little later this year, but there are steps to take if yours is late. (Image credit: Getty Images)

Why is my 2026 W-2 delayed?

Is your W-2 form late? Certain factors can affect the timing of your W-2 delivery, including:

Incorrect employee information. If an employee's name, address, or Social Security Number (SSN) is incorrectly stated on a W-2, the form may be marked "undeliverable" by the IRS or rejected during processing.
Mailing and delivery issues. The postmark date for W-2s in 2026 is January 31, which falls on a weekend. Because of this, W-2s may still be in transit in early February. Alternatively, the form could be lost in the mail or returned if the address was incorrect.
Employer errors (or omissions). Employer-related mistakes, like using light-colored ink or excluding certain information on the W-2, could ultimately delay the distribution of the form.

To mitigate the effects of W-2 delays, review the information on file with your human resources processor (or employer) to ensure that your W-2 information is accurate and up to date.

What if I haven't received my W-2?

What to do if your W-2 is not received by February 2. It's normal for a W-2 not to arrive exactly on the deadline date; though if you don't receive your W-2 by mid-February, that could indicate a problem. Here's what you can do:

Contact your employer first. Reach out to your human resources or payroll department to verify that the W-2 was mailed out (or made electronically available to you).
Contact the IRS directly. If contacting your employer doesn't resolve the issue and/or you still haven't received your W-2 by the end of February, you can contact the IRS for assistance by calling 1-800-829-1040.
File Form 4852, Request for Substitute for Form W-2, Wage and Tax Statement. If the tax filing deadline is approaching and you haven't been able to receive your W-2, you may use your final pay stub to estimate wages and withheld taxes while filing Form 4852. However, this is a last resort option.

Can I file my 2026 taxes with a paystub?

No. Although it may seem tempting to use your last paystub to file income taxes while waiting for your W-2, paychecks often lack the specific information state and federal agencies need for income tax filing.

Some filers use their final pay stub when their employer or former employer refuses to send a Form W-2. In that case, taxpayers can use their last paystub in conjunction with Form 4852 as a last resort (but only after contacting the IRS).

When is the 2026 tax deadline? Federal and state dates

Federal income tax returns are due Wednesday, April 15, 2026. So even if your W-2 is late, you'll still have until mid-April to file your federal income taxes.

Your state return (if you have one) is typically due on or around the federal deadline (though some states have an earlier due date for returns).

Alternatively, if you were in a federally declared disaster area in 2025, you might have more time to file and pay your income taxes. Check your state Department of Revenue or Taxation website or IRS disaster relief page for more information on when your income taxes may be due for 2026.

Ask the Editor, January 9: How to Get Ready for Tax Filing Season

joy.taylor@futurenet.com (Joy Taylor) — Fri, 09 Jan 2026 12:35:00 +0000

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter editor, answers questions on topics submitted by readers. This week she's looking at four questions on the IRS tax filing season and your 2025 tax return. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1. When can I file my 2025 tax return?

Question: When does IRS plan to open the 2026 tax filing season?

Joy Taylor: The IRS just announced that it will open the 2026 filing season on January 26. That's about a week later than some other years, likely because of the "One Big Beautiful Bill" (OBBB), which lawmakers passed last July.

The OBBB contains over 100 tax sections, with many of the changes taking effect on 2025 tax returns and others on 2026 tax returns. The IRS had a lot on its plate to implement the OBBB. It had to revise forms, instructions and publications, and the IRS's IT people needed to reprogram computer systems to account for all of these changes. The agency also released lots of guidance to implement many of the new tax changes. As of the date of this column, the IRS has released the final version of the 2025 Form 1040, but the instructions are still in draft form.

Last July, then-IRS Commissioner Billy Long said that the IRS was aiming to start the 2026 filing season around President's Day, which is about four weeks later than normal. The last time the filing season began in February was 2021, during the COVID-19 pandemic. Luckily, for taxpayers and the IRS, the agency didn't have to delay this year's filing season. Instead, the IRS will begin accepting 2025 tax returns on January 26.

2. How do I claim the $6,000 senior deduction?

Question: My wife and I are over age 65. I prepare our tax return each year. Where do I claim the new $6,000 senior deduction on the 2025 Form 1040?

Joy Taylor: There is now a new senior tax deduction of $6,000 per filer age 65 and older. Married couples with both spouses 65 and older can deduct $12,000 on a joint return. This deduction is available to taxpayers who claim the standard deduction and to those who itemize on Schedule A of the Form 1040. This deduction is temporary, first taking effect on 2025 tax returns filed this year, and ending after 2028.

Not every senior will qualify. The deduction begins to phase out at modified adjusted gross incomes (or modified AGIs) above $150,000 on joint returns and $75,000 on single and head-of-household returns. The deduction is fully phased out once modified AGI reaches $175,000 for single and head-of-household filers and $250,000 for joint filers. Also, each eligible spouse must have a Social Security number to claim this write-off.

Modified AGI for this purpose is AGI plus any foreign earned income exclusion, foreign housing exclusion, and certain income excluded from gross income because it was received from sources in Puerto Rico, American Samoa, Guam and the Northern Mariana Islands.

The IRS has released new Schedule 1-A for filers to claim the $6,000 senior deduction, as well as the up-to-$25,000 qualified tips deduction, the write-off for up to $12,500 of qualified overtime pay ($25,000 for joint filers), and the deduction for up to $10,000 of interest paid on loans to buy a new automobile.

To claim the senior deduction, you would fill out Part I of Schedule 1-A to calculate your modified AGI, and then complete Parts V and VI. You would then transfer the amount on line 38 of Schedule 1-A to line 13b of the 2025 Form 1040.

3. Will IRS send me a paper check for my tax refund?

Question: In past years when I filed my federal tax return, I always asked that the IRS send me my refund in the form of a paper check. I have a bank account, but I don't want to give the IRS my account information. I heard that the IRS is no longer issuing paper checks for tax refunds. Is that correct?

Joy Taylor: The IRS is phasing out paper refund checks to individuals to comply with an executive order from the White House. Tax refunds for individuals will generally be paid by direct deposit or some other electronic method.

According to the IRS's National Taxpayer Advocate, taxpayers who don’t provide bank account details or request an exemption will face delayed refunds. The IRS will send a letter to these filers, requesting the bank account information and providing directions on how to request an exemption from the rules. Taxpayers who receive the letter and don’t comply will see their refunds delayed for six weeks or more.

The IRS is encouraging people without bank accounts to open one as soon as possible.

4. Can I send a paper check if I owe taxes?

Question: If I owe taxes when I file my 2025 Form 1040, can I mail a paper check or do I have to give the IRS my bank information?

Joy Taylor: It appears that you can continue to pay your taxes with a paper check, for now. Although the IRS is urging filers to use alternative methods to pay their taxes, such as electronic payments and debit or credit cards, the IRS will still accept paper checks sent in the mail for tax payments.

About Ask the Editor, Tax Edition

Are You Afraid of an IRS Audit? 8 Ways to Beat Tax Audit Anxiety

kipdigital@futurenet.com (Roxanne Bland) — Wed, 07 Jan 2026 15:07:00 +0000

If the thought of tax season coming and possibly undergoing an IRS audit fills you with anxiety, you’re not alone.

As the late Sen. Orrin Hatch once said, “The Internal Revenue Service is the most feared federal agency in the country.”

The fact is that audit anxiety is real.

According to the American Psychological Association and Psychology Today, audit anxiety is a situational manifestation of anticipatory anxiety. That's a visceral reaction marked by an acute sense of worry and concern over potential findings and possible adverse consequences, even if you’ve done nothing wrong.

Many taxpayers fear being audited by the IRS, even though data show that the chances of an individual taxpayer being audited are relatively slim for most. Still, if you’re worried, read on for some tips on how to cope.

What’s so scary about being audited by the IRS?

There are several reasons that people might fear an IRS audit, but a big one is that the U.S. tax code is notoriously complex and difficult to understand. Tax forms are only marginally less so.

It’s easy to make mistakes, whether in understanding the law or completing your income tax return.

Other factors that can inspire audit anxiety include:

Fear of owing money to the IRS and concern over whether back taxes, penalties, or interest will put a strain on finances
The idea of government officials combing through personal records
The stigma of being judged as dishonest or careless
Prior audits or hearing about others’ negative experiences
Lack of professional guidance

And then, there’s perhaps the biggest reason of all: Some tax returns that are audited by the IRS are chosen at random — simply the luck of the draw.

Ways to beat audit anxiety

While it may be impossible to eliminate the chances of being audited, there are some things taxpayers can do to lessen audit risk.

1. File an accurate return. The IRS devotes several technical resources to finding inaccuracies in returns. These computer systems rank returns for:

the potential for error using a secret IRS formula
the potential of having unreported income
by comparing the information you reported to the information provided by third parties to see if everything matches up.

The IRS also uses AI and data analytics to detect discrepancies.

In addition to calculations, filing an accurate return includes properly reporting marital or dependent status and proper income reporting from more than one source.

2. Stay organized year-round. Create a filing system and keep receipts, invoices, and documents for deductions and credits in one place.

3. Know the red flags for an IRS audit. These include, among others, large charitable deductions and home office deduction claims. This is not to say you shouldn’t claim these if you’re eligible for them, but you should make sure you have the documentation to back them up.

4. File on time. Late filing will mark your return for IRS enforcement, making it more likely to be audited.

5. Consult a tax professional. If you have a complex return, using a tax professional can ease anxiety and ensure compliance.

6. File your return electronically. E-filing can help reduce math errors and ensure faster processing. For an extra fee, some tax preparation software companies offer representation in case your return is chosen for audit.

7. Don’t chase large refunds. Don’t cheat and claim deductions or expenses you didn’t have. This is a tactic the IRS is well aware of. You may escape audit for a particular filing season. But if you do it consistently and are audited once, the IRS can pull your returns for an indefinite period for audit. In other words, the IRS’s normal 3-year window for auditing returns never closes.

8. Maintain perspective. In 2024, the IRS reportedly performed 505,514 audits across all return types. That’s an audit rate of about 0.05% or about 1 in 200 returns.

Data generally show that high-income taxpayers and low-income taxpayers are the most likely to be audited. The middle class has been the least likely to be audited: the IRS Data Book shows that, as of 2022, middle-income taxpayers were subject to an audit rate of 0.01%.

Law Reversal Looming? Trump Eyes 2026 Gambling Winnings Tax Change

Kate Schubel — Tue, 16 Dec 2025 15:17:00 +0000

Gambling winnings are expected to be taxed more next year — at least federally. Thanks to the 2025 GOP/Trump tax and spending bill, a portion of winnings from activities like lotteries, slot machines, and sports betting face a potential double taxation.

That's because prior IRS gambling rules allowed you to deduct all gambling losses up to the amount of winnings. Starting in 2026, losses are limited to 90% of winnings.

But just weeks before the new gambling tax provision becomes effective, President Donald Trump reportedly said he would "think about" repealing income taxes on gambling winnings entirely.

Here's more of what to know.

Trump gambling tax: Is it coming to an end?

When reporters asked President Trump in early December if he would consider eliminating federal taxes on gambling winnings, he remarked, "No tax on gambling winnings, I don't know. I'm gonna have to think about that."

This suggestion stands in stark contrast to the effects of the major legislative Republican tax bill enacted in July. Starting January 1, 2026, the new GOP law will impose a tax cap, limiting gambling loss deductions to 90% of winnings (down from 100%) — a provision that may hike the tax bill for many gamblers.

For example, if you pay $100 for state scratch-offs and win $100, you could owe the government $10 on your "winnings" in 2026.

Gaming industry leaders and stakeholders, including the American Gaming Association, have referred to this new tax scenario as "phantom income." This term is used because the new cap forces gamblers to pay taxes on losses — a rule the AGA argues is "uniquely penalizing" gambling compared to other businesses.

And the new gambling tax provision is expected to generate a significant amount of phantom income.

According to the Joint Committee on Taxation, taxing Americans on 10% of their gambling losses could generate over $1.1 billion over the next decade.

While most of those earnings are expected to come from high-wealth, professional gamblers, any taxpayer who itemizes their gambling losses could be subject to paying more tax due to the new IRS gambling rule in 2026.

IRS audit triggers and gambling taxes

In recent years, the IRS has ramped up its investigative work on gambling winnings.

Under the Biden administration, the agency began enforcement efforts with taxpayers whose income was $100,000 or more, vowing to take a closer look at sports betting and online gambling in particular.

Since then, overall IRS audits have decreased under the Trump administration, particularly for high-income taxpayers. Yet the IRS still views nearly all recreational and professional gambling as taxable income.

As such, here are some types of gambling income that could be subject to an IRS audit:

Lotteries and raffles, including state lotteries, scratch-off cards, charity drawings, etc.
Sports betting (either online sports bets or in-person betting, and even office pools like the NFL playoffs or the Super Bowl).
Online gambling, including casinos, poker, and fantasy sports bets.
Horse races, dog races, and other racing activities.
Sweepstakes, contests, and game shows.

Whether a casual gambler or a professional, all gambling winnings are always subject to federal income taxes. Losses are deductible on Schedule A of Form 1040, up to 90% of the amount of gambling winnings for tax year 2026 (100% for tax year 2025). To claim the deduction, you must keep detailed tax records of your wagers (e.g., tickets, receipts, forms, etc.).

Tip: Also check with your state and/or local jurisdictions for how more localized taxes apply. Gambling is not legal in all states.

'Big beautiful bill' gambling tax changes backlash

As Kiplinger has reported, the new gambling winning tax provision in the new Trump tax law has faced considerable backlash from industry giants and government officials.

Jason Robbins, CEO of DraftKings (popular sports betting platform), remarked in an interview with CNBC, "If you can't deduct all your losses, you know, how does that make sense that you pay income tax on something that's not actually income."

Rep. Jason Smith (R-MO), Chairman of the House Ways and Means Committee and advocate of the new 2025 Trump tax law, called the provision a "mistake" and added that he was committed to working on a fix.

In the meantime, there have been proposals to repeal the new gambling tax law. For instance, the Fair Accounting for Income Realized from Betting Earnings Taxation (FAIR BET), proposed by Rep. Dina Titus (D-Nev), would revert the 90% gambling winnings loss deduction to 100% of gambling winnings.

Titus has been a lead critic against the new gambling winnings provision, citing negative economic impacts on Nevada and other "gaming-dependent" states.

Still other bipartisan bills have been introduced in Congress to repeal or modify the gambling tax provision, though all have stalled in committees and have not yet received votes in either the Senate or the House. Ongoing pressure from lawmakers and, now, the President, may help bolster a bipartisan deal or amendment in the new year.

Stay tuned for updates.

Standard Deduction 2026 Amounts Are Here

Kate Schubel — Thu, 09 Oct 2025 17:07:00 +0000

The IRS has released the 2026 standard deduction amounts you’ll use for your 2026 tax return — and they're higher than ever.

The federal tax agency adjusts these amounts for each filing status every year. Since these adjustments are based on inflation and given the key tax changes in the 2025 Trump/GOP tax overhaul, the standard deduction is higher for 2026 than in recent years.

Knowing the standard deduction for your status can help you determine whether you should plan to itemize or claim the standard deduction next year.

Here's more to know.

The standard deduction amount for 2026 (Returns normally filed in 2027)

Standard Deduction For 2026
Married, Filing Jointly and Surviving Spouses	$32,200	Increase of $700 from the prior tax year
Single and Married, Filing Separately	$16,100	Increase of $350 from the prior tax year
Heads of Household	$24,150	Increase of $525 from the prior tax year

2026 standard deduction age 65 and older

Taxpayers age 65 and older, as well as those who are blind, can claim an additional standard deduction. For 2026, that additional amount is $1,650 ($2,050 if unmarried and not a surviving spouse).

Those eligible can add the extra standard deduction to the regular amount for their filing status. A single taxpayer 65 or older (or who is blind) can claim a total standard deduction of $18,150 on their 2026 federal tax return.

Additionally, as Kiplinger has reported, the 2025 Trump tax bill introduces a new bonus standard deduction of $6,000 for those age 65 and older.

This can be added to the 2026 standard deduction for each eligible individual and can be claimed by those who itemize.

However, the "bonus" amount is temporary and phases out for incomes above certain thresholds.

Standard deduction if you're claimed as a dependent

Your standard deduction amount might differ if you can be claimed as a dependent on another taxpayer’s federal tax return.

The 2026 standard deduction for dependents is limited to either $1,350 or the sum of $450 and the dependent’s earned income, whichever is greater.

Note: The standard deduction for dependents cannot exceed the regular standard deduction for your filing status, even if your earned income is higher than the basic standard deduction amount.

What's the highest standard deduction amount possible?

Given the new senior bonus deduction, the existing extra standard deduction for those over age 65, and changes to the base standard deduction, the highest possible 2026 standard deduction amount is a whopping $47,500.

That amount is for married couples filing jointly who are both age 65 or older, qualify for the bonus deduction, and can claim the extra standard deduction for both spouses.

For more information on how to calculate your total standard deduction, see: The Extra Standard Deduction for People Age 65 and Older.

The October 15 Tax Deadline Is Coming: A Tax Attorney Highlights What You Need to Know

daniel@hgfg.com (Daniel Razvi, Esquire) — Thu, 25 Sep 2025 09:35:00 +0000

October 15 is right around the corner, so now is the time to finalize that tax return you pushed off in April by filing an extension.

Here are three things you need to know as you wrap up your 2024 taxes and start thinking about tax year 2025.

1. Common misconceptions about penalties and interest

Contrary to popular belief, filing an extension in April does not allow you to delay paying any tax you owe for last year. You were still supposed to pay the entire amount you owed (or thought you owed) by April 15.

Kiplinger's Adviser Intel, formerly known as Building Wealth, is a curated network of trusted financial professionals who share expert insights on wealth building and preservation. Contributors, including fiduciary financial planners, wealth managers, CEOs and attorneys, provide actionable advice about retirement planning, estate planning, tax strategies and more. Experts are invited to contribute and do not pay to be included, so you can trust their advice is honest and valuable.

Filing the extension just saves you from the late filing penalty (5% of the tax owed for each month you are late, up to 25%). If you still owe taxes that you did not pay before April 15, you will have late payment penalties of 0.5% of the tax owed each month you delay, plus additional daily interest.

On the flip side, if you did pay any balance owed before April 15, and/or you expect to get a refund when you file the return, you would not have any penalties regardless of whether you file the extension and the return on time or not.

This is because the tax penalties are percentages of taxes owed, and if taxes owed are $0, you cannot have a penalty.

Bottom line: Filing that extension back in April didn't allow you to delay paying taxes, but it hopefully has given you time to finish preparing the return and perhaps identify some additional deductions that you didn't have all documented properly before April.

2. Is it too late to take advantage of additional deductions?

While most opportunities for deductions ended on December 31 for tax year 2024, there are a few things you can do even now to lower your tax burden.

For example, if you filed an extension, you are permitted to make SEP IRA or solo 401(k) contributions (not regular IRA contributions) before October 15 and have them count for 2024.

If you file as an S corporation, the extension deadline passed on September 15, so you would not be able to contribute to the SEP for 2024 at this point.

Whether it is a good idea to contribute to the SEP is a more complicated question. Even though you might save money this year (or for the 2024 tax year) by contributing to a SEP or a solo 401(k), those contribution dollars (and future growth) will still be taxed at some point.

Many taxpayers find that they are not in a lower tax bracket in retirement as they might have expected, especially if they saved substantial amounts in tax-deferred buckets during their working years.

It is often better to pay tax on the seed and not the harvest. For example, utilize Roth IRAs or life insurance-based strategies. You can contribute to a solo 401(k) as a Roth contribution (after-tax) as long as you do it before October 15.

In theory, SEP IRAs are now allowed to accept Roth contributions as well, due to provisions in the SECURE 2.0 Act, but very few, if any, custodians have the back-end systems set up to allow Roth contributions.

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You can also do a "backdoor Roth" by contributing to a SEP and then converting that SEP to a Roth account the following year.

In short, don't be afraid to pay a little more tax now if it can save you a lot more tax in the future. Utilizing Roth, life insurance and other tax-free strategies can be very advantageous for the long term, even though you still have the short-term pain of the tax bite today.

3. Planning ahead for filing your 2025 taxes

Once you've finished and filed your 2024 tax return, there are some important decisions to make for the 2025 tax year, including windows of opportunity that close on December 31.

Here are a few:

Roth conversions. Unlike some types of Roth or traditional IRA contributions, you cannot backdate a Roth conversion, so any conversions need to be done in calendar year 2025.

The good news is, because of the One Big Beautiful Bill (OBBB) that became law in July, most taxpayers have quite a bit more room to do Roth conversions without going into a higher bracket, due to increased deductions and other factors.

Capital gains. With the market continuing to hit all-time highs, many taxpayers are considering cashing in on the big gains from this year. Because of the new tax law changes, there is more room than ever in the 0% capital gains bracket.

But be careful that the capital gains do not cause a cascading effect on other taxable income. Sometimes it is better to reposition qualified money (IRA/401(k) accounts) because there are no immediate tax consequences to buying and selling within those accounts.

Banks/Treasuries/money market accounts. With interest rates having been so high the last couple of years, many people have large cash holdings in CDs or money market accounts, which are generating taxable interest.

As interest rates decline, it may be possible to defer the interest with a fixed annuity. You can potentially lock in a higher rate for a much longer time than a CD, but you don't pay any tax until you withdraw the funds someday (after age 59½).

So, if you don't need to access the funds any time soon, but you want to keep it safe from market losses and taxes, this could be an ideal strategy. It would also give you more room for Roth conversions.

As you finalize your 2024 tax return and look ahead to tax year 2025, remember that smart tax planning is an ongoing process.

By understanding common misconceptions about penalties, exploring available deductions and strategically planning for Roth conversions, capital gains and cash holdings, you can optimize your financial future.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Quiz: Test Your Knowledge of Retirement Accounts, Charitable Giving and Taxes

Kiplinger Staff — Tue, 09 Sep 2025 15:30:00 +0000

If you've been following Kiplinger, you should have no trouble with this quiz. And if you slip up on an answer or two, you can follow the links below the quiz to refresh your memory.

These are the Kiplinger stories featured in this quiz:

IRS in Turmoil: GOP Budget Cuts and Staff Shake-Ups Threaten Taxpayer Services

Gabriella Cruz-Martínez — Tue, 09 Sep 2025 13:41:00 +0000

A spending bill is moving forward among Republicans in the U.S. House of Representatives that could significantly cut IRS funding, jeopardizing your taxpayer experience during the 2026 filing season.

The proposed measure, which is now moving to a House vote, would reduce the IRS budget by billions of dollars. In particular, key funding for Taxpayer Services, which is responsible for processing tax returns, answering taxpayer questions, and delivering tax refunds and correspondence, is at risk of being gutted further.

The IRS enforcement budget would also be dealt another blow by the GOP fiscal funding proposal. The result could mean fewer staff and automation tools would be available to enforce taxpayer compliance, audits, and the prevention of taxpayer fraud next year.

“No phones are going to be answered, no people are going to be at the offices to help people as they come in, and of course, Direct File has been eliminated as well,” said Rep. Steny H. Hoyer (D-Md.). “Under this administration, you’re certainly on your own if you’re a federal worker.”

Let’s dive into the GOP’s budget proposal for the IRS and what it means for you.

2026 GOP Budget Proposal for the IRS: Key Points

House Republicans seek to reduce IRS funding to $9.5 billion next year, representing a 23% decrease from its current spending.

Opponents of the funding cut argue that the proposed measure could seriously impact taxpayer services during the upcoming tax season and reduce revenue for the agency.

House lawmakers also rejected the Treasury Department’s request for $852 million for Taxpayer Services.
That funding was intended for the IRS to hire call center representatives to maintain its current level of phone service and implement automation tools for taxpayers.

The request sought to reverse some of the Trump administration’s major staffing cuts, which have already caused strain to taxpayers seeking customer service this year.

Here’s what proposed $2.8 billion in IRS funding cuts could mean for taxpayers next year.

Risk of fewer audits and taxpayer compliance

An IRS employee walks through tax documents in the staging warehouse at an Internal Revenue Service facility in Ogden, Utah. Opponents of funding cuts to the IRS argue that staffing shortages may lead to processing delays and fewer audits. (Photo by Alex Goodlett for The Washington Post via Getty Images) (Image credit: Alex Goodlett for The Washington Post via Getty Images)

The IRS suggests that every $1 invested in enforcement yields $7 in revenue, but House Republicans' proposed funding cuts could erode some of that funding stream.

House Republicans' proposed 2026 fiscal budget includes a more than $2.4 billion, or 45% cut below the current IRS enforcement budget.
This funding is allocated for IRS departments responsible for conducting financial crime investigations, including tax fraud, audits, and enforcing taxpayer compliance.

“When enforcement funding is cut, taxpayers potentially lose an important service provided by the IRS: the chance to gain clarity and, in some cases, certainty about what the tax code means for them before they file a tax return riddled with unintentional errors,” wrote Janet Holtzblatt, senior fellow at the Urban-Brookings Tax Policy Center.

Part of the services in the enforcement budget include guidance to taxpayers, like rulings and regulations. Businesses and high-income individuals often use these services, added Holtzblatt, and they aren’t cheap.

For example, a private letter ruling (the response when a taxpayer formally asks the IRS to explain a complicated tax provision that applies to their particular situation), can cost at a minimum $3,450.

The GOP’s proposed smaller enforcement budget could lead to a decrease in taxpayer services and an increase in undetected tax fraud and audit errors, warned Democratic opponents of the bill. As Kiplinger reported, for taxpayers, that means less access to customer service and a higher risk of accruing penalties.

Overall, the IRS warns that a budget cut of that magnitude will result in the agency losing billions in long-term revenue over the next couple of years.

Republicans reject funding for IRS hiring

After laying off thousands of employees from the IRS, the Trump administration sought to reverse some of the damage by asking for nearly $853 million (31% funding increase) to boost hiring at Taxpayer Services. The request was rejected by House Republicans.

The Taxpayer Services division is responsible for processing tax returns, answering telephone calls, processing taxpayer correspondence, and staffing Taxpayer Assistance Centers.

An IRS budget document warned that without the $853 million investment, the level of service provided to telephone callers would “plummet” to 16% next year, down from 87% in 2025.

“At this level of service, most taxpayers would be unable to reach the IRS by phone or receive answers to questions related to tax compliance,” the IRS noted. “Taxpayers that do get through would face long wait times.”

Former Internal Revenue Service workers leave their office after being laid off in downtown Denver, Colorado on Thursday, February 20, 2025. (Image credit: Hyoung Chang for The Denver Post via Getty Images)

The lack of staff could also impact other critical taxpayer service channels, including paper correspondence and in-person assistance.

“As the name implies, [Taxpayer Services] is responsible for the heaviest lift of serving taxpayers,” Erin Collins, National Taxpayer Advocate, wrote in a report to Congress, before recommending the Trump administration lift the hiring freeze and provide the division with direct hire authority to hire essential filing-season employees for 2026.

“It is critical the IRS hire them by the end of summer so it can onboard them, provide them with adequate training, and ensure they are prepared to assist taxpayers when the 2026 filing season begins in January,” the IRS government watchdog added.

The summer is over, and the IRS is reportedly planning on allowing some employees who accepted incentives to leave the agency to return to their jobs. However, the 2026 IRS budget's outcome could impact the agency's ability to fill staffing shortages before the next filing season.

Will GOP lawmakers cut IRS funding?

According to TaxNotes (paywall), it is “highly unlikely” that the 2026 Financial Services and General Government (FSGG) bill will be enacted by September 30, the end of the fiscal year.

This is primarily because the Senate has passed its version of the bill on time only once in the last two decades. Furthermore, the current White House request for a 20% reduction in the IRS's annual budget is unprecedented, as no previous administration has sought more than a 2% cut in the past century.

As noted, the GOP proposed budget calls to cut IRS funding by $2.8 billion next year, or 23% below the current 2025 fiscal year budget.

The impact on taxpayers nationwide would be devastating, warned the National Treasury Employees Union (NTEU).

“These drastic cuts, if enacted, would turn back the clock and undo all of the progress the agency has made in recent years, resulting in backlogs, slower refunds, more uncollected taxes, and fewer tax cheats caught,” NTEU National President Doreen Greenwald said in a statement.

“This bill is not going to see the light of day in the United States Senate,” said Rep. Hoyer.

An IRS Enrolled Agent's Top 10 Reasons to Stop Doing Your Own Taxes

EBeach@exit59advisory.com (Evan T. Beach, CFP®, AWMA®) — Sat, 06 Sep 2025 09:30:00 +0000

I do not do my own taxes.

That will shock a lot of my readers and clients who know that I own a business that offers tax planning and tax preparation.

Also, I am an IRS enrolled agent, licensed to prepare taxes and represent taxpayers in front of the IRS.

I did my own taxes in high school, college and early in my career, when my taxes were simple and the stakes were lower. But today, I own a few businesses and would rather have someone else — someone who spends all day doing this — wrestle with all the complexities.

I should also mention that the intent of this column is not to try to persuade you to stop doing your own taxes. We work with retirees who typically have about $2 million to $10 million invested. I would guess about 30% do their own taxes, and for the majority of them, that's totally fine.

Here are the situations on the other end of the spectrum, primarily folks in the demographic we help, where I think using a professional tax preparer makes sense.

1. You are selling your primary residence

On one hand, this can be a simple thing to report on Schedule D.

On the other hand, the stakes are high. We have a number of clients every year selling homes well into seven-figure territory that they bought for a fraction of that.

There are significant tax benefits to selling your primary residence vs an investment property, but you must ensure you qualify, calculate your adjusted basis, account for any periods when the home was rented, etc. Things can get complicated quickly.

2. You are considering selling an investment property or a vacation property

Investment properties are typically tax-advantaged during the period you own them, but a big bill often comes due at sale.

This calculation is much more complicated than the one for selling your primary residence. You must calculate the adjusted basis and factor in depreciation recapture.

Vacation homes tend to be simpler, but there may be planning opportunities here if you're willing to convert a vacation home into your primary residence for a period of time.

The accountant's job is to report the transaction. A financial planner may be able to help with the planning strategies.

We rely on tax planning and financial planning software to walk through the different scenarios and the estimated tax due, or saved, in each one. You can access a free version of the planning software.

3. You are starting a business or own one

Sole proprietors report income on Schedule C. It's a fairly straightforward form that you may be able to do on your own. However, a good CPA's job extends beyond just reporting and compliance to strategy.

Should you actually be a sole proprietor? Would an S corp or C corp be more advantageous? If so, things will get much more complicated, but it may be worth it.

Either way, it makes sense to have a pro weigh in.

4. You have significant K-1 income

K-1s report your share of income, losses, deductions and credits from a pass-through entity. That sounds like a different language to anyone who hasn't lived this life.

I have brought on many clients over the years who had straightforward tax situations but had to file extensions every year because their former adviser put them in a few private investments that issue K-1s.

These can be simple to plug into a tax-preparation software program like TurboTax, but the larger the proportion of your income these are, the more beneficial it will be to hire someone to correctly report the income.

This is especially true in years when one of these entities is sold or has a liquidity event.

5. You are planning a large gift

I'll define "large" as anything over the annual gift tax exclusion ($19,000 per recipient in 2025) because that's when you have to start reporting personal gifts on IRS Form 709.

However, the larger the gift, whether charitable or personal, the more important this is to get right.

I see people give kids money all the time for educational or medical expenses that would be better off going directly to the institution.

Similarly, I see charitable gifts done in an extremely inefficient manner.

To get this right often takes the coordination of a financial planner and a CPA.

6. You've received an inheritance

Inheriting capital assets (taxable investment accounts, real estate, etc.) is great because beneficiaries receive a step-up in basis.

However, this doesn't happen automatically. You are responsible for calculating date-of-death values and any subsequent gains. A CPA can help.

Inheriting an IRA or other retirement account has become much more complicated since the SECURE Act became law. You want to make sure you are taking RMDs when you are supposed to.

7. You have a taxable estate and/or there are irrevocable trusts

I don't think I've come across anyone with a taxable estate ($13.99 million per person in 2025) who is doing their own taxes, but this may be you.

In this situation, the investment income is likely high enough to warrant a second set of eyes. There are often gift and estate considerations that would also be reflected on your 1040.

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When you have a taxable estate, you often incorporate irrevocable trusts in your estate plan to help mitigate estate taxes and protect assets for the next generations. Irrevocable trusts will have their own trust tax return.

8. You are a dual citizen or have foreign assets/income

This could take all sorts of different forms:

You could be living in the U.S. but have foreign investments and foreign income.
You could be a U.S. citizen living abroad who has to file income taxes in multiple countries.
You may have dual citizenship, live here, but still own a house back home.

The IRS has specific rules, credits and forms that must be filed in all of these situations. You'll want to engage someone who specializes in cross-border tax planning.

9. You earn income in multiple states

In the U.S., you must report income in the state in which it was earned. Our clients who retired from big law firms saw the complexity of their returns implode the year after retirement. The same is true of the partners at Big Four accounting firms.

This is not the only situation where this is the case. We often see multiple state returns for clients with rental properties in different states.

Sometimes this is simple. Other times, it makes sense to get help.

10. You are divorced or getting divorced and have joint assets

I recently had a retired accountant reach out to figure out how to report joint income from a private investment with her ex-spouse. I had to refer her to our internal tax team.

Divorce creates a lot of complexity. Taxes can be one of those things. If you're trying to figure out how to report mortgage interest, who gets the various deductions/credits, etc., you're going to want professional help. Sorry for yet another bill!

My bottom line on DIY taxes

In 2019, I decided to do my own return on TurboTax. I had so many clients using the software that I thought it would be helpful for my clients if I had used it myself.

Two things surprised me: First is how intuitive the software is. The second is how many terms it uses that I know only because I am in the business.

At the end of the exercise, even I wasn't fully confident in the output. I have to assume most people feel this way.

Final thought: I wanted to keep this article to 10 reasons, but if I were to add an 11th, I'd suggest that if you're just guessing a lot, it's time to ask for help.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

2025 SALT Cap Could Hurt Top 'Hidden Home Cost'

Kate Schubel — Thu, 26 Jun 2025 14:07:00 +0000

Homeownership can be a source of joy for many. Whether it’s a fresh start in a different locale or a new life with a loved one, some might call owning a home the “American Dream.”

But the financial costs of homeownership can be a nightmare.

The average annual cost of owning and maintaining a single-family home in the U.S. is over $21,000 a year, according to a 2025 Bankrate study.* Property taxes, maintenance fees, and other so-called “hidden home costs” have some homeowners paying over $34,000 annually in their state.

Not to mention, recent political movements could make things challenging for American homeowners. The highly debated state and local tax (SALT) deduction could exacerbate home costs and lead to more expensive federal tax bills in 2026. Here’s what to know.

*Bankrate’s ‘hidden home cost of homeownership study’ included 49 out of the 50 U.S. states. New York was excluded due to data limitations.

Property tax among top home costs

As home prices have skyrocketed 197% in the last twenty-five years, hidden home costs are also on the rise. Here’s the pricetag for several items you might not expect when buying a home, according to Bankrate’s survey:

Home maintenance. The average cost of maintaining a home is over $8,800 per year.
Utilities and energy. The average annual bill for these services is nearly $4,500.
Property taxes. Homeowners can expect to pay an average $4,316, if not higher, annually.
Home insurance. Insuring a single-family home can cost almost $2,300 per year.
Internet and cable. Homeowners pay an average of $1,515 annually for cable and internet services.

*These numbers come from one survey, costs and averages can vary widely by state and coverage amounts in the case of home insurance.

Another Bankrate survey revealed that nearly half of homeowners with buying regrets cited maintenance and other hidden costs as being “more expensive than expected.” Unanticipated costs, which can include property taxes, were the most common source of buyer regret.

SALT deduction cap could make property taxes more expensive

The SALT deduction has allowed taxpayers who itemize to claim state and local taxes on their federal return for over one hundred years.

But the $10,000 “cap” on SALT — limiting how much of a deduction for state and local taxes taxpayers may claim — has only been in place for about 7-8 years as of 2025. And has just been raised (temporarily) under Trump's new mega tax bill, often called the "One Big Beautiful Bill" (OBBB).

Created to offset the Tax Cuts and Jobs Act (TCJA) tax cuts, the “SALT cap” in the OBBB:

Temporarily raises the SALT cap from $10,000 to $40,000 starting in 2025.
Phases out for incomes above $500,000 (married filing jointly). (Incomes above $500,000 would still be subject to the $10,000 cap.)
Will increase by 1% each year through the end of 2029.
Reverts to the $10,000 cap for 2030 and beyond.

So what does this have to do with property taxes?

Well, a big part of your state and local tax (SALT) deduction may come from your property tax bill.

When the SALT cap hinders how much you can claim, that could be problematic for your property tax bill, particularly in states with high property taxes.

Worst states for SALT Cap

While taxpayers in all states can be affected by a sustained SALT cap, seven could be hit the hardest when looking at the state and local tax collections per capita from the Tax Foundation:

District of Columbia (D.C.), where taxpayers pay an average of $14,974 in annual state and local taxes.
New York with an average of $12,685 per capita.
California, at $10,319 per capita.
Connecticut with $9,718 per capita.
Hawaii, with $9,503 per capita.
New Jersey at $9,366 per capita.
Massachusetts, with $9,341 per capita.

Although the above figures may have some state and local taxes that aren’t SALT deductions, per capita figures include property taxes, income taxes, and sales taxes — all of which may be included in SALT.

And keep in mind, the per capita numbers are just averages. SALT caps can significantly impact taxpayers who pay more in state and local taxes, especially as property tax rates soar.

Bottom line: Property tax rates are on the rise

Property taxes on single-family homes have risen nearly 7% in recent years, per ATTOM, a real estate data company.

That’s almost double what the rate was the year before, and the largest in the last five years.
If property taxes continue to rise, and the SALT cap remains, taxpayers could be sandwiched between having to pay higher property tax bills and being unable to claim a full deduction on those increased costs.

You may want to consult with a tax professional to prepare for legislative outcomes. Many families choose mid-year to get some tax planning done, and staying ahead of the curve can help you best respond to changes made on Capitol Hill.

Is Your State Coming For Your Online Sports Bets?

Kate Schubel — Sun, 22 Jun 2025 19:07:00 +0000

Many have been glued to their television screens watching the World Series and the National Basketball Association (NBA) finals. But if you’re placing bets on your favorite teams, watch out. Your state might be coming for those winnings.

Online sports betting has grown in recent years, with the American Gaming Association reporting a record-breaking $3.87 billion in the first few months of 2025 alone.

However, with the rise of sports betting comes the unfortunate potentiality of higher taxes on gambling wins and losses. The federal tax policy remains the same. But state legislatures are looking for ways to take advantage of the industry’s popularity.

Here are the states that have either recently increased or proposed bills to hike sports betting taxes in 2025.

Sports betting tax increase

Kiplinger used the online sports bet tax rates from the Tax Foundation to determine which states currently enact a sports betting tax. Data was then collected and compiled for states that recently increased, or are currently considering increasing, their online sports bets taxes. Here they are.

*Note: Sports betting isn’t legal in all 50 states. Check your local laws before placing a bet.

Colorado online sports betting

Colorado Gov. Jared Polis recently signed into law the elimination of a bet tax incentive that could affect all Centennial State sportsbooks.

Currently, sportsbook operators can deduct a certain percentage of “free bets” from their taxable revenue.
However, HB 1311, backed by bipartisan sponsorship, will gradually eliminate that deduction until it is completely phased out by July 1, 2026.

Colorado already taxes online sports bets at a rate of 10%, making it the 19th most expensive state tax in the U.S., according to Tax Foundation data.

And the new law is expected to reduce the number of promotions offered to bettors, thereby increasing tax revenue in the state. Some speculate this will make U.S.-based sports betting operators less attractive than offshore operators, which could potentially harm the domestic sports betting industry in Colorado.

Regardless, the new sports betting law goes into effect on July 1, 2025, limiting free bet deductions to just 2% per month. The rate drops again to 1% on January 1, 2026, before completely disappearing in July 2026.

Illinois sports betting fee

Per the Tax Foundation, Illinois sports betting taxes are the 12th-highest in the nation. But starting July 1, 2025, the Land of Lincoln will add yet another online sports betting tax.

Currently, Illinois sportsbooks are taxed on an Adjusted Gross Sports Wagering Receipts (AGSWR) tier system:

The first $30 million of AGSWR is taxed at a rate of 20%.
AGSWR between $30 million and $50 million is taxed at 25%.
AGSWR between $50 million and $100 million is taxed at 30%.
AGSWR between $100 million and $200 million is taxed at 35%.
AGSWR exceeding $200 million is taxed at 40%.

Under the new law, there will be an additional per-wager tax of 25 cents levied on sportsbooks for the first $20 million of online sports bets placed every fiscal year.

Any wagers placed above that amount will have the tax doubled to 50 cents per bet.

The new law has prompted larger operators like FanDuel to announce a 50-cent transaction fee on every online wager placed in the Prairie State.

CNBC news also reports that DraftKings “anticipates taking action [due to the tax increase] and expects to share more information soon.” In short, sports betting may be getting more expensive in Illinois.

Louisiana sports betting online

Louisiana may also soon have a tax hike on online sports bets.

HB 639, sponsored by Rep. Neil Riser (R-Columbia), would increase sports gambling tax in the Bayou State from 15% to 21.5%. One-fourth of the increase would support college athletes at Louisiana’s public universities.

The funds could be used for scholarships, insurance, medical coverage, facility improvements, and other student-athlete expenses at the NCAA Division I level.

But with a higher rate of 21.5%, Louisiana could bump the state from the 12th most expensive state to place a sports bet to the 5th, per Tax Foundation data.

Yet the bill has already passed both the House and the Senate, and is expected to be signed into law by Gov. Jeff Landry.

Legal online sports betting in Maryland

Maryland recently increased its online sports betting tax, effective July 1, 2025.

HB 352, part of the state’s Budget Reconciliation and Financing Act, will increase the mobile sports betting taxes from 15% to 20%. While not as dramatic as a previously proposed 30% tax, the rate could lead to less attractive odds or fewer promotional opportunities for bettors.

Sports betting operators generally oppose tax increases due to potentially lower payouts for winning bets and fewer funds for free bets and other promotions (per the National Conference of State Legislatures).

Some also speculate that sports betting operators will pass on the higher tax rates to consumers.

However, it’s important to note that in-person Maryland sports betting will remain at 15%, even after July 1. The Free State currently has the 12th highest sports bet tax in the nation, according to Tax Foundation data.

Sports betting legality in Massachusetts

Massachusetts is considering increasing its tax on online sports betting from 20% to a whopping 51%. This would make the Bay State one of the worst places to sports bet tax-wise, per the Tax Foundation.

The “Bettor Health Act,” proposed by Sen. John Keenan (D-Quincy), would raise the tax rate on sports bets to address “economic, health, and social harms caused by sports betting.”
The bill would also ban prop bets (event-specific wagers in a game) and set daily and/or monthly betting limits.

However, it’s important to note that a similar attempt was made last year by Keenan and failed to garner support in the state Senate.

Bettors can place wagers on basketball, soccer, and baseball via online sports bets. (Image credit: Getty Images)

Can you do sports betting in New Jersey?

Earlier this year, New Jersey Gov. Phil Murphy proposed increasing the online sports betting tax rate.

The proposal, included in the state’s budget plan, would almost double the state tax from 13% to 25%.
Online casino gambling tax rates would also increase, from 15% to 25%.

The additional revenue could address the projected budget deficit and boost funding for programs benefiting older adults and those with disabilities.

However, New Jersey currently has the 16th highest sports bet tax in the nation, according to the Tax Foundation. Some speculate that an increased tax on sports betting operators would be passed on to consumers and could negatively impact the industry.

Is sports betting legal in North Carolina?

Sports betting taxes in North Carolina are the 11th highest in the U.S. at 18%, per Tax Foundation data. But that’s not stopping state lawmakers from considering a raise on the state's sports tax.

Thanks to a proposed budget from the North Carolina Senate, the sports bet tax rate could double to 36%.

The state Senate estimates the tax rate increase could generate $53.4 million alone in the next fiscal year. The additional revenue could be used to fund university athletic departments and the Youth Outdoor Engagement Commission.

However, the North Carolina House of Representatives’ budget proposal does not increase the sports wagering tax rate in the state, suggesting a potential disagreement on policy within the state House and Senate Republican majorities.

The goal is to finalize the state’s budget by July 1, 2025, and submit it to North Carolina Gov. Josh Stein for approval.

Ohio tax bill on sports betting

Ohio lawmakers may make history with new sports betting taxes in the state.

Introduced by Sen. Louis Blessing III (R-Colerain Township), SB 199 would add a 2% tax on the “betting handle” (total amount wagered by bettors).
The tax would be in addition to the usual 20% tax on online sportsbook gambling revenue that the Buckeye State currently enacts.
This would make Ohio the first state to tax both sports betting handles and revenue.

Funds raised by the tax increase would support publicly owned sports facilities, interscholastic athletics, and public school extracurricular activities.

However, this isn’t Ohio’s first rodeo with proposed gambling tax increases.

Earlier this year, Ohio Gov. Mike DeWine proposed doubling the sports betting rate to 40% as part of his budget bill. While the newest tax proposal isn’t entirely the same, DeWine’s bill received significant backlash from Republican lawmakers.

The pushback may be good news for Ohio bettors, as their state already ranks as the 6th highest online sports betting tax rate in the nation, per Tax Foundation data.

Sports betting in Wyoming

A Wyoming legislative committee is proposing to raise the state sports betting tax rate in 2025. The proposal would double the online sports wagering tax rate to 20%.

The bill would be part of a broader push to raise taxes on gambling in the state, including on skill-based amusement games and historic horse racing, according to local news outlets.

This could harm the Cowboy State’s relatively low tax rate of 10%, which the Tax Foundation puts at the 19th most expensive sports betting tax rate in the U.S.

However, the bill is still being drafted and is expected to be considered in the next legislative session.

Don't Miss These Four Tax Breaks for Americans Living Abroad in 2025

Gabriella Cruz-Martínez — Mon, 16 Jun 2025 13:47:00 +0000

The tax deadline for U.S expats was June 16, but there are some tax credits and deductions you can still claim if you're an American living abroad.

Living overseas won’t let you off the hook from certain tax obligations, as you’re still required to file a tax return with the IRS. For some taxpayers, that means facing the burden of double taxation or having to file taxes both in the U.S. and their country of residence.

One of President Donald Trump’s campaign pledges included ending what some consider unfair double taxation for American expatriates. But the Trump administration has yet to keep that promise, so Americans living overseas needed to file their 2024 tax returns by the extended June 16 deadline.

Each year, many Americans choose to retire abroad to save on taxes. Luckily, there are ways you can reduce your U.S. tax burden further through credits and deductions.

There’s more: One of the tax credits on this list may be enhanced under the GOP’s version of Trump’s ‘One Big Beautiful Bill.’

Here are some key tax breaks that you don’t want to miss out on in 2025.

1. Foreign Earned Income Exclusion

One of the most popular tax breaks for U.S. expats is the foreign earned income exclusion (FEIE), which allows you to exclude some or all of your foreign earned income from your federal income taxes.

For the 2025 tax year (taxes due in 2026), eligible taxpayers can exclude up to $130,000 of their foreign earned income (that’s up from $126,500 for the 2024 tax year).

The exclusion is calculated using IRS Form 2555 and helps prevent double taxation on income earned abroad.

The FEIE is available to U.S. expats who:

Have earned income from work in a foreign country
Are self-employed and work outside of the U.S. or Puerto Rico
Pass either the Bona Fide Residence Test or the Physical Presence Test

Taxpayers must also be physically present in a foreign country for at least 330 days during the tax year to claim the FEIE.

2. Foreign Housing Exclusion

If you live abroad as an American, you can also get a potential federal tax break for your housing expenses with the foreign housing exclusion or a deduction. This benefit can be used alongside the foreign earned income exclusion (FEIE).

The foreign housing exclusion or deduction must be for your tax home, meaning that the property is located in your main country of employment, post of duty, or business.

What’s the foreign housing exclusion? This tax break allows you to exclude qualified housing expenses from your foreign income. Generally, this is up to 30% of the maximum foreign income exclusion.

For tax year 2025 (taxes filed in 2026), that amount is $39,000.
The limit for 2024 (taxes typically filed earlier this year) was $37,950.
This limit can vary depending on the location of your foreign tax home and the number of qualifying days in the tax year.

The foreign housing deduction works differently. The main difference is that only self-employed expats can claim this tax break.

3. Foreign Tax Credit

Taxpayers who paid or accrued certain foreign taxes can reduce their double tax burden by considering the foreign tax credit (FTC). To claim this credit, a tax must be imposed on you by a foreign country or a U.S. possession. For example, this can be a tax on an estate or investment.

Unlike the FEIE, the FTC provides a dollar-for-dollar credit for foreign taxes paid and applies to both earned and passive income. This tax break also allows taxpayers to carry over unused credits in future years.

You can claim this credit by filing the IRS Form 1116. Corporations must file IRS Form 1118 to claim the foreign tax credit.

On the flip side, if you want to itemize your deductions on foreign taxes, file a Schedule A (Form 1040). A few examples of itemized deductions include medical expenses, gifts to charities, and job expenses.

4. Child Tax Credit 2025

The federal child tax credit (CTC) is a tax break designed for families with qualifying children, and it's available to U.S. citizens who reside in foreign countries.

Here’s the catch: You won’t be able to claim the CTC if you use the foreign earned income exclusion, but you can if you claim an FTC.

As it stands, eligible households can claim up to $2,000 per child under the age of 17. If the credit surpasses your tax liability, you can receive some or all of the difference as a refundable credit.

The refundable portion of the CTC, known as the Additional Child Tax Credit, is worth 15% of a family's earnings above $2,500 — up to a maximum of $1,700 per child for tax year 2024 (taxes typically filed in 2025).
This credit phases down once a household income surpasses $200,000 for single parents or $400,000 for married couples.

Potential changes for the CTC

This version of the federal child tax credit under the Tax Cuts and Jobs Act of 2017 (TCJA) is slated to expire this year. If the Republican-controlled Congress doesn’t pass a legislative tax package, this means that the CTC will revert to $1,000 per child under age 17 after the end of the year.

As reported by Kiplinger, Republican lawmakers have proposed an expanded CTC in their version of Trump’s One Big Beautiful Bill.

The measure, which is currently undergoing revisions at the U.S. Senate, proposes the following changes to the CTC:

Increasing the full child tax credit amount to $2,500 per child through 2028.
Setting the full credit amount to $2,000 for subsequent tax years.
Applicants must have a Social Security number to qualify for the credit.

For more information on how the would-be expansion of the child tax credit would work, see: Here’s How the Child Tax Credit Could Increase Under Trump.

Need more time to file your taxes?

While most taxpayers file their taxes on April 15, the IRS automatically grants U.S. expats a two-month extension. This year, that deadline is June 16.

If you need more time to get your tax documents in order, you can request an additional extension through Oct. 15, 2025. However, you’ll have to act fast to avoid penalties.

To request an extension, you must file a Form 4868 (Application for Automatic Extension of Time to File U.S. Individual Income Tax Return) before June 16.
Keep in mind, an extension to file does not exempt you from interest on unpaid taxes.
Interest continues to accrue as of April 15, per IRS regulations.

Living abroad as an American can have its set of advantages and tax perks, as some countries can allow you to stretch your retirement savings. For instance, many Americans flock to Panama for its retirement benefits and no tax on inheritance.

Still, you’ll have to meet U.S. tax obligations for the time being. If you’re unsure of how to handle your taxes while living overseas, or want more tips on which tax breaks you may be eligible for, consult an international legal or tax professional.

For more tax tips for U.S. expats:

Government Watchdog Warns More IRS Layoffs to Come

Gabriella Cruz-Martínez — Wed, 14 May 2025 15:37:00 +0000

The 2025 tax season has wrapped up, and the IRS is set to experience another gutting of its workforce this week — or is it?

As many as 5,000 IRS employees reportedly accepted the Trump administration’s “fork-in-the-road” deferred resignation offer, initially provided earlier this year. Most of those workers were told to work until May 15, because the agency characterized their work as “essential” to the 2025 tax season.

Now, some Treasury Department and IRS employees are reportedly being told they must work through June 30, and can go on administrative leave starting July 1. This could include call representatives and employees who are still processing tax returns.

The timeline for the layoffs, orchestrated by the Trump administration’s efforts to downsize the federal government, caused problems for taxpayers across the country. Multiple tax preparers told Kiplinger that their communication with revenue officers was becoming a black hole.

“We suspect that this means that those revenue officers are no longer with the IRS, and we have to wait for a new one — from the already reduced pool of revenue officers to be assigned,” said Logan Allec, CPA and founder of Choice Tax Relief.

Here’s a snapshot of what the IRS layoffs looked like this tax season, and what it could mean for you going forward.

Nearly 5,000 IRS employees resigned

The disruptions at the IRS began nearly as soon as President Donald Trump began his second term in January, when federal employees were surprised with a controversial “fork-in-the-road” deferred resignation offer.

The offer would grant federal employees full pay and benefits through September 30 in exchange for their resignation. As reported by Kiplinger, IRS employees deemed critical to the tax season could accept the offer but were told to work through May 15, one month after the April 15 tax deadline.

An analysis by the Treasury Inspector General for Tax Administration (TIGTA) revealed that:

A total of 4,128 employees accepted and were approved for the deferred resignation program (DRP).
As of March, an additional 552 applications were eligible and pending approval.
Nearly half (47%) of approved applicants were older than 55.

Overall, more than half of the employees who accepted the DRP were placed on administrative leave.

IRS layoffs 2025: Probationary employees targeted

As more experienced IRS employees accepted Trump’s deferred resignation offer, newer federal workers were placed on the chopping block.

The Office of Personnel Management (OPM) sent a memorandum asking federal agencies to identify probationary employees in January. These workers were defined as those who had served “less than one year in a competitive service appointment, or less than two years in an excepted service appointment.”

Specifically, the memo said that probationary employees could be terminated “without triggering Merit Systems Protection Board appeal rights.”

In response to executive orders, the IRS Human Capital Office created an initial list of probationary employees to be let go. Employees deemed essential to the tax filing season from the Taxpayer Services, Taxpayer Advocate, and Information Technology departments were exempt from this list.

As many as 7,315 probationary employees received termination notices on February 20, according to the analysis. These workers were temporarily reinstated in March as part of ongoing court challenges, only to be fired again. The legal battle continues.

According to TIGTA, most of the 7,315 probationary employees who received termination notices had less than one year of experience with the IRS.

6,669 employees had been at the IRS for 1 year or less.
615 employees had between 1 and 5 years of service at the agency.
31 employees had worked at the IRS for more than 5 years.

Notably, probationary employees who received termination notices were under the age of 40. A total of 549 of those let go were under 25 years old, while 3,466 were between 25 to 39 years old.

Thousands forced to leave the IRS

Arlen Rusch, a former Internal Revenue Service worker, shows the termination notice and leaves her office after being laid off in downtown Denver, Colorado on Thursday, February 20, 2025. (Image credit: Hyoung Chang/The Denver Post via Getty Images)

As of February, the IRS had a headcount of 103,000 federal employees. The Trump-orchestrated reductions to the workforce shrank this figure by 11%, according to TIGTA.

Overall, 11,433 of the tax agency's employees were terminated because of their probationary status or were approved to accept the deferred resignation.

A deeper dive into job titles showed which employees were most affected by IRS layoffs, for instance:

As many as 3,623 (or 31%) of revenue agents either received termination notices or accepted the DRP.
Some 2,599 IRS contact representatives, who help taxpayers with tax-related issues, also left the agency.
A total of 1,614 (or 10%) of tax examiners separated from the IRS.

More layoffs are on the horizon

An IRS employee walks through tax documents in the staging warehouse at a Internal Revenue Service facility in Ogden, Utah. (Image credit: Alex Goodlett for The Washington Post via Getty Images)

The IRS is offering three voluntary separation programs, including the Treasury Deferred Resignation Program (TDRP), which “will mirror the benefits of the first DRP offering.”

The agency extended the Trump-instructed TDRP to all employees in April. According to the IRS, over 23,000 employees applied for the program, and 13,124 were approved as of April 22, 2025.

TIGTA also noted that the IRS announced in April that it had begun implementing a reduction-in-force (RIF) that would result in “staffing cuts across multiple offices and job categories.” These reductions would target the Office of Civil Rights and Compliance, which was formerly known as the Office of Equity, Diversity & Inclusion.

An internal IRS memo said that 5% of this office had left through the deferred resignation program and attrition, and that an additional 75% of the office would be “reduced through a RIF.” That same month, the IRS announced that it had initiated a RIF for the Taxpayer Experience Office and the Office of Equity, Diversity & Inclusion in Taxpayer Services.

TIGTA noted that it would periodically update its report on IRS reductions to the workforce and operational areas that are impacted by the cuts.

What’s next for the IRS

Before the disruptions in the IRS workforce began, the agency had over 100,000 employees — a staffing milestone not seen in 30 years.

Nearly half of the IRS workforce belongs to Taxpayer Services, which is tasked with processing tax returns and handling the high volume of calls during tax season, among other duties.

The IRS is known for having an “all hands on deck” approach to tax season, often siphoning employees from departments to Taxpayer Services to meet tax filing deadlines. The recent wave of layoffs sparked concerns over the future of the agency and whether taxpayers will be given a fair experience.

Trump has suggested abolishing the IRS and replacing the agency with a tariff-led revenue system administered by a so-called External Revenue Service. To date, the Senate has yet to confirm President Trump’s choice for commissioner, and it remains unclear when the hearing will be scheduled. Additionally, the IRS has lost several members of its leadership.

Stay tuned for more updates on how the IRS layoffs can impact you next tax season.

Ask the Editor, May 9 — Reader Questions on QCDs

joy.taylor@futurenet.com (Joy Taylor) — Fri, 09 May 2025 20:56:00 +0000

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at five questions on qualified charitable distributions. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1: QCDs and 401(k)

Reader Question: Can I make a qualified charitable distribution (QCD) from my 401(k) this year?

Joy Taylor, Editor, The Kiplinger Tax Letter
No, QCDs cannot be done from a 401(k) or other workplace retirement plan. A QCD can only be done from an IRA.
People age 70½ and older can transfer up to $108,000 in 2025 from a traditional IRA directly to charity. QCDs can count as all or part of your required minimum distribution (RMD), but they are not taxable, and they are not added to your adjusted gross income. The QCD strategy is a good way to get tax savings from charitable gifts for taxpayers not itemizing because of higher standard deductions.

2: How to do a QCD

Reader Question: Someone told me that the only way I can do a QCD is for my IRA custodian to directly transfer the money from the IRA account to the charity. Is this true?

Joy Taylor, Editor, The Kiplinger Tax Letter
It depends on the IRA custodian. It is true that only transfers from your IRA directly to charity are considered QCDs, but different IRA custodians have their own procedures for complying with this. Some will require that the check go directly from the custodian to the charity. Others will, at the account owner’s request, have the check written from the IRA account and send the check to the IRA owner to forward to the charity. Vanguard, for example, allows this second approach. Both procedures work for QCDs. What is not acceptable is for the custodian to write the check to the IRA owner, who then deposits the money and writes a check from his or her own account to the charity.

3: Charitable Gift Annuity

Reader Question: I’ve been receiving requests from my alma mater about doing a QCD through a charitable gift annuity. I thought QCDs could only go to a section 501(c)(3) charity. Have the rules changed?

Joy Taylor, Editor, The Kiplinger Tax Letter
As a general rule, in a QCD, the money must generally go to a section 501(c)(3) organization. The 2022 SECURE 2.0 legislation provided an easing to this. It allows IRA owners to do a one-time (not annual) QCD of up to $55,000 for 2025 through a charitable gift annuity, charitable remainder unitrust or a charitable remainder annuity trust. Many private colleges with charitable gift annuity programs are touting the QCD option. If you already did this in 2023 or 2024, you can’t do it again.

4: Deductible IRA Contributions

Reader Question: I am working and made a tax-deductible contribution of $3,500 to my traditional IRA in 2024. I also did a QCD that year. My accountant told me that I don’t get the full advantage of the QCD because I also contributed to my IRA. Is that true?

Joy Taylor, Editor, The Kiplinger Tax Letter
Yes. There’s a special rule if you do a QCD and you make tax-deductible contributions to a traditional IRA after 70½. Essentially, these post-70½ contributions reduce your allowable tax-free QCD amount until used up. Post-70½ deductible contributions to a SEP or SIMPLE IRA aren’t affected.
Let’s take a simple example:
A 75-year-old working man is planning to do a QCD for the first time in 2025. For 2021, 2022, 2023 and 2024, he made tax-deductible contributions to his traditional IRA totaling $23,000. In 2025, the man does a QCD and transfers $20,000 from his IRA directly to charity. He would owe income tax on the full $20,000 because it is less than the $23,000 of post-70½ tax-deductible IRA contributions. Let’s say that in 2026, he then transfers another $15,000 to charity directly from his IRA. $12,000 will be a nontaxable QCD, and $3,000 will be treated as a normal distribution.

5: What's the maximum QCD for spouses?

Reader Question: My wife and I want to max out donations from our IRAs to charity this year. What is the maximum QCD we can make for 2025?

Joy Taylor, Editor, The Kiplinger Tax Letter
$108,000 per IRA owner. Since you are married, you and your spouse can each potentially give up to $108,000 in QCDs from your separate IRAs, making the maximum QCD $216,000, provided each of you has substantial amounts in your IRAs. But let’s say you have a $70,000 balance in your IRA, and your wife has an IRA worth $1.2 million. In this situation, your QCD cap is limited to $70,000, and your wife’s QCD cap is limited to $108,000. Your wife won’t be able to make a QCD of $146,000 to make up for the deficit.

About Ask the Editor, Taxes

Subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can ask Joy questions about tax topics. You'll find full details of how to submit questions in The Kiplinger Tax Letter and The Kiplinger Letter. (Subscribe to The Kiplinger Tax Letter or The Kiplinger Letter.)

We have already received many questions from readers on topics related to charitable contributions, gifts and more. We’ll answer some of these in a future Ask the Editor round-up. So keep those questions coming!

6 Ways to Use AI to Improve Your Financial Life

Bob Haegele — Tue, 06 May 2025 12:00:00 +0000

Personal finances can be tricky to manage, especially if you find your life becoming increasingly complicated. To make matters worse, we sometimes let emotions get the best of us, leading to less-than-ideal financial decisions. If this sounds too familiar, artificial intelligence (AI) can help overcome these challenges and improve your financial life.

AI is particularly helpful if you need assistance with basic financial tasks and principles. Keep in mind, though, that for now, it can't match the advice of a human financial adviser.

Still, AI can be an excellent companion as you aim to keep up with the demands of modern society. Take a look at how you can use it.

1. Learn finance basics with AI

AI is not a personal finance expert, but one area where it can excel is in helping you learn the basics. It serves as an interactive companion that excels at explaining fundamental financial topics.

For instance, if you want to learn about budget categories or debt payoff strategies, AI chatbots like ChatGPT and Perplexity can take you through a crash course. You can also ask the chatbots to explain tools like mortgages, refinancing and different types of savings accounts.

But remember, an area where AI can fall short is in providing personalized advice. It can engage in a dialogue, but that isn't quite the same as working with a financial adviser.

A human adviser will ask for your complete financial picture, including your expenses, debts and income sources. If you don't disclose these to an AI — which you should not out of AI privacy concerns — it may not provide the best advice.

Stack Social is currently offering a deal to save 80% on a bundle of courses about generative AI and ChatGPT.View Deal

2. Manage your budget with AI

(Image credit: Getty Images)

You may not have time to track every little expense and whether your budget is balanced, but AI can take the manual work out of budgeting. Companies already exist that use AI to give budgeting advice – and you might already be using it without realizing.

For example, Cleo is an AI chatbot with a sense of humor that can help you navigate your budget shortfalls. Rocket Money, a more traditional financial analysis app, utilizes artificial intelligence to analyze your budget and pinpoint areas for improvement.

The benefit of the best budgeting apps is that they can eliminate the need for manual tracking. They typically let you connect your financial accounts and automatically populate your income and expenses.

This allows you to quickly view a summary of your finances, including areas where you spend the most. Some might even offer suggestions on how to optimize your budget and spend less.

Another way people have used AI to manage budgets is by asking chatbots specific questions. For example, you can ask an AI-powered bot to build a grocery list that fits a certain weekly budget and dietary needs, or ask Perplexity to compare rates at local auto shops or dry cleaners. You should, however, review their responses as the technology is not perfect – yet.

3. Automate your investing with AI

Investing strategies are virtually unlimited, with endless suggestions on how to build a better portfolio and beat the market. And with nerves and emotions tied up in money, investing decisions can be reactionary, with people buying and selling stocks and other investments based on the day's news stories. Letting your emotions guide your investing decisions rarely produces the best outcomes.

AI can automate your investing strategy with tools like robo advisers. These use algorithms to optimize your portfolio according to your preferences, such as income and time until retirement. They typically charge a management fee, but they are often lower than the fees you would pay to work with a traditional wealth adviser.

While robo advisers utilize algorithms that are sometimes referred to as AI, this is distinct from the technology employed by chatbots like ChatGPT. AI chatbots utilize large language models (LLMs) to generate responses, while robo advisers employ proprietary algorithms that inform investment decisions.

Various robo adviser options are available, including those from fintech companies and traditional financial institutions. Popular examples include Betterment, Schwab Intelligent Portfolios and Vanguard Digital Advisor.

Read more: How AI Can Be Used in Investing

4. Use AI to raise your credit score

(Image credit: Getty Images)

Understanding your credit score can be challenging. Credit score factors are often reported monthly, resulting in significant delays before they impact your credit.

This is another case where you may not necessarily know you're using AI, but companies use it to power suggestions for you. Tools like Experian Boost and Credit Karma are designed to understand how credit-scoring models work. They consider each credit score factor, such as payment history and credit utilization, then provide suggestions for how you can improve your credit score.

Similar to robo advisers, these tools don't rely on LLMs when making suggestions. However, they do rely on large amounts of data. For example, Credit Karma uses Intuit data to make AI-powered recommendations to its users.

Credit scoring is complex, and it typically takes time to recover from a rocky credit history. And if you have a significant amount of debt dragging down your credit score, you might benefit from working with a debt counselor.

Nevertheless, AI does a reasonably good job of helping you understand how you can improve your credit score.

5. Do your taxes with AI

Doing your own taxes can theoretically save you money, but it doesn't always work out that way. For instance, if you are self-employed, there may be many items you can deduct — but you may not know what's eligible and so miss out on those savings. Still, not everyone can afford to pay a professional to prepare their taxes.

This is another area where AI can help. First, you can talk to a chatbot for advice, for example by asking ChatGPT for suggestions of what a self-employed person can deduct. You can also ask a bot to explain IRS forms and rules in more digestible language.

In fact, companies like Blue J and TaxGPT have begun popping up to fit this exact use case. Additionally, even H&R Block and TurboTax have launched AI chatbots for users, which are reportedly getting better and better each year.

Aside from chatting with a bot, tax preparation companies have already begun utilizing AI to streamline tax filing. Some companies, like FlyFin, Keeper and Gelt combine AI and CPAs to help you do your taxes.

"AI can now automate a large portion of the tax filing process, even going so far as to create tax forecasting on a client’s behalf based on their last year’s return," Rachel Richards, CPA and head of product at Gelt, says. "Such automation not only saves time but provides both clients and their advisers with improved insight into the future ahead of them, allowing for smarter planning throughout the year."

However, Richards also notes that AI is not enough to handle tax prep on its own, so don't run off and try to use an AI agent to file. This is because taxes are highly personal, influenced by personal goals, investments and life events.

"Human guidance continues to be important for dealing with gray areas and modifying advice to meet each individual's own financial situation," Richards says.

Ultimately, you are responsible for mistakes made in your tax return, so you should check everything yourself or with a tax professional before filing.

6. AI for retirement planning

(Image credit: Getty Images)

When planning for retirement, several key factors must be considered, including investment income, Social Security benefits and the rising costs of health care. Balancing all these factors in your retirement can be tricky, but AI can help you start putting together a basic retirement plan.

One way AI can help with retirement planning is by modeling an optimized withdrawal order, says Doug Carey, CFA, at WealthTrace, a retirement planning software company: "Instead of following a static rule-of-thumb where retirees withdraw from taxable accounts first, AI models can run simulations to figure out the best withdrawal order."

While you can pose these questions to bots like ChatGPT and Perplexity (being sure to protect your privacy), as Kiplinger retirement writer Donna Fuscaldo recently reported, companies have begun leveraging AI to help answer retirement questions like withdrawal orders or whether to convert a traditional IRA or 401(k) to a Roth IRA.

Although these decisions are complex, Carey says AI is great at helping to make them. However, AI is only a starting point when planning for retirement. Remember that it often falls short of working with a human financial adviser when seeking personalized advice.

Learn more about AI

Ask the Editor, May 4 — Questions on Tax Deductions, Losses

joy.taylor@futurenet.com (Joy Taylor) — Sun, 04 May 2025 14:02:30 +0000

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at five questions on tax deductions and losses. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

1: Theft loss

Q. I was a victim of internet fraud and lost a lot of money. Can I claim this loss on my Form 1040?

A. Depending on the circumstances, this might be a deductible theft loss that you can claim on Schedule A of your 1040 if you itemize. A deductible theft loss must be incurred in a transaction entered into for profit or in a trade or business. Personal theft losses not connected with these two factors aren’t deductible through 2025. The analysis is based on facts and circumstances.

The IRS released a legal memorandum in mid-March that can help with this analysis. In the memo, IRS lawyers addressed five scenarios involving common internet scams and ruled whether a victim could deduct a theft loss. In each fact pattern, the victim owned IRAs or taxable accounts and transferred funds from the accounts to the scammer or to new accounts that the scammer controlled. Essentially, individuals who were victims of kidnapping or romance scams can’t deduct their theft losses because they are personal. The result is more favorable for victims of scams in which the scammer convinced them that their existing account was compromised or that they could put funds into an investment with better returns.

You can read the IRS memo [opens PDF]. You can also read more on the subject in IRS Publication 547, Casualties, Disasters and Thefts. Additionally, I would suggest that you consult with a tax professional, such as a CPA, before making any decision as to the deductibility of your loss.
— Joy Taylor, Editor The Kiplinger Tax Letter

2: Leasing a car for business

Q. I am self-employed. I lease a car that I use 80% for business and 20% for personal use. Can I deduct my car lease payments on Schedule C of my Form 1040?

A. Yes. If you lease a vehicle for use in your business, you can opt to use actual expenses to figure your deductible expense. You can deduct the part of each lease payment that is for business. There’s also this oft-forgotten rule: If you lease a car worth more than a certain value ($62,000 in 2025), you must pay income tax for each year of the lease term on an amount shown in IRS tables. The extra income partially offsets the lessee’s tax deduction of the lease payments and is intended to approximate the squeeze on buyers from the cap on depreciation. Note that you don’t add the amounts to your income when filling out your tax return. Instead, you reduce the size of your deduction for the lease payments on the vehicle.

Here’s a simple example.
You’re self-employed and in 2025, you lease a car for use in your business that is valued at $71,000. You must reduce the deduction for the lease payments on Schedule C of your Form 1040 each year by the amount shown in Table 3 of IRS Revenue Procedure 2025-16 [opens PDF]. If you use a leased car in business 80% of the time, you can only deduct 80% of the lease payments, and you would include 80% of the numbers in Table 3 of Revenue Procedure 2025-16 as a reduction to your deductible lease payments.

IRS Publication 463, Travel, Gift and Car Expenses, delves into these rules in more detail.
— Joy Taylor, Editor The Kiplinger Tax Letter

3: Qualified Business Income (QBI) deduction

Q. The 20% qualified business income deduction is set to expire after 2025. Do you think Congress will extend this tax write-off?

A. Yes, it’s quite likely that the qualified business income (QBI) deduction will be extended if Congress is able to pass its large tax, border security and energy bill this year.

Self-employed people, independent contractors and owners of LLCs, S corporations and other pass-through entities can deduct 20% of their QBI, subject to limitations for individuals with taxable income in 2025 of more than $394,600 for joint filers and $197,300 for single filers and head-of-household filers. (The 2024 amounts are $383,900 and $191,950.)

This deduction ends after 2025, unless Congress acts. It was first enacted in the 2017 Tax Cuts and Jobs Act to provide some federal income tax parity between C corporations, which are taxed at a 21% rate, and pass-throughs, in which the individual owners pay income tax on earnings up to a 37% tax rate. Republican lawmakers want to extend the QBI deduction. And they have lots of support from lobbying groups representing Main Street businesses.
— Joy Taylor, Editor The Kiplinger Tax Letter

4: Deduction for rental profit

Q. I own rental homes and generate a profit from them that I report on Schedule E of my 1040. I heard that I can get a tax deduction for 20% of the profit. Is that true?

A. It depends. Rental income reported on Schedule E of the Form 1040 may, in some cases, be eligible for the 20% qualified business income deduction (discussed above). The IRS’s regulations say the rental activity must generally rise to the level of a trade or business, a standard which is based on each taxpayer’s particular facts and circumstances. Alternatively, there is a safe harbor if at least 250 hours a year of qualifying time are devoted to the activity by the taxpayer, employees or independent contractors. Time spent on repairs, collecting rent, negotiating leases and tenant services counts. Taxpayers who use the safe harbor must meet strict recordkeeping requirements and attach an annual statement to their tax returns. Meeting the safe harbor will let you treat the rental activity as a trade or business for QBI purposes. Note that you would take the QBI deduction on line 13 of your Form 1040 after completing Form 8995 or 8995-A.
— Joy Taylor, Editor The Kiplinger Tax Letter

5: Home office deduction

Q. My employer closed its office, and I now work fully remote from home for that employer. Can I claim the home office deduction if I itemize on Schedule A of the Form 1040?

A. No. Prior to 2018, certain employees could deduct the cost of home office expenses as unreimbursed employee costs included in Schedule A miscellaneous itemized deductions, subject to the 2%-of-adjusted-gross-income threshold. But the 2017 Tax Cuts and Jobs Act repealed this group of tax breaks through the end of 2025. We don’t know yet whether this prohibition on deducting employee business expenses will get extended past 2025.

The home office deduction is still available to self-employed people or independent contractors who file Schedule C with their 1040 and use a room or space in their home or apartment exclusively and regularly as their principal place of business. If you are self-employed and qualify for the write-off, there are two ways to figure the deduction. You can allocate your actual costs on Form 8829. Or you can use a simplified option by deducting $5 per square foot of space used exclusively for business, up to 300 square feet, resulting in a $1,500 maximum write-off.
— Joy Taylor, Editor The Kiplinger Tax Letter

We have already received many questions from readers on topics related to inherited IRAs, gifts, qualified charitable contributions and more. We’ll answer some of these in a future Ask the Editor round-up. So keep those questions coming!

Subscribers of The Kiplinger Tax Letter and The Kiplinger Letter can ask Joy questions about a tax topic. You'll find full details of how to submit questions in The Kiplinger Tax Letter and The Kiplinger Letter. (Subscribe to The Kiplinger Tax Letter or The Kiplinger Letter.)

Ask the Editor: Reader Questions, April 25 — 529 plans

joy.taylor@futurenet.com (Joy Taylor) — Fri, 25 Apr 2025 16:26:00 +0000

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at five questions on 529 college savings plans. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

Q1: Unused Funds

We funded a 529 college savings plan for my son. We used money in the account for his college. He is now done with school, and there are still unused funds in the 529 account. What can we do with this money without paying tax on it?

If you funded a 529 plan, and the beneficiary decides not to go to college, or he or she did go to college, and there are funds remaining at the end, there are several tax-free options for using the leftover money:

Keep the funds in the account for the beneficiary’s grad school, etc.
Use the 529 money to pay for certain apprentice programs for the beneficiary.
Roll over leftover funds to a 529 plan for another family member’s education needs.
Use up to $10,000 to help pay off the beneficiary’s college debt. It’s important to note that this $10,000 is a lifetime limit, not an annual limit. 529 distributions for student loan repayments that exceed $10,000 are taxable in part to the extent of the excess and are also subject to a 10% penalty.
Roll over funds from a beneficiary’s 529 plan to an ABLE account for a disabled beneficiary or the beneficiary’s disabled siblings.
Some excess 529 funds can be transferred tax-free to a Roth IRA for the 529 beneficiary in a direct trustee-to-trustee transfer. There are key rules to meet: The 529 account must have been open for at least 15 years, with the same beneficiary. There is a $35,000 lifetime cap. 529 contributions made in the prior five years are ineligible for the transfer. And annual 529 distributions for this purpose can’t exceed the annual contribution limit for Roth IRAs, which is $7,000 in 2025.

Note that any actual contributions for the year made to any IRA owned by the beneficiary count against this limit. For example, let’s say a 529 plan beneficiary contributes $2,000 to his traditional IRA in 2025. Only $5,000 of leftover 529 funds can be transferred to his Roth IRA in 2025.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q2: Off-Campus Housing

My daughter is currently a sophomore in college. Next year, she and some friends are planning to live in an apartment off-campus. Can I use 529 funds to pay for her share of the rent, utilities and food?

Distributions from 529 plans used for college are tax-free. Eligible expenses include the cost of room and board for students enrolled at a college or university at least half-time, tuition, books, supplies, fees, computers and internet access. 529 funds can be withdrawn tax-free to cover off-campus housing, food and utilities, but the distribution amount cannot exceed the room and board allowance that the college includes in the cost of attendance. You should be able to get this figure from the college’s website.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q3: Study Abroad

Can I use 529 funds to pay for a college student’s studies abroad?

In many cases, yes. A 529 plan can be used for any college that participates in the U.S. federal student aid program. If a student is enrolled in a U.S. college and chooses to study abroad through the school’s program for a semester or two, the study-abroad program will be 529-eligible, provided the U.S. college is eligible and the college accepts the study-abroad credits. If the child decides to enroll in a non-U.S. college for his or her full college education, then that foreign university must participate in the U.S. federal student aid program. Believe it or not, many foreign colleges do participate and would therefore qualify as eligible schools for 529 purposes.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q4: Funding a 529 Plan

I am currently taking required minimum distributions (RMDs) from my traditional IRA. Can I roll over part of that RMD tax-free to fund a 529 plan for my granddaughter?

Unfortunately, there is no tax-efficient way to use money in your IRA to fund a 529 plan. So, for example, if you want to use your RMD money to put into a 529 account for your granddaughter, you will be treated as first receiving the RMD, which would be all or partially taxable to you, and then making a post-tax contribution to the 529 plan.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q5: Refund from the University

I used 529 funds to pay for my son’s college tuition and board. My son received a check from the college refunding some of the amount that was paid. Is that amount taxable to me?

The tax laws give relief in this situation, provided you act in a timely manner. Tax legislation enacted in 2015 waives tax and penalties if, after a distribution is made from a 529 account, the student gets a refund from the college or university. To qualify for relief, you generally must redeposit the funds into the 529 account for the same beneficiary within 60 days. The recontribution is treated as principal.
— Joy Taylor, Editor The Kiplinger Tax Letter

We have already received many questions from readers on topics related to annuities, health savings accounts and much more. We’ll answer some of these in a future Ask the Editor round-up. So keep those questions coming!

Ask the Editor: Reader Questions, April 18 — Amended Returns

joy.taylor@futurenet.com (Joy Taylor) — Fri, 18 Apr 2025 11:33:00 +0000

Each week, in our Ask the Editor series, Joy Taylor, The Kiplinger Tax Letter Editor, answers questions on topics submitted by readers. This week, she’s looking at questions related to amended returns, reverse mortgages and depreciation deductions. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

Q1: Amended returns

I mailed amended tax returns on Form 1040-X to the IRS in early January. They show up in the IRS system as received by the agency, but I have not yet received my refunds. Do you know when I might see my money?

The IRS is still lagging on processing amended returns. The delay began with the COVID-19 pandemic, and the IRS has not yet fully caught up. But the wait isn’t as bad as it used to be. The IRS says that it is now processing amended paper-filed returns that were received in January 2025, so you should see your refund shortly. Note that the IRS’s processing time is longer for paper returns with errors or paper returns that require special handling. You might want to check the IRS’s online tool, Where’s My Amended Return.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q2: Reverse Mortgages

I am planning to take out a reverse mortgage on my primary home. Will I have to pay federal income tax on the money that I receive in the transaction?

No. The payments you get from a reverse mortgage are treated as nontaxable loan proceeds, not income. Also, if you itemize, you cannot deduct, on Schedule A of the Form 1040, the interest you eventually pay because you are not using the reverse mortgage proceeds to buy, build or substantially improve the home securing the mortgage.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q3: Converted Rental Property

I bought a home in 2008 for $294,000 that I used as my primary residence. In 2014, when the property was valued at $225,000, I moved and converted the home to a rental property. I then used $225,000 to calculate depreciation on the rental property. I sold the home last year for $362,000. What is the tax basis for determining the gain on the sale of the rental home?

First, you were correct to use the $225,000 amount for figuring annual depreciation deductions when you converted your primary home to a rental property. Second, since you sold the rental property at a gain last year, your tax basis for determining your gain is the original cost of the home ($294,000) plus any amounts you paid for capital improvements, less depreciation that you deducted on the home. If you had sold the rental home for a loss, your basis starting point would have been the lower of your original basis ($294,000) or the value when you converted the home to a rental ($225,000).
— Joy Taylor, Editor The Kiplinger Tax Letter

Q4: Investment Subscription Costs

I am aware that I cannot deduct the fees I pay to my broker to manage my investments. However, can I deduct the costs of subscriptions to stock advice letters, some of which are quite expensive?

No. Unfortunately, you cannot deduct the cost of subscriptions to stock advice letters unless you use that information in your trade or business. This type of investment expense used to be deductible as a miscellaneous itemized deduction on Schedule A of the Form 1040 (subject to the 2%-of-adjusted-gross-income limit), but the 2017 Tax Cuts and Jobs Act temporarily eliminated that entire group of deductions through the end of 2025. It’s too soon to know whether you would be able to deduct the costs for 2026 and later years. Republican lawmakers are currently negotiating a big tax package that would extend many of the expiring provisions in the Tax Cuts and Jobs Act.
— Joy Taylor, Editor The Kiplinger Tax Letter

Q5: Deducting One’s Time

Can a self-employed person deduct the value of his or her time on Schedule C of the Form 1040?

No. A self-employed person cannot deduct the value of his or her time. As the United States Tax Court said in a recent case, “labor performed by a taxpayer does not constitute an amount paid or incurred by him, and the taxpayer is not entitled to deduct the value of such labor.”

Also, if a self-employed person pays wages to himself or herself, he or she cannot deduct the wages on Schedule C because he or she isn’t employed by the business for tax purposes. The person can take withdrawals from his or her Schedule C business, but those withdrawals aren’t taxable and aren’t deductible.
— Joy Taylor, Editor The Kiplinger Tax Letter

We have already received many questions from readers on topics such as leasing a car for business use, what to do with unused funds in a 529 college savings plan, using U.S. savings bonds to pay for college and much more. We’ll answer some of these in a future Ask the Editor round-up. So keep those questions coming!

Subscribers of The Kiplinger Tax Letter can ask Joy questions about a tax topic. You'll find full details of how to submit questions in The Kiplinger Tax Letter. (Get a free issue of The Kiplinger Tax Letter or subscribe.)

Gen X, Boomers, Millennials, or Gen Z: Which Generation Pays the Most Taxes?

Kelley R. Taylor — Thu, 17 Apr 2025 04:14:02 +0000

It's probably safe to say that most people don’t like paying taxes. Many feel they are paying too much.

A Gallup poll revealed that 60% of U.S. taxpayers believe their federal income tax burden is too high. In addition, a 2025 survey indicates that just over 50% of respondents think income taxes are unfair.

So, as we continue with Tax Season 2026, it’s a good time to consider how the tax burden in the United States is distributed.

Recent studies provide insights into which age groups contribute the most to the nation’s tax revenue. So, which generation pays the most in taxes? Read on for the details.

The main contributors: 45-55 year-olds pay nearly 30% of all income taxes

According to an analysis by the Tax Foundation, U.S. taxpayers ages 45 to 55 bear the largest share of the income tax burden.

This age group accounts for about 29% of the total income taxes paid to the federal government.

The study, which examined IRS data, indicates that individuals age 45 to 55 pay the most in absolute terms and experience the highest effective tax rates. (IRS data from 2024 lack age-specific shares but generally confirm peak tax rates around age 55.)

Tax rates by age data from the National Bureau of Economic Research (NBER) corroborate those findings.

The NBER model shows that those in their mid-40s to mid-50s face the highest (and similar) average tax rates:

The 45-50 age group faces an average tax rate of 17.2%
The 50-55 group faces a slightly higher rate of 17.6%

Why does this age group pay so much? The answer could lie in their earnings.

The Tax Foundation's research revealed that people age 45 to 55 are typically in their peak earning years, accounting for 26% of the nation's total adjusted gross income (AGI). (That’s despite making up only 18% of all federal income tax returns.)

And, as if high taxes weren’t enough, individuals in their late 40s to mid-50s often face additional financial burdens as the "sandwich generation."

This group often simultaneously supports aging parents and adult children while managing their own mid-career and economic pressures.

Tax burden by age: What about Gen Z taxes and retirees?

Households headed by individuals aged 45 to 54 face the highest average annual tax bill of $36,140.
Of this amount, $24,149 went to the federal government and $11,991 to state and local authorities.
The tax burden on the 45-54 age group is 4.3 times larger than that of those 75 and older, even though their average household incomes are only about 2.6 times as large.

At the other end of the spectrum, younger people contribute significantly less to the overall tax burden.

Data show that those under age 35 account for only 11% of total taxes paid. That’s despite making up 35% of all tax filers. Studies show that the lower burden is primarily due to lower incomes and a potentially higher proportion of non-payers in that age group.

For older adults, data suggest the tax burden decreases as individuals approach and enter retirement.

The Tax Foundation's study shows that for those older than 60, median total tax rates dropped below 5% by age 68 and below 2% by age 74.

That decline is reportedly mainly due to the shift from earned income to retirement income sources, some of which are exempt from certain taxes.

A study by the Pew Charitable Trusts highlights how the aging population will likely shift tax burdens in the coming years. As the proportion of retirees grows, that could increase the relative burden on younger workers.

The next highest tax-paying group is those aged 55 to 65, who pay about 23% of total income taxes. The two age brackets combined — 45 to 65 — contribute over half of all taxes collected in the U.S.

The Tax Foundation's study on total tax burden, including federal, state, and local taxes, provides more insights:

The following table combines Tax Foundation and NBER model data to show the tax burden across age groups.

Tax Burden Across Age Groups
Age Group	Percent of Total Income Taxes Paid	Average Tax Rate
Under 35	11%	14.5%
35-44	21%	16.8%
45-54	29%	17.6%
55-65	23%	17.2%
65-75	12%	12.3%
75+	4%	7.8%

Do you pay too much tax?

Many feel the U.S. tax system disproportionately benefits the wealthy and corporations and overburdens “regular workers.” Gallup’s surveys reveal that 70% of respondents believe corporations contribute too little, a view shared across political affiliations.

Similarly, nearly 60% argue that high earners don’t pay their fair share. At the same time, 58% say lower-income households shoulder too much, highlighting concerns about unequal burdens on working families.

The situation is complex: While data show that the top 1% account for nearly half of federal income tax revenue, billionaires often can minimize income taxes through strategies like untaxed asset growth.

(Wealthy individuals and corporations frequently leverage tax code advantages to reduce income tax liabilities, while their wealth, often tied to stocks and assets, grows largely untaxed.)

For instance, a pandemic-era ProPublica analysis found that some ultra-wealthy individuals paid no federal income tax in certain years despite massive wealth gains, relying on loopholes for investments and corporate holdings.
Meanwhile, other groups emphasize that workers with middle and lower incomes face higher effective rates on wages due to payroll and state taxes, which consume a larger portion of their earnings.

So, even if the top 1% technically contribute more in income taxes overall, everyday workers pay higher rates on their salaries.

Paying taxes: What you can do

If you feel you are paying too much tax, take advantage of all tax deductions and credits you're eligible for and consider the following strategies to potentially lower your tax bill next year.

Additionally, consult a qualified and trusted tax professional or certified financial planner who can customize an approach based on your situation.

Maximize Retirement Contributions: For 2025 (returns you’ll file now in 2026), you can contribute up to $23,500 to your 401(k) if you're under 50. For those age 50–59 or 64+, the catch-up is $7,500 (total $31,000).

A new "super catch-up" rule allows those 60–63 to contribute an additional $11,250, totaling $34,750 (if your plan permits). Those contributions can reduce your taxable income.

Roth Conversions: If you're in a lower tax bracket now but expect to be in a higher one in retirement, converting some of your traditional IRA to a Roth IRA could save you money.

Health Savings Accounts: HSAs allow tax-deductible contributions that reduce taxable income, offer tax-free growth on investments, and enable tax-free withdrawals for qualified medical expenses. 2025 Limits: $4,300 (self-only) / $8,550 (family), with a $1,000 catch-up for those 55+.

FSAs: Flexible Spending Accounts allow you to use pre-tax dollars for healthcare or childcare costs and lower your taxable income at the same time.

Charitable Donations: This might include giving stocks/funds directly to nonprofits and using dedicated giving accounts for upfront deductions. However, to claim charitable donations, you have to itemize deductions.

Tax Day 2025: Don’t Miss These Food Deals, Freebies and Special Discounts

Gabriella Cruz-Martínez — Tue, 15 Apr 2025 11:37:40 +0000

Tax Day is finally here, and unless you’ve filed for free, tax prep can take quite a bite out of your wallet.

To celebrate the end of tax season, which falls on Wednesday, April 15, this year, many restaurants nationwide will offer deals, discounts, and freebies to sweeten your civic duties as a taxpayer.

Here’s where you can score deals on Wednesday and make your tax obligations a bit more appetizing.

Burgers and Sandwiches

Shake Shack free burger

Shake Shack is the fastest growing fast casual food chain. (Image credit: Deb Cohn-Orbach, for UCG, Universal Images Group via Getty Images)

From now through April 27, 2026, customers can enjoy a free single Black Truffle Burger, Black Truffle Shroom, or Black Truffle Parmesan Fries with a $10.40 or more order.

To score this deal, enter promo code TRUFFLETAX at checkout

Potbelly tax day deal

Need to take the edge off of Tax Day? On April 15, if you purchase one Big or Original sandwich at Potbelly, you can get an Original free sandwich with the promo code BOGO.

You can claim your Potbelly deal in-store, online, or by ordering via the app or website.

Burger King

Since Tax Day falls on a Wednesday this year, BK is highlighting "Whopper Wednesday."

Royal Perks members can grab a Whopper for $3.99. Also, check the app for a BOGO Original Chicken Sandwich deal.

Sweet Treats

Krispy Kreme tax day special

Krispy Kreme announced a tax day special you don't want to miss if you're a fan of their original glazed donuts. (Image credit: Getty Images)

For online orders, use code TAXBREAK.

Paris Baguette tax day deal

Are you a rewards member at Paris Baguette? If so, you can get a free pastry with the purchase of any beverage on April 15. That should make Tax Day a little sweeter this year.

Cool off with a drink

Kona Ice tax day

If you want to save your hard-earned money, make sure to stop by Kona Ice on April 15 and celebrate their “National Chill Out Day.” You can get free shaved ice on Tax Day, just visit your nearest Kona Ice location.

Smoothie King

Meanwhile, if you want to cool off, Smoothie King is offering Healthy Rewards members $3 off on purchases worth $15. You can also get $4 off if you spend $20 or more.

STK

Some folks may want to top off Tax Day with a drink. At STK, you can enjoy a signature cocktail all day for just $10.40. The deal is only available at the bar and on the patio at select locations and excludes Boston, Salt Lake City, and Toronto.

Italian and Mexican Food and Pizza

Olive Garden free entree

Olive Garden has a buy-one-get-one-free deal on certain entrees. (Image credit: Getty Images)

At Olive Garden, starting at the price point of $14.99, you can order from a select menu of entrees and choose a salad or soup of your choice. The deal also comes with unlimited breadsticks.

The promotion is available until May 4 and comes with a free entree for you to take home, which can be spaghetti with meat sauce, fettuccine alfredo, or five-cheese ziti al forno.

Customers at Grimaldi's pizzeria chain can receive $10.40 off any order of $40 or higher with the promotion code TAXDAY26 on Wednesday, April 15.

This offer is valid for dine-in, to-go, and online orders, but it cannot be used at locations in Brooklyn (DUMBO) or the Las Vegas Palazzo.

Fazoli’s

At Fazoli’s, customers can get a buy-one-get-one-free deal if they order their classic Baked Spaghetti on April 15. Just use the code TAX26, available at select locations.

QDOBA tax day 'Guac Relief'

(Image credit: Getty Images)

QDOBA is leaning into its "free guacamole" policy this year with a Tax Day Guac Relief campaign.

To claim your relief, sign up for QDOBA Rewards and head to www.TaxDayGuacRelief.com to complete a quick survey about a time you were overcharged for guac at another restaurant.

If you "file" your survey by the 11:59 p.m. ET deadline on Wednesday, April 15, you will unlock a $5 Reward toward any full-sized entrée.
The credit will be automatically deposited into your Rewards wallet on Monday, April 20, and will be available for redemption through Sunday, April 26.

More savings

White Castle

At White Castle, you can get 15% off your order with the coupon code WC15OFF on April 15.

Hooters

On April 15, participating Hooters locations will be offering select appetizers for $4.15.

These are dine-in specials available at participating locations to help customers celebrate the end of tax season.

BJ’s Restaurant & Brewhouse

Need a break after crunching those numbers? BJ’s Restaurant & Brewhouse is offering a discount for diners on Wednesday, April 15.

Customers can take $10 off any purchase of $40 or more when they dine in or order takeout.

If you’re ordering through the BJ’s app or website, simply use the promo code TAXDAY at checkout to claim your savings.

TurboTax Uber discount

(Image credit: Eilon Paz/Bloomberg via Getty Images)

TurboTax is offering a $25 Uber ride credit to, or from, a local TurboTax in-person office for tax filing. The offer, available only in select cities, is valid through April 15, 2026.

To take advantage of the deal, you must book an appointment with a local tax expert via the Uber app or the TurboTax booking page.

Free Tax Filing

Tax Day deals: You can still file your taxes for free

The national deadline to file taxes is here, but don’t fret.

While these sweet deals can make your Tax Day a little better, don’t overlook tax credits and deductions on your return if you are eligible for them.

From family tax breaks for dependents and children to new deductions on car loan interest and overtime pay — follow our coverage to make your 2026 tax season easier.

Finally, you can still save on your tax prep and filing.

The IRS Free File tool is eligible for taxpayers with an adjusted gross income (AGI) of $89,000 or less for 2025.
IRS Direct File is no longer available.
More free filing options are available through partnerships with the IRS.

More About Tax Day

Does Your Kid Influencer Owe Taxes This Year?

Gabriella Cruz-Martínez — Mon, 14 Apr 2025 14:07:10 +0000

Influencers and content creators have tax obligations, and these days, more and more are starting as children.

You may have seen families on popular social media platforms like YouTube, TikTok, or Instagram featuring their children and expanding their online footprint. People under 18 have also grown more active on social media, making money from sponsored posts, affiliate marketing, brand representation, and subscribers, just to name a few examples.

The number of “kidfluencers”, or children who are social media influencers, has been growing over recent years. On a smaller scale, CBS News reports that a child with at least 1 million followers could earn as much as $10,000 per sponsored post.

But the cash earned by being an influencer isn’t a "free lunch." If your child or children are earning income, they may need to file a tax return this year. Those earnings may also impact your tax liability.

Furthermore, some states have recently passed landmark laws providing child influencers with protections similar to those for child actors. Those laws, which come in the wake of several scandals involving kidfluencers being taken advantage of, give children legal rights to a share of the profits earned.

Here’s what families need to know about handling taxes if their children earn income from social media.

How much does my kid have to make to file taxes?

Some child influencers may have little to no earnings and won’t have to file a return this tax season. However, other minors may earn incomes high enough that they must meet tax filing obligations.

As reported by Kiplinger, if a child only has earned income from wages, they must file if their income exceeds the standard deduction for the 2025 tax year, which was increased to $15,700 following the July 2025 tax legislation.

The filing threshold is much lower for other types of income:

Minors must file a 2025 federal income tax return if they received $450 or more in tips or self-employed income.
For unearned income (such as dividends or interest), the filing threshold is $1,350 for the 2025 tax year.
Unearned income that exceeds $2,700 is taxed at the parent's rate unless the child's rate is higher (often referred to as the "kiddie tax").

There’s one caveat: Even if a minor doesn’t earn enough to file taxes, they may opt to file a return to receive a refund of tax withheld from their earnings. Parents or guardians can also claim a child as a dependent regardless of whether they file, except for a few exceptions.

For more information: Does Your Child Need to File a Tax Return This Year?

Some states offer more protections to child influencers

Most states across the country don’t have many legal protections for child social media influencers, according to the University of Chicago Law School.

However, as family influencer and parent-facilitated child influencer content has become more common, some states have stepped up to safeguard minors from being exploited for profit.

Many of these families make thousands of dollars annually from associated brand deals, merchandise, and paid subscription models. Videos or vlogs often showcase families' day-to-day activities, vacations, and more.

A report from CNBC showed that you need a minimum of 5,000 Instagram subscribers and about 308 sponsored posts a year to generate $100,000.
The draw has led some parents to abandon traditional jobs and become full-time influencers featuring their families.

Child influencer laws to know

Here are some states paving the way for children to safeguard their finances.

California

In California, Gov. Gavin Newsom signed legislation in 2024 that protects children and teenagers featured in online content from financial abuse.

The legislation expands the Coogan Law (California Child Actor’s Bill) to include minors who are employed as online content creators. Essentially, parents and guardians must create a trust for their children and contribute to the account based on how often they appear in content.

Marketers and those hiring child influencers must verify the existence of Coogan trust accounts and deposit 15% of earnings directly into those accounts.
If the minor is featured on 30% of monetized digital content, 65% of their gross earnings must be put into a trust account.

The new law became effective January 1, 2025.

Illinois

Illinois passed a state Child Labor Law that requires parents of influencer children to set a portion of their earnings in a trust account, mirroring California’s Coogan Law.

Under the law, if a child appears in at least 30% of a parent or guardian’s social media content over a 30-day period, and gathers enough views to receive compensation, the minor is entitled so some of those earnings.
A trust fund must be made in the minor’s name, to be accessed once they turn 18.
Parents must keep records of the content created.

The legislation has been effective since July 1, 2024.

Minnesota

The state of Minnesota stepped up its protections for children influencers in several ways.

The Minnesota House passed legislation in 2024 that prohibits parents from including children under 14 in their vlogs or videos.
On their own, minors under 14 are also barred from “engaging in the work of content creation.”
If your child is age 14-17 and appears in at least 30% of content creator’s material over a 30-day period, they are entitled 30% of the generated revenue.
Modeling California’s Coogan Law, the income must be placed in a trust account for the minor and be accessible once they reach adulthood.

The law on children influencer content became effective on July 1, 2025.

Keep track of your child’s earnings

If you or your child is social media content creator, make sure you keep track of any earnings as they may be subject to taxes this tax season. With the April 15 federal tax deadline around the corner, you don’t want to accidentally file late and incur unwanted penalties or fees.

As mentioned above, some states have enacted or are slated to issue new protections for child influencers this year. This could change how you report some earnings on your tax return, so it’s recommended that you talk to a trusted certified public accountant (CPA) or tax professional.

Likewise, even if your child earns enough income to file a tax return, you can still claim them as a dependent on your tax return. You could still be eligible to claim popular tax breaks for families like the Child Tax Credit (CTC) or Earned Income Tax Credit (EITC).

How to Use H&R Block Tax Prep Software to File Your 2025 Tax Return

Rachael Green — Mon, 07 Apr 2025 22:55:54 +0000

The deadline is looming for the 2026 tax season, so if you haven’t filed yet, it’s time to start thinking seriously about which tax prep software you’re going to use. If you’re not sure what kind of support you need, H&R Block is a good place to start.

The tax prep service offers guided tax filing software along with a variety of ways to connect with a tax pro if you need to. You can start filing on your own with your preferred online or desktop H&R tax software. Then, add on various levels of expert assistance if you get stuck.

And if you don’t want to deal with your taxes at all, just gather up your forms and hand them off to an H&R Block tax preparer to do it for you.

Keep reading for our breakdown of the key features that come with H&R Block tax prep software. You’ll also get tips on how to choose the edition that makes the most sense for your tax situation.

H&R Block features to make your tax filing painless

Using H&R Block tax prep software is a fairly seamless experience. The guided software walks you through the filing process via a series of conversational questions. It feels more like you’re chatting with a tax preparer rather than trying to decipher cryptic tax codes.

While you’ll see a similar user-friendly experience with TurboTax, H&R Block shines in its support options. When you compare the various tiers of both tax software packages side by side, H&R Block typically gives you more access to expert support for the price than TurboTax.

For example, if you’re eligible for the H&R Block Online Free Edition, you can add tax pro review for $55 (and your state return is still free). With TurboTax, the cheapest edition that includes expert assistance is TurboTax Expert Assist Deluxe, which costs $129 for the federal return plus $69 per state.

Say this is your first time filing taxes after moving overseas and you don’t even know where to start. You can work with an H&R Block tax pro online and let them do your taxes for you.

In short, it’s easy to find the right balance of cost and support with the many options and add-ons H&R Block offers.

How to choose the right H&R Block Online Edition

(Image credit: Getty Images)

There are many editions of H&R Block tax software along with various tiers of expert support. Here’s a breakdown of the key differences between different versions of H&R Block online tax filing software:

H&R Block Free Edition: This free version only supports a limited range of simple tax situations. You can find more details on which filers qualify for this edition on the website. If you are eligible, you can e-file both your federal and state tax returns for free.
H&R Block Deluxe: For $65 (plus $37 per state), Deluxe is the version most filers probably need. In addition to the basic tax situations included in the free edition, Deluxe adds support for filers who want to claim tax credits or deductions for homeowners, childcare expenses and hundreds of other situations. You can also report self-employment income (but can’t claim business expenses). If your itemized deductions would be higher than the standard deduction or you earned some extra freelance income on the side, get H&R Block Deluxe.
H&R Block Premium: For $105 (plus $37 per state), Premium includes all tax situations from the free and deluxe editions as well as various investment incomes. If you own rental properties, stocks, bonds, or crypto, H&R Block Premium is the version you need.
H&R Block Self-Employed: This version costs $130 plus $37 per state. It includes all tax situations from previous versions as well as support for self-employed filers who want to deduct expenses. Note that you can use Deluxe to claim income if you’re self-employed, but you can’t deduct business expenses from that income unless you upgrade to H&R Block Self-Employed.

If you’re still not sure which version you need, H&R Block lets you start filing with the free edition. It will then prompt you to upgrade if you need to add a form that’s not included in the free tax prep software.

Just be wary of which upgrades you’re agreeing to. For example, you might need to upgrade to H&R Block Deluxe to claim certain homeowner deductions. But that doesn’t mean you need to upgrade to H&R Block Deluxe with Tax Pro Review.

If you do accidentally agree to an upgrade you don’t want or need, you should be able to connect with a chatbot or online customer service representative to downgrade.

Start filing for free

Start filing your 2025 taxes for free at H&R Block. Only pay for upgraded versions or added expert support if you need it. View Deal

How to choose the right version of H&R Block desktop software

The desktop version of H&R Block tax prep software functions pretty much the same as the online version. The difference is that your data is stored on your computer rather than online if you download H&R Block to your desktop.

There’s also no free version of the desktop software. But all versions do include e-filing of up to five federal tax returns for free. This is a definite bargain if you have family members (or friends) who also need to file taxes this year.

Most desktop versions also include one state return for free, though e-filing that return costs an extra $19.95. If you want to skip the extra e-filing fee, you can print out the state return for free and file it by mail.

Here’s a quick glance at all the desktop versions of H&R Block tax software:

H&R Block Basic: For $50, this version includes guided software for simple tax situations. You can e-file up to five separate federal tax returns at no extra cost. No state returns are included, so you’ll need to pay $39.95 extra per state to fill out your state tax return. Add $19.95 per state return to e-file it with H&R Block.
H&R Block Deluxe + State: For $70, this version includes everything in Basic plus support for filers who own their home and have investments. It also includes one state return for free, so you can skip that $39.95 fee. But you’ll still pay $19.95 if you choose to e-file your state return through H&R Block.
H&R Block Premium: For $95, this version includes everything in Deluxe plus support for those who own rental properties, are self-employed, or do freelance work on the side.
H&R Block Premium & Business: For $115, this version includes everything in Premium plus support for those who own a business.

Are you eligible for the H&R Block Online Free Edition?

H&R Block offers free online tax filing for some filers. According to its website, approximately 52% of filers will qualify for the free version.

Eligibility is based entirely on how simple your taxes are. If you’re a W2 employee with no freelance income and you’re planning to take the standard deduction, you probably qualify.

Here’s a complete list of tax situations that are included in the H&R Block Online Free Edition:

W-2 income
Up to $1,500 in interest and dividend income
Unemployment income
Qualified retirement plan distributions from Form 1099-R
Student loan interest deduction
Child Tax Credit
Earned Income Tax Credit

If your taxes involve anything more than what’s on that list, you’ll need to upgrade to one of the paid versions of the tax prep software.

Who should use H&R Block tax software?

H&R Block tax software is easy to use for just about anyone, but it offers the best value for filers with complex or unusual tax situations. That’s because the software can handle pretty much any situation you can throw at it. It also offers a lot of flexibility in the amount of support you get.

However, if your taxes are relatively straightforward but not quite simple enough to qualify for the free version of H&R Block, you might be able to save by opting for another tax prep software that’s either free or charges less than H&R Block for your tax situation.

Shop around and compare your options to find the most affordable tax prep software that still offers all the features and support you want.

Could Tax on Overtime End for Your State This Year?

Kate Schubel — Mon, 07 Apr 2025 14:28:00 +0000

You might have heard about the elimination of the tax on overtime at the federal level. Overtime workers are entitled to 1.5 times their regular rate for working more than 40 hours per week.

However, what’s happening with taxes on overtime pay has sparked national debate. There’s talk about whether “no tax on overtime” will help workers or contribute to the federal deficit and incentivize employers to use longer hours instead of hiring additional employees, especially after the so-called "One Big Beautiful Bill" was signed.

But do you know how your state is weighing in on the no tax on overtime debate?

States can follow the federal “no taxes on overtime” movement or decide to continue taxing overtime income.

Here are the states that have proposed bills relating to no taxes on overtime, and where those proposals are now.

States with no income taxes were excluded from this list as they do not tax overtime. These include Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.

Is overtime taxed more in Illinois?

Illinois has four active bills proposing no tax on overtime, “effective immediately” if signed into law:

SB 174, sponsored by Senate Republicans, would deduct any overtime wages paid during the taxable year.
HB 2734, sponsored by Rep. Christopher “C.D.” Davidsmeyer (R-Murrayville), would deduct overtime wages included in the taxpayer’s federal adjusted gross income (AGI).
HB 1899, sponsored by House Republicans, would create a tax deduction for overtime compensation included in a taxpayer’s AGI.
HB 1750, sponsored by Rep. Joe C. Sosnowski (R-Rockford), would not only exclude overtime from wages but also exempt gratuities (tips) from state income taxation.

All four “no tax on overtime” bills are being read in their respective chambers and have yet to crossover.

Does overtime get taxed more in Massachusetts?

Massachusetts might exempt overtime from the Commonwealth’s income taxes with HB 3173.

Sponsored by Rep. Marc Lombardo (R-Billerica), the bill could exclude overtime compensations from income tax in a place among those with the highest income tax rates for retirees.

However, only hourly employees would be included — not salaried. There is no enactment date for Massachusetts’ “no tax on overtime” bill.

Michigan rules for overtime tax on pay

Michigan legislators have proposed a no-tax-on-overtime bill. SB 125, sponsored by state Senate Republicans, seeks to deduct overtime compensation from the state’s taxable income.

The Great Lakes State recently raised base pay for hourly workers. Tipped employees went from $4.01 to $4.74 per hour, while nontipped worker rates went up to $12.48 from $10.56. No tax on overtime could provide further relief for hourly employees in 2025.

Overtime taxed in New Jersey

New Jersey is looking to exempt overtime pay from state income taxes. The Republican-sponsored bill would exclude overtime compensation from gross income as early as January 1 following the date of enactment.

The Garden State has some of the highest taxes in the nation. Not only is New Jersey expensive for homeowners, but the state also has one of the highest income tax rates for retirees. No taxes on overtime could help provide tax relief for some residents.

Over half of full-time American workers work more than 40 hours a week, according to a 2019 Gallup poll. (Image credit: Getty Images)

Overtime pay is taxed in North Carolina

North Carolina has a bill that includes more than no tax on overtime. Republican-led HB 11 would provide:

No tax on overtime pay.
An exemption of state income taxes on tips.
An exemption on the first $2,500 in bonuses from state income taxes.

Bonus pay might include hourly and salaried workers. The bill has been passed to the House Finance Committee for review.

Does no tax on overtime start in Ohio?

Ohio might consider ending state tax on overtime. HB 39, proposed by House Republicans, would amend Ohio’s tax policy to allow a deduction for overtime wages.

This would effectively make overtime pay state tax-exempt. If signed into law, the bill could go into effect as early as January 1, 2026. However, it was only recently referred to the House Ways and Means Committee.

Does overtime get taxed in Pennsylvania?

Pennsylvania lawmakers are seeking to exempt overtime pay from state taxes. Not only that, but the Coal State might implement no tax on tips, too, if signed into law:

HB 1586, a House Republican bill, would provide a tax credit for state taxes on overtime pay.
HB 1514, also Republican-led, would allow for a tax credit to offset taxes collected on tips.

Currently, both bills are in the House Finance Committee for consideration. If signed into law, either bill would be effective after December 31, 2025.

Does Alabama still tax overtime?

Although Alabama used to exempt overtime pay from state income taxes, that key piece of legislation expired earlier this year.

Alabama House Democrats had introduced a bill to preserve the income tax exemption on overtime pay. But House Republicans sought to let the provision expire in favor of other state tax breaks, such as reducing the state’s grocery tax, which is set to be cut from 3% to 2% in September.

State tax on overtime

More states may weigh in on the “no tax on overtime” debate. State legislatures will meet throughout the year, and overtime income could be on the slate of bills proposed. More than just your federal tax bill could be on the line, so stay tuned.

How to Teach Your Kids About the Tax Facts of Life

neale@nealegodfrey.com (Neale Godfrey, Financial Literacy Expert) — Fri, 28 Mar 2025 09:30:00 +0000

You may have a scowl on your face right about now and want to shout, “You want me to teach my kids about taxes when I’m drinking out of a fire hose right now trying to get my own taxes finished? Give me a break.”

OK, wait until April 16 to start the lessons. Because, if you don’t teach them about taxes, they may grow up to resent paying them.

You may feel that your taxes are too high (or too low), but you know the saying: “The only things in life you can count on are death and taxes.” The kids might as well learn the tax facts of life sooner rather than later.

Seriously, it is important to teach even young kids about taxes. This will help them to avoid what I call paycheck shock — that’s when they receive their first paycheck and see the difference between gross income and net income. It also helps them to avoid asking, “Who is FICO, and why is he taking money out of my paycheck?”

Earning money for chores — and paying taxes

I’m a proponent of teaching young kids the natural consequences of money. That means that the only way you get money is to earn it — there is no entitlement program in life.

I recommend setting up a system whereby kids earn money for chores around the house and then learn to budget that money by dividing it into different jars or accounts as follows:

Quick cash (or instant gratification): 30%
Midterm saving (this teaches kids to set a shorter-term goal to save for): 30%
Long-term saving and investing: 30%
Charity: 10%

By the time they are 10, they are ready to learn about taxes, which come off the top of their hard-earned allowance, their work-for-pay system.

You might play a game with kids I call Who Pays for That. For instance, when you are in the car, call out something they see and teach them who pays for that.

For instance, if you see a McDonald’s, tell them that it is a private company owned by lots of people called shareholders. When you buy burgers, you are paying McDonald’s for them.

If you see a public library, explain that the town pays for that through taxes, which are something people pay out of their paychecks.

You could explain how a town, city and country have to collect taxes to pay for lots of things we all use, such as roads, hospitals, fire and police people, schools, etc. You get the picture.

You might demonstrate further by letting kids know they’re in a 15% tax bracket. Get them to count out the money each week to put into the Family Tax Jar, where all the kids pay their taxes.

The family can vote on how to use that money to benefit the whole family. It could pay for a pizza or ice cream night.

My kids wanted to save for a trip to Disney. I had them estimate the total cost for the trip, and they figured out they would be in their 40s before their meager tax money could cover that.

Does your child need to file a tax return?

In the middle of doing your own taxes and thinking about teaching your kids about taxes, you may be hit with another thought: “My kid had a summer job and also babysits. Do they have to file a tax return?”

I am not a tax professional, so you need to consult one before you and/or your child consider this situation, but I’m here to offer some basics.

As with all IRS questions, the answer to the question of whether your child needs to file a tax return is, “It depends.” It depends on your child’s income, the type of income they received and their tax situation.

Your child has to file a tax return if they earned more than $14,600 in 2024. So, if they worked and earned less than that, they don’t have to file unless taxes were withheld from their paychecks. In that case, they could get a refund. (This is the standard for any single taxpayer in 2024.)

If your child has unearned income from investments, dividends or interest, that is more than $1,300, they may need to file a return and pay taxes. Also, if your child’s unearned income exceeds unearned income exceeds $2,600, that may be taxed at your rate under the kiddie tax rules.

Parents can sometimes include a child’s unearned income on their own Form 8814 if that’s their only income and totals less than totals less than $13,000, which will obviate the need for your child to file separately.

If your child earns $400 or more from self-employment, they must file a tax return and may even have to pay self-employment tax, which includes the taxes for Social Security and Medicare. This includes income that was paid in cash.

Let’s face it, though. Small babysitting fees probably won’t be reported, but in good conscience, I must disclose that babysitters are still legally required to report their income above $400. If the payer for the service issues a Form 1099 for independent work, this unreported cash income can lead to penalties.

Your kids and gift taxes

If your child receives money as a gift, they do not have to pay taxes on that money. The gift tax generally pertains to the giver, not the receiver.

In 2024, any person could give up to $18,000 to anyone, including a child, without triggering any gift tax reporting. In 2025, that limit is $19,000.

If you gave more than $18,000 to your child (or anyone) last year, you must file a gift tax return (Form 709), but the recipient neither has to file nor pay taxes on the money received.

However, if that money is invested and earns interest or dividends, those earnings may be taxable under the kiddie tax rules.

Most people don’t have to pay gift taxes because there is a lifetime gift tax exemption of $13.6 million for 2024 ($13.99 million for 2025).

What to know about 529 plans:

If you set up a 529 college savings plan account, or another tuition savings plan, that contribution does not count toward the gift limit.
You can contribute up to $19,000 per child per year to a 529 account without triggering a gift tax filing.
There is also a five-year superfunding option in which you can contribute up to $95,000 in one year, as of 2025, as a lump sum but spread it out over five years for tax purposes.
529 contributions are not tax-deductible to you — you cannot deduct them from your federal income taxes. Some states allow a state income tax deduction for contributions.
Withdrawals from 529 accounts are tax-free if they are for qualified educational expenses. That means your kids do not pay either federal or state taxes.
If the money is used for non-educational purposes, the earnings — not the contributions — will be subject to income tax and a 10% penalty.

Other tax issues to be aware of:

If you set up custodial accounts (UGMAs or UTMAs), your child will be responsible for paying the taxes on earnings that accrue after they take control of the account.
If you place money in a trust, there may be additional tax rules on that, depending on how the trust is structured.

Phew!

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

TaxAct: Plans, Pricing and Key Features Explained

Carla Ayers — Thu, 27 Mar 2025 16:33:57 +0000

TaxAct has been part of the online tax filing landscape for more than two decades, positioning itself as a lower-cost alternative to larger competitors such as TurboTax and H&R Block. While it may not offer the same level of visual polish or built-in guidance as some rivals, it provides the core tools many filers need to prepare and submit a return.

Founded in 1998, TaxAct has supported the filing of more than 105 million tax returns. Over the years, the platform has focused on straightforward pricing and tiered plans that allow users to choose a version based on the complexity of their finances.

From basic W-2 income to freelance work, homeownership or investment income, TaxAct offers several filing options designed to handle a range of tax scenarios. Here’s a closer look at how it's pricing works, what features are included and who may want to consider using it this tax season.

How much does TaxAct cost?

TaxAct stands out with competitive pricing that undercuts popular tax software providers like TurboTax and H&R Block. TaxAct offers five filing tiers, each tailored to different tax situations.

Here’s a breakdown of TaxAct’s 2026 plans:

Plan	Federal Filing	Best For	Includes
Free Federal	$0 (State filing costs $39.99)	W-2 employees, students, unemployment filers	Basic returns with qualifying income and deductions. Includes Child Tax Credit, education credits and unemployment income.
Deluxe Home & Family	$29.99 (State filing costs $39.99)	Homeowners, families	All Free features, plus deductions for mortgage interest, childcare expenses and health savings account (HSA).
Premier Investments	$49.99 (State filing costs $39.99)	Investors, landlords, home sellers	All Deluxe features, plus support for investment income, crypto transactions, rental property and real estate transactions.
Self-Employed Entrepreneur	$74.99 (State filing costs $39.99)	Freelancers, contractors, small business owners	All Premier features, plus tools for reporting 1099 income, managing business deductions and support for sole proprietors or LLCs.

TaxAct does run promotions throughout tax season. For example, AAA members can receive 25% off both federal and state tax filings for consumer and business tax products.

TaxAct's features and benefits

TaxAct offers several helpful features designed to make the tax filing process smoother. If you need additional time to file, you can submit a tax extension directly through the platform — no extra forms or third-party tools are required.

TaxAct also backs its software with a 100% Accuracy Guarantee, promising to cover any difference in your tax liability, up to $100,000, if an error results from using their system.

Additionally, the Maximum Refund Guarantee ensures that if you find a larger refund using a different provider with the same information, TaxAct will refund the cost of your software.

While TaxAct has fewer upsells than larger competitors, it does offer live assistance. Xpert Assist gives you access to live help from a tax expert for an additional $25. This feature includes unlimited questions and the option to request a quick review of your return before filing. This type of support is good for those filers who want a second set of eyes without committing to full-service tax preparation.

How to file your taxes with TaxAct

(Image credit: Getty Images)

You can choose between two main filing methods: TaxAct Online or TaxAct Download.

With the online version, you create an account and complete your return directly in a web browser. Your data is saved securely in the cloud, and you can access your return from any internet-connected device. Each online account supports one return.

For those who prefer to work offline or need to file for multiple people, the TaxAct Desktop software is a better fit. It allows you to save returns locally to your computer or flash drive and supports preparing and printing multiple tax returns, making it ideal for households with more than one taxpayer.

Filing with TaxAct follows a familiar step-by-step process, much like other tax software. The platform guides you through a series of questions about your income, deductions, and life events to help populate the correct tax forms and identify potential credits.

As you enter information, a real-time tracker updates your estimated refund or balance due, giving you immediate insight into how your input affect your return.

What to know before filing with TaxAct

TaxAct is a solid choice for those seeking a no-frills, cost-effective filing experience. One of its advantages is transparent pricing with minimal upselling.

While other platforms often nudge users toward more expensive tiers or add-ons, TaxAct largely avoids that, keeping things straightforward for users who know what they need.

Compared to TurboTax, TaxAct remains a more budget-friendly solution, particularly for those with more complex filing needs like freelancers, gig workers, and investors.

Is TaxAct worth it?

TaxAct is a good option for filers who want reliable tax prep tools without paying premium prices. While it may not offer all the bells and whistles of more expensive platforms, it delivers a user-friendly experience, essential features and flexible plan options.

The platform’s clear pricing, minimal upselling and support for complex tax situations make it a smart pick for those who prioritize value over flashy extras. Just keep in mind that state filing costs can add up, and live expert help comes at an additional charge. If you’re comfortable navigating your taxes with a bit of guidance, TaxAct is worth a closer look this tax season.

IRS Layoffs Spark Delays, Doubt This Tax Season

Gabriella Cruz-Martínez — Wed, 26 Mar 2025 14:47:00 +0000

The IRS is reportedly preparing to reduce its nearly 100,000 workforce by as much as half through layoffs, buyouts, and attrition — and experts say the disruption is already interfering with this tax season.

Close to 7,000 probationary employees were laid off on February 20, and now the agency is reinstating and placing those workers on paid administrative leave until further notice. That figure adds to about 5,000 IRS employees who have reportedly accepted the Trump administration’s fork-in-the-road deferred resignation offer to cut down federal spending.

As reported by Kiplinger, those deemed critical to the 2025 tax season have been barred from accepting the buyout until mid-May, after the tax filing deadline.

Now, more layoffs could be on the horizon, as Elon Musk’s Department of Government Efficiency (DOGE) plans to cut as much as 20% of the IRS by mid-May. The billionaire tasked by President Donald Trump to dismantle federal agencies and other spending expects to eliminate about 6,800 more federal workers, barely a month after tax season ends.

The dramatic downsizing could worsen as the IRS is drafting plans to eliminate up to 45,000 of its overall headcount, sources familiar with the matter told the Associated Press. With the 2025 tax season underway, tax experts have noticed signs of trouble at the IRS, from a lack of customer service and delays to audit errors.

Here’s what you need to know about how IRS layoffs can impact you as a taxpayer, based on Kiplinger’s conversations with CPAs and tax experts.

Contacting IRS: ‘Revenue officers becoming a black hole’

When tax season rolls around, the saying “all hands on deck” is not lost at the IRS. The agency has been operating with that approach for years to overcome staffing shortages and successfully process millions of tax returns.

In fact, the IRS has been known to siphon employees from other departments to meet tax filing deadlines in previous years. This year is no different. According to the National Taxpayer Advocate, the agency made the business call to temporarily direct staffers from the Identity Theft Victim Assistance (IDTVA) department to answer phones in Taxpayer Services to handle the high volume of calls during tax season.

As reported by Kiplinger, Taxpayer Services accounts for half of the IRS entire workforce. The agency’s overall headcount had surpassed 100,000 by January, a staffing milestone not seen in 30 years.

But that progress has fallen back in barely two months.

With the recent wave of layoffs shaking up the IRS, some impacted employees likely belonged to the IDTVA. Between fiscal years 2023 and 2024, the department hired 663 new employees. Musk’s firings on February 20 mostly impacted probationary workers who had fewer protections compared to long-term colleagues, which may have included some of those recent hires.

Industry experts across the country have already noticed that it’s getting harder to reach an IRS agent on the phone, putting their clients' tax returns and problems inevitably on hold.

“Typically, when we work a high-value collections case, we are working with a single point of contact for our clients’ case at the IRS known as a revenue officer,” Logan Allec, CPA and owner of tax relief company Choice Tax Relief, told Kiplinger. “All information is passed to, and negotiations done with, this particular individual.”

But what happens when IRS phone lines go unanswered? That’s a question many CPAs and taxpayers are asking themselves this year.

“We have already seen with several of our clients’ cases our communications — voicemails and taxes — with their revenue officers becoming a black hole. Although we don’t know for sure, we suspect that this means that these revenue officers are no longer with the IRS, and we have to wait for a new one — from the already reduced pool of revenue officers to be assigned.”
Logan Allec, CPA and founder of Choice Tax Relief

Harder to avoid tax penalties

With fewer employees at the IRS, taxpayers are likely to face more obstacles as they attempt to get their problems solved.

The National Taxpayer Advocate pointed to hiring as one of the IRS's most serious problems in its annual report to Congress this year. The government watchdog wrote that insufficient funding in the IRS and low staffing levels over the past decade have forced taxpayers to deal with:

Delays in processing returns and refunds
Reduced access to knowledgeable IRS employees
Inconsistent application of tax laws and increasing errors

The sudden reduction in IRS staff has sounded alarm bells for one attorney in Michigan, particularly regarding its impact on taxpayers.

“Fewer IRS employees create a big problem for taxpayers when it comes to getting their tax issues resolved,” Stephen Weisberg, principal attorney and founder of The W Tax Group, told Kiplinger. “Tax debt resolutions, including payment plans, Offers in Compromise, levy and lien releases, will take longer, that is, assuming you can get in touch with someone to help you.”

As reported by Kiplinger, only 32% of callers reached an IRS employee last year during tax season, and 29% of callers were able to speak with an employee during the full year. While that is an improvement from previous years, it still required reassigning employees from other departments to assist with phone calls.

“The IRS is already overwhelmed,” Weisberg added. “With even fewer employees, there’s going to be no one to help taxpayers resolve these issues. Penalties will still accrue, as will interest, despite the fact that taxpayers won’t be able to get in contact with anyone in order to resolve their tax debt.”

‘Slow processing and refunds’

An IRS employee walks through tax documents in the staging warehouse at a Internal Revenue Service facility in Ogden, Utah. (Image credit: Alex Goodlett for The Washington Post via Getty Images)

Taxpayers, particularly those with more complicated tax returns, often worry about delays.

Those concerns are within reason. It took the IRS an average of 180 days to manually process tax returns last year. Processing paper returns took an average of 20 days, instead of 13. Additionally, 66% of taxpayer mail was delayed and considered late by the end of 2024, according to the NTA.

If you were a victim of identity theft, the average time to reach a resolution and process refunds was nearly two years. Not to mention, the agency still faced a backlog of 1.2 million Employee Retention Credit (ERC) claims as of last fall.

The Trump administration’s hiring freeze and efforts to downsize the IRS are expected to aggravate existing problems. Mainly, ones that will impact your tax experience.

Slow processing will not only hurt responsible taxpayers it would also increase the national deficit if the IRS no longer has the bandwidth to target complicated returns, such as large corporations and higher earners.

A separate study from Yale Budget Lab shows that if the IRS shrinks by 50% — equal to a workforce reduction of about 50,000 people — the agency won’t be able to collect revenues, resulting in as much as $395 billion ($350 billion net) forgone revenue over 10 years. If the staffing reduction leads to an increase in taxpayer noncompliance, revenue losses could rise as high as $2.4 trillion in a decade.

“These layoffs within the IRS could slow processing and refunds; especially more complicated returns,” Thomas J. Cryan, attorney and author of Disrupting Taxes told Kiplinger. “Of greater impact, one can estimate that the reduction in the IRS workforce will undermine and reduce tax revenue collections; which will have the knock-on effect of increasing the annual budget deficit, which in turn will increase the costs of interest on the debt to the citizens.”

‘A focus on low-hanging fruit’

Carts containing documents sit organized at the IRS Processing Facility on September 06, 2024 in Austin, Texas. (Image credit: Brandon Bell via Getty Images)

The recent string of IRS layoffs spearheaded by Musk’s DOGE team reportedly impacted thousands of employees who worked in taxpayer compliance, call centers, and the agency’s technology modernization.

While those estimated 7,000 probationary agency workers were recently placed on paid leave until further notice, they are not allowed to work during this tax season. In a letter to Acting IRS Commissioner Melanie Krause, 130 House Democrats warned that the loss of thousands in compliance staff “could cripple progress” and “embolden tax evasion” which would deprive the U.S. of urgently needed resources.

“Unfortunately, to make up for the lost revenue from experienced auditors leaving the agency, we will likely see more of a focus on low-hanging fruit,” Allec told Kiplinger, explaining that these are “less sophisticated and often non-represented taxpayers whom the IRS can essentially railroad in an audit or collections case.”

Some examples of low-hanging fruit where the IRS may focus enforcement efforts on include:

Individuals behind on their taxes, or non-filers
Taxpayers on repayment plans

According to Allec, the IRS has a system called Automated Substitute for Return (ASFR), which can calculate a taxpayer's liability. With less staffing, the IRS would have to lean on this automated software to pull in revenue.

“If we see more layoffs at the IRS, I have to believe that more resources will be allocated to the ‘automated’ programs,” he added.

Karla Dennis, an enrolled tax agent and CEO of KDA, Inc. told Kiplinger that the loss of compliance workers could mean fewer audits across the business sector and the wealthy. That’s because more complicated casework often requires a manual review by the IRS and can’t be run through a software service.

“The IRS compliance sector is divided between processing returns and conducting audits,” Dennis said. “Since layoffs seem to be targeting auditors, we can expect a decrease in audits, especially those for small businesses.”

What’s next for the IRS

The IRS workforce could face more shakeups as the Trump administration pushes its goal to reduce federal spending.

To date, the agency has yet to confirm President Trump’s choice for commissioner — ex-congressman and auctioneer Billy Long (R-Missouri). The IRS also demoted the acting chief counsel, William Paul. His position was filled by another IRS attorney Andrew De Mello, who sources say supports DOGE.

Looking toward the future, Trump has suggested abolishing the IRS and replacing the agency with a tariff-led revenue system administered by a so-called External Revenue Service.

However, one fact is for certain: the recent layoffs at the IRS will cause some strain on taxpayers.

"In the short term, most likely it will cause some issues, but the goal is to shake things up and make things more efficient over time,” CFP and tax strategist Matt Chancey told Kiplinger. “No one thinks that agency is efficient today, so it makes sense.”

Chancey, founder of Tax Alpha Title, cited a potential positive: “Will it get worse before it gets better? Most likely. But with new technology and some AI integration and being forced to become more efficient it should get better over time. What is the old expression — you have to break a few eggs to make an omelette."

Seven Common Tax Preparation Mistakes (and How to Avoid Them)

Kiplinger Advisor Collective — Wed, 26 Mar 2025 12:00:10 +0000

As the deadline for completing taxes looms ever closer, taxpayers across the country are scrambling to gather necessary forms and documents, ensure their numbers are correct and get this burdensome task off their to-do list.

However, according to the tax and financial experts of Kiplinger Advisor Collective, preparing your taxes doesn’t need to be the dreaded task many make it out to be. In fact, it can be a great time to check in on the health of your finances and ensure you’re taking advantage of all the benefits and accounts that are available to you.

If tax time is adding unnecessary stress to your life each year, consider these common mistakes people make when preparing their taxes and what can be done to avoid them. A few simple steps may be all you need to ease your stress and feel good about your finances this year.

Ignoring beneficial accounts
“A common mistake could be ignoring accounts that offer tax benefits, such as HSAs, FSAs and retirement accounts that depreciate taxable revenue. A lot of people think it is too complicated to use these benefits. The solution is to look over the limits every year and intelligently take advantage of employer-offered benefits to reduce taxes while ensuring greater economic security for the future.” — Jabin Geevarghese George, Tata Consultancy Services Ltd.

Owing unnecessary penalties and interest
“Often, people owe unnecessary penalties and interest due to not doing proactive tax and income planning to determine if withholdings will satisfy their tax liability. Generally, this happens when overall tax withholdings are off, Roth conversions were executed during the tax year or another income source wasn't accounted for. The fix is to double-check that your paycheck and other withholdings are accurate.” — Doug Oosterhart, LifePoint Planning

Neglecting to track throughout the year
“A common mistake is neglecting to track deductions and credits throughout the year. Many miss out on savings simply because they don’t keep organized records. This happens due to a lack of planning or relying solely on memory. To fix it, keep a digital folder for receipts, use expense-tracking apps and review tax deductions regularly. Staying proactive ensures maximum refunds and fewer surprises.” — Stephen Nalley, Black Briar Advisors

Waiting until the last minute
“I’ve seen people scramble, miss deductions or rush into costly errors. Why? Because taxes feel overwhelming. The fix? Stay organized year-round — track expenses, review with a pro early and treat taxes like a financial checkup, not a deadline. A little prep now saves big headaches later.” — Bob Chitrathorn, Wealth Planning By Bob Chitrathorn of Simplified Wealth Management

Ignoring deductions and write-offs
“Too many people leave money on the table because they don’t track expenses, or they assume they don’t qualify. If you’re a business owner, freelancer or even have side income, you could be missing major tax breaks. Fix it by keeping detailed records and working with a tax pro who knows how to maximize what you keep. Don’t donate extra cash to the IRS!” — Justin Brock, Bobby Brock Insurance

Putting off getting organized
“The No. 1 mistake I see is a lack of organization and planning throughout the year. Better organization and planning can make tax preparation less challenging because you won’t be as overwhelmed or stressed.” — Marguerita Cheng, Blue Ocean Global Wealth

Failing to seek professional guidance
“Not having a good tax adviser is like sailing without a compass — you might be OK for some time, but eventually you will hit a rock or an iceberg. Tax laws are complex and ever-changing. The consequences of not being compliant can be disastrous. Ensure your tax adviser is sharp and up to date with the latest laws and requirements, or else you might end up paying more in the long run.” — Zain Jaffer, Zain Ventures

The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.

TurboTax: Features, Pricing and Filing Options for This Tax Season

Carla Ayers — Mon, 24 Mar 2025 20:40:21 +0000

Tax season can feel overwhelming, but the right software can simplify the process. TurboTax is known for its user-friendly interface, step-by-step guidance, and features designed to help filers maximize refunds while minimizing errors.

TurboTax is especially well-suited for people filing simple tax returns — think W-2 income, student loan interest and a few common tax credits. While its free version works well for basic needs, paying for a higher tier can be worth it for the added support if your return is a bit more complicated.

Here’s what to know about TurboTax’s features, pricing and how it compares to other filing options.

How to choose the right version of TurboTax

Selecting the right TurboTax option depends on your tax situation. The goal is to get the features you need — without paying for upgrades you don’t.

The online version offers the flexibility of accessing your tax information from any internet-connected device, with data securely stored in the cloud. You can switch back and forth between TurboTax online and the app seamlessly.

You can use the app to snap a pic of your W-2 and other documents and your information will be automatically entered in your return. It’s important to note that the mobile app doesn’t have access to the print center or tax tools.

The desktop version is installed on your computer, allowing for offline access and local data storage. Both versions support state tax returns, though additional fees apply.

TurboTax provides various support levels, ranging from self-service to live assistance and full-service options where a tax expert manages your entire return. The following are of some of the available options:

TurboTax Filing Options	Who It’s Best For	Federal Cost	State Cost
Do It Yourself	File yourself with clear, step-by-step tools	$0 - $139 *$0 if you qualify for a free federal return	$0 - $64 *$0 if you qualify for a free federal return
Expert Assist	File yourself with on-demand expert help	$59 - $209	$59 - $69
Expert Full Service	Hand off your taxes for one clear price	$129	$69

TurboTax software can be downloaded directly from the TurboTax website, or purchased from popular retailers like Costco and Best Buy.

These retailers often offer bundles or limited-time discounts, so it’s worth comparing prices before you buy.

There are several discounts and free filing options available for those who qualify. USAA members can access exclusive savings when purchasing TurboTax through the USAA website.

While active-duty and reserve military members may be eligible to file their federal and state tax returns for free.

TurboTax features that help maximize your tax refund

(Image credit: Getty Images)

TurboTax offers several features designed to simplify tax preparation. One standout feature I like is the ability to import W-2s, 1099s and investment income reports directly from financial institutions.

This can save time and reduce errors, especially for users with multiple income sources — though not all financial institutions are supported.

TurboTax offers a tool called the Deduction Maximizer, which helps users uncover tax breaks they might otherwise miss. It scans for eligible deductions and credits, including mortgage interest, student loan interest and charitable contributions.

While this tool can boost refunds, it may occasionally encourage upgrades that aren't necessary for every tax situation.

For those seeking additional help, TurboTax Live connects users with tax experts for real-time assistance. This service is ideal for complex returns but comes at an added cost, which may not be worthwhile for simpler filings.

TurboTax also includes an accuracy guarantee and audit support. While these features offer peace of mind, it's important to note that audit support is limited to guidance rather than full representation.

What to know before filing your taxes with TurboTax

While TurboTax simplifies the tax filing process, there are a few considerations to keep in mind. Before filing with TurboTax, it’s important to know that not all versions are free.

The free version is designed for simple tax returns and may not cover more complex situations like itemized deductions or certain types of income. If your tax situation involves freelance work, rental properties or investment income, you’ll likely need to upgrade to a paid version.

Finally, users can file state tax returns through TurboTax for an additional fee in most cases. However, some states offer free filing options, so it's worth checking local requirements before paying for the add-on.

Is TurboTax the right tax software for you?

TurboTax takes much of the complexity out of tax preparation by offering a guided, user-friendly experience that supports a wide range of tax situations.

Whether you’re filing a basic return or juggling multiple income streams, TurboTax provides tools and guidance to help you file accurately.

Features like document import and deduction-finding tools can help maximize your refund, but it’s important to consider whether you actually need the higher-tier upgrades or expert help. Not every filer will benefit from these paid add-ons, so review your tax situation carefully before choosing a version of the software to file your taxes.

Still Haven't Filed? The Best Tax Software to Beat the April 15 Deadline

Rachael Green — Mon, 17 Mar 2025 14:26:42 +0000

(Image credit: Getty Images)

It's that time of year, again. Tax Season 2026 is officially here, and if you haven't filed yet, the clock is ticking. Tax Day lands on April 15 this year so you've still got a couple of months left to file your return – or at least file an extension.

Whether your taxes are as simple as copying over a W2 and claiming a standard deduction or as complicated as living abroad while earning rental income on properties in multiple states, it's time to pick a tax prep software and start slogging through it.

If you don't like the one you used last year or you just want to see what your options are, digging past the advertising and upselling tactics can make it hard to figure out whether you qualify for a free version, how much it'll cost if you don't and whether or not the software can even handle your specific tax situation.

To help you sift through your options, check out our picks for the best tax prep software of 2026.

Best overall: FreeTaxUSA

Best tax prep software overall

Pay just $15.99 total to file your federal and state tax return – no matter what your tax situation is.View Deal

Before diving into why FreeTaxUSA earned top billing, let's manage your expectations by saying FreeTaxUSA probably won't be entirely free for you.

Despite the name, the completely free version of this tax prep software is only available to filers with an adjusted gross income (AGI) of $48,000 or less or active duty military with an AGI of $84,000 or less.

For everyone else, the federal return is free, but you'll pay $15.99 per state. There are a few upgrades and add-ons that can raise the price further, but none of those are tied to your tax situation – and that's why it's at the top of the list.

Say you're a self-employed filer or you plan to itemize your taxes, for example. Most tax prep software would force you into a deluxe or premium version to access the forms for those situations.

At FreeTaxUSA, the price is the same regardless of which forms you need to submit.

While it's not quite as seamless an experience as TurboTax and doesn't offer the full service options of H&R Block, it's a simple enough tax prep software at a flat price that works for most tax situations.

You'll be able to import W2s and prior-year tax returns from competitor sites. The rest of the process is fairly straightforward.

If you do decide you want the help of a tax pro, you can add Deluxe Support for just $7.99. This allows you to ask your questions to a tax specialist via live chat as needed.

For even more hands-on help, you can add Pro Support for $44.99. With this one, you can talk to an expert via live chat or phone and even share your screen with them so they can see exactly where you're stuck and walk you through the process.

In short, FreeTaxUSA may not actually be free for most, but it's a low-cost option that won't increase in price just because your taxes involve more than a W2. And if you do decide you need a little more guidance than the relatively basic software offers, you can add in expert support for as little as $7.99.

FreeTaxUSA Prices at a Glance
Online Tax Filing	$0 Federal + $15.99 per state
Add Deluxe Support	$7.99
Add Pro Support	$44.99
Add Audit Defense	$19.99

Easiest DIY tax filing: Intuit TurboTax

Easiest DIY tax filing

Enjoy a seamless tax filing experience with TurboTax's easy document importing and user-friendly software.View Deal

If you want to file taxes yourself, but also want to take as much of the guesswork out of the process as possible, TurboTax software makes it easy.

TurboTax is continuously upgrading their online tax prep software, most recently by building integrations with QuickBooks and Credit Karma. This makes the process of uploading documents and forms to TurboTax as painless as possible.

Instead of manually inputting information or answering questions, you can just link TurboTax to QuickBooks or your bank to import forms or even take a photo of your W2 and the software auto-fills your return with that information for you.

Once TurboTax has auto-filled as much of your return as it can, you'll be guided through the rest of your return in a step-by-step process that's easy to follow.

The tradeoff for that seamless process is price. While a free version is available, only those with the simplest tax situations are eligible and it excludes some of the cooler features that make TurboTax so easy to use.

To get the full experience, you'll need to spring for TurboTax Deluxe or Premium. The one you choose depends on your tax situation. Here's a quick comparison of pricing. Tap through the links to see which tax forms and tax situations are supported by each product.

Intuit TurboTax Prices at a Glance
TurboTax Free Edition	$0 Federal + $0 per State
TurboTax Deluxe	$79 Federal + $64 per State
TurboTax Expert Assist Deluxe	$129 Federal + $69 per State
TurboTax Premium	$139 Federal + $64 per State
TurboTax Expert Assist Premium	$209 Federal + $69 per State
TurboTax Expert Full Service	$150 and up

Best for complicated tax situations: H&R Block

Best for complicated tax situations

A free version of H&R Block is available for simple taxes. But the best value is found in the deluxe, premium or full service options. View Deal

Did you retire abroad and now have no clue where to start with taxes? Are you a freelancer whose earned income in multiple states? Is this your first year filing taxes after divorce?

For those extra tricky tax situations, it helps to have access to pros who study tax codes full time. H&R Block tax prep software is your best bet if you know you’ll need some professional advice and guidance as you navigate complicated tax situations.

While other tax prep software offer customer support and some even offer a few ways to connect with a live tax professional, H&R Block stands out as one of the most flexible options if you want extra help.

For example, if you want to handle the process yourself and just have access to a pro, H&R Block Deluxe, Premium and Self-Employed products all include unlimited expert help to ask questions whenever you need it.

You also have the option to pay extra for an expert review before you file, if you'd feel better having a professional check your work before you send your tax return to the IRS.

If you'd rather just hand all your paperwork over to a pro and let them figure it out, you can do that, too. H&R Block offers in-person tax prep services as well as remote or drop-off options so you can work with a professional no matter where you are or how little time you have.

The more support you want, the more you'll pay. But if you've got a tricky tax situation – especially one that most other tax prep software won't even touch – H&R Block is a great choice.

H&R Block Prices at a Glance
Free Online Tax Filing	$0 Federal + $0 per State
Free Online Tax Filing with Tax Pro Review	$55 Federal + $0 per state
H&R Block Deluxe	$65 Federal + $37 per state
H&R Block Deluxe with Tax Pro Review	$130 Federal + $37 per state
H&R Block Premium	$105 Federal + $37 per state
H&R Block Premium with Tax Pro Review	$200 Federal + $37 per state
H&R Block Self-Employed	$130 Federal + $37 per state
H&R Block Self-Employed with Tax Pro Review	$225 Federal + $37 per state
File with a Tax Pro	$89 and up + additional state fee

Most affordable pro support: Jackson Hewitt

Most affordable pro support

Pay a flat $25 fee for the online software or take advantage of low-cost full service tax preparation at thousands of Jackson Hewitt locations nationwide.View Deal

For a full service experience similar to H&R Block but at a lower price point, try Jackson Hewitt. You can get in-person help at your nearest Jackson Hewitt or participating Walmart location. You can also just gather all your paperwork and drop it off at one of these locations to let a pro do your taxes for you.

Prices start at just $49 for these full service options, depending on the complexity of your taxes. Meanwhile, H&R Block's full service options start at $89 and go up from there depending on which forms you need to file.

With that said, you won't have the option to work with a tax pro remotely like you can at H&R Block. You also don't get the option to complete the return yourself and just have a tax pro review it before filing.

Jackson Hewitt also has online tax prep software if you want to do it yourself. The best thing about it is that you pay a flat $25 fee for access to the full software, including filing your federal and state returns. There's no hidden fees and no upselling prompts as you work through your taxes.

The downside: there's no free version at all. There are also a few forms not supported in the online tax filing platform that you can find in H&R Block's tax prep software.

However, for most filers, the online software is comprehensive enough. But if you know your tax situation is complicated, check through the list of Jackson Hewitt's supported forms to make sure everything you have is included before you start working through their online filing option.

Jackson Hewitt Prices at a Glance
Online Tax Filing	$25 (federal and state)
File with a tax pro	$49 and up (depending on forms needed)

Truly free tax prep software: Cash App Taxes

Truly free tax prep software

Enjoy free tax filing for just about every situation with Cash App Tax.View Deal

Cash App Taxes stands out as one of the few ways to file taxes for free that is actually free for anyone with any tax situation. With most tax prep software, you can start filing for free. But if you have investment income to add or you’d like to itemize your deductions, you suddenly find yourself shunted to a paid version.

Basically, if you’re doing anything more complicated than inputting a W2 form and claiming the standard deduction, that free tax prep software is no longer free.

With Cash App Taxes, there is no paid version. There are no add-ons or upgrades. It's free from start to finish, no matter which tax forms you need to file — and that’s true for both your federal and state tax returns.

What's the catch? There are two. First, your support options are limited and many of the forms need to be filled out manually. So if your taxes are complex, you need to be confident in your ability to manually fill out the forms on your own.

The second issue is that there are a few tax forms that Cash App just doesn’t support. While most filers are probably covered, some of the trickier situations might not be.

You can find a full list of excluded forms on their website. The most glaring omissions include: no multi-state filing, no foreign earned income and no underpayment penalty calculations.

Cash App Taxes Prices at a Glance
Online Tax Filing	Free

Honorable mentions

The five options listed above offer a great balance of cost and support features. But these competitors listed below are also worth considering if you're still undecided.

Easy DIY software that's cheaper than TurboTax: TaxAct
Complex tax situations are free (if you're eligible): 1040.com
Simplified online tax filing: TaxSlayer

The bottom line

While tax prep software can be a lifesaver that helps you avoid making mistakes on your tax return, figuring out the best balance of price and features for your situation is almost as complicated as filing your taxes.

Fortunately, you generally don't have to pay until you file. So, if you're still not sure which one to choose, you can start the process in a couple different platforms, decide which one you like more and finish the rest of your return with that one.

Don’t Make These 5 Common Mistakes on Your Tax Return

Gabriella Cruz-Martínez — Wed, 12 Mar 2025 13:57:10 +0000

The 2026 tax season is in full swing, and the last thing you want is to file an incorrect return and wait through delays or worse — a rejected return.

The IRS has pointed out the most common errors taxpayers make as they file their taxes, from something as seemingly small as a misspelled name to accidentally entering the wrong bank account number for a direct deposit.

These kinds of subtle tax preparation flaws can be easy to miss, especially when dealing with multiple documents. However, watching for these inaccuracies can save you the headache of correcting or re-filing your tax return if you’re filing.

Here are some common tax errors you should avoid on your current tax return.

Common tax return mistakes to avoid

Note: These are just five mistakes the IRS points out as commonly made on federal income tax returns. If you're uncertain about whether your return is correct, you may want to consult a trusted tax professional.

The IRS requires taxpayers to include their Social Security number (SSN) on a tax return exactly as the number is printed on their Social Security card.

The same goes for other identification numbers on your tax return, such as an individual taxpayer identification number (ITIN) and employer identification number (EIN).

If you don’t have a SSN, but are eligible for one, you must fill out a Form SS-5 to apply and receive your Social Security number. This form can be used to apply for an original SSN, request a replacement for your card, or change or correct information on your SSN record.

There is one exception, if a child or dependent is age 12 or older and never received a SSN, the application process must be in person. The Social Security Administration will determine if you are eligible for the SSN.

Don’t have a SSN? There’s another option:

Taxpayers not eligible for an SSN must have an IRS individual taxpayer identification number (ITIN).
ITINs are 9-digit numbers issued by the IRS to taxpayers that don’t have a SSN for U.S. federal tax purposes.
If you do not have one, you must apply for the ITIN using a Form W-7.

Additionally, businesses, tax-exempt organizations, and other employers engaged in business as a sole proprietor must have an Employer Identification Number (EIN). If you don’t have an EIN, you can apply online.

2. Filing with an expired ITIN

Speaking of identification numbers, another common mistake is filing with an expired individual taxpayer identification number.

An ITIN expires if it remains inactive on a U.S. federal tax return for 3 consecutive tax years. The identification number effectively expires on December 31 after the third tax year of non-use.

This may happen to individuals who don’t earn enough to file for taxes, and more commonly, younger adults or students. You can check the status of your ITIN on your IRS Online Account.

What happens if you file taxes with an expired ITIN? You may face a delay in processing your return or not be able to claim certain credits, unless you renew your ITIN. Worse off, that may result in penalties and interest, or a reduced refund.

Notably, you don’t need an ITIN to request an extension or pay an estimated tax.

3. Typos and math mistakes

It’s only human error to have a typo once in a while, but having one on your tax return may result in a rejected return or delayed return. What are some common slip-ups?

Misspelled names: The name on your tax return should match the name on your Social Security card, for example.

Incorrect bank account number: If you entered the wrong bank account number, you should contact the IRS to stop the direct deposit. The IRS will mail you your refund.

Math mistakes: Even a simple calculation error on your return may lead to delays in some circumstances. Generally, math errors are caught during processing and corrected by the IRS, so you don’t have to worry about filing an amended return.

The IRS should notify taxpayers of the correction with a “math error notice” and provide further instructions if more information is needed.

As Kiplinger has reported, a new law makes these notifications mandatory and will hopefully clarify the process for addressing minor math mistakes. For more information, see our report: IRS Says You Made a Tax Return Mistake? A New Law Could Help You Fight Back.

4. Incorrect filing status, dependents, and more

If you accidentally filed your tax return with an incorrect filing status, dependents, total income, or deductions or credits, you’ll have to file an amended return. To do so, use Form 1040-X (Amended U.S. Individual Income Tax Return).

Avoid errors when figuring tax credits and deductions: If you’re unsure how to figure your Earned Income Tax Credit (EITC), or Child and Dependent Care Credit. The IRS offers an interactive tax assistant that can help you calculate your credits and deductions, and identify the required forms and schedules you must complete.

5. Unsigned forms

Lastly, an unsigned tax return is not considered a valid return by the IRS. This error may result in a delinquency penalty on your tax return if the agency finds the taxpayer willfully did not sign the tax return.

The IRS will return unsigned income tax returns requesting that you sign and resubmit the form for processing.

Filing taxes: What you can do

As you prepare to file your tax return this year, review your tax documents before submitting them to the IRS.

One pro-tip to avoid errors this tax season is to file your taxes electronically. According to the IRS, this reduces errors because the tax software does the math for you and flags common errors or missing information as you complete your return.

You can file for free or with the help of a Volunteer Income Tax Assistance (VITA) or tax counseling for the elderly (TCE) programs. You should also opt for a direct deposit to avoid getting your refund lost or stolen in the mail.

Lastly, using a reputable tax preparer, a certified public accountant, or commercial tax preparation software can help you avoid unwanted mistakes on your tax return.

First-Time Filing Taxes? Key Tax Tips to Know for 2025

Kate Schubel — Thu, 20 Feb 2025 15:08:00 +0000

You may have dreaded tax season for months: your first one ever. What do you need? How do you do your taxes? Where do you begin?

Everyone feels this way about the tax preparation process at one time or another. Some seasoned taxpayers may still feel a little uneasy.

We’re here to help. Read on for the ins and outs of getting your taxes prepared, filed, and squared away — so you can get this important item off your to-do list.

Key Points

Gather important documents.
Decide if you want to file online or via mail.
Consider whether you may be a dependent.
File by the April 15 deadline.
Save your tax documents for future years.

First time filing state and federal taxes

As a first-time filer, it’s important to know the different types of taxes and who needs to file them. There are two types of tax returns you may need to file:

Federal income tax return
State income tax return

The IRS requires you to file a federal return once you meet a certain income threshold, which includes filing status.

First, let’s start with some basics about filing status.

The IRS requires that you file a federal tax return if you meet certain “gross income” (total income) requirements for 2024:

$14,600 or higher (if single) OR,
$29,000 (if married filing jointly)

However, you may meet a different minimum if you fall under another filing status or income type. For example, if you’re self-employed, you have to file if you earn at least $400. Your income requirement may also differ if you can be claimed as a dependent (more on that later).

Additionally, you may owe state income tax. There are currently only nine states with no income taxes, so you will need to file a separate return if you live elsewhere.

With all this in mind, let’s dive into a few frequently asked questions, starting with documents you may need to prepare your taxes.

FAQs

What do I need for my first time filing taxes?

At the beginning of the tax preparation process, you will need to gather your paperwork. Some information is required of every taxpayer (like identification documents) while other forms will depend on your type of work, school expenses, and other life situations.

A good place to start is by following a personal checklist. Here is a sample list:

Personal information	Includes your Social Security number (or tax ID number) and the numbers for your bank account to receive your tax refund or pay your tax due.
Dependent and/or Spousal information	If you have children, persons with disabilities, or other adults who qualify as a dependent, you will also need their personal information.
Employment Income	Includes Form W-2 (if employed) or Form 1099-G (if unemployed)
Contractor, Freelance, or Gig Income	You must report any income received from renters (which also includes Airbnbs), self-employment income, online marketplaces, apps, or other “side hustles.”
Student Income	Form 1098-T or Form 1098-E are related to student expenses and student loan interest, respectively. These forms may help you obtain a tax break.
All other Income	Includes all other types of income. For example, interest from a bank savings account or investment income.
Qualifying Expenses	Have on hand any receipts that may qualify you for tax benefits. This could include work-related expenses, medical bills, statements from student loans or investments, or charitable donations.

It’s important to note the above list is not exhaustive. The form types and schedules you need depend on your specific tax situation. Also, check your state’s Department of Revenue website for additional guidelines about the documents you may need.

How do I file my taxes?

Once you have gathered all your documents, it’s time to choose how you will file your taxes. Below are a few options:

File for free. The IRS has a Free File and a Direct File program. While both provide tax filing, Free File may or may not be entirely “free” (some providers charge for state tax returns), while Direct File has free state returns with participating states and directly files with the IRS. Additionally, you may also use tax providers that offer free software, or IRS programs MIL (if you are in the military) or VITA for free filing options.
Purchase tax software. If you don’t want to file directly or indirectly with the IRS, you can buy tax software to guide you through the tax preparation process. Some options go for about $56 on Amazon.
Hire a certified trusted advisor. While this is the most expensive option, a CPA or tax professional may be useful for a complicated tax situation or if you require extra assistance.

In the digital age, most people choose to file electronically. This ensures a quick transmission of data and a potentially faster response from the IRS.

But if you prefer the old-school route, you can mail your forms; just be sure to postmark the envelope by the tax deadline — or you may face a penalty!

Note: Be wary of offers that seem too good to be true. Some companies have been accused of misleadingly advertising “free” tax filing services and making product downgrades more difficult. For more information, read Kiplinger’s report, H&R Block Faces Hefty $7 Million Fine: What It Means for Taxpayers.

Can my parents claim me as a dependent?

Yes, your parents may be able to claim you as a dependent if you are:

Under the age of 19.
Under the age of 24 and a full-time student.
“Permanently and totally disabled” or otherwise a qualified relative.

However, you may have to file taxes even if you are a dependent and you:

Earned income of at least $14,600.
Have unearned income (like investments or trusts) of at least $1,300.

Check with taxpayers who can claim you as a dependent before preparing your taxes.

What tax bracket am I in?

Income tax brackets are how much you pay as a percentage over a set income level. Huh? Let me explain.

There are seven brackets and each is determined by filing status and income.

You only pay tax on the portion of your income that falls into each bracket; not on the entirety of the highest rate. For more information, read Kiplinger’s report, Federal Income Tax Brackets and Marginal Rates.

Life events can also impact tax brackets.

It’s important to consider any personal situations that may have impacted your taxes for the year, such as:

Changing jobs or obtaining a promotion.
Getting married.
Having a baby or otherwise supporting a child at home.

Each of these may affect your tax bracket. For instance, accepting a higher-paying job may bump more of your income into a higher bracket.

What tax deductions and credits can I claim?

A tax credit or tax deduction can save you money on your taxes. While a tax credit may offer “dollar for dollar” savings, a tax deduction generally gives you “after-tax” benefits (reduces the amount you owe after taxes have been withheld).

Here are a few examples of credits and deductions that you may be eligible for:

Education tax credits and deductions. Tax breaks related to tuition, school supplies, and other qualifying expenses are available for eligible students. This includes the American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC), where students may be eligible to receive a credit of up to $2,500 or $2,000, respectively (though you cannot claim both the AOTC and the LLC for the same student or the same expenses).
Earned Income Tax Credit (EITC). For those without children, the current maximum is $632 off your tax bill; those with children could see more potential savings.
Child Tax Credit (CTC). Those with children may be eligible for a credit of up to $2,000 per child.
Home Office Tax Deduction. You may be able to claim expenses for the “business use” of your home if you’re a qualified self-employed individual.

For tax deductions, you can either “itemize” or take a “standard deduction.” Itemizing means adding up qualifying expenses you had throughout the year while the standard deduction is an IRS-provided dollar amount. Which option you choose depends on which offers you the most benefit.

For example, charitable donations can reduce your taxes if you claim an itemized deduction. Other tax benefits, like the EITC, are available regardless of whether you itemize or claim the standard deduction.

Every tax break has different eligibility requirements. And some states offer credits and deductions of their own. Visit your state’s Department of Revenue website for more information.

When are taxes due?

You did it! You have prepared your taxes and selected your filing method. So what’s next?

The deadline for you to file your tax return is Tuesday, April 15, 2025.

If you are mailing your return, be sure your envelope is postmarked by the due date. For electronic filing, the tax forms must be submitted by Tax Day at midnight.

But don’t wait.

Technology can glitch, inclement weather may affect mail pickup, and you will need to be mindful of post office closing times. If you cannot make the tax deadline, you may request an automatic six-month tax extension to October 15, 2025. However, remember that the extension will not affect when you need to pay your taxes. Any money you owe the IRS must be paid on the original Tax Day.

Additionally, your state tax deadline may differ from the IRS’. Check your state’s Department of Revenue website to know when your state taxes are due.

How long does a tax refund take?

Your filing method largely determines how long a refund on your taxes takes (though your refund method and whether your return is accurate are also important factors).

If you prepared and filed your return online, your refund should be issued in less than three weeks, according to the IRS. If you mailed your paper form, a response from the tax agency could take six to eight weeks.

You can check the status of your tax refund here.

In the meantime, store and save your tax documents for next year.

Not only will you need this information at the start of the 2026 filing season for your 2025 return, but the IRS can audit your return for up to six years after you’ve filed.

For more information, read Kiplinger’s report, How Long Should You Keep Tax Records?

For help in answering your tax questions, you can use the IRS Interactive Tax Assistant. You can also try the IRS Online Account tool to view your balances due, notices, and other personal information. For additional assistance, the IRS taxpayer hotline can be reached at 1-800-829-1040.

Just keep in mind the above resources are for federal taxes only. State tax information such as deadlines and state-specific tax breaks can be found by contacting your state’s Department of Revenue for resources.

Stressed About Doing Your Taxes? Use These Easy Tips to Cope

cpruemm@sisfg.com (Cynthia Pruemm, Investment Adviser Representative) — Thu, 20 Feb 2025 10:35:00 +0000

Tax season is underway, and for many, it’s a stressful time of year. A 2024 survey from Nextdoor found 64% of Americans experience stress during tax season. Meanwhile, CNBC reports that one in four Gen Zers say they’ll need a therapist to deal with their tax-related stress, and 54% said filing taxes has driven them to tears in the past. Whether we like it or not, filing income taxes is a routine part of life. So what can you do to prepare and mitigate the stress?

1. Take note of filing deadlines

This year, the IRS started accepting 2024 income tax returns on January 27. The IRS estimates more than 140 million individual tax returns will be filed ahead of the deadline of Tuesday, April 15. If you believe you’ll be unable to file by April 15, you can file an extension. Although you can file after the tax deadline without filing an extension, you’ll likely be penalized.

2. Organize your documents

With that in mind, now is a good time to gather all of your documents. The first form you’ll need to have is your W-2, or Wage and Tax Statement. Employers had until January 31 to send it to you. If you’re a business owner with independent contractors, the same deadline applies for sending out 1099s. There are various 1099 forms for different situations ranging from contractual work to royalties and rentals and even retirees. If you’re unsure, the IRS has specific instructions on filing a 1099 form .

Next, you’ll want Social Security numbers, birthdates and income for yourself, your spouse if you’re planning on filing jointly and any dependents you plan to claim. If you have a PIN from the IRS, you’ll also want to have that on hand.

If you’re planning to receive a refund by direct deposit, you’ll need to have your bank’s routing number and your account number. This can also come in handy for those who end up owing the IRS, as you can pay your tax bill directly from your account.

For those planning to claim any deductions, you’ll need to have documentation for each. Some common deductions include contributions to retirement accounts; education expenses, such as tuition, fees and interest on student loans; medical bills; property taxes and mortgage interest; and charitable donations.

Similarly, you’ll also want to have a record of any tax credits. Tax credits provide dollar-to-dollar cuts in any tax you owe. Some examples of tax credits you can claim include the child and dependent care credit, the premium tax credit, retirement savings contribution credits, and credits for older people and people who are disabled.

If you want to make sure you’re extra prepared, or are planning to file on your own, it might be wise to locate last year’s return. Having your state and federal returns (if applicable) can serve as a helpful guide, allowing you to see what you filed last year and the specific documents you used. If you’re using tax software to file your returns yourself, a lot of providers will allow you to upload your returns from the year before to save you from reentering information.

3. Know your options for filing your returns

When it comes to filing your taxes, you have a few different options. If you’re planning to file your own tax returns, there are a number of different online software programs that you can use, such as TurboTax, Jackson Hewitt and H&R Block. For those with an annual adjusted gross income of $79,000 or less, the IRS offers its Free File Program.

This year, the IRS also expanded its Direct File program, which is available in 25 states. This option allows taxpayers to file their returns for free. The platform has a couple of new features, including added support for various tax scenarios, such as claiming the c hild t ax c redit and the premium tax credit, which applies to people who have purchased medical coverage through the Health Insurance Marketplace. The Direct File program also allows you to claim deductions for health savings accounts (HSAs), student loan interest and expenses for educators.

If you have a simple financial situation, you can also fill out IRS Form 1040. The form asks who you are, calculates your taxable income and tax liability, and determines whether you’ve already paid some or all of your tax bill. You can file the form electronically or through the mail, which is a less secure option.

If you’re uncomfortable filing your returns yourself, you can hire a professional. This option works best for those who have complex financial situations, those who may feel intimidated or uncertain about filing, and those who just want to save time. If you have a side hustle or own your own business, it may be wise to hire a tax professional to avoid being audited.

What’s new this tax-filing season?

In addition to the Direct File program, the IRS says more help will be available for taxpayers this season. The agency is planning to expand in-person help by increasing hours at Taxpayer Assistance Centers nationwide and improving its phone helpline service. As for filing online, the IRS says it has added functionality to individual accounts, including scam alerts, virtual assistants, and ‘save and draft’ capabilities for forms on mobile devices, allowing people to start a form, save it and return to it later.

The IRS wants to increase its rural outreach program by 20%, which will ultimately increase the number of returns that are prepared. It also wants to increase awareness of the earned income tax credit. The agency says nearly one in five eligible taxpayers don’t claim it because they’re unaware of the credit or that they qualify for it.

When should I file?

Although you have until April 15 to file your federal returns, the sooner you file, the better. If you file early, you can get your refund faster. If you owe the IRS, filing early will give you time to prepare your payments, as the bill isn’t due until the filing deadline. Filing earlier can also help you obtain important financial information for major life changes, such as buying a home or enrolling in college. This information is needed to apply for financial aid or to get a mortgage.

Filing early can also help protect you from tax return identity theft. If you wait to file, it becomes easier for someone to file a fraudulent claim using your information. According to a report from the Treasury Inspector General for Tax Administration, the IRS says it identified more than 32,000 tax returns with around $272.7 million claimed in fraudulent refunds. Although the IRS says it prevented 96.3% of those refunds from being distributed, tax theft can still happen. Therefore, the sooner you file, the less likely you are to fall victim.

Tax season can be a complicated time. There’s a lot to keep track of and the information can be overwhelming for those who are new to filing, or who have complicated financial situations. However, knowing how to prepare, the important deadlines and your options for filing can help ease the stress. If you have questions, be sure to consult a financial adviser or tax preparer.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Legislation Cracking Down on IRS Tax Refund Mail Theft Advances

Gabriella Cruz-Martínez — Wed, 19 Feb 2025 14:47:30 +0000

Tens of thousands of U.S. Treasury checks were stolen in the mail last year, and a recently advanced bill aims to help victims recover funds via direct deposit.

The House Ways and Means Committee unanimously advanced several bipartisan bills on Feb. 12, including legislation that safeguards last-minute tax filers from late penalties.

The measures address reforms that would timestamp electronically filed tax returns, require the IRS to notify taxpayers of rights to dispute math errors, and protect the independence of the National Taxpayer Advocate.

New bipartisan legislation passed by the committee also points to reducing the risk of IRS tax refund mail theft, by giving taxpayers the alternative to ask for a direct deposit.

“The common thread that unites each of these bills is we are putting American taxpayers first,” said the Chairman of the House Committee on Ways and Means, U.S. Congressman for Missouri’s 9th District Jason Smith in an emailed markup. “They deserve to have an IRS that works for them and not the other way around.”

Here’s what these advanced measures could mean for you as a taxpayer.

Returning stolen taxpayer money

Imagine expecting your tax refund to be delivered by the mail, only to have it stolen. Then, requesting your check to be reissued only for it to be sniped again.

As Kiplinger has reported, Nicole Malliotakis (NY-11) says postal fraud has hit her district hard. At least $5.3 million in checks were stolen across 377 cases, with refund amounts ranging from a few hundred dollars up to $500,000. One constituent had their check reissued four times before it was received.

At least 40,000 IRS checks were stolen across the U.S. in 2024, up from 100 in 2022.

The increase in stolen checks led Malliotakis to join Reps. David Kustoff (TN-08), and Terri Sewell (AL-07) in introducing The Recovery of Stolen Checks Act on Feb. 11.

The bipartisan legislation, which passed the House Committee on Ways and Means in a vote of 41-0, would allow taxpayers who’ve had tax refunds stolen from the U.S. Treasury in the mail to receive a replacement check via direct deposit.

Worth noting, that so far this year, tax refunds are coming in bigger. As reported by Kiplinger, that extra boost is due to recent inflation adjustments to the tax code.

Legal independence for IRS watchdog

The second bill passed the committee in a vote of 41-0, would allow the National Taxpayer Advocate (NTA), Erin M. Collins, to hire attorneys who report directly to her.

This measure would grant the government watchdog group independence from the IRS in its choice of legal counsel. It also supports the NTA’s mission to improve taxpayer service and case outcomes at the IRS.

The tax agency has prohibited the National Taxpayer Advocate from hiring legal counsel since 2015, according to Rep. Randy Feenstra (R-IA). Currently, the staff hired by the NTA is accountable to the internal IRS counsel. The measure argues this may create a conflict of interest.

This National Taxpayer Enhancement Act of 2025 is co-sponsored by Reps. Feenstra, and Danny Davis (R-IL). U.S. Senators Bill Cassidy (R-LA) and Ben Cardin (D-MD) introduced companion legislation in the Senate.

Notify taxpayer rights to dispute math errors

The committee also passed a bill that simplifies taxpayers' experience when dealing with a math error in a vote of 43-0.

The Internal Revenue Service Math and Taxpayer Help Act requires the IRS to provide a clear explanation of an alleged math error and inform the taxpayer they have 60 days to dispute the assessment.

The IRS is currently not required to inform taxpayers they have the right to dispute mathematical adjustments within 60 days.

This bill is from Reps. Feenstra and Brad Schneider (Ill-10).

Fairness for last-minute electronic tax filers

If you’ve ever rushed to the U.S. Postal Service to deliver your tax return or payment to the IRS before the tax deadline, you just have to make sure your mail is postmarked by midnight.

However, if taxpayers submit the same payment or return electronically on the due date, it may be considered late if the IRS processes or receives it on the next business day. That can be incredibly frustrating.

The Electronic Filing and Payment Fairness Act passed in a vote of 41-0, ensures that electronic payments or returns submitted by midnight of the due date are considered timely. That’s regardless of whether the IRS waits to process or receive the payment the next day.

The bill is sponsored by Rep. Darin LaHood, (R-Ill), extends the IRS’s “mailbox rule” to electronic payments. The National Taxpayer Advocate pointed to this solution five years ago.

Addressing pandemic-era UI benefits fraud

Federal law enforcement agencies will have additional time and resources to prosecute criminals who stole billions of dollars in pandemic-era unemployment insurance (UI) benefits, under this new measure.

According to the Government Accountability Office, between $100 to $135 billion of UI benefits were stolen during the pandemic.

The legislation introduced by House and Means Committee Chairman Jason Smith, and co-sponsored by all 25 Republican members of the committee, extends the statute of limitations for CARES Act-related unemployment fraud from 5 to 10 years.

The Pandemic Unemployment Fraud Enforcement Act advanced in a vote of 24-18. Currently, the statute of limitations expires on March 27, 2025.

Bottom line

With tax season in full swing, taxpayers should take precautionary measures when preparing and completing their tax returns.

Filing a tax return electronically and selecting direct deposit can help you avoid the risk of mail theft. Additionally, keeping track of IRS notices and potential errors can help avoid penalties you may have to dispute or correct.

Lastly, filing your return or making payments ahead of the April 15 tax deadline can steer you away from accidentally having your documents processed at a later date.

Still, these new measures aim to give taxpayers less to worry about by simplifying their tax experience and better protecting their owed refunds during tax season.

For more information and live updates, follow our tax team on Filing Taxes 2025: Live Updates, Tax Tips, and Strategies from Kiplinger.

Could ERC Delays Get Worse if Trump Downsizes the IRS?

Gabriella Cruz-Martínez — Tue, 11 Feb 2025 16:47:00 +0000

President Donald Trump’s attempt to hollow out the IRS workforce revealed a major flaw. Who’s going to process millions of tax returns in their absence?

The Trump administration fired approximately 6,700 IRS workers on February 20, smack in the middle of the 2025 tax filing season. While they comprise a sliver of the tax agency’s approximate 100,000 full-time employees — internal sources say some worked in crucial areas such as auditing and compliance teams.

This comes barely two weeks after the president’s downsizing “efficiency” head Elon Musk said workers essential to tax filing must work until May 15 even if they accepted the Trump administration’s controversial federal employee buyout offer, the deadline of which was put on hold temporarily by a federal judge.

Federal employees exempt from the buyout through the tax filing season include people in Taxpayer Services, Information Technology, and the Taxpayer Advocate Service. These are teams comprised of professionals responsible for operations support, direct customer assistance, accounts management, and run compliance checks, to name a few functions.

They also manage tax returns across the seven processing centers — Andover, Atlanta, Austin, Cincinnati, Fresno, Kansas City, and Ogden. The IRS expects more than 140 million individual tax returns for tax year 2024.

The IRS has been known to siphon employees from other departments to meet tax filing deadlines in previous years, and the latest downsizing efforts are troubling.

Here’s what downsizing the tax agency can mean for you and your taxes, based on problem areas the IRS has been working to improve.

Continued delays in IRS in ERC claims processing

If you’re still waiting on your ERC refunds, you won’t want to hear this.

As of last fall, the IRS still faced a backlog of about 1.2 million Employee Retention Credit (ERC) claims, with many pending for more than a year.

The ERC is a pandemic-era refundable credit enacted to encourage businesses to keep their employees on payroll during the COVID-19 crisis. As previously reported by Kiplinger, abusive promoters advertised the ability to claim the ERC to unsuspecting employers, leading to a surplus of ERC fraud and erroneous claims.

The IRS restarted processing ERC claims following a one-year pause, but it’s been slow to reduce its backlog. At one point, the agency encouraged taxpayers to participate in a temporary Voluntary Disclosure Program to self-correct improper ERC claims at a discount.

The IRS claim withdrawal remains open. So far, there’s no clarity on whether pending cases will be resolved soon.

To say the least, some outstanding businesses aren’t happy. The tax agency was sued for millions over prolonged delays back in October 2024, and more lawsuits may pile up.

If the Trump administration gets enough IRS employees to voluntarily resign or issues furloughs in the future, there’s no telling when people will get their ERC claims resolved.

For more information see: IRS Sued for Millions Over Employee Retention Credit (ERC) Delays.

Identity theft delays may worsen

A judge temporarily blocked Tesla and SpaceX CEO Elon Musk from accessing the U.S. Treasury Department’s payment system. Musk gained temporary access to the department’s sensitive information system, raising alarm bells of fraud risk.

The tech billionaire is Trump’s appointed head of the newly created Department of Government Efficiency (DOGE), which aims to cut government spending and reshape the federal workforce.

The Treasury Department has information containing your name, address, Social Security number, and government payments including your Social Security check. So if there’s a breach, will the IRS be able to handle it?

The IRS closed the door on more identity theft cases last year, but the average time to reach a resolution and process refunds to affected victims was nearly two years.

At the end of 2024, the IRS had a total inventory of over 470,000 Identity Theft Victim Assistance (IDTVA) cases to triage, according to the National Taxpayer Advocate (NTA).

The delays were once again due to staffing shortages. Last year, the IRS temporarily reassigned staffers from IDTVA processing to answer phone calls in Taxpayer Services during tax season to achieve better customer service response times.

This year, the IRS again made the business call to siphon IDTVA employees from identity theft casework to answering phones during the 2024 filing season.

In total, the IRS lost 552 IDTVA employees to attrition in FY 2023 and 2024
During the same time, it hired 663 new employees

If you’re a victim of tax-related identity theft, Trump’s plan to reduce the workforce could mean you may have to wait even longer to resolve your case. It may also mean that your calls to the IRS customer service will go unanswered.

General processing delays

Reducing the IRS workforce may negatively impact customer service toll lines and processing of paper returns.

66% of taxpayer mail was delayed and considered late by the end of 2024
It took 20 days, instead of 13 days to process paper returns last year
Manual reviews could take as long as 180 days

According to the Taxpayer Advocate, only 32% of callers reached an IRS employee last year during tax season, and 29% of callers reached an employee during the full year. That was better than in previous years, but it still required reassigning employees from other departments to answer phone calls.

The Trump administration’s hiring freeze on the federal government doesn’t help. Not to mention, the hiring pause on the IRS is indefinite.

Bottom line on Trump IRS plans

The IRS has struggled to overcome staffing shortages for decades, and the Trump administration’s goal to shave down the federal workforce may crumble its progress.

The tax agency has faced continued challenges in employee recruitment, hiring, training, and retention, according to an analysis by the Taxpayer Advocate. For many key areas within the IRS, the clock is ticking.

An estimated 63% of the current IRS workforce is eligible to retire within the next six years, according to the 2024 NTA annual report to Congress. Over the past two years alone, at least 16% to 36% of employees have left Taxpayer Services, depending on the job position.

Separately, the IRS just lost another $20 billion in key funding which may impact the agency's capability to audit certain groups, mainly wealthy individuals. Republicans have also pushed the idea of abolishing the IRS.

All of these changes may impact taxpayers like you as you wait for your tax returns to be filed and processed in upcoming years. So stay tuned.

IRS Tax Refunds Are $1,000 Smaller This Year: Here's Why

Gabriella Cruz-Martínez — Tue, 11 Feb 2025 14:47:30 +0000

Tax refunds are coming in smaller this year, and the drop may be due to certain family tax credits haven’t been delivered yet.

The IRS reported that the average refund amount via direct deposit was $2,252 based on 33 million tax returns processed through February 14. That’s down 31% from $3,265 during the same period last year when the agency processed over 34 million returns.

It’s still early in the tax season, meaning refund amounts still have time to even out or climb higher as more tax returns come in.

Additionally, under current law, the IRS cannot issue refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. Those numbers aren’t reflected in the latest statistics.

Here’s what you can expect regarding your refund amount in the coming weeks.

Tax refunds average amount

Though IRS tax refunds came in $1,000 smaller this week, here are some key reasons why refunds may increase for some taxpayers.

Tax experts this year hinted that refunds could come in slightly larger due to inflation-related changes to the standard deduction and tax brackets for 2024. There’s also an extra standard deduction benefit for people over 65.

These changes impact your taxable income and generally translate to a bigger refund. That’s if your filing status and tax credits are the same as last year.

Here are three reasons why your refund may be better this year.

1. Larger standard deduction

Most taxpayers benefit from the standard deduction, and there’s good news this year. The 2024 standard deduction amounts for returns you’re filing now, in early 2025, are slightly larger.

That means you’ll get a broader chance to lower your tax liability and potentially get a larger tax refund. For single taxpayers and married individuals filing separately, the standard deduction rises to $14,600 for 2024, an increase of $730 from the previous year.

For couples who file jointly, the standard deduction is $29,200. As for heads of households, their deduction is $21,900 for the 2024 tax year.

If you are at least 65 or blind, you can claim an additional standard deduction benefit worth $1,950 for 2024. The extra deduction amount is doubled if you and your spouse meet that criteria.

Planning ahead? The IRS announced the 2025 standard deduction, and it’s the largest it has ever been.

2. Tax brackets adjusted for inflation

The IRS adjusts tax brackets each year to reflect upticks in the cost of living, to prevent what is sometimes referred to as “bracket creep.”

However, if a taxpayer's income increases more than the inflation rate, they could move into a higher bracket. In some cases, that can impact the amount of tax credits and deductions they are eligible to claim.

For instance, popular credits like the child tax credit phase out the higher your income level is.

The federal income tax rates haven’t changed for the 2024 tax year: 10%, 12%, 22%, 24%, 32%, 35%, and 37%.

For more information see our guide: 2024 and 2025 Federal Tax Brackets and Income Tax Rates

3. Earned Income Tax Credit

The Earned Income Tax Credit (EITC) is an often-overlooked refundable tax break available for workers with low and moderate incomes, with or without children.

As Kiplinger reported, the amount you get depends on your income, filing status, and the number of qualifying children in your household. Most importantly, due to 2024 inflation adjustments, the EITC credit amounts and income thresholds are slightly larger than a year ago.

No qualifying children: $632
1 qualifying child: $4,213
2 qualifying children: $6,960
3 or more qualifying children: $7,830

Some good news: the EITC income and credit thresholds increased for 2025. That could lead to a bigger refund next year as well.

Check your refund status for updates

Tax season is underway, and the IRS has already received over 33 million tax returns through February 14. The tax agency expects more than 140 million individual tax returns to be filed by the April 15 deadline.

If you’ve electronically filed your tax return, the ‘Where’s My Refund’ tool can show you the status of your tax refund as early as 24 hours after the IRS receives your return. Those who file a paper return can check their refund status four weeks after mailing a return.

As mentioned, there’s one exception. The IRS isn’t legally allowed to issue EITC or Additional Child Tax Credit (ACTC) refunds before mid-February, which may keep some refunds on hold for early filers.

If you electronically filed your tax return and expect an EITC or ACTC refund, you can check your refund status by Feb. 22. The first refunds should be delivered by March 3, according to the IRS.

Remember, your tax refund amount may be slightly bigger this year if your income levels and tax brackets haven’t changed significantly. So stay tuned for more updates as the tax season continues.

For more information and live updates, follow our tax team on Filing Taxes 2025: Live Updates, Tax Tips, and Strategies from Kiplinger.

Tax Season 2025: Updates, News, Tax Filing Tips and Strategies

Kelley R. Taylor — Mon, 27 Jan 2025 13:19:50 +0000

Welcome to Kiplinger’s 2025 tax season blog!

Since the IRS started accepting returns in January, our tax team (Kelley, senior tax editor, and Kiplinger tax writers Gabriella and Kate) has been here with essential updates, practical tips, and analysis to help you navigate every step of tax season — from maximizing deductions and credits to understanding the latest IRS and tax policy changes.

For most filers, Tax Day passed on Tuesday, April 15. So this blog is now officially closed.

If you haven’t filed or paid taxes owed yet, it’s important to do so as soon as possible to avoid penalties and interest. And, although the blog won’t be updated further, you can still explore all of our helpful posts from this tax season.

Thank you for joining us! We hope the insights and guidance we shared made filing easier and kept you informed every step of the way.

Stay tuned to Kiplinger for more expert advice on taxes and personal finance all year round, and subscribe to our weekly email newsletter: Kiplinger’s Tax Tips.

The First Day of Tax Season 2025

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As of January 27, the IRS opened its doors for the 2025 tax season. This year brings notable shifts that will impact how millions in the U.S. file their taxes.

For example, the IRS has expanded its Direct File program to allow taxpayers in 25 states to complete returns without traditional preparation costs. That could save millions of households time and money. (The tax agency estimates 30 million taxpayers could participate)

President Trump's return to the White House has prompted significant shifts. On inauguration day, the former IRS Commissioner Danny Werfel stepped down. As the tax agency awaits confirmation of Trump’s Commissioner pick (former Congressman Billy Long), it must deal with a hiring freeze and reduced funding.

What does this mean practically? The core tax season process should remain the same: gathering documents, understanding tax deductions and credits, and eventually meeting the April 15 deadline (if you don’t have a valid tax extension).

However, the federal tax landscape is evolving, and as a new Congress begins to address tax policy, there is uncertainty about what tax bills will look like beyond this year.

For those feeling anxious about the changes, take a deep breath. Focus on the fundamentals of good tax preparation: good record keeping, understanding your income streams, leveraging tax breaks you’re eligible for, and seeking professional advice when and if you need it.

Welcome to Tax Season 2025.

As mentioned, we'll be live blogging all week, offering tips, analysis, IRS updates, and related news and information. In the meantime, here are some resources to get you started.

Tax Changes to Know Before You File

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Every year, before you file your 2024 tax return, there are significant federal tax changes you need to know. This tax season is no different.

So, we’ve compiled a list of key IRS changes that could impact your 2024 tax return — from the child tax credit and 1099k thresholds to extended tax deadlines in states affected by devastating natural disasters.

See: Tax Season 2025 Is Here: Seven IRS Changes to Know Before You File

Also, if you aren’t sure where to begin to prepare for tax season or wonder if you even need to file a return this year, we’ve got you covered with the following guides:

Who is Required to File a Tax Return

Does Your Child Need to File a Tax Return?

- Kelley

A Bit of News on Tariffs

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Among President Donald Trump’s wave of executive orders signed on day one of his second term, one major campaign promise was missing — imposing universal tariffs on all imports.

What’s imminent, however, is how Trump’s sweeping would-be tariffs will impact your wallet as a consumer in the United States. Economists warn that tariffs on China, Mexico, and Canada can impact the cost of everyday essentials like food, gas, and clothing.

Here’s where you could see prices rise sooner than you think.

Food, Gas Prices to Spike if Trump Levies 25% Tariffs on Canada and Mexico

Free Tax...Help!

(Image credit: Getty Images)

Just a reminder that there are a bunch of ways to file taxes for free this filing season. Here are a few services that the IRS offers:

Free File is open to low-to-middle-income taxpayers with an AGI of $84,000 (or less).
Direct File is open to some taxpayers in 25 states with an AGI of up to $250,000.
The MIL (Military One Source) program (if you’re in the military) or the
The VITA (Volunteer Income Tax Assistance) program (if you make $67,000 or less, you can meet with an IRS partner or volunteer staff who can provide tax counseling and preparation services)

There are also some free filing options offered by tax prep companies. Just double-check their eligibility rules.

...Don’t know what your “AGI” is? No problem.

Adjusted gross income (AGI) is your total income minus specific deductions. It's the starting point for calculating your tax bill before applying standard or itemized deductions designed to give the IRS a clearer picture of your taxable income.

To learn more, check out Kiplinger’s take on AGI, and then head over to our guide to Federal Tax Brackets and Income Tax Rates for more information regarding your 2024 tax rate.

Note: Your marginal tax rate is the percentage you pay on your last dollar earned, not your entire income. Think of it like a staircase: as you climb to higher income levels, only the dollars on each new step are taxed at that step's rate.

Plus, we have everything you need to know about the standard deduction and a load of tax credits and deductions you might be eligible for. (We’ll talk more about some of those tax breaks this week.)

Fun Fact: Why Most People Don't Itemize Deductions

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Did you know the standard deduction has become the choice for nearly 90% of U.S. taxpayers? This surge in popularity isn’t an accident. The Tax Cuts and Jobs Act (TCJA) of 2017 (also known as the “Trump tax cuts”) nearly doubled the standard deduction, and that higher deduction is still in place now.

Data show that before the TCJA, about 30% of taxpayers itemized their deductions. After its implementation, that number plummeted to just under 14%. Congress will have to consider whether to extend the higher base standard deduction amount as it weighs new tax policy.

For the 2024 tax year, the standard deduction amounts are:

Single filers: $14,600
Married couples filing jointly: $29,2002
Head of household filers: $21,900

For more information, see Kiplinger’s guide: What’s the Standard Deduction for 2024 and 2025?

- Kelley

Go Digital This Tax Season

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The IRS is expecting more than 140 million individual tax returns to be filed by April 15, and the last thing you want is for your return to be delayed or lost in the mix.

As you prepare to file your taxes, storing your tax forms and supporting documents in a digital folder can help you file a secure and accurate tax return. Depending on your tax situation, you may collect receipts for expenses you’d like to deduct or claim as credit.

To get started, some documents you should consider digitizing include:

W-2 forms from employers
1099 forms for freelance or contract work
Paystubs or unemployment compensation
Receipts for deductible expenses
Investment records or bank statements

File digitally. As we’ve mentioned, IRS Direct File is available in 25 states, allowing taxpayers to file for free and directly to the IRS. Meanwhile, if you earned less than $84,000 in 2024, consider filing with IRS Free File. You can also select a direct deposit and receive a refund quicker if you are entitled to one

Avoid accidental loss. Digitizing your tax records and supporting documents can help you avoid the risk of losing crucial paperwork in the event of a natural disaster.

Consider the political landscape. The IRS has recently overcome years of challenges due to old tech, limited staff, and paper backlogs. The Trump administration is halting hiring new staff and considering cutting back on IRS funding. These changes may lead to potential tax processing delays, particularly for paper returns or those that need manual review.

- Gabriella

Related:

Some News: Scott Bessent Becomes New Treasury Secretary

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The Senate confirmed Scott Bessent as the new U.S. Treasury Secretary on January 27, with a vote of 68-29. Bessent, known for his work in the hedge fund industry, is the 79th Treasury Secretary, succeeding Janet Yellen.

During his confirmation hearing, Bessent outlined several key focus areas, some of which center on tax policy.

Addressing the upcoming expiration of certain Tax Cuts and Jobs Act (TCJA) provisions
Managing the national debt and debt ceiling negotiations
Potential reforms to the IRS
Navigating international trade relationships, particularly with China

As Bessent takes on his new role in the Trump administration, his decisions and policies will likely significantly impact the U.S. economy.

- Kelley

Trump Wants to Freeze All Federal Aid

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The White House Office of Management and Budget (OMB) has issued a memo pausing all federal grants and loans, effective January 28, 2025. While not directly targeting taxes, this unexpected and sweeping move could significantly affect the tax landscape.

Just before the 5 pm deadline when the pause was supposed to go into effect, a federal judge paused its implementation until Feb. 3. The situation is developing.

The memo came in addition to executive orders already issued freezing federal hiring for 90 days (indefinitely for the IRS), requiring a return to the office for many federal workers, and changing processes for reclassifying federal workers.

Key points of the memo:

Halts distribution of federal financial assistance
Excludes Social Security, Medicare, and Medicaid benefits
Federal agencies must report on affected programs by February 10, 2025 (this will likely be impacted by the judge's order.)

Potential tax impacts:

IRS Operations: A hiring freeze at the IRS could slow tax return processing and impact customer service.
Tax Credits: Uncertainty around grant-supported tax credit programs, especially in clean energy and electric vehicles.
Tax Guidance: Possible delays in issuing guidance on recent tax law changes.
Program Changes: Tax-related federal programs could be affected, potentially altering available incentives and credits.

Notably, the memo doesn't specify an end date for this "temporary" pause, adding another layer of uncertainty. And it's hard to say what will happen from a legal standpoint.

As we navigate this open-ended situation, keep an eye on any IRS updates and consider consulting a tax or finance professional if you have specific concerns about impacts on your situation.

Is the EV Tax Credit Going Away?

A Reminder for Those With Student Loan Debt

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If you’re paying off a student loan, you could be eligible for an up to $2,500 tax break for student loan interest, among other education tax credits and deductions.

Some education-related tax breaks hinge on "qualified education expenses," including tuition and fees, room and board, and loans for school supplies, like books. But in some cases, the combined total could save you thousands.

Why this matters. Data show that more than 50% of students graduate with student loans, with the average student loan payment of around $300.

On top of that financial burden, there may also be a new challenge for some students: Parts of the SAVE plan (a federal student loan repayment program) are currently being contested in a federal lawsuit.

For more information on how you can save tax dollars on your student debt and to learn about the taxability of recently forgiven student loans, check out these Kiplinger reports:

Don't Miss This $2,500 Tax Break for Paying Your Student Loan

How to Get a 401(k) Match for Your Student Loan Payment

Will You Owe Taxes on Your Recently Forgiven Student Loan?

A Little-Known Way to Help Pay Your Student Loan

In the News...No More Income Tax?

(Image credit: Thinkstock)

Donald Trump has once again stirred the debate on tax policy, recently advocating for eliminating income tax and returning to a tariff-based revenue system.

"We're going back to the old days. No income tax, just tariffs. It worked before, and it'll work again," Trump said during a January 25 event in Las Vegas, Nevada.

The remarks, which come not long after a Republican lawmaker separately proposed to abolish the IRS and rewrite that tax code, reignited discussions about fundamental changes to the U.S. tax system.

(It's worth noting that critics argue that heavy reliance on tariffs could lead to trade wars, increased consumer prices, and potential economic instability.)

To learn more about this latest tax suggestion, see: Hello Tariffs? What's Wrong With Trump's Plan to Abolish Income Tax.

- Kelley

$1,400 IRS Stimulus Check?

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Keep your eyes peeled for some extra cash flow coming your way via mailbox or a direct deposit.

As Kiplinger reported, the IRS is sending a million individuals a pandemic stimulus check worth up to $1,400 per taxpayer. The tax agency said it would send $2.4 billion in payments, which should be delivered by the end of this month (January).

The checks in question are from the 2021 Recovery Rebate Credit, a refundable credit for folks who did not receive one or more Economic Impact Payments (EIP) or stimulus checks.

Why such a delay? The IRS has been reviewing internal data to identify eligible taxpayers who filed a return but didn’t claim the credit. During the pandemic, the tax agency was short-staffed and faced many challenges as it dug itself out of paper backlogs.

Most taxpayers have already received their credit. However, some have not yet filed their 2021 tax returns and may qualify for a refund. If you’re in that situation, you’ll need to file that prior return by April 15.

For all the details, see our story, IRS is Sending Up to $1,400 to One Million People: Are You Eligible?

- Gabriella

Don't Overlook This Tax Break

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This year marks the 50th anniversary of the Earned Income Tax Credit (EITC), and there’s no better way to celebrate than by claiming your credit.

The EITC is a refundable tax credit designed for low- and moderate-income workers. If you qualify, you can use the credit to reduce your tax liability and may get a refund.

Approximately 23 million workers and families received $64 billion in EITC last year. Nationwide, the average tax credit amount was $2,743 —some good news: the Earned Income Tax Credit is expected to be slightly higher this year.

To qualify, you must have an earned income under $66,819 or an investment income under $11,600 last year.
For the 2024 tax year (taxes generally filed in early 2025), the EITC is worth up to $4,213 if you have only one qualifying child. That figure increases to $6,960 for two kids and up to $7,830 for three or more eligible children.
You don’t have to have children to qualify. Single taxpayers with an income under $18,591 ($25,551 for married filing jointly) qualify for a maximum EITC of $632.

Lastly, 31 states, plus the District of Columbia and Puerto Rico, currently have their state or local government version of the earned income tax credit in addition to the federal EITC.

Also, watch for EITC Awareness Day this Friday, January 31, 2025. The IRS in collaboration with community organizations, elected officials, schools, employers, and other partners, offers taxpayers free information and help to claim the EITC and other family tax credits.

For more details, see: Earned Income Tax Credit: How Much Is It?

Also: 2025 Family Tax Credits: Four IRS Changes That Can Save You Money

The Child Tax Credit: A Boost for Families

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Since 1997, the Child Tax Credit (CTC) has supported millions of families. What began as a $400 per child credit now provides up to $2,000 per eligible child, reaching approximately 46 million families - more than the population of Spain.

The CTC's impact is significant:

It helps lift nearly 2 million children out of poverty each year, comparable to emptying a city the size of Houston.
By providing financial support, the credit creates opportunities and stability for families across the United States.

For the 2024 tax year, the maximum CTC remains $2,000 per qualifying child under 17, but the refundable portion has increased from $1,600 last year to $1,700 for this tax filing season.

Families with lower tax liabilities can receive up to $1,700 back as a refund, even if they owe no taxes.

Learn more: Child Tax Credit 2024 and 2025: How Much Is It?

Are You Receiving a New Tax Form This Year?

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Here’s some news for gig workers, eBay sellers, and part-time Etsy vendors: You may get a tax form this year that you haven’t received before.

The IRS instituted a new 1099-K reporting change for this 2025 filing season (2024 tax returns). Previously, taxpayers received Form 1099-K when they reached $20,000 and 200 online transactions. Now, the threshold is just $5,000. This means more casual sellers of goods and services may receive this tax form for the first time.

While the new lower threshold doesn’t change the taxability of these items, you should review your Form 1099-K to ensure proper classification of what is taxable income.

For example, your form could accidentally include nontaxable transactions to friends and family. Items like splitting a meal, gifting birthday money, and like-personal transactions shouldn't trigger tax.

For more information, check out Kiplinger’s report 1099-K Reporting Change for the 2025 Tax Season.

Types of Income That Aren't Taxed by the IRS

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It can often feel like the IRS taxes most of your hard-earned money, but thankfully, certain types of income are nontaxable in the eyes of the federal tax agency. And those exceptions can significantly impact your financial strategy and tax planning.

Some examples? Gifts and inheritances up to certain limits, life insurance proceeds, some Social Security benefits, and interest from municipal bonds. Qualified distributions from Roth retirement accounts also provide tax-free benefits in retirement. Additionally, profits from the sale of a home may be exempt from tax under specific conditions.

For 2025, the annual gift exclusion is $19,000 per recipient, up from $18,000 in previous years. Additionally, Roth IRA withdrawals can be tax-free if you're over 59½ and have held the account for at least five years. It's important to note that while these income sources may be tax-free at the federal level, some might still be subject to state taxes depending on where you reside.

See: Common Types of Nontaxable Income to Know

While these and some other opportunities for tax-free income exist, remember that tax laws are complex, and each exemption has its own set of rules and qualifications.

Check out our summary on several types of income the IRS doesn’t tax. And, as always, consult a qualified tax professional who can help you navigate what in your financial life is and isn’t taxable.

- Kelley

Learn More:

Types of Income the IRS Doesn’t Tax: What to Know for 2025

How the IRS Taxes Retirement Income

Capital Gains Tax Exclusion for Home Sales

Qualified Charitable Distribution (QCD): Lower Your Taxes with This RMD Strategy in 2025

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When you are planning out your required minimum distributions (RMDs), remember to take advantage of a special tax consideration: Qualified Charitable Distributions.

RMDs are the minimum amount someone 73 or older must withdraw yearly from their retirement savings plan. A QCD is a donated portion of your RMD and can be made by anyone 70 ½ or older.

In addition to helping a qualified charity, a QCD may help you save on 2025 income tax through potentially:

Lowering the amount of tax you owe
Reducing high taxes on Social Security benefits
Lowering Medicare premiums

QCDs aren’t itemized deductions, so you can take full advantage of this tax benefit while still claiming the standard deduction.

Ready to learn more? Check out Kiplinger’s reports:

What Is a Qualified Charitable Distribution (QCD)?

RMDs: Key Points and What to Know

Form 1099 Guide: What You Need to Know About All 22 IRS 1099 Forms

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If you have a tax paper from someone other than your employer, you may have received a 1099. But what does the form mean, and why did you receive it?

IRS Form 1099 is informational. This means that taxes may not be due, but you should report the information (however small) anyway. Not only does this make your return more accurate, you can decrease the risk of getting audited by the IRS and potentially avoid any penalties or other tax fees associated with underfiling.

It's important to understand that different 1099 forms serve various purposes. For example, Form 1099-MISC reports miscellaneous income such as rent or royalties, while Form 1099-NEC is specifically for reporting non-employee compensation.

Form 1099-K reports payment card and third-party network transactions. For tax year 2024, the reporting threshold for 1099-K has been lowered significantly, potentially affecting many more taxpayers involved in gig economy work or online selling. Be sure to carefully review any 1099-K forms you receive and compare them against your own records to ensure accuracy

Check out our guide to the many types of Form 1099 so you can get off to a good start this filing season.

IRS 1099 Forms: What to Know About All 22 of Them

- Kate

Capital Gains Tax 2025: Rates, Rules, and How to Minimize Your Tax Bill

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Now that tax season has arrived, investors who sold assets in 2024 face the reality of capital gains taxes.

Any profit from selling stocks, real estate, or other investments is subject to capital gains tax. The rate depends largely on your holding period: assets kept for over a year qualify for favorable long-term rates, while those sold within a year are taxed as ordinary income. This distinction can make a substantial difference in your tax liability.

Fortunately, there are strategies to mitigate the impact. For example:

Investment losses can offset gains, potentially reducing your tax burden.
Homeowners who sold their primary residence may be eligible to exclude a portion of the profit from capital gains tax—up to $250,000 for individuals or $500,000 for married couples filing jointly.

As you navigate this tax season, don't underestimate the importance of capital gains in your overall financial picture. Planning and clearly understanding these rules can allow you to retain more investment returns for future growth.

More on capital gains tax:

The Wash Sale Rule: Six Things Investors Need to Know

States With Low and No Capital Gains Tax

The Capital Gains Tax Exclusion for Homeowners

Capital Gains Tax Rates for 2024 and 2025

State Retirement Taxes 2025: A Complete Guide to Taxes by State

(Image credit: Getty Images)

Navigating taxes in retirement isn’t always easy. After all, how your retirement income is taxed depends on multiple factors, such as what type of income you receive, federal taxes, and which state you live in. Not all states tax retirement income, and some tax some types of income but not others. Even within states, taxes can differ for each type of retirement income.

If you are considering moving to a different state, it's a good idea to investigate how each state handles taxes on retirement income before you decide. And even if you’re not moving, this list can help give you a picture of your state's tax landscape for retirees.

Check out this overview of how income from employment, investments, a pension, retirement distributions, and Social Security are taxed in every state and the District of Columbia.

Retirement Taxes: How All 50 States Tax Retirees

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As a presidential candidate, Donald Trump pledged to eliminate taxes on Social Security benefits if he won the election. What happens now that he's in the White House?

Currently, folks with incomes under $25,000 ($32,000 if married filing jointly) don’t pay any taxes on their Social Security benefits. Those earning up to $34,000 ($44,000 joint filers) are subject to up to 50% tax on Social Security benefits. For anyone earning above those limits, up to 85% of their benefits can be taxed.

Theoretically, Trump’s promise to end taxes on SS benefits could provide tax relief to some retirees — but his administration has yet to propose a working mechanism to offset lost revenue.

Fully exempting taxes on Social Security benefits would drive the program’s retirement and Medicare hospital insurance trust funds into insolvency by 2032 rather than late 2033, according to government reports.
Medicare’s funding would hit rock bottom six years earlier than expected — as early as 2030.

At worst, that means millions of beneficiaries would see reduced benefits in less than a decade. Those hardest hit would be the lowest-income beneficiaries. However, experts say this is unlikely to reach that point. Congress would have to intervene.

For more information, see What’s Wrong With Trump’s Pledge to End Taxes on Social Security Benefits.

Also see:

Taxes on Social Security: Five Things Retirees Need to Know

Calculating Taxes on Social Security

Avoid Tax Filing Errors: When Shouldn't You File Your 2024 Taxes?

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Now that tax season has officially started, you might feel ready to get it over with and complete your filing. While the go-getter spirit may help make tax season less stressful, be wary of rushing to get things done. The IRS expects you to file a complete and accurate return.

For instance, you don’t want to start filing before you have all your tax documents in order. This includes 1099s, W-2s, or investment statements. You may also have to wait for documentation like Form 1098 if you plan to claim the mortgage interest deduction.

Tip: One common mistake taxpayers make when filing early is overlooking late-arriving tax forms. For example, some investment income forms, like certain 1099s, may not arrive until mid-February or even March. Filing before you have all your documents can lead to underreporting income and potential IRS scrutiny.

...Did you catch our guide to all 22 IRS Form 1099?

Additionally, waiting to file may give you more time to review tax law changes that might affect your return. For instance, the 2025 tax year has seen adjustments to standard deductions and tax brackets due to inflation. Taking the time to understand these changes can help ensure you're taking advantage of all available deductions and credits.

Another key area the IRS looks at is gambling winnings and losses (particularly if you claim high winnings or significant losses). Last year, the IRS started looking more closely at gambling winnings, with increased enforcement efforts on high-income earners. (With new leadership at the IRS, it's hard to say what enforcement priorities will be going forward.)

To learn more, see Taxes on Gambling Winnings and Losses and Is the IRS Coming for Your Gambling Winnings?

And as you prepare to file, there may be prudence in minding IRS audit red flags.

So, no matter how early you file, remember that the federal tax return deadline (Tax Day) is April 15th, 2025. The federal extended deadline is October 15th, 2025 for most taxpayers (but taxes owed are still due by April 15).

For more information on both federal and state tax return deadlines, check out Kiplinger’s reports:

When Are Taxes Due in 2025? Tax Deadlines by Month

States With 2025 IRS Tax Deadline Extensions

2024-2025 Tax Brackets: Find Your Federal Income Tax Rate

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Currently, in the federal system, there are seven federal tax rates: 10%, 12%, 22%, 24%, 32%, 35%, and 37%. These rates generally don't change unless Congress passes major tax legislation. (That happened with the 2017 Tax Cuts and Jobs Act (TCJA, also known as the "Trump tax cuts.") However, the tax brackets tied to the rates change yearly since they are adjusted for inflation.

These rates apply to your taxable income, which is your total income minus deductions and credits. Thankfully, though, your entire income isn't taxed at the rate of your highest bracket. Instead, the U.S. uses a progressive tax system with marginal tax rates.

That means only the portion of your income that falls into each bracket is taxed at that bracket’s rate.

So, what’s your bracket for this filing season?

Check out our guide: 2024 and 2025 Tax Brackets and Income Tax Rates.

In the News: Mexico & Canada Tariffs: Will They Raise Your Gas & Food Prices in 2025?

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President Donald Trump hasn’t backed down (so far) from plans to impose 25% tariffs on Canada and Mexico imported goods on Feb. 1. He’s also set to impose a 10% tariff on Chinese goods.

Trump’s bold 25% tariffs will hurt your wallet: The tax on Mexico and Canada will raise gas, food, and car prices. Not to mention, your Valentine’s Day may just be more expensive this year. Canada is a major supplier of chocolate, while Mexico is a main exporter of strawberries to the U.S.

China's 10% tariff impact: As Kiplinger has reported, the price of everyday goods like clothing, electronics, and furniture will spike. It’s worth noting that Trump previously threatened 60% to 100% tariffs on Chinese products during his 2024 campaign.

Here’s how tariffs work and can impact your finances.

Breaking: Trump's EU Tariffs: How They Could Impact Your Finances in 2025

As the United States prepares to levy tariffs on Mexico, Canada, and China, President Donald Trump takes it a step further.

Trump told reporters he would “absolutely” impose tariffs on the European Union in the future, arguing that the EU has treated the U.S. “so terribly.”

The European Union’s commissioner for the economy Valdis Dombrovskis told CBS that Europe would respond in a “proportionate way” in defense of its economic interests earlier this month.

The potential of tariffs on EU goods could have far-reaching effects on American consumers and investors. For instance, prices of imported European luxury goods, wines, and certain food products might increase. This could impact individual consumers and businesses in the hospitality and retail sectors.

As reported by Kiplinger, Trump plans to hit Canada and Mexico with 25% tariffs on Saturday, Feb. 1. China will also be hit by a 10% tariff on all imports to the U.S. The neighboring countries' leaders say they are preparing to retaliate, citing Trump’s tariffs as a “strategic mistake.”

In short, Trump’s tariffs on Canada, Mexico, and China’s imported goods will cause the costs of food, gas, and cars to increase this month. This is a developing story.

For more on how universal tariffs can impact your wallet see Trump’s Tariffs Could Dramatically Spike Clothes, Toys Prices in 2025. Also, see What's Happening With Trump Tariffs?

- Gabriella

When Will You Get Your Refund?

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The IRS anticipates that more than 140 million individual federal tax returns for the 2024 tax year will be filed before the April 15 federal deadline. More than half of all returns expected to be filed this year will be with the help of a tax professional.

Taxpayers will file the rest independently using self-service platforms like IRS Direct File, which is now available in 25 participating states, or IRS Free File.

To avoid unwanted delays, the safest way to receive a refund is to file electronically (e-file) your tax return and request a direct deposit. Data from the U.S. Treasury Department show that paper refunds are 16 times more likely to have an issue, such as going lost, destroyed, stolen, or uncashed.

Once you complete those steps, you can track your refund in real time using the IRS ‘Where’s My Refund’ tool. Generally, more than 90% of refunds issued by the IRS are delivered in less than 21 days.

At this time last year, over 13 million tax returns had been processed and the average refund amount was $1,395. That can give some families and taxpayers a well-needed boost to their income.

Why should you file sooner this year? The IRS is currently experiencing a hiring freeze as part of President Donald Trump’s executive orders. The Trump administration has also placed federal employees tied to Diversity, Equity, and Inclusion (DEI) initiatives on leave and offered a buyout.

Not to mention, the agency recently experienced a $20 billion loss in funding allocated to key enforcement programs. U.S. Treasury officials anticipate that recent changes to the IRS workforce will impact its ability to adequately service taxpayers.

For more information, check out our recent reporting:

No New IRS Agents? What Trump’s Federal Hiring Freeze Means for Your Tax Return

Where’s My Refund? How to Track Your Tax Refund Status

February Tax Deadlines 2025: Tips, Dates & What to Know

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February is here! And since some see this as a less busy month after the frenzy of the holiday season and new year, why not use this month to get your finances in order?

Here are some helpful planning tips to reach your 2025 tax and financial goals:

Observe National “Pay Your Bills” Week (Feb. 2-8). Data show that 77% of US adults lose sleep over money. Don’t let that be you. Make a list of your 2025 home projects, insurance payments, and cash outlays, and plan accordingly. Budgeting early can help cut overspending at other times of the year.

Check Your Mailbox. Many tax forms, including 1099s, Form 1098, and other tax documents, are mailed out at the end of January. We’ve got a rundown of all 22 IRS 1099 Forms if needed.

Know Your February Tax Deadlines:

February 10 is the deadline to report tips to your employer (if you have any).
February 18 is the deadline to reclaim a tax exemption on withholding for 2025.

Don’t miss these important due dates. For more information, check out Kiplinger’s report Tax Deadlines By Month.

Also, as we approach the April 15th tax filing deadline, it's crucial to gather your necessary documents now. This includes W-2 forms, 1099 forms for various types of income, receipts for deductible expenses, and records of any estimated tax payments made throughout the year.

Organizing these materials early can help you avoid last-minute stress and potential errors on your return. Additionally, consider scheduling an appointment with a tax professional soon if you plan to use one, as their calendars fill up quickly in the weeks leading up to the deadline.

More to come, but for now, have a Happy February, and try not to eat too much chocolate.

Trump Trade War Watch

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President Donald Trump levied 25% tariffs on all imports from Canada and Mexico on Feb. 1, and the neighboring countries' top leaders are taking action.

Canada’s Prime Minister Justin Trudeau said he would impose 25% tariffs on $155 billion worth of U.S. goods. The tariffs would be enacted tomorrow, Feb. 4, on $30 billion worth of U.S. imports, the rest would be issued in three weeks. Trudeau said the timing would allow Canadian companies and supply chains to seek and find alternatives to U.S. trade.

Mexico President Claudia Sheinbaum Pardo said her government would announce retaliatory trade penalties soon.

Both Canada and Mexico are top trading partners for fresh food, crude oil, and auto parts and vehicles. That means prices at the gas pump and grocery store could spike soon.

Not sugarcoating it: If the trade war persists, many certain food and other products will be more expensive for consumers not to mention items like chocolate and strawberries that will also be more expensive in time for Valentine's Day.

Trump admitted Sunday that Americans could feel “some pain” from the developing trade war triggered by his penalties on Canada, Mexico, and China. Canada and Mexico’s leaders have warned that this will cause supply chain issues, raising prices for U.S. consumers like you.

Trump will reportedly discuss the next steps with Mexico and Canada's leadership today.

For more information and tariffs and how they work see our latest coverage:

Food, Gas Prices to Spike as Trump Levies 25% Tariffs on Canada and Mexico

Breaking: Trump Pauses 25% Mexico Tariff

As Gabriella mentioned, we are on Trump tariff watch today and there's news:

Mexican President Claudia Sheinbaum has agreed to send 10,000 soldiers to the Mexico border in exchange for a one-month delay in the 25% tariff Trump imposed two days ago.

According to a post on X (formerly Twitter), Sheinbaum said the border reinforcement would be to stop drug trafficking from Mexico to the United States.

Stay tuned for more information.

- Kelley

2025 State Tax Changes to Know

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Tax season is heating up, and as we’ve mentioned, 2025 is already looking like a wild ride for your wallet.

We've already covered many federal issues and will continue to delve into the new administration, TCJA tax cut expirations, and IRS shakeups. But to kick things off for February, let's take a minute to focus on something equally important: state tax changes.

This year, states are offering a mixed bag of tax reforms that can impact your finances in varied ways. This includes everything from income tax cuts and property tax tweaks to rent relief and those inevitable gas tax increases.

These aren't just numbers on a page—they're changes that'll directly impact how much cash you keep each month.

Ready to learn more about what's changed in your state?

Check out our guide: Key 2025 State Tax Changes: What They Mean for Your Money

- Kelley

More News: Trump Pauses Tariffs on Canada

President Trump is holding off 25% tariffs on imports from Canada for at least 30 days. This comes a day before Canada would have imposed retaliatory 25% tariffs on $155 billion worth of U.S. imports.

Outgoing Prime Minister Justin Trudeau said Canada would reinforce the border with “new choppers, technology and personnel” to stop the flow of illicit drugs, particularly fentanyl, to the U.S.

The pause was announced hours after Trump and Mexico’s President Claudia Sheinbaum agreed to a 30-day pause on 25% tariffs. In a similar negotiation, Sheinbaum is to send 10,000 troops to the border to mitigate the flow of illegal migrants and illicit drugs.

For more information, see Trump Abruptly Delays 25% Tariffs on Canada, Mexico for One Month.

Trump Considers Ending NYC Congestion Pricing

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Yesterday, we posted about state tax changes, and it’s worth noting that the Trump administration is discussing plans to kill New York’s congestion pricing barely a month after it started.

President Trump has reportedly been in talks with NY Gov. Kathy Hochul recently as the Department of Transportation considers withdrawing the controversial $9 toll to drive into downtown Manhattan South of 60th Street. The measure went into effect Jan. 5, despite facing multiple lawsuits.

To unravel congestion pricing, the Trump administration must revoke federal authorization for the tolling plan received from the Biden administration last year. Lawmakers say such a move will be challenged in court.

Early data show that congestion pricing seems to be working, with MTA officials citing speedier bus service and more riders using public transit compared to a year ago.

Stay tuned for more on this developing story.

For more information about congestion pricing, see NYC Congestion Pricing: ‘Ghost Tax’ or Necessary Fee?

- Gabriella

No, Elon Musk Didn’t Delete Direct File: What to Know

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Throughout the day, we’ll catch you up on developments that impact the tax and financial landscape and continue a mini-focus on state taxes. First up, let’s talk about IRS Direct File.

On Monday, Musk declared on his social media platform X that he had "deleted" 18F, the digital services agency responsible for developing the IRS Direct File system.

Despite Musk's claim, which caused some confusion, the Direct File program remains operational, accepting tax returns for the 2025 tax season, which began on January 27, 2025.

This free tax filing program, which expanded to 25 states this year, allows eligible taxpayers to file their federal returns directly with the IRS at no cost.

It’s worth noting that during his confirmation hearing on January 16, 2025, Scott Bessent, who has since been confirmed as Treasury Secretary, committed to maintaining the IRS Direct File program for the 2025 tax season, Though he didn’t make any long-term commitment, saying, "If confirmed, I will consult and study the program and understand it better and make sure that it works to serve the IRS' three goals of collections, customer service and privacy"

We'll have more to come on this, but, for now, to learn more about whether filing taxes directly with the IRS could help you, see our report: IRS Direct File: What You Need to Know for 2025.

No taxes on overtime pay?

The "no tax on overtime" proposal is part of a series of tax cut promises Donald Trump made during his presidential campaign. As Kiplinger has reported, the now president previously suggested eliminating taxes on tips and ending the tax on Social Security benefits.

While the idea of tax-free overtime may sound appealing, critics worry.

There's the potentially significant loss of federal tax revenue (on the low end, depending on what income is exempted, an estimated $145 billion over ten years, according to the Tax Foundation)

Plus, the possibility of employers relying more on overtime instead of hiring additional workers

Similar concerns have been raised about the no-tax-on-tips proposal (the Tax Foundation estimates a cost, on the low side, of $107 billion over ten years).

As a result, at this time, it's unclear whether the no tax on overtime proposal will make it into the reconciliation bill the Republican-led Congress is trying to craft and pass this year. But for now, it’s important to know how overtime pay is currently taxed.

Check out: Taxes on Overtime Pay: What's Happening in 2025

- Kelley

These States Don’t Tax Retirement Income

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Living in a state that doesn’t tax retirement income may sound exciting. Not only could you pay fewer taxes in retirement, but you may save by not paying any state income tax. However, some states still tax certain earnings, so you may want to consult a tax professional depending on your type of taxable income.

But if your retirement income includes Social Security benefits, distributions from a 401(k) or IRA, or a pension, read on: you won’t see a tax bill from any of the states listed in our guide:

Thirteen States With No Retirement Taxes

Note: While these states don’t tax “traditional retirement income,” you may still have to pay tax on other income types you earn in retirement, like wages, interest, and dividends.

Breaking: China Retaliates Trump Tariffs, Files Lawsuit

China will impose 15% tariffs on imports of coal and liquified natural gas from the United States in retaliation for the Trump administration’s 10% duty on Chinese goods.

The Chinese government also announced another series of targeted 10% tariffs on U.S. imports of crude oil, agricultural machinery, and certain vehicles. These tariffs are slated to go into effect on Feb. 10.

The Chinese Ministry of Commerce filed a lawsuit against the United States for allegedly violating the World Trade Organization’s rules. The ministry claims Trump’s 10% unilateral tariff increase on Chinese imports to the U.S. undermines the economic and trade cooperation between the two countries.

“China firmly opposes the U.S. approach and urges the U.S. to immediately correct its wrong practices,” the commerce ministry said in a statement.

President Donald Trump had issued 25% blanket tariffs on Mexico and Canada, and a 10% duty on Chinese imports to the U.S. on Feb. 1, 2025. After negotiations with top leaders, the Trump administration agreed to delay 25% tariffs until March 1.

Trump is reportedly set to speak with Chinese President Xi Jinping “soon” over China’s retaliatory tariffs.

For more information: Trump Abruptly Delays 25% Tariffs on Canada, Mexico for One Month.

Musk Treasury Access Sparks Tax Refund Concerns

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As the 2025 tax filing season continues, Elon Musk's influence over government systems and recent claims about "deleting" an agency have created confusion and alarm about potential tax return disruptions.

It’s also worth mentioning that Musk, who has been deemed a “special government employee” tasked by Trump with cutting government spending through a Department of Government Efficiency (DOGE), heads Tesla, which paid zero income tax last year despite making billions.

For his part, Musk posted the following Tuesday on his social media platform X: "We're never going to get another chance like this. It's now or never. Your support is crucial to the success of the revolution of the people."

Wondering what this means for you?

Learn more about Musk and your taxes: Will Elon Musk’s Treasury Access Derail Your Tax Refund?

Musk Polls X Users Regarding IRS Audit

Elon Musk has once again stirred controversy by appearing to propose an audit of the IRS through his Department of Government Efficiency (DOGE). In a poll on X, Musk asked his followers if DOGE should investigate the IRS, which attracted more than one million responses.

Over 90% of respondents initially backed the potential audit, including some selecting an emphatic "F Yes" option.

Would you like @DOGE to audit the IRS?February 4, 2025

This comes amid ongoing tensions between Musk and government agencies, particularly after he announced the "deletion" of 18F, a government technology agency that worked on IRS Direct File. As Kiplinger reported, this created confusion about the new free tax filing program being deleted. (Direct File is operational for this 2025 tax filing season.)

As a "special government employee" under President Donald Trump, Musk claims to want to save the federal government money through cost-cutting. However, the X tease raises questions about the potential politicization of tax oversight and the implications of a private entity auditing a federal agency.

For more information, see our report on Musk's increasing power and how it might impact the IRS.

Musk Treasury Access Raises Alarm: Is Your Tax Refund at Risk?

- Kelley

USPS Resumes Delivery of Parcels from China Amid Trade War

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Today, we’ll deliver updates on the developing trade war with China, tax refunds, and potential tax credits on Trump’s chopping block. Let’s dive in!

The U.S. Postal Service (USPS) announced on Wednesday that it will continue accepting inbound international packages from China and Hong Kong after saying it would temporarily suspend deliveries on Feb. 4, 2025.

"The USPS and Customs and Border Protection are working closely together to implement an efficient collection mechanism for the new China tariffs to ensure the least disruption to package delivery," the Postal Service said in a statement, suggesting the temporary suspension was related to Trump's escalating trade war with China.

The Trump administration levied 10% blanket tariffs on all Chinese imports to the U.S. on Feb. 1, 2025. Meanwhile, proposed duties on Mexico and Canada were paused for 30 days.

China countered on Feb. 4 with targeted tariffs on select U.S. imports and put Google under notice for potential sanctions. The Chinese government said the retaliatory tariffs would go into effect next Monday, February 10. This is a developing story.

Want to know more about what China tariffs could mean for you, follow our recent coverage: Trump Abruptly Delays 25% Tariffs on Canada, Mexico for One Month.

EITC and ACTC Refunds Available Starting Feb. 27

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Yesterday, we clarified that IRS Direct File remains fully functional, despite Elon Musk's claims about “deleting” 18F — the digital services agency responsible for developing the program.

On that note, if you’ve done your due diligence and filed early, you may wonder where your tax refund is, especially if you’re expecting an Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC).

The maximum EITC amounts to claim for the 2024 tax year (taxes generally filed in 2025) are $632, $4,213, $6,960, and $7,830, depending on your filing status and household size.
Meanwhile, the ACTC allows you to receive up to a maximum of $1,700 per qualifying child for the 2024 tax year.

How soon can you receive your refund? Due to federal regulations, the IRS cannot issue EITC and ACTC refunds before mid-February. That being said, you should be able to see an updated status of your refund by Feb. 17 through the IRS-free tool: Where’s My Refund?

The tax agency notes that related EITC/ACTC refunds should be available on your bank or debit cards by February 27, 2025, if you select a direct deposit with your return. Normally, tax refunds are issued within 21 days.

Check out: Where’s My Refund? How to Track Your Tax Refund Status

- Gabriella

Family Tax Cuts on GOP Chopping Block

It was clear to anyone who won the 2024 presidential election: taxes would key item going into 2025.

The Trump administration is facing a looming tax cliff tied to expiring provisions of the 2017 Tax Cuts and Jobs Act (TCJA), which contain temporary expansions to key family tax breaks like the Child Tax Credit.

President Donald Trump promised a myriad of tax cuts if he won, mostly for the rich, and some for businesses and working taxpayers. These tax cuts, along with other immigration policies and energy reforms are being bundled into “one big, beautiful bill.” The issue: congressional Republicans are scrambling to find revenue to afford Trump’s ambitious tax proposal.

A 50-page policy menu prepped by the House Budget Committee was recently leaked, listing a deluge of tax breaks in danger of being gutted by the GOP.

On the chopping block are family tax credits like the Child and Dependent Care Credit, reductions of eligibility to the CTC, and eliminating education tax credits.

For more information see: Family Tax Deductions and Credits on GOP Chopping Block This Year

CIA Offers Buyouts to Workforce

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The Central Intelligence Agency (C.I.A.) offered buyouts to its entire workforce on Tuesday, citing its compliance with the Trump administration’s goal to shrink the government.

This comes as the federal government is undergoing a Trump-imposed hiring freeze, and 2 million federal employees across other agencies face a Feb. 6 deadline to take an exit offer in exchange for “pay and benefits” until Sept. 30. So far, according to the Office of Management and Budget (OMB) 20,000 federal employees have voluntarily resigned.

The move to purge the federal workforce seems to align with Project 2025, a conservative-led blueprint that calls to reshape the government. Some impacted agencies include the IRS, the Federal Reserve, and the Department of Education.

See how the federal hiring freeze can impact you: No New IRS Agents? What Trump’s Federal Hiring Freeze Means for Your Tax Return

- Gabriella

Abolishing the Department of Education?

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President Donald Trump is reportedly drafting an executive order to abolish the Department of Education. Now what?

The Education Department is responsible for distributing billions of dollars in federal financial aid for education and supports federal college loan programs like the Pell Grant. It even administers funding for K-12 schools, including the Title 1 grant program, to schools with high percentages of low-income students.

Before you panic, it would require congressional approval to shut down the department, even if Trump plans to issue an executive order. Still, the development is troubling.

It’s also part of the Heritage Foundation's Project 2025 tax overhaul blueprint. This conservative think tank proposes transferring functions like student loans or Title 1 funding to other government agencies, such as the U.S. Treasury Department.

Worth noting: GOP lawmakers are considering eliminating certain education tax credits to fund Trump’s tax plans in 2025. These include the American Opportunity Tax Credit and other important family tax credits on the chopping block.

The Fine Print: What Trump Isn’t Telling You About His 2025 Tax Plans

State Tax Holidays, Property Tax Relief, and Tax Credits

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Welcome back! Here are a few state tax news highlights from the week in case you missed them:

Florida Gov. DeSantis released his 2025-2026 budget proposal, including a new “Second Amendment” tax holiday that turned heads. (We’ll have more detail on this later.)
Missouri Republican lawmakers seek to eliminate the state’s income tax and replace it with an expanded sales and use tax.
North Dakota passed a bill to enact a $1,000 tax credit per homeschooled child. Qualified expenses may include books, computers, and other educational costs.
Ohio Gov. DeWine proposed a new child tax credit in his state budget, which would provide a tax credit of up to $1,000 per child under seven years old.
Texas Republican lawmakers look to slash property taxes for homeowners and businesses alike, as Gov. Abbott declared property tax cuts an “emergency item” last Sunday.

We’ll be covering some state tax updates every Thursday, so be sure to check back for more news on states. See also Kiplinger’s reports on state taxes:

Best States for Middle-Class Families Who Hate Paying Taxes

The Nine States With No Income Tax in 2025

Retirement Taxes: How All 50 States Tax Retirees

How Much Do You Have to Make to File Taxes?

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The short answer: It depends. The IRS requires filing a federal return once you meet a certain "gross income" (total income) threshold in tax year 2024:

$14,600 or higher (if single) OR,
$29,200 (if married filing jointly)

However, you may meet a different minimum if you fall under another filing status, income type, or age. For instance, provided that one spouse is 65 or older, you may need to file federal taxes if your gross income is at least $30,750. Alternatively, the self-employed have to file a federal tax return if their net earnings are $400 or more.

Also, keep in mind that your state tax division may have different income requirements or none at all if you live in one of the nine states without income tax.

For more information on filing tips, check out Kiplinger’s reports:

- Kate

IRS Employees Can’t Take Trump’s Buyout Until May 15

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The Trump administration gave approximately 2.3 million full-time federal workers until Feb. 6 at midnight to accept a so-called buyout offer. The resignation package promised former employees pay and benefits until Sept. 30, 2025, even if they stop working effective immediately.

So far, reports show that as many as 40,000 government employees have taken the deal. There’s no telling how many are tied to the IRS.

That thought may have sprung to the Trump administration’s collective concerns last night, as IRS employees were suddenly told that “critical” tax filing season workers are exempt from the “deferred resignation offer” until May 15. Anyone who already voluntarily accepted the deal must work through the end of the period. Tax season ends on April 15, 2025.

For more details on Trump’s goal to hollow out the IRS, check out:

Trump Wants You Out of the IRS, But You’ll Have to Wait Until May

Breaking: Judge Pauses Buyout Trump Offered Federal Employees

In a developing situation, a federal judge has paused President Trump’s federal employee buyout program pending a court hearing scheduled for Monday.

The decision to temporarily enjoin the so-called “Fork in the Road Directive” came just hours before the deadline Trump’s emails provided to millions of federal workers. Tens of thousands had reportedly already accepted the offer. Confused?

Here’s our story: Judge Pauses Trump Buyout Offers As Deadline Loomed

Did You Bet on the Super Bowl? There are some Taxes With That...

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Super Bowl LIX is in the books and if you're a Chiefs fan, you're not happy. And if you placed an online sports bet, you might not be happy either, since you can't forget about the IRS. The federal tax agency has specific rules surrounding taxes on gambling winnings and losses, which include sports betting:

You must report all gambling winnings on your tax return as “other income” on IRS Form 1040.
If your winnings are more than a certain amount, the payer will withhold 24%.
You should keep adequate records, like dates and types of specific wagers, for tax documentation.

Gambling losses may be claimed on your federal tax return but only to the extent of your gambling winnings (generally, you must itemize to claim a deduction). State tax laws may also apply to your sports bets.

For more information, check out Kiplinger’s reports on gambling winnings and losses:

Did You Bet on Super Bowl 59? Don’t Forget the Taxes

Is the IRS Coming for Your Gambling Winnings?

Taxes on Gambling Winnings and Losses: 8 Tips to Remember

- Kate

GOP Tax Talks on Reconciliation Bill: ‘Stuck in the Mud’

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Good Morning! With the 2017 Tax Cuts and Jobs Act (TCJA, “Trump tax cuts”) provisions set to expire, we start this Friday with news that Republicans are struggling to forge a path forward on tax reform.

Rep. Byron Donalds (R-Fla.) described the situation to reporters as "stuck in the mud," highlighting the challenges in passing a single reconciliation bill in the U.S. House of Representatives.

The comments came after President Trump outlined his 2025 tax priorities, including:

Extending expiring TCJA provisions
Expanding the State and Local Tax (SALT) deduction
Tax breaks for American-made goods
Cutting taxes on income from tips, overtime, and Social Security
Eliminating tax breaks for carried interest and stadium owners

According to the Committee for a Responsible Federal Budget, the proposed package could reduce revenue by $5 trillion to $11.2 trillion over ten years, raising concerns about the national debt. Fiscal conservatives are reportedly pushing for significant spending cuts to offset these reductions.

The Road Ahead? As the TCJA expiration approaches, Republicans will have to navigate these challenges to advance their ambitious tax agenda. That won’t be easy since a also divide exists between House and Senate Republicans. The House wants a single comprehensive bill, while the Senate is reportedly leaning toward a separate approach.

Sen. Lindsay Graham of South Carolina told NBC news, "I've always believed that one big, beautiful bill is too complicated,” adding, "What unites Republicans, for sure, is border security and more money for the military. It's important we put points on the board."

The coming months will determine whether they can overcome these obstacles and pass a reconciliation bill that balances Trump’s priorities with fiscal responsibility.

Read More:

Carried Interest Tax Loophole in Trump's Crosshairs?

In an unexpected twist, President Trump has reignited the debate on the so-called “carried interest loophole,” calling for its elimination as part of his 2025 tax reform agenda.

The carried interest tax provision has long allowed fund managers to pay lower tax rates on their earnings. While Trump's stance on this loophole isn't new — he criticized it in his 2016 presidential campaign — its resurgence in his priorities has raised a few eyebrows.

Notably, the move aligns him with some political rivals, at least for now, as ending this controversial tax break has been a bipartisan talking point for years.

For example, former President Biden consistently called for carried interest reform. He proposed taxing carried interest as ordinary income, subjecting it to a higher tax rate than the current long-term capital gains rate. (Biden's budget proposals also include other tax changes impacting high-income earners, such as increasing the Net Investment Income Tax (NIIT) rate, the corporate tax rate, and a minimum tax for billionaires.)

However, the loophole has survived numerous attempts at elimination, protected by intense lobbying efforts and entrenched interests. Given competing fiscal priorities and a historically slim majority in the U.S. House of Representatives, the path to carried interest reform remains murky at best.

- Kelley

Tax Reform 2025: Key Deductions and Credits at Risk

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With the Tax Cuts and Jobs Act (TCJA) expiring at the end of 2025, the Republican-led Congress is considering significant tax code changes that will likely impact millions of taxpayers.

Kiplinger has reported on proposed cuts to popular tax breaks listed in a document circulated by the GOP that, if embraced, would be used as offsets for more than $4 trillion in tax cuts President Trump desires.

Some family tax credits and benefits in jeopardy:

Other key tax breaks that could change or go away:

What does this mean for you? If some or all of these tax breaks are altered or eliminated, that could impact millions of families, students, homeowners, and employees. While proposals are preliminary, staying informed and planning is crucial.

Consult a qualified and trusted tax professional or financial planner to discuss potential impacts and the best action for you and your finances.

Learn More:

Family Tax Breaks on the GOP Chopping Block This Year

Popular Tax Breaks Are in Danger

Florida Second Amendment Summer Tax Holiday: What to Know Now

Governor Ron DeSantis has unveiled a proposal for a "Second Amendment Summer Tax Holiday" as part of his 2025-2026 budget plan for Florida. This initiative, which has garnered significant attention, would eliminate state sales tax on firearms, ammunition, and related accessories from Memorial Day to Independence Day.

The tax holiday is just one component of DeSantis' $115.6 billion budget proposal, which includes various other tax relief measures, from back-to-school supply exemptions to disaster preparedness item holidays and tax breaks on outdoor recreation equipment.

DeSantis estimates that these combined tax relief efforts could save approximately $2.2 billion for Florida families. While the proposed gun tax holiday has sparked debate, it's not unprecedented in the United States.

States like Louisiana and Mississippi have implemented similar tax exemptions for firearms and hunting equipment.
However, Florida's proposal contrasts with actions taken in other states like California, which has recently increased its gun and ammunition tax.

DeSantis has expressed confidence in the proposal's popularity, suggesting that it aligns with voter expectations. However, the budget still requires approval from the state legislature, which will begin its regular session on March 4, 2025.

The "Second Amendment Summer" tax holiday is projected to save Floridians about $8 million on eligible items. This measure is part of a broader set of tax relief initiatives in the budget, including a "Freedom Month" sales tax holiday for outdoor recreation purchases in July and a new "Marine Fuel Tax Holiday" to provide savings for boaters.

As the budget proposal moves forward, it will likely generate further discussion among legislators, citizens, and advocacy groups on both sides of the gun rights issue. The outcome of this proposal could have significant implications for Florida's gun policies and tax structure in the coming years.

Check out Kate's story: Florida Gun Tax Holiday Turns Heads.

Musk, Trump IRS Changes for 2025: What's Happening?

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The 2025 tax season is already one of the more confusing in recent memory due to the convergence of leadership changes, workforce disruptions, and unprecedented access to sensitive systems in the early weeks of filing.

Leadership Vacuum? The IRS is currently operating without a confirmed commissioner. Danny Werfel, resigned on January 20, 2025, coinciding with President Trump's inauguration. While Trump nominated former Rep. Billy Long for the position, the former congressman/auctioneer still awaits Senate confirmation. In the interim, Deputy Douglas O'Donnell is currently serving as acting commissioner.

See: IRS Leadership Shakeup: What It Means for Your Taxes

Workforce Disruptions? President Trump's administration has implemented a "deferred resignation program" to reduce the federal workforce. This buyout offer, however, has created significant complications for the IRS:

Critical IRS employees involved in the 2025 tax season are prohibited from accepting buyouts until May 15, 2025.
The IRS buyout offer could have caused confusion and staffing shortages during peak tax season.
Union leaders have advised federal workers against accepting these "dubious" offers.

Adding to the complexity, a federal judge has temporarily paused the controversial buyout offer just hours before the original deadline was set to expire, suspending the program's implementation until at least the start of next week.

See: Trump Wants You Out at the IRS But Not Until May and Judge Blocks Trump Buyout Offer: What It Means for You

Unprecedented Access to Treasury Systems? In an unprecedented move, the Trump administration granted Elon Musk and his Department of Government Efficiency (DOGE) team access to the federal payment system. This system controls the trillions in government funds, including tax refunds. While the U.S. Treasury Department claims this access was reportedly "read-only," concerns remain about potential implications for data security and the integrity of the payment process. A judge has since temporarily blocked Musk's Treasury system access.

See: Will Elon Musk’s Treasury Access Derail Your Tax Refund?

Impact on Taxpayers? As the IRS grapples with these challenges, the specific impacts on you as a taxpayer are unclear. Given the workforce uncertainties and potential staffing shortages, processing delays for returns and refunds could occur. Customer service support could be reduced, making it more difficult for taxpayers to get timely assistance with their questions and concerns. Additionally, there's increased uncertainty regarding tax policies and procedures, which could confuse filers.

Some tax professionals advise filing early to avoid potential processing backlogs that may arise later in the season. Electronic filing methods can help streamline the process and reduce the likelihood of delays.

Staying informed about any IRS announcements or policy changes is crucial, as the situation remains fluid.

For those with complex returns, seeking professional tax assistance may be particularly beneficial this year, given the increased complexity and uncertainty surrounding the tax filing process.

Tax News: Tax Refund Status, the Penny and Steel Tariffs?

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As we kick off the week, a lot is happening in the world of tax policy and filing season updates. We’ll have more in-depth coverage to come, but for now, here’s some of what you need to know:

Farewell to the penny? President Trump has directed the U.S. Mint to discontinue the production of pennies. The move is designed to cut costs associated with minting the coin, which exceeds its face value. While this change doesn’t have direct tax implications, there could be some adjustments for many, who might have to round cash transactions to the nearest nickel. However, it's worth noting that some questions remain about whether the president has unilateral authority to stop minting pennies.

Tax filing season: Early stats are in. The 2025 tax filing season is underway, and here are some key updates from the IRS:

As of January 31, the IRS has issued 3.2 million refunds, with an average amount of $1,928. This figure is expected to fluctuate as more returns are processed. (We’ll have more to say on tax refunds this week.)
The IRS anticipates processing over 140 million individual returns by the April 15 deadline.
For those seeking faster refunds, the IRS recommends filing electronically and opting for direct deposit.

Tax policy. Congress is gearing up for significant tax policy discussions: House Republicans are advancing a framework for extending the 2017 Tax Cuts and Jobs Act (TCJA) provisions, many of which expire at the end of 2025. Proposals include making some tax cuts permanent while introducing revenue-raising measures to offset costs.

What we’re watching? Here are a few developments to keep an eye on this week:

Budget Reconciliation Progress. The House Budget Committee will mark up an FY2025 budget resolution soon. This marks a crucial step toward unlocking reconciliation for tax legislation.

Tariff Talk. President Trump has floated plans to announce tariffs that could impact the steel industry.

Stay tuned for more updates.

Don’t Miss the Earned Income Tax Credit: Valuable Benefits You Need to Know

The Earned Income Tax Credit (EITC) is an often overlooked refundable tax credit available to workers with low and moderate incomes with or without children.

The amount you can be eligible for will depend on your income, filing status, and amount of “qualifying children” in your household.

For the 2024 tax year, the maximum EITC ranges from $632 for those without qualifying children to $7,830 for those with three or more qualifying children.

To qualify, your adjusted gross income (AGI) and earned income must be below certain thresholds, which vary based on your filing status and other factors.

It’s important to note that to be eligible for the federal EITC, you must have a valid Social Security number, be a U.S. citizen or “resident alien” for the entire year, and your investment income, if any, can’t be more than $11,600 for the 2024 tax year. If you’re claiming the EITC without qualifying children, you must be at least 25 years old but not older than 65.

What’s more, some states offer their version of the EITC as a boost to the federal credit. For example, in New Jersey, as many as 200,000 qualifying workers miss out on the state-funded credit. For the 2024 tax year, the NJ earned income tax credit is equal to 40% of the federal EITC.

Using the New Jersey example, that means if you qualify for a federal credit of $4,000, you can claim up to $1,600 with your New Jersey EITC. Lastly, if you have children, you may be eligible for your state-level child tax credit. Rules, amounts, and other criteria vary by state.

Read more about the Earned Income Tax Credit, and don’t miss out: Earned Income Tax Credit (EITC) 2024 and 2025: How Much Will You Get? and Does Your State Offer a Child Tax Credit?

Tax News: $1,400 Stimulus Check Scam and GOP Proposal to Tax College Scholarships

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Good morning! So far this week, two issues making headlines are a $1,400 stimulus check scam and a controversial GOP proposal to tax college scholarships.

Beware of the $1,400 Stimulus Check Scam: Scammers are again targeting taxpayers with phishing schemes centered around Economic Impact Payments (EIPs), also known as IRS “stimulus checks.” Fraudsters are sending texts claiming to be from the IRS, promising $1,400 payments if recipients provide personal information.

These scams exploit confusion about recent IRS announcements regarding automatic stimulus payments of up to $14,00 for those who missed the Recovery Rebate Credit in 2021 during the COVID-19 pandemic.

As Kiplinger has reported, the IRS has clarified that legitimate payments are processed automatically and were sent out in late December and by the end of January — no action or personal data submission is required.

So, If you receive such a message, it’s a red flag. For information about the legitimate stimulus payments, see: The IRS is Sending Payments of Up to $1400 to One Million People.

GOP Proposal to Tax College Scholarships: To potentially offset the cost of extending the TCJA “Trump tax cuts,” Republican lawmakers are reportedly considering taxing college scholarships.

Critics warn that such measures would disproportionately burden families with low- and middle-income, potentially making higher education less accessible. The plan is still in its early stages but has sparked backlash from some education advocates and lawmakers.

Currently, scholarships can be either taxable or tax-free, depending on how they are used and the student's status. Generally, scholarships aren't taxable if they meet certain conditions. For more information, see When Are Scholarships Tax-Free?

What’s at Stake? These and similar developments highlight the need for vigilance — whether protecting yourself from tax scams or staying informed about legislative changes that could impact your finances. Monitor these issues to understand their potential implications as debates over tax policy continue.

More to come.

Will IRS Agents Be Sent to the U.S. Border?

U.S. Homeland Security Secretary Kristi Noem apparently wants to send IRS agents to the U.S.-Mexico border to assist with immigration enforcement. The proposal, first reported by the Wall Street Journal, suggests that IRS law enforcement officers, who specialize in investigating financial crimes, could be repurposed to target employers hiring undocumented workers and support deportation efforts.

This idea reflects a broader push within the Trump administration to redirect federal resources toward stricter immigration policies. However, critics have raised concerns that such a move could divert the IRS from combating tax fraud and financial crimes, potentially weakening its ability to enforce tax laws. As Kiplinger has reported, early in his administration, Trump has imposed a federal hiring freeze that also significantly impacts the IRS.

Over the years, some Republican lawmakers have called attention to the IRS’s Criminal Investigation (CI) division, which employs armed agents in certain cases to investigate serious financial crimes. That scrutiny intensified after the Inflation Reduction Act provided funding for up to 87,000 new IRS hires by 2035.

While most of these positions are intended to improve customer service and audit capacity, critics have fueled concerns about overreach and armed enforcement. Noem’s proposal adds another layer to the debate about the role and priorities of federal agencies like the IRS.

Stay tuned and for more information, see Are Thousands of Armed IRS Agents Headed to the Border?

- Kelley

Tax Refunds Are Bigger This Year

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Good morning! Today, we'll discuss tax refunds and the Trump administration's latest tariffs on certain metals. Let's dive in. Tax season is underway, and refunds are already coming in at $526 more than last year. You may have to thank inflation for the boost.

Out of 11.7 million tax returns processed through Jan. 31, the average refund was $2,069. That’s up from $1,543 during the same period in 2024. Overall, the IRS has delivered over $3.2 million in tax refunds versus $2.6 million last year.

That’s not counting family credits like the Earned Income Tax Credit (EITC) and Additional Child Tax Credit, which are expected to be delivered in early March. In other words, tax refunds may increase in the upcoming weeks.

Tax experts say that inflation-related changes to the standard deduction and tax brackets for 2024 are largely to blame. There’s also an extra standard deduction for folks over 65. These improvements impact your taxable income, may reduce your liability, and could make you eligible for certain credits and deductions.

What’s more, the EITC's income and credit amount limits are slightly larger this year. The tax break is aimed at low and moderate-income workers with or without children.

Eligible taxpayers with no qualifying children can get a credit worth up to $632
Those with one qualifying child can get a maximum benefit of $4,213
Households with two or more children may qualify for up to $6,960
Lastly, those with three or more qualifying children can get a top credit of $7,830

Don’t miss out on these key credits; they could make a real difference come tax time. If you’ve already filed your taxes and are wondering where your tax refund is, make sure to check the IRS tool ‘Where’s My Refund’ to track its progress.

Want to find out if your tax refund will be better this tax season? See: IRS Tax Refunds Are $526 Bigger This Year: Here’s Why

House GOP Releases Budget Plan Calling for $4.5 Trillion in Tax Cuts

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The Trump administration’s goal to have a comprehensive legislative tax policy package piled into “one big, beautiful bill” just got one step further.

House Republicans released a budget resolution Wednesday, as part of President Trump’s policy framework to cut spending, bolster border security, and push forward energy reforms. It would also address expiring tax breaks in the Tax Cuts and Jobs Act (TCJA).

The blueprint budget proposal calls for up to $4.5 trillion in tax cuts and sets a goal of slashing mandatory spending by $2 trillion.

GOP lawmakers have circulated various proposals which include placing crucial family tax breaks on the chopping block. That includes ending the Child and Dependent Care Credit, which helps qualifying parents or guardians cover caregiving expenses to work or look for work.

Currently, eligible taxpayers can claim 20% to 35% of work-related expenses up to a limit of $3,000 for one child or dependent and up to $6,000 for two or more dependents. Per the GOP proposed budget, ending the credit should yield $55 billion in savings over the next decade.

Other proposed budget cuts included eliminating the ‘head of household’ filing status, which mainly penalizes single parents raising children or adults claiming a dependent as their own. The particular filing status offers lower tax rates and a higher standard deduction for unmarried taxpayers. The provision would result in $192 billion in savings over the next decade.

The blueprint was released one day before the House Budget Committee is scheduled to consider it. More to come.

Popular Tax Breaks Are in Danger

Key Family Tax Breaks Are on the GOP Chopping Block This Year

- Gabriella

State Tax Holidays, Property Tax Relief, and Tax Credits

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Welcome back! While many people may be thinking about their income taxes this time of year, several states are proposing and/or enacting several key tax changes.

So here are a few state tax news highlights in case you missed them:

Alabama and Maryland have sales tax holidays in February, during which certain items are exempt from state sales tax (more coverage to follow).
Colorado has a new tax credit, designed to help lower-income families with children under 17.
Minnesota looks to bill HF18 to remove sales taxes on baby products like strollers and swings.
Washington lawmakers seek to raise the state’s property tax cap from 1% to 3%, to keep up with inflation and population growth (Washington was one of the most expensive states for homeowners to live in last year).

As a reminder: California Gov. Gavin Newsom has extended state property tax deadlines for Los Angeles residents. Californians who qualify for the extension now have until April 2026 to pay property taxes previously due in 2025.

The announcement followed fires that destroyed parts of the state earlier this year and quickly became one of the most devastating disasters. The largest blaze consumed about 5,300 structures and devoured over 23,000 acres.

Because of the widespread destruction, California’s federal and state income tax returns were extended. But while the IRS's extension of the California tax deadlines has provided some relief, wildfire victims may face an uphill battle with insurance claims and home rebuilding.

We’ll be covering a few state tax updates every Thursday, so be sure to check back for more news on states. See also Kiplinger’s reports on state taxes:

State Tax Changes for 2025: What They Mean for Your Finances

New Law Delivers Tax Breaks to Natural Disaster Victims

Five States With the Largest EITC Checks

Sales Tax Holidays Are Going Away in Some States

Tax Refund Schedule: When Can You Expect Your IRS Check?

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Now that we’re beginning to enter the thick of tax season, some may wonder: When I can expect my refund? While IRS tax refunds may be bigger this year, most will not get their federal tax refund until later in the filing season.

Below are a couple of timeframes the IRS has hinted at regarding tax refunds (Note: These are after the return has been accepted):

Direct deposits can take up to 21 days to arrive.
Mailed checks can take at least 30-60 days to arrive.

However, if you claimed the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC), your return will likely be delayed. The IRS expects returns with these refunds to roll out in March.

What other factors can affect my tax refund status? Your refund may also experience a delay if you file during the busiest time of the tax season. This is especially true if you submitted your return via paper mail-in, which generally processes 1-5 weeks slower than electronically filed returns. And, of course, if you owe any money to the IRS, all or part of your refund may go toward repaying your debt instead of in your wallet.

Otherwise, here is a general estimate of when you may expect your refund:

Filed by Jan. 27. Direct deposit arrives by Feb. 17*. Mailed check arrives by March 28.
Filed by Feb. 3. Direct deposit arrives by Feb. 24. Mailed check arrives by April 4.
Filed by Feb. 10. Direct deposit arrives by March 3. Mailed check arrives by April 11.

*February 17 is President’s Day, a federal holiday. Returns may experience mail and/or processing delays.

For the complete federal tax refund schedule, check out Kiplinger’s report, IRS Income Tax Refund Schedule 2025: When Will Your Refund Arrive?

….Kiplinger will also add more dates to this blog as tax season progresses.

How do I check the status of my tax refund? You can check your refund status using the IRS “Where’s My Refund?” tool or by downloading the IRS2Go app. There’s also the automated IRS refund hotline at 800-829-1954 which may be quick.

When can I expect my state income tax refund? It depends. While some states process refunds within a week, others may take three months or longer. Each state has a different refund schedule. Check your state’s Department of Revenue website for further information.

- Kate

Proposed Legislation Targets the EV Tax Credit, Electric Vehicle Fees

In the news this morning: Two Republican senators have recently reintroduced bills involving electric vehicle (EV) incentives and costs in the United States.

Sen. John Barrasso (R-Wyo.), the Republican whip, proposed the Eliminating Lavish Incentives to Electric (ELITE) Vehicles Act (S. 541). The bill would:

Repeal the $7,500 tax credit for new EV purchases
End the $4,000 tax credit for used EVs
Eliminate federal incentives for EV charging infrastructure
Close the "leasing loophole" that allowed certain taxpayers and foreign entities to evade restrictions on EV incentives

If passed, those changes would take effect 30 days after the bill is signed into law.

“Repealing these reckless tax credits from the Biden administration once and for all will stop Washington from giving handouts to our adversaries and high-income individuals. Wyoming families should not foot the bill for expensive electric cars they don’t want and can’t afford,” Barrasso said in a release regarding the bill.

Simultaneously, Sen. Deb Fischer (R-Neb.) has put forward a separate bill that would impose a new $1,000 fee on EV purchases at the point of sale. This Fair SHARE Act fee is designed to roughly match the federal fuel taxes paid by gasoline-powered vehicle owners over 10 years.

In a release, Fischer explained the rationale behind the fee, stating, “EVs can weigh up to three times as much as gas-powered cars, creating more wear and tear on our roads and bridges. It’s only fair that they pay into the Highway Trust Fund just like other cars do. The Fair SHARE Act will require EVs to pay their fair share for the upkeep of America’s infrastructure.”

The senators argue these proposals would create a more equitable system between electric and conventional vehicle owners.

If enacted, the bills could significantly alter the financial landscape for potential EV buyers and the EV market as a whole. However, as with all proposed legislation, the proposals must pass Congress to become law.

Tax News: SALT Deduction Proposals for 2025

The state and local tax (SALT) deduction is again at the center of congressional debate. This deduction allows itemizing taxpayers to deduct certain state and local taxes from their federal taxable income, including income, property, and sales taxes. As the $10,000 cap on SALT deductions, introduced by the 2017 Tax Cuts and Jobs Act (TCJA), approaches its expiration at the end of this year, lawmakers are wrestling with its future.

Republican members of Congress have proposed various approaches. These range from a complete repeal of the SALT deduction, potentially generating an estimated $1 trillion in revenue over ten years by some estimates, to various modifications of the existing cap. Some proposals include:

Making the current $10,000 cap permanent but doubling it to $20,000 for married couples
Increasing the cap to $15,000 for individuals and $30,000 for married couples
Restructuring the deduction to eliminate the income and sales tax components, allowing only property taxes to be deducted without a cap

Some reform proponents argue the current cap disproportionately affects residents of high-tax states, effectively resulting in double taxation. Some critics contend that removing or significantly raising the cap would primarily benefit high-income earners and potentially encourage states to maintain higher tax rates.

The revenue implications of these proposals vary. Some options could generate substantial federal income, while others might lead to significant revenue losses. This fiscal impact adds another layer of complexity to the debate.

Interestingly, the SALT deduction has created some unusual political alliances. Representatives from high-tax states, regardless of party affiliation, often find themselves on the same side of this issue.

As discussions continue, the outcome remains uncertain. However, any changes to the SALT deduction could impact taxpayers nationwide, particularly those in states with higher tax burdens, so keep an eye on tax changes involving this and other key deductions.

Learn More: SALT Deduction: Three Things to Know Now AND Will the SALT Deduction Cap Be Increased or Eliminated?

- Kelley

Is the IRS Closed on Presidents Day? What You Need to Know

Good morning! Presidents Day, observed February 17th, 2025, isn't just a day off. It’s also a timely reminder that tax season is well underway. The weeks surrounding Presidents Day typically see a surge in taxpayer activity as many begin preparing their returns.

Presidents Day is also a good opportunity to organize your tax affairs if you haven’t already. By leveraging the IRS's online resources and choosing efficient filing methods, you can confidently navigate the tax season and potentially receive your refund faster.

Here are some tips to get you started:

IRS: Closed for business, but online resources available: Like other federal agencies, the IRS will be closed on Presidents Day. This means no phone support, walk-in services, or processing on Feb 17. However, IRS.gov is available for tax questions and filing guidance.

Your IRS online account offers a way to manage your tax information. You can track payments, review prior year returns, and communicate with the IRS securely. The "Where's My Refund?" tool provides up-to-date status information for refund inquiries.

Filing tips for faster refunds. Consider e-filing your return and opting for direct deposit to expedite your refund. E-filing minimizes errors through built-in checks, while direct deposit ensures your refund arrives quickly and securely in your bank account. Fun fact: Most taxpayers are now e-filing.

For more on President’s Day and your taxes, see Four Things to Know About Presidents Day and the IRS.

Also see: IRS Refund Schedule 2025 and Here’s Why Tax Refunds Are $586 Bigger So Far This Year.

- Kelley

IRS Braces for Major Layoffs Amid Tax Season

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The IRS is reportedly on the brink of a workforce reduction, potentially affecting thousands of employees as early as this week. This move comes at a critical time during the ongoing tax filing season. It is part of a broader federal government restructuring effort led by President Trump and Elon Musk's Department of Government Efficiency (DOGE).

The layoffs are expected to primarily target probationary employees who have been with the agency for less than two years and lack the job protections of longer-serving staff.
These proposed cuts follow a pattern seen across various federal agencies, where probationary employees have been terminated with little notice.
The reductions will likely affect those who either declined a prior buyout offer or were not deemed essential for the current tax season.

While the exact number of IRS employees to be laid off isn't certain, the scale of the reduction is expected to be substantial. This has raised concerns about the potential impact on the agency's operations, particularly during this crucial tax filing period.

More updates to come.

Tax News: DOGE, Musk Want Access to Confidential IRS Data

Good morning. Today, we’re kicking off reporting with developments involving Elon Musk and his Department of Government Efficiency (DOGE).

The latest controversy centers on an unprecedented request for the IRS Integrated Data Retrieval System (IDRS) access. That database contains sensitive personal tax information of millions of people, including tax returns, Social Security numbers, and other confidential data.

The request has raised concerns about taxpayer privacy and data security. DOGE's proposed agreement with the IRS would grant a team member 120 days of detail at the federal tax agency, potentially giving them access to this highly sensitive information.

The move has prompted strong reactions from lawmakers.

Representative Jimmy Gomez (D-Calif.), a House Ways and Means Committee member, called it a "five-alarm warning" and urged bipartisan action to prevent potential misuse of taxpayer information.
A group of taxpayers and unions have already filed a lawsuit in federal court, arguing the proposed DOGE access violates the law.
Democratic Sens. Elizabeth Warren (Mass.) and Ron Wyden (Ore.) wrote a letter to the acting IRS Commissioner demanding information.

Many worry that this access could lead to privacy violations, targeted harassment, or other misuse of personal data. There are also concerns that DOGE's involvement with IRS systems during tax season could cause disruptions, leading to delays in tax refund processing.

As the controversy unfolds, it highlights the ongoing tension between government efficiency efforts and the protection of personal privacy. The situation also raises important questions about the balance between transparency, efficiency, and safeguarding sensitive personal information in government systems.

More to Know? See our report: DOGE, Musk Eye IRS Access to Sensitive Taxpayer Information

- Kelley

Overtime Taxes: What's Really Happening in 2025

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As we navigate the ever-changing landscape of tax policy in 2025, one topic that's getting attention involves taxes on overtime pay. President Trump's promise to eliminate tax on overtime has reignited discussions about how we compensate workers for extra efforts.

Note: Currently, overtime pay is taxed just like regular wages. Workers who work more than 40 hours a week are entitled to at least 1.5 times their standard pay rate, but this extra income is subject to federal income tax, Social Security tax, and Medicare tax.

Trump's proposal to make overtime hours tax-free is part of a broader series of tax cut promises. While the idea might sound appealing, it has potential challenges.

For instance, some economists and policymakers have raised concerns about the potential loss of federal tax revenue and the possibility that employers might rely more heavily on overtime instead of hiring additional workers.

However, it's important to note that this is still merely a proposal. Any changes to tax policy must survive the complex legislative process, which is no small feat.

Meanwhile, the Department of Labor's new overtime rule, which would have raised the minimum salary requirement for overtime pay eligibility, has been halted. A Texas federal court struck down the rule, effectively blocking its nationwide implementation.

For now, workers should continue to plan their finances based on current tax laws. As always, stay tuned for updates and consult with a tax professional for personalized advice.

See: Taxes on Overtime Pay in 2025: What You Need to Know

Trump’s Tariff Agenda Rattles Global Trade

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Welcome back. This is Gabriella, and today we’ll dive into tax policy developments that may impact you directly as a consumer.

President Donald Trump announced 25% blanket tariffs on all aluminum and steel imports entering the United States last week. The measures, justified as a tax to counter trade practices that “undermine national security,” are an expansion of his 2018 Section 232 tariffs.

The tariffs are slated to begin on March 12, 2025. However, they will add costs to everyday goods such as canned foods and beverages, housing, and cars.

Coca-Cola CEO James Quincey said the company imports aluminum for its cans from Canada, a major supplier of the U.S. for this raw material. To mitigate costs from tariff hikes, the company plans to increase the production of plastic bottles. It may also source aluminum domestically, but that would entail higher consumer prices.

Adding further pressure on trade: Trump declared plans to impose reciprocal tariffs on all U.S. trading partners including “whatever countries charge the United States” in a Truth Social post.

The functionality of reciprocal tariff policy has been cast under doubt by economists. Dartmouth Professor Douglas Irwin noted in an editorial with Wall Street Journal that it would entail surveying about 200 countries and 13,000 separate tariff lines. That would equal managing about 2.6 million individual tariff rates, which may be unsustainable.

“The lobbying pressures for exemptions and exceptions on the U.S. side would be enormous,” adds Irwin.

That’s not all: Trump recently said he aims to impose tariffs around 25% on auto and semiconductor imports, as well as pharmaceuticals entering the U.S. as soon as April 2.

Separately, Trump temporarily paused 25% blanket tariffs on Canada and Mexico until March 1, 2025. That may add further strain on the price of certain consumer goods.

Want to read more on this latest development? Check out: Trump’s Tariffs on Metals to Slam Soda and Housing Prices in U.S.

Trump Takes Aim at NYC Congestion Pricing

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The Trump administration clawed back federal support for New York City’s controversial congestion pricing toll, which charges commuters $9 during peak traffic hours.

The U.S. Department of Transportation informed Gov. Kathy Hochul of their decision to revoke approval of the program on Wednesday, which had been authorized on Nov. 21 by the Biden administration.

The congestion pricing program subsequently enacted on Jan. 5, 2025, is projected to bring in around $15 billion in critical revenue for the city’s Metropolitan Transit Authority (MTA). It would also reduce the gridlock south of 60th Street in Manhattan.

If the Trump administration is successful in rolling back the toll, there’s no telling if it would force state lawmakers to raise taxes to shore up revenue for the MTA’s aging infrastructure.

As reported by Kiplinger, some lawmakers have already expressed concerns that congestion pricing wouldn’t be enough to bridge the MTA’s budget shortfall. That may signal a tax increase in some other way, although Hochul has doubled down on her promise to halt tax hikes.

In response to the Trump administration’s push against congestion pricing, the MTA initiated legal proceedings in the Southern District of New York to safeguard the program.

“We’ll see you in court,” Hochul said.

This is a developing story, more to come.

For more on congestion pricing tolls: NYC Congestion Pricing: 'Ghost Tax' or Necessary Fee AND What's Happening With NYC Congestion Pricing?

- Gabriella

State Tax Holidays, Property Tax Relief, and Income Taxes

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Good morning and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes this week.

So here are a few state tax highlights you might have missed:

Florida Governor Ron DeSantis has expressed support for ending property tax in the Sunshine State, leaving some wondering whether Florida will eliminate property taxes permanently.
Kansas residents are in their second month of state tax-free groceries. Before 2025, Kansas was one of the states that still tax groceries.
Louisiana may have a ballot measure next month that, if approved, would raise school teacher pay, lower income taxes, and increase certain deductions. The catch? Some property tax exemptions would be limited and education trust funds would be liquidated. There’s a lawsuit against the proposal's verbiage on the ballot.
Missouri lawmakers look to eliminate state taxes on income reported as a capital gain. There are currently nine states with low and no capital gains tax, so the idea isn’t new.
South Carolina lawmakers are considering a slash on boat property tax by 50%, which would cut some of the highest "boating taxes" in the country.

A quick reminder: February kicks off this year’s 2025 Sales Tax Holidays in Energy and Preparedness. Several states are expected to participate in these special tax-free periods, where some items, like refrigerators and washing machines, can be purchased without paying state sales tax. If you’re in the market for a new home improvement this year, check back as Kiplinger adds to the report.

We’ll be covering a few state tax updates every Thursday. See also Kiplinger’s other reports on state taxes:

States With the Lowest Property Tax

Ten States With the Highest Sales Tax

States That Won't Tax Your Death

Tax Refund Schedule: State Tax Delays

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As Kiplinger reported, the IRS was closed earlier this week due to a federal holiday, so that may have affected your federal return’s processing time. The IRS has also officially processed 23.5 million returns, though most will not get their federal tax refund until later this filing season.

Here is a general estimate of when you may expect your refund:

Filed by Jan. 27. Direct deposit arrives by Feb. 18. Mailed check arrives by March 28.
Filed by Feb. 3. Direct deposit arrives by Feb. 24. Mailed check arrives by April 4.
Filed by Feb. 10. Direct deposit arrives by March 3. Mailed check arrives by April 11.
Filed by Feb. 17. Direct deposit arrives by March 10. Mailed check arrives by April 18.

What factors can affect my tax refund status? Claiming the EITC, ACTC, filing late, or filing by mail are just a few components that may delay your return. For more information and a complete federal tax refund schedule, check out Kiplinger’s report: IRS Income Tax Refund Schedule 2025: When Will Your Refund Arrive?

State tax return delays. Unfortunately, we are only a month in and already have delays in state tax processing times:

Colorado state tax returns should begin processing this week, according to state officials. Many residents are worried as the state’s filing season typically begins in late January.
Kentucky has scheduled a transition to a new tax system from February 26th through March 14th. Any taxpayers who file during this time will not have their returns processed until operations resume. State officials are encouraging Kentuckians to file before the processing pause begins.

For more information on income tax returns and deadlines, see Kiplinger’s reports:

IRS Tax Refund Calendar

IRS Tax Refunds Are $526 Bigger This Year: Here's Why

States With 2025 IRS Tax Deadline Extensions

- Kate

IRS Fires Nearly 7,000 Employees

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The IRS reportedly laid off 6,700 employees this week, a person familiar with the plans first told the Associated Press. The development comes barely a month into the tax filing season and has raised concerns about the agency’s ability to sustain operations as usual.

As reported by Kiplinger, the layoffs primarily target probationary employees who have been at the agency for less than two years and lack the job protections of longer-term workers. One anonymous source told the Guardian that some workers affected belonged to the compliance department. The compliance team ensures taxpayers meet their tax obligations voluntarily and on time, lessening the risk of tax evasion.

It may also impact those who declined a prior buyout offer or were not deemed essential for the current tax season. For the time being, those in Taxpayer Services, Information Technology, and Taxpayer Advocacy are spared from cuts until mid-May.

The reductions are part of a directive of President Donald Trump and Elon Musk, who is leading efforts to reduce the federal workforce through the so-called Department of Government Efficiency (DOGE).

Before the layoffs, the agency had a headcount of about 100,000 workers. Half of those belong to critical tax filing groups. Additionally, the IRS often siphons employees from departments such as Identity Theft Victim Assistance to assist Taxpayer Services in processing phone calls during tax season. There’s no telling how this latest shakeup could impact your experience as a taxpayer.

For more information see: How Tax Delays Could Get Worse if Trump Downsizes the IRS.

Colorado Dept. of Revenue Now Processing Tax Returns

Residents of Colorado can finally breathe easier. The Colorado Department of Revenue announced Friday that it’s officially accepting 2024 tax returns.

The department began processing income tax returns from third-party services on February 21. It also shared a new, online tax benefits hub aimed at helping taxpayers identify dozens of tax breaks they may be eligible for. Colorado had delayed the acceptance of returns this tax season as its Department of Revenue worked to implement 26 changes to the tax code, including 14 new tax credits.

To find out more about tax benefits provided by the state, you can use the new online source Tax.Colorado.gov/Save Money. The savings, which range from property, rent, and heat tax breaks for older adults to credits for folks using electric bicycles, are organized into four high-impact groups.

Families and individuals
Older adults and retirees
Charitable contributions
Climate-friendly

You won’t want to miss out on some often-overlooked family tax credits for the 2024 tax year. Some could potentially save you thousands of dollars. These include but are not limited to:

Colorado Earned Income Tax Credit: A couple filing jointly with two children and a combined income of $50,000, for example, would receive $1,334.
Colorado Child Tax Credit: Get up to $1,200 per child (for children under 6).
Family Affordable Tax Credit: Receive up to $3,200 per child under the age of 6 and up to $2,400 per child under the age of 16.
Colorado Promise Higher Education: Varies by school, but provides qualifying students with tuition and fees for their first two years of college.

You can also use the Get Ahead Colorado state tool to check your eligibility for state tax credits. Once you file your taxes, you can track your Colorado tax refund online on the Where’s My Refund banner. To check the status of your federal tax return, visit the IRS.gov online tool.

- Gabriella

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Good morning! Let's talk a little about Social Security and your taxes.

Many retirees face the unexpected challenge of paying taxes on their Social Security benefits. Depending on your income, up to 85% of your benefits could be subject to federal tax. For single filers, taxes generally kick in when combined income exceeds $25,000; for married couples filing jointly, the threshold is $32,000.

While proposals to eliminate these taxes are floating around Capitol Hill, their future is far from certain. So, if you're a retiree, you should focus on strategies you can control to minimize your tax burden.

Here are some approaches to consider:

Delay Social Security: Delaying benefits until age 70 can increase your monthly payment, providing more flexibility in managing taxable income.

Leverage Roth Accounts: Converting traditional IRA or 401(k) funds to a Roth account can lead to tax-free withdrawals in retirement.

Manage Investments: Shifting to tax-efficient investments like municipal bonds can lower taxable income.

Offset Capital Gains: Use tax-loss harvesting to offset capital gains and reduce your adjusted gross income.

Time Withdrawals Strategically: Take smaller withdrawals from retirement accounts before required minimum distributions (RMDs) begin to spread out your tax burden.

Make Qualified Charitable Distributions (QCDs): If you're 70½ or older, use QCDs from your IRA to satisfy RMDs without increasing taxable income.

Consider State Taxes: Moving to a state with no income tax can significantly reduce your overall tax burden.

Remember, each approach has potential drawbacks, and each retiree's situation is unique. Consulting a financial advisor or tax professional can help you develop a personalized strategy to minimize taxes on your Social Security benefits and maximize your retirement income.

To learn more, see our report: How to Reduce Taxes on Social Security Benefits in 2025 AND Social Security and Your Taxes: Five Things to Know.

-Kelley

Tax News Update: Trump Tax Cuts, Musk, DOGE Dividend Checks and IRS Layoffs

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As we approach the end of February, this tax season has been marked by significant shifts and heated debates. From leadership shakeups to radical proposals, here's a rundown of some of the latest tax news.

Trump Tax Cuts: The House and Senate are pursuing different strategies to address the expiring provisions of the 2017 Tax Cuts and Jobs Act.

House Republicans are advocating for one comprehensive bill that would renew the Trump-era tax cuts and incorporate additional measures, such as eliminating taxes on tips, overtime, and Social Security benefits.

In contrast, Senate Republicans propose a two-bill approach, focusing first on increasing military and border security spending, with tax cuts to be addressed in a second bill.

This divergence sets the stage for a potential showdown between the chambers, with significant stakes: failure to act could result in a $4 trillion tax hike if the TCJA provisions expire at the end of the year.

Musk's Controversial Role: Elon Musk's involvement in government efficiency efforts has raised concerns. As the apparent head of the newly established Department of Government Efficiency (DOGE), Musk has been granted unprecedented access to federal payment systems. DOGE also recently initiated eliminating 7,000 IRS jobs during tax season.

As Kiplinger has reported, that has sparked debates about data security and the appropriateness of a private citizen's significant influence over government operations.

Potential "DOGE Dividend" for Taxpayers? Musk is considering a proposal to return some of the “savings” achieved by DOGE to tax-paying households. If DOGE meets its $2 trillion savings goal, this, according to Musk and Trump administration officials, could amount to checks of about $5,000 per household.

However, the "DOGE Dividend" is widely criticized as unrealistic and fiscally irresponsible, given the current federal deficit and lack of genuine government savings to distribute.

Experts argue that any funds allocated for such payouts would add to the national debt, making the proposal economically unsound and potentially harmful in the long term.

IRS Leadership Vacuum: The IRS is operating without a confirmed Commissioner following Danny Werfel's resignation on January 20. President Trump's nominee, former Rep. Billy Long, awaits Senate confirmation, leaving the agency in flux during peak tax season.

Workforce Disruptions: The Trump administration's "deferred resignation program" has created significant complications for the IRS. While critical employees are prohibited from accepting buyouts until May 15, 2025, the offer has caused confusion and potential staffing shortages during this crucial period.

As we navigate this complex tax landscape, staying informed and seeking professional advice when needed is crucial.

Long-Term Care Expenses Tax Deduction: Key Points to Know

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As healthcare costs continue to rise, many are looking for ways to offset the financial burden of long-term care. Fortunately, the IRS offers some relief through a tax deduction for qualifying long-term care expenses. Here's what you need to know about deducting these costs on your tax return.

Eligibility for Deductions: To qualify for long-term care tax deductions, a licensed healthcare practitioner must deem the care medically necessary. The individual receiving care must be certified as chronically ill, meaning they cannot perform at least two activities of daily living without substantial assistance for at least 90 days or require supervision due to severe cognitive impairment.

Deductible Expenses: Qualifying expenses include various services, from preventive care to rehabilitation. In-home care, assisted living, and nursing home services are all potentially deductible. Even the cost of attending medical conferences related to a chronic illness might be eligible.

To claim these deductions, you must itemize on your tax return using Schedule A (Form 1040).

It's important to note that only unreimbursed medical expenses exceeding 7.5% of your adjusted gross income (AGI) are deductible.

Long-Term Care Insurance Premiums: If you have long-term care insurance, you may also be able to deduct a portion of your premiums. The deductible amount is based on your age, with higher limits for older individuals.

Note: While these deductions can provide tax relief, keep detailed records of all expenses and consult a tax professional to help maximize your benefits if needed.

To learn more, see Gabriella’s report on how to Deduct Expenses for Long Term Care on Your Return.

- Kelley

More IRS Turmoil: Acting Commissioner Stepping Down

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The IRS faces significant challenges as Acting Commissioner Doug O'Donnell has just announced his retirement during the peak of tax season. This leadership vacuum comes at a critical time for the agency, which is already dealing with several pressing issues:

Hiring Freeze: President Trump implemented a federal hiring freeze, forcing the IRS to rescind job offers with specific start dates in February. The staffing shortage may impact the agency's ability to process returns efficiently and provide adequate taxpayer support during this filing season.

Learn more: What Trump's Federal Hiring Freeze Means for the IRS

DOGE Access: Adding to the agency's concerns, Elon Musk's Department of Government Efficiency (DOGE) has requested access to the IRS' Integrated Data Retrieval System (IDRS). This system contains sensitive tax information for millions of Americans. DOGE's request, which hasn’t yet been granted, has raised alarms among privacy experts and some lawmakers, who fear potential misuse of this confidential data.

Buyout Offers: The IRS also faces potential staff losses as employees consider buyout offers set to take effect after the current tax season. This could result in a significant loss of expertise within the agency.

Learn more: Trump Wants You Out of the IRS, But You'll Have to Wait

ERS? President Trump has proposed replacing the IRS with an "External Revenue Service" funded by tariffs. This suggestion and other discussions about significant changes to the agency's role have created uncertainty among IRS employees and taxpayers.

Stay tuned. The agency's ability to adapt to these pressures will likely impact government revenue collection and public trust in the U.S. tax system.

- Kelley

Why Is Tax Season 2025 Off to a Slow Start?

The 2025 tax season is underway, but it's off to a slower start than previous years. The IRS has reported receiving and processing fewer tax returns than expected at this point in the season. This trend raises questions about what might be causing the delay in filings.

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Several factors could be contributing to this slower pace:

Changes in Tax Forms: 1099-K forms going to more taxpayers might be causing hesitation or uncertainty.

Political Climate: The current political environment could be influencing taxpayers' decisions about when to file their returns.

Extended Deadlines: Some states affected by federal disasters have delayed tax filing deadlines, which may impact the overall filing rate.

IRS Staffing Concerns: Recent news about IRS staff cuts has raised concerns about possible delays in processing returns and issuing tax refunds.

Despite these challenges, remember that the filing deadline remains April 15, 2025, for most filers.

As the tax season progresses, it will be interesting to see if the filing rate picks up and how the IRS manages its workload.

Trump’s 'One Big Beautiful Bill' Concept Narrowly Advances

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The House passed a Republican budget blueprint that calls for $4.5 trillion in tax cuts and a $2 trillion reduction in federal spending over a decade.

The measure dubbed “one big, beautiful bill,” barely passed in a vote of 217 to 215, as G.O.P lawmakers are split between what federal programs to chop down to finance multi-trillion dollar tax cuts — which policy analysts say mainly benefit the wealthy.

The blueprint sets the foundation for House Republicans to outline tax cuts worth up to $4.5 trillion over the next 10 years. However, it doesn’t pinpoint which tax breaks will be reduced or eliminated to achieve this lofty goal. It’s also a greenlight for lawmakers to roll back $2 trillion in federal spending across the nation, which can impact popular programs like Medicaid and food aid programs like SNAP for those most vulnerable.

As reported by Kiplinger, a 50-page policy menu prepared by the House Budget Committee was obtained by Politico, listing a flood of family tax breaks at risk of facing significant reductions or an inevitable erasure.

The menu lists a series of current tax breaks that are in danger, these include but are not limited to:

Tax breaks for families
Education tax breaks
Home Mortgage Interest write-off
State and Local Tax (SALT) deduction

The comprehensive legislative tax plan aims to fund border security, energy policy, and major tax cuts. Among proposals on the agenda, include eliminating taxes on tips and extending certain tax breaks tied to the Tax Cuts and Jobs Act (TCJA) of 2017. There’s a lot of legislative action that has to take place before a full reconciliation bill can become law. But these and other potential changes may impact you, so stay tuned.

IRS Tax Refunds Come in $1,000 Smaller

It’s been a month since the official kick-off to the 2025 tax season, and tax refunds are coming in smaller.

The IRS reported that the average direct deposit refund amount was $2,252 based on 33 million tax returns processed for the week ending February 14. That’s down roughly $1,000 from the same period a year ago when the agency processed over 34 million returns.

The tax agency expects more than 140 million individual tax returns to be filed by the April 15 deadline. That means there’s more time for tax refunds to increase. Why are they smaller?

Under current law, the IRS cannot issue refunds for tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) before mid-February. The current statistics won’t reflect those refund amounts.

What else can make your refund slightly bigger this year? Put frankly, inflation. The standard deduction amounts for returns you’re filing now, in early 2025, are slightly higher. Income tax brackets were also adjusted for inflation, which may impact eligibility for tax credits and deductions you can claim.

If you’ve already filed your tax return and are waiting for your refund, you can check your refund status using the ‘Where’s My Refund’ tool directly with the IRS. For taxpayers that expect an EITC or ACTC refund, the status of your refund is available by February 22. The first refunds should be delivered by March 3, per the IRS.

- Gabriella

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President Donald Trump’s plan to end taxes on Social Security income sounds like a good deal for retirees and those nearing retirement — not so much for younger generations.

Eliminating income taxes on Social Security benefits would reduce revenues by $1.5 trillion over a decade and increase the federal debt by 7% by 2054, according to the Penn Wharton Budget Model, a non-partisan, research initiative at the University of Pennsylvania.

Only the highest-earning Millennials in their 40s would see a welfare gain equal to a one-time payment of $12,400. However, anyone in their 40s with a gross income between the 40th and 60th percentile would see no gain at all.

Individuals in their 30s, and those who have not yet been born, may face the largest losses in welfare — ranging from $1,100 to $22,000 over their lifetime. It gets worse the younger you are.

Already retired? If you’re among the highest earners, you stand to gain between $11,000 and $135,000 in welfare benefits. Meanwhile, those in the two lowest quintiles would just see a positive gain between $1,000 and $2,000.

The truth is that ending taxes on Social Security income would have ripple effects across every age group. While only the highest earners over the age of 40 may benefit in some capacity — every person under that age limit will lose.

If you want to learn more, check out: Trump’s Plan to Eliminate Taxes on Social Security Forgets Your Children.

State Property Taxes, Income Tax Rates, and February news

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Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Illinois is considering Senate Bill 1862, which would eliminate property taxes for anyone who has owned a home for 30 or more years. The proposal, if approved, could provide relief to residents in one of the most expensive states for homeowners.
Iowa residents may now enjoy one of the lowest income tax rates in the country. Iowa’s new tax rate has dropped nearly two percentage points in 2025 alone.
Kentucky residents are also in for a treat. Kentucky’s new income tax rate is lower than before, but planned state tax return delays may affect when taxpayers see 2025 refunds.
New York City motorists have a bit of drama: President Trump’s administration has ended support for NYC congestion pricing. Currently, commuters are charged $9 for entering Manhattan’s Lower District during “peak hours.”
Ohio Senate Bill 81 proposes freezing property tax increases for primary homes owned by older adults. At present, Ohio homeowners 65 and older may qualify for the homestead exemption program.

A quick reminder for February: The last round of Social Security payments is coming out for those born between February 21 and 28. What does that mean for your taxes? Well, up to 85% of your Social Security income may be taxed, and it’s never too early to start planning for next year. Here are seven ways to reduce taxes on Social Security Benefits in 2025.

For more information on retirement taxes, particularly as they pertain to state tax law, check out Kiplinger’s reports:

States That Tax Social Security Benefits in 2025

Ten Tax-Friendly States for Retirees

States That Don't Tax Pension Income in 2025

Retirement Taxes: How All 50 States Tax Retirees

Tax Refund Schedule and What to Watch

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As Kiplinger reported, this year's IRS tax refunds are $1,000 smaller. But this shouldn’t dampen the excitement of receiving yours. As of Valentine’s Day, the IRS has officially processed 33 million returns, though most will not get their federal tax refund until later this filing season.

Here is a general estimate of when you may expect your refund:

Filed by Jan. 27. Direct deposit arrives by Feb. 18. Mailed check arrives by March 28.
Filed by Feb. 3. Direct deposit arrives by Feb. 24. Mailed check arrives by April 4.
Filed by Feb. 10. Direct deposit arrives by March 3. Mailed check arrives by April 11.
Filed by Feb. 17. Direct deposit arrives by March 10. Mailed check arrives by April 18.
Filed by Feb. 24. Direct deposit arrives by March 17. Mailed check arrives by April 25.

Also, as we continue through the filing season, be sure to read the fine print. Tax providers sometimes offer options for you to get your refund early. While seemingly advantageous, a couple of these early tax refund options could trap your cash. For instance, last year’s refund anticipation loans and checks cost taxpayers $842 million in fees, with some interest rates as high as about 36%.

For more information on what to look out for this filing season, see Kiplinger’s other reports:

Mail Theft Crisis: Why Your IRS Tax Refund Is At Risk

IRS Back Taxes Scam Call Steals Millions

- Kate

Feb. 28 ‘Economic Blackout’: What You Need to Know

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Welcome back. Have you heard about the nationwide "economic blackout" that was scheduled for Friday, February 28, 2025? It's a grassroots initiative organized by The People's Union USA, a movement founded by John Schwarz, a meditation instructor from the Chicago area.

The 24-hour consumer spending halt was designed to demonstrate the collective power of consumers and protest against various economic and social issues.

The boycott called for participants to refrain from all non-essential purchases from midnight to 11:59 p.m. EST on February 28. It primarily targeted major retailers like Amazon, Walmart, Best Buy, fast-food chains, and gas stations. The organizers encourage supporting small, local businesses for essential items.

Key aspects of the initiative include:

Protesting corporate greed and high prices
Opposing the rollback of diversity, equity, and inclusion (DEI) programs by major companies
Highlighting the perceived influence of billionaires and large corporations on everyday life

Schwarz describes the movement as "economic resistance" to expose how the system is "rigged" against everyday people in the U.S. The People's Union USA describes itself as a non-partisan organization,

As of the day before the event, the movement had gained traction on social media and received support from various activists and faith leaders. The organization had also reportedly raised over $70,000 through a GoFundMe campaign.

While the immediate impact of a single-day boycott may be limited, organizers say they hope it sparks broader discussions about economic fairness and corporate responsibility. The People's Union USA is reportedly planning potential additional efforts, like a broader economic blackout on March 28 and targeted weeklong boycotts against specific retailers.

EV Tax Credit Filing Mistake for Your 2024 Return?

Some electric vehicle (EV) buyers are facing unexpected hurdles with their tax returns. NPR reports that some taxpayers are seeing their returns rejected due to federal EV tax credit complications.

The credit, worth up to $7,500 for eligible new vehicles, is available for eligible buyers at the point of sale. While this change, effective as of last year, has been popular, it is also reportedly leading to reporting issues for some dealers and confusion for some buyers trying to claim the benefit on their tax returns. (According to NPR, rejected returns have stemmed from situations where dealers weren’t properly registered to pass on EV tax credit savings to buyers.)

This is happening as the future of the EV tax credit, a key part of the Inflation Reduction Act, is now uncertain. As Kiplinger has reported, the Trump administration and many Republican lawmakers plan to eliminate the credit.

For example, President Trump signed an executive order, "Unleashing American Energy," to dismantle EV incentives and related policies. Additionally, two Senate Republicans have proposed legislation to eliminate the credit and/or separately to impose a $1,000 fee at the time of EV purchase.

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Key Points

For now, the current federal EV tax credit remains in effect.
If desired, eligible buyers can receive the credit as an up-front rebate at the point of sale, with registered dealers providing the credit value to the buyer. The dealer is then reimbursed by the IRS.
However, the complexity of the credit requirements has reportedly led to some tax return issues, as buyers and dealers navigate eligibility rules and reporting procedures.

As the debate over EV incentives continues, consumers interested in purchasing an electric vehicle should stay informed about the evolving landscape of EV tax credits. With potential policy changes, the current tax credit opportunity might be time-limited.

- Kelley

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Could retirees see a break on their federal taxes next year? The "You Earned It, You Keep It Act," sponsored by Rep. Angie Craig (D-Minn.), proposes eliminating the federal income tax on Social Security benefits. The bill also proposes tax relief for older adults and is designed to ensure the long-term stability of Social Security.

But will it pass? Similar proposals, including the "RETIREES FIRST Act" and President Trump's pledge to eliminate Social Security taxes, are on the table, but their fate remains uncertain.

Read more about the proposed legislation, potential benefits, and challenges: Will Retirees Stop Paying Tax on Social Security Next Year?

Also see: Can Trump Eliminate Taxes on Social Security?

Your Retirement Income and the IRS: Tax Changes to Know

Good morning. Let’s start today with a look at the shifting retirement tax landscape. Many things are happening at the federal and state levels, including reforms to lower tax rates (or extend existing tax cuts) and, in some cases, to reduce or eliminate taxes on Social Security (See our previous post).

Meanwhile, navigating the world of retirement taxes can feel like a whole new ballgame. Gone are the days of simple W-2s, replaced by a mix of Social Security, required minimum distributions, and investment income, each with its own tax rules.

So, it’s more important than ever to appreciate and understand how your hard-earned retirement income will be taxed.

Our recent article summarizes some key aspects of retirement income taxes to help you make informed decisions and keep more of your hard-earned money where it belongs — with you.

Retirement Income Taxes and the IRS: What Every Retiree Should Know

- Kelley

Tax Policy News: Trump Says Tariffs Are on for March 4

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As March 4, 2025, approaches, the global economy braces for a potential shift in international trade. President Trump is poised to implement a series of tariffs that could upend economic relationships with the United States' largest trading partners.

As Kiplinger has reported, the proposed tariffs are sweeping: a 25% levy on all imports from Canada and Mexico (with a 10% exception for Canadian energy), and a doubling of existing tariffs on Chinese goods to 20%. The move would affect an estimated $1.5 trillion annual imports, potentially sending shockwaves through global markets.

Trump's rationale? He argues these measures are necessary to combat the influx of illegal drugs, particularly fentanyl, into the United States. However, critics say this approach is a blunt instrument that could have far-reaching consequences.

The impact on American consumers and businesses could be significant.

Some experts estimate that these tariffs could result in a tax increase of $120 billion to $225 billion annually for U.S. citizens.
Industries from automobiles to agriculture and even many small businesses are holding their breath, anticipating potential disruptions to supply chains and increased costs.

Meanwhile, China is reportedly considering retaliatory measures, targeting American agricultural and food products. Canada and Mexico have been scrambling to appease Trump's demands, with Canada even appointing a "fentanyl czar" in an attempt to address U.S. concerns.

As March 4th approaches, uncertainty reigns. Will Trump follow through, or will there be another last-minute reprieve? For now, he says the tariffs are on. According to the Associated Press, Trump told reporters:

“Tomorrow — tariffs 25% on Canada and 25% on Mexico. And that’ll start. They’re going to have to have a tariff.”

Stocks slid in response to the news.

One thing is clear: if implemented, these tariffs could mark a dramatic shift in U.S. trade policy, with ripple effects felt across the global economy.

Learn More About Trump Tariffs: Food, Gas Prices to Spike If Trump Levies Tariffs, Tariffs: What They Are and How They Impact Your Wallet

ICYMI: 2025 Tax Deduction Change for Those Over 65

Taking a break from the March 4 Trump tariff talk: Have you seen the IRS inflation adjustments for 2025? There are some interesting changes, including for those 65 and older. The 2025 adjustments are relatively modest but could make a difference for tax returns typically filed in early 2026.

For single filers and heads of households over 65, the extra standard deduction goes up to $2,000. (That's a $50 increase from 2024.)
If you're married filing jointly, each qualifying spouse gets $1,600 — up $50 from last year.
So, if both of you are 65 or older, you're looking at an extra $100 in deductions.

Here's something to remember: if you're 65 or older and blind, you can double those amounts. That means $4,000 for single filers or heads of household and $3,200 per qualifying spouse for joint filers.

Those changes are on top of the regular standard deduction increases. For 2025, it's $15,000 for single filers, $30,000 for married couples filing jointly, and $22,500 for heads of household.

These aren't huge changes for some, but depending on your situation and tax bracket, they could lower your tax burden. Checking with your tax advisor to see how these and other adjustments might affect your situation can help.

- Kelley

Tariffs News: Trade War Hits Home, Target CEO Says Higher Prices Likely Soon

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As the clock struck midnight on Tuesday, March 4, 2025, President Trump's long-threatened tariffs on Canadian and Mexican imports took effect. Those new taxes — 25% on most imports and an additional 10% on Canadian energy — mark a major shift in North American trade relations.

Tariffs are essentially taxes, and consumers ultimately bear the cost. As prices rise, the impact is felt directly in our wallets.

Canada's response was immediate, with outgoing Prime Minister Justin Trudeau imposing a 25% tariff on $20 billion of U.S. goods and planning more tariffs. China, facing its own tariff increase, also reportedly plans to impose duties on U.S. agricultural products. Mexico is expected to announce its response later today.

Target CEO Brian Cornell told CNBC, "These tariffs will undoubtedly lead to higher prices on many everyday products." As Kiplinger has reported, tariffs will cause consumers to pay more for shopping in 2025.

As global markets react and economists warn of potential economic challenges, this trade dispute is no longer talk — it will affect consumers. With the possibility of a full-blown North American trade war looming, the question remains: Who ultimately benefits?

- Kelley

RMDs: Avoid These Common Mistakes

Required Minimum Distributions (RMDs) are a non-negotiable aspect of retirement planning, but are you sure you're getting them right? The stakes are high; missteps can trigger IRS penalties and unnecessarily inflate your tax bill. With recent changes from the SECURE 2.0 Act adding to the complexity, even seasoned retirees can stumble.

Are you sure you're calculating your RMD correctly? Are you aware of the aggregation rules and how they apply to your accounts? And are you fully leveraging opportunities like Qualified Charitable Distributions to minimize your tax burden?

Read on to discover common RMD mistakes and protect your retirement strategy.

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For millions of retirees, a long-awaited change to Social Security benefits has arrived,. The recent passage of the Social Security Fairness Act introduced significant changes for many retirees, particularly those who were impacted by the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO).

Over 3.2 million individuals are expected to see some increased benefits as a result of this act, according to the Social Security Administration (SSA). The law primarily affects public servants who receive pensions from work not covered by Social Security, including teachers, firefighters, police officers, and certain federal employees.

And while the increase in benefits is a positive development, it’s important to be aware of the potential tax implications of this additional income.

For example, the changes may bring some unexpected surprises for retirees, especially when it comes to how much of their Social Security benefits could be subject to tax or how their overall tax picture might shift.

Could it affect your tax situation? What about other costs tied to your income, like your Medicare premiums (IRMMA)? Those are questions worth asking as you plan.

So, if you’re one of the millions impacted by this change, now is the time to take a closer look at what it could mean for you from a tax perspective.

Also, stay tuned for more insights from Kiplinger on navigating this new chapter in Social Security benefits.

Social Security Fairness Act Tax implications: Are You Prepared?

Also from Kiplinger:

The Social Security Fairness Act: Good News for Retirees?

Social Security Fairness Act Back Payments Start Arriving

- Kelley

Trump Steadfast on Tariffs in Speech to Congress

(Image credit: President Donald Trump addresses a joint session of Congress in the Capitol building's House chamber in Washington, D.C., on March 4, 2025. (Credit: Ricky Carioti, The Washington Post via Getty Images))

President Donald Trump delivered his State of the Union address to Congress and the nation Tuesday night — and taxes, particularly tariffs, made a splash.

Notably, the president omitted the fact that his latest 25% tariffs on top trading allies Canada and Mexico have sent the stock market tumbling. China was also hit by an additional 10% duty, one month after the Trump administration had placed a 10% tariff on the country. As a result, the Dow plunged 670 points by the closing bell, its worst day in over a week.

At the same time, retail giants like Target are warning shoppers of price hikes on fruits and vegetables as soon as this week. Target CEO Brian Cornell said the company relies on Mexican produce during winter months. Trader Joe’s, which also carries produce from Mexico — like avocados — and frozen items from Canada, could see prices increase as a consequence of tariffs.

“Tariffs are about making America rich again and making America great again. And it’s happening and it will happen rather quickly,” Trump said during his address. “There will be a little disturbance, but we’re ok with that.”

The disturbance refers to rising market fears, a destabilized stock market, and rising prices on everyday goods, from your clothes and food, to furniture and cars. It’s also a stark departure from President Trump’s promise on “Day One” to lower grocery prices and inflation.

As reported by Kiplinger, Canada, Mexico, and China are retaliating against the Trump administration’s tariffs. The actions are likely to worsen the state of your wallet. If you didn’t know, Canada exports eggs to the U.S. With eggs already scarce due to the bird flu, a trade war is not the best news.

That’s not all — Trump also reaffirmed reciprocal global tariffs effective April 2, citing President William McKinley’s as an example of the positives of tariffs.

As a note: McKinley’s final words on tariffs in 1901 were “Isolation is no longer possible or desirable.” He added, “Commercial wars are unprofitable.”

Thousands of IRS Employees Take Trump Buyout Offer

The National Treasury Employees Union estimates that up to 5,000 IRS staff accepted the deferred resignation offer from the Office of Personnel Management (OPM), TaxNotes first reported.

The Trump administration had extended the buyout offer to approximately 2.3 million federal workers, promising continued pay through September 30, 2025, if they agreed to resign by the deadline. NTEU President Doreen Greenwald told reporters that between 4,000 and 5,000 IRS employees took the deal despite the program’s legal controversies and uncertainty.

The buyout offer is spearheaded by Elon Musk and his Department of Government Efficiency (DOGE) as part of President Donald Trump’s goals to reshape the IRS and shave down the federal workforce.

As reported by Kiplinger, IRS employees who are critical to the filing season are required to continue working until May 15, including those who took the offer. Separately, the IRS fired approximately 6,700 workers on February 20, casting further doubt on how these changes will impact the 2025 tax filing season.

Before the layoffs and downsizing measures, the IRS had been struggling to hire workers after decades of staff shortages. Even with a headcount of approximately 100,000 full-time employees before Trump’s actions to shrink the workforce, half of those employees were part of essential departments to the tax filing and customer service.

The IRS is known to siphon employees from less critical departments to aid Taxpayer Services and take customer service calls during the busy months of tax season. Concerns are brewing that these latest actions may cause delays for taxpayers like you.

For more information: Could ERC Delays Get Worse if Trump Downsizes the IRS?

- Gabriella

Can Florida Abolish Property Taxes?

(Image credit: Getty Images)

Florida Gov. Ron DeSantis is doubling down on eliminating property taxes in the state, and economists think the idea is incredibly risky.

During a State of the Union Speech March 4, DeSantis addressed the tax reform, saying, “You buy a home, you pay off the mortgage, and yet you still have to write a check to the government every year just for the privilege of living on your own property.”

In Florida, like in other states, property taxes fund schools, infrastructure, and safety net programs — like firefighters and police departments. The revenue is even more critical as the Sunshine State is a no income tax state.

Economists warn that without property taxes, Floridians may have no choice but to face a record-high sales tax of 12%. That’s much higher than California’s nationwide high of 7.25%, and double the 6% Florida currently levies.

Even then, it remains uncertain whether consumers will be able to purchase at the same rate they currently do to sufficiently cover the revenue gap of a no-property tax state.

For more details: Why Abolishing Florida Property Taxes is Problematic

- Gabriella

State Tax News and Important March Dates

(Image credit: Getty Images)

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Arkansas lawmakers are seeking to eliminate the state's grocery tax, which currently stands at 0.125%. This is the lowest rate among states that still tax grocery items.
Idaho has a new refundable tax credit starting this year. Eligible parents with children enrolled in homeschool or private school may qualify for the Idaho parental choice tax credit, worth up to $5,000 per K-12 student ($7,500 per student with a disability).
New Jersey Gov. Murphy pitched a budget proposal with record-high property tax relief for New Jersey residents. However, millionaires in the state and other New Jerseyans could end up footing the bill.
Oregon House Bill 3362 is causing debate as lawmakers decide whether to use a 4% “tire tax” to fund fish and wildlife protections. The increased cost of tires would also support Amtrak Cascades rail service.
Rhode Island senators recently proposed a bill to end the state tax on Social Security benefits. The Ocean State is one of nine states that still tax Social Security payouts above a certain threshold.

Also, now that we’re almost done with our first week of March, let’s dive into a few important dates later this month. You can use these days for tax planning:

St. Patrick’s Day (Mar. 17): Celebrate the holiday by volunteering for charity. Not only will this support your local community, but if you itemize in 2026, your charitable contribution could reduce your taxes owed.

Check Your Mailbox: If you claimed the ACTC or EITC on your 2024 tax return, those refunds are expected to roll out this month. We’ve got a rundown of the IRS tax refund calendar if you need a schedule.

Upcoming March Tax Deadlines:

March 10 is the deadline to report tips to your employer (if you have any).
March 17 is the deadline for S corporations and partnerships to file 2024 business tax returns.

Don’t miss these important due dates. For more information, check out Kiplinger’s report Tax Deadlines by Month.

More to come! But for now, continue having a productive March.

Considering Skipping Tax Season? Think Again

So far, the IRS is reporting fewer tax forms filed compared to last tax season. This may not come as a surprise with all that’s been going on in the news lately.

However, 2024 tax returns are still due, and April 15th is the deadline. If you miss that deadline and do not pay your taxes owed, you could be subject to a 5% penalty of your tax due for each full or partial month you are late — plus any daily compounded interest.

And there may be further consequences if you still don’t pay. For instance, the IRS can levy on your bank account, ask for a revocation of your passport, and even seize your house for outstanding tax debt.

For more information, check out Kiplinger’s report 5 Scary Things the IRS Can Do If You Owe Back Taxes.

- Kate

Trump Pauses Tariffs on Mexico, Yet Again

Tariffs are making headlines this week. Here’s what we know.

President Donald Trump paused 25% tariffs on Mexican imports until April 2, after speaking with President Claudia Sheinbaum. Is it a sign of regret?

The move comes two days after the Trump administration slammed Mexico and Canada with sweeping 25% duties on all imports to the U.S. on March 4, igniting a trade war with our closest trading partners and sending the stock market tumbling. Tariffs on Chinese imports also doubled, to 20%.

As the stock market plunged, Trump announced plans to temporarily walk back tariff hikes on automakers whose cars comply with the North American trade agreement known as the USMCA, allowing a one-month delay for U.S. carmakers. As reported by Kiplinger, brands such as General Motors, Ford and Stellantis have manufacturing plants in Mexico and Canada and would have been hit hard by the duty.

Still, the stock market remained on a downswing Thursday as Canada and China are still in the heat of a trade war with the United States. What does a trade war with our closest allies mean for you?

The added tariff costs, which importing companies pay, are expected to be transferred to consumers in some capacity — leading to price hikes on everyday goods, from food and beverages, to your car.

For more, see: Trump’s Trade War Targets Your Groceries

Retirement Abroad: Tax Considerations

(Image credit: Getty Images)

Does retirement outside the U.S. sound intriguing? Maybe it’s a vision of scenic beaches and fresh, locally-sourced food. Or perhaps cheaper healthcare and lower housing costs are more the allure.

Either way, one word could bring those fantasies to a halt: Taxes.

Unfortunately, you’ll still need to file (and likely pay) U.S. federal taxes even if you leave the country. But how much you pay may depend on where you go. Some countries could help you avoid double taxation and even provide a few perks.

For example, Panama’s retiree visa offers a 25% discount on utility bills and airline tickets. And Costa Rica’s property taxes are significantly lower on average compared to the U.S.

For more information about taxes and retirement abroad, check out Kiplinger’s reports:

Tax Reasons to Retire in Panama in 2025

Three Countries Without Inheritance Tax

Retire in Costa Rica With These Tax Benefits

- Kate

Tax News: Trump Tariffs Off Again As Stocks Struggle

About 48 hours after levying 25% tariffs on two of the United States’ largest trading partners, President Trump again paused most of his tariffs on Canada and Mexico. This latest trade policy flip left some businesses and consumers scrambling for stability.

Why does this matter? Tariffs are taxes on imported goods. When the government imposes these fees, consumers often end up footing the bill through higher prices at the checkout counter. As Kiplinger has reported, everything from your favorite avocados to the car you've been eyeing could suddenly come with a heftier price tag.

In an interesting development, the United Auto Workers Union expressed support for Trump’s tariff policy, writing the following in a release:

“There’s been a lot of talk of these tariffs “disrupting” the economy. But if corporate America chooses to price-gouge the American consumer or attack the American worker because they don’t want to pay their fair share, corporate America bears the blame for that decision.”

Meanwhile, the stock market reacted negatively to President Trump's recent tariff actions and the resulting uncertainty.

"Panic selling sent the Nasdaq Composite into correction territory, while the Dow and S&P 500 suffered notable losses," says Karee Venema, Kiplinger senior investing editor. (Image credit: Getty Images)

Related from Kiplinger’s investing team: Trump's Tariff Reversal Can't Save Stocks

As we navigate an uncertain tax landscape, it's worth watching how these trade policy changes impact your wallet in the coming months. At least for the moment, some can breathe a sigh of relief.

Grocery Tax Debates Amid High Egg Prices: A 2025 Update

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As U.S. shoppers grapple with rising food costs (egg prices are averaging $7.09 per dozen), grocery taxes are at the forefront of many state-level policy discussions. While most states have eliminated sales taxes on groceries, others still impose them as of 2025.

However, the state food tax landscape is still changing. For instance, Illinois plans to eliminate its 1% grocery tax as of January 1, 2026, while Arkansas Gov. Sarah Huckabee Sanders has proposed eliminating the state's remaining 0.125% grocery tax.

In Alabama, Democratic lawmakers are reportedly pushing to eliminate the state's 3% grocery tax, while Mississippi's legislature is considering a cut to its 7% grocery tax as part of a broader tax reduction package.

Learn More: Alabama Grocery Tax: How Much Will You Save?, AND Kansas Food Tax Cut: What to Know.

As states weigh the benefits of tax relief against potential revenue losses, the debate over grocery taxes will remain a hot topic in state capitals. High food prices will likely impact federal policy chatter as well.

- Kelley

If you're receiving Social Security, understanding how it's taxed is crucial for effective financial planning. Here's a quick guide:

Each January, after you begin receiving Social Security benefits, you will receive a statement (Form SSA-1099) showing the total benefits you received in the previous year.

(Image credit: Getty Images)

Calculate Your Combined or Provisional Income

When determining how much of your Social Security may be taxed, the first step is to calculate your "combined income." (This is also sometimes called "provisional income.")

Combined Income = Adjusted Gross Income + Nontaxable Interest + 1/2 of Social Security Benefits

Next, you’ll want to check your Social Security tax threshold:

Single filers:

Under $25,000: No tax
$25,000 - $34,000: Up to 50% taxable
Over $34,000: Up to 85% taxable

Married filing jointly:

Under $32,000: No tax
$32,000 - $44,000: Up to 50% taxable
Over $44,000: Up to 85% taxable

Use IRS Tools: If your income exceeds these thresholds, use the worksheets in IRS Publication 915 to calculate the taxable amount. The IRS also offers a tool on its website to help. Of course, you can also work with a trusted tax professional.

Also, Don’t Forget State Taxes: Some states also tax Social Security income. Check your state’s taxing authority for specifics.

Also see: Retirement Taxes: How All 50 States Tax Retirees and States That Tax Social Security Benefits in 2025.

- Kelley

Retirement tax planning for 2025

Good morning! Let's start this week by discussing your financial future. Whether you’re just starting to save or nearing retirement, taking advantage of tax-efficient strategies can make a big difference in your long-term wealth. Here are a few things to consider.

(Image credit: Getty Images)

Catch-Up Contributions

If you’re 50 or older, you can make catch-up contributions to your retirement accounts, which allow you to save more than the standard annual limits.

For 2025, the catch-up contribution limit for 401(k) plans is $7,500 on top of the regular $23,500 contribution limit.
Even better, if you’re between ages 60 and 63, new super catch-up contributions let you save an additional $11,250 annually.

Those higher limits are designed to help accelerate your savings during your peak earning years. For more information, see New for 2025: SECURE 2.0 Super Catch-up Contributions.

Roth Accounts

Roth accounts are another tool worth exploring. While contributions are made with after-tax dollars, qualified withdrawals in retirement are tax-free. This can be especially valuable if you expect tax rates to rise or think you’ll be in a higher federal income tax bracket later in life.

For some, combining Roth contributions with traditional pre-tax savings can provide flexibility and balance in retirement.

Employer Matches

If your employer offers a matching contribution to your retirement plan, consider contributing enough to take full advantage. Some see these matches as "free money" that can significantly increase your overall savings.

IRA Contributions: There’s Still Time

For those with an IRA, remember that you have until the tax filing deadline (typically April 15) to make contributions for the prior year. This gives you extra time to maximize your tax-advantaged savings. (Keep IRA contribution limits in mind.)

Bottom line

Reviewing and updating your retirement strategy allows you to potentially take advantage of these and other opportunities and set yourself up for a more secure future. If you’re unsure where to start, consider contacting a financial advisor or tax professional who can help tailor these strategies to fit your specific goals.

- Kelley

Economic Uncertainty: Tariffs, Recession Fears, and Tax Cut Debates

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Let's dive into some recent news...

First Up: Tariffs

President Trump recently reignited trade tensions with Canada by threatening to impose retaliatory tariffs of up to 250% on Canadian dairy products.

During an Oval Office briefing late last week, Trump accused Canada of exploiting American farmers through its high tariffs on U.S. dairy exports, which he described as “unjust.” Those tariffs, however, only apply after the U.S. exceeds specific export quotas under the USMCA agreement — limits United States producers have yet to reach.

Canadian officials pushed back, calling Trump’s claims “false” and labeling the proposed tariffs “entirely unwarranted.”

Recession in 2025?

Meanwhile, concerns about the broader economic outlook are growing. In a Fox News Sunday interview, Trump declined to rule out the possibility of a recession in 2025.

“I hate to predict things like that, Trump said, adding, “There is a period of transition because what we’re doing is very big. We’re bringing wealth back to America. That’s a big thing… it takes a little time.”

His comments come as economic indicators show signs of strain: unemployment ticked up to 4.1% last month, and consumer confidence saw a steep drop.

Tax Negotiations

All of this is unfolding as Congress dives into contentious tax negotiations. GOP lawmakers want to extend key 2017 Tax Cuts and Jobs Act provisions while balancing budget constraints.

According to Politico, some House Republicans are resisting efforts to eliminate clean energy tax credits introduced under the Inflation Reduction Act. These credits have driven significant investment in GOP districts, creating an interesting divide within the party as it looks to fund sweeping tax cuts.

With trade disputes escalating and economic uncertainty mounting, the intersection of tariffs and tax policy will likely dominate political and economic discourse in the coming weeks. Stay tuned.

Retiring Abroad? Panama Offers a Tax-Friendly Option

As the world becomes increasingly interconnected, more Americans are embracing the idea of retiring abroad, drawn by the promise of new experiences, lower costs of living, and favorable tax environments.

As our tax writer Kate Schubel has reported, Panama stands out as a top destination for retirees due to its absence of inheritance tax, making it an attractive choice for those looking to preserve assets for their heirs.

Navigating international taxes is crucial, particularly regarding inheritance tax, which can significantly impact the legacy you leave behind. (Image credit: Getty Images)

Panama retirement benefits

Panama offers retirees numerous benefits, including a retirement visa that provides various discounts and a warm climate with few hurricanes.
Additionally, only U.S. taxes are owed on foreign-earned income and U.S. retirement benefits, avoiding double taxation on income from outside Panama.
The country also boasts a lower cost of living, diverse landscapes, and high-quality healthcare, making it a popular choice for expats.

While Panama is a popular option, other countries also offer favorable tax environments for retirees. Consult an international tax professional to navigate the complexities of international tax to help you choose the best destination for your circumstances.

Learn More: Three Countries to Retire With No Inheritance Tax

- Kelley

Trump Tesla News Amid EV Credit Debate

President Trump called Elon Musk a "truly great American" as he pledged to buy a Tesla soon. (Image credit: Getty Images)

Welcome back. We’re starting with news: President Trump wants to buy a Tesla.

Trump’s Monday evening post on his social media platform Truth Social declared, "I’m going to buy a brand new Tesla tomorrow morning as a show of confidence and support for Elon Musk, a truly great American."

The statement comes as Musk, a billionaire leading the Trump administration’s Department of Government Efficiency (DOGE), faces scrutiny for his dual roles in government and private industry.

DOGE's impact on the IRS has been significant, with at least 6,700 IRS positions slated for elimination and perhaps up to 45,000 positions (about half the IRS’ workforce) potentially being cut, according to some reports. Some of those cuts and a hiring freeze during tax season have raised concerns about the IRS's ability to maintain service quality and enforcement capabilities. There have also been ongoing concerns about DOGE access to sensitive Treasury and IRS data systems.

Update: On March 11, 2025, President Donald Trump hosted Elon Musk on the South Lawn of the White House, showcasing several Tesla models. Trump expressed his support for Tesla, praising Musk as a "great patriot" and announcing his intention to purchase one of the vehicles.

Meanwhile, the federal electric vehicle tax credit remains a contentious issue on Capitol Hill. Despite Trump's historical opposition to clean energy incentives in the Inflation Reduction Act, Politico first reported that some GOP lawmakers are now advocating to preserve them.

As Tesla navigates challenges (e.g., declining sales, plummeting stock prices, margin pressure, increased competition, etc.) and its CEO confronts some of the blowback from “chainsaw” DOGE government cuts, the implications of these developments will continue to unfold in the coming months.

Note: In the meantime, if you took possession of an EV in 2024 and can claim the credit, the tax break is available for the 2024 tax year. For more information, see How the EV Tax Credit Works and Is the EV Tax Credit Going Away?

Tariffs vs. Tax Cuts: Which is Most Important Now?

As the U.S. economy faces uncertainty, an interesting voice is pushing back against President Trump's tariffs.

Stephen Moore, a former economic adviser to Trump and co-author of "Trumponomics," said on Fox News Sunday that the administration’s tariff strategy isn’t the economic boost the country needs right now.

Moore's concerns stem from recent economic indicators, including a disappointing jobs report and declining consumer confidence. He argues that the economy is "wobbly" and needs stimulation rather than the drag tariffs can create.

Instead of tariffs, Moore advocates for prioritizing expanding the Trump tax cuts from 2017 (the TCJA). Moore called for Congress to pass these tax cuts by Memorial Day to deliver the economic boost he sees as essential.

Meanwhile, Trump doubled down on tariffs on Canadian steel and aluminum imports, posting Tuesday: “I have instructed my Secretary of Commerce to add an ADDITIONAL 25% Tariff, to 50% on all STEEL and ALUMINUM COMING INTO THE UNITED STATES FROM CANDA, ONE OF THE HIGHEST TARIFFING NATIONS ANYWHERE IN THE WORD.”

As the administration grapples with these strategies, the impact on U.S. consumers and businesses hangs in the balance. With the 2025 tax debate ongoing and economic uncertainties looming, the coming months will be crucial in determining the direction of U.S. monetary policy and its impact on you.

More to come.

- Kelley

The 2025 Standard Deduction: What You Need to Know

Most people take the standard deduction on their federal income tax returns. (Image credit: Getty Images)

As we move through 2025, taxpayers should take note of the updated standard deduction amounts, which have increased slightly from 2024 due to inflation adjustments. These changes are important for those filing their 2025 tax returns in early 2026 and those still working on their 2024 returns.

For the 2025 tax year, the standard deduction amounts are:

$15,000 for single filers and married individuals filing separately (up $400 from 2024)
$30,000 for married couples filing jointly and qualifying widow(er)s (up $800)
$22,500 for heads of household (up $600)

Additionally, taxpayers aged 65 or older or those blind can claim an extra standard deduction of $2,000 per qualifying individual in 2025.

For those still finalizing their 2024 taxes, the standard deduction amounts were slightly lower: $14,600 for single filers, $29,200 for joint filers, and $21,900 for heads of household.

The decision to take the standard deduction or itemize is critical. Most taxpayers opt for the standard deduction due to its simplicity and the higher thresholds introduced by the Tax Cuts and Jobs Act (TCJA). However, with the TCJA set to expire at the end of 2025, that could change.

For more information, see: What’s the Standard Deduction for 2024 and 2025.

- Kelley

Trump Won’t Double Tariffs on Canadian Metals

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President Donald Trump no longer plans to raise tariffs on Canadian steel and aluminum imports to 50% on Wednesday, according to White House trade advisor Peter Navarro.

Trump announced plans to double import tariffs on Canadian metals starting March 12, 2025, in response to Ontario’s decision to impose a 25% surcharge on electricity exports to Michigan, New York, and Minnesota, with a 25% tariff on Canadian electricity. The action would have increased utility bills for U.S. consumers by $100 a month, according to Canadian government officials.

After much back-and-forth and another bad day for the U.S. stock market, Ontario Premier Doug Ford agreed to suspend the 25% tariff threat. Meanwhile, the Trump administration is set to levy 25% tariffs on all steel and aluminum imports to the U.S., including those from Canada, at midnight Wednesday.

Trump’s 25% tariffs on aluminum and steel imports and your finances:

As reported by Kiplinger, Trump’s sweeping tariffs on metals will impact the costs of everyday goods, from certain canned foods in the grocery aisle to cars and homebuilding. For instance, Coca-Cola announced that it will likely increase its beverage production in plastic bottles in response to the tariff hikes. The company may also source aluminum domestically, but that will likewise increase consumer prices.

For more information: Trump Tariffs on Metals to Slam Soda and Housing Prices in U.S.

Avoid Common Tax Return Errors When You File

As millions of taxpayers prepare to file their taxes, the IRS flagged five common return errors that may result in unwanted delays or a rejected return.

These mistakes may be as small as a misspelled name or an omitted number on the bank account you registered for your direct deposit. Still, these subtle inaccuracies can be easily avoided by double-checking your documents, getting help from a reputable tax preparer, or using a tax software service that does the math for you and points out missing information as you complete your return.

That being said, here are some mistakes you don’t want to make on your tax return this year.

1. Missing or inaccurate Social Security Number: Getting your SSN or individual taxpayer identification number wrong can result in a rejected return.

2. Filing with an expired ITIN: If your taxpayer identification number (ITIN) is unused for three years, it will expire. Your return will not be accepted and refunds may be withheld until you renew your ITIN.

3. Typos and math mistakes: Misspelling a name, entering a bank account incorrectly, or having wrong math calculations can result in delays or the rejection of your return.

4. Incorrect filing status, dependents and more: If you file your tax return with an incorrect filing status, dependents, total income, or deductions or credits, you’ll have to file an amended return.

5. Unsigned forms: An unsigned tax return is not a valid return. The IRS will return the unsigned income tax return for you to sign and resubmit for processing. This may result in delays or at worst — a delinquency penalty.

Why are errors such a big deal? Sometimes, making a mistake on your tax return can result in unwanted delays, a rejection, or potential delinquency penalties.

As an example, math errors were a significant problem for many taxpayers claiming the Employee Retention Credit (ERC). As of October 2024, the IRS reported a backlog of 1.2 million ERC claims dating back to the pandemic. Now, as President Donald Trump works to shave down the IRS workforce -– delays may worsen.

To learn more about how to steer clear of common tax preparation errors see my latest story: Don’t Make These Five Mistakes on Your Tax Return

- Gabriella

U.S. Trade Partners Retaliate Trump’s Tariffs on Metals

As reported earlier, President Donald Trump raised tariffs on global aluminum and steel imports to 25% on Wednesday. Now, some of the United States’ biggest trade partners are retaliating.

The European Union responded with reciprocal tariffs on $28 billion of U.S. goods imported to Europe. Some items include American beef, poultry, and vegetables. The extensive 99-page list shared by Politico also mentions taxing motorcycles, footwear, and heavy-duty plant machinery.

EU officials said the strategic tariffs aim to hit products made in Republican states. For example, beef and poultry products are made in Kansas and Nebraska. Some blue states will inevitably be impacted. Vermont is the leading producer of maple syrup in the U.S., and that item is included in the list.

“We firmly believe that in a world fraught with geopolitical and economic uncertainties, it is not in our common interest to burden our economies with tariffs,” said European Commission President Ursula von der Leyen in a statement.

Canada also responded with 25% tariffs on more than $20 billion worth of U.S. goods on Wednesday as a countermeasure to Trump’s tariffs. The northern trade ally is the largest steel supplier to the U.S. Some items impacted included sports equipment and computers.

The fresh wave of duties is in addition to 25% tariffs Ottawa had imposed on $30 billion worth of U.S. goods. According to Canadian Finance Minister Dominic LeBlanc, the new tariffs will be enacted Thursday, March 13, 2025.

This news is developing.

Update: Goverment Shutdown 2025?

(Image credit: Getty Images)

You may have heard rumblings about a looming federal government shutdown due to ongoing legislative challenges. The U.S. House of Representatives recently passed a continuing resolution (CR) to fund the government, but the CR faces opposition in the U.S. Senate.

The Senate requires bipartisan support to pass legislation, which complicates the process. Democrats are reportedly hesitant to support the resolution due to certain policy provisions and significant funding concerns.

The deadline to avoid a government shutdown is March 14, and negotiations are ongoing. While there is still time for an agreement, the current situation suggests a shutdown remains a possibility unless a compromise is reached in time.

For more information about how this could impact tax season, see: What Would a Government Shutdown Do to the IRS?

- Kelley

State Tax News, Proposals, and Credits on Taxes

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Iowa lawmakers are proposing two bills that could significantly overhaul property tax relief in the state. A few of the highlights include a $25,000 homestead property tax exemption, increased veteran property tax exemption, and a property tax credit for Iowans age 70 and older who make less than 350% of the federal poverty level.
Kansas has a bill to eliminate its affordable housing tax credit, which has helped construct 4,800 homes across the state, according to the Kansas Housing Resource Corporation. The proposal left the House and is moving to the Senate for review.
Michigan is considering lowering its state income tax rate from 4.25% to 4.05%. The Republican-led bill harkens back to a one-year reduction in 2023 before financial triggers caused the rate to rise again. The bill is currently undergoing House review.
Minnesota lawmakers have proposed a bill that could eliminate the lowest income tier rate of 5.35%. This would allow the first $47,620 in income to be state tax-free for married filing joint couples ($32,570 for single filers). Minnesota has four income brackets, with the highest income tax rate at 9.85%.
New Jersey has expanded its DirectFile.nj.gov program to include 400,000 residents with retirement income. The Direct File federal program was launched to provide taxpayers a free and “direct” way to file with the IRS. However, more than 20 federal staffers, some of whom had previously worked on the IRS tax filing program, resigned last month, citing ethical concerns about the Department of Government Efficiency (DOGE) dismantling critical public services.

Additionally, Georgia surplus tax refunds could be welcomed again this year. After passing the state House vote unanimously last week, a bill proposing these one-time payouts for 2025 is moving onto the state Senate for approval. If the bill is approved and signed by Gov. Kemp, Georgia residents could expect about $1 billion in payouts.

That’s it for now! But be sure to check back soon for more tax news and updates.

Aging-in-Place Tax Ideas for Retirement

Do you plan on retiring in your current home, the so-called “aging in place" strategy?

You’re not alone. Some retirees are saying ‘no’ to rising mortgage rates and have decided to put down roots in their forever homes.

But is your home ready for retirement?

Some retirees are opting to "age-in-place," and modify their longtime homes. (Image credit: Getty Images)

Aging-in-place plans typically involve a list of upgrades for your house. Whether that’s installing non-slip floors, easier-to-read thermostats, or lower kitchen cabinets — nearly every home needs an improvement or two before becoming retirement-ready.

Luckily, a few home improvements may be tax-friendly, meaning you can deduct certain upgrades as medical expense tax deductions. However, not all renovations qualify, and you will want to look out for how home improvements could impact your capital gains tax or next property tax bill.

Interested? You can read more about it in Kiplinger’s report: Home Improvement Tax Ideas for Retirement. Also, check out our other tax articles for home ideas:

Downsize in Retirement With 2025 Tax Benefits

Should Rent Be Part of Your Retirement Plans?

Tax Credits for Energy-Efficient Home Improvements

- Kate

‘Middle-Class’ and Hate Paying Taxes? Best States

(Image credit: Getty Images)

Ever wonder which are the best states for middle-class families who hate paying taxes? Look no further.

Kiplinger reviewed each state’s median annual salary. Then, we calculated the average annual tax spent on state income taxes, property taxes, and sales tax on essential items such as groceries, diapers, and other necessities. Based on those metrics, ten states floated to the top, including some states that don’t tax income. However, there may be a couple of surprises on the list.

Also, be sure to check out Kiplinger’s other state roundup articles that may feature your state as having tax-friendly perks:

States With the Lowest Property Tax

States That Won't Tax Your Retirement Income in 2025

Ten States With the Lowest Sales Tax

- Kate

More Trump, DOGE IRS Layoffs After Tax Season?

(Image credit: Getty Images)

Good morning. We’re watching much news today as the U.S. Senate works to avert a government shutdown, and controversy continues with federal government agencies and the Trump administration’s Department of Government Efficiency (DOGE).

The latest involving the IRS is that DOGE has proposed a substantial downsizing of the IRS that would further reduce its workforce by nearly 20% by mid-May.

The proposed IRS reduction would result in the termination of an additional 6,800 employees, in addition to the nearly 7,000 probationary workers already dismissed and around 4,700 who reportedly accepted voluntary buyouts.

If implemented, these cuts would amount to a total IRS workforce reduction of almost 20% since the start of 2025. Some are concerned about the impact of such significant cuts on revenue generation and customer service.

For instance, reduced audit capacity could affect voluntary tax compliance, and the timing of these reductions, following closely after the tax filing deadline, could severely impact the agency's ability to process returns and serve taxpayers effectively.

The move could also result in billions of lost revenue because fewer agents will be available for tax enforcement involving the wealthy and large corporations.

Advocacy group Americans for Tax Fairness expressed concern in a post yesterday on X (formerly Twitter).

“Firing IRS agents will let the wealthy cheat us out of billions in taxes. Cutting a few thousand jobs will never make up for those losses. This isn’t about “saving money.” It’s about making the rich richer.”

Meanwhile, return-to-office (RTO) mandates pushed by Trump and DOGE have created confusion for the IRS. On March 12, 2025, the agency reportedly paused its RTO order for customer service employees after discovering there weren't enough desks to accommodate everyone.

This disarray comes while the agency still lacks a Senate-confirmed IRS Commissioner. Trump’s pick for the role, former Rep. Billy Long, hasn’t had a confirmation hearing, seemingly due to delays in completing his background paperwork. Concerns about his qualifications and involvement in promoting the fraud-prone Employee Retention Tax Credit program remain.

Despite this turmoil, Tax Day is still April 15 for most taxpayers. So stay with us for daily updates, tips, and news.

Yes, Taxes Are Due Soon: What to Know Now

As we're in the thick of the 2025 tax season, it's crucial to stay on top of important deadlines. Here's the latest information on when taxes are due this year.

Federal Tax Deadline
Tuesday, April 15, 2025, is Tax Day, the deadline for most taxpayers to file their federal income tax returns for the 2024 tax year.

Now is the time to gather your documents and start preparing your return if you haven't already. For more information, see: How to Prepare to File Your Taxes and Tax Changes to Know Before You File.

Where We Stand Now
As of today, Friday, March 14, 2025, we're about a month away from the filing deadline.

The IRS began accepting returns on January 27th, so if you're ready, you can file right away.
Many taxpayers have already received their refunds, with the average processing time for e-filed returns being about 21 days.

Importantly, some states have received extensions due to natural disasters. For example, the California tax deadline is extended to October 15, for parts of the state affected by wildfires, while several counties in Florida, Alabama, and other southeastern states impacted by hurricanes have until May 1, 2025. For more information, see States With IRS Tax Deadline Extensions.

"Tax Day" this year is Tuesday, April 15 for most U.S. taxpayers. (Image credit: Getty Images)

What to Do If You Can’t Make the Tax Deadline
If you don't think you'll make the April 15th deadline:

You can request an automatic extension by filing Form 4868 before April 15th.
Remember, an extension gives you until October 15, 2025, to file, but you still need to pay any taxes owed by April 15th to avoid penalties.

State Tax Deadlines and Extensions
Most states align with the federal deadline, but double-check your state's specific requirements. Also, check with your state's tax authority for specific details if you live in an area affected by recent natural disasters.

A Few More Tax Tips

E-file for faster processing and refunds
Double-check all your information to avoid common tax return errors and delays
If you owe taxes, consider IRS payment plans if you can't pay in full

- Kelley

In the News: White House Claims Tariffs Are Tax Cuts

In a March 11 briefing, White House Press Secretary Karoline Leavitt said that tariffs were tax cuts.

"Tariffs are a tax hike on foreign countries that have been ripping us off. Tariffs are a tax cut for the American people," Leavitt claimed.

That false assertion has sparked discussion among economic experts and policy analysts.

According to economic consensus, tariffs are a form of taxes. When tariffs are imposed, they typically result in increased costs for companies importing goods, which can lead to higher prices for consumers.

While tariff revenue goes to the government, many economists note that that doesn't necessarily translate to tax reductions for the general public. The impact of tariffs can vary depending on market conditions, industry specifics, and consumer behavior.

Since tariffs are a key part of President Trump’s tax and economic plans, it's important to understand the nature of tariffs and their potential effects on your wallet. For more information, see Gabriella’s coverage:

Tariffs: What They Are and Who Pays AND Trump Tariffs: Which States Will Be Hardest Hit?

- Kelley

Gift Tax Exclusion Update: Maximizing Your Giving 2025 and Beyond

Welcome back. Let's start today with gifting.

The IRS has increased the annual gift tax exclusion to $19,000 per recipient, up from $18,000 in 2024. This allows individuals to gift up to $19,000 to as many people as they wish without triggering gift tax reporting requirements. Married couples can offer tax-free gifts of up to $38,000 per recipient.

In addition, the lifetime estate and gift tax exemption has risen to $13.99 million per individual in 2025 (or $27.98 million for married couples). However, this expanded exemption is set to expire at the end of the year unless Congress acts.

The Republican-led Congress is floating several plans that could impact the lifetime estate and gift exemption. (Image credit: Getty Images)

With a Republican-controlled Congress and President Trump’s administration prioritizing tax cut policy, these high exemptions will likely either be extended or made permanent. The GOP has already introduced potential tax reform proposals, including extending key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) and repealing the federal estate tax altogether. The measures align with Republican goals of reducing taxes on wealth transfers.

However, these changes come with fiscal challenges. Extending TCJA provisions could cost trillions over the next decade, and repealing the estate tax would reduce federal revenue by an estimated $370 billion over ten years. To offset these costs, Republicans are considering significant spending cuts to programs like Medicaid and SNAP, which could disproportionately impact those with lower incomes.

The political landscape underscores the importance of strategic gift planning for high-net-worth individuals in 2025 and beyond. Consult a tax professional to navigate these and other potential changes.

- Kelley

Trump $150K No-Tax Proposal: What We Know So Far

Donald Trump has reportedly floated the idea of eliminating federal income taxes for anyone earning less than $150,000 a year.

At first glance, this proposal might seem like a huge win for the U.S. middle class, but digging deeper reveals significant economic concerns and logistical challenges. This idea would exempt most Americans — some estimates as high as 90% or more of working-age individuals — from paying federal income taxes. This could drastically reduce government revenue, which helps fund critical programs like Social Security, Medicare, infrastructure projects, etc.

Also, without a clear strategy to replace this lost income, such a proposal risks creating massive budget deficits or forcing cuts to vital public services.
Another issue is tax fairness. Those earning just above the $150,000 threshold would suddenly be responsible for a disproportionate share of taxes.
That could create a “tax cliff,” where earning slightly more results in a significantly higher tax burden and could discourage income growth and produce unintended consequences for workers and businesses.

Trump’s idea also raises questions about how the government would compensate for the shortfall. Would corporate taxes increase? Would spending cuts be made?

Trump administration officials have pointed to tariffs as a solution. However, as Kiplinger has reported, the costs of tariffs are typically passed on to consumers.

For more information, see Gabriella’s latest reporting: Trump: No Taxes If You Eearn Less Than $150K?

- Kelley

2025 Tax Season: Filings Lag as DOGE IRS Changes Loom

The IRS continues to report fewer than usual tax filings at this point in the 2025 tax season. (Image credit: Getty Images)

As we enter mid-March 2025, the IRS reports a significant downturn in tax return submissions compared to previous years. Since the January 27 start of the filing season, the number of returns processed has fallen by 4.2% compared to the same period in 2024.

The decline comes despite an average increase in refund amounts of 5.7%, suggesting that fewer taxpayers are filing early this tax season.

The slowdown might be attributable, at least in part to recent significant changes in federal government operations, particularly the controversial Department of Government Efficiency (DOGE) spearheaded by Elon Musk under the Trump administration.

As Kiplinger has reported, concerns have been voiced about DOGE personnel accessing sensitive IRS tax information and potentially disrupting IRS operations during this crucial filing period.
Further complicating matters is the ongoing reduction of the IRS workforce. The Trump administration's plan to cut approximately 20% of IRS staff by mid-May comes after thousands of layoffs.
These reductions and DOGE's interventions have created uncertainty for taxpayers and remaining IRS employees.

Additionally, the IRS continues to operate without a Senate-confirmed Commissioner, as we await hearings for Trump's IRS pick, former Congressman and auctioneer Billy Long.

As the April 15 Tax Day deadline looms, some question whether these changes will delay processing returns and issuing refunds. Some good news? As of March 7, the IRS issued $145,063 billion in tax refunds, with an average amount of $3,324.

Still, the current situation presents a unique challenge for the 2025 tax season. So stay tuned to learn more about administrative overhauls and other IRS changes that could impact you going forward.

Does Your Child Need to File a Tax Return?

In some cases, it could be beneficial for your child to file a return. (Image credit: Getty Images)

As Tax Day approaches, some parents wonder if their children need to file a tax return. The answer isn't always straightforward, but understanding the basics can help you make the right decision for your family.

For the 2024 tax year, children who earned more than $14,600 in wages or salary must file a return. However, the threshold is much lower for other types of income. If your child received $400 or more in tips or self-employment income, they must file. For unearned income, such as dividends or interest, the filing requirement kicks in at $1,300.

However, even if your child isn't required to file, it might be beneficial to do so, in some cases, for example: if they're eligible for a refund.

Remember, as a parent, you're not obligated to claim your child's income on your tax return.

Filing taxes for your child doesn't necessarily mean you cannot claim them as a dependent. Generally, as long as your child doesn't provide more than half of their own financial support and meets other IRS criteria, you typically claim them. Check with a tax professional who knows your situation to be sure.

For more information, see: Does Your Child Need to File a Tax Return This Year?

- Kelley

In the News: Could Buy-Borrow-Die Reform Help Pay for Trump Tax Cuts?

As the Republican-led Congress debates extending Trump-era tax cuts set to expire soon, at the end of 2025, a March 17 Yale Budget Lab report has sparked discussions about closing a tax loophole used by the ultra-wealthy. The "buy-borrow-die" strategy allows the rich to avoid capital gains taxes while accessing their wealth tax-free.

Here's how it works:

Buy: Wealthy individuals purchase assets that appreciate over time, like stocks or real estate.

Borrow: Instead of selling these assets and triggering taxes, they borrow against them at low interest rates.

Die: When they pass away, their heirs receive the assets with a stepped-up basis, wiping out potential capital gains taxes.

The Budget Lab estimates this creates a significant tax advantage, noting, "the rich face an average tax rate from borrowing that is about 12 percentage points less than from dumping assets."

To address this issue, the report proposes three options that could generate $102 billion to $147 billion over a decade:

Treat loans as taxable asset sales
Impose a withholding tax on loan proceeds
Levy an annual tax on loan balances

While those proposals won't fully offset the potential $4 trillion cost of extending the 2017 Trump tax cuts, they target a growing wealth inequality loophole. According to the Budget Lab, the reforms would primarily affect the top 0.1% of earners, with minimal impact on middle-class taxpayers.

As lawmakers search for ways to fund tax cut extensions without burdening average taxpayers, the "buy-borrow-die" strategy could be part of a broader conversation about tax fairness and fiscal responsibility.

Unemployment Taxes in 2025: A Review Amid Federal Layoffs

Many people are unexpectedly dealing with unemployment right now — not only in the private sector but also due to unprecedented mass layoffs in the federal government. The Trump administration’s Department of Government Efficiency (DOGE), led by Elon Musk, has been implementing extensive cuts, resulting in tens of thousands of federal employees losing their jobs.

Newsweek reported that as of February 22, 2025, approximately 62,530 federal workers were dismissed in the first two months of 2025. That reportedly represented a 41,311% increase compared to the same period last year.

The IRS has already laid off about 7,000 probationary employees and is drafting plans to further reduce its 90,000-person staff through additional layoffs, attrition, and incentivized buyouts.

In this challenging economic climate, it's important to review how unemployment benefits are taxed. Here’s some information to get you started.

The IRS considers unemployment benefits to be taxable income. (Image credit: Getty Images)

At the federal level, unemployment benefits are considered taxable income, requiring recipients to report them on their federal tax returns. However, state-level taxes vary significantly across the U.S.

As of 2025, 14 states plus the District of Columbia don’t impose state income taxes on unemployment benefits.
These include Alabama, Alaska, California, Florida, Montana, Nevada, New Hampshire, New Jersey, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, and Washington.
For the remaining states, tax rates and structures differ. Some states apply a flat tax rate, while others use progressive tax brackets.

To manage your tax liability, consider having a portion of your unemployment benefits withheld for federal taxes by completing Form W-4V (Voluntary Withholding Request). Additionally, you may need to make estimated tax payments throughout the year to avoid penalties.

Consult a financial planner or a trusted and qualified tax professional for guidance tailored to your specific situation.

For more information, see our guide: Is Unemployment Taxable in Your State? AND

Trump Wants You Out at the IRS, But You’ll Have to Wait Until May

- Kelley

IRS Acting Chief Counsel Replaced by DOGE Ally

(Image credit: Getty Images)

The disruptions at the IRS continued this week as Elon Musk’s Department of Government Efficiency (DOGE) gained more grip over the agency.

IRS acting chief counsel, William Paul, was reportedly demoted from his role at the agency and is expected to return to his prior role as deputy chief counsel technical. Paul was replaced by another IRS attorney, Andrew De Mello, who sources familiar with the matter say is supportive of DOGE.

The chief counsel serves as the top legal advisor to the IRS Commissioner, Treasury, and taxpayers. The position, along with the commissioner, is appointed by the President and confirmed by the Senate.

Although President Donald Trump has the power to appoint these positions, the reshuffling of said positions is an unusual move as the presidency changes hands. In case you missed it, former IRS Commissioner Danny Werfel stepped down from his role three years before his tenure was due to end to ensure a seamless transition for Trump’s commissioner nominee, ex-congressman and auctioneer Rep. Billy Long (R-Missouri).

These changes come as IRS leadership and employees are at odds with DOGE personnel gaining access to sensitive taxpayer databases and contracts. Some servers contain your Social Security number, address, and bank information.

At the same time, the Trump administration, via DOGE, has shaved down the IRS workforce by thousands over the last month. It’s reported that DOGE expects to cut down the IRS headcount by nearly 20% by May 15.

That means 6,800 federal employees would be terminated, adding to 11,400 who have been laid off or accepted the controversial Trump buyout offer. For more information on how this can impact you as a taxpayer, see our coverage.

IRS Puts Fired Probationary Employees on Paid Leave

The IRS laid off close to 7,000 probationary employees on February 20, and now the agency is reinstating and placing those workers on administrative leave until further notice.

The mass layoffs were part of the Trump administration’s efforts to downsize the federal workforce, which include a buyout offer that nearly 5,000 IRS employees have reportedly accepted. Former IRS employees fired during their probationary periods received an email this week, telling them they would be placed on paid administrative leave.

“While you are being reinstated to federal service, you are also being placed on administrative leave. You should not report to duty or perform any work until receiving further guidance,” said the email addressed to impacted employees.

According to court documents, the government was ordered to rehire 24,000 workers across 18 agencies. The IRS workers account for 30% of that total. Workers placed on administrative leave will receive their pay and benefits, including health insurance, dental coverage, vision, and life insurance.

More layoffs could be on the horizon. The Trump administration is reportedly planning another round of layoffs at the IRS which could impact 20% of workers by May 13. That means 6,800 employees would be laid off, adding to about 6,700 firings (currently being placed on administrative leave), and 4,700 accepted buyouts.

These dramatic changes can impact your experience as a taxpayer, so stay tuned to updates as we cover what’s going on with the IRS this tax season.

In case you missed it: DOGE Gains More Grip on IRS Amid Leadership Reshuffle

- Gabriella

IRS Refund: How Much Will You Get?

(Image credit: Getty Images)

Roughly a month ago, taxpayers were getting an average refund worth $2,252. That amount was down nearly $1,000 compared to a year ago.

Those figures, however, did not reflect tax returns claiming popular family tax credits like the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC). The IRS began issuing refunds for those tax breaks toward the end of February, with related funds available on taxpayer bank accounts or debit cards by March 3, if they chose direct deposit.

That being said, the average refund amount was $3,379 for the week ending March 7, based on over 42 million delivered direct deposit refunds. That’s up from $3,209 average refund amount from a year ago. Overall, the IRS has processed over 60 million tax returns this tax season.

As reported by Kiplinger, tax refunds may be slightly larger this year due to inflation-related changes to the tax code. This includes tax bracket adjustments for inflation that can impact the amount of tax credits and deductions, who is eligible for them and a larger standard deduction.

If you'd like to track the status of your tax refund, check the IRS 'Where's My Refund' tool.

For more information on why some taxpayers may see a slightly larger tax refund, see our story on IRS Tax Refunds.

- Gabriella

State Tax News, Bills, and Grocery Credits

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Idaho Gov. Brad Little signed legislation expanding the state’s grocery tax credit to $155 per person, up from $120 for most residents. Idahoans may use the grocery tax credit to offset expenses in one of the few states that still tax groceries.
Mississippi House lawmakers are seeking to end the state’s income taxes and reduce the grocery tax rate. Groceries in the Hospitality State are currently taxed at 7%, which would be reduced to 5% if the new plan is signed into law. The House proposal could also reduce the 4% income tax rate annually until Mississippi becomes one of the states with no income tax. However, both the state House and Senate have a slew of tax proposals in play, with various tax cuts and increases, and some proposed measures might be dropped.
Missouri House members just passed a bill that would lower the state’s income tax to a flat rate of 4.7% and could allow for future reductions until the rate reaches 3.7%. Currently, the Show-Me State’s income tax rates range from 2% to 4.8%. The flat income tax proposal moves onto the state Senate next.
Tennessee doesn’t impose a statewide property tax, but that’s not stopping the state’s Senate from proposing a constitutional amendment to ban future state-issued property taxes. The Volunteer State has some of the lowest property tax rates in the nation, however, amounts vary by county.

New this week: You may be tracking taxes on tips at the federal level, but could you still pay state tax on tips? Whether your state will eliminate tax on tips or keep taxing them could depend on where you live. For example, Arizona has proposed a bill that would make tips not taxable at the state level, while Connecticut lawmakers propose enacting an income tax cap to deter abuse from high-income earners.

That’s it for now! But be sure to check back soon for more tax news and updates.

Bored in Retirement? There’s a Tax Solution for That (and it’s Fun)

After the first few days, weeks, or months, maybe retirement had you questioning: What should I do every day? Or, where do I go to have fun?

Without work emails or kids’ busy schedules, you may find yourself with a lot of free time. And all the while, inflation causes your tax bill to climb higher and higher.

Fortunately, there’s a tax solution for that: And no, we’re not talking about doing your taxes (well, that is one idea).

But there are five tax-friendly fun retirement activities you could try. For instance, a significant portion of entrepreneurs are over the age of 50, so why not consider starting that business you’ve always wanted?

On the other hand, you may want to pick up an additional hobby, start volunteering with an organization, or learn a new skill. These projects could help you save on taxes.

For more information, check out Kiplinger’s tax reports on fun retirement activities:

Fun Things to Do in Retirement With Added Tax Benefits

Three Creative Ways to Lower Your Retirement Taxes

‘Pickleball Tax’? It’s More Likely Than You Think

- Kate

Hobby Income vs. Business Income: Know the Difference

(Image credit: Getty Images)

You may already know that hobby income is taxable. This can include special interest projects like woodworking, quilting, photography, or crocheting. The IRS requires you to report all income you receive from a revenue stream. But determining whether it’s a hobby vs. a business makes a big difference.

Hobbies are not taxed the same as other income types. For example, you cannot deduct hobby expenses on your federal income tax return.

But what starts as a hobby could quickly become a business, so it’s important to reassess your hobbies annually for tax purposes. For instance, if you expect to make a profit this year or next, the IRS might consider the activity a business and not a hobby, and tax it accordingly.

For more information on hobby income vs. business income, check out Kiplinger’s other reports:

How is Hobby Income Taxed?

1099-K Reporting Change for the 2025 Tax Season

Home Office Tax Deduction: Work-from-Home Write-Offs

Seven Overlooked Tax Deductions for the Self-Employed

- Kate

News: Trump’s Education Department Move Sparks Tax Credit Fears

Good morning, and welcome back. Let's start the day with some news that might not at first seem tax-related.

President Trump's recent executive order to dismantle the U.S. Department of Education has sparked concerns about potential impacts on education policy. While the order is designed to transfer educational responsibilities to state and local governments (state and local government already manage most education decisions), it has raised questions about the future of federal education support for students in need as well as valuable education tax benefits.

For instance, Republican lawmakers in Congress are reportedly considering modifications to or elimination of key tax breaks, including the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). These changes, those lawmakers say, could save the government an estimated $85 billion over 10 years.

Another proposal under consideration is the taxation of scholarships and fellowships, which are currently tax-exempt when used for qualified educational expenses. This change could significantly affect college affordability for many families.

President Trump has taken steps to dismantle the U.S. Department of Education. (Image credit: Getty Images)

The potential closure of the Education Department also raises concerns about the administration of federal student loan programs and the enforcement of disability rights in education. While borrowers would still be required to repay their loans, the transition could lead to uncertainty in loan servicing and repayment plans.

As the situation unfolds, educators, parents, and students are left with many unanswered questions about the future of federal education policy, financial support, and related tax policies.

However, it's important to note that Trump cannot order the elimination of the department, since that requires Congressional action. The administration's goal is to dismantle the agency in a piece-by-piece approach.

For more information, see: What Happens With Scholarships, Tax Credits if Trump Closes the Dept. of Education?

- Kelley

Women’s March Madness and Other Less-Exciting Brackets

There are all kinds of brackets to think about in March. (Image credit: Getty Images)

March Madness is in full swing, and the women's tournament is delivering. Columbia and William & Mary made history with their first-ever NCAA Tournament wins, advancing to the first round. March 21 matchups include Michigan vs. Iowa and Kentucky vs. Liberty, with South Carolina and UCLA taking the court later.

But there's another less thrilling set of brackets capturing attention this March – tax brackets. While not as interesting for most as buzzer-beaters, they're crucial for your financial game plan.

For 2025, the IRS has adjusted the income tax brackets for each marginal tax rate to account for inflation. For example, single filers now enter the 22% bracket at $48,476, up from previous years. These changes can impact your take-home pay and tax strategy.

So, while you're cheering on your favorite basketball team, take a moment to check out your federal tax bracket.

Learn More: New 2025 Tax Brackets Set and Federal Tax Brackets and Income Tax Rates for 2024 and 2025.

ICYMI: The Direct File IRS Program: What to Know This Tax Season

IRS Direct File offers eligible taxpayers a free way to file federal tax returns directly with the federal tax agency. As we’ve reported, It is currently available for this 2025 tax season in 25 states.

This service has expanded since its 2024 pilot phase and appears to be well-received by users so far. The IRS expected 30 million taxpayers to be eligible to use the service this year.

However, the program's future beyond this tax season is uncertain. While U.S. Treasury Secretary Bessent has committed to maintaining Direct File through April 15, 2025, there are no guarantees for subsequent years. The Trump administration and some Republican lawmakers have expressed reservations about the program's long-term sustainability and cost-effectiveness.

Several factors suggest Direct File may face challenges ahead:

The IRS has paused certain technology upgrades, including a review of Direct File.
Discussions about potential reductions in the IRS workforce could impact the program.
Some in Congress have called for ending Direct File, citing concerns about government overreach.

For this filing season, at least, Direct File remains an option for eligible filers. However, its continuation beyond 2025 will likely depend on decisions made by the administration and Congress in the coming months.

To learn more, see Kate’s coverage: How IRS Direct File Works in 2025

- Kelley

Good morning, and welcome back. Let's start the day with some news that has potential privacy implications.

The IRS reportedly is nearing an agreement with Immigration and Customs Enforcement (ICE) to share taxpayer data for immigration enforcement purposes. This proposed deal would allow ICE to submit names and addresses of suspected undocumented immigrants for verification against IRS records.

Historically, the IRS has maintained strict confidentiality regarding taxpayer information, but this shift aligns with the Trump administration's intensified deportation efforts.

Some privacy advocates have raised concerns, arguing that the actions could violate federal laws protecting taxpayer confidentiality.

The IRS has encouraged undocumented immigrants to file taxes using Individual Taxpayer Identification Numbers (ITINs), which require them to disclose sensitive information, including addresses, employers, and income details.

Despite their exclusion from most public benefits, undocumented immigrants contribute significantly to the U.S. tax system. Data show In 2022 alone, undocumented taxpayers paid $96.7 billion in federal, state, and local taxes, including $25.7 billion in Social Security taxes and $6.4 billion in Medicare taxes.

If finalized, the agreement could redefine how IRS tax data is used in immigration enforcement and likely spur lawsuits regarding tax privacy.

- Kelley

Time is Running Out: File Soon for $1 Billion in Unclaimed Tax Refunds

You might have an IRS tax refund waiting for you from 2021. (Image credit: Getty Images)

As the clock ticks down to Tax Day, April 15, 2025, the IRS is sounding the alarm on $1 billion in unclaimed tax refunds from 2021. That money belongs to over 1.1 million taxpayers across the U.S. who didn’t file a tax return for 2021.

The IRS says the median refund amount is $781, but it could be higher for those eligible for credits like the Earned Income Tax Credit (EITC).

Why are so many refunds unclaimed?

Many workers with lower incomes, students, and part-time employees may not have realized they were required to file or thought they wouldn't receive a refund. Others simply missed the deadline but can still claim the refund if they file by the deadline and have filed returns for 2022 and 2023.

After April 15, 2025, these unclaimed refunds become the property of the U.S. Treasury.

To learn more, see: IRS Says File by April 15 for $1B in Unclaimed Tax Refunds

The Home Office Deduction for 2025: What to Know

If you're self-employed and work from home, the home office tax deduction could be a valuable opportunity to reduce your tax bill. While many remote employees can't claim this deduction, independent contractors and business owners may still qualify in 2025.

To be eligible, one key requirement is that you must use the claimed office portion of your home regularly and exclusively for business. This could be a dedicated room or even a section of a room, as long as it's used solely for work purposes.

It's important to know the rules for the home office tax deduction. (Image credit: Getty Images)

When it comes to calculating your deduction, you generally have two options:

The simplified method: Deduct $5 per square foot of your office space up to 300 square feet (maximum $1,500).

The regular method: Calculate the percentage of your home used for business and apply that to your actual expenses, including mortgage interest, utilities, and repairs.

While some find the simplified method easier, the regular method can sometimes result in a larger deduction. If you’re uncertain about which method is right for you or whether you can claim the credit, consult a qualified and trusted tax professional.

But don't let IRS audit fear deter you from claiming this legitimate deduction. If you qualify, it can potentially reduce your taxable income and help you keep more of your hard-earned money.

For more information, see our Guide to the Home Office Tax Deduction.

- Kelley

Tax Reform Update: U.S. House vs. Senate GOP Tax Plans Differ

Good morning and welcome back. Let's start today with some tax reform news.

As you may have heard, congressional Republicans are working to advance President Trump’s tax agenda; however, key differences between the U.S. House of Representatives and the U.S. Senate, both of which are Republican-led, could create hurdles.

With key provisions of the 2017 Tax Cuts and Jobs Act (TCJA) set to expire at the end of 2025, both chambers are racing to finalize their tax plans.

The House has passed a sweeping budget resolution that includes up to $4.5 trillion in tax cuts over the next decade.

It proposes making Trump’s 2017 tax cuts permanent, eliminating taxes on tips and overtime pay, and introducing new deductions for auto loans on American-made cars.
The House plan also addresses border security and raises the debt ceiling by $4 trillion, aiming to consolidate multiple priorities into one comprehensive bill.

In contrast, some Senate Republicans seem to favor a two-bill strategy.

Their budget resolution focuses on immigration, defense, and energy but does not currently include provisions for tax cuts or address the debt ceiling.
The Senate plan is far smaller in scope, with a $340 billion price tag compared to the House’s $4.8 trillion proposal.

Reconciling these differences will be critical for Republicans as they work to implement Trump’s tax agenda. So, stay tuned.

Also, for more information, see The Fine Print: What Trump Isn't Telling You About His 2025 Tax Plans.

- Kelley

In the News: IRS to See Significant Decline in Tax Revenue

A perfect storm of factors could lead to a significant loss of tax revenue. (Image credit: Getty Images)

The IRS is preparing for a 10% drop in tax revenue this year, amounting to over $500 billion, as reported by multiple sources. This shortfall, anticipated by the April 15 "Tax Day" filing deadline, is being attributed by some to changes in taxpayer behavior and staffing cuts implemented by the Trump administration so far.

The decline reflects a growing trend of individuals and businesses either failing to file taxes or attempting to evade payment altogether. Some taxpayers may be betting that audits are less likely due to the widespread layoffs at the IRS.

The Trump administration’s Department of Government Efficiency (DOGE) targeted nearly 20% of the IRS workforce for termination, with over 11,000 employees already dismissed. Those cuts have affected taxpayer services and enforcement divisions, likely limiting the agency's ability to investigate high-value corporations and wealthy individuals.

Other taxpayers may be concerned about DOGE and data privacy and may therefore be hesitant to file this tax season.

The projected revenue loss is particularly notable when compared to last year’s $5.1 trillion in tax collections and could have serious implications for federal budgets.

Some experts warn that diminished IRS capacity risks undermining compliance and creating long-term inefficiencies in tax collection. More to come.

Tax Breaks That Get Better With Age

Several additional tax benefits kick in as you age. (Image credit: Getty Images)

As we journey through life, certain financial benefits become more accessible and valuable. These tax perks can potentially enhance your retirement planning and tax strategies. Consider these examples:

Catch-Up Contributions: Once you reach 50, you can start making additional contributions to your retirement accounts.

Retirement Withdrawal Flexibility: At a certain age, you gain more flexibility in accessing your retirement funds without incurring penalties.

Enhanced Deductions and Free Tax Help: As you age, you may be eligible for additional deductions that can reduce your taxable income. Plus, resources are available to help you navigate complex tax issues, helping ensure you maximize these benefits.

Charitable Giving and More: You can make tax-free charitable donations directly from your IRA from a certain age, which can also satisfy Required Minimum Distributions (RMDs).

Read our full article to learn more about these and other tax breaks, as well as how they can benefit you. Six Tax Breaks that Get Better With Age.

- Kelley

IRS Layoffs Sway Taxpayers to Put Off Filing Returns

(Image credit: Getty Images)

Tax Day is quickly approaching, and millions of taxpayers still haven’t filed their tax returns yet.

According to the latest filing data provided by the IRS, just under 2% fewer tax returns were filed for the week ending March 14 compared to a year ago. Similarly, nearly 1.5% fewer returns have been processed.

IRS.gov website usage is dramatically down, registering a drop of 44.6% compared to a year ago.

One potential reason for the decrease in returns could be the Trump administration’s efforts to downsize the IRS. So far, Elon Musk’s Department of Government Efficiency (DOGE) has pushed nearly 5,000 IRS employees to take a controversial buyout offer and reportedly plans to cut 20% of staff by mid-May.

The agency also laid off nearly 7,000 probationary employees on February 20, but these workers were recently placed on paid administrative leave until further notice. Multiple reports show that DOGE may be considering cutting down the IRS headcount by half, or about 50,000.

The disruptions at the IRS have aggravated existing internal challenges at the agency, particularly with regard to delays and compliance. For some taxpayers, the unpredictable tax season has caused them to hold off their filing plans.

A survey from Credit Karma found that 57% of respondents said they were aware of the layoffs at the IRS, driving 47% of taxpayers to say they were not confident in the IRS agency’s ability to enforce tax compliance.

The lack of confidence in the IRS has sparked fears of delays for many taxpayers. Among those who already filed but are still waiting on a refund, 46% say they are worried their refund will be delayed due to layoffs. At the same time, 43% of those who have not yet filed share the same concerns.

The worries cut across different age groups but have sparked different reactions. About a quarter (24%) of taxpayers say they feel less concerned about making mistakes on their tax returns. Similarly, one in six (17%) of millennials admitted that they are considering not filing taxes due to the reduced chances of facing an audit.

In case you missed it: Among the nearly 7,000 IRS probationary employees laid off last month, most belonged to compliance departments responsible for audits.

The tax deadline for most taxpayers is April 15, and the IRS expects more than 140 million individual tax returns to be filed by that date. To check the status of your tax refund, see our story ‘Where’s My Refund’ to track its progress or potential delays.

Trump’s Downsizing of the IRS is Causing Problems

This morning, we discussed how IRS layoffs are causing some taxpayers to delay filing their tax returns, as concerns spike over potential delays and errors.

Their concerns are within reason. Kiplinger spoke with several CPAs and tax experts across the country who say they are noticing unusual delays this tax season. For one, it’s getting harder to reach an IRS agent on the phone, putting their clients’ tax returns and problems inevitably on hold.

“We have already seen with several of our clients’ cases our communications — voicemails and taxes — with their revenue officers becoming a black hole,” Logan Allec, CPA and founder of Choice Tax Relief, told Kiplinger. “Although we don’t know for sure, we suspect that this means that these revenue officers are no longer with the IRS, and we have to wait for a new one — from the already reduced pool of revenue officers to be assigned.”

Other industry professionals cited that the lack of staff would cause slow tax processing and refunds on complicated returns, which would have a “knock-on” effect of spiking the annual budget deficit.

A separate study from the Yale Budget Lab revealed that if the IRS shrinks by 50% — equal to a workforce reduction of about 50,000 — the agency would face a $395 billion ($350 billion net) forgone revenue over 10 years. If the dramatic staffing decrease leads to an increase in taxpayer noncompliance, revenue losses could rise as high as $2.4 trillion in a decade.

We asked our sources how the government would handle the budget deficit, and they speculate that to make up for lost revenue from experienced auditors, the agency would be forced to target low-hanging fruit — or easier casework. These include taxpayers on repayment plans or individuals behind on their taxes.

For more, see my latest story: IRS Layoffs Spark Delays, Doubt This Tax Season

- Gabriella

Tax Update: Extended Deadline for West Virginia Taxpayers

(Image credit: Getty Images)

The IRS announced that individuals and businesses impacted by severe storms that began on Feb. 15, 2025, in West Virginia are eligible for tax relief and may file taxes after the April 15 deadline.

These taxpayers have until November 3, 2025, to file their individual and business tax returns or make payments to the agency. The IRS has also extended tax deadlines in several states due to severe storms, fires, hurricanes, or other federally declared natural disasters.

As reported by Kiplinger, the IRS frequently adds new states to its extended deadline list. So, if you don’t see your state below, you can verify if you are eligible on the IRS official disaster relief website.

As an example, some states that have extra time to file their federal tax return include:

1. Individuals and businesses impacted by California wildfires;

2. Taxpayers impacted by Hurricane Milton in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia;

3. Kentucky taxpayers impacted by severe weather events that began on Feb. 14, 2025, and more.

As a note, taxpayers impacted by federally declared natural disasters must recover tax records as soon as possible to facilitate the claims process. Tax records like your federal and state tax return can serve as proof of income, property ownership, and expenses that may be subject to federal disaster-related tax deductions or government relief.

If you haven’t been impacted by a severe storm but still need more time to file your tax return or pay the IRS, you also have options.

For more information: States With 2025 IRS Tax Deadline Extensions. Don’t miss this related story: The Truth About Hurricane Relief, FEMA, and Your Taxes.

- Gabriella

Trump Tariff News: 25% on All Car Imports

President Donald Trump just announced plans to impose 25% tariffs on imported automobiles and parts. The announcement during a press conference at the White House is seen as a significant escalation in ongoing global trade tensions.

Trump claims these new tariffs will boost American manufacturing and bring car production back to the United States. However, industry experts warn that the move could disrupt supply chains, increase consumer costs, and potentially harm the U.S. economy.

The tariffs are set to take effect on April 2, 2025, as part of Trump's broader "liberation day" trade policy. Vehicles manufactured entirely in the U.S. and those from Canada and Mexico that comply with USMCA rules will reportedly be partially exempt.

We’ll provide more details as we get them.

- Kelley

Mississippi Tax Elimination and Other News on State Taxes

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

The Alabama House legislature passed a bill calling for state sales tax exemptions on diapers, baby formula, and other household essentials. While the Cotton State’s 4% sales tax rate isn’t unusually high, total taxpayer savings could be $13 million annually if the bill is signed into law, according to Al.com. Next, the proposal goes to the state Senate for consideration.
California has the highest gas tax rate in the states, at 69.82 cents per gallon. However, the Department of Transportation (DoT) is exploring using a mileage-based fee instead due to declining gas tax revenues and rising electric vehicle usage. The “California Road Charge” program would tax all motorists in the state to pay per mile. The DoT tested this program last year by taxing participants at a fixed rate of three cents per mile or an individualized rate per mile. The State Department is expected to report the results of the pilot later in 2025.
Kansas Rep. Blake Carpenter (R-Derby) has proposed eliminating state income and property taxes. The proposal would cut sales tax exemptions via a state board. Revenue from these eliminations would go into a “Freedom From Taxes Fund,” which would theoretically garner enough interest income over time to offset the taxes collected. Voters might even be able to vote on House Concurrent Resolution 5014 on the November 2026 ballot.

Additionally, the Mississippi legislature has been eventful. For months, the state House has proposed a quick elimination of Mississippi’s income tax, while the state’s Senate favored a much slower approach — longer than a decade. But after receiving the Senate’s latest amendment to HB 1, the House passed the bill to Gov. Reeves.

The problem? Well, the economic trigger for the income tax cut was supposed to be 85% of state revenue growth. However, the state Senate accidentally drafted “.85%.”

This made the Senate’s plan to eliminate income tax about as fast as the House’s previous proposals. Gov. Reeves has said the passage of HB 1 is a “historic moment for our state,” leading some to believe he will sign the “typo bill” into law. However, the House has stated its willingness to renegotiate the trigger’s typos in a separate proposal with the Senate.

That’s it for now! But be sure to check back soon for more tax news and updates.

Do You Live in a High Income Tax State for Retirees?

Income taxes in these states could make retirement expensive for some retirees. (Image credit: Getty Images)

Perhaps the first thing you thought about in retirement was pursuing a passion or exploring your family genealogy.

But what about income taxes?

Whether your state enacts high or low-income tax rates could be a factor when deciding where to retire, especially as you adjust to a fixed-income lifestyle. Income types like Social Security may be taxed at a higher rate in some areas than others, while a few states may partially (or fully) exclude pension income.

For instance, Vermont residents pay one of the highest income tax rates in the U.S. and may also be taxed on Social Security benefits. However, New Jersey taxpayers can be partially tax-exempt on private and public pension revenue streams if they meet income eligibility requirements.

For more information about high-income taxes in retirement, and to see where your state stacks up, check out Kiplinger’s reports:

States with the Highest Income Tax Rates for Retirees

States That Tax Social Security Benefits in 2025

Worst States to Retire if You Hate Paying Taxes

- Kate

Be Alert to AI Tax Scams This Filing Season

Individual taxpayers can lose thousands to scams during filing season. And according to a recent McAfee survey, those scammers are getting smarter.

Over half of adults surveyed say some scam methods are more sophisticated than before, with 87% worried that artificial intelligence (AI) is making scams difficult to spot. Scammers use AI to clone voices, impersonate tax preparation services, and generate fake websites to trick taxpayers out of their confidential information.

Remember: Don’t respond to an email, text, or any other kind of “unexpected” communication from the IRS demanding immediate payment. If in doubt, call a valid phone number directly from the IRS website to confirm the scam. Also, be sure to take your time. If an “urgent” message is preying on your busy schedule, don’t click on any links or make a step toward paying a “bill” until you have time to consider all the facts.

For more information on AI tax scams and other scammer reports, check out Kiplinger’s articles:

AI Tax Scams Target Middle and Older Adults: What to Know

IRS Back Taxes Scam Call Steals Millions

Retirees Face Significant Tax Bills Due to Fraud

IRS Warning: Beware of Smishing and 'Helper' Tax Scams

- Kate

GOP Eyes Cuts to Municipal Bond Tax Breaks Amid Tax Reform Push

Good morning and welcome back. Let's start the day talking about tax reform.

As Congress races to finalize tax reform plans before key provisions of the Tax Cuts and Jobs Act (TCJA) expire at the end of 2025, Republican lawmakers are considering significant changes to municipal bond interest tax exemptions. This proposal could reshape the $4 trillion municipal bond market, which has long been a cornerstone of U.S. public finance.

Currently, interest earned on municipal bonds is exempt from federal income taxes, saving investors an estimated $32 to $42 billion annually. These bonds are popular among high-income households due to their tax benefits, but GOP leaders argue that eliminating or capping this exemption could help offset the $4.5 trillion cost of extending TCJA provisions over the next decade.

Republican lawmakers could change the muni bond tax exemption. (Image credit: Getty Images)

Stephen Moore, a former economic adviser to Donald Trump, has supported this idea, suggesting it aligns with Republican goals of broadening the tax base while targeting wealthier investors who benefit most from the exemption. Other proposals include phasing out the exemption gradually or limiting it to specific types of bonds, like private activity bonds.

While no legislation has been introduced yet, the debate over municipal bond tax breaks highlights broader tensions in striking a balance between tax cuts and revenue generation.

Investors should monitor developments closely as Congress navigates these fiscal challenges.

For more, see: GOP May Tax Muni Bond Interest.

Crypto IRS Reporting Rule Repeal Heads to Trump’s Desk: What It Means for DeFi and Blockchain

In a significant move for the cryptocurrency industry, the U.S. Senate voted yesterday 70-28 to overturn a Biden-era IRS reporting rule that broadened the definition of "broker" in the crypto space. The rule, implemented in 2023, required decentralized finance (DeFi) platforms to collect and report user information for tax purposes, similar to traditional financial institutions.

Critics argued the rule was impractical and potentially harmful to innovation in the blockchain sector. Many DeFi platforms operate autonomously through smart contracts, without centralized control or access to user identities, making compliance with the rule challenging, if not impossible.

The bipartisan vote reflects growing recognition of blockchain technology's influence in the U.S. economy. Supporters of the repeal, including prominent crypto exchanges and advocacy groups, hailed it as a victory for innovation in the digital asset space.

The resolution now awaits the President's signature.

Although the repeal is projected to result in nearly $4 billion in lost tax revenue, proponents argue that the long-term benefits of supporting crypto innovation outweigh the short-term fiscal impact.

- Kelley

In the News: Trump's Auto Tariffs: Revenue Expectations

President Trump's decision to impose a 25% tariff on imported vehicles and parts will have significant implications for the automotive industry. So, a key question is how much revenue these tariffs are expected to generate.

The President has suggested that the tariffs could generate between $600 billion and $1 trillion over the next two years. However, a more conservative estimate from the White House puts the figure at around $100 billion.

This discrepancy highlights the uncertainty surrounding the economic impact of the tariffs. While they are intended to increase government revenue, they are likely to lead to higher costs for consumers and potential job losses in industries that rely on imported vehicles and parts.

Meanwhile, on Saturday, Trump told NBC News he "couldn't care less" if foreign automakers raise prices due to the levies.

As the tariffs are set to take effect on April 3rd, it remains to be seen how much revenue they will actually generate. The coming months will provide clarity on the economic impact.

- Kelley

Don't Be Fooled: April 1st Is an Important RMD Deadline

Good morning and welcome back. Let's start the week by discussing tax deadlines.

Are you over 70 and have a traditional IRA, 401(k), or other retirement plan? Then required minimum distributions (RMDs) are something you need to deal with.

Thanks to the SECURE Act and the SECURE 2.0 Act, the age at which you must start taking RMDs has shifted. It's now age 73. But here's where it gets a bit complicated: your first RMD can be delayed until April 1st of the year following the year you turn 73.

So, if you turned 73 in 2024, you have until April 1, 2025 (tomorrow), to take your first RMD.

But delaying means you'll have two RMDs in 2025 — one due by April 1st and another due by December 31st. Both distributions will be taxable on your 2025 tax return.

RMDs apply not only to IRAs and 401(k)s. Traditional SEP, SIMPLE IRAs, and workplace 403(b) or 457(b) plans also require them. Roth IRAs are exempt from tax until after the owner's death, and designated Roth 401(k)s are now RMD-free as of 2024.

(Image credit: Getty Images)

What to Do?

RMDs are taxed as ordinary income, which can impact your federal income tax bracket and potentially increase the amount of Social Security income subject to tax.

If you're unsure how RMDs will affect you, consult a financial advisor or tax professional.

For more information, see: April RMD? Five Tax Strategies to Manage Your 2025 Income and Is Your First RMD Due April 1?

- Kelley

In the News: Are Tariffs the ‘Biggest Tax Cut’?

Peter Navarro, an advisor to President Donald Trump, recently described tariffs as the "biggest tax cut in American history." He argued on Fox News Sunday that tariffs, particularly on auto imports, could generate billions in revenue, which would then be reinvested into tax credits for buyers of American-made vehicles.

Navarro estimated that tariffs could generate $6 trillion over the course of a decade. His (and Trump’s) perspective challenges conventional economic views, which often associate tariffs with higher consumer prices rather than economic relief.

President Trump has also downplayed concerns about potential price hikes, suggesting that tariffs will encourage Americans to purchase domestic products. However, the claim that tariffs function as a tax cut has sparked skepticism among many economists.

Adding to the controversy is growing dissatisfaction with Trump’s economic policies.

Recent polls reveal that only 39% of Americans approve of his handling of the economy, while 51% disapprove — the lowest rating of his presidency. Additionally, a majority of Americans now reportedly describe the economy as “fair” or “poor,” with many believing they are worse off under Trump’s leadership.

Those sentiments highlight a disconnect between the administration’s optimistic view of tariffs and the experiences of many "average Americans" struggling with economic uncertainty.

More to come.

- Kelley

(Image credit: Getty Images)

If you're among the millions of people receiving federal payments, like Social Security benefits or tax refunds, it's important to know that the U.S. Treasury Department plans to phase out paper checks by September 30, 2025.

This change, driven by one of President Trump's executive orders, is, according to the Trump administration, part of a broader effort to modernize government financial operations, reduce costs, and enhance security.

Electronic fund transfers (EFTs), like direct deposit, debit cards, and digital wallets, will become the standard for both receiving and making payments to the federal government.
The shift is reportedly designed, in part, to address the inefficiencies and risks associated with paper checks, which are more prone to loss, theft, or alteration.
The White House reports that maintaining the infrastructure for paper checks cost the government $657 million in 2024 alone.

Still, for Social Security recipients who rely on paper checks — approximately 456,000 individuals — this transition may create hardship and require significant adjustments.

The Treasury has indicated that limited exceptions will be made for those without banking access or in specific emergency situations, though the details are still unclear.

The Trump administration will reportedly launch a public awareness campaign to help guide individuals and businesses through the change. So, stay tuned.

For more information, see Gabriella's reporting: U.S. Treasury to Eliminate Paper Checks: What It Means for Tax Refunds, Social Security.

Will Trump Raise Taxes on the Wealthy to End Tax on Tips?

Good morning and welcome back. Let's start off today by talking about tax policy.

The Trump administration is reportedly exploring a tax proposal that could increase taxes on the wealthy while eliminating taxes on tips. The idea, reportedly still in the early stages of discussion, is designed to strike a balance between campaign promises and fiscal priorities.

The proposal described in reporting from Axios, would involve raising the top income tax rate back to 39.6%, the level it was before the 2017 Trump tax cuts (Tax Cuts and Jobs Act, TCJA). That increase could generate additional revenue, which might then be used to fund tax relief for tipped workers in the service industry.

(Image credit: Getty Images)

Cutting taxes on tips would be a popular move among the so-called "working class" in the U.S., especially in sectors such as hospitality and food service, where tips account for a significant portion of income.

However, this potential shift wouldn’t be without challenges. While polls show broad public support for higher taxes on the wealthy, many Republican lawmakers remain opposed to any tax increases.

Meanwhile, Treasury Secretary Scott Bessent has warned of potential economic risks if the 2017 tax cuts aren’t preserved.

For more information about taxes on tips, see Should Taxes on Tips Stay or Go Under Trump? AND Are Tips Taxable? What to Know for 2025.

PLUS: Will Your State End Taxes on Tips This Year?

- Kelley

Cory Booker Delivers Historic Senate Speech About Trump Policies, Including Taxes

Senator Cory Booker, Democrat from New Jersey, captured attention due to a marathon speech on the U.S. Senate floor, lasting over 24 hours, to protest policies under the Trump administration. The speech began Monday, March 31 and continued well into Tuesday, April 1.

Booker opened his remarks by emphasizing the urgency of the moment, stating, “These are extraordinary times in our country, and they should not be regarded as ordinary within the United States Senate.”

His record-breaking speech focused on defending federal programs, including Social Security and Medicaid, which he argued are under threat from Republican proposals to fund tax cuts for corporations and the wealthy.

Booker criticized these tax policies for prioritizing the interests of billionaires over those of working families. He expressed concern about efforts to make the 2017 tax cuts (TCJA) permanent, warning that such measures would exacerbate economic inequality and balloon the national debt.

“It is wrong to take away health care for millions of Americans just to pay for tax cuts for the rich,” Booker declared.

He also criticized rhetoric surrounding the elimination of “waste, fraud, and abuse” as a pretext for cutting essential programs.

Throughout his speech, Booker shared letters from constituents worried about losing access to critical benefits, illustrating the human impact of these policies.

He urged lawmakers to prioritize fairness and compassion in their decisions rather than catering to corporations and billionaires.

During Booker’s speech, several Democratic colleagues joined to show support and contribute to the discussion.

Senate Minority Leader Chuck Schumer of New York, along with Sens. Chris Murphy of Connecticut, Lisa Blunt Rochester of Delaware, Andy Kim of New Jersey, Peter Welch of Vermont, Dick Durbin of Illinois, and Kirsten Gillibrand of New York, among others, have taken turns speaking briefly.

For more information, see: Are You Better Off Than You Were 71 Days Ago? Cory Booker Historic Senate Speech Highlights Taxes.

Trump Tariff Update: What’s Happening Now?

As President Trump continues to make tariffs a central part of his economic policy, the impact on the U.S. economy and consumers is becoming more evident.

Recent announcements include a 25% tariff on imported cars, effective April 3, as well as increased tariffs on steel and aluminum. Those measures aim to reduce the trade deficit and boost U.S. manufacturing, but economists warn of potential downsides, including higher consumer prices and inflation.

The tariffs have also sparked retaliatory actions from trading partners like Canada, Mexico, and China, further complicating global trade dynamics.

As the situation unfolds, it's crucial to stay informed about how these policies might affect your wallet and the broader economic landscape.

Full Story: What's Happening With Trump's Tariffs?

- Kelley

Trump Admin. Expected to Announce Reciprocal Tariffs

(Image credit: Getty Images)

Good morning, and welcome back. President Donald Trump has referred to April 2 as “Liberation Day,” and you may be asking yourself what it means.

That’s one question that Sen. Cory Booker (D-NJ) asked multiple times during his historic 24+ hour speech on the Senate floor. Other government officials have also asked what this means for their constituents, as the Trump administration’s stance on tariffs is expected to have a widespread impact on trade.

The Trump administration is expected to announce and enact “fair and reciprocal” tariffs on the nation’s global trading partners today. The widespread tariffs will be levied on U.S. imports. According to a White House fact sheet, the sweeping tax will reduce the trade deficit, bolster the domestic economy and security, and encourage local manufacturing.

President Trump suggests reciprocal tariffs will liberate the U.S. from being “ripped off” by every nation. Economists, however, counter that tariffs are regressive and will lead to higher consumer prices or inflation, especially if retaliatory tariffs from other countries come into play.

For instance, on April 3, the Trump administration is slated to enact a separate 25% tariff on all imported automobiles. Trump says that this measure should encourage companies to manufacture cars inside the U.S. to avoid paying the tax.

The problem is that nearly half the cars sold in the U.S. are built outside of it, according to the Kelley Blue Book. Even the Tesla Model 3, which won this year’s ‘most American car’, reportedly still sourced some of its interiors from China.

As reported by Kiplinger, some analysts say the new auto tariffs could increase the cost of U.S.-manufactured cars by as much as $3,000 and those made in Mexico and Canada without exemptions by as much as $6,000.

A separate 25% tariff will apply to car parts on May 3, further straining U.S. consumers.

For the latest insights on tariffs, see Kelley’s article: What’s Happening With Trump’s Tariffs? Updates for April 2025.

Florida Homeowners Could Get $1,000 in Property Tax Relief

Floridians are facing an uphill battle when it comes to rising property taxes.

Gov. Ron DeSantis has proposed several relief measures to reduce the tax burden on homeowners in the Sunshine State. Barely a month ago, DeSantis pitched abolishing the property taxes altogether.

Now, a new proposal aims to deliver immediate property tax relief to Florida homeowners via an average rebate of $1,000 for each homesteaded property in the state. If the measure passes, the rebates would be issued in December 2025 and cover state-mandated school property taxes.

According to the governor’s office, the property tax rebate program would benefit over 5.1 million homesteaded properties in Florida.

“Property taxes effectively require homeowners to pay rent to the government,” DeSantis said in a statement. “Constitutional protections for Florida homeowners require approval of the voters in 2026. In the meantime, Floridians need relief.”

The Florida House of Representatives proposed $5 billion in tax relief by reducing the state’s sales tax from 6% to 5.25%. Instead, DeSantis doubled down on lowering property taxes.

The governor called on the legislature to immediately shift the $5 billion rebate for homestead property owners. This is a developing story.

If you’re interested in lowering your property taxes, there are some strategies you can implement to reduce your bill. These include seeking property tax relief programs and exemptions, appealing your bill, relocating to a low property tax state or county, and limiting improvements to your home.

For more on Florida’s property tax: Why Abolishing Florida Property Taxes is Problematic

- Gabriella

Update: Trump Rolls Out ‘Kind’ Reciprocal Tariffs

U.S. President Donald Trump holds up a chart while speaking during a “Make America Wealthy Again” trade announcement event in the Rose Garden at the White House on April 2, 2025 in Washington, DC. (Image credit: Chip Somodevilla via Getty Images)

President Donald Trump unveiled his tariff plans at an event in the White House Rose Garden this afternoon.

The Trump administration pointed out that reciprocal tariffs on all of the United States' trading partners were synonymous with what the president characterizes as ‘Liberation Day.’ Trump argues that enacting widespread reciprocal tariffs will restore “fairness” and correct longstanding “imbalances” in international trade that put the U.S. at a disadvantage.

Trump announced how the United States would charge “kind reciprocal tariffs” on other nations while holding up a chart today, meaning he would enact partial reciprocal taxes. Some targeted levies include 34% tariffs on China, a 20% tax on the European Union, a 46% tax on Vietnam, a 24% tax on Japan, 25% tariffs on South Korea, and 31% tax on Switzerland, just to name a few.

“They are ripping us off,” said Trump. “...Foreign nations will finally be asked to pay for the privilege of access to our market. The biggest market in the world.”

This is on top of a 10% baseline tariff on U.S. imports from all countries. This new wave of tariffs is just the tip of the iceberg.

LIBERATION DAY RECIPROCAL TARIFFS 🇺🇸 pic.twitter.com/ODckbUWKvOApril 2, 2025

So far, the Trump administration has imposed 20% tariffs on Chinese imports effective March 4, 2025. A 25% tax on most Canadian and Mexican goods (certain USMCA exemptions were paused until April 2).

President Trump also said in a Truth Social post that he would enact a 25% tariff sanction or “secondary tariff” on any country that imports oil or gas from Venezuela today.

The Trump administration imposed a 25% tax on imports of steel and aluminum products from all countries in March, which will impact domestic consumer prices of popular brands like Coca-Cola, as soda cans are to become more expensive to produce. As reported by Kiplinger, costs of canned goods and soda at the grocery aisle, newly built homes, and auto parts are expected to rise due to the tariffs on metals.

Next up is a 25% tax on imported automobiles that will go into effect April 3, which will be followed by a 25% tariff on all imported car parts to the U.S. on May 3. Experts in the car industry warn that the new taxes will impact the costs of new cars and used cars, as some dealerships may be less inclined to import older automobiles or parts due to higher prices.

Finally, Trump says he will soon announce tariffs on imported pharmaceuticals. Reports say these could be as high as 25% and impact pharmaceutical products imported from China, Europe, Canada, and Mexico. No set plan has been provided by the Trump administration yet.

This story is developing.

Stay tuned to our latest updates on tariffs: What's Happening With Trump Tariffs? Updates for April 2025

-Gabriella

State Tax News, Property Taxes, and Proposals

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Arizona Republican lawmakers are seeking to limit grocery taxes in the state. While Arizona does not impose a statewide sales tax on consumable goods, localities can impose up to 5.30% on grocery items. HCR 2021 would limit the local grocery tax rates to just 2% and require voter approval before raising rates to 2%. The issue may come on the state ballot as early as November 2026.
Idaho residents may soon see their next property tax bill go down. Gov. Brad Little signed legislation that will provide $50 million of state funding to school districts and $50 million toward counties to reduce homeowners’ property taxes. Residents may see a 14.6% decrease in their total property tax bill, sponsor Sen. Scott Grow (R-Eagle) announced during the bill’s press briefing.
Iowa Democrat lawmakers have introduced a property tax relief proposal: A $1,000 rebate for homeowners and a $500 rebate for renters. If signed into law, HF 691 would make payouts by January 1 of each year. The bill is just the latest development in a bipartisan effort to cut the state’s property taxes. As Kiplinger previously reported on this blog, other Iowa bills have included a $25,000 homestead property tax exemption and a property tax credit for Iowans age 70 and older making less than 350% of the federal poverty level.

New this week: The South Carolina state income tax cut is turning heads. If signed into law, this bill would collapse the Palmetto State’s tiered income tax brackets into one fixed rate of 3.99%. While introducing a flat income tax might save some taxpayers money, almost 60% of residents might pay more in the first year, according to a report by the state’s Revenue and Fiscal Affairs Office. However, most South Carolinians might save money if future tax cuts occur. For that to happen, the bill would not only need to be signed into law, but certain economic triggers would have to be met each year.

That’s it for now! But be sure to check back soon for more tax news and updates.

Caregivers for Adults Can Save on Tax

While caring for an older adult, disabled spouse, or other family member can be rewarding, for some, it may also be a challenge. The physical and emotional toll, as well as daily financial costs, can start to accumulate. According to a recent AARP study, family caregivers spend about $7,200 annually on out-of-pocket costs for caregiving.

Fortunately, some tax breaks provide relief for caregivers with adult dependents. For instance, if your dependent meets the qualifying relative test, you may be able to claim the Credit for Other Dependents (ODC). There is also the medical expense tax deduction to help you, the caregiver, with health costs for your dependent.

For more information, check out Kiplinger’s report How Caregivers for Adults Can Save on Taxes in 2025.

- Kate

Are You a Retiree Who Likes to Volunteer?

(Image credit: Getty Images)

Did you know? The Urban Institute reports that about 6 out of 10 adults age 55 and older volunteer. If that’s you, you might save on your next federal income tax bill. However, the following conditions must be met:

You must itemize your tax return instead of claiming the standard deduction.
The organization you volunteer with must be qualified — visit the IRS website for a qualified organization search tool or ask where you currently volunteer for a copy of their IRS letter showing tax-exempt status.
You may only deduct travel expenses if the primary reason for your trip is to volunteer.
You cannot claim volunteer hours as a tax deduction on your federal income tax return.

But if volunteering isn’t your “thing,” no biggie. You can also donate to your local charity through a charitable donation and potentially reduce your taxes that way. Or, utilize a Qualified Charitable Distribution (QCD) to possibly lower your next tax bill and help out your favorite cause. The possibilities are endless.

- Kate

Breaking News: China Retaliates With 34% Tariff on U.S. Goods

In response to President Trump's April 2 global tariff announcement, China has announced sweeping 34% tariffs on all U.S. imports, reportedly effective April 10.

Why it matters: With billions of dollars in trade hanging in the balance, industries ranging from agriculture to technology face disrupted supply chains and higher costs.

For consumers, prolonged tariffs will mean pricier electronics, energy, and other goods, as well as inflation and an increased likelihood of recession.

This is a developing story. For more information, see What's Happening With Trump Tariffs?

- Kelley

Are More People Avoiding Taxes This Year?

A recent poll suggests tax filing hesitancy is real this tax season. (Image credit: Getty Images)

The 2025 tax season is witnessing a unique phenomenon: a potential “tax revolt” fueled by frustration and mistrust in the IRS.

This year, many Americans are choosing to delay or skip filing their taxes. What’s driving this rebellion?

Some say massive cuts to the IRS workforce under the Department of Government Efficiency (DOGE) could leave the agency struggling to enforce compliance. With over 11,000 employees dismissed and plans to slash another 20% of staff, some taxpayers feel emboldened to take risks, believing audits are unlikely.

A recent survey revealed that nearly half of Americans doubt the agency’s ability to enforce tax laws effectively. At the same time, one in four felt less anxious about filing mistakes due to the IRS chaos.

This growing trend could have serious consequences, with an estimated $500 billion revenue shortfall compared to last year.

To learn more, see our reporting: Taxpayer Revolt? Why Fewer People Are Filing Taxes This Year.

- Kelley

Republican Resistance Mounts Against Trump Tariffs

(Image credit: Getty Images)

Republican opposition to President Donald Trump’s sweeping new global tariffs intensified this week, with some prominent figures and lawmakers openly challenging his trade agenda.

As Kiplinger has reported, Trump announced a 10% baseline tariff on imports from over 100 nations, effective April 5, alongside elevated levies targeting other trading partners — a move he framed as “economic liberation.”

Critics call it reckless.

Former Vice President Mike Pence took to X to denounce the tariffs as the “largest peacetime tax hike in U.S. history,” estimating a $3,500 annual burden on households. He warned of job losses, inflation, and electoral fallout for Republicans in 2024, highlighting a growing rift within the party.

Not long after Trump’s tariff announcement, four Republicans in the U.S. Senate — Mitch McConnell, Lisa Murkowski, Susan Collins, and Rand Paul — joined Democrats to pass Tim Kaine’s (D-Va.) resolution to invalidate Trump’s emergency declaration, which justified the 25% steel and aluminum tariffs on Canada. Despite the 51-48 Senate vote, the resolution faces headwinds in the U.S. House of Representatives.

Meanwhile, Sens. Chuck Grassley (R-Iowa) and Maria Cantwell (D-Wash.) introduced legislation requiring presidents to justify tariffs and secure congressional approval within 60 days, after which the duties would expire. The bill, backed by Republican Sen. Thom Tillis (R-N.C.), would essentially reclaim Congress’ constitutional trade authority.

The backlash reflects deepening concerns about Trump’s trade strategy.

In a recent Fox Business interview, Sen. Ted Cruz (R-Texas) said, "I'm not a fan of tariffs," adding, "If the result is our trading partners jack up their tariffs and we have high tariffs everywhere, I think that is a bad outcome for America."

In an April interview, Sen. Rand Paul of Kentucky said, "I believe that economically, it's a misconception to think that tariffs will benefit the nation."

Economists warn of global trade wars as well as supply chain and economic havoc, fears that were partly realized this week as the U.S. stock market experienced its worst decline since the 2020 pandemic.

As some countries vow countermeasures (China will levy a 34% retaliatory tariff against the U.S.), GOP dissent and widespread fear of recession grow.

More to come.

Senate Passes Budget Blueprint: What's Next for Trump's Agenda

The U.S. House of Representatives and the U.S. Senate, both led by the GOP, have some negotiating to do to achieve Trump's tax goals. (Image credit: Getty Images)

Good morning and welcome back. Let’s start by talking about legislative action regarding Trump’s tax agenda.

Over the weekend, the United States Senate passed a budget blueprint in a closely contested vote, marking a significant step forward for President Trump's tax agenda. The plan includes extending the 2017 tax cuts (enacted in the Tax Cuts and Jobs Act, TCJA), increasing border security funding, and raising the debt ceiling by $5 trillion.

The Senate's proposal differs from the U.S. House of Representatives’ version in key areas. For example:

The Senate suggests modest spending reductions of $4 billion
The House aims for more substantial cuts of $1.5 trillion over ten years, which could affect Medicaid, SNAP, and other vital programs.
The Senate also seeks a higher debt ceiling increase than the House.

As lawmakers proceed, they face the challenge of reconciling these differences.

The House will soon vote on the Senate's blueprint (sometime this week, according to House Speaker Johnson (R-La.), and if it passes, committees will begin drafting legislation to implement Trump tax reform.

But this won't be as easy as it sounds. Republicans will have to navigate notable internal divisions over spending cuts and deficit concerns to deliver a unified package.

The coming weeks will be crucial in determining how effectively they can balance competing interests and advance their legislative objectives.

- Kelley

Breaking News: Trump Threatens 50% Tariffs on China in Escalating Trade War

President Donald Trump has warned China to withdraw retaliatory tariffs by April 8, 2025, or face additional U.S. duties. In a Truth Social post, Trump stated:

“If China does not withdraw its 34% increase above their already long-term trading abuses by tomorrow, April 8th, 2025, the United States will impose ADDITIONAL Tariffs on China of 50%, effective April 9th.”

The threat follows China’s 34% tariffs on U.S. goods in response to Trump’s 34% reciprocal levy. If enforced, the new 50% tariff would compound existing 20% duties, potentially resulting in 70% or more on some imports. Global markets reacted sharply to the announcement, with Asian and European stocks plunging.

Trump frames tariffs as corrective action against decades of trade imbalances, asserting the U.S. is “bringing in Billions of Dollars a week” from existing tariffs.

China denounced the measures as “economic intimidation,” vowing to defend its interests.

For more information, see What's Happening With Trump Tariffs?

- Kelley

More IRS Staff Cuts Cause Confusion Just Before Tax Deadline

The IRS is undergoing significant workforce reductions, with up to 25% of employees reportedly affected.

Among the changes is the closure of its Office of Civil Rights and Compliance, with some of its functions potentially being folded into the Office of Chief Counsel.

The next round of cuts, estimated to affect approximately 20,000 workers, is part of a broader government efficiency initiative led by the Department of Government Efficiency (DOGE), although specific leadership details remain unclear.

Nonprofit publisher Tax Notes reports that a recent email mistake further complicated matters. During an internal system test, employees reportedly received a message that appeared to signal terminations, sparking panic. The IRS later clarified that the email was a technical error and stated that official layoff notices would be sent via postal mail. Still, the incident highlights concerns about communication breakdowns during the restructuring process.

As if that weren’t enough, the timing coincides with the April 15 Tax Day deadline for most, leaving some taxpayers and employees uneasy, and, as Kiplinger has reported, prompting some to avoid filing taxes.

While the IRS claims that essential functions, like return processing, remain intact, experts warn that staff reductions could strain operations, potentially delaying refunds or customer service responses.

As the agency navigates these changes, questions linger about its ability to maintain efficiency during one of its busiest periods.

- Kelley

Taxes Are Due Soon: What to Know Now

Good morning and welcome back.

For those who haven't filed yet (Tax Day is next Tuesday), we're starting today with a reminder: Every year, before you file your 2024 tax return, there are significant tax changes to know. This tax season is no different.

We’ve compiled a list of key IRS changes that could impact your 2024 tax return, from the child tax credit and 1099k thresholds to extended tax deadlines in states affected by devastating natural disasters.

See: Tax Season 2025 Is Here: Seven IRS Changes to Know Before You File

Also, if you aren’t sure where to begin or wonder if you even need to file a return this year, we’ve got you covered with the following guides:

Who is Required to File a Tax Return

Does Your Child Need to File This Year?

- Kelley

Interesting Read: Unveiling the Hidden History of U.S. Income Tax

Donald Trump speaks fondly of what the United States was like before income taxes came along. (Image credit: Getty Images)

The White House has been talking a lot lately about possibly replacing income taxes with tariffs. Some of this harkens back to what President Trump sees as the "good old days" before income tax existed.

For those who enjoy deep dives into history, a new story from ProPublica examines the history of the U.S. income tax, revealing its surprising origins and how it has evolved into a system riddled with loopholes often exploited by the ultrawealthy.

The article “The Real History of U.S. Income Tax” traces the income tax back to the Civil War, when it was first introduced to fund wartime expenses and promote fairness.
Displeased with the public disclosure of their earnings, wealthy Americans pushed for its repeal in 1871.
By the early 20th century, mounting inequality and growing government responsibilities led to the ratification of the 16th Amendment in 1913, which granted Congress the power to tax income.

The piece also highlights how legal precedents opened loopholes allowing billionaires to grow their fortunes tax-free by borrowing against assets instead of selling them.

ProPublica’s reporting underscores how those early mechanisms now enable some of America’s richest citizens to sidestep paying substantial taxes while many ordinary workers in the U.S. face hefty tax burdens relative to their income.

Interested? Read ProPublica’s full story.

Also see Kiplinger’s coverage: Back to the Good Old Days? What’s Wrong With Trump's Plan to Abolish Income Tax.

U.S. 104% Tariffs on Chinese Goods Begin

The White House confirmed that new 104% tariffs on Chinese imports take effect today, Wednesday, April 9. This escalated trade tensions after China maintained its 34% duties on U.S. exports, which came as another of Trump's baseline and higher "reciprocal" tariffs that went into effect today in many countries.

The additional 50% levy, triggered by Beijing’s refusal to withdraw retaliatory measures, reportedly applies to goods that arrived after midnight, compounding existing tariffs.

China’s government denounced the move as “economic coercion,” pledging to defend its interests.

White House press secretary Karoline Leavitt said, "If China reaches out to make a deal, he'll [the President will] be incredibly gracious, but he's going to do what's best for the American people."

For now, the tariffs, among the highest ever imposed by the U.S., align with Trump’s “reciprocal action” strategy to address supposed trade deficits.

This is a developing story.

- Kelley

Trade War Update: China Retaliates, European Union to Announce Countermeasures

(Image credit: Getty Images)

Good morning, and welcome back. Today, countries are responding to President Donald Trump’s widespread tariffs. Here’s what’s happening.

As discussed yesterday, Trump’s sweeping tariffs on all U.S. trading partners went into effect on Wednesday with an extra punitive 104% tax on all imported Chinese products.

In response to the harsh tariffs, China announced 84% retaliatory tariffs on U.S. imports. That’s up from the 34% levy the country previously sustained, the new tax is slated to go into effect at 12:01 Beijing time on April 10. The Chinese government had previously filed a complaint to the World Trade Organization, alleging that the U.S. is violating international trade laws by enacting tariffs.

At the same time, the European Union is expected to announce countermeasures to Trump’s reciprocal tariffs today. The 27-nation bloc was hit with a 25% tariff on steel, aluminum, and cars. It’s also facing a 20% tax on all other goods under Trump’s sweeping reciprocal tariff measures.

Some proposed retaliatory measures aimed at Trump’s tariffs on metals include placing a 25% tariff on targeted U.S. imports to the European Union. As reported by Kiplinger, some impacted goods include poultry, fruit, and motorcycles. The bloc is still voting on how it will respond to the Trump administration’s reciprocal and car tariffs.

Meanwhile, Canada hasn’t backed down. The country announced that it would impose a 25% tariff on certain vehicle imports from the U.S. The levy went into effect at 12:01 a.m. ET on April 9. This adds to a suite of countermeasures Canada has placed to pressure the U.S. to remove its tariffs.

“Canada continues to respond forcefully to all unwarranted and unreasonable tariffs imposed by the U.S. on Canadian products,” said Canada’s Minister of Finance François-Philippe Champagne. “The government is firmly committed to getting these U.S. tariffs removed as soon as possible, and will protect Canada’s workers, businesses, economy, and industry.”

For the latest information on tariffs, see Kelley’s coverage: What’s Happening With Trump Tariffs? Updates for April 2025

Trump Pauses Tariffs for 90-days, Raises Duties for China

President Donald Trump announced that he’s backing off his reciprocal tariff policy and would pause the tax hikes for 90 days.

During this period, reciprocal tariffs would be lowered to 10% effective immediately, Trump posted on his Truth Social account.

At the same time, the Trump administration raised duties on Chinese imports from 104% to 125% due to “lack of respect that China has shown to the World’s Markets.”

China announced that it would raise tariffs on U.S. goods from 34% to 84% starting April 10. Separately, the country also issued travel warnings alerting its citizens and students of risks related to travel in the U.S. due to the “deterioration” of China-US economic and trade relations.

Trump’s decision to pause sweeping reciprocal tariffs comes as the EU announced that it would impose retaliatory duties on $23 billion worth of U.S. goods as a countermeasure to U.S. tariffs on metals.

Canada had also responded with retaliatory tariffs.

For the latest on tariffs: What’s Happening With Trump Tariffs? Updates for April 2025

- Gabriella

European Union Retaliates Against Trump’s Tariffs on Metals

(Image credit: Getty Images)

The European Union approved retaliatory tariffs on $23 billion worth of U.S. goods as a countermeasure to President Donald Trump’s 25% levy on aluminum and steel.

“The EU considers US tariffs unjustified and damaging, causing economic harm to both sides, as well as the global economy,” the European Commission said in a statement accompanying the announcement. “The EU has stated its clear preference to find negotiated outcomes with the US, which would be balanced and beneficial.”

Members of the 27-country bloc said the tariffs would go into effect in phases, with the first set issued as soon as April 15 and the rest to be enacted on May 15 and December 1.

The EU was also hit with a tariff rate of 20% on nearly all of its U.S. imports as part of Trump’s widespread 'reciprocal' tariffs on April 9 at 12:01 a.m. ET. Trump later dropped the universal tariff rate to 10% the same day.

As mentioned, Trump announced a 90-day pause on all reciprocal tariffs, except for China, which is now facing a tariff hike equal to 125%. As a response to the pause, U.S. stocks skyrocketed with the S&P 500 registering its best day since October 2008.

As reported by Kiplinger, the Dow Jones and Nasdaq also posted notable jumps at the closing bell.

For more on how tariffs on metals con impact your wallet at the grocery store, see my article: Trump Steel and Aluminum Tariffs to Hike Soda, Housing Prices

- Gabriella

State Tax News, Budget Proposals, and Property Taxes

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Maryland is tackling its budget deficit by introducing new tax legislation. The proposed changes include two new income tax brackets for high earners, a 2% state tax on capital gains exceeding $350,000, and various tax and fee adjustments on technology services, sports betting, car tires, vehicle excise taxes, and more. These changes are included in the latest amended budget and companion reconciliation bill, which await the governor's signature.
Missouri is considering a bill that would exempt long-term capital gains (gains on property held longer than a year) from state taxes. The bill would also expand property tax relief for low-income older adults and exempt diapers and hygiene products from state sales tax. After clearing the state Senate, HB 594 will return to the state House for review, and if approved, could go to the governor’s desk for signature.
A bipartisan bill in Washington state proposes increasing the state’s property tax cap, which restricts how much property taxes can increase from one period to the next. According to the bill’s sponsors, this would “ensure investments in public K-12 schools and public safety.” If passed, however, the bill would triple the current property tax cap.

New this week: Watch out if you’re a Kentucky resident filing income taxes late. Recently, the Commonwealth’s officials extended the tax deadline from April 15 to November 3 for state tax returns. This was due to the recent storms, which resulted in significant damage, over 1,000 rescues, and lost lives. However, the Kentucky Department of Revenue (DOR) has told residents they are responsible for paying accrued interest on taxes if they file by the new tax deadline. Because of this, the Kentucky tax deadline extension might cost you more money than if you were to file by April 15.

That’s it for now! But be sure to check back soon for more tax news and updates.

States are Considering No Tax on Overtime and Tips

You may have heard of “no tax on overtime” at the federal level — but what about your state income taxes?

President Trump’s initiatives like “no taxes on tips” and “no tax on overtime” have trickled down to the state level, with over 15 states considering no tax on tips and almost 20 states considering no tax on overtime. Not only that, but a few state tax bills include more than just tip and overtime exemptions. For instance, North Carolina and South Carolina lawmakers seek to end state taxes on bonus pay up to a certain amount — which could impact salaried and hourly employees.

For more information, check out Kiplinger’s reports on overtime and tip taxes:

Your State Could End Tax on Overtime

Should Tax on Tips Stay or Go Under Trump?

States That Might Eliminate Taxes on Tips

What’s Happening With Taxes on Overtime Pay?

- Kate

Retirees Can Supplement Fixed Income With Rentals

(Image credit: Getty Images)

According to a study by SpareRoom, a website that matches roommates, individuals 65 and older are the fastest-growing growing group of “live-in landlords.” Just behind them is the 55-64 crowd, which saw a 40% increase in renting out rooms in their homes compared to the prior year.

But what if you don’t want to rent out part of your house?

Well, some people manage a separate rental property in retirement as a means to combat boredom while earning a little extra cash. Renting out detached properties also gives you more privacy versus renting out a room in your home. Plus, rentals can offer some sweet tax benefits.

For instance, you could qualify for a potential tax deduction for expenses like mortgage interest, property taxes, and repairs on your rental. Your rental’s depreciation may also be tax deductible. However, some states, like California, levy an additional tax on “short-term” rentals like those offered through Vrbo or Airbnb. So consult a tax professional if you are unsure of your tax implications as a landlord.

And for more information on rentals, mortgages, and how they relate to taxes, check out Kiplinger’s other articles:

Landlord With Rental Income? See if You Qualify for a 20% Tax Break

Capital Gains Tax on Real Estate and Home Sales

Do You Know the Tax Rules for Home Mortgages?

- Kate

House Narrowly Passes Senate Budget Blueprint, Advancing Trump's Tax Agenda

The Republican-led Congress took another step to advance Trump's tax plans. (Image credit: Getty Images)

Good morning and welcome back. Let’s start this Friday with an update from Capitol Hill.

Yesterday, the U.S. House of Representatives narrowly approved the U.S. Senate's budget blueprint in a 216-214 vote. The passage advances President Trump's priorities (which he has dubbed “one big, beautiful bill” after intense Republican negotiations.

The budget framework enables extension of Trump's 2017 tax cuts (i.e. the TCJA) and up to $5 trillion in new reductions over a decade, paired with increased defense spending and $175 billion for border security operations.

House Speaker Mike Johnson (R-La.) said regarding the process, "We're committed to finding at least $1.5 trillion in savings for the American people while preserving essential programs," after convincing holdouts who initially opposed the Senate's $4 billion minimum cut target.

The plan will likely offset costs through cuts to Medicaid, education grants, and housing assistance, reductions some critics argue will disproportionately affect low-income families.

Two Republicans — Reps. Thomas Massie (R-Ky) and Victoria Spartz (R-Ind.) joined all House Democrats in opposition.

Committees will now draft legislation finalizing tax rates and program funding levels ahead of Memorial Day. So, more to come.

- Kelley

News: Trump Administration Imposes Higher-Than-Expected China Tariffs

The Trump administration's updated tariff structure on Chinese goods has revealed effective rates exceeding initial projections. Due to overlapping trade penalties, combined levies now reach up to 145%.

According to the White House, the recalibration layers new reciprocal tariffs on top of existing measures, including a 20% duty linked to China’s role in the fentanyl crisis.,

The move creates one of the most aggressive U.S. trade barriers in nearly a century.

What to know:

Revised rate: The administration clarified that Wednesday’s 125% announced tariff, imposed after China’s 84% retaliatory duty on U.S. goods, now serves as a baseline, with preexisting charges pushing effective rates higher.

Sector-specific impacts: Automotive imports still face 25% tariffs, while electronics and consumer goods could bear the brunt of higher rates.

Market response: Stocks initially rallied on temporary exemptions for allies but dipped as importers grappled with abrupt rate changes.

The administration framed the escalation as necessary to counter China’s “disregard for fair trade practices,” though critics warn it risks destabilizing global supply chains and inflating consumer prices.

To learn more, see What’s Happening With Trump Tariffs?

- Kelley

Tax Filing Update: The Standard Deduction

(Image credit: Getty Images)

Data show that before the TCJA, about 30% of taxpayers itemized their deductions. After its implementation, that number plummeted to just under 14%.

For the 2024 tax year (returns you're filing now), the standard deduction amounts are:

Single filers: $14,600

Married couples filing jointly: $29,2002

Head of household filers: $21,900

For more information and the 2025 standard deduction amounts, see Kiplinger’s guide: What’s the Standard Deduction?

- Kelley

Breaking News: Trump Exempts Electronics from Steep Tariffs

(Image credit: Getty Images)

President Trump has recently exempted smartphones, laptops, and other electronics from his administration’s sweeping 145% tariffs on Chinese imports.

The decision, announced on April 12 by U.S. Customs and Border Protection (CBP), spares critical tech products like semiconductors and flat-panel displays from high levies, which combine a baseline 20% tariff with a newly imposed 125% “reciprocal” tariff.

The exemption comes amid an intensifying trade conflict. China had just raised its tariffs on U.S. goods to 125%.

While the 145% U.S. rate for now remains in place for most imports, the carve-out for electronics acknowledges the reliance of companies like Apple and Dell on Chinese manufacturing.

Industry leaders had warned that applying the full tariff to devices like iPhones could triple consumer prices and disrupt supply chains.

This is a developing story.

- Kelley

Tax Day 2025 Is Almost Here

Tax Day 2025 is Tuesday, April 15, for most filers. (Image credit: Getty Images)

Good morning and welcome back. It’s Monday, April 14, 2025, and we’re in the final countdown to Tax Day — just one day left to file your returns!

While many of us are scrambling to finish up our paperwork, this 2025 tax season has been anything but ordinary.

First, the IRS is facing major challenges. Thousands of IRS employees have been laid off, some reinstated, and then laid off again as part of federal budget cuts, leaving the agency stretched thin during its busiest time of year. The agency also lacks stable leadership since several of the IRS Commissioner or acting Commissioner roles have departed or are planning to depart soon.

But: Despite these workforce and operational reductions, the April 15 deadline remains firm for most. If you haven’t filed, get everything in by tomorrow to avoid penalties.

Adding to the confusion, some states have been granted tax deadline extensions due to natural disasters. If you’re in places like Florida or Georgia, you have more time to file (see Kiplinger’s list of states with extended IRS tax deadlines) — but the April clock is ticking for the rest of us.

So grab your favorite beverage and tackle your return if you haven’t already.

Why the IRS Recommends Electronic Filing

The IRS emphasizes electronic filing for its speed, accuracy, and security. IRS Direct File — now available in 25 states — allows eligible taxpayers to submit federal returns directly to the IRS at no cost.

Free File, available nationwide for those earning under $84,000, offers guided preparation for federal and most state returns.
Both methods reduce errors, expedite refunds, and allow W-2 data imports from IRS accounts.

Of course, you can also use traditional tax software or a tax preparer who can help you electronically file your return. For more information, see Ways to File Taxes for Free.

Mailing returns: Key considerations

If you must mail your tax return, make sure your envelope is postmarked by April 15. Use tracking to confirm delivery.

The IRS notes that paper returns take longer to process and increase the risk of delays.
Also, most USPS locations operate with regular hours on Tax Day, but check if your local office offers extended hours. See Is the Post Office Open Late on Tax Day?

Whether you file digitally or by mail, act now to meet tomorrow’s deadline. Double-check forms and avoid common tax filing mistakes.

- Kelley

Will 2025 Finally Bring SALT Deduction Relief?

Changes could be in store for the SALT deduction cap. (Image credit: Getty Images)

The $10,000 cap on state and local tax (SALT) tax deductions is a contentious provision of the 2017 Tax Cuts and Jobs Act (TCJA), also known as the "Trump tax cuts." Key provisions of that legislation currently face potential reforms as lawmakers gear up for 2025 tax negotiations.

The SALT cap is one of the provisions set to expire at the end of 2025 if Congress doesn't act. As a result, bipartisan pressure is mounting to address its impact on residents in high-tax states — so-called “blue” states like New York and New Jersey and “red” states like Texas, where property taxes strain household budgets.

Possible reforms

Proposals range from doubling the cap to $20,000 for joint filers to tripling it to $30,000.

Others suggest limiting deductions to property taxes only while eliminating write-offs for state income or sales taxes.

The negotiations are complicated by cost concerns — repealing the cap entirely could cost $620 billion over a decade by some estimates. Plus, there are ongoing debates over who benefits most (high earners, per the Tax Policy Center).

Political dynamics

Republicans like Rep. Mike Lawler (R-N.Y.) vow “no SALT, no deal,” while Democrats like Rep. Tom Suozzi (D-N.Y.) echo the sentiment, framing the cap as “double taxation.

President Trump, who initially backed the $10,000 limit, now supports adjustments, calling to “get SALT back” during his 2024 campaign. However, skepticism remains about whether compromises will satisfy fiscal hawks and constituents in high-cost areas.

What’s next?

While full repeal seems unlikely, a higher cap or targeted relief could soften the blow for some lawmakers and taxpayers.

Stay tuned for updates.

Also, see our report: SALT Cap Repeal? What to Expect From 2025 Tax Reform.

- Kelley

It's Tax Day! Some Important Considerations Beyond the IRS Filing Deadline

For most taxpayers in the United States, taxes are due today, April 15. (Image credit: Getty Images)

Good morning and welcome back.

It's Tax Day! That means taxes are due for most U.S. taxpayers before midnight.

But did you know April 15 marks a critical date for more than just filing your federal income tax return? It's also the deadline for several other critical tax-related actions that can impact your financial situation.

For instance, unless you have a valid extension, today is the last day to contribute to your Health Savings Account (HSA) and Individual Retirement Account (IRA) for the previous year, which can help reduce your tax liability.

Self-employed individuals must also make their solo 401(k) contributions and estimated tax payments by this date.

Missing these deadlines can result in penalties or missed savings opportunities. Additionally, some states may have different deadlines, so checking local requirements is crucial.

See our report: Nine Tax Day Deadlines to Know for 2025 Filing.

- Kelley

Celebrate Tax Day with Surprising Freebies and Deals!

On Tax Day, several retailers offer sweet discounts. (Image credit: Getty Images)

Tax Day doesn’t have to be all stress and numbers — this year, several popular restaurants and brands offer some unexpected treats to help you celebrate surviving the tax season.

From exclusive menu items to special discounts, these limited-time offers are designed to brighten your day and reward your hard work. Whether you’re craving a savory bite or a sweet indulgence, there’s something to satisfy every palate.

But don’t wait too long — these deals are only available for a short window around Tax Day.

Ready to discover how to make April 15 a little more delicious?

Check out Gabriella’s article: Tax Day 2025: Freebies, Food Deals, and Discounts.

- Kelley

Fun Fact: Which Generation Pays the Most Tax?

With it being Tax Day, you may wonder who pays the most taxes in the United States. It might not be who you expect.

(Image credit: Getty Images)

Recent data reveals interesting insights about which age groups and income levels contribute the largest share of federal income taxes.

From younger earners to those in their prime working years — and even the wealthiest Americans — the story of tax burden is more complex than it seems.

Curious to find out who carries the biggest tax burden? Read our full story: Which Generation Pays the Most Taxes?

A Little History: IRS Celebrates 70 Years of the April 15 Tax Deadline

This Tax Day, the IRS commemorates the 70th anniversary of the April 15 federal income tax filing deadline, a consistent date since 1955. (The shift from the original March 15 date was reportedly made to accommodate increasingly complex returns, allowing more time for taxpayers and the IRS.)

Driven by technological advancements and improved customer service, the tax filing process has evolved from manual paper submissions to more efficient e-filing and online tools.

The tax agency reports that over 144 million individual tax returns were filed last year, with 96% submitted electronically.

Remember: It’s important to file by tonight's tax deadline or request an extension until October 15. Taxes owed must still be paid by April 15 to avoid penalties.

Visit IRS.gov for more information.

Is the Post Office Open Late Tax Day? What to Know for 2025

The days of post offices staying open late on Tax Day are primarily gone. (Image credit: Getty Images)

Tax Day used to mean long lines at the post office, but in 2025, most people file their taxes online.

But, if you’re mailing a paper return, here’s what you need to know: The U.S. Postal Service will operate on regular hours on April 15, with only a few local branches possibly offering extended hours for last-minute filers.

Still, your return must be postmarked by April 15 to be considered on time, or you risk penalties.

When in doubt, check with USPS or your local post office online for hours and collection times to avoid last-minute stress.

Before mailing, confirm you’ve included enough postage and the correct address and that all your information is accurate.
Errors like missing Social Security numbers or unsigned forms can delay your refund.
If you’re pressed for time, you can file for an extension by April 15. But remember: an extension to file doesn’t extend the payment deadline. Interest will accrue on any unpaid taxes after the deadline.

Also, remember that state tax deadlines may vary, especially in areas affected by natural disasters.

- Kelley

Tax Day Midnight Deadline: What You Need to Know

You've heard it already: Today is Tax Day, and the clock is ticking. The IRS requires you to file your 2024 federal income tax return by midnight on April 15.

Whether you’re e-filing or submitting a payment electronically, everything must be completed before midnight in your time zone to avoid penalties. The IRS systems typically accept returns until 11:59 p.m. local time for electronic filers, so plan accordingly.

If you’re mailing a paper return, it must be postmarked by today. But remember, the post office won’t stay open late, so don’t wait until the last minute.

If you can’t finish by midnight, you can file for an extension using Form 4868, which must also be submitted before midnight.

Remember, an extension doesn’t extend the time to pay any taxes owed; interest and penalties will accrue after midnight.

Did You Miss the Tax Deadline?

Missing the tax deadline can feel stressful. If you didn’t file your taxes (or request an extension) yesterday, the most important thing is to act as soon as possible.

The IRS charges penalties and interest on both late filings and late payments, so the sooner you file, the better. Even if you can’t pay your full tax bill right away, file your return to minimize penalties.

Consult a tax professional if you missed the tax deadline. (Image credit: Getty Images)

If you’re due a tax refund, there’s usually no penalty for filing late. However, you have up to three years to claim your refund — otherwise, you’ll lose it.

For those who owe taxes, consider setting up a payment plan with the IRS if you can’t pay in full. (See: Ways to Pay the IRS if You Owe.)

Remember: Don’t ignore the problem. Taking prompt action can help you get back on track and reduce financial stress.

For more information see our report: What Happens if You Missed the Tax Deadline?

Millions of Taxpayers Have Extended Deadlines

(Image credit: Getty Images)

Did you miss the tax deadline? Don’t panic just yet. If you reside in certain states or counties that were impacted by federally-declared natural disasters, the IRS has automatically granted extended deadlines to give you more time to file and pay your taxes.

Before diving in, you should know that the 2024 health savings account (HSA) contributions deadline was on Tuesday, April 15. However, qualifying taxpayers given federal tax extensions due to severe storms or natural disasters also have an extended HSA contribution deadline.

Extended tax deadlines for each state listed may only apply to certain counties or parishes impacted by natural disasters. Here are some to keep an eye on:

Alaska: Folks impacted by severe flooding in the Juneau area of Alaska beginning Aug. 5, 2024, now have until May 1, 2025, to meet various tax filing and payment obligations.

California: Taxpayers impacted by California wildfires beginning January 7, 2025, have an extended IRS tax deadline of October 15, 2025. (For more: California Tax Deadline Extension: What to Know for 2025)

Kentucky: Affected taxpayers from flooding and landslides documented on Feb. 14, 2025, now have until Nov. 3, 2025, to file various federal tax returns and make payments.

New Mexico: Severe storms and flooding impacted New Mexico on Oct. 19, 2024. Affected businesses and residents in Chaves County, New Mexico, now have until May 1, 2025, to meet various tax deadlines originally due between Oct. 19, 2024, and May 1, 2025.

Furthermore, the IRS issued extensions to multiple states and counties impacted by Hurricanes Helene and Milton. Affected businesses and residents in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Virginia now have until May 1, 2025, to meet various tax deadlines.

Currently, Alabama, Georgia, North Carolina, Florida, and Virginia have individual state deadline relief. Impacted residents of these states may also qualify for tax relief. For more information, see: Hurricane Helene Aftermath: IRS Tax Relief and How to Help.

If you suspect that you may have qualified for an extension due to a natural disaster and want to learn more, see Kate’s article: States With 2025 IRS Tax Deadline Extensions.

Taxpayer: You Still Have Time to Restore Lost Tax Records

(Image credit: Getty Images)

Taxpayers who have been impacted by a federally declared natural disaster were granted extended deadlines to meet their tax filing and payment obligations for the 2025 tax season.

However, you must restore your federal and state tax records if you’ve experienced property loss or business disruptions, as these documents can facilitate the claims process while you rebuild. Your tax records can serve as proof of income, property ownership, and expenses that may be subject to federal disaster-related tax deductions or relief.

As mentioned earlier today, residents of certain states impacted by Hurricanes Helene and Milton qualify for federal disaster-related tax deductions or government relief. That being said, the time to act is now.

Some tax records you may want ot recover include your W-2, 1099s, or prior tax returns. The best news is that the IRS may allow you to recover your federal return transcripts for free. A starting point to get your tax records online is to visit the Get Transcript tool on IRS.gov.

If you’re missing your state tax return, you can request a copy by contacting your state’s Department of Revenue. These documents can also be recovered free of charge under certain circumstances determined by your state. However, make sure to file these requests carefully and through the verified channels to avoid fraud or identity theft.

For more information on how to restore your tax documents, see: Here’s How to Recover Your Tax Records After a Natural Disaster

- Gabriella

Due for a Refund? IRS Says You Can Still File

(Image credit: Getty Images)

If you’ve missed the April 15 deadline to file your taxes, there’s some good news. The IRS doesn’t penalize taxpayers for filing after Tax Day if a refund is due.

Every year, the tax agency estimates that nearly one million taxpayers who failed to file prior-year tax returns were potentially eligible for a refund. This often happens to individuals who choose not to file because they don’t earn enough to meet filing requirements.

These folks could be missing out on refundable tax credits, such as the Earned Income Tax Credit (EITC), the Child Tax Credit (CTC), and the Child and Dependent Care Credit (CDCTC).

If you’re a student, you could also be eligible for some popular education tax credits and deductions. For example, the American Opportunity Tax Credit (AOTC) is a partially refundable credit that helps qualifying taxpayers who are currently enrolled in college claim certain education expenses such as books, supplies, enrollment fees, or equipment.

If you have yet to file your 2024 tax year return, you can use free electronic filing options available through IRS.gov. For instance, IRS Free File will remain open until Oct. 20, and IRS Direct File is available until Oct. 15.

- Gabriella

State Tax News, Refunds, and Property Taxes

Good morning, and welcome back! Here’s your weekly update on state tax news. Several states are proposing and/or enacting key tax changes.

So here are a few state tax highlights you might have missed in the last week:

Indiana homeowners are receiving some property tax relief due to a new law recently signed by Gov. Braun. The law provides a tax credit worth 10% of a homeowner's property tax bill, with a maximum credit of $300. Additionally, the law caps county income tax rates at 2.9%, a decrease from the previous 3.75% rate. Municipalities will also be allowed to impose a local income tax rate up to 1.2% without county officials' approval; this has caused some worry about higher local income taxes making up for lost property tax revenue. Others are concerned that the tax cut will negatively impact school funding, as property taxes are a major revenue source for Indiana schools.
Minnesota lawmakers are seeking a way to tax social media platforms based on the number of users. Larger companies with at least 1 million users would pay $165,000 per month plus $.50 per person. Smaller sites with fewer than 100,000 users would not pay a tax per user. Platforms in between the two thresholds would pay varied amounts. The state’s Department of Revenue estimates the bill could bring in about $334 million in revenue over four years.
North Carolina HB 920 would allow taxpayers to pay their tax obligations through digital assets, like cryptocurrencies. Proposed by State Rep. Neal Jackson (R-Robbins), the bill requires that a digital asset meet strict criteria, like having been on the market for at least 10 years, before it becomes an acceptable means of paying off tax debt.

New this week: Georgia taxpayers have something to celebrate. Earlier this week, Gov. Kemp signed two key tax bills. One new law gives Georgia surplus tax refunds for 2025. Residents may see up to $500 in their mailboxes later this year. The second law accelerates the state’s income tax cut schedule. Georgians will see their 2025 flat income tax rate drop from 5.39% to 5.19%.

That’s it for now! But be sure to check back soon for more tax news and updates.

Retirees: Have You Ever Wanted to Live as a ‘Minimalist?’

The minimalist mindset began as an art movement about eighty years ago. However, in recent decades, the movement has become synonymous with less stuff: Spending less, keeping only what you need, and removing frivolous distractions to focus your time more on what matters to you the most.

By adopting this “creative” mindset, you may also maximize your finances in retirement.

For instance, downsizing in retirement may not only lower your utility bill but also reduce property taxes and allow you to move from a high-tax place to a low-tax place (potentially reducing the need for a car, which would save on motor vehicle costs and, in some cases, gas tax and property taxes as well).

For more examples of how minimalist techniques can improve your finances through a simplified lifestyle, check out Kiplinger’s report, Three Creative Ways to Lower Your Retirement Taxes.

- Kate

Four IRS Commissioners this Year, and Counting...

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President Trump recently nominated acting Commissioner Gary Shapley, a Hunter Biden whistleblower, to replace acting Commissioner Krause, who is expected to resign from the IRS effective mid-May.

The announcement comes amid ongoing turmoil at the IRS, as DOGE and the Trump team consistently cut workers (either through layoffs or buyouts) and shortly after the Department of Homeland Security (DHS) signed a data-sharing agreement with Treasury Secretary Scott Bessent. If it survives court scrutiny, that will give U.S. Immigration and Customs Enforcement (ICE) private information about undocumented taxpayers.

But wait – wasn’t former Congressman Billy Long supposed to be confirmed by now as the new IRS Commissioner? And why is Krause leaving?

Follow Kiplinger’s report, How Many IRS Commissioners Have We Gone Through? For more information on who the 2025 IRS Commissioners have been, why they potentially left, and how their strategic tasks at the IRS might have related to Trump’s administrative initiatives.

- Kate

Which Generation Pays the Most Tax?

Good morning and welcome back. Let's kick off this Friday with some interesting tax facts.

Ever wonder which generation ends up paying the most in taxes? The answer might surprise you.

While many might guess it’s retirees or high-earning millennials, it’s actually those in their 40s and 50s who shoulder the most significant share. That group contributes nearly 30% of all federal income taxes — far more than their population share.

People aged 45 to 55 pay nearly 30% of all income taxes in the United States. (Image credit: Getty Images)

Why is that? It seems to come down to peak earning years and all the financial responsibilities that come with them.

Even though people in that age bracket are often juggling careers, kids, and in many cases, helping aging parents, their average annual tax bill is much higher than that of younger adults or retirees.

Curious how your generation stacks up — and what these numbers mean for the future?

Our full story breaks down the details and might change your perspective on who’s really footing the tax bill in the U.S.

See: Which Generation Pays the Most Tax?

- Kelley

Tax Season 2025: New Challenges and the Way Forward

Stay tuned to Kiplinger for full coverage of tax reform in 2025. (Image credit: Getty Images)

As we wrap up this 2025 tax season blog that started when the IRS first began accepting returns on January 27 and concludes April 18, it’s a good moment to reflect on what we’ve covered and look ahead.

Tax season always brings a mix of challenges and opportunities, and we hope this journey helped make sense of some of the complexities, from filing tips and policy updates at the federal and state levels to deeper dives into issues like President Trump's tax plans, retirement taxes, and generational tax burdens.

Whether you’re an individual taxpayer, a small business owner, or just curious about how tax shapes our economy, understanding the rules can empower you to make the best financial decisions for you.

But remember, 2025 is a time when federal tax laws will evolve (state tax laws are constantly changing) and the IRS is in a bit of turmoil, so staying informed year-round, not just at filing time, is key.

Consider this the start of a new chapter in your tax knowledge as the calendar turns. Keep an eye on upcoming changes, plan, and don’t hesitate to seek professional advice.

Thank you for following along, and here’s to a more confident tax experience next season.

P.S.: In the meantime, read more from the Kiplinger tax team on Kiplinger.com and subscribe to our weekly email newsletter: Kiplinger’s Tax Tips.

IRS Direct File: What You Need to Know for 2025

Kate Schubel — Fri, 24 Jan 2025 15:19:10 +0000

The IRS Direct File program will not be offered for the 2026 filing season, leaving potentially millions of taxpayers without this free file option.

The program, which allowed residents in 25 pilot states to file directly with the federal tax agency, was officially discontinued this month. The decision to shutter Direct File was set in motion by the 2025 Trump tax bill, though officially executed after a long-awaited U.S. Treasury Department task force report was released.

Here's more of what you need to know.

What was IRS Direct File?

Direct File was a free way for taxpayers to file directly with the IRS. It was created after the tax agency found that many filers would be interested in such a program, with funding from the Inflation Reduction Act (IRA), signature legislation from the Biden administration.

For last year's 2024 tax filing season, Direct File's initial pilot proved a success across 12 participating states, with over 140,000 taxpayers using the service.
According to the IRS, most reported their experience with the program as “Excellent” or “Above Average.”
In tax season 2025, the Direct File program opened on January 27 (the day the IRS officially began accepting returns), and 30 million taxpayers were expected to be eligible.)

However, participation was on a state-by-state basis. Basically, you could only use Direct File if you lived in a nonparticipating state, the District of Columbia, or a U.S. territory.

IRS Free File vs. Direct File: What’s the difference?

Although they may have similar names, the IRS Direct File program differed from Free File. Free File partners with private-sector companies to offer free tax filing services, while Direct File was an option to file directly through the IRS.

Unique eligibility requirements also separated the two programs. Free File is generally for taxpayers with lower- to middle-income. For tax year 2025, that’s an adjusted gross income (AGI) of $84,000 or less (for guided tax software).

Comparatively, Direct File had the following income limits:

Filing Status	Income Limit (must be less than)
Single Filer	$200,000 in one income source ($168,600 if multiple employers)
Married Filing Jointly	$250,000 in combined income ($168,600 if multiple employers) AND under $200,000 for one spouse
Married Filing Separate	$125,000 in income

However, Direct File was limited by the types of income the tool could accept.

Commonly accepted incomes included: W-2s, Social Security, unemployment benefits, interest income, and HSA distributions. If you had income types that fell outside of that, like gig economy income, business income, rental income, or capital gains and dividends, you could not use Direct File. Certain deductions and credits were also limited for Direct File.

When Did IRS Direct File End? The Final 2025 Status

According to the Associated Press, IRS official Cynthia Noe reportedly sent an email earlier this month to state comptrollers that typically participate in the program.

"IRS Direct File will not be available in Filing Season 2026," the email read. "No launch date has been set for the future."

The announcement came after a Treasury task force report recommended terminating the program last month. Among the reasons cited were cost and low participation. The report stated that the program had cost about $138 per return to administer, though the uptake had risen 111% compared to the year prior.

Instead of Direct File, the GOP seeks to further improve the IRS's Free File program, according to the Treasury report. However, Direct File was established to address the limitations of Free File, like income limits and varied tax situations.

Plus, limitations aside, some are concerned that the call to eliminate Direct File is mainly due to its competition with commercial tax preparation software like H&R Block and TurboTax. (Free File uses private tax software companies.)

Regardless, taxpayers who have used Direct File for the last two years should begin searching for other free ways to file taxes for the 2026 filing season.

Why Digitizing Your Tax Records Can Simplify Your Filing in 2025

Gabriella Cruz-Martínez — Sun, 19 Jan 2025 14:57:20 +0000

Tax season is fast approaching, and whether you’re an early filer or procrastinator, there’s one extra step you can take to safeguard your tax documents.

Storing your tax forms and supporting documents in a digital folder can help you file a secure and accurate return come tax time. From travel receipts and bank statements to your W-2, 1099s, or other information returns — having those records at the click of a button can simplify your tax experience.

The IRS announced that the 2025 tax season will start on Jan. 27, and expects more than 140 million individual tax returns for tax year 2024 to be filed in the months leading to April 15, the federal deadline.

What’s more: Direct File will be available in 25 states, allowing taxpayers to file their taxes directly with the IRS for free. The common thread? It’s all digital, which the IRS encourages as it can ensure faster processing and a quick refund if you are entitled to one.

Here are some tips on how to prepare for the tax season by going digital.

Keep track of your documents

It’s just about that time of the year when you receive your W-2s from your employer, and feel the need to start organizing your tax documents. Depending on your tax situation, you may collect receipts for expenses you’d like to deduct or claim as a credit.

As reported by Kiplinger, one way to prepare before the IRS starts accepting returns is by creating a dedicated digital folder for the following documents:

W-2 forms form employers
1099 forms for freelance or contract work
Paystubs or unemployment compensation
Receipts for deductible expenses
Investment records or banking statements

Also consider life changes.

If you have dependents on your tax return, you’ll also need their Social Security Number. You never know if you may be eligible for family tax credits.

Having those documents stored digitally can relieve you of the headache of misplacing key documents or receipts you may want to deduct later on. It can also prevent accidental losses due to flooding or unprecendented natural disasters.

While you can still recover your tax records and other important documentation, having these documents in a digital cloud or file can ease your worries. It’s worth noting that the IRS has extended tax deadlines for taxpayers in designated areas impacted by natural disasters.

File your tax return digitally

Each year, the IRS encourages taxpayers to file their tax returns electronically. Luckily, there are multiple services that allow you to file your taxes for free directly with the IRS or through the private sector.

Why should you consider filing electronically?

E-filing your tax return is fast, easy, and more secure than mailing a paper return and risking it getting lost in the post.
You can also select to receive your tax refund as a direct deposit, which can result in getting a refund faster.
You can store a completed tax return copy in a digital folder or cloud, for future use or record-keeping.

In fact, the IRS has proactively been working toward offering taxpayers digital solutions to modernize their tax filing experience. As of Jan. 27, eligible taxpayers in 25 states can file their taxes for free with IRS Direct File. The U.S. Department of Treasury estimates that as many as 30 million taxpayers could benefit from the program.

If you’re interested in filing before the start of tax season, IRS Free File is another way you can file your taxes for free. The service is only available for taxpayers with an adjusted gross income (AGI) of $84,000 or less for 2024.

Why is digitizing your tax records recommended?

Switching from paper to digital isn’t just an eco-friendly choice, but a secure way to store your important tax documents and information and prevent the risk of loss or damage.

Keeping all of your personal tax records in one place can also simplify your tax filing process, and motivate you to file digitally. The IRS highly recommends taxpayers to e-file their taxes as it speeds up processing times, and the delivery of your refund if you are entitled to one.

The IRS has been pushing to modernize its tax processing system for several years now, and at the center of it is prioritizing the digitization of required documents to file a return. With the recent loss of another $20 billion in key IRS enforcement funds, there’s no telling how it will impact processing times and the agency’s workforce capacity.

Avoiding paper filing if you can, can be worth it in the long run. With the start of IRS tax season just around the corner, going digital can be a step in the right direction.

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