Get Ready for 2025 Tax Year

I have a number of suggestions for you to get ready: These are some of the things that I have problems with every year.

YOUR CHILDREN GET A JOB.....

Be sure to monitor your kids when they start working. There are many things to consider. Are you going to continue claiming them as dependents? Will they be filing their own tax return? What should they

do for withholding at their job? What about their school tuition if they are in college?

If you plan to deduct them as a dependent you cannot let them claim themselves on their tax return. Many teens want to go ahead and file on Turbo tax when they first get their W2. Be sure they claim "Dependent of another" when they check their filing status. If they don't do this you can't deduct them on your return and there will be amendments involved. Messy.

Call and consult with me before you file or they file a return.

If they are in college I will need the 1098T that you get in the mail which lists tuition information and the name of the college.

REAL ESTATE.....

REFINANCE.... I will need to see the closing disclosure for any items that may be deductible on your return.

Be sure to give me a copy with your paperwork.

PURCHASES....- I also need the closing statement for any deductible items, and to keep track of the date of purchase of that home and the costs.

SALES OF REAL ESTATE....

Again I need a copy of the closing disclosure for sales of your real estate. If I don't have a copy of the statement for the original purchase of the property, be sure to send me one so I can calculate gains, etc. This is when you

will give me the expenses of fixing up during the time you owned the property. You don't need to send me the invoices, a list will suffice.

STATE TAXES...

This item came up several times this past year. It happens when particularly when working remotely. The company withholds the wrong State Tax - could be for your previous state, their state, or who knows. I had several W2's with withholding for states that the person never worked in. Check your paycheck stubs and make sure they are withholding taxes for the correct state. If you move to a new state,

check your paycheck stub and make sure they are withholding the new state's taxes. This creates a big mess at year end. If you move to state that doesn't have withholding, i.e., WA state, be sure they stop taking out taxes. As well as moving to a state that has tax.

OWING TAXES......

If you owed Federal taxes in 2024, you may have to adjust your withholding with your employer. Please do that. If you consistently see they are withholding very little in Fed tax, there could be a problem.....

AFFORDABLE CARE ACT

If you receive a 1095A from the IRS at the end of the year, I will need that to enter the info on your tax return.

Remember that you may owe tax if you made too much money for your level of insurance. There is a repayment necessary of

some of the premiums. If you made less money for the year that what you predicted, you will get additional credit on your tax return.

PINS

I cannot efile (electronically file) your return if you don't give me the PIN number assigned to you by the IRS. They are

giving these to some taxpayers. So make sure you send it to me or give me a copy of the letter you received from the IRS.

STOCK - If you have a brokerage account I will need a copy to pick up any sales or stock, interest/dividends (if there are any)

CRYPTO - Or digital money as the IRS calls it. If you get a statement from a transaction such as this I will need to see it.

I am waiting for more direction on this one.

ID'S/SOCIAL SECURITY NUMBERS

I will need a copy of your state driver's license or your passport, or green card the first time I do your taxes. I will also

need a copy of your SS card for taxpayer(s) and children, as well as dates of birth for everyone. I need to know your immigration status

for tax filing purposes

BUSINESS TAXES/SIDE HUSTLES ETC.

If you did work for DoorDash or Uber, they will send you a tax document. I will need it. Also any 1099's you receive should be given or sent to me. If you have a business. I will need your total gross sales as well as deductions. It's usually more beneficial to take

standard mileage, but if you have auto expenses I figure it both ways to see which one is more beneficial.

STANDARD DEDUCTION

Since the standard deduction is so high for married couples, often you will not have enough deductions to exceed the standard deduction. Keep this in mind when you give me your deductions, i.e. interest and property taxes on your home.

Here is a summary of the major changes made by Big Beautiful Bill to the 2025 tax year tax returns on 7/4/25

.

BIG BEAUTIFUL BILL

CHANGES FOR 2025

CHANGES TO TAXES DUE TO BIG BEAUTIFUL BILL (BBB) EFFECTIVE 7/4/25

The following changes are taken from the BBB signed on 7/4/25 and become effective for tax year 2025. I will keep you informed of any other developments-

🧾 New SALT Deduction Cap (State and local taxes)

The SALT deduction cap increases from $10,000 to $40,400 in 2026.
It will rise 1% annually through 2029, then revert to $10,000 in 2030 unless extended.

Tax Year

SALT Cap

2025 $40K

2026 $40,400

2027 $40,804

2028 $41,212

2029 $41,624

2030 $10K

This is a big increase to the state and local taxes deduction(think property taxes and state payroll taxes) It has been limited to $10K since 2018 and this will make a big difference for those who itemize deductions and will allow more of us to itemize. We will also be able to deduct up to $10K of car loan interest expense on American made vehicles.

SENIOR/SOCIAL SECURITY TAX DEDUCTION

A temporary tax deduction for Americans aged 65 and older
Dubbed the “senior bonus”
Applies to tax years 2025 through 2028

💰 Deduction Amount

Up to $6,000 per eligible senior
$12,000 for married couples if both are 65+
Available regardless of whether you itemize deductions

📊 Income Thresholds

Full deduction if:
- Modified Adjusted Gross Income (MAGI) ≤ $75,000 (single)
- MAGI ≤ $150,000 (married filing jointly)
Phases out at a 6% rate above those thresholds

Fully phased out at $175,000 (single) and $250,000 (joint)

🧮 Impact

Designed to offset taxes on Social Security benefits
Could result in $1,600+ in savings for a middle-income couple
Estimated to benefit 33.9 million seniors, increasing the share of retirees who owe no federal tax on Social Security from 64% to 88%

TIPS TAX DEDUCTION:

Tips: You can deduct up to $25,000 in reported tip income from your federal taxable income.
Overtime: You can deduct up to $12,500 in overtime pay — or $25,000 if filing jointly.

📅 When It Starts

Applies to tax years beginning after December 31, 2024 — so it kicks in for your 2025 tax return, filed in early 2026.

Not tax-free at the paycheck level: Employers will still withhold taxes on tips and overtime throughout the year.
You’ll claim the deduction when filing your federal return — that’s when the savings hit.
Income phaseout: The deduction begins to phase out for individuals earning over $150,000 and couples over $300,000.

OVERTIME PAY DEDUCTION

You can deduct up to $12,500 in qualified overtime pay from your federal taxable income.
If you’re married filing jointly, the deduction doubles to $25,000.
Applies to overtime wages earned beyond 40 hours/week in hourly jobs, as defined under the Fair Labor Standards Act.

📅 When It Starts and Ends

Effective for tax years beginning after December 31, 2024 — so it kicks in for your 2025 tax return.
The deduction is temporary, ending December 31, 2028, unless extended by future legislation.

Income phaseout: Deduction begins to phase out for individuals earning over $150,000, or $300,000 for joint filers.
Payroll taxes still apply: You’ll still pay Social Security and Medicare (FICA) taxes on overtime income. The deduction only applies to federal income tax.
Not automatic: Employers will still withhold taxes on overtime. You’ll claim the deduction when you file your return.

· Payroll taxes still apply: You’ll still pay Social Security and Medicare (FICA) taxes on overtime income. The deduction only applies to federal income tax.

Not automatic . You’ll claim the deduction when you file your return.

LOW INCOME WORKERS INFORMATION

No federal tax on tips and overtime: Workers earning tips (e.g., servers, barbers) or overtime pay can deduct up to $25,000 in tips and $12,500 in overtime from taxable income. That’s a big win for service and hourly workers.
Expanded standard deduction: The bill boosts the standard deduction by up to $1,500, helping 91% of taxpayers keep more of their income.
Child tax credit increase: The credit rises to $2,200 per child and adjusts for inflation, offering more support to working families.
Estimated tax cut: Workers earning $15,000–$30,000 could see a 21% reduction in federal taxes — the largest percentage cut of any income group.

LOW INCOME WORKERS - LOSSES

Cuts to Medicaid and SNAP: The bill imposes stricter work requirements and reduces funding, which could cause 7–10 million people to lose Medicaid and millions more to lose food assistance.
Eligibility restrictions: New rules require a Social Security number for child tax credit eligibility, potentially disqualifying up to 4.5 million families.
Net effect varies: While some low-income workers may see a few hundred dollars in tax savings, others could lose $700–$1,000 annually in benefits.

If you're a low-income worker without reliance on public assistance, this bill could boost your take-home pay. But for those who depend on Medicaid, SNAP, or refundable credits, the gains may be offset — or even reversed — by benefit losses.

TO FIND YOUR TAX BRACKET:

If you look in the tax return copy folder you received for your 2024 taxes, on the “Comparison” sheet for federal, you will find your bracket in the “2024” column at the bottom of the column under “Effective Tax Rate”.

CHILD TAX CREDIT

Was increased to $2200 from $2000 for 2025 tax year, for children 16 and younger.

MEDICAID

Imposes an 80 hr a month work requirement for able bodied adults to receive benefits.

BELAND TAX SERVICE
Redmond, Oregon

Here is a summary of the major changes made by Big Beautiful Bill to the 2025 tax year tax returns on 7/4/25

.

BIG BEAUTIFUL BILL

CHANGES FOR 2025

CHANGES TO TAXES DUE TO BIG BEAUTIFUL BILL (BBB) EFFECTIVE 7/4/25

The following changes are taken from the BBB signed on 7/4/25 and become effective for tax year 2025. I will keep you informed of any other developments-

🧾 New SALT Deduction Cap (State and local taxes)

The SALT deduction cap increases from $10,000 to $40,400 in 2026.

It will rise 1% annually through 2029, then revert to $10,000 in 2030 unless extended.

Tax Year

SALT Cap

2025 $40K

2026 $40,400

2027 $40,804

2028 $41,212

2029 $41,624

2030 $10K

​

SENIOR/SOCIAL SECURITY TAX DEDUCTION

A temporary tax deduction for Americans aged 65 and older

Dubbed the “senior bonus”

Applies to tax years 2025 through 2028

💰 Deduction Amount

Up to $6,000 per eligible senior

$12,000 for married couples if both are 65+

Available regardless of whether you itemize deductions

📊 Income Thresholds

Full deduction if:

Modified Adjusted Gross Income (MAGI) ≤ $75,000 (single)

MAGI ≤ $150,000 (married filing jointly)

Phases out at a 6% rate above those thresholds

Fully phased out at $175,000 (single) and $250,000 (joint)

🧮 Impact

Designed to offset taxes on Social Security benefits

Could result in $1,600+ in savings for a middle-income couple

Estimated to benefit 33.9 million seniors, increasing the share of retirees who owe no federal tax on Social Security from 64% to 88%

TIPS TAX DEDUCTION:

Tips: You can deduct up to $25,000 in reported tip income from your federal taxable income.

Overtime: You can deduct up to $12,500 in overtime pay — or $25,000 if filing jointly.

📅 When It Starts

Applies to tax years beginning after December 31, 2024 — so it kicks in for your 2025 tax return, filed in early 2026.

Not tax-free at the paycheck level: Employers will still withhold taxes on tips and overtime throughout the year.

You’ll claim the deduction when filing your federal return — that’s when the savings hit.

Income phaseout: The deduction begins to phase out for individuals earning over $150,000 and couples over $300,000.

OVERTIME PAY DEDUCTION

You can deduct up to $12,500 in qualified overtime pay from your federal taxable income.

If you’re married filing jointly, the deduction doubles to $25,000.

Applies to overtime wages earned beyond 40 hours/week in hourly jobs, as defined under the Fair Labor Standards Act.

📅 When It Starts and Ends

Effective for tax years beginning after December 31, 2024 — so it kicks in for your 2025 tax return.

The deduction is temporary, ending December 31, 2028, unless extended by future legislation.

Income phaseout: Deduction begins to phase out for individuals earning over $150,000, or $300,000 for joint filers.

Payroll taxes still apply: You’ll still pay Social Security and Medicare (FICA) taxes on overtime income. The deduction only applies to federal income tax.

Not automatic: Employers will still withhold taxes on overtime. You’ll claim the deduction when you file your return.

· Payroll taxes still apply: You’ll still pay Social Security and Medicare (FICA) taxes on overtime income. The deduction only applies to federal income tax.

Not automatic . You’ll claim the deduction when you file your return.

LOW INCOME WORKERS INFORMATION

No federal tax on tips and overtime: Workers earning tips (e.g., servers, barbers) or overtime pay can deduct up to $25,000 in tips and $12,500 in overtime from taxable income. That’s a big win for service and hourly workers.

Expanded standard deduction: The bill boosts the standard deduction by up to $1,500, helping 91% of taxpayers keep more of their income.

Child tax credit increase: The credit rises to $2,200 per child and adjusts for inflation, offering more support to working families.

Estimated tax cut: Workers earning $15,000–$30,000 could see a 21% reduction in federal taxes — the largest percentage cut of any income group.

LOW INCOME WORKERS - LOSSES

Cuts to Medicaid and SNAP: The bill imposes stricter work requirements and reduces funding, which could cause 7–10 million people to lose Medicaid and millions more to lose food assistance.

Eligibility restrictions: New rules require a Social Security number for child tax credit eligibility, potentially disqualifying up to 4.5 million families.

Net effect varies: While some low-income workers may see a few hundred dollars in tax savings, others could lose $700–$1,000 annually in benefits.