by Tax News | Jan 6, 2026 | Tax Tips and News
It’s tax time again. Forms are arriving. Logins are unlocking. Coffee is brewing. Here’s a quick, practical rundown of what matters for your 2025 return (filed in 2026) and a few simple steps to make filing smoother.
New and notable this season
One, Big, Beautiful Bill Act: Tax deductions for working Americans and seniors
- “No tax on tips” (qualified tip income deduction):
A new above-the-line deduction allows eligible workers to deduct qualified tip income for tax years 2025 through 2028, even if they take the standard deduction. Tips are still taxable and must be reported, but income limits, annual caps, and employer reporting rules apply.
- “No tax on overtime” (qualified overtime pay deduction):
Eligible taxpayers can deduct certain qualified overtime pay, generally the premium portion required by federal labor law. This is an above-the-line deduction with income phaseouts and reporting requirements, not a full exclusion of overtime from tax.
- “No tax on car loan interest” (qualified vehicle loan interest deduction):
For 2025 through 2028, taxpayers may deduct up to $10,000 of interest paid on a qualifying loan for a new, personal-use vehicle, even if they do not itemize. The loan, vehicle, and taxpayer must meet specific requirements, and the deduction phases out at higher income levels.
- Additional deduction for seniors (age-based additional deduction):
Taxpayers age 65 and older may qualify for a new additional deduction through 2028, on top of the existing senior standard deduction. This benefit is income-limited and applies whether or not you itemize.
Other important filing updates (not part of the Act)
- Marketplace health insurance (Premium Tax Credit reconciliation):
If you had coverage through a state or federal marketplace in 2025, you must wait for Form 1095-A and reconcile any advance Premium Tax Credit on your return. Filing without it or using estimates can delay processing or cause corrections.
Watch your mailbox (and inbox)
Most tax forms land by the end of January. Some arrive later. Common ones to look for:
- W-2 from your employer
- 1099-NEC/1099-MISC for freelance or gig income
- 1099-INT/1099-DIV for bank and investment income
- 1099-B or a consolidated investment statement (often comes in February, and corrected versions can follow)
- 1095-A for marketplace health coverage (essential if you got advance credits)
Match the name and Social Security number on your forms to your return. If you moved in 2025, make sure companies have your new address so forms don’t go missing.
Refund timing reminders
- Electronic filing with direct deposit is generally the fastest route.
- If you claim the Earned Income Tax Credit or the Additional Child Tax Credit, federal law typically delays those refunds until at least mid-February. That’s normal.
- Simple, accurate returns move quicker. Double-check Social Security numbers, bank info, and any dependent details before you hit “submit.”
Simple prep moves that help
- Create a single folder (digital or paper) and drop every tax form into it as it arrives.
- Save year-end statements for savings, investments, student loans, and mortgages. Interest and dividend totals often show up there.
- Wait for corrected investment forms if your broker warns one is coming. Filing once is better than filing twice.
- Have last year’s return handy. You’ll need numbers like your prior-year AGI to e-file.
For small-business owners and gig workers
- New mileage rate for 2026: The IRS set the 2026 standard mileage rate for business use at 72.5 cents per mile starting January 1, 2026. That matters for the miles you’re logging now for next year’s return.
- Interest expense rules: The IRS updated FAQs on the business interest limitation under the new law. If interest is a big line item in your books, watch for how those changes affect your deduction.
Keep an eye on announcements
The IRS typically releases more filing-season details in January, including updates on forms, credits, and processing times. A quick check before you file can save time later.
Disclaimer: This article is for general information only and is not legal, financial, or tax advice.
– Article provided by Tax News.
by Tax News | Dec 3, 2025 | Tax Tips and News
It’s holiday shopping season. It’s also the warm-up for tax season. Two quick updates to know this December.
Security push this week
The IRS and state tax agencies are using early December to promote National Tax Security Awareness Week. The message is simple: thieves want your tax refund and your identity. Don’t make it easy.
- Be suspicious of emails and texts claiming to be from the IRS. The IRS doesn’t start contact by email, text, or social media DMs about a bill or refund.
- Turn on two-factor authentication for tax software and financial accounts.
- Use strong, unique passwords. Consider a password manager.
- Avoid public Wi‑Fi for anything sensitive. Hotspot or wait until you’re on a secure network.
- Update your phone, computer, and apps to patch security holes.
- Watch for “smishing” and “vishing.” Don’t click unknown links, and don’t read off codes to callers.
Bonus: If you choose to use an Identity Protection PIN, store it somewhere safe. You’ll need it to e-file.
Automatic first-time penalty relief coming in 2026
The IRS says it plans to start applying First-Time Abate Relief automatically next year for about 1 million taxpayers. That means certain late-filing or late-payment penalties may be removed without you having to ask, if you have a clean recent history.
What to expect: If a qualifying penalty posts, the system should reverse it. Keep any IRS notices you receive, and watch your account for updates.
For small businesses
- Security tips apply to payroll and bookkeeping systems, too. Protect access to payroll portals and cloud accounting tools.
- January brings tight filing windows for W‑2s and 1099s. Start gathering info now to avoid last‑minute scrambles.
This article is for general information only and is not legal, financial, or tax advice.
– Article provided by Tax News.
by Taxing Subjects | Nov 10, 2025 | Tax Tips and News
Two of the most widely used credits — the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC) — may offer significant opportunities to reduce a client’s federal income tax liability.
This article provides an overview of these credits, including qualified expenses, income limits, institutional reporting requirements, and common filing issues — so you can better support your clients this back-to-school season and beyond.
1. American Opportunity Tax Credit (AOTC)
The AOTC is a partially refundable credit available for up to four years of postsecondary education.
Key Features:
- Maximum credit: $2,500 per eligible student
- 40% refundable (up to $1,000)
- Covers tuition, required fees, and course materials, including books and supplies
- Student must be enrolled at least half-time in a degree or credential program
- Credit phases out at MAGI:
- $80,000–$90,000 (single)
- $160,000–$180,000 (married filing jointly)
2. Lifetime Learning Credit (LLC)
The LLC is a nonrefundable credit aimed at part-time students, graduate students, or those seeking to gain or improve job skills.
Key Features:
- Maximum credit: $2,000 per return (20% of the first $10,000 in expenses)
- Available for any number of years
- Covers tuition and required fees, but not books or supplies unless required
- No enrollment minimum—available even for one course
- Income phase-out:
- $80,000–$90,000 (single)
- $160,000–$180,000 (MFJ)
3. Qualified Education Expenses
It’s critical to distinguish between allowable and disallowable expenses:
|
Allowable
|
Disallowable
|
|
Tuition
|
Room and board
|
|
Required enrollment fees
|
Insurance
|
|
Required books/supplies (AOTC)
|
Transportation
|
|
Course materials (if required)
|
Health fees, personal expenses
|
Note: For AOTC, books and supplies can be claimed even if not paid directly to the institution, as long as they are required for coursework.
4. Institutional Reporting Requirements
To claim either credit, the taxpayer must have received a Form 1098-T from an eligible educational institution.
- Institutions must report payments received (Box 1) for qualified tuition and related expenses (QTRE)
- Box 1 may include amounts paid by third parties (e.g., grants, scholarships)
- Form 1098-T must also include the student’s TIN (Taxpayer Identification Number)
Encourage clients to verify the accuracy of their 1098-T forms early in the season to avoid delays or disallowed credits.
5. Filing the Credit on Form 8863
Both credits are claimed using IRS Form 8863, which is built into Drake Software’s tax prep system. Errors on this form are common and can lead to:
- IRS rejections or audits
- Delayed refunds
- Future year disqualification due to improper claims
Common Errors to Watch For:
- Missing or incorrect TINs
- Claiming AOTC for more than 4 years
- Incorrect expense classification
- Overstating Box 1 payments
Drake Software includes validation checks to help prevent these errors and supports electronic filing of Form 8863 with detailed audit trails.
6. Looking Ahead: The “One Big Beautiful Bill Act” and Education Policy Changes
While the AOTC and LLC remain the foundation of federal education tax benefits, proposed legislation like the One Big Beautiful Bill Act may introduce significant changes for tax professionals to monitor. This wide-reaching bill includes provisions that could expand employer-sponsored education benefits, enhance loan forgiveness tax exclusions, and simplify reporting requirements for both students and institutions.
Stay informed so you can adjust planning strategies if these reforms are enacted —particularly for clients with student debt or employer education benefits.
Help your clients get ahead.
Read out next blog post about The One Big Beautiful Bill Act.
Proactively support your clients with a pre-season checklist (URL to checklist) designed to prevent delays and reduce filing pressure.
– Article provided by Taxing Subjects.
by Tax News | Jul 11, 2025 | Tax Tips and News
An Identity Protection PIN (IP PIN) is a six-digit number issued by the IRS to safeguard your federal tax return from identity theft and fraud. It ensures that only you, or someone you authorize, can file a tax return using your Social Security Number or Individual Taxpayer Identification Number.
Why is an IP PIN Important?
Tax-related identity theft is on the rise, and fraudsters are constantly looking for ways to file false returns to claim refunds. An IP PIN acts as a lock on your tax account, blocking unauthorized returns. Without the correct IP PIN, the IRS will reject any e-filed return or delay the processing of paper returns with your SSN.
Who Should Get an IP PIN?
- Victims of tax-related identity theft
- Anyone who wants to proactively protect their tax return
- Taxpayers who want extra peace of mind during tax season
How to Get an IP PIN
You can obtain an IP PIN through the IRS’s Get an IP PIN tool. The process requires identity verification, including access to your tax and financial records. Once enrolled, you will receive a new IP PIN each calendar year.
Important Things to Remember
- Never share your IP PIN with anyone other than your trusted tax preparer.
- Keep your IP PIN in a secure place – it is valid for one year only.
- The IRS will never ask for your IP PIN via phone, email, or text.
- An IP PIN is not mandatory for most taxpayers but is available for added protection.
Adding an IP PIN to your tax filing routine is a simple step that provides strong protection against fraud. If you have not already, consider applying for one today!
The post What is an IP PIN? appeared first on taxPRO Websites.
– Article provided by Tax News.
by Tax News | Jul 11, 2025 | Tax Tips and News
Summer wedding bells may have just finished ringing, but tax season will be here before you know it. As newlyweds, it’s important to make a few key updates now to ensure a hassle-free tax filing experience next year. Here’s a quick IRS-backed checklist to help you start married life on a financially smart note.
1. Update Your Name with the SSA
If either of you changed your name, be sure to report it to the Social Security Administration (SSA). Your name and Social Security number must match on your tax return to avoid processing delays.
2. Update Your Address
Moved in together? Let the IRS and the U.S. Postal Service know your new address. Use IRS Form 8822 to notify the IRS directly.
3. Notify Employers
Make sure your employers update your name and address on W-2s. This ensures accurate reporting of your income.
4. Check Your Withholding
Your combined income may bump you into a higher tax bracket. Use the IRS Tax Withholding Estimator to make adjustments via Form W-4. Doing this now can prevent an unexpected tax bill later.
5. Decide How to File
Most couples benefit from filing jointly, but it’s worth considering both options. Filing separately might make sense if one spouse has significant medical expenses or miscellaneous deductions.
6. Consider the Bigger Picture
Buying a home? Starting a business? Adding dependents? All of these life changes come with tax implications. It’s a good time to speak with a tax professional to make a plan tailored for your new life together.
7. Protect Your Identity
Consider signing up for an IRS Identity Protection PIN (IP PIN). This extra step helps prevent tax-related identity theft.
Getting married is a huge milestone. Make sure your taxes reflect your new status to avoid surprises and potentially save money down the road. Congrats, and may your future be as financially smooth as your honeymoon was sweet!
The post Just Married? Here’s Your Tax Checklist for a Smooth Start appeared first on taxPRO Websites.
– Article provided by Tax News.
by Taxing Subjects | Jul 2, 2025 | Tax Tips and News
6 Practical Tips for Managing Difficult Tax Clients
Tax season can bring out the best—and worst—in your clientele. Stress, deadlines, and complex financial issues may cause some tax customers to act impatient, defensive, or outright combative. As a professional tax preparer, knowing how to handle difficult clients is essential for maintaining professionalism, protecting your time, and delivering accurate returns.
Here are six actionable tips for client management for tax preparers when dealing with difficult tax clients.
Set Clear Expectations Early
Before you prepare a single form, make sure your clients understand the scope of your services, timelines, required documents, and associated costs. Provide an onboarding packet or checklist that outlines what they need to bring. This reduces confusion and gives you a reference point if disputes arise.
Pro tip: Share Drake Software’s Client Tax Document Checklist to get clients organized early.
Use Calm, Assertive Communication
Difficult conversations are best handled with a calm tone and steady posture. When tensions rise, try not to match the client’s energy. Instead, use clear, direct language and reframe issues around solutions rather than blame.
Pro tip: Acknowledge the client’s position and present action items. For example, “I understand this is frustrating. Let’s look at what we can do next to resolve it.”
Don’t Skip Documentation
In any case where there’s a dispute or pattern of hostility, make sure you’re documenting conversations and decisions. Keep copies of email threads, engagement letters, and notes from phone calls. If needed, this can help protect you from liability or justify your decisions to the IRS.
Create Boundaries Around Availability
Managing clients during tax season requires time-blocking and structure. Let your clients know your office hours and how to reach you for urgent versus non-urgent needs. Establish boundaries for same-day turnaround and weekend availability — you can even include these details in your voicemail or email signature during peak season.
Empathize, But Stay Professional
Sometimes, tax clients are difficult because they’re anxious about refunds, audits, or unfiled returns. Acknowledge their emotions without taking on their stress. Keep the conversation focused on facts, not feelings.
Pro tip: For example, you could say, “It’s completely normal to feel overwhelmed. We’ll work through this step by step.”
Know When to Say Goodbye
If a client is consistently disrespectful, refuses to follow your advice, or becomes a liability, it may be time to disengage. You have the right to protect your practice and your peace of mind.
Use a disengagement letter to formally end the relationship, outline what work (if any) will be completed, and document how sensitive information will be disposed of on your end.
Ready to Reduce Stress with Your Clients?
Improve your workflow by downloading our Client Checklist to help your tax customers be prepared and reduce friction during intake.
– Article provided by Taxing Subjects.
RH2 Inc.