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Prepare for Tax Season: Critical Updates and Tips for 2025

As tax season approaches, taxpayers nationwide are gearing up for the often-daunting task of assembling records for their upcoming tax appointments. Whether you prefer face-to-face meetings, video conferences, or telephone consultations, the level of preparation you've maintained throughout the year will greatly influence the ease of this process. Regardless of your record-keeping habits, arriving fully prepared for your tax preparation appointment allows us to focus on maximizing deductions, assessing optimal income reporting methods, exploring new law changes, and discussing future tax liability reduction.

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Exciting 2025 Updates – This year brings transformative tax changes courtesy of the One Big Beautiful Bill Act (OBBBA). Here's what you need to know:

  • No Tax on Tips: Enjoy a deduction up to $25,000 for qualifying cash tips if you're employed in customary tip-receiving occupations, with phase-out thresholds for higher earners. Qualifying tips will be included on the W-2 or detailed in a standalone statement from employers.

  • No Tax on Qualified Overtime: Benefit from a deduction for overtime earnings surpassing standard rates, enhancing both individual and joint filer opportunities while considering Modified Adjusted Gross Income (MAGI) thresholds.

  • Vehicle Loan Interest Deduction: Deduct interest on loans for new personal-use vehicles—provided they meet specific criteria—while keeping an eye out for the new Form 1098-VLI.

  • SALT Deduction Limit: The itemized state and local taxes (SALT) deduction limit has risen, presenting considerable tax-saving potential, especially for higher income brackets.

  • Super Retirement Catch Up: Familiarize yourself with enhanced catch-up contributions available to those aged 60-63 for various retirement plans, excluding IRAs. Stay updated on specific plan rules to make the most of these expanded limits.

  • Child Tax Credit: With increased amounts and phased-out thresholds, ensure eligible dependents meet Social Security number requirements to take advantage of this valuable credit.

  • Adoption Credit: The OBBBA's introduction of a refundable adoption credit component boosts resource accessibility for adoptive families, with carryforward options available for any excess credit.

  • Section 179 Expensing: Leveraging the increased limits for business asset expensing can significantly enhance cash flow and investment opportunities for small to medium-sized enterprises.

  • Bonus Depreciation: Seize the opportunity to fully depreciate qualifying assets purchased before January 2025, enhancing financial agility through immediate write-offs.

  • Research or Experimental Expenditures: Make the most of immediate deductibility for domestic expenditures, aligning your business strategies with recent tax incentives for innovation.

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Navigating Your Choices – Your tax return encompasses crucial decisions, each affecting not only current but also future filings. Key areas to consider include:

  • Sales of Property: Evaluate gains structured over extended timeframes versus immediate reporting to optimize tax outcomes.

  • Depreciation: Analyze available deductions for business properties to maximize operational benefits through strategic allocation between immediate and staggered write-offs.

Organize Early – Begin your tax preparation journey in January to streamline your document process whether attending appointments physically or virtually. Designating a secure location for important papers and developing a consistent filing habit can mitigate stress later. Consider printing electronic documents unless advised otherwise, and follow these pointers:

  • Segment records into dedicated categories—medical expenses versus mortgage interest—and complete all relevant sections of any pre-appointment questionnaires.

  • Highlight any foreign financial interests or digital currency holdings, ensuring compliance with reporting requirements to avoid severe penalties.

  • Include health insurance information from Forms 1095-A, B, or C, as applicable, to confirm premium tax credits or coverage details.

  • Keep annual income statements separate to simplify the cross-referencing process with prior returns, helping ensure comprehensive reporting.

  • Prepare a list of questions for your appointment or correspondences, focusing on changes in income, deduction comparisons, or unexplained documents.

Accuracy is Key – Verify all personal details from prior returns for accuracy, noting changes in names, addresses, or dependents’ information, while documenting marital status shifts or dependent qualifications relevant to current year preparations.

Transactions Requiring Special Attention – Special transactions, including stock sales, home purchases, vehicle acquisitions, and charitable donations, necessitate careful review to capitalize on potential benefits or avoid regulatory pitfalls.

In case of any extraordinary events with potential tax implications, proactively consult with our office for clarity on documentation or additional data needs.

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