Core Insights - The child tax credit is a federal tax break designed to assist families with the costs of raising children, increasing to $2,200 for the 2025 tax year from $2,000 in 2024 for each qualifying dependent under age 17 [2][4] - Taxpayers may receive up to $1,700 of the credit as a refund through the additional child tax credit [2] Tax Credit Overview - The child tax credit is distinct from other tax credits such as the child and dependent care credit and the earned income tax credit [3] - There is also a credit for other dependents worth up to $500 for those who do not qualify for the child tax credit [3] Qualification Criteria - To qualify for the child tax credit, specific requirements must be met, including income limits that phase out the credit for married couples filing jointly with incomes above $400,000 and for all other filers above $200,000 [4][5] - The eligibility rules have changed, requiring both the parent and the child to have Social Security numbers [4][5] Child Eligibility - Each qualifying child must be under age 17 at the end of the tax year, meaning they must be 16 or younger at the end of 2025 to qualify for the credit on the 2025 tax return [5] - The child must be a U.S. citizen, U.S. national, or resident alien with a valid Social Security number and must not have provided more than half of their own financial support for the year [5][6]

Core Insights - Many individuals may be missing out on potential monthly income by not adjusting their tax withholding, with the IRS offering new deductions that could increase take-home pay by $200 or more each month [1][2] - The average tax refund in 2025 was $3,116, equating to approximately $260 per month that could have been utilized throughout the year [2] - Adjusting the W-4 form can lead to an increase in monthly take-home pay by $150 to $300, depending on income and tax bracket [3] Tax Withholding Adjustments - Individuals who received large tax refunds effectively provided the government with an interest-free loan, highlighting the importance of updating withholding [2] - The IRS Tax Withholding Estimator is a free tool that helps calculate the correct withholding amount, allowing individuals to submit a new W-4 form to their employer [2] New Deductions - The One Big Beautiful Bill Act introduced temporary deductions valid until 2028, which can be accounted for directly on the W-4 form [4] - The Qualified Tip Income Deduction allows workers in tipping occupations to deduct up to $25,000 from their taxable income, with specific income thresholds for phase-out [5] - For individuals in the 22% tax bracket earning $20,000 in tips, this deduction can save $4,400 in federal taxes, translating to about $367 in additional monthly take-home pay [6] Overtime Pay Deductions - The Qualified Overtime Pay Deduction permits workers earning overtime to deduct the premium portion of their overtime pay, specifically for those earning time-and-a-half [7]

Core Points - The IRS announced that the 2026 tax filing season will begin on January 26, 2026, allowing taxpayers over two months to file their returns before the April 15 deadline [1][4] - The IRS Free File program will accept individual tax returns starting January 9, 2026, for taxpayers with an adjusted gross income of $84,000 or less [2] - A new form, Schedule 1-A, will be introduced to claim recent tax deductions, including those related to tips, overtime, and interest on car loans [4] Group 1 - The IRS is prepared to assist taxpayers in meeting their filing and payment obligations during the 2026 filing season, with updated information systems to process returns efficiently [9] - IRS CEO Frank Bisignano emphasized the agency's commitment to serving the American public and ensuring a smooth tax filing experience [9] - The "Where's My Refund?" tool will be available for taxpayers to check the status of their refunds shortly after filing [8] Group 2 - The IRS has been updating tax forms to reflect changes from the One Big Beautiful Bill Act, indicating a proactive approach to adapting to new tax policies [7] - Taxpayers can access their individual online accounts for information on balances due, payments made, and tax records [5] - The IRS is implementing a new type of individual retirement account, referred to as a Trump Account, for children under 18 [8]

Core Insights - The article emphasizes the importance of year-end financial housekeeping to enhance savings, reduce tax liabilities, and prepare for financial success in 2026 [1] Group 1: Retirement Contributions - Contributions to employer-based retirement funds, such as 401(k) plans, must be made by December 31, 2025, to count for the current tax year, unlike IRAs which can be funded until April 15, 2026 [2] Group 2: Tax Withholdings - Adjusting tax withholdings through Form W-4 is crucial to avoid overpaying taxes and receiving large refunds, which effectively act as interest-free loans to the government [3][4] Group 3: Capital Loss Harvesting - Investors can utilize loss-harvesting strategies to sell losing investments and offset gains, which can also allow for up to $3,000 of excess capital losses to offset non-investment income [5][6] Group 4: Charitable Donations - Charitable contributions must be made by December 31, 2025, to qualify for tax deductions on the 2025 return, with various forms of donations accepted [7]

Core Insights - Year-end tax planning is crucial for aligning with financial realities and avoiding surprises in tax liabilities, emphasizing the importance of proactive adjustments and strategic contributions [21]. Tax Planning Strategies - **Safe Harbor Payments**: It is recommended to pay either 90% of the current year's tax or 100% of the previous year's tax to avoid underpayment penalties [1]. - **W-4 Adjustments**: Individuals should update their W-4 forms following significant life changes, such as new jobs or income sources, to ensure proper withholding [2]. - **IRS Tax Withholding Estimator**: Utilizing this tool can help individuals compare current withholdings against projected income, allowing for necessary adjustments before year-end [3]. Retirement Contributions - **401(k) Contributions**: For 2025, individuals can contribute up to $23,500 to a 401(k), with additional catch-up contributions available for those aged 50 and older [6]. - **IRA Contributions**: Up to $7,000 can be contributed to a traditional or Roth IRA for the 2025 tax year, with a deadline of April 15, 2026, for contributions to count towards 2025 [6]. - **Health Savings Accounts (HSA)**: Eligible individuals can contribute $4,300 for individuals or $8,550 for families, with additional catch-up contributions for those aged 55 and older [6]. Charitable Contributions - **Documentation for Charitable Giving**: Keeping proper receipts and acknowledgment letters is essential for claiming charitable deductions [8]. - **Qualified Charitable Distributions (QCDs)**: For retirees, QCDs can satisfy required minimum distributions while lowering adjusted gross income [10]. Investment Review - **Capital Gains and Losses**: Reviewing investment portfolios before year-end allows for strategic rebalancing and tax planning, including harvesting losses to offset gains [9][11]. - **Long-term Capital Gains Tax Rates**: These are still taxed at 0%, 15%, or 20% for 2025, with high earners potentially facing an additional 3.8% net investment income tax [9]. Deductions and Credits Organization - **Organizing Deductions**: Proper organization can reveal overlooked deductions and simplify the filing process [10][12]. - **Bunching Charitable Contributions**: This strategy can help exceed the standard deduction threshold, allowing for itemization and maximizing tax benefits [10]. Self-Employment Considerations - **Estimated Payments for Self-Employment**: Freelancers and contractors should ensure they make estimated payments to avoid penalties [17]. - **Retirement Options for Self-Employed**: SEP IRAs and solo 401(k)s allow business owners to contribute a percentage of earnings, reducing taxable income [17]. State and Local Tax Planning - **State Tax Considerations**: Understanding state-specific tax rules and deadlines is essential to avoid penalties and maximize deductions [16][19]. - **SALT Cap Awareness**: The federal deduction for state and local taxes has increased from $10,000 to $40,000 under recent legislation [18]. Professional Assistance - **Seeking Professional Help**: When financial situations become complex, consulting with a tax professional can optimize tax planning and ensure compliance with regulations [20][22].

Core Insights - The "One Big Beautiful Bill" introduces significant changes to tax credits and deductions for the 2025 tax year and beyond, prompting taxpayers to act now to maximize benefits [3][4]. Tax Changes and Strategies - The SALT deduction cap has increased from $10,000 to $40,000 for the 2025 tax year, benefiting higher-income earners and residents in high-tax states [5]. - Taxpayers can pre-pay estate taxes and quarterly state and local taxes to take advantage of the new SALT cap [7][10]. - Individuals earning less than $633,333 may consider "double-paying" real estate taxes to fully benefit from the increased SALT deduction cap [8]. Charitable Contributions - The new legislation allows non-itemizers to deduct up to $1,000 in charitable contributions starting in 2026, suggesting a delay in end-of-year donations for these taxpayers [11][12]. - Itemizers may want to expedite charitable donations planned for 2026 due to new restrictions on deductions starting in 2026 [13][14]. Clean Energy Tax Credits - Taxpayers must act quickly to utilize clean energy home tax credits, which allow for a deduction of up to 30% of qualified expenses, including solar panels and energy-efficient home improvements [15][19].

The new “no tax on tips” and “no tax on overtime” deductions require additional reporting by employers and payers. To help, the IRS is offering penalty relief in 2025. https://t.co/t2EF4CyNn5 ...

Core Insights - Millions of Americans will see tax savings for the 2025 tax season due to the provisions of the Big Beautiful Bill Act (OBBBA), which made many aspects of the 2017 Tax Cuts and Jobs Act (TCJA) permanent and introduced new tax deductions and credits for households [1] Tax Savings by Income Group - Working-class families earning between $15,000 and $30,000 will experience a 21% tax cut, the largest reduction among all income groups [2] State-Specific Tax Savings - Taxpayers in different states will experience varying levels of tax savings, with some states projected to save significantly more than others [3] California - California taxpayers are expected to save an average of $2,293.15 annually, primarily due to estate and gift tax breaks, averaging $898 per return, potentially saving over $3.2 million per estate [4] - The State and Local Tax (SALT) deduction is significant, with about 15% of Californians itemizing their returns, leading to average savings exceeding $5,200. Seniors benefit from an average savings of $1,386 with a new $6,000 senior deduction, and over 6.6 million qualifying children are eligible for the Child Tax Credit (CTC) [5] Oregon - Oregon taxpayers are projected to save an average of $2,226.61 annually, with estate and gift tax benefits averaging about $963 per return, allowing estates to save upwards of $2.5 million [6] - Approximately 13% of Oregonians itemize their returns, resulting in average tax savings exceeding $5,500. Seniors, making up about 20% of the population, could save over $1,100 on average with the new senior deduction, and there are over 670,000 qualifying children eligible for the CTC [7] Massachusetts - Massachusetts ranks third, with taxpayers saving an average of $2,150.45 annually, driven largely by estate and gift tax savings, which average about $921 per return, with individual estates saving more than $2.3 million [8]

Core Points - The article discusses estate planning for a couple in their 70s, focusing on the distribution of assets and the implications of a recent health diagnosis [1][3][5] - The husband plans to leave a life estate in the condo to his wife, allowing her to receive rent from his properties, while leaving the remainder of his estate to charity [3][6] - The wife's estate will primarily benefit her two adult children, which raises questions about fairness and reasonableness in their estate planning [2][4][5] Financial Overview - The wife has $30,000 in stocks, shared ownership of a house worth $125,000, and a monthly pension of $1,200 [2][3] - The husband owns a home and two rental properties valued at $1 million, along with $300,000 in savings and a $200,000 Porsche [2][6] - The husband's income is reported to be three times that of the wife, indicating a significant financial disparity [2][6] Estate Planning Considerations - The husband's decision to leave a life estate and charity bequests is viewed as logical and fair, given his financial situation [5][6] - The wife is encouraged to consider the financial future of her children, who may benefit from her estate for home purchases or investments [5][6] - The article highlights the potential for rental income and property appreciation as beneficial aspects of their financial strategy [7]

Core Perspective - The traditional approach to building wealth through long-term employment and retirement savings may not be the most effective strategy, as alternative methods can lead to greater financial success [1][2]. Group 1: Side Business - Establishing a side business can provide additional income, allowing individuals to pay off debts, build an emergency fund, and invest more effectively [4]. - Employees relying solely on retirement accounts may face challenges due to stagnant wages and high fees associated with 401(k) plans [3]. Group 2: Remote Income - A side business can facilitate remote income opportunities, enabling individuals to work flexibly and avoid time-consuming commutes, thus improving work-life balance [5]. - Being self-employed allows for greater control over retirement timing and the potential to continue working into older age [5]. Group 3: Tax Advantages - Business owners can take advantage of tax deductions that significantly reduce their tax liability, potentially saving over $10,000 annually [6]. - Employees typically face higher tax rates compared to business owners, making it financially advantageous to operate a business [6][7].