The biggest tax overhaul in years just went into effect, and most people have no idea what it means for their paychecks. The Working Families Tax Cuts Act got signed into law back in July 2025, but the real changes hit on Jan. 1, 2026, to impact your 2027 tax filing. Some provisions kicked in retroactively for 2025, which means your tax refund this filing season could be bigger than you expect. But if you want to get the most out of these new rules, you need to act now before the window closes on certain ...

Core Insights - Side gigs can be profitable for many Americans but come with tax complexities that require proper planning and understanding of deductions available to freelancers and gig workers [1] Group 1: Tax Deductions for Gig Workers - The Home Office Deduction is significantly underclaimed, with only an estimated 15% of eligible sole proprietors taking advantage of it, despite many working primarily from home [3] - Freelancers often miss or underclaim the home office deduction due to perceived risks, but it is legitimate if a specific area is used exclusively for business [4] - A general guideline suggests deducting between 8% and 15% of housing expenses, which can result in substantial savings depending on the city [4][5] Group 2: Vehicle and Mileage Deductions - Vehicle use is a valuable deduction for gig workers, especially for those who drive frequently, such as Uber and DoorDash drivers, who may overlook thousands of deductible miles [6] - Many freelancers fail to log business miles accurately, often confusing personal and business use, which can lead to mistakes in deductions [7] - It is important to choose between the standard mileage rate and actual expenses, as both cannot be used simultaneously [7] Group 3: Software and Digital Tools Deductions - Many freelancers neglect to deduct costs associated with software and digital tools that are essential for their work, despite these being eligible for deductions [8] - Business-related subscriptions and educational expenses related to digital tools like Canva, Zoom, and QuickBooks can also be deducted [8]

Core Insights - Taxpayers have until April 15, 2026, to file their taxes, but delaying can lead to mistakes and missed tax breaks [1] Group 1: Organization and Preparation - Utilizing a single digital folder for all tax-related documents can simplify the filing process and help maintain organization [2] - Even for simple tax situations, having organized documents prevents last-minute scrambling [3] - Reviewing the previous year's tax return is crucial as life changes can significantly impact the current tax situation [4][5] Group 2: Deductions and Credits - Tax credits and deductions vary yearly, and it is important to check what is available, such as the Earned Income Tax Credit (EITC), which ranges from $649 to $8,046 depending on the number of qualifying children [7] - Gathering all necessary documents in advance and considering professional assistance can ease the tax filing process [8]

Group 1 - The article discusses various legal strategies to lower tax bills, categorized into quick wins, opportunities for freelancers, and long-term wealth-building strategies [1] - Retirement accounts are highlighted as a primary method to reduce taxable income, with 401(k) contribution limits set at $24,500 for 2026, and catch-up contributions for those aged 50 and older potentially increasing this to $35,750 [2] - Health Savings Accounts (HSAs) are praised for their triple tax benefits, with contribution limits of $4,400 for individual coverage and $8,750 for family coverage in 2026 [3] Group 2 - The standard deduction for 2025 is noted to be $16,100 for single filers and $32,200 for married couples filing jointly, with advice to take the standard deduction unless itemized deductions exceed these amounts [4] - Common itemized deductions include mortgage interest, state and local taxes capped at $10,000, charitable donations, and medical expenses exceeding 7.5% of adjusted gross income [5] - Tax credits are emphasized as more beneficial than deductions, with the child tax credit providing up to $2,200 per qualifying child under 17 [6] Group 3 - Self-employed workers are identified as having significant opportunities for tax savings through business expense deductions, which can include home office space, internet and phone bills, and work-related subscriptions [8]

Core Insights - The article discusses the benefits and rules surrounding Required Minimum Distributions (RMDs) for retirement accounts like 401(k)s and traditional IRAs, emphasizing the tax advantages of contributions and the penalties for failing to withdraw the required amounts [1][2]. Group 1: RMD Rules and Penalties - RMDs begin in the year an individual turns 73, with the first withdrawal due by April 1 of the following year, and subsequent withdrawals required by December 31 each year [4][7]. - A penalty of 25% applies to the amount not withdrawn if RMDs are missed, with the potential to reduce the penalty to 10% if the mistake is corrected [5]. - Research from Vanguard indicates that failure to withdraw RMDs has cost Americans approximately $1.7 billion annually, with nearly 7% of Vanguard IRA holders missing their RMDs in 2024, incurring an average tax penalty exceeding $1,100 [6]. Group 2: Strategies to Avoid Missing RMDs - 401(k) RMDs are less likely to be missed due to proactive notifications from plan providers, while IRA holders are responsible for calculating and taking their withdrawals [8]. - It is recommended that individuals set up an automatic distribution plan with their financial institution to ensure compliance with RMD requirements [8].

Core Insights - The article discusses the potential tax benefits under Trump's One Big Beautiful Bill Act (OBBBA), particularly for seniors, families with children, and employees earning overtime [6][8] - It highlights that a significant portion of U.S. households could potentially pay $0 in federal income tax by 2025 due to the new tax deductions and credits [7][8] Tax Benefits for Seniors - A retired couple earning a combined adjusted gross income of $96,700 can reduce their taxable income significantly through the standard deduction and the new seniors deduction, resulting in a taxable income of $50,000 [2][6] - The article notes that a senior couple could potentially pay $0 in federal income tax due to capital gains and qualified dividends being taxed at a 0% rate [1][6] Tax Credits and Deductions - Families like Casey and Riley, with a combined income of $100,000 and two children, can utilize various deductions totaling $31,500, along with additional deductions for overtime pay, to lower their taxable income [5][4] - The maximum child tax credit has increased to $2,200 per child, which can further offset tax liabilities, potentially resulting in a $0 federal tax bill [3][6] Broader Implications of Tax Changes - Approximately 40% of U.S. households had a $0 federal tax bill in 2022, and this trend may continue with the new tax cuts favoring specific demographics [6][7] - The article mentions that while many may benefit from the new tax rules, higher-income households may not be able to reduce their tax bills to $0 [9] Financial Advisory Services - The article introduces financial advisory services like Range, which offers tax recommendations and investment advisory services at a lower cost compared to traditional advisors [10][11] - It emphasizes the importance of working with a financial advisor to navigate the new tax landscape and optimize tax strategies [13][18]

Core Insights - The IRS assessed approximately $4.8 billion in estimated-tax penalties on over 15 million individual returns in fiscal year 2024, nearly tripling the amount collected two years prior, primarily due to underpayment of taxes from various financial decisions [2] Group 1: Tax Implications of Financial Decisions - Many individuals underestimate the tax implications of their financial decisions, leading to significant tax bills that could have been avoided with proper consultation [3] - Selling investments held for under a year results in ordinary income tax rates ranging from 10% to 37%, while holding the asset longer can reduce the tax rate to 0%, 15%, or 20%, demonstrating the importance of timing in sales [4] - Required minimum distribution (RMD) mistakes now incur a 25% penalty, emphasizing the need for careful planning around withdrawals from retirement accounts [5] Group 2: Retirement Account Strategies - Withdrawing from traditional IRAs or 401(k)s before RMDs at age 73 can be beneficial if done during lower tax bracket years, but delaying withdrawals can lead to higher tax brackets when mandatory withdrawals begin [6][7] - Financial experts recommend strategically utilizing pretax accounts between retirement and age 73 to manage taxable income and avoid significant tax increases later [7] Group 3: Tax-Loss Harvesting - Tax-loss harvesting allows individuals to sell depreciated investments to offset gains, with Wealthfront clients saving an estimated $49.83 million in 2024 through this strategy [8]

Tax Policy Changes - The child tax credit received a $200 boost to the maximum amount for the 2025 tax year [2] - Individuals with tipped income can deduct that on their tax return, effective for 2025 [3] - A new $6,000 deduction per senior is available, subject to income thresholds [5][6] Impact of Tariffs - In 2025, tariffs amount to an estimated $1,100 burden per US household on average [7][8] - If tariffs remain in effect, the burden is projected to grow to about $1,400 per household next year [8] - Customs duties on Christmas lights alone have risen to $45 million this year [9] - Tariffs on holiday items have climbed to upwards of $500 million through the first 9 months of 2025 [11] - Toys and board games are subject to tariffs, increasing their cost [13][15] Offsetting Factors - Tax cuts passed by Congress last year will result in larger refunds [16] - The Treasury Department will adjust withholding tables for lower taxes from each paycheck [16] - Tax cuts in aggregate have a larger revenue impact than the tariff hikes [17]

Core Insights - The article discusses unique tax situations faced by middle-class retirees, emphasizing the importance of understanding tax deductions available to them in 2026 [1][2]. Group 1: Tax Deductions for Retirees - A new temporary senior deduction for individuals aged 65 and older allows qualifying taxpayers to deduct up to $6,000 from their taxable income, applicable from 2025 to 2028 [3]. - Retirees can utilize Health Savings Account (HSA) funds for qualified medical expenses, including Medicare premiums, allowing for tax-free income to cover these costs [4]. - Starting in 2026, retirees can claim tax deductions for charitable donations without needing to itemize, allowing $1,000 for single filers and $2,000 for married couples filing jointly [5].

Core Insights - Taxpayers often overlook valuable deductions and credits that could lead to significant savings in 2026 Group 1: Health Savings Account (HSA) - Contributions to HSAs for high-deductible health plans can be a major tax shelter, with limits of $4,400 for individual coverage and $8,750 for family coverage in 2026 [2] - HSAs provide triple tax benefits: pretax contributions, tax-free growth, and tax-free withdrawals for qualified medical expenses [2][3] - Taxpayers can make contributions until the tax filing deadline in April 2027 for the 2026 tax year [2] Group 2: Child and Dependent Care Credit - The child and dependent care tax credit increases to allow claiming up to 50% of qualifying expenses starting in 2026, up from 35% [4] - Eligible expenses include up to $3,000 for one dependent or $6,000 for two or more, resulting in a maximum credit of $1,500 for one child or $3,000 for multiple children if income is $15,000 or less [5] - The credit phases down with rising income but remains available at 20% for higher earners, and various childcare expenses qualify [5] Group 3: Traditional IRA Contributions - Taxpayers can still make contributions to IRAs up until the tax filing deadline in April 2027, which can lower taxable income for 2026 [6] - The contribution limit for personal IRAs increases to $7,500 in 2026, with an additional catch-up contribution of $1,100 for those aged 50 or older, totaling $8,600 [7] - Contributing to an IRA can potentially lower a taxpayer's income enough to drop them into a lower tax bracket, significantly reducing their tax rate [8]