NEW YORK (AP) — Tax season is underway and you have until April 15 to file your return with the IRS. If you want to avoid the stress of the looming deadline, start getting organized as soon as possible. “Don’t wait until the last minute but also don’t rush,” said Tom O’Saben, director of tax content and government relations at the National Association of Tax Professionals, Gathering all your documents, signing up for direct deposit and keeping copies of your tax returns are some of the best practices wh ...

Social media influencers often look like they live a charmed life, but offline, they pay taxes just like the rest of us. Social media content creators, like everyone else with a more typical gig, must file their tax returns by April 15 with the IRS. And even if their lives look effortless on Instagram, you can almost bet their taxes will be more complicated. “Being self-employed introduces complexity compared to reporting W-2 income as an employee,” said Richard Pianoforte, managing director of tax at F ...

Core Insights - The article emphasizes the importance of Schedule C for freelancers, side-hustlers, and small business owners in reporting income and expenses for tax purposes [2][3] Group 1: Understanding Schedule C - Schedule C is an attachment to Form 1040, used to report income earned and business expenses incurred during the tax year [3] - The IRS uses Schedule C to determine net profit or loss, which affects self-employment tax calculations [3] Group 2: Deductions on Schedule C - Deductions can significantly reduce taxable profit, and common write-offs include advertising, vehicle expenses, commissions, office supplies, insurance, travel, meals, and home office expenses [5][7] - Keeping receipts is crucial for substantiating deductions in case of an IRS audit [5] Group 3: Filing Requirements - Individuals typically need to file Schedule C if they operate a business as a sole proprietor or single-member LLC, especially if net earnings exceed $400 [8][9] - Statutory employees also use Schedule C to report income and expenses [9] Group 4: Filing Process - The process of filling out Schedule C involves gathering records, calculating gross income, determining cost of goods sold, itemizing expenses, and calculating net profit or loss [15] - Tax preparation software can simplify the filing process, while hiring a tax professional may provide tailored advice and ensure accuracy [10][11] Group 5: Who Should Not File Schedule C - W-2 employees and individuals engaged in hobby activities rather than profit-driven businesses should not file Schedule C [16] - Partnerships file Form 1065 instead of Schedule C [16]

Core Insights - The 2023 tax season is expected to be significant, with the IRS anticipating around 164 million individual income tax returns, primarily filed online, influenced by the provisions of President Trump's One Big Beautiful Bill Act [1] Tax Refunds and Changes - The Bank of America Institute forecasts a 26% increase in tax refunds due to recent changes, particularly benefiting middle- and higher-income filers, with average refunds potentially rising by $300 to $1,000 compared to previous years, where typical refunds averaged around $3,000 [2] - A survey by Intuit's TurboTax revealed that 40% of Americans are unaware of the new tax changes, and approximately 33% believe they will be worse off, despite the potential for increased refunds or lower balances due [3] Deductions and Benefits - The standard deduction for the 2023 tax season is set at $15,750 for single filers and $31,500 for married couples filing jointly, showing a modest increase from the previous year [6] - Seniors over 65 can claim an additional deduction of up to $6,000, which primarily benefits upper-middle-class seniors with significant wealth [7] - The senior deduction phases out for individuals with modified adjusted gross incomes exceeding $75,000, or $150,000 for couples [8] Specific Provisions for Workers - Certain workers, such as restaurant servers, can temporarily deduct up to $25,000 in qualified tips on their federal returns through 2028, with the benefit phasing out for incomes above $150,000 [9]

Core Insights - The article discusses various federal tax credits available to taxpayers, emphasizing the importance of understanding eligibility based on income levels and the nature of the credits [1][4]. Tax Credit Types - **Partially Refundable Tax Credits**: Only a portion of the credit is refundable; for instance, a $1,000 credit with $800 refundable results in an $800 refund if the tax bill is zero [2]. - **Refundable Tax Credits**: These credits can result in cash back; for example, a $1,200 credit against a $1,000 tax bill yields a $200 refund [2]. - **Nonrefundable Tax Credits**: These credits can reduce tax liability to zero but cannot result in a refund; for example, a $1,200 credit against a $1,000 tax bill would cap the benefit at $1,000 [3]. Child and Dependent Tax Credits - **Child Tax Credit**: Taxpayers with a modified adjusted gross income below $400,000 (married filing jointly) or $200,000 (other filers) may qualify for a credit of up to $2,200 for the 2025 tax year, with reductions for incomes above these thresholds [5][6]. - **Child and Dependent Care Credit**: This credit can be worth up to $1,050 for one child or dependent and up to $2,100 for two or more, based on a percentage of childcare expenses [9]. Earned Income Tax Credit (EITC) - The EITC targets low- to moderate-income workers, with maximum credits ranging from $649 for no qualifying children to $8,046 for three or more qualifying children for the 2025 tax year [11][12]. Educational Tax Credits - **Lifetime Learning Credit**: Worth up to $2,000 per tax return for qualified education expenses, this nonrefundable credit is available to taxpayers with modified adjusted gross incomes below $90,000 (single) or $180,000 (married filing jointly) [15][16]. - **American Opportunity Tax Credit (AOTC)**: This partially refundable credit can provide up to $2,500 for educational expenses, with a maximum refund of $1,000, available to taxpayers with similar income thresholds as the Lifetime Learning Credit [17][18][19]. Tax Credits for Electric Vehicles and Renewable Energy - **Electric Vehicle Tax Credit**: Previously offered up to $7,500 for new electric vehicles, this credit is no longer available for purchases made after September 30, 2025 [20][21]. - **Residential Clean Energy Tax Credit**: Taxpayers can claim credits for sustainable home improvements made by December 31, 2025, including solar panels and other energy-efficient upgrades [22][23]. Saver's Credit - The Saver's Credit is available for individuals with modest incomes contributing to retirement savings plans, with credits ranging from 10% to 50% of contributions, capped at $1,000 for individuals and $2,000 for married couples [25][26].

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].