Everything you need to know to file your 2025 taxes

Oh no. It's that bad? Taxes. You have to start thinking about filing. Taxes in general begin to take off. We pay taxes to government. It's hard to relax with those tax forms on your mind, but don't give up. Tax season's in full swing, and we want to help you get prepared with our Tax Season Playbook. The Internal Revenue Service expects Americans to file 164 million tax returns this year. Here's some key dates to be aware of. For the vast majority of taxpayers, returns are due on April 15th unless it lands on a weekend or holiday. If you live outside the U.S. or are serving abroad in the military, you have two additional months to file your individual income taxes without penalty on or around June 15th. While you automatically receive this extension so long as you indicate on your return that you're based abroad, you will still have to pay interest on any uncollected taxes if not filed by the original due date. And if you need more time to file, you can ask for an extension that gives you until October 15th to file your return. For those who live in the U.S., you'll still need to send the IRS Form 4868, application for automatic extension of time to file U.S. individual income tax return. You can do all this via your online tax preparation service, an accountant, by mail, or through the federal government's free file program. One key detail, an extension of time to file doesn't mean an extension of time to pay. So you've got to make sure you pay any owed taxes, estimated taxes, at least by the original due date, or you could face penalties. This year, the IRS has granted automatic extensions on some deadlines for taxpayers affected by natural disasters in Louisiana and Montana. And as for when you'll receive your return, that depends, especially if you have a more complicated tax situation. But typically, you can expect it about two to three weeks after your filing. Well, the Republican tax bill passed in 2025, also known as the One Big Beautiful Bill, is in effect. While the process of filing your taxes, of course, that doesn't change. Some of the details could look different here. According to the Tax Foundation, the biggest changes represent a tax cut of $129 billion. Let's talk about what that little sliver of it could mean for you. So at the high level, what is the maybe biggest change that people are going to need to be aware of as they're filing? Yeah, biggest change really is the change that impacts you, and each and every individual are different. So those with tips, that big new $25,000 potential deduction, that's big to them. If, on the other hand, you're an overtime-qualified wage earner, that new $12,500 potential deduction for overtime might make bigger sense on your tax return. Then again, the senior deduction. If you're just 65 or older, you can qualify for a new new $6,000 per person deduction. And of course, if you bought a car and you financed it in 25 and it was final assembled, that new potential $10,000 deduction probably looks good to you. On the other hand, they expanded the state and local tax break, which of course was unlimited in years past. Then they limited it to $10,000. Now that's been raised up to $40,000. So if you're in one of those states with high property tax and high income tax and you itemize, that new $40,000 threshold might make sense to you. And then you put all those on the side. If none of that affected you, but you had a big life change, you moved to a new state or you started a new job, you started a side hustle, you started trading in cryptocurrency, those rules might make some impact. So it really is taxpayer-specific on what is really important, but there's a lot to watch this year. It's probably the biggest year that I've seen in my career of tax law change, life change as we continue to emerge in the pandemic. It's really quite an opportunity year to get a bigger refund. Yeah. So, Garrett, obviously there's a lot to parse through here, but sort of of the policy changes that we have been talking about and then how that might trickle down, understanding it's going to be different for every person. From a policy perspective, what do you think is the biggest change that could then translate into a big change on these returns? So I think Mark covered a lot of the major items we're going to see. Of course, these major new tax deductions are going to be a very large source of elevated refunds in the tax season, according to our estimates. It's a big chunk of that new $129 billion that folks are going to be getting in tax cuts in 2025, and that'll be paired along with other broader changes. But I think it is an important point that Mark said that there's going to be a lot of variation here for folks. An average of about $750 to $1,000 increase in refunds is just that. An average, we might see a lot of variation here, where with these policy changes, very targeted tax cuts. Some folks with overtime or tips may see very large increases in their refunds if it affects them. Others who aren't in those targeted tax changes may see smaller increases in their refunds. Something else that I know there's a change on is the car loan interest. So, Mark, what do people need to be aware of there? Well, a couple of things. One, it's not automatic. I'm surprised at how many taxpayers just think if you file your tax return, like the stimulus payments, you're just going to get these tax breaks. You have to actually put them on your tax return. An important point to also note is you do not have to itemize for any of these big four, the overtime, the tips, the automobile loan interest deduction, and even the senior deduction. They go in a separate place, new form, new line. Now, the automobile interest, it's really an important item because if you take a loan out to buy a car, and tens of millions of people do that every year, then you can take the auto loan interest as a deduction. And again, I emphasize you do not have to itemize, as was pointed out earlier. You know, a lot of people don't itemize today. They take that large standard deduction. Well, these new benefits don't have any consequence on that. So if you bought a car in 2025 and you financed it, which many do, watch for that auto loan. The interest can be tax deductible regardless of whether you itemize. Now, there are some requirements. It has to be final assembled in the United States, and there's some income limitations. If you're high income, they phase out because a lot of these benefits don't inure over to high income earners. But if you're just a regular person, bought a car, financed it, and it was final assembled here, and that's a lot of cars, you know, you've got a brand new tax break up to $10,000. And if you're in a 30% tax bracket, that's another $3,000 of tax refund potential. And those numbers are pretty big. Garrett, talk me through, speaking of big numbers, talk me through the SALT cap increase and who that could affect. So prior to this law, SALT was capped at $10,000 for everyone, as Mark had mentioned. And it was increased up to $40,000, which is a pretty dramatic increase in the value of that deduction. Still not unlimited, but that will provide a lot of relief for folks who, in higher cost of living, higher tax locations, were bumping into that limitation. And that's going to mechanically reduce the amount of taxable income and therefore the amount of tax liability they're paying. Though worth noting, of course, this is mostly going to accrue to higher earners who are itemizing, who are exceeding that prior limitation. And that increased SALT deduction will be in place over the next few years, though we will see by 2029 it snapping back of that deduction to $10,000. So definitely a future policy debate to be had about the future of that deduction. But folks will see that relief for itemizing taking that this year. According to the IRS, about 90% of taxpayers take the standard deduction on their taxes each year rather than itemizing each expense. There are some less common situations that could be confusing. We talked about some of them just a few moments ago, but there are some also that are even less common. So let's run through those here. First of all, we have seen a huge rise in prediction markets, right, as well as online gambling. What are the implications for people who are filing, who have either made or I guess lost money doing that? Yeah, gaming, especially with the proliferation of the online gaming, many states allowing it now, the development of apps, you can bet on just about anything. And the rules can be very complicated, in particular with the rule change that's taking place or, you know, supposed to take place for this year. The one thing that I find most misunderstood about gaming are two things, really. Number one is there's no de minimis. If you win a dollar, that's taxable. There's no $600 rule. There's no, it has to be a professional rule. There's no casino rule. There's a if you have income rule. If you have income, even the pool in the office for March Madness and you win, technically that's taxable. Now, where you put it on there, whether the IRS knows about it, you know, that's a separate issue, but it's taxable. The second and more misunderstood rule regarding gaming is that you get to net everything, which is not true. The rules do not allow wins and losses. So even if you come out kind of good at the end of the year or kind of bad at the end of the year, you have to put all gross winnings on page one. And then it really gets murky, even under the old rules on where you take a deduction, if you take a deduction. And that has changed now to even limit your deductions up to 90%. And so, again, if you've got gaming, more importantly, if you've got significant gaming, you really need to understand the rules and you need to engage some help to make sure you don't cheat yourself and, more importantly, put yourself at risk. And just to be clear, this goes for the prediction markets also, the same rules as well as if you fall in the same bucket? If you have income, I'll put it all in the same bucket. Now, gaming is different in the fact that you may get a W2G gaming proceeds, and there's some very restrictive requirements on when the casino or when the platform or when the house needs to report that. But if you have income, it's income, no matter whether it's a side lemonade stand or a hobby or gaming or prediction markets. That's simple. Got income. Happy day. Income. OK, a different kind of income from crypto. Is that is that does that work differently if you have crypto related gains or losses? Well, on the one hand, if you have income, it works the same. Yeah, there's no I only had a little income. Now, there are some rules that allow offsets or capital losses and short term and long term. But if you have income, you have a consideration. If you're just buying and investing and you do not sell, that's a different animal. And there's that question on the tax return. Now, as to where you put it, totally different area. If you have digital accounts, crypto and all of those types of activities, it's still considered an equity. It's still considered kind of like a stock. It goes on a separate section of the tax return as opposed to gaining income. And the rules are equally convoluted on when you have income, when you have splits, when you have ports, when you have all those other things. And a lot of people think, well, you know, it's just a hobby and they don't report it. Well, starting this year, there's the new 1099 D.A. for digital assets, which means now if you hit a certain threshold, they're going to report it to you and they're going to report it to the IRS. And that rule changes again in 26. So if you've got digital assets in your portfolio, you need to pay particular attention because that two trillion dollar industry is of a great deal of interest to the IRS, especially with noncompliance. Yes, indeed. All right. And finally, just quickly, student loans. What do people need to be aware of their big deduction if you've got student loan payments? I'll simply say if you've got a tax deduction, you don't want to leave that off and it's not automatic. And it gets a little bit complicated on who the debt's name is and who's making the payments. Suffice to say, if you've got student debt, make sure you don't overlook that twenty five hundred dollar deduction. It's a pretty sweet nugget. Now, another thing to watch out for if you have student debt and this was scheduled, but then it got suspended. But it'll probably be back soon is the offset to any type of tax refund that you might have if you're in arrears on your student debt. That was supposed to start this year in twenty five and twenty six. Now they've suspended it a while. But for those unpaid debts on student loans, if you do a big tax refund from other activity in the near future, they may confiscate that. So it's really important to pay attention to both student loan and your tax profile. Let's talk about retirees, because there is still time to save on twenty twenty five and their tax bill. It's even a good time to start planning ahead for next year for them. Number one, if you had earned income in twenty twenty five, make sure you take an individual retirement account contribution if you qualify. And a lot of people think, oh, I'm retired, but you may have been consulting, doing part time work of some kind. So really pay attention to taking that deduction. If you're still in a high deductible health insurance plan and you haven't started Medicare yet, by all means, make a contribution to your health savings account. It's not a huge amount of money, but anything you can set aside in that is going to go in tax free. It's going to grow tax free and you can take it out for qualified medical expenses at any time in the future tax free as well. So I think those are three important first steps. And then it gets a little tricky here, Julie. You need to run the numbers on whether you want to take that standard deduction or to itemize your deductions. But the fact is, you might have medical expenses, you might have charitable deductions, you might have mortgage deduction. Some of these things can push you up over that standard deduction and state and local taxes for sure. So really pay attention to what's the best deal for you in terms of that deduction. And, you know, I think it's in many areas around the country, there's specific tax breaks depending on your age. I know in Washington, D.C., there's a lop off on your property taxes if you're over 65. So take a look at what you might have that's just special to where you live. And then let's look at what you might have going on for next year. So you can start looking right now. If you started taking required minimum distributions, if you turned 73 in 2025, also you're going to need to take that first RMD by April 1st of this year. But if you're turning 73 in 2026, pay attention because you might want to take that first RMD this year so that you don't get hit with two RMDs for next year. Is there anything else you should be doing? I mean, I know it's early, but is there anything else that people need to be aware of this year for when they're filing this year's taxes next year? I know you want to say, oh, my gosh, I just finished this year. But, okay, let's roll our hands together a bit. If you try to take a stab at how much you might have earned in income coming in, and this can be from all different sources, income from investments and so forth, your RMDs, all that, what tax bracket might you fall into for the 2026 tax year? If you're in a fairly low tax bracket, which is quite possible, you might consider doing a Roth conversion. And I know you talk about this, Julie, with others, but the fact is the Roth conversion, you're taking the money out of your tax-deferred retirement accounts, you're rolling it into a Roth IRA, and that means it's taxable income to you. So that's going to be taxed, but moving forward, of course, it will not be. I'm a big fan of the Roth, so if that's something that works for you, do it. You might consider taking your required minimum distributions. As I started to talk about, if you're turning 73 in 2026, you might want to take that first distribution by December 31st of this year so you don't get hit with two next year, which really will bump up your taxable income. There's also qualified charitable distributions, which is something that's a pretty interesting tax technique that people who are charitably inclined should look into. There's some nuances around that, but it can provide a very interesting tax break as well for you. And again, there's also that higher state and local tax deduction. It's really been bumped up, and it's for everyone, not just retirees, but if you live in a high state that really taxes these, like New York, New Jersey, California, you have to itemize for this, but do take a look at that for tax year 2026. Let's broaden it out to everybody else and talk to Andrew Gordon, Gordon Law Partner, tax attorney, and CPA about what everybody needs to be thinking about this year to get ready for the next filing season. So what do we do first of all? Once we're done filing taxes this time around, you think people should do sort of a tax checkup. What does that entail? Yeah, so if you've already filed your tax return, first of all, you don't want to file too quickly. We had a client just last week that filed their tax return, was so excited that everything was done, and then this week got a K-1, and now they've got to amend their return. So one of the first things you want to make sure you do if you've already filed is make sure you have all of your forms. But as we go into next year and we think about the tax season, there's a few key things that you should do to make sure that you're ahead. The first is now that we're approaching the middle of the year, 2026, crazy how time flies, run a mid-year tax checkup. Identify your withholding and look at your paycheck and see if you're actually up to your tax rate. For a lot of people, you received a large refund at the end of last year or as you're filing your taxes this year. Mid-year is a great time to check. Make sure that you're withholding enough, not too much. Another great tip is to get your documents organized. Year over year, we've got clients that the last week right before the deadline, they're rushing to get everything together. And what they're doing is they're leaving money on the table. If you don't have your records ready and you're not organized, you're most likely going to miss deductions. You're going to miss tax forms. It's going to make things more complicated, more expensive. The last thing that you should do is run scenarios for big changes in your lifestyle and any life event that has happened. If you received equity compensation, a bonus, or even if you've now been trading crypto or investing in prediction markets, you should account for those scenarios. Make sure that you're paying your estimates. Have that withholding in because at the end of the year, it's going to come and it's going to hit you with additional taxes. I have this picture in my head of people showing up at their tax attorney's office with a shoebox full of papers. Does that kind of thing still happen? It still happens, but now it's in the digital way where it's just a folder of miscellaneous files, PDFs, Word documents. A great tip is to organize your folders. Have a folder for your income items. Have a folder for deductions, things like charity, and have another folder for miscellaneous items that you're not sure. The more that you can be organized, the less time it'll take to file your taxes, and again, the more that you'll save. What about for people who are independent contractors? In the here and now, what do they need to do to get that organization in place for next year? We work with independent contractors all the time that, first of all, aren't aware that they have to withhold and pay their own taxes. On a W-2, your employer takes those taxes out of your paycheck. But independent contractors, you're responsible for estimating, calculating, sending in those payments, in fact, quarterly. If you're an independent contractor, now is a good time to start already estimating what your income, what your expenses are for the year. Always stay organized. Use a bookkeeping system. Don't do all your bookkeeping at the end of the year. Do it gradually throughout the year.