SignalsAZ.com Prescott News Podcast - IRS Announces New Tax Deductions for Americans

Starting point is 00:00:00 Text to Speech Audio articles made possible by Cast 11 Talking Glass Media. The IRS announced that changes are coming for American taxpayers, with the one big beautiful Bill Act offering tax deductions for working Americans and seniors. Below are descriptions of new provisions from the bill, signed into law on July 4th, that go into effect for 2025. No tax on tips. New deduction, effective for 2025 through 2028, employees and self-employed individuals may deduct qualified tips received in occupations that are listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and then are reported on a form W2, Form 1099,

Starting point is 00:00:41 or other specified statement furnished to the individual or reported directly by the individual on Form 4,137. Qualified tips are voluntary cash or charge tips received from customers or through tip sharing. Maximum annual deduction is $25,000. For self-employed, deduction, deduction may not exceed the individual's net income, without regard to this deduction, from the trade or business in which the tips were earned. Deduction phases out for taxpayers with modified adjusted gross income over $150,000, $300,000 for joint filers. Taxpayer eligibility, deduction is available for both itemizing and non-itemizing taxpayers. Self-employed individuals in a specified service trade or business, SSTB under Section 199A are not eligible.

Starting point is 00:01:31 Employees whose employer is in an SSTB also are not eligible. Taxpayers must include their social security number on the return and file jointly if married to claim the deduction. Reporting, employers and other payers must file information returns with the IRS or SSA and furnish statements to taxpayers showing certain cash tips received in the occupation of the tip recipient. Guidance, by October 2, 2025, the IRS must publish a list of occupations that customarily and regularly receive tips on or before December 31, 2024. The IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction

Starting point is 00:02:16 and for employers and payers subject to the new reporting requirements. No tax on overtime. New deduction, effective for 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay, such as the half portion of time and a half compensation, that is required by the Fair Labor Standards Act, FLSA, and that is reported on A. Form W-2, Form 1,099, or other specified statement furnished to the individual. Maximum annual deduction is $12,500, $25,000 for joint filers. deduction phases out for taxpayers with modified adjusted gross income over $150,000, $300,000 for joint filers.

Starting point is 00:03:05 Taxpayer eligibility. Deduction is available for both itemizing and non-itemizing taxpayers. Taxpayers must include their social security number on the return end. File jointly if married, to claim the deduction. Reporting, employers and other payers are required to file information returns with the IRS, or SSA, and furnish statements to taxpayers showing the total amount of qualified overtime compensation paid during the year. Guidance, the IRS will provide transition relief for tax year 2025 for taxpayers claiming the deduction and for employers and other payers subject to the new reporting requirements. No tax on car loan interest.

Starting point is 00:03:49 New deduction, effective for 2025 through 2028, individuals may deduct interest paid on a loan used to purchase a qualified vehicle, provided the vehicle is purchased for personal use and meets other eligibility criteria. Lease payments do not qualify. Maximum annual deduction is $10,000. Deduction phases out for taxpayers with modified adjusted gross income over $100,000, $200,000 for joint filers. Qualified interest, to qualify for the deduction, the interest must be paid on a loan that is. originated after December 31, 2024. Used to purchase a vehicle, the original use of which starts with the taxpayer, used vehicles do not qualify. For a personal use vehicle, not for business or commercial use, and

Starting point is 00:04:38 secured by a lien on the vehicle. If a qualifying vehicle loan is later refinanced, interest paid on the refinanced amount is generally eligible for the deduction. Qualified vehicle, a qualified vehicle is a car. minivan, van, SUV, pickup truck or motorcycle, with a gross vehicle weight rating of less than 14,000 pounds, and that is undergone final assembly in the United States. Final assembly in the United States, the location of final assembly will be listed on the vehicle information label attached to each vehicle on a dealer's premises. Alternatively, taxpayers may rely on the vehicle's plan of manufacture as reported in the

Starting point is 00:05:17 vehicle identification number, VIN, to determine whether a vehicle has undergone final in the United States. The VIN decoder website for the National Highway Traffic Safety Administration, NHTSA, provides plan of manufacture information. Taxpayers can follow the instructions on that website to determine if the vehicle's plan of manufacture was located in the United States. Taxpayer eligibility, deduction is available for both itemizing and non-itemizing taxpayers. The taxpayer must include the vehicle identification number, VIN, of the qualified vehicle on the tax return for any year. in which the deduction is claimed. Reporting, lenders or other recipients of qualified interest must file information returns with the IRS and furnish statements to taxpayers showing the total

Starting point is 00:06:06 amount of interest received during the taxable year. Guidance, the IRS will provide transition relief for tax year 2025 for interest recipients subject to the new reporting requirements. Deduction for seniors New deduction, effective for 2025 through 2028, individuals who are age 65, and older may claim an additional deduction of $6,000. This new deduction is in addition to the current additional standard deduction for seniors under existing law. The $6,000 senior deduction is per eligible individual, i.e., $12,000 total for a married couple where both spouses qualify. Deduction phases out

Starting point is 00:06:45 for taxpayers with modified adjusted gross income over $75,000, $150,000 for joint filers. Qualifying taxpayers, to qualify for the additional deduction, a taxpayer must attain age 65 on or before the last day of the taxable year. Taxpayer eligibility, deduction is available for both itemizing and non-itemizing taxpayers. Taxpayers must include the social security number of the qualifying individuals on the return, and file jointly if married, to claim the deduction. Catch up with more business, finance. and technology news on signals a z.com. Subscribe and be the F1 RSD 2-No.

SignalsAZ.com Prescott News Podcast - IRS Announces New Tax Deductions for Americans

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