WSJ Your Money Briefing - Tax Season 2025: What’s New in the Tax Rules That Can Save You Money

Episode Date: February 9, 2025

The IRS has new tax changes for some filers who are victims of natural disasters or purchased an electric vehicle last year. In the second episode of our series, Wall Street Journal reporter Ashlea Ebeling joins host Ariana Aspuru to discuss the latest tax credit changes, disaster relief, and how to stay organized this tax season. If you missed the first episode, you can find it here.  Sign up for the WSJ's free Markets A.M. newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices

This episode is sponsored by Northern Trust Wealth Management. There is more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the road to why where you listen to your favorite podcasts. Here's your money briefing for Sunday, February 9th. I'm Arianna Aspudu for The Wall Street

Journal. Filing your taxes means taking a closer look at everything that's happened in the past year, the good and the bad, to see where you could owe or save on your return. And this year, there's a few new additions to the list of possible tax credits and deductions to navigate. So many people miss out on education credits, the earned income tax credit, home improvement for green energy tax credits. So it's important to look through the lists and really see how my life's changed or what have I done that I might get a tax break for. We're back with part two of our special series to get you ready for tax day on April 15th. Wall Street Journal reporter Ashley Ebling joins me again to discuss the new changes from the IRS that could impact your 2024 tax return. That's after the break.

or 2024 tax return. That's after the break. This episode is sponsored by Northern Trust Wealth Management. There's more to being a successful entrepreneur than just good business practices. What is it about an entrepreneur's childhood that helped fuel their entrepreneurial spirit? What are entrepreneurs doing to cultivate the spirit

in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast by the Northern Trust Institute, There are new rules to consider this year before filing your 2024 tax return that could save you money. Wall Street Journal reporter Ashleya Ebling joins me. Ashleya, we're about two weeks into tax season. If people haven't started gathering their documents or preparing to file, is now the time? It's always the time. But what is the benefit of filing early if you can? People want their refunds. Last year, refunds on average came in at $3,138.

So, you know, big chunk of change. So that's the main reason people file early. But a lot of people can't file early because if you're an investor and you're waiting for 1099B, the brokerage statements, those come later in February, and sometimes they get corrected. So you don't want to jump the gun if you know you're waiting for certain documents. It's better to have everything in hand before you file. Last week, we discussed all the tools available to help make the process of filing your taxes cheaper and easier. But there are lots of tax credits or deductions that people might not know about. How common is it for people to overlook them? So that's huge. There's a recent government report saying so many people miss out on education

credits, the earned income tax credit, home improvement for green energy tax credits. So it's important to look through the lists and really see how my life's changed or what have I done that I might get a tax break for. So it's all about trying to help save you money on your tax return. That's what people want. People want to pay less in taxes. The IRS has made some changes to their tax credits that I want to get into. First off, there are new opportunities for people who've been affected by natural disasters. What are the biggest changes? Recent disaster victims for the LA fire victims, there have been big delays in when they have

to file their taxes. So the roughly 10 million taxpayers who live in LA County have an extension until October 15th of this year to file and pay their 2024 taxes. They also get to delay paying quarterly estimated taxes. So that can benefit them as well. If you're in a state or an area of a state that was affected by a disaster, go to IRS disaster relief.

And they have, it lists by state. You can look and see what your deadlines are. Beyond those extensions on the deadlines, what else is out there for people who've been affected by natural disasters? There is a tax law just in December of last year that was a long time coming that's changed the rules for claiming casualty losses. So for people who are in these disaster areas, they can now go back and amend tax returns if they were affected in a natural disaster from 2020 through

2024. And I talked to one CPA, he's working with a client, he just finished their amended 2022 return, they suffered damage to their house in Hurricane Ian, and they're getting a $60,000 refund because of that new law change. So that's an example where Tax Pro can really help. So for someone to check if they qualify for any of these, where can they go? The best place is IRS's website. It's just tax relief and disaster situations and that spells it out. There's another updated tax credit intended to help people who purchased an electric vehicle in 2024.

What can those filers get? So that's a big one. It's up to $7,500 for buying an electric vehicle. What was new in 2024 is there was this option you could get it as a rebate in advance at the dealer. And for those people, it's not that easy. When you file your tax return, you still have to fill out the electric vehicle tax form and it has to all match up. There are certain income limits. If it turns out your income ended up being too high and you're not eligible for it, it could be clawed back. Any other big tax credits or reliefs out there that aren't new but could be overlooked by some filers? Two that are often overlooked are tax breaks for education. The American Opportunity Tax

Credit provides up to $2,500 per student. And then there's another one, the lifetime learning credit, that's typically less generous but applies to a broader range of expenses. That one's $2,000 per taxpayer per year. Families should really look at these carefully to make sure that they're taking the one that gives them the biggest deduction. And the child care tax credit as well is another big one,

right? So that's the child or dependent tax credit. That's tricky too, because a lot of people who work for big employers, they can put in pre-tax money into a flexible savings account for child care. And people who don't have that option would then be able to take this child or dependent tax credit directly on their tax return. If you don't get the benefit through work, basically, you can get a similar benefit on your tax return. If you don't get the benefit through work, basically, you can get a similar benefit on your tax return. And that's for each child under age 17 at year end gets up to $2,000.

Charitable deductions is another area that's really changed since the 2017 tax law. Nine out of 10 taxpayers take the standard deduction. You can only take the charitable deduction if you itemize. So you'd have to have such big charitable deductions or other things to get you over the standard deduction. So there are fewer people taking the charitable deduction. But if you do take the charitable deduction, it's super important that you substantiate, you have like all the proof. You mentioned the 2017 tax law. There were questions about how that might affect the next filing season, so the 2026 filing season for this 2025 year. When can we expect an

update on that? So that's a day by day in Congress. We're looking into that. But it won't affect your filing this season, the 2024 tax year. It's possible they'll do something this spring, this summer. It might go to the end of 2025 when the tax cuts expire on December 31st. It might be one of these last minute laws. And if that's the case, it will likely not kick in until 2026. But if it's done earlier, some professionals are saying that it might affect 2025 taxes. The last big shift I want to discuss is the IRS's new rules on getting your tax refund in bonds.

What's changing? There is a program where you could direct some or all of your refund in the savings bonds. And you would either get a paper savings bond, like the old fashioned way, or a savings bond in the Treasury direct account. And they've ended that program. But you can still use this form

8888 to split your direct deposit refund between two or more accounts. So you can still save your tax refund and you can put it in a savings account or even a traditional or Roth IRA. Ashley, tax season can feel overwhelming for some people. What's the best way to stay organized before filing this year? The best advice I would give is that you have all your documents. A challenge is that things are moving online. So the Treasury iBonds, for example, to get your 1099 from Treasury Direct, you have to actually go onto the site and download it. So they're not sending it

to you automatically. Anything you get in the mail, stick in a envelope, anything you get in the mail, stick in a minnow envelope, anything you get online, make an online folder that's tax year 2024, and then compare the two things and make sure you have everything together before you get started. So as things start coming in your inbox, hey, here's your form, here's your form, download them, maybe print them, and just have them ready to go so that whenever you're ready to file,

you have them. Having them in the online folder works well for me. There's so many options out there and they're mostly good options. So go ahead and do it. Ashley, thanks for being here. Thanks. Happy filing. You too. That's WSJ reporter Ashley Ebeling. And that's it for the special series, tax season 2025

what's new from your money briefing. We'll be back tomorrow with a new episode. This episode is produced by Jess Jupiter sound design by Michael Laval. Our supervising producer is Melanie Roy. Aisha Al-Muslim is our development producer. Scott Salloway and Chris Zinsley are our deputy editors. And Falana Patterson is the Wall Street Journal's head of news audio. I'm Arianna Espudu for The Wall Street Journal. Thanks for listening. entrepreneurial spirit? What are entrepreneurs doing to cultivate this spirit in their own children and build a legacy beyond their business? Tune in each month to the Road to Why podcast

by the Northern Trust Institute, where host Eric Schapea dives deeper with leading entrepreneurs on these topics and more. Find the Road to Why where you listen to your favorite podcasts.