Every year, the IRS releases inflation adjustments that affect multiple tax provisions. Given that we are reaching the end of 2025, it is important to be aware of these changes for 2026 as they affect most taxpayers. Some important changes include adjustments to the standard deduction, estate tax credits, and earned income tax credits.
Author: Michael Gollob
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2025’s One Big Beautiful Bill Act
With the passing of the One, Big, Beautiful Bill, there are many changes that will begin to affect taxpayers in 2025. The IRS has provided a comprehensive list on their website with some of the bill’s provisions. These items include tax inflation adjustments, the new senior deduction, no tax on tips or overtime, and more.
Do you think you may be affected? Click the link to learn more: https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions
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How Do Interest & Penalties Work?
If you’ve filed your taxes late or failed to file your taxes at all, the sound of penalties and interest may sound intimidating. Penalties are calculated as 5% of the tax you owe for each month that your return is late, with a maximum limit of up to 25% of your tax liability. On the other hand, the interest rate varies as it is updated every three months and is based on the federal short-term rate plus 3 percent. This rate is updated every three months, and it compounds daily until the full tax liability is paid.
Learn more in this article by HomeWork Solutions.
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Missed the Tax Deadline? Here are Payment and Relief Tips
For taxpayers who missed the tax filing deadline, they may be subject to interest and penalties if they owe. The IRS offers multiple payment options and payment plans to accommodate those who may not be able to pay immediately. In certain circumstances, taxpayers can even request penalty relief if it is their first time filing late.
Visit the irs.gov website to learn more:
https://www.irs.gov/newsroom/irs-has-options-to-help-taxpayers-who-missed-the-filing-deadline -
Frequently Asked Questions for the PAS-1 Form
This year, the State of NJ has issued a blue book that combines three property tax relief programs for eligible taxpayers. The PAS-1 form allows individuals to apply for three programs – the Senior Freeze, ANCHOR, and Stay NJ – if they are 65 or older, Social Security Disability recipients, or mobile homeowners. With the new process, it is common to have questions about what has changed and when applicants should expect to receive payments.
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2025’s Dirty Dozen Tax Scams
Every year, the IRS releases a list of 12 scams and schemes that affect taxpayers. Named the “Dirty Dozen”, these items are listed to raise awareness to common schemes that are used to steal money and sensitive information. Aside from well-known identity theft, some of these scams can range from donating to fake charities to falsely claiming tax credits.
Although this year’s tax season is over, it is important to stay informed to avoid falling victim to these common scams.
Visit the irs.gov website for this year’s list:
https://www.irs.gov/newsroom/dirty-dozen-tax-scams-for-2025-irs-warns-taxpayers-to-watch-out-for-dangerous-threats -
Is the BOI Already Dead?
Is the BOI already dead?
A federal judge has ruled that the Corporate Transparency Act (CTA) and its beneficial ownership information (BOI) reporting requirement are unconstitutional, but only for the National Small Business Association (NSBA) and its 60,000+ members as of March 1, 2024. The ruling, however, has the potential to have nationwide consequences as other court cases may now arise as a result.
Small businesses who are required to file should continue to meet compliance requirements while waiting for official court decisions. Businesses that fail to file on time are risking significant civil fines, interest, penalties, and possible criminal penalties if the Treasury prevails in the appeals process. Filing provides peace of mind and ensures compliance, even if it means potentially losing filing fees and advisor costs. The BOI requires small business owners to submit a copy of their driver’s license before January 1, 2025.
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How to File an Extension for Your Tax Return
Are you ready for Tax Day? Need more time to prepare your federal tax return? Please be aware that an extension of time to file your return does not grant you any extension of time to pay your taxes. You should estimate and pay any owed taxes by your regular deadline to help avoid possible penalties. You must file your extension request no later than the regular due date of your return. Taxpayers in certain disaster areas do not need to submit an extension electronically or on paper.
Check to see if you qualify and the due date of your return at irs.gov.
Filing an extension gives you until October 15 to file a return. You can also get an extension by electronically paying all or part of your estimated income tax due and indicating the payment is for an extension. To get the extension, you must estimate your tax liability on this form and should also pay any amount due. You can make a same day payment or schedule a payment by accessing your IRS Individual Online Account, using Direct Pay, using the Electronic Federal Tax Payment System (EFTPS) or with a credit or debit card. If an extension is selected when making your payment, you won’t have to file a separate extension form and you’ll receive a confirmation number for your records.
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Beware of Scams This Tax Season
The IRS warns taxpayers to be wary of scam mailing that claims they are owed an “unclaimed refund”. These scams then request sensitive information from taxpayers including but not limited to detailed pictures of drivers’ licenses to commit identity theft and fraud. These scams can be recognized by awkward wording, requests for bank routing information, social security numbers, or other unsolicited requests for sensitive information by email, phone, or text. The IRS will never initiate contact with taxpayers via email, text or social media regarding a bill or tax refund. Never click on any unsolicited communication claiming to be the IRS as it may surreptitiously load malware. It may also be a way for malicious hackers to load ransomware that keeps the legitimate user from accessing their system and files.
For more information, visit irs.gov:
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IRS Improvements to Assist Taxpayers
The IRS has released some new improvements to assist taxpayers this filing season. This includes expanding in person services and a reduction in wait times on the IRS toll-free call line with a new customer callback feature. There have also been improvements to online resources such as the “Where’s My Refund?” tool and the paperless processing returns. These improvements allow the software to be accessed on mobile devices with clear and detailed updates on their returns. As the tax season begins on January 29th, 2024 be aware of the helpful new improvements IRS has prepared and how they can effectively answer any questions you may have as well as effectively streamline your return!
Visit irs.gov for more information: