Summers Tax Service

TIPS AND OVERTIME SUMMARIES PER THE IRS:

No Tax on Tips summary:

Under the One, Big, Beautiful Bill (PL119-21), workers may be eligible for new deductions for tax years 2025 through 2028 if they received qualified tips. For tipped workers, the maximum annual deduction is $25,000, which phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
An estimated 6 million workers report tipped wages.

No Tax on Overtime summary:

For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (generally, the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, 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).
The deduction is available for both itemizing and non-itemizing taxpayers.

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Please hang on to the IRS letter regarding the Advance Child Tax Credit as your tax preparer will need it.

IR-2021-255: IRS issues information letters to Advance Child Tax Credit recipients and recipients of the third round of Economic Impact Payments; taxpayers should hold onto letters to help the 2022 Filing Season experience IR-2021-255: IRS issues information letters to Advance Child Tax Credit recipients and recipients of the third round of Economic Impact Payments; taxpayers should hold onto letters to help the 2022 Filing Season experience Internal Revenue Service (IRS) sent this bulletin at 12/22/2021 02:05 PM EST....

Tax Tip 2021-104: A tip for teachers: Some educator expenses may be tax deductible Tax Tip 2021-104: A tip for teachers: Some educator expenses may be tax deductible Internal Revenue Service (IRS) sent this bulletin at 07/20/2021 09:30 AM EDT IRS Tax Tips July 20, 2021 Useful Links: IRS.gov Help For Hurricane Victims News Essentials What's Hot News Releases IRS - The Basics IRS Gu...