January 26 was the official beginning of tax season. It is time to focus on closing out the 2025 tax year and filing returns. 

2025 was a big year for tax law changes. Most notably, in July 2025, the federal One Big Beautiful Bill Act (OB3) was enacted. Several of its provisions impact your 2025 tax reporting. Additionally, states have struggled with whether and how to adopt OB3 changes. Guidance from the IRS and the states has been slow in coming and there remains some uncertainty. This tax season promises to be an exciting one, but we’ll all do our best and get through it. 

What’s new on your 2025 tax return?

In addition to higher standard deductions (increased annually), there are several new items to be aware of, including new deductions. Note that most of the deductions noted are limited or phased out for higher income taxpayers, so make sure ask your tax adviser about whether you may take them. They include:

• Personal deduction for seniors: New $6,000 single / $12,000 MFJ deduction for individuals born before January 2, 1961. 
• Higher state and local tax (SALT) deduction: For those itemizing deductions, the SALT deduction cap has been raised to $40,000 (up from $10,000).
• Car loan interest deduction: If you purchased a new car that was produced in the U.S. in 2025, you may be eligible to deduct up to $10,000 of car loan interest.
• Tax deductions for tips: If you work in an industry where tipping is common, you may deduct up to $25,000 of your tip income. This deduction phases out for higher income taxpayers.
• Tax deduction for overtime: If you earn overtime, you may be eligible to deduct up to $12,500 of eligible overtime pay.
• Charitable contribution deduction: For itemized returns, the annual charitable deduction limit for monetary donations is equal to 60% of your adjusted gross income (AGI) for 2025.
• Higher child tax credit: OB3 raised the maximum child credit to $2,200 (up from $2,000).
• Expiration of clean vehicle tax credits: The credit for purchasing a new EV or FCV vehicle is not available for vehicles purchased after September 30, 2025.
• Cryptocurrency: Crypto transactions on any centralized crypto exchange like Coinbase will be reported to the IRS and to you. So, if you sold or exchanged your crypto holdings on such a platform in 2025, you should expect a 1099-DA to be sent to you by mid-February. Speak with a trusted tax preparer to make sure your investments are accounted for properly on your return.

For additional information, please take a look at these MBK articles: Individual Tax Planning 2025 and Business Tax Planning 2025. 

Preparing your return

Will you be preparing your return yourself, or will you hire someone to file on your behalf? Have a plan in place now, so you know what required information you need to have at hand, and what you expect to pay for completion of all needed forms. If you will be using a new tax preparer, they will ask for a copy of your prior year return in addition to all relevant documents for your 2025 tax filing.

The IRS also offers a Free File program if your income is below $84,000. Go to IRS.gov or see the IRS2Go app to see your options. You may also qualify for local tax assistance through programs like Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE).

Other considerations

Use your resources

The Interactive Tax Assist (ITA) is an IRS online tool (https://www.irs.gov/help/ita) to help you get answers to several tax law items. ITA can help you determine what income is taxable, which deductions are allowed, filing status, who can be claimed as a dependent, and available tax credits. You can also visit MBK 2025 Tax Filing to find more resources for assistance with your 2025 tax filing including blogs on the latest changes and links to useful IRS and state resources.

Be vigilant

Be especially careful during this time of year to protect yourself against those trying to defraud or scam you. The IRS will NEVER call you directly unless you are already in litigation with them. They will not initiate contact by email, text, or social media. The IRS will contact you by US mail. However, you still need to be wary of items received by mail. Anything requesting your social security number, or any credit card information is a dead giveaway for scam identification. Watch out for websites and social media attempts that request money or personal information. You can check the IRS.gov website to research any notice you receive or any concerns you may have. You can also contact your tax practitioner for assistance.

What if you have been compromised?

How do you know if someone has filed a return with your information? The most common way is your tax return will get rejected for e-file. These scammers file early. You may also get a letter from the IRS requesting you verify certain information. If this does happen, there are steps to take to get this rectified:

1. Contact IRS Identity Protection Specialized Unit (800-908-4490)
2. File Form 14039 Identity Theft Affidavit
3. Paper file your return

In addition, we recommend you take further steps with agencies outside the IRS:

• Report incidents of identity theft to the Federal Trade Commission at www.consumer.ftc.gov or the FTC Identity Theft hotline at 877-438-4338 or TTY 866-653-4261.
• File a report with the local police.
• Contact the fraud departments of the three major credit bureaus:
• Equifax – www.equifax.com, 800-525-6285
• Experian – www.experian.com, 888-397-3742
• TransUnion – www.transunion.com, 800-680-7289
• Close any accounts that have been tampered with or opened fraudulently.

Identity Protection PIN (IP PIN)

If you are a confirmed identity theft victim, the IRS will mail you a notice with your IP PIN each year. You need this number to electronically file your tax return.

You may also opt into the IP PIN program. Use this link https://www.irs.gov/identity-theft-fraud-scams/get-an-identity-protection-pin to set up your IP PIN. An IP PIN helps prevent someone else from filing a fraudulent tax return using your social security number.

Getting your paperwork in order

Get your paperwork in order early to ease the stress of tax season. Below is a list of the most common required forms and items to gather, as well as few other things for you to consider as you prepare to file your 2025 tax return. Please note that this list is not exhaustive because everyone's tax situation is different. 

Make a note of changes to your life

It is important to review and organize any and all significant life events that happened in the past year as they may affect your tax return. Significant life events can include changes in marital status, welcoming a new child, a dependent filing their own tax return for 2025 tax year, or, in the unfortunate circumstances, the loss of a spouse or a dependent. Having records of this information can help ensure your return is accurate. 

Documentation of income:

• W-2 - Wages, Salaries and Tips
• W-2G – Gambling Winnings
• 1099-Int & 1099-OID – Interest income statements
• 1099-DIV – Dividend income statements
• 1099-B – Capital Gains – sales of stock, land, and other items
• 1099-G – Certain Government Payments
• Statement of State Tax Refunds
• Unemployment Benefits
• 1099-Misc – Miscellaneous Income
• 1099-NEC – Independent contractor income
• 1099-S – Sale of Real Estate (home)
• 1099-R – Retirement Income
• 1099-SSA – Social Security income
• K-1 – Income from Partnerships, Trusts and S-Corporations

Documentation for deductions:

If you think all your deductions for Schedule A will not add up to more than $15,750 for single, $23,625 for head of household or $31,500 for married filing jointly, save your time and plan to take the standard deduction.

Itemized Deductions:

• Medical expenses - out of pocket (limited to 7.5% of Adjusted Gross Income)
• Medical insurance (paid with post-tax dollars)
• Long term care insurance
• Prescription medicine and drugs
• Hospital expenses
• Long-term care expenses (in-home nurse, nursing home etc.)
• Doctors and dentist payments
• Eyeglasses and contacts
• Miles traveled for medical purposes
• State and Local taxes you paid 
• State withholding from your W-2
• Real estate taxes paid
• Estimated state tax payments and amount paid with prior year return
• Personal property (excise)
• Interest you Paid
• 1098-Misc – Mortgage Interest Statement
• Interest paid to private party for home purchase
• Qualified investment interest
• Points paid on purchase of principal residence
• Points paid to refinance (amortized over life of loan)
• Mortgage insurance premiums
• New car loan interest
• Gifts to Charity
• Cash and check receipts from qualified organization
• Non-cash items need a summary list and responsible gift calculation (IRS tables). If the gift is valued more than $5,000 a written appraisal is required.
• Donation and acknowledgement letters (over $250)
• Gifts of stocks – you need the market value on the date of gift

Additional adjustments: 

• 1098-T – Tuition Statement
• Educator expenses (Up to $300)
• 1098-E - Student Loan Interest Deduction
• 5498 HSA – Health Savings Account contributions
• 1099-SA - Distributions from HSA
• Qualified Child and Dependent Care Expenses
• Verify any estimated tax payments (does not include taxes withheld)

Sole proprietors (Schedule C) or owners of rental real estate (Schedule E, Part I) need to compile all income and expenses for the year. You need to retain adequate documentation to substantiate the amounts that are reported.

Items to keep on your radar

Submitting documents via United States Postal Service (USPS):

If you are planning to mail your documents, be aware of the latest post office change effective 12/24/25.

The new rule effects the postmark date system, published in the 11/24/25 Federal Register, explains that a machine-applied postmark indicates the date of the "first automated processing operation" at a processing facility, which may be later than the date the mail was dropped off. 

What could this mean? May be problematic for tax filings, because if received after the due date, the document won't be considered timely filed or the payment timely made unless the postmark bears a date on or before the due date (IRC Sec. 7502). 

Tips on how to avoid a late filing or payment: 

• If working with a tax preparer, send your documents in sooner rather than later to avoid the need to go on extension or any fees/penalties.
• Request a manual postmark by presenting the envelope at a USPS retail counter. The postage validation imprint applied to the envelope when a customer pays for postage will also show the correct USPS acceptance date.
• Senders may also use Registered or Certified Mail to obtain a receipt as evidence of the mailing date.

The End to Paper Checks:

On March 25, 2025, President Trump signed Executive Order 14247 in an effort to modernize "Payments To and From America's Bank Accounts", which will require all payments and collections related to Federal agencies to be fully electronic. Read more on this topic here: Phase Out of Paper Checks.

File timely and with confidence

Make this tax season go smoothly by getting your paperwork organized early and alerting your tax preparer to any changes to your life or financial situation. The sooner you file, the sooner you can focus on a great outlook for 2026.