With the passage of the One Big Beautiful Bill Act (OBBB Act) many who took a standard deduction may now need to consider a potential change to itemizing. If this could be you, it is better to know this now, when you can still take tax advantage of your situation.
The Change:
In 2024 you could only take a maximum of $10,000 as an itemized deduction on Schedule A for taxes of any kind. To make matters worse, this limit was the same for single filers and married filing joint taxpayers, making it one of the most severe marriage penalties in the tax code. So many taxpayers who typically itemized deductions, often found themselves taking the standard deduction.
But effective for tax years 2025 thru 2029, this limit of tax deductions is increasing to $40,000. This will result in many individuals once again itemizing their deductions.
As you or your family members approach retirement years, it's important to have a basic understanding of the IRS gift giving rules. With this understanding, there are opportunities to leverage this tax law without creating a tax problem.
The rules
You may give up to $19,000 to any individual (donee) in 2025 and avoid any gift tax filing requirements.
If married, you and your spouse may transfer up to $38,000 per donee.
If you provide a gift to your spouse who is not a U.S. citizen, the annual exclusion amount is $190,000.
Gifts in excess of this annual amount trigger the need to file a gift tax form with your individual tax return. The excess gift amounts are then added to your estate for potential estate taxation.
The estate tax currently has a maximum rate of 40% and the donor of the gift (or their estate) is responsible for paying the tax.
Missed your quarterly estimates this year? You’re not alone. The IRS underpayment charge is nondeductible, compounds daily, and snowballs fast. Writing a big check today will stop new penalty accrual from this point forward, but it won’t erase the penalties tied to the quarters you already missed.
There is, however, a lawful way to make it as if you paid each quarter on time. It relies on how the tax code treats withholding from retirement distributions.