Episode 73: In this episode, Timalyn addresses taxpayers who can't afford tax representation and how they can get help through the Low-income taxpayer clinics.

What is the Low-Income Taxpayer Clinic?

The low-income taxpayer clinic (LITC) helps qualifying taxpayers handle disputes with the IRS. It receives funding for the IRS but it is independent from the IRS and the Taxpayer Advocate Service (TAS). LITCs offer tax representation services, not tax preparation services like the Volunteer Income Tax Assistance (VITA) program.

LITCs can help taxpayers respond to IRS notices, handle audits, payment arrangements, and educate them on their rights and responsibilities as a taxpayer. All of these services are offered for a free or a small fee.

LITCs can also represent taxpayers in court.

Who is eligible for the Low-Income Taxpayer Clinic?

Taxpayers must meet certain criteria to be eligible to receive services from a LITC. The taxpayers income must be under a certain threshold. This threshold is 250% of poverty guidelines for 2025. The amount of the dispute is also usually under $50,000.

These same services are available to taxpayers whose first language is not English. Members of the ESL community may receive tax education from the LITC.

How can I find a Low-Income Taxpayer Clinic?

You can find an LITC near you by searching Publication 4134, Low Income Taxpayer Clinic List (PDF). If you are a spanish speaking taxpayer there is also a spanish version of the form that you can access here: Publication 4134 (sp), Low Income Taxpayer Clinics (LITCs) (Spanish version) .

What if I don't qualify for the Low-Income Taxpayer Clinic?

If you make too much money to qualify for the LITC all hope is not lost. You still have options such as an Installment Agreements, exploring an Offer in compromise is and How to qualify for an offer in compromise. But if those aren't right Currently not collectible status may be the right option for your account.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.

As we conclude Episode 73, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 72: In this episode, Timalyn addresses how long the IRS has to collect taxes from a taxpayer if they have unfiled tax returns.

Not filing taxes is not a get out of jail free card. You may yet be on the IRS' radar.

What are the different IRS statute of limitations?

Many taxpayers believe that the IRS only has 3 or 6 years to assess tax for a certain year on their account. That is incorrect. What they are mistaking that for is the Assessment Statute Expiration Date (ASED). The IRS has 3 years after your taxes were initially assessed to assess additional tax for that year. If the IRS suspects frivolous activity, they have 6 years to assess tax for that tax year.

Once the tax has been assessed, the IRS has 10 years from that date to collect. This is called the collection statute expiration date (CSED).

If no tax return has been filed, the IRS has an unlimited amount of time to assess tax for that tax year. This is why Timalyn urges taxpayers to take control of the situation and not give the IRS an open door to come assess tax on their account.

When the IRS prepares the return for the taxpayer, it is called a substitute for return (SFR). The IRS takes the third-party documentation that has been reported to them and creates a return, and assesses the taxpayer penalties for not filing. The IRS does not take into consideration all of the deductions or credits that the taxpayer may be entitled to. This is another reason why Timalyn urges taxpayers to take control of their own situation and to file instead of having the IRS file for them.

What if I have unfiled tax returns?

Don't put your head in the sand if you have years of tax returns to file. Take a deep breath and take control. If you are expecting a refund, you only have 3 years from when the tax return was due to claim that refund. This is called the refund statute expiration date (RSED). If a payment was made that you didn't have to make toward a year, then you have 2 years from the date of the payment to claim a refund of that payment.

If you have balances or are anticipating balances that you cannot pay in full, the IRS only requires you to file the past 6 years of returns to be eligible for a payment arrangement. In addition to that, you must also get current with your withholding/ estimated tax payments.

So if you haven't filed in 10 years, don't file years 7 -10. The IRS will not require it. If you were due refunds in years 4,5, and 6, the IRS may allow you not to file those since they won't add to the balance, and you can't claim the refunds.

Once you've done you're part to get into tax compliance, you can negotiate a payment arrangement. In episode 10, Timalyn talked about Installment Agreements. She also explains what an offer in compromise is and how to qualify for an offer in compromise. If your situation doesn't fit either of those currently not collectible status may be the right option for your account.

These episodes are hyperlinked as a resource for you to find out more about how they work. Timalyn doesn't judge the tax competency of taxpayers. But she does urge them to get the help they need. Even if it isn't with her.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.

As we conclude Episode 71, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 71: In this episode, Timalyn addresses the additional Medicare tax that taxpayers are faced with when they reach they reach a certain income threshold.

Before getting into the episode, Timalyn warns taxpayers not to go exempt on their W-4 because the government is shut down. She reminds taxpayers that they will still be responsible for the tax due when they file their taxes in the Spring.

What is the additional Medicare Tax?

The additional Medicare tax was created to help fund the tax provisions in the Affordable Care Act. This includes the premium tax credit.

The tax amount is 0.9% of self-employment income, and railroad retirement (RRTA) compensation that exceeds certain income thresholds that are set based on filing status.

The threshold for single and head of household taxpayers is $200,000. It is $125,000 for married taxpayers who file separately, and $250,000 for taxpayers who are married filing jointly.

How is the additional Medicare Tax computed?

Form 8959, Additional Medicare Tax is used to calculate the tax amount. The tax then flows to Schedule 2 of the 1040. The amount over the income threshold is what the taxpayer pays 0.9% on. If the taxpayer is self-employed and has a loss, they will not pay the additional Medicare tax on that amount.

For self-employed taxpayers, it is their responsibility to make payments of the additional Medicare tax with their estimated tax payments. If they have wage income, they can adjust their withholding to account for that.

You can check out America's Favorite EA YouTube page for a series on how to fill out your W-4 here: Tax Withholding

Employers are responsible for withholding the additional Medicare tax from wages or railroad retirement compensation if they pay the employee more than $200,000 in a calendar year. It does not matter what the filing status of the employee is. The employer does not have an obligation to match the amount that is withheld for the additional Medicare tax.

Expats pay additional Medicare tax too

U.S. citizens who live abroad have to pay the additional Medicare tax if their income exceeds the threshold. They are not exempt, even if they are eligible for the foreign income exclusion. This also applies to nonresident aliens.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.

As we conclude Episode 71, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 70: In this episode, Timalyn addresses a tax filing fundamental that is often misconstrued and can lead to unnecessary tax debt and penalties.

Head of household is a tax filing status for taxpayers who are unmarried but keep up the expenses of a home for a qualifying dependent.

Who Qualifies for Head of Household?

3 requirements must be met for a person to claim head of household status.

1 - They were unmarried for the tax year. This is for taxpayers who have never been married, are legally separated from their spouse, or are divorced. Married taxpayers who did not live with their spouse for the last 6 months of the year are considered unmarried for this filing status.

2 - They paid more than half of the expenses for the home. This includes, but is not limited to, things such as rent, mortgage interest, property taxes, food, utilities, and insurance.

3 - They have a qualifying person who they pay more than half of the expenses for and who lives with them more than half of the year. This can be a qualifying child. This includes children who may not be the biological children of the taxpayer. It can be a foster child, adopted child, or grandchild. If the dependent is not a child, they may still be a qualifying relative.

Check out the IRS interactive tool to help you determine which filing status you should use - What is My Filing Status?

Can I claim my girlfriend/boyfriend as a dependent on my tax return?

No, you can not claim your girlfriend or boyfriend as a dependent on your tax return. Even if they did not work and/or you provided more than half of their support for the tax year. Yes, you meet the test for being single. You also meet the support test. However, the test for them being a qualifying relative is not met.

Head of Household vs Single

Couples who cohabitate can not both claim head of household status. Even if a professional "allows it" it is not correct. They can not both meet the second requirement, providing more than haf of the support to upkeep the home. One must file as single while the other will file as head of household.

Filing as head of household does offer more tax advantages than filing as single. The standard deduction is higher if you are filing as head of household. This means that more of your money is automatically deducted from your taxable income.

Example: For the 2025 tax year, single taxpayers have a standard deduction of $15,750. This means their first $15,750 is not taxable. But for head-of-household taxpayers, the standard deduction is $23,625. So even if the two taxpayers make the same amount of money, the one filing as head of household is paying taxes on almost $8,000 less.

That's not all. The tax brackets are also more favorable for taxpayers who file as head of household. For the 2025 tax year, head of household filers can have a taxable income up to $64,850, and they'll still be in the 12% tax bracket. For single taxpayers, if they have taxable income, they'll be in the 22% tax bracket. The highest their taxable income can be to stay in the 12% tax bracket is $48,475.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.

As we conclude Episode 68, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 69: In this episode, Timalyn deviates from the discussion begun in Episode 64 about the One Big Beautiful Bill Act. Timalyn addresses the government shutdown and how it affects the IRS and, in turn, all taxpayers.

Today, she's explaining what a government shutdown is, how a government shutdown doesn't give taxpayers in tax debt a get out of jail free card, what to expect from the IRS right now, and how this will likely affect the 2026 filing season.

What is a government shutdown?

The government shuts down when Congress cannot agree on a budget. It is not that the country does not have money. The money can't be spent to fund government jobs or programs because, for this time period, Congress has not agreed on the amount to allocate to different expenses that the country has.

Some government agencies continue to work but without pay. Essential workers can stay, but others are sent home on furlough.

How does the government shutdown affect the IRS?

Keep in mind that the IRS has already lost a significant number of people, taking the number of employees from ~101,000 to ~71,000 since January. This government shutdown has called for another 30,000 - 35,000 employees to be furloughed at the end of the individual and corporate tax extension season.

With fewer employees, the services offered have become very limited. Taxpayers can expect delays in processing returns, payments, refunds, and payment arrangements. Certain audits and exams have come to a halt until after the shutdown.

Although things have come to a halt, the automated systems within the IRS are still working. This means that returns can still be filed. It also means that the automated collection system is still working. Taxpayers who have debts that they cannot pay in full are at risk of being levied if a bank account match is made by the system.

If you are in that position, take care of your situation as soon as possible. Removing a levy right now will be more difficult than it typically is due to fewer staff being available.

How will this affect the next tax season?

The IRS typically shuts down the e-file system in November to prepare for the next season. It typically does not open again until the end of January, in a normal year. This year, the One Big Beautiful Act was passed as law in July.

There are things in the law that went into effect this tax year, which means they will affect the return that you file in the Spring. The IRS has yet to translate some of the things that Congress has written into law under the One Big Beautiful Bill Act. But who can do that if the government is shut down?

A government shutdown doesn't equal a complete IRS shutdown. But with the restrictions they are facing right now, it will feel that way. The IRS also has to update forms and publications so that taxpayers and professionals will know how certain things should be reported on the tax return. With them being out of the office now, that will put them behind on making these updates for next season.

What should you do?

If you have tax debt, get it off the back burner. Take care of it as soon as possible. There are different options for you if you need more time or can't afford the proposed monthly payments.

Consider hiring a tax professional whose expertise is in handling back tax situations. If you have to make a call to the IRS, be sure to document the agent's name, badge number, as well as the time and date that you are calling.

When mailing something, be sure to send certified and keep the green receipt.

Plan for delayed processing and service times as well.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.

As we conclude Episode 68, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 68: In this episode, Timalyn continues the discussion begun in Episode 64 about the One Big Beautiful Bill Act.

Today, she's explaining the charitable contribution deduction and the changes that have been made to it under the One Big Beautiful Bill Act.

What is a charitable contribution?

Charitable contributions are money or property that are given to a 501(c)(3) nonprofit organizations, religious organizations, educational institutions, fraternal organizations, public cemeteries, and certain government organizations.

The IRS has a search tool that can be used to look up tax-exempt organizations.

Charitable Contributions Deduction

The IRS allows taxpayers to receive a deduction for the charitable contributions they give to qualified organizations. This deduction lowers the taxpayer's taxable income. In the past this deduction has been reserved for taxpayer's who itemize deductions.

During COVID taxpayers who didn't itemize could receive a partial charitable contribution deduction .

The One Big Beautiful Bill Act brings this back with an increased amount. Taxpayers who do not itemize can still deduct up to $1,000 of their charitable contributions ($2,000 if married filing jointly).

For those who do itemize the One Big Beautiful Bill Act introduces a floor to this deduction. Taxpayers can deduct the amount they have given that is over .5% of their adjusted gross income (AGI). Timalyn uses the example of a taxpayer having an AGI of $100,000. .5% of that is $500. That means the taxpayer can deduct the amount they have given to charitable organizations that is over $500.

Donation Tax Deduction Limit

The amount that can be deducted for charitable contributions is not unlimited. For cash donations it is limited to 60% of the taxpayer's adjusted gross income. So, for the taxpayer who has an AGI of $100,000 they cannot deduct more than $60,000 in cash donations for the current tax year.

If the taxpayer has given more than 60% of their AGI in charitable contributions the amount that exceeds the limit rolls over to the next year. This does not apply to those who will take the partial charitable contribution deduction.

Deductions given to private foundations and cemetery organizations are limited to 30% of taxpayer's adjusted gross income.

Charitable Contribution Record Keeping

Taxpayers are responsible for keeping track of their donations. For any cash donation of $250 or more a contemporaneous statement from the organization is required to substantiate the deduction.

If volunteering the value of the taxpayer's time may not be deducted. However, the mileage they drive with their personal vehicle can be deducted at 14 cents per mile (2025). Also the direct costs associated with volunteering may be deducted.

For non-cash donations of at least $500 written acknowledgement from the organization from the charity and Form 8283, Noncash Charitable Contributions is required.

For non-cash donations valued at $5,000 or more a qualified appraiser must do an appraisal of the property, complete section B of Form 8283, and sign it along with someone from the charity.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it.

As we conclude Episode 68, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 67: In this episode, Timalyn continues the discussion begun in Episode 64 about the One Big Beautiful Bill Act. Timalyn opens up the episode with a reminder of what the One Big Beautiful Bill Act is.

There is a video version of this episode! You can watch it here : Senior Deduction Video

Today, she's explaining the enhanced senior deduction for taxpayers who are 65 and older. This deduction will be available for tax years 2025 - 2028. If there is any part of this new tax law that you'd like to hear her cover, please let us know.

What is the standard deduction for 2025?

The standard deduction is an amount that the IRS allows taxpayers to deduct from their taxable income. For 2025 the standard deductions are:

• $15,750 for taxpayers filing as single or married filing separately

• $31,500 for married filing jointly taxpayers

• $23,625 for those taxpayers filing as head of household

It is an additional $6,000 deduction for each qualifying taxpayer. So if a couple married filing jointly is in their 70s, they are eligible to deduct an additional $12,000 from their taxes if they meet other criteria.

Seniors already get to deduct an additional $1,600 for those Married filing separately and jointly, and $2,000 for those filing as Single or Head of Household. The $6,000 is in addition to this. The senior deduction is also available whether the taxpayers itemize or use the standard deduction.

If the taxpayer is not married filing jointly, the deduction begins phasing out when their modified adjusted gross income reaches $75,000. This doubles to $300,000 for taxpayers who are married filing jointly. The IRS has yet to give more guidance on this.

To stay up to date with these changes, Timalyn lets listeners know that Tax Tips with Timalyn will be coming back. There will be different paid versions to subscribe to relevant information for individual taxpayers and business taxpayers.

No Tax on Social Security Benefits

A proposal was made during President Trump's last campaign that there be no tax on Social Security benefits. Social security benefits are still taxable income, but it is based on your provisional income, whether or not you actually pay taxes on the income. Timalyn goes into more detail about this in another episode of the podcast and a video. Both are linked down below for your convenience, as well as a playlist with other relevant information for retired taxpayers.

• Is My Social Security Taxable?

• Retirement and Taxes

• Episode 13 - Retirement and Income Taxes

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it. After all, back taxes shouldn't ruin their life either.

As we conclude Episode 67, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 66: In this episode, Timalyn continues the discussion begun in Episode 64 about the One Big Beautiful Bill Act. Timalyn opens up the episode with a reminder of what the One Big Beautiful Bill Act is. Timalyn also warns that this tax year may not be the one where you want to let someone who is not a professional handle your preparation.

Today, she's explaining the car loan interest deduction. If there is any part of this new tax law that you'd like to hear her cover, please let us know.

Car Loan Interest Deduction

This new deduction is effective for tax years 2025 - 2028.

The vehicle must be purchased new for personal use, and leased on vehicles do not count for this deduction.

The maximum deduction is $10,000. The deduction begins phasing out for single and head of household taxpayers with a modified adjusted gross income of $100,000. That amount doubles to $200,000 for married taxpayers who file jointly. This deduction is not available for taxpayers who are married but file separately.

This deduction is only for qualified vehicles. The vehicle has to have final assembly in the United States. It has to be less than 14,000 pounds, so it can be any of the following:

• Car

• Minivan

• Motorcycle

• Pick-up truck

• SUV

To qualify for the deduction, the loan has to have originated after December 31st, 2024, for personal use. Used vehicles do not qualify for the deduction. The loan must also be secured by a lien on the vehicle.

Lenders will be responsible for reporting the interest paid to both the IRS and the taxpayer on an interest statement.

Timalyn warns taxpayers that this is the year they may not want to let a family member who is not a professional handle their taxes. There are a lot of mid-year changes that, if not handled correctly, can lead to tax issues.

To stay up to date with these changes, Timalyn lets listeners know that Tax Tips with Timalyn will be coming back. There will be different paid versions to subscribe to relevant information for individual taxpayers and business taxpayers.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it. After all, back taxes shouldn't ruin their life either.

As we conclude Episode 65, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes, visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.

Episode 65: In this episode, Timalyn continues the discussion begun in Episode 64 about the One Big Beautiful Bill Act. Today, she's explaining the no tax on tips deduction. If there is any part of this new tax law that you'd like to hear her cover, please let us know.

No Tax on Tips

Timalyn jumps right in to let listeners know that tips are still considered taxable income. In order for them to be deducted, they must also be reported to the IRS.

The One Big Beautiful Bill Act created a new section in tax law that allows a maximum of $25,000 in qualified tips to be deducted from an eligible taxpayer's returns. This deduction is available for tax years 2025 - 2028.

To be eligible, the taxpayer must have a Social Security number. The social security number must be administered by the social security administrator prior to the due date of the tax return.

The tip is limited to the amount the taxpayer earned in qualified tips or $25,000, whichever is less.

For single taxpayers, the deduction begins to phase out once their modified adjusted gross income (MAGI) reaches $150,000. For taxpayers filing jointly with their spouse, that MAGI limit doubles to $300,000, but the deduction remains at $25,000.

This deduction is not available to married taxpayers filing their taxes separately from their spouse.

For every $1,000 the taxpayer goes over the MAGI limit, their deduction is reduced by $100.

The deduction is also available to self-employed taxpayers. They can only take the deduction up to the amount of their net income. It cannot create a loss.

Qualified tips must be cash and voluntary. This means that the payor has to select the amount of the tip. Tips earned in a tip-sharing arrangement or charged to a card count as cash tips for the purposes of this deduction.

Qualified tips will be found on the taxpayer's W-2, wage statements, contractor's 1099-NECs, and on third-party payment processing Form 1099-K. Taxpayers who report unreported tips on Form 4137 may also use that form to show their qualified tips.

Timalyn warns taxpayers that this is the year they may not want to let a family member who is not a professional handle their taxes. There are a lot of mid-year changes that, if not handled correctly, can lead to tax issues.

Need Tax Help Now?

If you need answers to your tax debt questions, book a consultation with Timalyn via her Bowens Tax Solutions website. Click this link to book a call.

Please consider sharing this episode with your friends and family. There are many people dealing with tax issues, and you may not know about it. This information might be helpful to someone who really needs it. After all, back taxes shouldn't ruin their life either.

As we conclude Episode 65, we encourage you to connect with Timalyn on social media. You'll be able to subscribe to this podcast on Spotify, Apple Podcasts, YouTube, and many other podcast platforms.

Remember, Timalyn Bowens is America's Favorite EA, and she's here to fill the tax literacy gap, one taxpayer at a time. Thanks for listening to today's episode.

For more information about tax relief options or filing your taxes , visit https://www.Bowenstaxsolutions.com/ .

If you have any feedback or suggestions for an upcoming episode topic, please submit them here: https://www.americasfavoriteea.com/contact.

Disclaimer: This podcast is for informational and educational purposes only. It provides a framework and possible solutions for solving your tax problems, but it is not legally binding. Please consult your tax professional regarding your specific tax situation.