Name: Tax Year 2025 Tax Law Update, Planning & Tips
Uploaded: 2026-02-09T18:16:07.766Z
Duration: 2 h 8 s
Description: Tax Year 2025 Tax Law Update, Planning & Tips

Transcript for "Tax Year 2025 Tax Law Update, Planning & Tips": Hello, everybody. I'm Mike DiVolio, and welcome to our session today, Tax Year 2025: Tax Planning Tips and Strategies. The goal of this session is to equip you with the latest tax law and form changes, planning tips and impact to your practice and clients as we head into this upcoming tax season. And I'm gonna introduce my partner today, Megan. Thanks, Mike. I am Megan Leasley. I am a CPA and the Director of Tax for Dark Horse CPAs. We are a fully remote firm with CPAs located across The United States. A little bit of in tax compliance and advisory services, as well as CAS compliance and advisory. We've I've been in accounting for about, I'm going into my eleventh tax season, starting with a large regional firm where I worked for many years specializing in rental real estate and high net worth tax before I moved into a small local practice, where I became much more of a generalist. And then I joined Dark Horse CPAs a little over, actually, I just had my three year anniversary. I started as a senior manager, was promoted to principal shortly after joining the firm, and now I've been director of tax for about a year and a half. So excited to be here. Thanks, Mike, for inviting me to join. Thanks, Megan. We're very we're delighted to have you today. A lot of good information to deliver to the attendees. I'm Mike DiVolio. I have a dual role at Intuit. I'm a tax law specialist, also a business operations manager in the tax realm. Love teaching classes for customers and employees like we're doing today. I also write tax and product articles for the media and our Tax Pro Center, which is our pro tax blog. I worked in public accounting many years ago, and now I continue to prepare taxes for friends and family. And I'm also very happy to be here today. All right, we got a little bit of housekeeping to do. Apologize if you've seen this before, it gets a little repetitive, but we gotta go through it. We may have some newbies. So the webcast will stream audio exclusively through your computer speakers. We recommend using Chrome or Safari for the best experience. Please don't use VPN, AdBlocker, or a firewall such as McAfee, but instead use Incognito mode in your browser. Please complete the survey before you leave as your feedback is super important and valuable to us, and we'll remind you about that at the end. A recording will be available using the same MagicLink login shortly after the session concludes. The recorded webinars are not eligible for CPE and CE, unfortunately, just a live session. Ask content related or tech issue questions in the Q and A tab to be answered by the moderators. And you can find relevant documents or links in the Docs tab in that same location. All right. Polling, very important. When a poll is launched, you'll see a pop up on your lower left area of the event window. Click Go to Polls to be taken to the tab, or click on the Polls tab, two entry points. If you missed this on the main screen, you can still vote by going to the Poll tab in the upper right hand corner next to the chat and messages. And we're gonna have eight, yes, count them, eight polling questions along the way. Gonna test your knowledge. This session is eligible for two CPE credits and two IRS continuing education credits. Eight interactive polling questions will occur during the session. To receive the credit, you must answer those polling questions and attend a minimum of fifty minutes per hour. Follow requirements or met certificates will be sent to the email that you provided during registration. And those certificates will be sent within forty eight hours. Check your junk or spam folders if not received within the forty eight hours. To troubleshoot for CE and CPE contact, here's the email address, protax, one word, underscore trainingintuit dot com. Provide details including the webinar title and the date that you attended. All right, we got a quick disclaimer here. As you know, session is educational in nature. The information presented is accurate and up to date. Both Megan and I double checked all the material. Remember to keep yourself updated on any future guidance and interpretations by the government. Super important now, I mean, with this OB3 Act, there's changes all the time. So keep yourself updated. Carefully consider facts and circumstances when applying tax laws in your practice. All right, we got a robust agenda today. And here's how it's gonna break down. New and revised provisions from OB3 that are effective in tax year 2025. We're gonna go through additional tax form changes that we received from the IRS. We'll cover the new ten ninety nine DA, digital asset proceeds from broker transactions, brand new this year, retroactive extenders, Tax Cuts and Jobs Act, permanent extenders, terminated provisions, provisions beginning in tax year 2026 and after, and then we have some resources to share out with you. In each section and where applicable, we'll cover the prior rule and then the new rule, give you a basis of comparison. We'll point out any planning strategies to best help your clients. Please pay special attention to the effective dates because they vary quite a bit. And we do point them out, but you'll wanna pay attention to that. We'll cover the higher impact items, the more important elements of each provision and key callouts. You can use the rest of the material as a reference guide, including any hyperlinks. Okay, some general information before we get into the nitty gritty here. There's an OB3 landing page where they posted some basics around the new legislation, and you can find this link in your materials. We've been receiving guidance and updated tax forms and instructions for TY25 changes. A number of states have moved to decouple from specific OB3 provisions. This creates potential compliance challenges for tax professionals and taxpayers and developers like ourselves. Our tax products are being updated accordingly. By the way, you might see one big beautiful bill, OBBB and OB3 for abbreviations. We're gonna keep it simple and use OB3 throughout. Here's a link to an article addressing the IRS phasing out of paper tax refund checks beginning this season, and another article on annual inflation adjustments for TY26. I think there's two waves of that. This is the first wave. The IRS then comes out with another article outlining the rest of those inflation adjustments. Finally, a link to an infographic on OB3 changes that you can share freely with your clients. Kind of breaks things down at a lay person's level and simplifies it. So nice little resource that you can send out and touch base with your clients. Okay, Megan. So now I'm gonna give you a little bit of approach, my approach of my approach to tax law changes, especially when there's sweeping changes like we saw with the TCJA and now with OB3. It can be pretty overwhelming to try and track of every change, every nuance that is and all the guidance that is coming out as those things are put into place. So I would say definitely focus on the most impactful changes for your clients. That can make it much more focused and help you to eliminate some of the noise that comes from all of the other pieces that are coming out. The other thing is attending webinars and training just like this one. There's lots of them being put out out there. And you know, if if you get the opportunity, not only are you getting some CPE, most of them are free, and you can also be learning of the things that are going to be most impactful to you and your clients. And then my last suggestion subscribing. If you haven't already, subscribe to the IRS newsletters. I put a link to it in the presentation. And you can be very targeted with which subscription you would like. But that's one way that you can get immediate notification of any changes that pertain to the particular sections of the tax law changes that you are most interested in directly from the IRS. So with that, we are going to go into our first poll. So we're going to give about a minute for each one of these polls. As you can see here, what is your biggest concern for this upcoming tax season? Is it going to be late federal or state tax compliance updates? My firm's workflow, hiring seasonal staff, or I don't have any concerns. And you can answer the polling question by going to the poll tab in the upper right, top right navigation. And then you should see the text turn purple once you've actually selected your answer. See some answers rolling in here may give everyone a few more seconds. We have time to respond to this. Looks like there's some concerns out there with one, two and three for sure. All right, so no right or wrong answer. Thanks for your input on that one. And we are going to move on now to new and revised provisions. Thanks, Megan. Those are my favorites when there's no right or wrong answer. All right, so first up here, we're gonna cover new and revised provisions effective for this coming tax season, TY '25. And these were the big changes that we had from OB3 and you'll be familiar with these already. Okay, so we have starting off with the impact on the tax form. Draft ten forty, there's a new, a brand new Schedule 1A, additional deductions. And the big four, I call them, no tax on tips, no tax on overtime, no tax on automobile loan interest and the enhanced deduction for seniors. And there's the IRS landing page with more details. A little bit of a misnomer by saying no tax on tips. We all know it's there are limitations like everything, but it is what it is. It's catchy anyway. Okay. Additional deductions from Schedule 1A are then reported on the ten forty line 13B after adjusted gross income deductions, separate from itemized deductions on Schedule A and separate from the standard deduction. And I'm giving you a link to the draft ten forty. There's been a lot of back and forth on this. Some people think that some of these deductions are reduced AGI and but this form 1A and also the ten forty make it clear that it's all after AGI and before, and it does reduce taxable income. Unless something changes, that is a draft form. All right. According to the IRS for TY25 related to the new law, This came out a little while ago. Form W-two ten ninety nine, Form nine forty one, and other payroll return forms will remain unchanged. Federal income withholding tables will not be updated for these provisions. Employers and payroll providers should continue using current procedures for reporting and withholding. These decisions are intended to avoid disruptions during tax filing season, and give the IRS business tax professionals enough time to implement the changes effectively. And we're looking ahead to TY26. The IRS is working on new guidance and updated forms, and we'll share what we have with you as we go along here. All right, first one here, we're gonna cover no tax on tip income. It's effective for 2025 through 2028. So it's one of those temporary provisions, unless they extend it. Well, that's always a wildcard. Employees, self employed individuals may deduct qualified tips received in occupations that are listed by the IRS, as customarily and regularly receiving tips on or before 12/31/2024, and that are reported on a W-two, a ten ninety nine, or other specified statement furnished to the individual, or reported directly by the individual on the Form 4,137. Qualified tips are voluntary cash or charged tips received from customers or through tip sharing. The maximum annual deduction, 25,000. For self employed, the deduction may not exceed the individual's net income without regard to the deduction from the trade or business in which the tips were earned. The deduction phases out for taxpayers with modified AGI over $150,000 and 300,000 for joint filers. The deduction is available for both itemizing and non itemizing taxpayers. Self employed individuals in a specified service trade or business, SSTB, under 199A, that's qualified business income, they're not eligible. Employees whose employer is in an SSTB also not eligible, unfortunately. Taxpayer must include their social security number on the return and file jointly if married to claim this deduction. For reporting, employers and other payers must file information returns with the IRS and furnish statements to the taxpayer showing certain cash tips received and the occupation of the tip recipient. Yes, that was a mouthful. Okay, moving on here, we'd like to see what the compliance end looks like. So here's the section of the form, no tax on tips. Tips are gonna be reported from the following forms, the W-two, 4,137, ten ninety nine NEC, ten ninety nine miscellaneous income, ten ninety nine ks. So various sources there. All right, some more details, qualified tips, tips received by an individual in an occupation which customarily regularly receive tips on or before 12/31/2024. We mentioned that before. Amounts need to be paid voluntarily and not subject to negotiation. Tips must be the amount determined by the payor. Tips must have been reported on statements to the IRS. And that'll help out you folks. Specified service, trade or businesses not eligible. That's gonna include fields of health, law, accounting, actuarial science, performing arts, consulting, athletics, financial services and brokerage services. You probably recall that from qualified business income deduction. One of our faves. So, while we now have this new deduction for no tax on tips, tips are still subject to Social Security and Medicare taxes. And the question out there right now is what the state conformity is going to look like. And there's, it's pretty limited at the moment, our knowledge of that. And part of it is that many states have static conformity. That means they set a date that they will conform to the IRC to the Internal Revenue Code. So until a new date is set, that is post OB3, they won't conform. And I've included a link here for which states are those static conformity as well as which what some of the implications for conformity might be. Another thing that Mike pointed out is that deduction is available to self employed taxpayers that receive tips. So it's pretty important to be on the lookout for classifications, because employees of SSTBs are also disqualified from this no tax on tips provision. People often get really confused over that generic bucket that isn't very clearly defined as actuarial science, accounting, those medical, etc. That is any trader business where the principal asset is the reputation or skill or one of one or more of its employees that are owners. So keep in mind there's some great guidance out there about what that actually means because that seems really generic. And there are some some there's plenty of guidance out there that can help you bucket that to make sure that your person that you're taught your client that you're talking with is not subject to that SSTB rule there. All right, cool. That's the form itself of W-two. Thanks, Megan. Yeah, this is actually a look forward. Unfortunately, we don't have this reporting for TY25. It makes life a lot easier. It would make life a lot easier. So here's a draft version of the 2026 W-two and you have box 12A, includes a TP code to report total amount of qualified tips. That makes it very, very easy, but we gotta wait for that one. But we thought we'd give you a heads up there, nonetheless. Okay, here's a basic example that we put together. So you have a married filing joint return, taxpayer receives 20,000 in tips, spouse receives $15,000 in tips, modified AGI, 160,000. Total allowable deduction is gonna be $25,000 max, which is less than the tips total. And they're also underneath the $300,000 AGI ceiling. So pretty straightforward, but that's how the calculation is gonna pan out there and they handle that on the tax form. Okay, the next big section, no new deduction on overtime, no tax on overtime, effective for 2025 through 2028. Also temporary, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay, such as the half portion of time and a half compensation That is required by the Fair Labor Standards Act. Getting pretty technical. And that's reported on Form W-two, ten ninety nine, and other specified statements furnished to the individual. Maximum annual deduction is gonna be 12,500 per individual, 25,000 for joint filers. The deduction phases out for taxpayers with modified AGI over 150,000, 300 ks for joint filers. You're gonna reduce the 12,500 by $100 for every $1,000 greater the phase out threshold. Little formula there that baked into the form. The deduction reduces taxable income, like we said, available for both itemizers and non itemizers. Taxpayers must include their social security number on the return and file jointly to claim the deduction, just like the other provision. Employers and other payers are required to file information returns with the IRS and furnish statements to the taxpayer showing the total amount of qualified overtime comp paid during the year to help you folks out. Unless you're doing some of those payroll forms. Then it's a little bit of a challenge, maybe. Okay, going back to the form here, we've weaved it in, no tax on qualified overtime comp, also reported on the schedule 1A. Overtime is reported on the following forms, W-two box one, ten ninety nine NEC box one, ten ninety nine miscellaneous box three. Be on the lookout there. Some more details and Oh, I'm sorry. Some planning tips and insight on that no tax on overtime, and there's not a lot of planning you can do here. But certainly, there's certain workers like police officers, firefighters, nurses, retail workers that are likely going to benefit from this deduction. And one thing to be really cautious of if you're if you don't have the final numbers and you're just looking at a projection is, you know, look to those pay stubs or within the payroll reporting system, you should be able to see what that cumulative number is. But it's important to note that the overtime pay that is deductible is only the incremental piece of pay that's eligible eligible for the deduction. So it's the half portion of that time and a half in excess of the regular rate. And Mike's going to show you a in a moment here, he's going to show you a calculation of that. Great. Thanks. Okay, again, I look forward to 2026 draft version of the W-two. They have in box 12A a TT code to report total amount of qualified overtime comp. So life will get a little bit easier next year. And here's a simple example. Taxpayer makes $20 an hour. They work twenty five hours of overtime at $30 per hour. Modified AGI, 120 ks. Twenty five hours of overtime multiplied by $10 an hour, which is the 30 minus 20, that's the differential, And that's gonna equal $250 allowable overtime deduction. Okay, so moving on to another new deduction, we've got the enhanced or I guess enhanced deduction enhanced deduction for seniors. So prior to 2024, we didn't have this. This is separate from the existing additional standard deduction that exists. But and so this is going to be a new deduction of $6,000 for ages 65 and over. It's pretty straightforward, need to be 65 as the last day of the tax year and income here so income here for the phase out is defined as modified adjusted gross income. One other little nuance here is if you are married, you must file jointly in order to claim the deduction. Other details you can see there on the slide with the phase out as well as the deduction reducing taxable income. So as you can see here on this slide, this is going to be the new area on schedule 1A again that is going to show that enhanced deduction for seniors. And you'll notice that on line 36A, like many of the other provisions this year, you must, you and your spouse must have a valid social security number in order to get many of these deductions, including this enhanced deduction for seniors. Some planning tips and insight on this. So this could impact whether seniors might want to start claiming Social Security benefits if they have the opportunity to start this early. But I would definitely look to your clients to consider opportunities to accelerate or either either accelerate or delay income to meet those deduction thresholds because there are phase outs associated with this deduction. So another consideration here is if you have a 65 plus client who's considering taking their retirement distributions, because they will no longer be penalized, but they're still pre RMD, so pre required minimum distribution. Keep an eye on this because if that's going to push them into losing out on that 6,000 it's a pretty good deduction to be able to be getting. So that might, they may want to delay that timing even further based on those tax implications. So moving on to another new deduction, we have the no tax on car loan interest. As this didn't exist before, it was a deduct it is a deduction of up to $10,000 per year for interest that's paid on qualified car loans. So what is a qualified car loan? Well, it has to be for personal use. And the cars have to have it's only on cars whose final assembly occurred in The United States. This should be for that final assembly piece, it should be indicated on the dealer's vehicle information label. But if not, there's this link in here that that I provided that is a VIN decoder that where you can plug in that VIN. The VIN is required to report this car loan interest, so you have to have the VIN anyway, you can use that VIN decoder to determine whether that final assembly did occur in The United States. Has to be on a loan incurred after twelvethirty onetwenty twenty four. GVW, so gross vehicle weight, must be below 14,000 pounds. And there is used vehicles, by the way, do not qualify here. This is only on new vehicles. And for the the phase out, because again we have a phase out like we do on pretty much everything, it phases out for married couples who have income in excess of $200,000 or $100,000 for individual taxpayers. That is going to reduce the $10,000 deduction, the max deduction by $200 for every $1,000 that they have, that their AGI is greater than the phase out threshold. So as with the other deductions, we are back to schedule 1A. And you can see here you'll all not only is that BIN required, you can see that spot on line 22 here where you are going to have to put in the BIN. But you'll also need to indicate if any of the interest is deducted on schedule C, E, F because that will not qualify. You can't double dip here. And so some planning tips here. So you'll see that there's a link here to the transition relief that has been provided for lenders who in the report, the new reporting requirements for the car loan interest under OB3. So that transition relief basically indicates that lenders will have met their reporting obligation for that interest. It are making a statement available to the buyer indicating the total amount of interest received. So basically there's not a formal way of doing this, but they have they do have to make a statement available. Some timing issues here for planning. So buyers of new vehicles definitely want to consider the timing. They want to take advantage of this deduction. If they are if they're planning on buying a vehicle towards the beginning of the year, probably far more advantageous than buying one towards the end of the year, because you're not going to accrue a lot of interest on on a new loan towards the end of the year versus the beginning of the year, you get that full year of interest that you get to deduct. In addition, with that phase out, as always, considering the opportunity if you have delay income so you can meet those deduction thresholds and not be subject to that phase out. All right another new one. So we with the introduction with the OA3 we have a new introduction to the tax code of section 168 N, N as in Nancy. This is providing for a new two new formal terms. One is qualified production property and the other one is qualified production activity. For practical purposes, this is just manufacturing. So if the business is involved in making something physical, assembling, creating, or processing products, so basically transforming raw materials into finished goods in that manufacturing process. This is now a new section of property that is qualified for bonus depreciation for 100% deduction. Taxpayers claiming this deduction do have to be operating the qualifying activity. They actually have to be active in that. And if the activity qualifies, the taxpayer again, can they can fully expense the cost of a new facility that is a part of that process. So this would be thirty nine year depreciation in the past. This now is a significant acceleration of that to 100% bonus depreciation. If it is placed in service between 07/05/2025 and 12/31/2030. And this is newly constructed buildings. So again, and the construction must have occurred between 01/20/2025 and 12/31/2028. So some pretty detailed dates there to pay attention to. And also keep in mind that only the parts of the building that are directly tied to the manufacturing process count. So office space administrative areas, those would not be included and would not qualify. That's a nice perk, you go from thirty nine year depreciation to a write off. That's pretty good. And I imagine that those are not cheap buildings to build. Yep, keep it on the radar. Okay, so we have some miscellaneous provisions that are new for 2025. I'll jump through them here now. So the adoption credit, which is 17,280 for TY25, new with the OB3 starting 2025, up to $5,000 of that adoption credit will now be refundable. That's really nice. The business interest limitation was previously limited to 30% of adjusted taxable income. OB3 now adds back depreciation and amortization for purposes of the limitation. Section twelve oh two, the exclusion of eligible gain realized from the sale of qualified small business stock. For tax years beginning after 07/04/2025, the effective date or the signing date of OB3, They increase the exclusion to $15,000,000 and the gross assets amount to $75,000,000 and allows for the exclusion starting after three years. Legislation adds a new category, qualified sound recording productions to the special expensing rules. That already applied to qualified film, television, live theatrical productions. Qualified sound recording production is a sound recording produced and recorded in The US for costs up to $150,000 However, the deduction only applies to qualified sound recording productions that commence before 01/01/2026. That one's crazy. It's like, wow. Very tight window there. But what are you gonna do? Okay. So let's go to poll number two. And which of the following options is true regarding the no tax on overtime provision under OB3? I'm not gonna read those out because I'll just confuse everybody. So have at it. And we'll give you another forty seconds to answer it. No tax on overtime. Answers are rolling in. And another ten seconds or so. All right. Those who chose option one would be correct. The maximum annual deduction, 12,500, phases out for taxpayers with modified AGI over 150 ks for single filers. Okay, we're gonna delve into another section here. These are IRS tax forms, changes that are non OB3 related. I got these from the IRS nationwide form. A little dry, but we'll run through them nonetheless, give you a heads up on some of the big changes here. And first up, have the familiar familiar face, the October, which I think it was a postcard at one point, but no longer the case. That's a big misnomer. Okay. Ten forty changes. Top of the form. They added checkboxes and entry spaces for special processing and an other field for later use. Section three zero one dot 9,100.2 provides for automatic extensions. Had to look that one up. Checkboxes for combat zone and deceased taxpayer and spouse. Next to the address, they added a checkbox to indicate the taxpayer's main home was in The US for more than half of 2025. The dependent section, they added entry field to indicate the dependent lived with the taxpayer in The US for more than half of the year, added check boxes to indicate a dependent is a full time student and or permanently and totally disabled. And a check box for certain married taxpayers claiming the EIC, but not filing a joint return. All right, next section here. For income, other earned income, they added an entry space for the write ins for public safety officers, foreign employer compensation, and excess allowance. Line 3C, check if your child's dividends are included in qualified dividends and ordinary dividends. Checkboxes replace the write in for the ADA 14, which we saw in the past. Line 4C, for IRA distributions, added checkboxes for write ins for rollovers and qualified contribution distributions. 5C, pensions and annuities, Checkboxes for write ins for rollovers and public safety officers. Line 6D for social security benefits. If you're married, filing separately, and lived apart from your spouse the entire year, you're gonna check that box. Seven b for capital gains and losses added a checkbox to indicate the child's capital gain loss is included in seven a and an entry space to replace the write in for the eighty eight fourteen. All right, going to page two now. Lines 12 through 15, they move that to page two. Like I said, the postcard has come and gone. Lines 12A and 12E expanded the standard deduction section with box X. 12A, someone can claim you and your spouse as a dependent. 12B, the spouse itemizes on a separate return. 12C, taxpayer is a dual status alien. 12D, taxpayer and or spouse born before 01/02/1961, and or are blind. Line 26, estimated payments. If you made estimated payments with your former spouse in 2025, you're gonna enter the social security number. This replaces the DIV write in. 27B, earned income credit. Added a checkbox to replace clergy write in for clergy members filing schedule SE. Lines 27C and 28, added checkboxes to decline the earned income credit or the additional child tax credit. Not sure why you would do that, but it is there nonetheless. Megan can probably answer that one. About that. All right, schedule one, additional income and adjustments to income. Line four, other gains and losses. Added checkboxes for the form forty seven and forty six eighty four, forty seven ninety seven, forty six eighty four. Line seven, added a checkbox in entry space for repayments of unemployment comp. Line 14, moving expenses for members of the armed forces, added a checkbox to replace the storage write in. Line 20, our deduction, they added a checkbox to replace the D write in for married filing separately and lived apart. So the IRS has been busy in the off season. You gotta say that. This was before they knew the or the OB3 was on board. They got all these these changes in. Little did they know they were gonna get blindsided and then have a government shutdown. So there's that. Okay, 89.49. Sales and other dispositions of capital assets. Part one, added boxes G, H, and I to identify short term transactions reported on the new October DA. The line G transaction showing basis was reported to the IRS, H transaction showing basis, but not reported to the IRS, and then I transactions not reported to you or anyone else. Part two, added boxes J, K, and L to identify long term transactions reported on the ten ninety nine DA, and they made conforming changes on the Schedule D for all the partners, ten forty, ten forty one, ten sixty five, eleven twenty, eleven twenty s. Okay, this is the 2025 W two. I don't wanna confuse you with what I showed you before, which was the 2026. So what do they do here for 2025 box 12? The updated code F to include elective deferrals for Roth SEP IRAs, updated code S to include salary reduction contributions for Roth Simple IRAs. The instructions for box 12, they added information about higher catch up contribution limits for those aged 60 through 63. Catch up contributions that generally apply to employees aged 50 and over who participate in most four zero one ks, four zero three, four fifty seven, and federal government Thrift Savings Plans, that's gonna remain at $7,500 for 2025. Thus, participants in these plans can contribute up to 31,000 each year starting in 2025. And here's the caveat. Under a change made under the secured two point zero Act that was rolled out some years back, higher catch up contribution limits apply to employees aged 60 through 63 who participate in these plans. So for 2025, the higher catch up contribution limit is 11,250 instead of the 7,500. So a nice perk coming out of that secure two point zero act. Alright. Here's some links to the draft forms, the latest forms, form changes, and all forms. You can go out there and check out anything coming down the pipe. All right, we've been referencing this ten ninety nine DA. I'm gonna cover that, a little bit of a deeper dive here. Digital asset proceeds from broker transaction. And again, I captured this material that was presented at the IRS Nationwide Forum. And here is a picture of what that form looks like. The new DA, digital asset proceeds. Who's gonna file the ten ninety nine DA? Well, let's see, brokers and digital asset platforms that facilitate the sale of it or exchange of digital assets. Brokers must report proceeds from, and in some cases basis, for digital asset dispositions to you and the IRS. For tax purposes, digital assets are considered property, not currency. A digital asset is stored electronically and can be bought, sold, owned, transferred, or traded. It is a digital representation of the value recorded in a cryptographically secured distributed ledger like blockchain or similar technology. Now that's a mouthful. Examples include convertible, virtual currencies and cryptocurrencies such as bit Bitcoin. We've seen those before. Stablecoins and non fungible tokens. A digital asset that has an equivalent value in real currency is referred to as a convertible virtual currency and cryptocurrency. A whole new language here that we gotta get up to speed on. It can be used to pay for goods and services, digitally traded, or exchanged for or converted into currencies other than digital assets. Little crash course here. Some of you are probably well up to speed. Okay, what's a request from your clients? You're gonna wanna get the cost basis, the purchase date and holding period, transfers or exchanges, and non custodial transactions and transactions not reported. More compliance, right? Or job security. So here's a basic example that you can glance at. Similar treatment as a sale of stock, basically. And we have seen this in the past. It's just, now captured on this, new form. Okay, how to educate your clients. Slide on maintaining records for digital asset transactions. You can refer to it in the docs section in the upper right hand corner of the screen, next to chat, and next to the Q and A tab. Okay, we got a poll here. What should you request from your clients regarding the new ten ninety nine DA? The cost basis, purchase date and holding period, transfers or exchanges, or all the above. Let's see how you do. And I'll give you another thirty seconds or so. See the answers coming in, most are getting it right. Give you a little more time. Alright. Those who chose option four, all the above would be correct. Make sure to request the cost basis, purchase date, holding period, transfers, exchanges, and you're in business. Well, let's cover some of the provisions that were extended that have retroactive effect as part of the OB three. First one being bonus depreciation. This was one that I know that a lot of people were pushing for. Definitely a lot of business owners are happy to see this back. So bonus depreciation, and it is now permanent at 100%. So this is going to be effective for property placed in service after 01/19/2025. It would have been lovely if it had been beginning of the year, but it was not. So make sure to pay attention to that date. And if you remember, there was a phase out. So there was a phase down after 2022, it was going to 40% for 2025. That 40% does still apply for anything before on or before 01/19/2025. Otherwise, it jumps that 100%. And the this was entirely supposed to be phased out as of 2027. So 0%. Again, now that now that is permanent at 100%. And it is retroactively applicable for property placed in service after 01/19/2025. However, you can, I don't quite know why you would elect to be to apply the prior percentages, but you could elect to to apply the prior percentages just for the first tax year ending after 01/19/2025, you could elect to go back to those forty, twenty depending on where you might, where your client might fall for that first tax year ending after 2025, 01/19/2025? We also have those two new sections of property. So the qualified sound recording property and the qualified production property that are now eligible for that bonus depreciation, at least for a certain time period. And you can also, as a reminder, you can also elect out of bonus depreciation for any class of property altogether. Some planning tips around this would be when, as I mentioned on that last slide, when electing out a bonus depreciation, it has to be within all assets within an asset class. So if you are wanting to elect out, it has to be you can't take one. If you have five different five year prop pieces of property that have been placed in service, you can't elect out for one of them. It must be all five. And it is an election out, not an election in. So if you have businesses that are going to be operating at a net operating operating loss or perhaps they know that their income is going to be accelerating in future years and they're going to need some sort of additional deduction because they're not going to be placing in service a bunch of capital assets in future years, you may want to elect out of bonus depreciation for them so they can get that so they can get the regular depreciation for the next five years or seven years, depending on what your forecasting looks like for them. And one last thing is this bonus depreciation always provides the opportunity for business owners to make those asset purchases before year end and then accelerate those deductible expenses as needed. So R and D expenditures. This is kind of a complex one. So if you remember under the prior year or prior rule, domestic R and D needed to be amortized over a five year period and international R and D had to be amortized over fifteen year period. And now you can go and you can actually immediately deduct domestic R and D expenditures. This does not change anything for those foreign expenditures. Those are still subject to the fifteen year amortization period. But for domestic R and D expenditures, those can now be immediately deducted. And this is now made permanent beginning with tax year 2025. I mentioned before that this is a retroactive we're covering retroactive provisions. So this provides a retroactive impact where small businesses can accelerate their they can go back and they can amend their returns to deduct their domestic R and D expenses for starting in 2022. So 2022, twenty twenty three, twenty twenty four. And what I mean by small business is those with average gross receipts of $31,000,000 or less. So great opportunity for that that amendment provision. And some planning tips and insight with this. So the deadline here, I mentioned that small businesses can make that election to amend the prior year returns. The deadline for that is the earlier of 07/06/2026, or the statute of limitations. So kind of a tight turnaround, definitely want to make sure that you're getting those amendments in if you are choosing to do so. And any taxpayer, so it doesn't matter the size, can now accelerate that amortization of any unamortized domestic R and D expenditures that maybe were previously capitalized. So if you have some expenditures left that were amortized in prior years, businesses of any size can elect to go ahead and accelerate those and deduct them in 2025. So definitely want to take a look at any affected business owners who incurred these R and D expenditures between those time frames who may have some remaining unamortized expenses available for deduction to see if it might be worth it to go ahead and push those through instead of continuing to amortize them. Also keep in mind that no form 3,115, so that change in accounting method form that is often required when it comes to a change in accounting method, which this technically is. Form 3,115, however, is not required here. An election statement does have to be attached to the returns and should include the information that's listed under section 3.032 of RevProc 2020 five-twenty eight. And it's basically the name, the address, what expenses are being deducted. But go ahead and take a look at that guidance if you're wanting to do this for your clients. So we have our next poll. Gonna give you about a minute on this. So effective for property placed in service after 01/19/2025, bonus depreciation will be set to what percentage moving forward permanently? Now options we have here are 40%, 20%, 0%, or 100%. Can give you a few more seconds here. Looks like quite a few responses rolling in. And judging from the responses, I'm guessing you guys are excited about this for your clients as I am, because most of you are getting it right. Five, four, three, two, and one. Okay, we're going to go ahead and move it, move on, move on. And of course, the answer here was option four of 100%. So now it is time for our break. If you could please be back in five minutes and we will start back up again. Hey, welcome back, everybody. Hopefully, everybody got some whatever your fix was, coffee, caffeine, snack, did some jumping jacks, and you're all ready to go for the second half. And again, thanks so much for joining us today. We love having everybody aboard. Okay. Megan, you ready to go too? I'm ready to go. Let's do it. Awesome. All right. So we're going into a deeper dive into OB3 permanent extenders. The new law under OB3 made permanent a number of provisions under the Tax Cuts and Jobs Act, which were set to sunset at the 2025. And let's see what those look like. Starting out real basic here with rates. So the Tax Cuts and Jobs Act had temporarily modified the ordinary income tax brackets for individual taxpayers, and those were effective for tax years 2018 through 2025. OB3 now makes those permanent. Nice. So continuing on after 2025, those brackets are gonna be ten, twelve, 22, 24, thirty two, thirty five and thirty seven percent. Tax Cuts and Jobs Act had also expanded the income ranges for each tax bracket for both ordinary and capital rates, capital gain rates, adjusted the thresholds for tax brackets to eliminate the marriage penalty, and modified the inflation indexing rules. Each of those provisions now are permanent. OB3 made a minor change to adjust the base year for inflation, indexing for the 1012% brackets. Extending these provisions offer a level of stability in individual tax rates going forward. Hooray there, too. We like stability. We probably like the changes too a little bit. Right, Megan? Keeps things fun. Yep. Exciting. Right. Similarly. About taxes. Exciting. That's right. You got to be in it to appreciate it. Similarly, Tax Cuts and Jobs Act temporarily modified the ordinary tax income tax brackets for trusts and estates effective for tax year 2018 through 2025. 10%, 24%, 35%, 37%. OB3 now makes these rates permanent and the same provisions for expanding the ranges covered for each bracket. The changes to the rules on how indexing for inflation is determined applies to trusts and estates as well. Standard deduction. Tax Cuts and Jobs Act, as you recall, significantly increased the standard deduction, and the IRS had already released the standard deduction amounts for 2025. However, OB3 made those permanent, those increased standard deductions, and even provided for an additional increase over what was previously scheduled under TCJA. There's a small increase for the deduction amounts previously provided. Neither the Tax Cuts and Jobs Act nor OB3 made changes to the additional standard deductions for taxpayers either over 65 and or who are blind. So a lot of people had those questions earlier. No changes to those. And we all remember this one from the old days, Tax Cuts and Jobs Act, personal exemptions were repealed. OB3 now makes this permanent. The new deduction for seniors added by OB3, which Megan covered earlier, that's separate from this, so, and separate from the standard deduction. So state and local tax deduction, if you the $10,000 cap that was put in place under the old rules under TCJA had a pretty significant impact for a lot of taxpayers. And so the new this new provision provides for a $40,000 SALT cap, massive increase from that $10,000 SALT cap, or $20,000 for married filing separately. It's also pegged to inflation, so it increases by 1%. It will increase by 1% each year until 2030. This is not a permanent provision. So in 2030, this sums up back to that $10,000 maximum deduction, dollars 5,000 for married filing separately. And there is no phase down at that point. However, for the current year, so for 2025, the the phase out will start at $500,000 or $250,000 of married filing if married filing separately. And it will be fully phased back down to $10,000 if you have a if you're married filing jointly and have a modified AGI of 600,000, then you're back down to that $10,000 threshold. So the $10,000 for it cannot go below $10,000 so there's no impact. It's you're not worse off than you were under the old TCJA cap of $10,000 if you are a high income earner, but just be aware that that is out there. And then of course, it will increase to by 1% to 40,400 in 2026. And that SALT, the phase out threshold will also increase by 1%. So it'll be 05/2005 we'll start at 500 and 5,000 in 2026. So some things to consider in light of that new rule is that high income taxpayers, of course, in high tax states probably going to see some limited benefits because they will, if they're outside of that phase out, they're going to be backed down at that $10,000 limit anyway. So definitely consider bunching some deductions or timings and payments so to exceed that elevated standard deduction in certain years if possible. And also, so there might be some strategic guidance you can plan there with that because with that higher SALT deduction there may be more taxpayers who can itemize. One other thing is OV3 didn't did not affect the PTEP. So that pass through entity tax workaround that was implemented by a lot of states. We're going to want to monitor how states are handling this, especially because in light of the fact that this new $40,000 threshold is sunsetting currently in 2030, we'll want to monitor how the states might handle this moving forward. Great. Okay, child tax credit. Increase of child tax credit made permanent under OB3. That's cool. Increase the credit from 2,000 up to a whopping 2,200 per qualifying child, and added a provision to adjust this amount annually for inflation. Under TCJA, taxpayers were required to earn at least 2,500 in order to qualify, and this was also made permanent. The income phases out for a child tax credit for modified AGI of 200,400 ks if married, filing joint, that provision also made permanent. One difference of note is that the new law requires social security number for the taxpayer or the spouse if filing jointly and the qualifying child on the return, whereas under TCJA, a social security number was not required for the child. This means taxpayers no longer qualified, qualified for the credit if they only have an ITIN number and not a social security number. Be on the lookout for that. And the child tax credit is only one area that's impacted by this new Social Security number requirement. Mike and I both mentioned several provisions earlier in this presentation. So in the, to keep this easy, in the additional resources at the end of the presentation, we've included a summary of all the provisions that where a social security number is now required. And for those of you who might be wondering how to tell the difference whether an ID number is social security number and ITIN, because they're both nine digits and they're formatted just like a social security number. But the first number in an i10 is always going to be nine and the fourth and fifth digits are always going to be in the ranges that you can see there on your screen. So some tips there on how to tell the difference. For that child tax credit, some planning considerations here is, as with most of the benefits that have AGI limitations, taxpayers that are affected by the phase out of the child tax credits might want to employ some strategies to help lower their current year income. So taking advantage of contributions to retirement accounts, to HSAs, that can be a good way to do it. You're also going to want to review your clients who have received the child tax credit in the past or any of these other deductions or credit or who might qualify for these deductions or credits but are using an ITIN and advise them on the impact so that they know that they don't qualify for this anymore. One quick tip here too is those social security numbers do have to be issued before the return due date. This has always been the case, but it's just a good reminder of social security numbers do have to be issued before the return due date. Big long lines this year getting an SSN, right? Well, I don't know about that. Hopefully not, but it's still a good thing to be take note of. The provisions for the additional tax child tax credit were also made permanent. The refundable portion is 1,700 per qualifying child, the same as it was in 2024. And OB3 has the same requirement around social security numbers for the child and at least one parent for the additional child tax credit. TCJA also or allowed for a temporary non refundable credit of $500 for dependents who do not qualify for the child tax credit OB3 made both this provision and the related income phase out thresholds permanent. Moving into the qualified business income deduction, OB3 did make permanent the qualified business income deduction, so that's great news. And it's going to be effective it's permanent as of tax year 2026. The new some new OB3 provisions that were included with this with CUBID, I'm going to call it CUBID, so it's a lot easier to say. It also the OB3 increased the phase in threshold, so it went for joint filers that went from 100,000 to 150,000, and for other filers that went from 50,000 to 75,000. So a pretty decent jump there. OBI three also added a this new provision for a minimum deduction of $400 This will be indexed to inflation. And this is effective for tax year 2026, not 2025. So this is a new minimum QBI deduction of $400 for any qualified trader business in which and here's the kicker in which the taxpayer materially participates. So they definitely they have to materially participate in that trader business. And the qualified the active qualified trader business does have to have aggregate business income of at least $1,000 As I mentioned, this provision is 2026, tax year 2026 and moving forward. But that's a pretty nice little perk there. And some planning tips around that. There's some opportunities here for you to run some projections, particularly for small businesses, to strategize around whether earnings are best allocated to wages, or should be included in self employment income wages paid to owners to be able to maximize depending on where especially where their income is to maximize their their QBID. And then in the beginning in 2027 or tax year because of 2026 tax year and later, that $400 minimum QBI deduction could be really helpful for some small businesses or maybe even spark some new side ventures. As you know the CUBIT deduction is the standard is 20%. So if they're making at least a thousand dollars, $400, you're already at 40% deduction. So it could be helpful for those startups and people just getting going. With that, we're going to go into our fifth poll. Obi three has changed the SALT or state and local tax deduction in which way? One, it increased to 40,000. Two, it's effective for tax years 2025 through 2029. Three, it was set resets to $10,000 in 2030, or for all of the above. So, I'm gonna give you guys a few more seconds here. So, you have a good minute to respond to this. See some answers starting to come in. Got about ten more seconds. It's like most of you guys are paying attention. This is awesome. All right, so wrapping that up now. And hopefully, most of you got this that it is all of the above. Cool. All right. The increased estate and gift tax lifetime exclusion amount was set to sunset at the 2025, causing a big stir among estate planning attorneys. Uh-oh. Prior to OB3, the 2026 exemption amount was set to drop down to one half of the 2025 amount adjusted for inflation. Still some heavy hitters, even if, even when you dropped it down. All right. Now under OB3, the new basic exclusion amount for decedents passing in 2026 is set to $15,000,000 and the adjustments for inflation were changed to key off of this 2026 amount. So it's important to note that ObiFree didn't make any change to that annual gift tax exclusion, so it's still $19,000 per recipient of a gift for, or you can give up to 19,000 for 2025. And that's still the annual gift exclusion. It also did not change any of the portability election rules around the FUE. So the deceased spouse unused exclusion amount has not changed. So obviously this change does subject even fewer individuals than before to the estate tax. So one really great planning tool here, I tend to see that a lot of estate plans were put in place when the exemption amount was a lot lower than it now is. And so a lot of those estate plans are overly complex and burdensome from an administrative standpoint, it's not something we necessarily think about much. But in many cases, those complex plans should be revisited and amended to simplify them because it can really help our clients with their administrative overhead and provide a net tax savings, especially allowing for a second basis step up on the passing of the survivor who inherited the estate or the assets in the first place. Also, if you have any ultra high net worth clients who are participating in lifetime giving plans, this would be a really great time to go back and reevaluate those gifting plans that they've got in place. One other, and this always goes for pretty much any provision, it's certainly important to review any state estate tax exemption levels and their federal ties because those can often and are often different than the federal provisions. Megan, do you do much estate and gift tax planning in your practice? I don't, but I do work very closely with attorneys and retire and retirement funds, administrators or financial services to be on basically a team making sure that we're doing everything we can for our clients across the board. So from that standpoint, I think this is a great time to revisit those conversations. Awesome. Okay, Tax Cuts and Jobs Act increased the AMT exemptions and phase out thresholds and OB3 is now making those permanent. OB3 made a few tweaks in this area as well. First, the phase out rate for higher income taxpayers was increased from 25% to 50%, meaning that the exemption phases out much more quickly under these new rules, and a minor change in the base year used for inflation indexing for these AMT perimeters. All right, moving expenses here. Under TCJA, moving expenses were only deductible for active duty members of the US military who moved due to a permanent change of station order. OB3 now makes that permanent and also adds employees and appointees of the intelligence community who are required to relocate due to a change or change in assignment. TCJA provision, which eliminated the 2% miscellaneous itemized deduction for individuals, is now permanent. No changes have been made to the 2% miscellaneous itemized deduction for estates and trusts. So those continue to be deductible. OB3 also made permanent some provisions around deductibility of home mortgage interest, including the restriction that interest must be from debt related acquisition or improvement of the home, and the reduction of the limit on the amount of acquisition debt from 1,000,000 down to $750,000 and half of that for separate filers. OB3 made some changes to itemized deductions in addition to extending some provisions of TCJA. Each of these will be effective for tax years beginning in 2026. One of the significant changes made by OB3 was the permanent reinstatement of the deduction for mortgage insurance premiums. Tax year 2021 was the last time taxpayers were able to deduct PMI. Now mortgage insurance premiums will be treated the same as mortgage interest. This change will benefit those homeowners who are itemizing and who are making PMI payments. And those are typically those who made lower down payments on the purchase of a home. Educator expenses. The $300 per teacher above the line deduction, still intact. What OB3 changed is that the excess educator expenses, which exceed the above the line limit, are now allowed as miscellaneous itemized deductions, subject to the 2% AGI limit. OB3 also added intrascholastic sports administrators and coaches to the list of qualified educators eligible for the deduction. TCJA suspended the overall limitation on itemized deductions, and that was set to revert to the prior limitation of the lesser of 3% of the excess AGI over the applicable amount, or 80% of the amount of the itemized deduction otherwise allowed. Remember that? That was a while ago. However, OB3 rewrote section 68 and added a new overall limitation tied to the 30% tax bracket threshold. The new overall itemized deduction limit will be two over 37 of the lesser of the itemized deduction or the amount of adjusted taxable income, which exceeds the dollar amount of which the 30% tax bracket begins. Boy, that's a real tongue twister and crazy calculation, but there you go. Right. OB3 made permanent that deductible personal casualty losses must stem from federally declared disasters and added casualty losses resulting from state declared disasters as well. OB3 made permanent that disaster casualty losses are not subject to the 10% AGI limit, and don't require the taxpayer to itemize deductions. So nice benefits there, expanding that provision. Gambling losses, let's see what they did here. Provision including any deduction allowable and carrying on wagering transactions in the definition of gambling losses has now been permanently extended. Notable change with OB3 is that while gambling losses can be recognized only to the extent of gambling winnings, as always that's been the case, deductible portion is now limited to 90% of the losses. Several of the TCJA provisions around the ABLE accounts have been extended, including ABLE beneficiaries who are employed may make additional contributions, up to the lesser of their compensation or the federal poverty level for a one person household. Qualified contributions to ABLE accounts are now eligible for the savers credit. And taxpayers can make tax free rollovers from a five twenty nine plan to an ABLE account. One small change with OB3 is that the maximum savers credit was increased from 2,000 to a whopping 2,100 beginning in tax year 2027. So section 179, another one of our special depreciation areas, there were some changes with OB three, increasing the 109 expense limit. So in it was already adjusting for inflation, the expense limit was $1,000,000 adjusted for inflation 2024 was 1.22. And that is now increased to an expense limit of $2,500,000 starting in tax year 2025. And then will be adjusted for inflation as it was in the past, moving forward. It's also been made permanent. So this this new beginning threshold with those adjustments for inflation. The phase down threshold, so that amount by which any dollar over the 2,500,000.0 or what used to be 1.22 that you had to reduce it by, that is now it was 2,500,000.0 adjusted for inflation that would have made it 3,050,000.00 in 2024. Now for 2025, the phase down limit starts at 4,000,000 and again will be adjusted for inflation. That is really sweet. 2 and a half million dollars. And it's a great provision for those that maybe can't take bonus on something, but can take Section 179. Definitely complimentary provisions there. Miscellaneous provisions extended and made permanent under OB3. Limitation on excess business loss expenses for non corporate taxpayers extended and made permanent. Paid family and medical leave credit has been enhanced and made permanent. Exclusion for employer payments of student loans was made permanent and a provision for adjusting it for inflation was added. The exclusion for employer payments, I'm sorry, OB3 has made permanent TCJA provisions of the Opportunity Zone Program and made some significant changes, allowing a new Opportunity Zone, or new to opportunity zones to be designated every ten years, five year rolling deferral period for capital gains, enhanced benefits for rural opportunity zones. If you have clients participating in these, you'll wanna take a deeper dive on the changes and maximize the benefits. Some international provisions of note affecting tax years beginning in 2026 related to the foreign tax credit OB3 renames the global internet intangible low taxed income, the GILTI we used to call it. So the net CFC tested income, didn't really make it better, but whatever, reduces the deduction from 50% down to 40% and slightly modifies the calculation. The foreign derived intangible income, FIDI deduction, is now being renamed to the foreign derived deduction eligible income. OB3 reduces the deduction from 37.5% down to 33.34% and modifies the calculation. For the base erosion anti abuse tax, OB3 slightly increases the rate from 10% to 10.5%, and US Virgin Island based services income is now excluded from the GILTI and the FIDI. Okay, we're going to our six out of eight. Sixth poll out of eight. Beginning in tax year 2025, the section one seventy nine expense limit will be set to what amount moving forward permanently adjusted for inflation? Is it one two 1,220,000, 2 and a half million, $3,050,000, or $4,000,000? And we'll give you another half a minute or so to do that. We got some good responses rolling in. Most of you paying attention. Alright. Those who got option two are correct, would be correct. 2 and a half million bucks. Alright. Let's go through permanent or is terminated measures. Important to know. The new bill eliminates the clean vehicle credits for electric vehicles purchased after 09/30/2025. And I'm gonna quickly refresh you on the rules in case you had some clients who would have made purchases before the date. So the credit for new clean vehicles, the amount of the credit is based on two separate requirements. You get $3,750 credit for meeting the critical minerals requirement, and then another $3,750 credit for satisfying a battery component requirement, grand total of $7,500. The credit is also available for new qualified fuel cell motor vehicles. Can't take the credit if prior or current year modified AGI exceeds the threshold amounts. 300 joint returns or qualified surviving spouses, 225,000 for head of household, 150,000 for single and separate filers. Vehicles not eligible if the MSRP exceeds 80,000 for vans, pickup trucks and SUVs, 55 k for other vehicles. If you purchase and place in service a previously owned vehicle, clean vehicle, you're allowed an income tax credit equal to the lesser $4,000 or 30 percent of the vehicle sales price. No credit allowed if the lessor of your modified AGI year of purchase or the preceding year exceeds 150 k for joint qualified surviving spouse. 112,500 for head of household, 75 k for single and separate filers. Maximum purchase price would have to be 25,000. Qualified commercial clean vehicles credit. This is pretty lucrative. It was calculated at the lesser 15% of the basis of the vehicle, 30% for a vehicle not powered by a gasoline or diesel internal combustion engine, or the vehicle's incremental cost. Maximum credit, 7,500 if the gross weight under $14,040 for vehicles with higher weights. And we may have state states that still allow some credits. Those could still be in place. So check with your state. But that last one, that's a bummer. That's a big perk that's going away. Okay, the second part here of lapsing provisions. Important to know residential energy credits for property placed and served after 2025, no longer allowed. And I'll refresh the rules kind of quickly here. Non business energy property expenses, credit is 30% of the aggregate of qualified energy improvements and residential energy property expenditures made during the year. The credit is increased for amounts spent on home energy audits, limited to $150 There's an annual credit limit of $1,200 per taxpayer. Annual limits of $600 for expenses, windows and skylights, $2.50 for any exterior door, 500 for all exterior doors. Dollars 2,000 annual limit for specified heat pumps, heat pump water and biomass stoves and boilers, dollars 2,000 limit is in addition to the $1,200 so really the grand total is $3,200 And the credit carry forward is not available, unfortunately. Personal credit for residential energy efficient property. This is some of that higher tech type stuff. Solar electric, solar hot water, fuel cell, small wind energy, geothermal heat pumps, and biomass fuel property installed in homes. 30% credit of the qualified expenses installed during the year. Credit is also available for qualified battery storage technology and qualified biomass fuel property. That provision has been removed. But there is a possible carry forward of any unused credit to TY twenty six. I haven't don't quote me on that, but I haven't seen the instructions yet. So some planning tips and insights. Unfortunately, there's not a ton that can be done here, since these credits are all basically going away. However, they can still be claimed for improvements made in 2025 on you or your clients 2025 taxes. This is the last tax year that they will be available. Important to note, as I've mentioned on a couple of other things, really important to check those state benefits because just because a federal benefit is done away does not mean that the state benefit has. One other little side note here, if for married taxpayers who have more than one home, if both you and your spouse or your you and your client, your clients, your client and their spouse who owned and lived apart in separate main homes, the credit limit would apply to each of them separately. Okay, I'm gonna kind of run through these tasks. They did make some changes to the now, it'll be discontinued after this year, the 5,695. 7B, qualified fuel cell property, added cautionary text to remind taxpayers that they can only have one main home at a time. Line 10 added a sentence to emphasize the statutory requirement that the nameplate capacity for fuel cell property must be at least 0.5 kilowatts per hour. Part two, line 19, exterior doors that meet the applicable ENERGY STAR requirements. They added a qualified manufacturer identification number, the QMID, of the doors. And they added that QMIDs and the cost of the four most expensive windows and skylights. Lines 20B and 20C, they added to improve the calculation flow for the credit for windows and skylights. All this investment that they made was only gonna be, it's gonna be short lived. Okay, line 22, residential energy property cost. They added line 22A to enter the QMID and the cost of the most expensive central AC unit. Evidently, they don't care about anything less or expensive. Added line 23A to enter the QMID and costs of the two most expensive natural gas propane or oil water heaters. 24A, enter the QMID and the cost of the most expensive natural gas propane or oil furnace or hot water boiler. Line 25, installation of improvements or replacements of panel boards, sub panel boards, branch circuits, or feeders related to energy improvements. 25A through E, added checkboxes to document the required relationship between the enabling property and the enabled property, added entry spaces to identify the type of the enabled property, and entry spaces for the QMIDs of the enabling property. 29A, C, and E added lines for QMID for most expensive electric or natural gas heat pump, electric or natural gas heat pump water heater, and biomass stove or boiler. 32, energy efficient home improvement credit. On 32B, they added a checkbox for taxpayers who live in a condominium or a co op. Miscellaneous provisions that are sunsetting. The Alternative Vehicle Refueling Credit, Gonzo. Energy Efficient Commercial Buildings Deduction, Gonzo, not available after 06/30/2026. The enhanced health care premium tax credit slated to sunset at the 2025, basically an expanded form of the credit, has been available since 2021 for higher income taxpayers purchasing marketplace healthcare plans. Taxpayers with household incomes above 400% of the federal poverty line, they've been able to claim a credit for the years 2021 through 2025. We'll have to see if that somehow gets resurrected. Okay, we got the second to last poll here. Which of the following options is true? And I'm not gonna read the responses. I'll give you the right answer at the end. I'll confuse you if I read those off. So take your time. Couple more seconds here. All right, so the correct answer is gonna be 3. The credit for new clean vehicles is terminated beginning after 09/30/2025, and the energy efficient home improvement credit is terminated beginning after 12/31/2025. All right. Basically, last section here before we get to resources and such, gonna cover provisions beginning in tax year 2026 and after. So the existing rural taxpayers can qualify for the American Opportunity Tax Credit Lifetime Learning Credit for the education of an individual, only if the taxpayer includes their tax return on their tax return, the Taxpayer Identification Number, the TIN. New rule beginning after 2025, taxpayer must include taxpayers on the taxpayer's return, their or their spouse's social security number, or for an individual other than the taxpayer's spouse, that individual's name and social security number. You might be on mute, Megan. Oh, sorry. There's construction going on here, so I've been muting it. So again, important to note reviewing your clients for any taxpayers who may have items rather than social Security numbers and keeping in mind that Social Security numbers do have to be issued before the return due date to be able to take these credits. Okay. Five twenty nine plans. Effective for tax years beginning after 2025, OB three increases the annual limit for five twenty nine account distributions from 10,000 to 20,000 for K-twelve expenses. Additional expenses treated as qualified higher education tuition, curriculum materials, books or other instructional materials, online educational materials, tuition for tutoring or educational classes outside of the home, fees for national standardized tests, advanced placement exams, and college admission exams, fees for dual enrollment at higher education institutions, and educational therapies for students with disabilities. Effective for distributions after the date of enactment, OECD three allows five twenty nine savings plan distributions to apply to qualified post secondary credentialing expenses. What does that mean? Expenses include tuition fees, books, equipment, and the cost of required exams, and continuing education associated with professional licenses, trade certifications, and vocational programs. So a nice expansion, including certificates of completion of an apprenticeship, registered, and certified with the Secretary of Labor. Examples are going to include HVAC certification, CPA exam prep and test classes, yay. Courses needed to maintain licensure or certification, materials required as part of qualified credentialing or licensing program. Programs must typically be listed in the Workforce Innovation and Opportunity Act Directory, or the web enabled approval management system, or the Veterans Benefit Administration. A little bit of overhead there to track that stuff, but gotta live with it. The enhancement of the dependent care credit effective for tax years after 2025. The act increases the maximum credit rate to 50%, reduced by one percentage point, but not below 35% for each $2,000 or fraction thereof by which the taxpayer's AGI exceeds $15,000 For AGIs between 43,075 ks, the credit is 35%, and you would double those thresholds if you're joint filers. Credit rate is further phased down to 20% for AGI between 75 ks and 105,000, or 105,000, double that for joint filers. Before the change, the credit rate vary by taxpayers adjusted gross income with a maximum credit rate of 35%, and that declines as AGI increases, to 20% for taxpayers with AGI above 43,000. General rule, gross income of an employee does not include the amounts paid or incurred by an employer for dependent care assistance provided to an employee if the amounts are furnished under a dependent care assistant program. Effective for tax years beginning after 2025, the Act increases the exclusion for dependent care assistance up to $7,500 annually, and 3,750 for married individuals filing separately. Under free law, the maximum annual exclusion was 5,002 thousand 500 for separate filers. Under prior law, a repayment cap limited the repayment of the excess premiums for certain taxpayers based on income limits. OB3 eliminates the repayment cap, effective tax years beginning after 2025. Thus, all taxpayers will have to repay in full their excess advanced premiums, premium tax credit payments. This is something where it's really important to monitor your clients 2025 returns and see if they have a premium tax credit repayment and adjust and then advise them to adjust their credit with the marketplace by inputting accurate income information. And realistically, I would advise that any clients who have any kind of marketplace insurance and are taking this credit should be advised to really make sure that they're being accurate with their income levels. And if they're if and keep paying attention to and adjusting when they know that their income could be increasing or decreasing from a prior year so that that credit is accurate. I also recommend advising, especially if they have highly variable income. So you know, maybe they're self employed or they have a business where the income is not steady, particularly if they're just growing or if they're in the tail end and phasing out their business. If they can afford to pay the insurance premiums, advise them to do so. Because that's really going to prevent that surprise that some of my clients have had where they're like, well, I thought I was going to qualify for it because this is where I thought my income was going to be. And then their income was significantly higher than they had actually anticipated. And they come back with, you know, having a $10,000 tax bill because they have solely because they have to repay this premium tax credit. So an important thing to be really engaging with your clients on from a planning standpoint. So for charitable contributions, there's some changes here. The so not this is probably this first one is probably one of the I'm most excited about this but non itemizers now will be allowed to claim a $1,000 charitable deduction or $2,000 if married filing jointly. If even if they do not actually, they're not able to actually itemize their deductions. So it's a below the line deduction that's deducted from AGI before arriving at taxable income. So that's a great great thing there for your charitably inclined clients. It also extends the OB three extends the 60% AGI limit for charitable cash charitable contributions. And it also creates a point 5% floor. This is permanent. Both of these that were just mentioned, actually all three of these up here are permanent after twelvethirty onetwenty twenty five. So effective for tax year 2026, allowable charitable contributions by a corporate taxpayer for any tax year will be allowed only to the extent that they exceed a 1% floor of that corporation's taxable income. So a little bit of a change there as well. And that it's important to note that that 1% floor, that new 1% floor that's going into effect for those corporate charitable contributions will apply in addition to the 10% of taxable income limitation that's already in place. As always, disallowed charitable contributions can still be carried forward for five years, so no change there. On informational reporting, so there were quite a few threshold changes that were made here, under which certain information reporting forms will be required. So this first one, many of you are probably immensely familiar with, the October miscellaneous or the ten ninety nine NEC filings. The old rule has been $600 The new rule for any payments made after twelvethirty onetwenty twenty five will be $2,000 threshold. So if payments don't exceed $2,000 there's not a requirement to file those. If they exceed $2,000 and that will that number will be adjusted for inflation beginning in 2027, then you will have to will have to file a ten ninety nine miscellaneous or NEC. Backup withholding payments, so when a payee doesn't provide a taxpayer identification number, So therefore you have backup withholding that is required. The threshold for that was exactly the same as the NEC miscellaneous because it's tied to that was $600 that will now also be $2,000 for 2026. And so for payments, any payments made after twelvethirty onetwenty twenty five. Those that will also be indexed for inflation starting after starting in 2027. This last one is the $10.99 ks third party network transactions. So there's some FAQs. There's a link to some FAQs out there in the slide deck, but the de minimis exception for this, it was going to be 2,500 for tax year 2025, but it's now going to be restored to $20,000 and 200 transactions. If you have one transaction for $20,000 still won't have to file it. If you have over $20,000 and over 200 transactions, you are going to have to file that ten ninety nine ks. And this is also retroactive to 2022. Keep in mind here though that keep saying this, but keep in mind that state specific thresholds might exist that are different from B. All right, got about five minutes left here. So let's go through some Trump accounts. OB3 allows Trump accounts to be established for American children who have not reached age 18. Trump accounts can be established on behalf of every eligible American child. The Benny must have a social security number. Child must be born after 01/01/2025 through the 2028 for whom an election is made. Government will then make an initial deposit of $1,000 into each Trump account. Parents are then able, though not required, to make additional deposits up to $5,000 per year. And 2,500 of that can come from the employer. Deposits in the Trump accounts must be invested in stock mutual funds or ETFs, mirroring this S and P 500 or another American Stock Index. The deposits cannot be withdrawn before the Bennies turning 18 years old. After that point, the account generally becomes a traditional IRA. Children born before 01/01/2025, who are under age 18, will also still be eligible for the Trump account, but they don't get that $1,000 deposit. Planning here, financial advisors have said that aside from that $1,000 contribution and those potential employer contributions, other vehicles such as the five twenty nine plans might be more beneficial, especially with those new changes to the 05/29 plan. So definitely something to look at here and compare. And with that, we are going to move into our final poll. So OB3 retroactively reinstated the reporting threshold in effect prior to the passage of American Rescue Plan Act, IRPA, so that a third party settlement organization is not required to file a form ten ninety nine ks unless the gross amount of reportable payment transactions to a payee exceeds what amount. That was a mouthful. So your first option here 20,000. Second option $600. Third option, 2,500 for none of the above. Give you about twenty more or fifteen more seconds here to answer that question. As always, answers are rolling in at a rapid pace. About five more seconds. Alright, so our correct answer is one. So it's $20,000. Now we're gonna give you a couple of final resources. Yay, I got it right. Excellent, You Megan. So yeah, we're gonna go, we're landing the plane here. So we're gonna go kind of quickly. You have these resources. As Megan said earlier, a recap of the provisions requiring social security numbers for your reference. And then if you're looking for more resources around training and also our blog, the Tax Pro Center, there's some material on that. And then finally here, last slide. Yeah, please complete the survey. Remember to save your handouts. CPE certificates will be emailed to you within twenty four hours. Continuing education, if applicable, will be reported to the IRS using your PTIN within seven days. I wanna thank everybody so much for attending today. We really enjoyed it. I wanna thank Megan for her contributions. Hopefully everybody found the presentation valuable and best wishes navigating the new tax law for you and your clients this tax season. And I'll just let Megan sign off for herself. Yeah, thanks everyone for having me. Mike, thanks again for inviting me to do this with you again. It's been great and always enjoy sharing anything I can to help with planning tips and tricks for the season. So thanks. Awesome.