IRS Tax Updates for 2025: What You Need to Know

As we approach the 2025 tax season, the IRS has announced several significant updates that could impact your tax planning and filing. Here’s a breakdown of the key changes to be aware of:

1. Increased Standard Deduction

The standard deduction has been raised to $15,000 for single filers and $30,000 for married couples filing jointly. This increase can help reduce your taxable income, potentially lowering your overall tax bill.

2. New Tax Bracket Adjustments

Tax brackets have been adjusted for inflation. Be sure to review the new rates for 2025, as this could change your tax liability, especially if your income falls near the threshold of a higher bracket.

3. Child Tax Credit Enhancements

The Child Tax Credit remains at $2,000 per qualifying child. However, the eligibility requirements may have changed slightly, so it’s essential to check if you qualify for this credit.

4. Higher Retirement Contribution Limits

Contribution limits for retirement accounts have increased. You can now contribute up to $22,500 to 401(k) plans (with an additional catch-up contribution of $7,500 for those aged 50 and over) and $7,500 to IRAs. This is a great opportunity to bolster your retirement savings.

5. Health Savings Account (HSA) Updates

The contribution limit for HSAs has also been raised, allowing individuals and families to save more for medical expenses while enjoying tax advantages. Check the specific limits for 2025 to maximize your contributions.

6. Changes to Itemized Deductions

Certain itemized deductions have been adjusted, including limits on mortgage interest and property tax deductions. Review these changes to determine if itemizing remains beneficial for you.

7. Tax Relief for Disaster-Affected Areas

The IRS continues to provide tax relief options for individuals and businesses affected by natural disasters. If you’re in an impacted area, look for specific provisions that may apply to your situation.

8. Filing Deadlines

The deadline for filing individual tax returns remains April 15, 2025. Be sure to gather your documents early to avoid last-minute stress.

Conclusion

These updates from the IRS for the 2025 tax year could have a significant impact on your tax strategy. Staying informed and proactive can help you take full advantage of available deductions and credits. For more detailed information, visit the official IRS website or consult a tax professional to navigate your specific situation.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

The Interception of AI and the Tax Sector – What You Need to Know

By now, you probably have heard of or encountered some form of artificial intelligence (“AI”), which appears to be rapidly expanding globally. AI's application in tax preparation also seems to be growing. With growth, comes growing pains and learning curves; even though using AI to analyze vast volumes of tax data has advantages in terms of reducing human error, recognizing patterns, and increasing efficiency. The intriguing aspect of the learning curve, as it relates to tax preparation, is that AI most depends on access to data pools which present security challenges and additional levels of complexity. Additionally, research shows that there are different types of AI models, including generative, limited, reactive, natural language, narrow, speech recognition, reinforcement, etc. which should be considered when determining how it will best serve tax clients.

As AI continues to develop, so too must tax professionals and their plans for using it; it must be done securely, accurately, responsibly, and encrypted, with internal security measures in place to keep data safe. Once this has been established, use of AI will enhance client relationships, assist tax professionals in identifying consequences sooner, modernize internal processes, lower errors, and increase the overall effectiveness of services rendered to clients. This is not to suggest that tax professionals' valuable labor and expertise may be replaced by AI. Perhaps, to some extent, AI can open the door for tax professionals to concentrate on higher-value tasks while leaving the mundane tasks to AI.

The use and protection of AI in the tax professional world is no doubt a hot issue to be considered upon thoughtful review and in conjunction with the relevant and evolving professional standards and codes of conduct determined by state and local regulatory and licensing bodies, including, but not limited to, the  AICPA, State Bar, American Bar Association, IRS Office of Professional Responsibility and Circular 230.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

The Interception of AI and the Tax Sector – What You Need to Know

By now, you probably have heard of or encountered some form of artificial intelligence (“AI”), which appears to be rapidly expanding globally. AI's application in tax preparation also seems to be growing. With growth, comes growing pains and learning curves; even though using AI to analyze vast volumes of tax data has advantages in terms of reducing human error, recognizing patterns, and increasing efficiency. The intriguing aspect of the learning curve, as it relates to tax preparation, is that AI most depends on access to data pools which present security challenges and additional levels of complexity. Additionally, research shows that there are different types of AI models, including generative, limited, reactive, natural language, narrow, speech recognition, reinforcement, etc. which should be considered when determining how it will best serve tax clients.

As AI continues to develop, so too must tax professionals and their plans for using it; it must be done securely, accurately, responsibly, and encrypted, with internal security measures in place to keep data safe. Once this has been established, use of AI will enhance client relationships, assist tax professionals in identifying consequences sooner, modernize internal processes, lower errors, and increase the overall effectiveness of services rendered to clients. This is not to suggest that tax professionals' valuable labor and expertise may be replaced by AI. Perhaps, to some extent, AI can open the door for tax professionals to concentrate on higher-value tasks while leaving the mundane tasks to AI.

The use and protection of AI in the tax professional world is no doubt a hot issue to be considered upon thoughtful review and in conjunction with the relevant and evolving professional standards and codes of conduct determined by state and local regulatory and licensing bodies, including, but not limited to, the  AICPA, State Bar, American Bar Association, IRS Office of Professional Responsibility and Circular 230.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Use of NOL Deductions for Corporate & Individual Taxpayers – Suspended

Recently passed legislation in California, under Senate Bill 175 - Taxation, might preclude some corporate and individual taxpayer claims for NOL deductions in 2024 beginning on January 1, 2024 and before January 1, 2027. This suspension may affect those California corporate and individual taxpayers who have a net or modified adjusted gross income greater than $1 million. This is not the first time that California has suspended or limited claims for NOL deductions. Additionally, this legislation places an annual $5 million cap on the utilization of income tax credits, including the California pass-through entity elective tax credit. For any income tax credit that is prohibited due to this annual limitation, there is an additional carryover period that is equivalent to the number of taxable years that the credit was denied.

It is unclear as to whether the Governor of California will end the NOL deduction suspension and annual tax limitation sooner than January 1, 2027 as it depends on the state revenue meets required minimums.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Use of NOL Deductions for Corporate & Individual Taxpayers – Suspended

Recently passed legislation in California, under Senate Bill 175 - Taxation, might preclude some corporate and individual taxpayer claims for NOL deductions in 2024 beginning on January 1, 2024 and before January 1, 2027. This suspension may affect those California corporate and individual taxpayers who have a net or modified adjusted gross income greater than $1 million. This is not the first time that California has suspended or limited claims for NOL deductions. Additionally, this legislation places an annual $5 million cap on the utilization of income tax credits, including the California pass-through entity elective tax credit. For any income tax credit that is prohibited due to this annual limitation, there is an additional carryover period that is equivalent to the number of taxable years that the credit was denied.

It is unclear as to whether the Governor of California will end the NOL deduction suspension and annual tax limitation sooner than January 1, 2027 as it depends on the state revenue meets required minimums.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)

Wilson Tax Law Group, APLC, welcomes new Legal Administrator, Christine Wilbur

Please join us in welcoming Christine Wilbur to the Wilson Tax Law Group! We are very excited to have Christine on the team. She brings a wealth of experience from her notable career, with over fourteen years of experience providing legal management solutions, strategic creativity and human resources support to various law firms located throughout Orange County. Please connect with her today with any questions and she will be happy to assist you.

#Welcome #newemployee #WTLGrocks #strategicpartner

Business Tax Alert – Improper Employee Retention Credit Claims

While the IRS continues its expansive efforts to deny of improper Employee Retention Credit (ERC) claims, intensifying audits and pursuing civil and criminal investigations of potential fraud and abuse, there are several options that may still be available for those businesses who wish to resolve these matters to avoid these possible consequences.  Recently, the IRS announced the details of a second employee retention credit Voluntary Disclosure program (ERC-VDP) for employers who claimed and received an ERC refund for a tax period in 2021 but were not eligible. Like the first ERC-VDP, the program will allow claimants to repay ERC at a reduced rate of 85% of the credit; this is slightly less favorable than the original ERC-VDP that allowed employers to repay 80% of their credits. Applications to participate in the second ERC-VDP will be accepted only until Nov. 22, 2024. The further benefits of the second program waive penalties and interest on the full amount, not just the 85% returned.  The 15% reduction is not taxable as income and the IRS won’t examine (audit) ERC on your employment tax return for tax period(s) resolved within the terms of the second ERC-VDP.  You also don’t need to repay any interest you received on your ERC refund.  To qualify accepted applicants must execute a closing agreement confirming that they are not entitled to ERC and will be required to provide the name and contact information for any preparer or advisor who assisted in claiming the ERC. Additionally, the IRS released five more red flag issues they are regularly seeing in newly processed ERC claims; the agency recommends that businesses whose claims fall into any of these warning sign categories consider participating in the second ERC-VDP or the ERC Withdrawal Program.

To find out more about how Wilson Tax Law Group, could help with your tax litigation and defense needs, we invite you to set up a  consultation with our firm.

Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense.  Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board.  Wilson Tax Law Group is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.

For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC

Tel: (949) 397-2292 (Newport Beach Office) 

Tel: (714) 463-4430 (Yorba Linda Office)