By Maria Brockmeyer, Legal Aid Society
According to the IRS, approximately one-quarter of Americans wait until the last few weeks before the deadline to file their tax returns. If you’re among that group, this year’s deadline of April 15 might be coming up faster than you realize.
With the passage of the One Big Beautiful Bill Act and the issuance of numerous executive orders, many individuals’ tax returns will look a bit different this year. Here are a few of the major changes that may be affecting you this season:
No taxes on tips and overtime: Servers, bartenders, hairstylists and other service industry workers who regularly receive tips can now deduct up to $12,500 in tips from their income ($25,000 for joint filers), hopefully providing them some tax relief. In addition, workers who received overtime can deduct the pay that exceeds their regular hourly rate (in other words, the “half” in “time-and-a-half”) up to $12,500 per taxpayer.
Gig workers: It’s been a confusing past few years for gig workers, with IRS rules concerning reported income changing not once, but twice. This year, the IRS has reinstated its former “20/200” threshold, with online sellers and gig workers only required to report income that surpasses $20,000 or 200 transactions. As a result of this change, people who only make occasional income through eBay sales or part-time gigs may no longer receive a 1099-K form unless they reach those numbers. While this change may benefit gig workers in the short-term, the problem is that people likely still have a requirement to file and this may create an additional barrier to doing so.
Enhanced deduction for seniors: Starting this year, individuals age 65 and above can claim up to an additional $6,000 deduction on top of the additional standard deduction for seniors (which itself can be up to $2,000 above the standard deduction for other taxpayers).
Refund checks: Taxpayers who still prefer to receive refund checks are being cautioned that they might wait longer than usual this year — an estimated 10 weeks instead of the typical 2 to 3. The reason is that the IRS and federal government are phasing out the use of paper checks and encouraging the use of direct deposit. Taxpayers are encouraged to set up direct deposit at their bank or other financial institution to receive their tax refund as quickly as possible. Taxpayers who use online services like Cash App, Venmo or Square can also arrange to have their refunds go to those accounts as long as they provide the necessary account and routing numbers.
Trump Accounts: Created through the One Big Beautiful Bill Act, these new individual retirement accounts are available for U.S. citizens born between 2025 and 2028. Each account holder receives a $1,000 federal deposit to be invested in stocks, with the goal of spurring wealth accumulation. Parents can contribute as much as $5,000 annually. To open an account for an eligible child, make sure to complete IRS Form 4547 or visit TrumpAccounts.gov to set up an account online.
Unclaimed refunds: If you have an unclaimed refund from a previous year, you must file or amend that year’s return within three years. April 15 is also the deadline to claim refunds going back to the 2022 tax year.
Free tax assistance: Unfortunately, the IRS’s DirectFile program, which offered free electronic tax filing to all taxpayers regardless of income level, has been discontinued by the current administration. However, Tennesseans do have other options for getting free help with their taxes. The IRS’s Volunteer Income Tax Assistance (VITA) program aids low-income and at-risk taxpayers, and the Tax Counseling for the Elderly (TCE) program offers assistance to taxpayers ages 60 and up. To find out more, call 800-906-9887 (VITA) or 888-227-7669 (TCE) or visit https://irs.treasury.gov/freetaxprep/.
Legal Aid Society’s statewide Tennessee Taxpayer Project is another free resource for taxpayers. While the Tennessee Taxpayer Project doesn’t offer tax preparation services, qualifying low-income Tennesseans can receive assistance related to their tax returns or any federal tax problems. Call Legal Aid Society’s toll-free hotline at 866-481-3669 or visit https://las.org for more information.