Dear Valued Clients and Friends,
Welcome to the March 2025 edition of the Sellers CPA Tax Newsletter! As tax season gets into full swing, we’re here to equip you with the latest updates, practical tips, and insights to navigate the process with confidence. With the new Trump administration in place, there’s plenty of discussion about potential tax law changes ahead. While the details are still unfolding, we’re committed to keeping you informed. Let’s explore what’s on the table—covering tax law updates, planning strategies, refund tips, filing extensions, and how these connect to your financial planning.
Tax Law Updates: What’s Happening in 2025
The 2025 tax season is underway, and the IRS has released its annual adjustments. The standard deduction is now $15,000 for single filers and $30,000 for married couples filing jointly, providing a bit more breathing room. The Child Tax Credit holds steady at $2,000 per qualifying child, with up to $1,700 refundable—important figures to note as you prepare your returns.
Tax Law Updates: What’s Happening in 2025
The 2025 tax season is underway, and the IRS has released its annual adjustments. The standard deduction is now $15,000 for single filers and $30,000 for married couples filing jointly, providing a bit more breathing room. The Child Tax Credit holds steady at $2,000 per qualifying child, with up to $1,700 refundable—important figures to note as you prepare your returns.
The Tax Cuts and Jobs Act (TCJA) of 2017 remains a focal point, set to expire at the end of 2025 unless extended. This law, which lowered individual tax rates, boosted the standard deduction, and introduced the Qualified Business Income (QBI) deduction, could see action under President Trump’s leadership. Campaign promises hinted at making the TCJA permanent, removing the $10,000 SALT deduction cap, and adding exemptions for tipped income, overtime pay, and Social Security benefits. These changes, however, require Congressional approval and are not yet finalized. For now, we’re working with the current rules while monitoring developments in Washington.
Tax Planning: Positioning Yourself for Success
With potential shifts on the horizon, thoughtful tax planning is key. Here are some strategies to consider:
Maximize Deductions: If the TCJA sunsets without renewal, itemizing deductions like mortgage interest or charitable contributions could regain appeal in 2026. Bunching deductions this year might make sense if you’re near the standard deduction threshold.
Leverage Business Benefits: The QBI deduction (up to 20% of qualified income) is a valuable break for business owners but could disappear after 2025. Ensure you’re taking full advantage while it’s available.
Roth Conversions: With today’s tax rates potentially lower than future ones, converting traditional IRA funds to a Roth IRA could secure tax-free growth. This is worth exploring if you anticipate higher rates post-TCJA.
Stay Adaptable: Proposals like reducing the corporate tax rate from 21% to 20% (or 15% for U.S. manufacturers) could shift your planning. Flexibility will be essential as policies take shape.
Getting Your Refund: Tips for a Smooth Process
A quick refund can brighten anyone’s day. Here’s how to streamline the process:
File Early and Electronically: E-filed returns with direct deposit are typically processed in under 21 days, far faster than paper filings. Recent IRS staffing cuts could further delay mailed returns, so digital is the way to go.
Verify Your Details: Simple mistakes—like incorrect Social Security numbers or bank info—can hold up your refund. Double-check everything before submitting.
Track Your Refund: The IRS’s “Where’s My Refund?” tool lets you monitor your return’s status using your filing status, SSN, and refund amount.
Protect Yourself: Identity theft is a growing concern. An IRS Identity Protection PIN adds a safeguard to ensure only you can file under your SSN.
Refunds usually arrive within three weeks, though complex returns may take longer. Plan conservatively if you’re counting on those funds.
Filing for an Extension: Know Your Options
Need more time beyond April 15? Filing an extension is simple and extends your deadline to October 15, 2025. Here’s what to know:
How to File: Submit Form 4868 electronically or by mail. It’s a quick process to buy yourself extra breathing room.
Payment Reminder: An extension applies only to filing, not paying. Estimate your tax liability and pay by April 15 to avoid penalties and interest. Overpaying slightly can minimize risk, with any excess refunded later.
When It Makes Sense: Extensions are handy if you’re awaiting documents (like K-1s), organizing records, or aiming to refine your return for maximum benefit.
Financial Planning: Taxes in the Bigger Picture
Taxes are just one piece of your financial strategy. Here’s how they fit in:
Retirement Savings: Contributions to an IRA or 401(k) by April 15 can reduce your 2024 taxable income. For 2025, IRA limits are $7,000 ($8,000 if 50+), and 401(k) limits are $23,500 ($31,000 with catch-up).
Estate Planning: The estate tax exemption is $13.99 million per person but may drop to around $7 million in 2026 unless extended. Gifting or trusts now could preserve the higher limit.
Emergency Fund: With inflation lingering and potential tariffs (Trump has suggested 20% on imports, 60% on Chinese goods), building a cash buffer can help you weather rising costs.
Trump Administration Updates: Executive Orders and IRS Changes?
Since taking office on January 20, 2025, President Trump has signed several executive orders impacting the IRS, reflecting his administration’s focus on reducing federal bureaucracy. On his first day, Trump issued a memorandum imposing a hiring freeze across federal agencies, with a specific provision extending the freeze indefinitely for the IRS until the Treasury Secretary deems lifting it in the “national interest.” This action halts plans to onboard additional staff, including seasonal workers typically hired for tax season, though existing employees remain unaffected for now.
On February 11, 2025, Trump signed an executive order titled “Reforming the Federal Workforce,” directing agencies to coordinate with the Department of Government Efficiency (DOGE) to reduce staff through attrition and layoffs. For the IRS, this has translated into reported reductions, with posts on X claiming between 400 and 6,700 employees—many hired under the Biden-era Inflation Reduction Act—were let go in mid-February, targeting probationary staff in divisions like Small Business/Self-Employed. Official figures from the IRS or White House have not been released, leaving the exact scope unclear.
Management changes have also occurred. Former IRS Commissioner Danny Werfel resigned on January 20, 2025, with Douglas O’Donnell, a 38-year agency veteran, stepping in as acting commissioner. Trump has nominated former Rep. Billy Long (R-Mo.) to lead the agency, though his Senate confirmation hearing is pending as of March 3.
These moves align with Trump’s campaign pledge to scale back the IRS, which saw significant funding increases under the 2022 Inflation Reduction Act to bolster enforcement and customer service. The hiring freeze and staff cuts could reduce the agency’s capacity to process returns or pursue audits, particularly of high-income earners, though the full impact on taxpayers remains to be seen. Meanwhile, a January 20 memorandum exploring an “External Revenue Service” to collect tariffs has sparked speculation about shifting tax collection priorities, but no concrete steps have been taken.
All these actions face potential legal challenges, with lawsuits already filed contesting broader workforce orders. Updates will follow as policies solidify and as always you can depend on Sellers CPA to keep you informed so you can make informed business decisions.
Contact Carol Sellers for Your Tax Needs
Tax season doesn’t have to be daunting. Whether you’re tackling your return, planning for the future, or curious about how Trump’s policies might affect you, Carol Sellers and the Sellers CPA team are here to assist. Feel free to reach out to Carol at carol@sellerscpa.com or (555) 123-4567 for any of your tax needs—we’d be delighted to hear from you!
Wishing you a smooth tax season and a thriving 2025!
Warm regards,
Carol Sellers and The Sellers CPA Team
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