WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 

* The 2025–2026 New York State budget provides for the state’s first-ever Inflation Refund Checks for residents based on their 2023 IT-201 NY Adjusted Gross Income.

“Checks will be mailed over a period of several weeks beginning in mid-October of 2025.”

* The IRS has issued Fact Sheet 2025-05 to address the accelerated termination of several energy provisions under the big but not so beautiful bill -  

“OBBB accelerated the termination of several energy credit and deduction provisions. The following incentives expire the soonest:”

IRC	Credit	Termination date
25C	Energy efficient home improvement credit	Property placed in service after December 31, 2025.
25D	Residential clean energy credit	Expenditures made after December 31, 2025.
25E	Previously-owned clean vehicles credit	Any vehicle acquired after September 30, 2025.
30C	Alternative fuel vehicle refueling property credit	Any property placed in service after June 30, 2026.
30D	New clean vehicle credit	Any vehicle acquired after September 30, 2025.
45L	New energy efficient home credit	Any qualified new energy efficient home acquired after June 30, 2026.
45W	Qualified commercial clean vehicle credit	Any vehicle acquired after September 30, 2025.
179D	Energy efficient commercial buildings deduction	The deduction will not be allowed with respect to any property the construction of which begins after June 30, 2026.

* Speaking of the termination of energy credits, Kay Bell reports “IRS tweaks EV tax credit’s Sept. 30 ending date” at DON’T MESS WITH TAXES -

“ . . the IRS’ frequently asked questions (FAQ) fact sheet issued Aug. 21 says that a vehicle is acquired, per the OBBB requirement, ‘as of the date a written binding contract is entered into and a payment has been made.’”

* And Kay tells us “IRS releases draft 2026 Form W-2, incorporating no tax on tips or overtime income” in another DMWT post.

Kay explains how the newly required information on tip and overtime income available for the OBBA tax deductions are reported for 2026.  But there is no word on how this information will be reported on the 2025 W-2.  

* Russ Fox gives us the word that “IRS Closes Cincinnati Lockboxes; New Addresses In Effect Immediately” at TAXABLE TALK –

“The major change for residents of Alaska, California, Colorado, Hawaii, Idaho, Kansas, Michigan, Montana, Nebraska, Nevada, Ohio, Oregon, North Dakota, South Dakota, Utah, Washington, and Wyoming is that there are new addresses to mail Forms 1040-V and 1040-ES. (Paper-filed forms 1040 with a payment go to the 1040-V address.)”

His source is IRS Publication 3891 “Lockbox Addresses for 2026”.

THE LAST WORD

Supporting and enabling convicted felon and indicted traitor Trump and his attempt to effectively become the King of the United States is unconscionable.

The Republicans in Congress should be ashamed.

Every day brings more proof that nothing is more important – and I mean nothing – for the future of America than making sure the Democrats take control of Congress by a safe majority in 2026.

If Republicans maintain control of Congress, 2026 will not only be the 250^th anniversary of the Declaration of Independence but it will also be the end of American freedom and democracy.

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 

* Kay Bell, the yellow rose of taxes, explains that “OBBB increases reporting thresholds for 1099 forms K, MISC, and NEC” at DON’T MESS WITH TAXES.

For 2026 the filing threshold for Forms 1099-NEC, Nonemployee Compensation, and 1099-MISC, Miscellaneous Information, will increase from $600 to $2,000, and will be increased for inflation for 2027 and beyond.

Kay ends with an excellent reminder -

“Earners also need to remember that a lack of a 1099 does not mean the money they received is tax-free. All earnings, even those amount not large enough to trigger issuance of a 1099, are taxable income and must be reported when tax returns are filed.”

* Jeff Stimpson reports “New Mexico weather victims get tax relief” at ACCOUNTING TODAY.

* The NJ Division of Taxation has released the “2024 Senior Freeze Payment Schedule”.

* Michael Cohn reports “Commissioner Billy Long leaving IRS for Iceland” at ACCOUNTING TODAY –

“President Trump has removed Billy Long as commissioner of the Internal Revenue Service in the latest sign of turmoil at the embattled agency.”

I wonder what sin of disloyalty to Trump Long committed.  Or what order from Trump he refused to carry out. 

THE LAST WORD

The motto of Trump and the Trump Administration –

“If you can’t dazzle them with brilliance (and we can’t) baffle them with bullshit.”

TTFN

NO TAX ON SOCIAL SECURITY? NO WAY, RAY!

 

The so-called “One Big Beautiful Act” does not make any change to the way Social Security benefits are taxed.  Depending on the extent of your other income, up to 85% of your gross Social Security benefits (before any Medicare deduction) continue to be taxed as ordinary income on the Form 1040 (or 1040-SR).

What the legislation does is create a deduction of $6,000 for every taxpayer age 65 or older at year-end for 2025 to 2028.  The deduction is per taxpayer, so if both spouses on a joint return are 65 or older they can deduct $12,000.  This deduction is available whether or not you are collecting Social Security.  

The amount of the deduction is reduced by 6% of the amount your Modified Adjusted Gross Income (MAGI) exceeds $75,000, or $150,000 if you are married and filing a joint return with your spouse.  For this deduction MAGI is your Adjusted Gross Income plus any exclusion for foreign income or income from Puerto Rico, Guam, American Samoa, and the Northern Mariana Islands.

You can claim the deduction whether or not you itemize your deductions on Schedule A.  The deduction is in addition to the extra Standard Deduction amount for senior taxpayers who do not itemize.  For married individuals the deduction is only available if you file a joint return.  This new deduction is not available on “Married Filing Separately” returns.   

So, there is a tax on your Social Security benefits, calculated in the same manner as it has been in the past.

FYI, I oppose the current method of calculating taxable Social Security benefits.  Social Security should be taxed in the same way as any other contributory pension.

TTFN

NO TAX ON OVERTIME?

 

Like “No Tax on Tips” the statement “No Tax on Overtime” in relation to the recently passed tax legislation is misleading.

The so-called “One Big Beautiful Act”, signed into law on July 4^th, did not exempt all overtime pay from all federal taxes.  The Act created a federal income tax deduction for up to $12,500 ($25,000 on a joint return) in overtime pay received for tax years 2025 (all of 2025) through 2028, phased out based on your “Modified” Adjusted Gross Income (MAGI).  For this deduction MAGI is your Adjusted Gross Income plus any exclusion for foreign income or income from Puerto Rico, Guam, American Samoa, and the Northern Mariana Islands.

There is no change to how overtime pay is reported.  The employer must still withhold, and match, the 7.65% FICA (Social Security and Medicare) tax and pay FUTA (federal unemployment) tax on overtime pay.  Employers received no tax benefit related to overtime pay in the new law.

As in the past, employers will include overtime pay in the amount reported as “wages, tips, other compensation” in Box 1, Social Security wages” in Box 3, and “Medicare wages and tips” in Box 5 of your 2025 Form W-2.  Overtime pay that qualifies for the deduction will be separately reported in Box 12 or Box 14.

And, also as in the past, you will report the amount from Box 1 of all W-2s on Line 1a of your 2025 Form 1040 (or 1040-SR).  What you will now be able to do is claim a deduction for up to $12,500, or $25,000, of qualified overtime (as identified on your Form W-2), which reduces your federal net taxable income. 

The amount of the maximum deduction you can claim for qualified tips is reduced by $100 for every $1,000 (or fraction thereof) that your MAGI exceeds $150,000, or $300,000 if you are married and filing a joint return with your spouse. 

What qualifies as overtime pay is pay for hours worked in excess of the standard 40-hour workweek, calculated at a rate above the employee’s regular hourly rate.  Only the “premium portion” of overtime pay qualifies for the deduction – the “half” portion of “time and a half”.  If an employee’s regular hourly rate is $20.00 and he/she is paid $30.00 per hour for overtime work only $10.00 of the overtime pay qualifies for the deduction.

This is not an itemized deduction.  You can claim the deduction for overtime pay whether or not you itemize your deductions on Schedule A.  For married individuals the deduction is only available if you file a joint return.  This new deduction is not available on “Married Filing Separately” returns.   

The Act does not change the state tax treatment of overtime pay.  Your overtime pay will still be subject to any state income tax and state payroll tax.

So, you could be paying no federal income tax on a portion of your overtime pay.

The amount that qualifies for the overtime pay deduction, and also the tip deduction, does not have to be calculated by the taxpayer, or tax preparer.  The amount of qualified overtime pay or tips will be separately reported on the employee’s Form W-2.

As with the new tip deduction – as a taxpayer and citizen I oppose the deduction for overtime pay as being unfair to W-2 employees who do not receive time and a half pay if they work more than 40 hours in a week.

TTFN

THIS I KNOW TO BE TRUE BEYOND ANY DOUBT

 

Donald J. “The Man Who Would Be King” Trump, the current President of the United States, is a totally worthless piece of garbage, completely devoid of intelligence, competence, character, integrity, honor, humanity, sympathy, and empathy who does not possess a single redeeming positive human quality or value.  He does not care one ounce about anyone or anything but himself and has never performed a single totally unselfish act in his entire adult life. 

Trump is a convicted felon, an indicted traitor who instigated an armed assault on the Capital and stole boxes of top-secret documents for personal use and gain upon leaving office.  A civil court determined Trump to be a rapist.  And he was impeached twice by Congress.

The legacy of the first Trump Presidency was the “legitimization” of racism, bigotry, and white supremacism.  The top priority of the current Trump Presidency is destroying the safeguards and programs that protect the safety, security, health, and finances of Americans.  His only agenda as President is to feed his ego, line his pockets, and gain for himself the total control of government of a medieval monarch.

Today the checks and balances of the separation of power so wisely created in the Constitution by our founding fathers no longer exists.  Trump currently controls all three branches of the federal government.

In our country’s history no one single individual has done more damage to America, the American people, American freedom and democracy, and true American values than Donald J “Little Mushroom” Trump.

The only Americans who could possibly support Trump and his Administration are either morons, racists, without a conscience, or, like Trump himself, someone who is all three.

It is vital for the future of America and Americans that every intelligent and patriotic American vocally and aggressively oppose and denounce Trump and his Administration and work to end his “reign”.

It is equally vital that every intelligent and patriotic American vote against EVERY candidate of today’s Trump-embracing Republican Party in EVERY election for EVERY office at EVERY level in 2025 and 2026.

TTFN

WHAT’S THE BUZZ, TELL ME WHAT’S A HAPPENNIN’?

 

* More details on the effects of the despicable Trump Administration’s staffing and funding cuts to the IRS from Michael Cohn at ACCOUNTING TODAY –

“IRS reassesses service improvement projects amid layoffs”, 

“IRS enforcement efforts hit by cutbacks”, and 

“IRS workforce reductions accelerate”

From the 3^rd listed article (highlight is mine) –

“The Internal Revenue Service is continuing to shed employees, with over 25% of its workforce now gone since the beginning of the year, according to a new report, and more employees are expected to depart after the Supreme Court cleared the way.”

Government efficiency my arse!  

* Kay Bell continues the conversation in “2026 filing season could be problematic due to cuts in IRS funding and staff” at DON’T MESS WITH TAXES -  

“Finally, the third thing that could make filing season 2026 problematic is that in addition to working with fewer staff, the agency’s overall budget is going to be cut.”

* Kay also tells us “13 sales tax holidays are scheduled for August”.

* There has been much written about Trump’s recent tax cuts (the big but not so beautiful bill) – but what about the new Trump tax?  Alex Durante and Rebecca Walker explain “Trump Tariffs Will Raise the Cost of Food for Americans” at THE TAX FOUNDATION website.

TTFN

NO TAX ON TIPS?

The statement “No Tax on Tips” in relation to the recently passed tax legislation is misleading.

The so-called “One Big Beautiful Act”, signed into law on July 4th, did not exempt all tips from all federal taxes.  The Act created a federal income tax deduction for up to $25,000 in tips received for tax years 2025 through 2028, phased out based on your “Modified” Adjusted Gross Income (MAGI).  For this deduction MAGI is your Adjusted Gross Income plus any exclusion for foreign income or income from Puerto Rico, Guam, American Samoa, and the Northern Mariana Islands.

There is no change to how tips are reported.  Employees must still report tips received to their employer and the employer must still withhold, and match, the 7.65% FICA (Social Security and Medicare) tax and pay FUTA (federal unemployment) tax on the tip income.  Employers received no tax benefit related to tip income in the new law.

As in the past, employers will include tip income in the amount reported as “wages, tips, other compensation” in Box 1 and “Medicare wages and tips” in Box 5 of your 2025 Form W-2.  Tips will be separately reported as “Social Security tips” in Box 7.  Qualified tips will probably also be separately reported in Box 12 or Box 14 (tips that qualify for the deduction may be different from reported “Social Security tips”) and your occupation will probably be reported in Box 14.

And, also as in the past, you will report the amount from Box 1 of all W-2s on Line 1a of your 2025 Form 1040 (or 1040-SR).  What you will now be able to do is claim a deduction for up to $25,000 of qualified tips (as identified on your Form W-2), which reduces your federal net taxable income. 

The amount of the maximum deduction you can claim for qualified tips is reduced by $100 for every $1,000 (or fraction thereof) that your MAGI exceeds $150,000, or $300,000 if you are married and filing a joint return with your spouse. 

Qualified tips are cash or credit card tips voluntarily paid by the customer or distributed through tip-sharing arrangements for voluntary tips.  Mandatory service charges or automatic gratuities for large parties do not qualify.  Only tips received in “an occupation that customarily and regularly received tips on or before December 31, 2024” qualify for the deduction.  The IRS will be issuing a list of qualified occupations by October 2nd – but restaurant and tavern and hotel and motel service staff will certainly be on the list.  Tips you report on Form 4137 (Social Security and Medicare Tax on Unreported Tip Income) may also qualify for the deduction.

This is not an itemized deduction.  You can claim the deduction for tips whether or not you itemize your deductions on Schedule A.  For married individuals the deduction is only available if you file a joint return.  This new deduction is not available on “Married Filing Separately” returns.  It appears the $25,000 maximum is per return and not per taxpayer.

The Act does not change the state tax treatment of tip income.  Your tips will still be subject to any state income tax and state payroll tax.

So, you could be paying no federal income tax on your tips.

My personal opinion –

As I have posted in the past, from a financial, economic, and “tax fairness” point of view the “No Tax on Tips” and “No Tax on Overtime” deductions make absolutely no sense. 

Tip and overtime income is W-2 earned income.  Why do restaurant and tavern and hotel and motel service employees deserve a special tax deduction and secretaries and clerks do not?

Promises of these new special deductions were “gimmicks” that were used to “buy” votes in the 2024 Presidential election – made by a candidate known for not keeping his campaign promises.  I am truly surprised that these promises were actually made law. 

To be honest, when Trump proposed especially the “no tax on tips” deduction I very seriously believe he intended a total exemption from all federal tax on tip income – including an exemption from payroll taxes.  In such a case the big winner would not be tipped employees but resort owners like Trump who hire tipped employees – allowing Trump and friends to save millions on the FICA tax match.  But if federal payroll taxes were exempt the beneficiary tipped employees would lose out in the long run from reduced Social Security income at retirement.  Thankfully the tax writers created a federal income tax deduction – and did not make any changes to how tips are reported by employers and kept the FICA employee withholding and employer match.

If Congresscritters believed low-income employees deserved a tax break it should have created a deduction for all service employees (i.e. not professional employees) with a MAGI phase-out.

TTFN