$1,400 IRS Stimulus Check?
Keep your eyes peeled for some extra cash flow coming your way via mailbox or a direct deposit.
As Kiplinger reported, the IRS is sending a million individuals a pandemic stimulus check worth up to $1,400 per taxpayer. The tax agency said it would send $2.4 billion in payments, which should be delivered by the end of this month (January).
The checks in question are from the 2021 Recovery Rebate Credit, a refundable credit for folks who did not receive one or more Economic Impact Payments (EIP) or stimulus checks.
Why such a delay? The IRS has been reviewing internal data to identify eligible taxpayers who filed a return but didn’t claim the credit. During the pandemic, the tax agency was short-staffed and faced many challenges as it dug itself out of paper backlogs.
Most taxpayers have already received their credit. However, some have not yet filed their 2021 tax returns and may qualify for a refund. If you’re in that situation, you’ll need to file that prior return by April 15.
For all the details, see our story, IRS is Sending Up to $1,400 to One Million People: Are You Eligible?
Gabriella is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. She contributed to national dialogues on fiscal responsibility, market trends, and economic reforms.
In the News...No More Income Tax?
Donald Trump has once again stirred the debate on tax policy, recently advocating for eliminating income tax and returning to a tariff-based revenue system.
"We're going back to the old days. No income tax, just tariffs. It worked before, and it'll work again," Trump said during a January 25 event in Las Vegas, Nevada.
The remarks, which come not long after a Republican lawmaker separately proposed to abolish the IRS and rewrite that tax code, reignited discussions about fundamental changes to the U.S. tax system.
(It's worth noting that critics argue that heavy reliance on tariffs could lead to trade wars, increased consumer prices, and potential economic instability.)
To learn more about this latest tax suggestion, see: Hello Tariffs? What's Wrong With Trump's Plan to Abolish Income Tax.
- Kelley
A Reminder for Those With Student Loan Debt
If you’re paying off a student loan, you could be eligible for an up to $2,500 tax break for student loan interest, among other education tax credits and deductions.
Some education-related tax breaks hinge on "qualified education expenses," including tuition and fees, room and board, and loans for school supplies, like books. But in some cases, the combined total could save you thousands.
Why this matters. Data show that more than 50% of students graduate with student loans, with the average student loan payment of around $300.
On top of that financial burden, there may also be a new challenge for some students: Parts of the SAVE plan (a federal student loan repayment program) are currently being contested in a federal lawsuit.
For more information on how you can save tax dollars on your student debt and to learn about the taxability of recently forgiven student loans, check out these Kiplinger reports:
Don't Miss This $2,500 Tax Break for Paying Your Student Loan
How to Get a 401(k) Match for Your Student Loan Payment
Will You Owe Taxes on Your Recently Forgiven Student Loan?
A Little-Known Way to Help Pay Your Student Loan
Kate is a CPA with experience in tax, audit, and finance topics. As a tax writer at Kiplinger, Kate helps you and your wallet stay in the know.
Trump Freezes All Federal Aid
The White House Office of Management and Budget (OMB) has issued a memo pausing all federal grants and loans, effective January 28, 2025. While not directly targeting taxes, this unexpected and sweeping move could significantly affect the tax landscape.
The pause comes in addition to executive orders already issued freezing federal hiring for 90 days (indefinitely for the IRS), requiring a return to the office for many federal workers, and changing processes for reclassifying federal workers.
Key points of the memo:
- Halts distribution of federal financial assistance
- Excludes Social Security, Medicare, and Medicaid benefits
- Federal agencies must report on affected programs by February 10, 2025
Potential tax impacts:
- IRS Operations: A hiring freeze at the IRS could slow tax return processing and impact customer service.
- Tax Credits: Uncertainty around grant-supported tax credit programs, especially in clean energy and electric vehicles.
- Tax Guidance: Possible delays in issuing guidance on recent tax law changes.
- Program Changes: Tax-related federal programs could be affected, potentially altering available incentives and credits.
Notably, the memo doesn't specify an end date for this "temporary" pause, adding another layer of uncertainty. (The February 10 reporting deadline for agencies doesn't necessarily indicate when the freeze will lift.)
As we navigate this open-ended situation, keep an eye on any IRS updates and consider consulting a tax or finance professional if you have specific concerns about impacts on your situation.
Related:
What Trump's Federal Hiring Freeze Means for Your Tax Return
Is the EV Tax Credit Going Away?
Kelley simplifies federal and state tax information, news, and developments to help empower readers. She has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.
Some News: Scott Bessent Becomes New Treasury Secretary
The Senate confirmed Scott Bessent as the new U.S. Treasury Secretary on January 27, with a vote of 68-29. Bessent, known for his work in the hedge fund industry, is the 79th Treasury Secretary, succeeding Janet Yellen.
During his confirmation hearing, Bessent outlined several key focus areas, some of which center on tax policy.
- Addressing the upcoming expiration of certain Tax Cuts and Jobs Act (TCJA) provisions
- Managing the national debt and debt ceiling negotiations
- Potential reforms to the IRS
- Navigating international trade relationships, particularly with China
As Bessent takes on his new role in the Trump administration, his decisions and policies will likely significantly impact the U.S. economy.
- Kelley
Go Digital This Tax Season
The IRS is expecting more than 140 million individual tax returns to be filed by April 15, and the last thing you want is for your return to be delayed or lost in the mix.
As you prepare to file your taxes, storing your tax forms and supporting documents in a digital folder can help you file a secure and accurate tax return. Depending on your tax situation, you may collect receipts for expenses you’d like to deduct or claim as credit.
To get started, some documents you should consider digitizing include:
- W-2 forms from employers
- 1099 forms for freelance or contract work
- Paystubs or unemployment compensation
- Receipts for deductible expenses
- Investment records or bank statements
File digitally. As we’ve mentioned, IRS Direct File is available in 25 states, allowing taxpayers to file for free and directly to the IRS. Meanwhile, if you earned less than $84,000 in 2024, consider filing with IRS Free File. You can also select a direct deposit and receive a refund quicker if you are entitled to one
Avoid accidental loss. Digitizing your tax records and supporting documents can help you avoid the risk of losing crucial paperwork in the event of a natural disaster.
Consider the political landscape. The IRS has recently overcome years of challenges due to old tech, limited staff, and paper backlogs. The Trump administration is halting hiring new staff and considering cutting back on IRS funding. These changes may lead to potential tax processing delays, particularly for paper returns or those that need manual review.
- Gabriella
Related:
Fun Fact: Why Most People Don't Itemize Deductions
Did you know the standard deduction has become the choice for nearly 90% of U.S. taxpayers? This surge in popularity isn’t an accident. The Tax Cuts and Jobs Act (TCJA) of 2017 (also known as the “Trump tax cuts”) nearly doubled the standard deduction, and that higher deduction is still in place now.
Data show that before the TCJA, about 30% of taxpayers itemized their deductions. After its implementation, that number plummeted to just under 14%. Congress will have to consider whether to extend the higher base standard deduction amount as it weighs new tax policy.
For the 2024 tax year, the standard deduction amounts are:
- Single filers: $14,600
- Married couples filing jointly: $29,2002
- Head of household filers: $21,900
For more information, see Kiplinger’s guide: What’s the Standard Deduction for 2024 and 2025?
- Kelley
Free Tax...Help!
Just a reminder that there are a bunch of ways to file taxes for free this filing season. Here are a few services that the IRS offers:
- Free File is open to low-to-middle-income taxpayers with an AGI of $84,000 (or less).
- Direct File is open to some taxpayers in 25 states with an AGI of up to $250,000.
- The MIL (Military One Source) program (if you’re in the military) or the
- The VITA (Volunteer Income Tax Assistance) program (if you make $67,000 or less, you can meet with an IRS partner or volunteer staff who can provide tax counseling and preparation services)
There are also some free filing options offered by tax prep companies. Just double-check their eligibility rules.
Related: Ways to File Taxes for Free in 2025
...Don’t know what your “AGI” is? No problem.
Adjusted gross income (AGI) is your total income minus specific deductions. It's the starting point for calculating your tax bill before applying standard or itemized deductions designed to give the IRS a clearer picture of your taxable income.
To learn more, check out Kiplinger’s take on AGI, and then head over to our guide to Federal Tax Brackets and Income Tax Rates for more information regarding your 2024 tax rate.
Note: Your marginal tax rate is the percentage you pay on your last dollar earned, not your entire income. Think of it like a staircase: as you climb to higher income levels, only the dollars on each new step are taxed at that step's rate.
Plus, we have everything you need to know about the standard deduction and a load of tax credits and deductions you might be eligible for. (We’ll talk more about some of those tax breaks this week.)
Kate is a CPA with experience in tax, audit, and finance topics. As a tax writer at Kiplinger, Kate helps you and your wallet stay in the know.
A Bit of News on Tariffs
Among President Donald Trump’s wave of executive orders signed on day one of his second term, one major campaign promise was missing — imposing universal tariffs on all imports.
What’s imminent, however, is how Trump’s sweeping would-be tariffs will impact your wallet as a consumer in the United States. Economists warn that tariffs on China, Mexico, and Canada can impact the cost of everyday essentials like food, gas, and clothing.
Here’s where you could see prices rise sooner than you think.
Food, Gas Prices to Spike if Trump Levies 25% Tariffs on Canada and Mexico
Gabriella is a seasoned finance journalist with 8 years of experience covering consumer debt, economic policy, and tax. She contributed to national dialogues on fiscal responsibility, market trends, and economic reforms involving family tax credits, housing accessibility, banking regulations, student loan debt, and inflation.
Tax Changes to Know
Every year, before you file your 2024 tax return, there are significant federal tax changes you need to know. This tax season is no different.
So, we’ve compiled a list of key IRS changes that could impact your 2024 tax return — from the child tax credit and 1099k thresholds to extended tax deadlines in states affected by devastating natural disasters.
See: Tax Season 2025 Is Here: Seven IRS Changes to Know Before You File
Also, if you aren’t sure where to begin to prepare for tax season or wonder if you even need to file a return this year, we’ve got you covered with the following guides:
Who is Required to File a Tax Return
Does Your Child Need to File a Tax Return?
- Kelley
The First Day of Tax Season 2025
As of today, January 27, the IRS has opened its doors for the 2025 tax season. And this year brings notable shifts that will impact how millions in the U.S. file their taxes.
For example, the IRS has expanded its Direct File program to allow taxpayers in 25 states to complete returns without traditional preparation costs. That could save millions of households time and money. (The tax agency estimates 30 million taxpayers could participate)
President Trump's return to the White House has prompted significant shifts. On inauguration day, the former IRS commissioner Danny Werfel stepped down. As the tax agency awaits confirmation of Trump’s Commissioner pick (former Congressman Billy Long), it must deal with a hiring freeze and reduced funding.
What does this mean practically? The core tax season process should remain the same: gathering documents, understanding tax deductions and credits, and eventually meeting the April 15 deadline (if you don’t have a valid tax extension).
However, the federal tax landscape is evolving, and as a new Congress begins to address tax policy, there is uncertainty about what tax bills will look like beyond this year.
For those feeling anxious about the changes, take a deep breath. Focus on the fundamentals of good tax preparation: good record keeping, understanding your income streams, leveraging tax breaks you’re eligible for, and seeking professional advice when and if you need it.
Welcome to Tax Season 2025.
As mentioned, we'll be live blogging all week, offering tips, analysis, IRS updates and related news and information. In the meantime, here are some resources to get you started.
- Not Ready to File Taxes? Eight Things to Do to Prepare
- When are Taxes Due in 2025? Tax Deadlines By Month
Kelley simplifies federal and state tax information, news, and developments to help empower readers. She has over two decades of experience advising on and covering education, law, finance, and tax as a corporate attorney and business journalist.