CLOTAX
Tax & Accounting Service
FAQ & News
1. Tax Relief in Disaster Situations
Tax Relief in Disaster Situations from the IRS: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations
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1/10/2025 update: IRS annoucnes tax relief for taxpayers impacted by wildires in California
2. ITIN - Renew Expiring Tax ID Numbers and Non-Resident Alien
Renew Expiring Tax ID Numbers:
If your ITIN wasn’t included on at least one U.S. federal tax return for the last 3 consecutive tax years, it expires on December 31 of the third consecutive tax year, and must be renewed before being used again on a U.S. federal tax return. If your ITIN was assigned before 2013 and was never renewed, you'll need to submit a renewal application with your U.S. federal tax return. See How To Apply, later, for more information. ITIN not needed for estimated tax payments or extensions. If you receive income such as self-employment income without having taxes withheld, you may have to make estimated tax payments even if you don't have an ITIN when you earn the income. If you're making an estimated tax payment using Form 1040-ES or Form 1040-ES (NR) or filing an application for an extension of time to file using Form 4868, mail payments to the IRS with an estimated tax payment voucher or Form 4868 and complete all required information on the voucher except enter.
"ITIN TO BE REQUESTED" wherever your social security number or ITIN is requested. Don’t file Form W-7 with the forms or voucher. An ITIN will be issued only after you file a tax return and meet all other requirements. See Form 1040-ES or Form 1040-ES (NR) and its instructions for more information on completing the voucher and when estimated tax payments are required.
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We are Certified Acceptance Agents (CAA) and we can help to apply or renew your ITIN for you with the right documents to the IRS. You don’t need to travel to the IRS office by yourself for your spouse/dependents or submit an original passport to the IRS.
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Nonresident Alien:
(see our checklist last page to determine if you are a tax residence or not)
If you are a nonresident alien and earn wages subject to U.S. income tax withholding, your 2024 U.S. income tax return Form 1040NR is due by April 15, 2025. If you don't earn wages subject to U.S. income tax withholding, your return is due by June 15, 2025. If you are a U.S. citizen or resident, are living outside the United States and Puerto Rico on the due date of your return, and your main place of business or post of duty is outside the United States and Puerto Rico—OR if you are in the military or naval service on duty outside the United States and Puerto Rico—you are allowed an automatic 2-month extension without filing form 4868 (until June 15, 2025). However, if you pay the tax due after the regular due date (April 15, 2025), interest will be charged from that date until the date the tax is paid in full.
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3. Special Payments to Taxpayers who Did Not Claim 2021 Recovery Rebate Credit​​
IRS announces special payments going this month to 1 million taxpayers who did not claim 2021 Recovery Rebate Credit. They encourage non-filers about the approaching deadline to claim credits .
4. IRS Releases Tax Inflation Adjustments for Tax Year 2025
Notable changes for tax year 2025:
The tax year 2025 adjustments described below generally apply to income tax returns to be filed starting tax season 2026. The tax items for tax year 2025 of greatest interest to many taxpayers include the following dollar amounts:
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Standard deductions. For single taxpayers and married individuals filing separately for tax year 2025, the standard deduction rises to $15,000 for 2025, an increase of $400 from 2024. For married couples filing jointly, the standard deduction rises to $30,000, an increase of $800 from tax year 2024. For heads of households, the standard deduction will be $22,500 for tax year 2025, an increase of $600 from the amount for tax year 2024.
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Marginal rates. For tax year 2025, the top tax rate remains 37% for individual single taxpayers with incomes greater than $626,350 ($751,600 for married couples filing jointly). The other rates are:
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35% for incomes over $250,525 ($501,050 for married couples filing jointly).
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32% for incomes over $197,300 ($394,600 for married couples filing jointly).
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24% for incomes over $103,350 ($206,700 for married couples filing jointly).
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22% for incomes over $48,475 ($96,950 for married couples filing jointly).
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12% for incomes over $11,925 ($23,850 for married couples filing jointly).
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10% for incomes $11,925 or less ($23,850 or less for married couples filing jointly).
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Alternative minimum tax exemption amounts. For tax year 2025, the exemption amount for unmarried individuals increases to $88,100 ($68,650 for married individuals filing separately) and begins to phase out at $626,350. For married couples filing jointly, the exemption amount increases to $137,000 and begins to phase out at $1,252,700.
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Earned income tax credits. For qualifying taxpayers who have three or more qualifying children, the tax year 2025 maximum Earned Income Tax Credit amount is $8,046, an increase from $7,830 for tax year 2024. The revenue procedure contains a table providing maximum EITC amount for other categories, income thresholds and phase-outs.
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Qualified transportation fringe benefit. For tax year 2025, the monthly limitation for the qualified transportation fringe benefit and the monthly limitation for qualified parking rises to $325, increasing from $315 in tax year 2024.
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Health flexible spending cafeteria plans. For the taxable years beginning in 2025, the dollar limitation for employee salary reductions for contributions to health flexible spending arrangements rises to $3,300, increasing from $3,200 in tax year 2024. For cafeteria plans that permit the carryover of unused amounts, the maximum carryover amount rises to $660, increasing from $640 in tax year 2024.
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Medical savings accounts. For tax year 2025, participants who have self-only coverage the plan must have an annual deductible that is not less than $2,850 (a $50 increase from the previous tax year), but not more than $4,300 (an increase of $150 from the previous tax year).
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The maximum out-of-pocket expense amount rises to $5,700, increasing from $5,550 in tax year 2024.
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For family coverage in tax year 2025, the annual deductible is not less than $5,700, increasing from $5,550 in tax year 2024; however, the deductible cannot be more than $8,550, an increase of $200 versus the limit for tax year 2024. For family coverage, the out-of-pocket expense limit is $10,500 for tax year 2025, rising from $10,200 in tax year 2024.
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Foreign earned income exclusion. For tax year 2025, the foreign earned income exclusion increases to $130,000, from $126,500 in tax year 2024.
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Estate tax credits. Estates of decedents who die during 2025 have a basic exclusion amount of $13,990,000, increased from $13,610,000 for estates of decedents who died in 2024.
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Annual exclusion for gifts increases to $19,000 for calendar year 2025, rising from $18,000 for calendar year 2024.
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Adoption credits. For tax year 2025, the maximum credit allowed for an adoption of a child with special needs is the amount of qualified adoption expenses up to $17,280, increased from $16,810 for tax year 2024.
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Unchanged for tax year 2025:
By statute, certain items that were indexed for inflation in the past are currently not adjusted.
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Personal exemptions for tax year 2025 remain at 0, as in tax year 2024. The elimination of the personal exemption was a provision in the Tax Cuts and Jobs Act of 2017.
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Itemized deductions. There is no limitation on itemized deductions for tax year 2025, as in tax year 2024 and preceding, to tax year 2018. The limitation on itemized deductions was eliminated by the Tax Cuts and Jobs Act of 2017.
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Lifetime learning credits. The modified adjusted gross income amount used by taxpayers to determine the reduction in the Lifetime Learning Credit provided in Sec. 25A(d)(1) of the Internal Revenue Code is not adjusted for inflation for taxable years beginning after Dec. 31, 2020. The Lifetime Learning Credit is phased out for taxpayers with modified adjusted gross income in excess of $80,000 ($160,000 for joint returns).
5. Transition Relief for Third-Party Settlement Organizations & Form 1099-K Threshold of $5,000 for 2024 Calendar Year
11/26/2024 update: The IRS is currently working on updating the frequently asked questions. Please refer to IR-2024-299 and Notice 2024-85 PDF for current information. ​
On Nov. 26, 2024, in Notice 2024-85 PDF, the IRS announced that calendar year 2024 would be a further transition period and calendar year 2025 would be the final transition period for IRS enforcement and administration of certain information reporting requirements for third party settlement organizations (TPSOs). TPSOs, which include popular payment apps and online marketplaces, must file with the IRS and provide taxpayers a Form 1099-K that reports payments for goods or services where gross payments exceed $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and thereafter.
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1099-K is an IRS information return used to report certain payment transactions to improve voluntary tax compliance. You should receive Form 1099-K by January 31 if, in the prior calendar year, you received payments:
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From all payment card transactions (e.g., debit, credit, or stored-value cards)
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In settlement of third-party payment network transactions above the minimum reporting thresholds
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Note:
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Some individuals may receive a Form 1099-K for the sale of personal items or in situations where they received a Form 1099-K in error (i.e. for transactions between friends and family, or expense sharing).
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If you received a Form 1099-K that shows payments you didn’t receive or is otherwise incorrect, contact the Form 1099-K issuer. Don’t contact the IRS. The IRS can’t correct an incorrect Form 1099-K. If you can’t get it corrected, or you sold a personal item at a loss, we will help to take care of it on your tax return for some cases.
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On Dec. 23, 2022, the IRS announced that the calendar year 2022 will be treated as a transition year for the reduced reporting threshold of $600.
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For returns for calendar years prior to 2023: Gross payments that exceed $20,000 AND
more than 200 such transactions
6. Credits for New Electric Vehicles Purchased in 2022 or Before​
If you bought a new, qualified plug-in electric vehicle (EV) in 2022 or before, you may be eligible for a clean vehicle tax credit of up to $7,500 under Internal Revenue Code Section 30D.
Credits for New Clean Vehicles Purchased in 2023 or After:
You may qualify for a credit of up to $7,500 under Internal Revenue Code Section 30D if you buy a new, qualified plug-in EV or fuel cell electric vehicle (FCV). The Inflation Reduction Act of 2022 changed the rules for this credit for vehicles purchased from 2023 to 2032. The credit is available to individuals and their businesses.
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To qualify, you must:
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Buy it for your own use, not for resale
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Use it primarily in the U.S.
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In addition, your modified adjusted gross income (AGI) may not exceed:
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$300,000 for married couples filing jointly
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$225,000 for heads of households
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$150,000 for all other filers
You can use your modified AGI from the year you take delivery of the vehicle or the year before, whichever is less. If your modified AGI is below the threshold in 1 of the two years, you can claim the credit. The credit is nonrefundable, so you can't get back more on the
credit than you owe in taxes. You can't apply any excess credit to future tax years.
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Click the button below to see if a vehicle is eligible for the new clean vehible credit:
To qualify, a vehicle must:
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Have a battery capacity of at least 7 kilowatt hours
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Have a gross vehicle weight rating of less than 14,000 pounds
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Be made by a qualified manufacturer
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Undergo final assembly in North America
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Meet critical mineral and battery component requirements (as of April 18, 2023)
7. Home Energy Tax Credits
If you make energy improvements to your home, tax credits are available for a portion of qualifying expenses. The credit amounts and types of qualifying expenses were expanded by the Inflation Reduction Act of 2022.
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We'll help you compare the credits and decide whether they apply to expenses you've already paid or will apply to improvements you're planning for the future.
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Who can claim credits?
You can claim either the Energy Efficient Home Improvement Credit or the Residential Clean Energy Credit for the year when you make qualifying improvements.
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Homeowners who improve their primary residence will find the most opportunities to claim a credit for qualifying expenses. Renters may also be able to claim credits, as well as owners of second homes used as residences.
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The credits are never available for improvements made to homes that you don't use as a residence.
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Energy Efficient Home Improvement Credit
These expenses may qualify if they meet requirements detailed on energy.gov:
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Exterior doors, windows, skylights and insulation materials
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Central air conditioners, water heaters, furnaces, boilers and heat pumps
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Biomass stoves and boilers
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Home energy audits
The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation:
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2022: 30%, up to a lifetime maximum of $500
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2023 through 2032: 30%, up to a maximum of $1,200 (heat pumps, biomass stoves and boilers have a separate annual credit limit of $2,000), no lifetime limit
Get details on the Energy Efficient Home Improvement Credit.​
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Residential Clean Energy Credit
These expenses may qualify if they meet requirements detailed on energy.gov:
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Solar, wind and geothermal power generation
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Solar water heaters
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Fuel cells
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Battery storage (beginning in 2023)
The amount of the credit you can take is a percentage of the total improvement expenses in the year of installation:
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2022 to 2032: 30%, no annual maximum or lifetime limit
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2033: 26%, no annual maximum or lifetime limit
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2034: 22%, no annual maximum or lifetime limit
Get details on the Residential Clean Energy Credit.