Summary
The article explains common tax mistakes that employees with W-2 forms make and offers tips to avoid them when filing 2025 taxes. It covers changes related to new deductions from the One Big Beautiful Bill Act and advises on retirement contributions to lower taxable income.
Key Facts
- W-2 employees have taxes withheld by their employers, affecting their annual tax return.
- The One Big Beautiful Bill Act (OBBBA) introduced new deductions for 2025.
- Workers can deduct up to $25,000 in tips from taxable income with the No Tax on Tips Deduction.
- The No Tax on Overtime Deduction allows qualified overtime pay to be deducted up to $12,500 for singles, $25,000 for couples.
- Some deductions phase out at higher incomes, starting at $150,000 for singles and $300,000 for couples.
- Pre-tax contributions to retirement plans like 401(k) can reduce taxable income.
- The IRS allows contributions to a Traditional IRA for the previous year until April 15th.
- Retirement contribution limits for 2026 increased to $24,500, with special catch-up limits for older people.
