There is a new form for this current tax season that reflects numerous changes in the law, and using it properly can benefit you financially. The experienced tax preparation professionals at Moskowitz, LLP are on top of all the tax laws and can explain how it may help you.
The One Big Beautiful Bill Act (OBBA) contained a number of new deductions and exemptions that are aimed at helping individual taxpayers. You must detail these deductions to the IRS on Schedule 1-A. Since this is a new form that came into existence for the first time this year, you must understand both the deductions and the form itself before you file a return.
If you try to handle your taxes on your own in the wake of major changes to the laws, you may be leaving money on the table that is better off in your pocket. Schedule an appointment with the tax preparation professionals by calling us at (888) TAX-DEAL (829-3325) at Moskowitz, LLP, so you can optimize your own tax situation.
Schedule 1-A Documents New Tax Breaks That Can Help You
OBBA made the following major changes to the tax laws that are helping many individual taxpayers:
- Qualified tips for workers in certain professions are not taxable, within certain limits
- You can deduct car loan interest for new vehicles purchased from 2025 and onwards that were assembled in the United States, within certain limits
- Overtime pay is not taxable, within certain limits
- There are now enhanced benefits for taxpayers who are aged 65 and over, within certain limits
Although these new deductions cover a wide variety of circumstances, they must all be reported to the IRS on a single form. Schedule 1-A covers each of these topics individually. Since your ability to take these deductions begins with your income level, the form begins by asking you to report your modified adjusted gross income.
Which Deductions Are Covered on Schedule 1-A?
Then, each of these deductions is covered separately on the form. Here is what you need to know about each of the deductions covered on Schedule 1-A:
- You can deduct up to $25,000 on tip income in a given year, reducing your overall taxable income. This deduction begins to phase out at an income level of $150,000 ($300,000 for a married couple).
- You can deduct up to $12,500 of pay for time-and-a-half overtime ($25,000 for a married couple). This deduction has the same phase-out levels at the “no tax on tips” rule.
- You can deduct up to $10,000 of interest that you pay on loans for a new car. This deduction does not apply to business vehicles, and it only applies to the interest (and not the principal)
- Seniors over the age of 65 can take an enhanced deduction of $6,000 per individual and $12,000 per married couple. The phase-out levels for these deductions begin at $75,000 for an individual and $150,000 for a married couple.
Remember that these are deductions from your overall taxable income and not tax credits. When you are able to take a deduction of $25,000, it reduces the overall amount of income on which you must pay taxes.
Further, even though OBBA was passed midway through 2025, the laws apply retroactively to January 1 of that year. Accordingly, you can take a deduction for amounts that you earned and car loan interest that you paid prior to the time that the law was passed.
Get Tax Help to Complete Schedule 1-A Correctly
The best way to get the maximum peace of mind when dealing with any new tax laws is to get help from an experienced professional. At Moskowitz LLP, our tax preparation professionals have taken the time to review and learn these new laws, and our knowledge can make your life easier and less taxing.
Schedule 1-A requires that you perform your own calculations to see if you qualify for these deductions. Each of the new deductions comes with a phase-out, meaning that taxpayers who have an income above a certain level cannot take them. These calculations may be difficult, especially since the tax deductions are new. If your numbers are wrong, and you claim a deduction that you cannot take, the IRS will disallow it when it reviews your return and may also penalize you. The result is that you could end up owing the IRS money, or your tax refund will be smaller than you expect.
Contact a Tax Preparation Professional
New tax breaks are available to you, but you must claim them correctly, and the tax attorneys and CPAs at Moskowitz, LLP can help. Schedule an appointment with our firm by reaching out to us online or by calling us today at (888) TAX-DEAL (829-3325).
