Your Complete 2025 U.S. Tax Checklist

It’s a new year and you’re ready to get on top of your small business taxes. Our resident Bookkeeping Mensch, Paul Rosenblum, is here with a handy checklist of super important items that you need to know about (and follow up on) to make sure you dot all those i’s and cross all those t’s (except in number form, because Bookkeeping, right?)

Paul covers inheritance, insurance, workers comp, capital gains child support and so much more on the personal side of your taxes as well as small business tax deductions like vehicle expenses, business meals, advertising, etc. You’ll need to listen to this before talking to your Bookkeeper. 

They’ll be really impressed with how prepared you are when you do. Promise!

Transcript

Episode #49

Welcome to 2025! Thanks for subscribing and following me on LinkedIn and this podcast in 2024.  It was a year of growth for us because of all of YOU.  So, thank you and don’t forget – also – subscribe to the newsletter (although I am not promising many posts there during tax season, but will try my best!)   It’s a new year, and a new tax season, and time to go through some tax tips for personal and businesses for 2025 (aka the 2024 tax prep).  I’m…. taking a deep breath and not letting it out until April --- Paul Rosenblum. 

Not only does the IRS change their rules every year, but your individual states do also.  Especially with the sales tax area. There are services that were not sales taxable in 2023, which were sales taxable in 2024, so be careful that you google your particular state’s tax law changes so that you are up to par with those.  Today, let’s talk about the changes in the federal IRS rules.  

As mentioned quite a while ago in episode 25, there were changes made to the 1099 NEC forms that us bookkeepers create in January of every year.  From that episode to today, surprisingly, there are no more changes or additions.  In short, the new 1099 rules involve VENMO, Apple Pay, CASHAPP, PayPal, but NOT Zelle.  Zelle is connected directly to your bank account, so the rules remain the same using that service.  If you use the other services mentioned to pay contractors, then this year in 2025 (for the 2024 tax filings), the services will report to the IRS the amount that you paid each vendor through their respective services.  If you pay any individual vendor $5,000.00 or more, the IRS will create a 1099K form and the bookkeeper doesn’t have to. (I think I will anyway, because I am expecting some errors from the IRS being the first year that they are doing this; and I’m saying this as nicely as I can!)  If under $5,000.00 for the entire year of 2024, then the rules are the same for 1099 NEC’s that the bookkeeper creates and sends out or emails through the service that files the form with the IRS.  Episode 5 explains the whole 1099 vs W2 situation which really hasn’t changed since all the way back then 20 years ago.  This is a conversation that I have almost every day with someone during tax season. 

Aside from 1099 NEC’s and 1099K’s, there are other tax tips and changes that I want to talk about – let’s start with the personal ones: 

1. Inherited money
   1. In 2024, if you receive less than $13,610,000.00 that income is not taxable.  
2. Life Insurance Payouts
   1. In 2024, that money was not taxable for the beneficiary.  So, no need to put it on your taxes, but you might want to let your accountant know about it anyway, just in case their tax software differs. 
3. Workers’ compensation 
   1. If an individual receives workers’ compensation, that money is not taxable on the tax return.
4. Home Sale capital gains 
   1. Up to $250,000 capital gains from selling your home might not be taxable.  Check with your accountant, there are specific rules. 
5. HSA (Health Savings Account) 
   1. If you have an HSA, they are not taxable on the return.  
6. Child Support and Alimony 
   1. Is not taxable on a tax return
7. Gifts 
   1. Up to $18,000.00 isn’t taxable for the person receiving the money gift in 2024.  That will probably go up in 2025, but as of this recording, that has not been announced yet. 
8. Academic Scholarships 
   1. They are not taxable in 2024. 
9. Education 
   1. Up to $5,250 of the money given to you by your employer isn’t taxable for you.  So, take advantage of that! You can take part of that money and donate it to this podcast! (just kidding … kind of) 
10.  Disability Insurance payouts 
    1. If your employer pays the disability insurance premium, payouts are taxable.  However, if you pay the premiums yourself out of your own money, the payouts are not taxable. 
11. Credit Card rewards are not taxable, either for individuals or for businesses.  

So, I know this is a small business podcast, so here is a list of small business deductions (I also will be doing a webinar during tax season for a large NYC non-profit organization covering this subject, so if you want to be invited, let me know by emailing me at the Gmail address below in the notes). 

Business Deductions: 

1. We have talked about this before in other episodes, but I’ll put it on this list: Home Office Deductions.  If you rent an apartment, or rent or own a house, you can use the square footage of dedicated office space as a tax deduction.  If your home/office is 250 square feet and your entire apartment is 1000 square feet, then you can take ¼ of the rent and the utilities and internet access as deductible expenses for your business. 
2. Self-Employment Tax: I can’t really explain this, except to say that you are taxed on being self-employed. But you can deduct 50% of that tax on the return.  
3. Depreciation is taking the purchase price of equipment, for one example, and deducting the total amount over 3-5 years, typically.  However, Section 179 is taking 100% of the purchase price and deducting it in one year.  This is a conversation that you should have with your accountant only after your bookkeeper gives you the final set of books. 
4. 20% Pass through deduction – Let’s say you end up having a $50,000 net profit (which is income minus cost of goods minus expenses) – the IRS let’s you take off a pass-through deduction of 20% which means that your taxable adjusted income would be $40,000.00.  You don’t show it in books, only on tax returns.
5. Personal Car deductions: Generally, you would have to keep track of the mileage that you use your personal car for the business, and you get reimbursed nontaxable income at 0.67 cents per mile. There are other ways, but most people make out better than taking a percentage of gas, tolls, parking, maintenance, etc.
6. Vehicles owned by the business:  100% deductible if it’s a lease, treated as an Asset and is depreciated over time.  Gas, maintenance, parking, and tolls are also 100% deductible.
7. Business meals (or what some people call in the books Business Development) are 50% tax deductible. Refreshments, coffee, and snacks are also 50% deductible (they used to be 100% deductible, so I would make Refreshments a subaccount of business meals in the books). 
8. Payroll paid to employees, benefits, bonuses – all deductible for the business.
9. If the business contributes to employees’ 401K’s, they are tax deductible for the business. Also, IRA SEP contributions are tax deductible for the business, but tax deferred for self employed people.  
10. Rent or leasing property is 100% deductible for businesses. 
11. Utilities and office expenses – 100% deductible. 
12. Advertising and marketing costs: 100% deductible for businesses.
13. Charitable donations: If you own an LLC or a sole proprietorship, charitable donations are a personal deduction, and you must reach thresholds for that to happen.  An S-Corporation can put charitable donations as a tax-deductible expense for any amount. 

I think this list gives you something to work with for the next two weeks until I somehow figure out what to talk about next!   

For now, I’m going back to tax season, after a second cup of coffee --- Welcome to January and tax season 2025!  I’m Paul Rosenblum