C (4:24)

The agency expects refunds to be larger this year. That's good news and you may want to get a head start. There are several new credits and deductions available after Congress passed the so called one big beautiful bill last summer. So to find out what they are, we have CBS News business analyst Jill Schlesinger here to explain. Slade. Hi, Jill.

D (4:41)

Good morning.

C (4:42)

So do tell. What are these new credits and deductions?

E (4:44)

Woo.

D (4:44)

Eat your Wheaties. There's a lot of changes this year, so let me kind of do the easy stuff. April 15, back to the deadline.

B (4:51)

No changes there.

D (4:51)

Okay. There are a bunch of them. I'm just going to give you four of the biggest ones.

C (4:55)

Okay.

D (4:56)

If you're over the age of 65, you are a senior, you're getting an enhanced tax deduction. There are also folks who are going to see big changes. Why? Because they receive tip income or overtime income. And those are going to be very advantageous for those filers because there will not be tax on that. And I think that's a big difference. It is limited by the amount of income you earn. There are also many other provisions inside of this bill, one especially focused on auto loan interest, which is now deductible so there's so many new parts of the tax code that the IRS has said there's a new form available. And you will see that as you begin the tax filing process.

C (5:36)

There's also a new program, a tax advantage program for people's kids. Tell us about that.

D (5:40)

Well, if you had a baby last year, you are going to be entitled to something called the so called Trump account. Now, it's a way to save long term for retirement for your baby. And this is going to be not just in 25, but it'll be 26 and 27. If you have a baby born in this year, the government is going to put $1,000 into an account. That's incredible. Now, the reason I'm flagging this for tax season is although the program doesn't really start until the summer, you can actually flag it when you file your returns. Like, hey, I had a baby. I'm going to participate. You can also, as a parent and maybe grandparents want to get involved. In addition to what the government puts in, you'll be able to put in 5,000 bucks in a year.

C (6:21)

And just think about how that might accrue over the 18 years of your child's life and beyond for their retirement.

D (6:27)

Although having a baby is actually more expensive than that. Yeah, just a little bit.

C (6:32)

Just a little bit. And this is only for people who have babies this year, in the next few years.

D (6:35)

Yes, exactly right.

C (6:36)

So last year the average tax refund amount was about 30, $100. What is your advice for people getting that refund back quickly?

D (6:44)

Well, first of all, you have to file electronically, use direct deposit. It should be there within 21 days according to the IRS people who are clinging to paper returns. Man, you are missing the boat. You are going to get your return back much faster. And another note about those refunds, that amount is likely to be higher this year because of the change in the tax code. A lot of people didn't adjust their withholding because the tax bill was passed in July. So these people might find you have a big fatter tax refund. You know, I don't like tax refunds. You just loan money to the government and getting zero interest.

C (7:19)

But we like to get them. So if you get a refund, you like it.

D (7:23)

I've never gotten a refund.

E (7:24)

You're so good.

C (7:25)

You're so efficient. Okay, so for those people who are lucky enough to get refunds, what should they do with them? What's your advice?

D (7:32)

Have you heard me talk about Jill's big three?

C (7:35)

Tell me again, Jill okay, the big.

D (7:37)

Three things that I think everyone needs to consider. Number one is you have an emergency reserve fund that has at least 6 to 12 months of your living expenses. So maybe you use your refund and you put money into that account. Number two, you're paying down debt. We know there's a lot of people have outstanding credit card debt, an expensive auto loan, pay it down. Number three, increase your retirement plan contributions as much as possible. What a great way to get that tax refund to work for you.

A (8:05)

Okay, we are going to talk a lot more about tax season and specifically some of the big changes that are occurring. I'm going to keep reminding you about this because again, there's this new Schedule 1A that the IRS is flagging. These four big changes that have occurred because of last year's tax law. And those changes are the deduction for seniors. The ones who are over 65 get an extra deduction. No tax on tips, no tax on overtime, no tax on car loan interest. These are all income tested, so you have to be below a certain threshold of income. If you go to jillonmoney.com, you'll see my blog post that will outline all these different deductions, the new ones, the limits, the standard deduction, the state and local tax deduction, all the new things that you can expect when you file your tax returns this year. Again, if you've got questions, and I'm sure you will, just go to the website jillonmoney.com, click the contact us button, write us a note. And if you want to join us live, check the box. Mark will do everything else. Oh, eat your Wheaties, gang. It's going to be an exciting tax season. You can subscribe to us on the Odyssey app or wherever you find your favorite podcasts. Please, please leave us a rating and review. Wherever you listen and of course, lift someone up. Change your work, change your wealth, change your life. Thank you for listening and we'll talk to you tomorrow.

E (9:41)

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G (10:11)

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H (10:19)

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G (10:36)

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