Ready for the Biggest Tax Breaks of the Year! Tips, Overtime, Car Loans & Senior Deductions

chimeinconsults2
Jan 8
3 min read

If you worked overtime, earned tips, bought a new car, or are over age 65, you may be leaving money on the table this year if you don’t file Schedule 1-A.

For the this tax year , the IRS has introduced a new form to capture four specific deductions created by the Working Families Tax Cut (also known as the "One Big Beautiful Bill"). These are “below-the-line” deductions, meaning they lower your taxable income directly, andyou can claim them whether you itemize or take the Standard Deduction.

Here is everything you need to know to get ready, and how we can help you file.

📋 What is Schedule 1-A?

Schedule 1-A is a temporary IRS form available only for the 2025 to 2028 tax years. It allows qualifying taxpayers to claim deductions that were previously unavailable. It is filed alongside your standard Form 1040.

💰 The 4 New Deductions (And What You Can Write Off)

Schedule 1-A is broken down into specific parts. You only need to complete the sections that apply to you.

1. The Tip Deduction ("No Tax on Tips")

The Benefit: You can deduct up to $25,000 of qualified tip income.
Who Qualifies: Service industry workers (waitstaff, bartenders, etc.) who receive tips on the job.
Income Limit: Deduction may be reduced if your MAGI (Modified Adjusted Gross Income) exceeds certain thresholds.

2. The Overtime Deduction ("No Tax on Overtime")

The Benefit: You can deduct up to $12,500 of overtime pay ($25,000 for married couples filing jointly).
Who Qualifies: Hourly workers who put in extra hours and received overtime compensation during the year.

3. Car Loan Interest Deduction ("No Tax on Car Loan Interest")

The Benefit: Deduct up to $10,000 of interest paid on a vehicle loan.
Who Qualifies:
- You took out the loan after 2024.
- The vehicle was purchased new (not used).
- The vehicle's final assembly point was in the U.S.

4. The Senior Deduction ("Enhanced Deduction for Seniors")

The Benefit: An additional deduction of $6,000 per person.
Who Qualifies: Anyone age 65 or older by the end of the tax year.
Joint Filers: If both spouses are 65+, the deduction increases to $12,000.

✅ Checklist: What You Need to Have Ready

To ensure we can file Schedule 1-A accurately for you, please gather the following documents before your appointment:

If you are claiming...	You must provide...
Tip Deduction	Forms W-2 or 1099 (look for tip income separation). Form 4070A (daily record of tips) or pay stubs if tips aren't clearly separated on your W-2.
Overtime Deduction	Year-end Pay Stubs showing total overtime hours and pay (often listed as "OT" or "Overtime"). W-2 Form (ensure it reflects total compensation).
Car Loan Interest	Loan Statements showing interest paid in 2025. Vehicle Purchase Agreement showing the purchase date (must be post-2024). Proof of Assembly (Window sticker or VIN check confirming U.S. assembly).
Senior Deduction	Government ID or records verifying birth date (must be 65 by Dec 31, 2025).

Note: We will also calculate your Modified Adjusted Gross Income (MAGI) using Part I of the form to determine if your income level affects the maximum deduction amount.

🚀 How We Help You File

All this can be confusing, but you don’t have to do it alone.

Automatic Qualification Check: We will review your W-2s and loan documents to instantly see if you qualify for any of the four Schedule 1-A parts.
Calculations: We handle the complex math in Part I to ensure you don't over-claim or under-claim based on your income bracket.
Audit-Ready Filing: We ensure the totals from Schedule 1-A are correctly transferred to your Form 1040 to lower your taxable income.

Don't miss out on these new write-offs.

If you think you qualify for any of the above, let us know immediately so we can include Schedule 1-A in your 2025 return.

Make your appointment and gather your documents, and upload them here, we are ready when you are!