Simplified Tax Tips
We compiled our most frequently asked tax questions as well as our favorite tax factoids and created a list of information-packed Tax Tips! We update this information annually to include any major legislative change for your individual tax situations.
Tax Tip - Child Tax Credit
When you’re filing your return, the Child Tax Credit can make a meaningful difference for families. For each child under age 17, the credit can be worth up to $2,200, which directly reduces the tax you owe. And if you have a full-time student who is 17 or older, there’s still a $500 credit available that many people don’t realize they qualify for. It’s one of those areas where reviewing your dependents each year can really help, especially as your kids get older and the rules shift a bit.
Tax Tip - Child and Dependent Care Credit
If you’re paying for daycare, after-school programs, or even certain summer day camps, the Child and Dependent Care Credit may help offset some of those costs. The IRS allows up to $6,000 in eligible expenses, and the credit can cover as much as 35% of that amount. For many families, this credit provides a little relief during a time when childcare costs continue to rise. It’s worth taking a moment to look at what you paid throughout the year to see if this applies to you.
Tax Tip - New IRA-Style Accounts for Minors
Beginning in July 2026, families will have the option to contribute up to $5,000 a year to new IRA-style accounts for children under 18. And for kids born after January 1, 2025, the federal government will add a $1,000 contribution. These accounts are designed to help families start building long-term savings early, and they may become a helpful planning tool as your children grow. It’s something to keep on your radar as these rules take effect.
Tax Tip - Michigan Education Savings Plan Deduction
Michigan offers a nice benefit for families who are saving for education. When you contribute to the MESP or MET plans, you can take a deduction on your Michigan return. And the contribution doesn’t have to be for your own child — you can contribute for grandchildren, nieces, nephews, or any loved one and still receive the deduction. It’s a simple way to support someone’s future education while lowering your state taxable income.
Tax Tip - Home Sale Gain Exclusion
If you’re thinking about selling your home, there’s a valuable tax rule that may help. As long as the property was your primary residence for two of the last five years, you can exclude up to $250,000 of gain if you’re single or up to $500,000 if you’re married. For many homeowners, this means there’s no tax owed on the sale at all. It’s one of the most generous benefits in the tax code, and it’s worth understanding before you list your home.
Tax Tip - Retirement Savings Credit
When you contribute to a retirement plan, you may qualify for a helpful tax credit — up to $1,000 per person in some cases. The credit is based on your income and can cover anywhere from 10% to 50% of what you put in. If your household income is below roughly $47,500 for married couples or $23,750 for single individuals, this is something worth looking at. And here’s something many people don’t realize: even though we’re already in 2026, certain retirement plans can still be created and funded for the 2025 tax year. It’s a unique chance to make a decision now that still impacts last year’s return.
Tax Tip - Residential Energy Credits
If you made energy-efficient improvements to your home in 2024 or 2025, you may qualify for a credit worth up to 30% of the cost. There’s no longer a lifetime limit, which means you can claim the credit more than once. Upgrades like exterior doors, windows, and other qualifying improvements may all count. These credits expire at the end of 2025, so if you’re planning additional projects, timing them before the deadline could be beneficial.
Tax Tip - Electric Vehicle Credit
If you purchased a fully electric vehicle before September 30, 2025, you may qualify for a credit of up to $7,500. The calculation can be a bit technical because it depends on several factors, but the potential savings are significant. This credit expires during 2025, so it’s worth reviewing your purchase date and the vehicle’s eligibility to make sure you’re getting the full benefit.
Tax Tip - American Opportunity Tax Credit
When you or a dependent are paying for college, the American Opportunity Tax Credit can be a valuable benefit. It provides up to $2,500 per student by covering 100% of the first $2,000 of qualified expenses and 25% of the next $2,000. A portion of the credit is even refundable, which is rare in the tax world. And if you’re claiming the student as a dependent, you can take the credit even if someone else — like a grandparent or a loan — helped pay the expenses.
Tax Tip - Side Hustle Income and 1099-K Reporting
With more people earning money through online sales or freelance work, it’s important to know that this income is taxable. Platforms like Etsy, Venmo, and PayPal may issue a Form 1099-K to report your activity to the IRS. If the income isn’t handled correctly on your return, it can lead to mismatches and IRS letters. Taking a little time to track your earnings and expenses throughout the year can make tax season much smoother.
Tax Tip - Vehicle Mileage Deductions
If you use your vehicle for certain purposes, the IRS allows mileage deductions that can help reduce your taxable income. The rates are 14 cents per mile for charitable driving, 21 cents for medical travel, and 70 cents for business use. Business mileage is the most common deduction, but each category has its own rules. Keeping a simple mileage log can make it much easier to determine what qualifies at tax time.
Tax Tip - Rental Property Tax Rules
If you rent out a personal-use cottage or vacation home for 14 days or fewer during the year, the rental income is completely tax-free. For people who rent their property just a couple of weeks each year, this can be a pleasant surprise. And if you convert a primary home into a rental, many of the carrying costs — like taxes, mortgage interest, insurance, utilities, and repairs — may become deductible. It’s an area where a quick conversation with your Simplified Tax Professional can help you understand what applies to your situation.
Tax Tip - Michigan Retirement Income Phase-In
Michigan is in the middle of phasing in expanded tax benefits for retirees, and by the 2026 tax year, most retirement income will be fully tax-free. The amount you qualify for depends on your birth year and your income level, so the rules can feel a bit layered. Reviewing your specific situation can help you understand how much of your retirement income will be exempt each year as the phase-in continues.
Tax Tip - Senior Bonus Deduction
Seniors now receive a new $6,000 bonus deduction per person, which can help reduce taxable income. While Social Security is still taxable in many cases, this deduction can soften the impact by reducing the amount of overall tax that must be paid. Eligibility depends on income limits, so it’s worth taking a moment to ask your Simplified Tax Professional how this applies to your return and whether you qualify for the full amount.
Tax Tip - No Tax on Overtime for Hourly Workers
If you’re an hourly worker who puts in extra hours, there’s a new deduction that may help. You can now deduct up to $12,500 of qualified overtime pay from your federal taxable income, and the same deduction applies to your state return. Bringing your final paystub to your tax appointment makes it easier to determine whether you qualify and how much of the deduction applies to you.
Tax Tip - Health Savings Accounts (HSAs)
A Health Savings Account can be a powerful tool if you’re enrolled in a high-deductible health plan. Contributions are tax-deductible, the balance can grow tax-free when invested, and withdrawals for qualified medical expenses are also tax-free. Your balance rolls over each year and stays with you even if you change jobs. And after age 65, you can use it much like a traditional retirement account. It’s a flexible way to prepare for both current medical costs and long-term financial goals.
