Tax time: What’s new for tax season 2025

Tax season is officially underway! Whether you file yourself or hand things off to an accountant, there are a few changes to be aware of when preparing to file your return—especially if this is your first time filing. The April 15th deadline will be here soon, so we’ve put together this list to help you file your taxes with confidence—even if you wait until April! Here’s what to know about filing your 2024 tax return:

New for 2024

Updated income brackets

The IRS updates the tax brackets annually to account for inflation. While there are still seven federal income tax brackets, the marginal rates have changed. For details on the new brackets, click here. These new brackets only apply to income earned during the 2024 calendar year.

Standard deduction amount increase

Also adjusted for inflation, the standard deductions have increased across the board. For 2024, the amounts are:

  • Single or married filing separately: $14,600
  • Head of household: $21,900
  • Married filing jointly or qualifying surviving spouse: $29,200

Increased contribution limits

Another change this year involves contribution limits. For 2024, total IRA contributions can’t exceed $7,000 (or $8,000 if you’re age 50 or older). Additionally, contribution limits for tax-deferred 401(k)s and Roth 401(k)s have also increased to $23,000, or $30,500 if you’re age 50 or older. Don’t forget—you have until Tax Day to make your final 2024 contributions, so be sure to take advantage of the increased limits.

Enhanced child tax credits

In 2024, Congress approved the expansion of the popular Child Tax Credit (CTC) to allow more families across the United States to qualify for this benefit—and receive more money on their tax refund. For 2024, the initial CTC amount of the CTC is $2,000 for each qualifying child. Furthermore, the Additional Child Tax Credit (ACTC) amount has increased to $1,700 for each qualifying child. As a note, if a future change affects your return, the IRS will automatically adjust for those who’ve already filed, so be sure to file as soon as possible.

Clean Vehicle Credit

In 2023, new tax credits were introduced for those with electric vehicles (EV) and energy-related enhancements to houses like solar panels. It’s important to review those changes to see if you qualify for these expanded credits—even if you bought an electric vehicle before the credit was enacted. Those who bought a new, qualified plug-in EV in 2022 or before may also be eligible for a clean vehicle tax credit up to $7,500. If you qualify, make sure to submit all appropriate forms.

How to stay ahead

Gather 2024 tax documents

The end of January means an influx of tax forms in the mail or your email inbox. Your employer will send you a W-2, which reports how much you were paid, the amount of taxes withheld, and what you contributed to your company’s retirement plan (if they have one available). You’ll receive a W-2 from each employer if you work multiple jobs.

You’ll receive a 1098 form if you have a mortgage, which shows the amount of interest you paid on your home loan (which is usually deductible). If you paid student loan interest, you’ll get a 1098-E. Form 1098-T reports any tuition payments made.

1099 forms report payments from sources that aren’t your employer. There are several types, but the most common are 1099-DIV, 1099-INT, 1099-MISC, 1099-NEC, and 1099-K. 1099-DIV is used by banks or other financial institutions to report any dividends you may have received. Those dividends are also considered interest, which is reflected on Form 1099-INT. You’ll receive a 1099-INT if you were paid more than $10 in interest.

1099-MISC reports any miscellaneous income, like prizes or awards. 1099-NEC reports nonemployee compensation and is common for freelancers, people who are self-employed, or anyone who has a side gig.

A 1099-K is issued to anyone who received $20,000 or more in business income or payments for products and services from third-party payment networks, like Venmo or Cash App.

You’ll also need Form 1095-A if you have health insurance through the Marketplace.

Having all of your necessary tax documents together before filing will help you avoid errors and potential processing delays.

Get online

Exciting news on the digital front! If you have a Social Security number or an Individual Taxpayer Identification Number (ITIN), you can now easily access the information needed to file your return. This can be helpful when filing yourself, allowing you to see key information from your most recently filed tax return, including adjusted gross income, without having to dig through your files. You can also set up and manage payment plans, and even cancel scheduled payments. Visit irs.gov/payments/your-online-account to access your records.

Get refunds faster with direct deposit

Filing electronically and choosing direct deposit is the quickest way to get your tax refund. It’s faster than having a paper check mailed to you and avoids any chance of your refund check being lost, stolen, or sent back to the IRS as undeliverable.

Key takeaways

  • Both income brackets and standard deductions have been adjusted for inflation
  • Check to see if you qualify for credits like the Child Tax Credit or Clean Vehicle Credit
  • Access your previous year’s tax return and other important documents in your IRS Online Account
  • Have your tax documents prepared ahead of time to help maximize your refund and avoid errors or potential processing delays

Remember—if your adjusted gross income (AGI) is less than $84,000 annually, you qualify to file your return for free using the IRS’s Free File program. If you’re preparing your taxes yourself, the IRS also provides federal Free File Fillable Forms for any income level. Additionally, eligible taxpayers can use MilTax, a free tax resource offered through the Department of Defense.

The Where’s My Refund tool allows you to track when you’ll receive your refund after your return is accepted by the IRS. April 15th will be here before you know it, so allow yourself plenty of time to file to ensure there are no errors. Keep these tips in mind, and tax season will be a breeze.

Understanding the pros and cons of a home equity line of credit

Homeowners who want to tackle major home renovations or consolidate high-interest debt can tap into their home’s equity and take out a home equity line of credit (HELOC). Unlike home equity loans, which offer a lump sum, HELOCs are a revolving line of credit. You can borrow funds whenever you need them, like a credit card. You’re given a maximum credit limit based on appraised value of your home and current mortgage balance, typically up to 85% of your home’s value minus any remaining mortgage payments. If you’re considering borrowing against your home’s equity, check out the pros and cons of a HELOC and see if it’s the right choice for your financial situation.

Pros of a HELOC

Little to no closing costs

Closing costs for HELOCs are lower than what it costs to close a mortgage, as loan sizes for HELOCs are smaller than a standard mortgage. Closing costs for HELOCs typically run between 2% to 5% of the total line of credit and consist of origination fees, underwriting fees, and other administration fees. Depending on your lender, some of these costs are reduced or eliminated. For example, some lenders may waive origination fees or offer no cash due at closing.

Lower interest rates and tax benefits1

HELOC rates are often lower than other credit lines, like personal loans and credit cards. Interest rates for personal loans range from 6% to 36% depending on credit score and financial history, and credit cards average around 21%. Meanwhile, some of the best HELOC rates fall around 6%. Interest may be eligible for a tax deduction1, but there are restrictions depending on the use of funds for home improvements or renovations. The Tax Cuts and Job Act of 2017 made several changes to individual income tax, including reforms on itemized deductions. But interest paid on HELOCs can be deducted only if the loan makes improvements on the taxpayer’s home used as collateral, and it must be their main home. Interest isn’t tax-deductible when used to pay off personal living expenses, like credit card debt.

Financial flexibility

HELOCs offer tons of financial flexibility. Depending on the amount borrowed, HELOC repayment periods are often longer, allowing flexibility in managing monthly payments, which makes them ideal for big-ticket projects or expenses. The timeline varies, but some lenders offer terms up to 30 years. You also only pay interest during the HELOC draw period, which is usually the first five to 10 years of the loan’s lifetime. When the draw period ends, you start making payments on principal and interest. You have the option to pay the principal amount, too, to lower the amount remaining during the repayment period.

Fewer restrictions on how you use funds

There aren’t many restrictions on how you can use HELOC funds, but most people use HELOCs to pay for major renovations. Even though HELOCs are secured by your home, you don’t have to use them for remodeling. Sometimes, it can be beneficial to use HELOCs to pay off personal expenses because of their lower interest rates. For example, HELOCs can be used to consolidate debt, pay off substantial medical expenses, or help pay for tuition, to name a few.

Cons of a HELOC

Your home is collateral

Unlike credit cards or personal loans, which are unsecured, HELOCs are secured loans, which means a form of collateral is required to borrow funds. Secured loans often have lower interest rates but assume some risk. The upside of your home being used as collateral is that the more equity you’ve built, the more you’re capable of borrowing. The downside of your home as collateral is if you’ve missed a few loan repayments, unfortunately, your home could be subject to foreclosure.

Your home’s equity is reduced

As previously mentioned, HELOCs involve borrowing against your home’s equity, which impacts your overall property values and appraised value over time. When you build equity and can borrow what you need, it’s beneficial. However, if housing prices decrease and the value of your home drops, this could lead to you owing more than what your home’s worth. And, if you owe more than what your home is worth, this reduces your borrowing capability.

Variable interest rates

Unlike home equity loans, which offer fixed interest rates, HELOCs offer variable interest rates. The interest rate fluctuates over time—usually at the mercy of the Federal Reserve. The Federal Reserve is responsible for setting the rates that credit unions and banks charge each other for overnight loans to meet reserve requirements. The prime rate is another benchmark rate and the most used determining factor of HELOC rates. The prime rate is typically 3% higher than the federal fund rate, and lenders use this to set their rates. When the Federal Reserve changes the federal funds rate, other loan rates increase or decrease.

How to handle rate fluctuations

Because HELOCs have variable interest rates, borrowers should be prepared for potential rate fluctuations over time. While lower rates can mean affordable monthly payments, rising rates can increase your costs. Here’s how you can manage these fluctuations effectively:

  1. Set aside extra funds during low-rate periods

    2. When interest rates are low, your monthly payment will be lower, which gives you an opportunity to save. Consider setting aside the difference between your current payment and what it might be at a higher rate. This cushion can help cover future increases and prevent strain on your budget.

  2. Explore fixed-rate conversion options

    3. Some lenders offer the ability to convert a portion of your HELOC into a fixed-rate loan. If you’re worried about rising rates, check with your lender to see if this option is available. Locking in a fixed rate on a portion of your balance can provide stability and predictability in your payments.

  3. Talk to a financial advisor

    4. A financial advisor can help you develop a strategy for managing your HELOC based on your overall financial situation and goals. They can offer insight into interest rate trends, repayment strategies, and whether refinancing into a different loan product might be a good option for you

Possibility of overspending

Unfortunately, HELOCs aren’t interest-only payments forever. During the draw period, you’re required to make interest payments. It can be easy to lose track of your HELOC balance and forget how much you owe, especially when you have a draw period of 10 years. When the draw period’s over, you begin paying the principal amount of your loan, plus interest. If you’re not anticipating or accounting for the increase in monthly payments when your draw period ends, it can come as a financial shock.

Comparing HELOCs to other borrowing options

When you’re considering a HELOC, it’s helpful to know your other borrowing options, too, like personal loans, cash-out refinancing, or credit cards. Each has its own advantages and works for different situations.

Comparing HELOCs to Other Borrowing Options
Loan Type Key Features Best For
HELOC Variable interest rate, revolving credit line, uses home as collateral Ongoing expenses like home renovations, debt consolidation, or covering unpredictable costs
Personal loan Fixed interest rate, lump-sum disbursement, no collateral required One-time expenses such as medical bills or weddings, or consolidating high-interest debt without using your home as collateral
Cash-out refinance Replaces existing mortgage with a new one, provides a lump sum based on home equity, typically lower interest rates than personal loans Large expenses like major home improvements or consolidating higher-interest debt with a long repayment term
Credit card High interest rates, revolving credit, may offer low-rate promotional period Short-term expenses or emergencies, especially when a 0% APR promotional period is available

Choosing the right option

  • Choose a HELOC if you have equity in your home, need flexible access to funds, and are comfortable with a variable interest rate.
  • Opt for a personal loan if you need a fixed repayment plan and don’t want to use your home as collateral.
  • Consider a cash-out refinance if you want to take advantage of lower mortgage rates and access a lump sum for major expenses.
  • Use a credit card for smaller, short-term expenses, especially if you can pay off the balance before interest accrues.

When a HELOC fits your goals (or doesn’t)

HELOCs can be a great tool, but they’re not the right choice for every situation. Here’s a few situations for when a HELOC makes sense and when it might not.

1. Home improvements

When it fits: A HELOC is ideal for home renovations, especially if you plan to complete projects over time. Since it’s a revolving line of credit, you can borrow what you need and only pay interest on what you use. For example, if you’re remodeling your kitchen and later decide to update your bathroom, a HELOC lets you fund both without taking out separate loans.

When it doesn’t: If you need a fixed amount for a single project, a home equity loan or cash-out refinance with a set repayment plan might be a better choice.

2. Debt consolidation

When it fits: A HELOC can help consolidate high-interest debt, like credit card balances, into a lower-interest option. If you have $20,000 in credit card debt with a 20% interest rate, using a HELOC with a lower rate can reduce your monthly payments and total interest costs.

When it doesn’t: If you struggle with managing debt or are likely to continue using credit cards after consolidating, a HELOC might not be the best long-term solution. You could risk accumulating more debt while also tying your home to your repayment obligations.

3. Emergency fund

When it fits: A HELOC can be a financial safety net for unexpected expenses, like medical bills or unexpected home repairs. Since you don’t have to use the funds immediately, it can give you peace of mind knowing you have access to cash if needed.

When it doesn’t: If you frequently rely on a HELOC for emergencies, you may end up in a cycle of debt. It’s better to build a dedicated emergency fund with savings rather than depending on borrowed money tied to your home.

Key takeaways:

  • HELOCs offer lower interest rates than other credit lines, like personal loans and credit cards, plus offer a ton of flexibility in how you can use the funds.
  • HELOCs are secured loans and require your home to be used as collateral, and they offer variable interest rates, so your monthly payment can change.
  • HELOCs are great for home renovations that you plan to complete over time or for consolidating high-interest debt.

Although it involves significant consideration, HELOCs can be a viable option if you have enough equity built in your home due to their flexibility and potential tax benefits. But, using your home as collateral can be intimidating. Examine your financial goals and debt-to-income ratio and see if a HELOC works for your situation. And remember, we’re here for your lending needs with competitive ReadiEquity LOC rates.2

The basics of overdraft protection

What’s an overdraft?

An overdraft happens when you spend more money than what’s available in your account. If an overdraft occurs, your credit union or bank may charge a fee.

What’s overdraft protection?

Overdraft protection is an optional service that credit unions and banks may offer to cover a transaction when there aren’t enough funds available in your checking account (sometimes for a fee). Overdraft protection is usually available for checks, ACH transactions, and recurring debits. If you want one-time debit card and ATM transactions covered, you’ll need to opt in.

Here’s an example of overdraft protection in action: You decided to opt into overdraft protection for one-time debit card and ATM transactions. You’re at your favorite coffee shop, but the available balance in your checking account is $11.40—and your total is $20. When your debit card is processed for this transaction, the $20 purchase is more than your available balance. Because you opted into overdraft protection, you authorized your credit union or bank to cover the purchase and charge you an overdraft fee as a result.

If overdraft protection doesn’t work for your financial situation, or if you’re having trouble managing it, you can easily opt out. Without overdraft protection, the transaction won’t go through if you use your debit card and don’t have enough funds in your account to cover the transaction.

What other options are available?

You also can link your checking account to your savings account or to a line of credit to cover overdrafts. When you make a purchase that would overdraw your account, the funds transferred from your linked account cover the difference. You may be charged an overdraft transfer fee for this service, which is typically a much smaller fee than what a returned transaction would cost.

Let’s say you’re ready to check out at the grocery store. Your checking account has an available balance of $180, but your purchase amounts to $200. If you have enough funds available in an account linked to your checking account to cover overdrafts, you’ll receive a transfer from your linked account to cover the additional $20 needed for the purchase (plus an overdraft transfer fee).

What can I do to help me avoid an overdraft fee?

Regularly monitor your account activity and set up balance alerts to warn you when your checking account dips below a certain amount so you can avoid overdrafts before they happen. Use that balance alert as a reminder to transfer money to your checking account.

What else can I do if I’m having financial problems?

Overdraft protection isn’t a one-size-fits-all solution. Talk to your credit union or bank if you’re having trouble managing your money or if you’re facing financial issues. They may be able to offer you help or other ways for you get a better grasp on your finances. You can also check out their financial education, or other budgeting tools and apps, to help you learn more about your spending habits.

Understanding your escrow account

Buying your first home can be super exciting—and nerve-wracking! Just like that, you’re responsible for any repairs and maintenance, plus a plethora of new bills like your property taxes and homeowner’s insurance. Luckily, you may not have to deal with these expenses alone, thanks to the help of your escrow account. Not sure what that is or what it covers? No worries! Read on to see what an escrow is and how it works.

What’s an escrow?

An escrow is a financial arrangement that involves an impartial third party who holds money during a transaction to ensure both parties fulfill their contractual obligations. Once the transaction has been completed, the third party transfers the funds from one party to another.

How does it work?

Typically, escrow is associated with real estate, and there are two main occurrences. When buying a house, you’ll likely need to put down earnest money to show your serious interest in a house. In this case, an escrow account is set up to protect both the buyer and the seller, allowing the money to safely be deposited after the transaction is completed. For example, if a house fails an inspection during a contingency period, you would be able to walk away without losing that earnest money—and without a fight to get your money back. You can also walk away with no penalty if the house doesn’t appraise. If you’re building instead of buying, escrow may be used to ensure the work is completed and signed off on before payment.

Once you’ve purchased your home, your lender may setup an escrow account for taxes. Each month, part of the payment you make is put into that account, which your lender then can use to pay your property taxes and insurance. Escrow accounts may also cover things like waste management services from the city or county and homeowner’s association fees, but check with your lender for a full list.

Your lender will analyze your account yearly to make sure they’re collecting the right amount. If they’re collecting too much, you’re entitled to an escrow refund, while you’ll be on the hook for the difference if they’re collecting too little. You may be given options to make a one-time payment or increase the amount of your monthly mortgage payment to make up for a shortage in your escrow account.

Why have an escrow?

Overall, the main purpose is to protect all parties in a transaction. During the buying process, escrow helps ensure that funds are only deposited once all the required conditions are met, like a home inspection or the completion of a punch list, which are the tasks that need to be completed before construction is considered finished. There’s also less risk of fraud because the money is held by a third party. Escrow accounts can even make things easier for you by handling fund disbursement or tax payments so you don’t have to. Note that escrow accounts may not be required, but you can request one. If you don’t have an escrow, you’ll need to be sure you’re setting aside funds for your property taxes throughout the year.

Benefits of using an escrow

Aside from the legal protection, escrow accounts can provide several additional benefits. By setting up an escrow account, you’re able to divide a larger insurance or tax bill into more manageable monthly payments. Sometimes adding an escrow account can also help you qualify for a lower interest rate or reduced closing costs. If you’re worried about remembering and paying all the new bills that come with homeownership, this can be convenient and a helpful way to avoid late fees.

Drawbacks of using an escrow

On the other hand, an escrow account isn’t necessarily the best choice for everyone. The biggest drawback is that estimates aren’t always correct, which may end up costing you more down the line. In addition to increasing your monthly mortgage payment, you may also have to pay additional service or maintenance fees, and these fees can add up fast. Lastly, if growing your money is a priority, most escrow accounts don’t earn interest.

Managing your escrow

If the drawbacks outweigh the benefits to you, you may consider managing the funds yourself, or self-escrowing. To do this, you’ll want to a separate account where you can set aside money to cover your property taxes and insurance premiums directly. This affords you more control over your money, allowing you to set up accounts that earn interest, like a high-yield savings or money market account (MMA), so you can grow your funds in addition to paying your bills.

Be aware, your loan type may require an escrow account. Moreover, you may be charged a cancelation fee to close an existing escrow account. If you already have an account, you’ll have to contact your lender to see if you qualify, and follow their steps to close the account.

When managing your own account, be sure to budget appropriately and keep up with your bills. Property taxes in Georgia are paid annually, typically around the end of the year. With holidays falling at the same time, you’ll want to plan ahead. Additionally, you don’t want to fall behind on your homeowner’s insurance—emergencies can strike at anytime and a lapse in coverage can impact you negatively.

What happens if your funds are mismanaged

Even if you aren’t self-escrowing, it’s incredibly important to stay up-to-date on your property taxes and insurance premiums. Unfortunately, mistakes can happen and your lender may miss a payment, causing a discrepancy. If you notice a mistake, contact your mortgage servicer immediately. You may also need to follow up with a notice of error. Depending on what bills they might have missed, you’ll also want to contact the tax office or your insurance carrier to ensure you can resolve the issue as soon as possible.

Other types of escrow

While escrow is most common with real estate, it can apply to any situation where funds pass from one party to another. One place you might not expect an escrow is with online transactions, especially more high-value items, like antiques, jewelry, or digital assets. Once the item has been received and the condition confirmed, the funds are dispensed to the seller. Escrow may also be used for transactions like business acquisitions, stock transactions, and even legal settlements, providing an extra layer of security for these transactions.

Key takeaways:

  • Escrow is when a neutral party holds money during a financial transaction.
  • An escrow is commonly associated with real estate but can also be used during stock transactions or business acquisitions.
  • Escrow accounts are not mandatory with all mortgages, but you can request one or self-escrow.

Homeownership can be a lot of fun, but it comes with a lot of responsibilities. Thankfully, an escrow account can help you manage some of them, without any extra hassle. But even if your lender manages your escrow, don’t forget to keep an eye on your property taxes and insurance payments to ensure they’re being paid on time.

 

5 things you need to know to start your own business in Georgia

So, you’ve decided to start your own business—congrats! While you’re undoubtedly excited, we know you also have a lot of questions. Whether you’re ready to open your business in a month or are just now starting on this journey, take some time to prep with a few of the steps we’ve outlined below. Every business is different, but all of them have to start somewhere—like with these five steps you’re about to read.

1. Know your business plan

Every business needs a plan before it can get off the ground. You need to start with the basics: what goods or service your business will provide, how it’ll provide those goods or services to customers, and whether you’ll operate from home or from another location are a few things you should have answers to before your business opens to the public. However, these beginning items aren’t the only things you have to consider—you’ll also need to look ahead. What will your business look like a year from now? When can you expect to make a profit? Having a basic plan in place will help you determine your steps to success.

Funding your new business

How you’ll fund your business is a major part of your business plan. Funding your business isn’t a one-size-fits-all venture, either. How you decide to fund your business depends on your business structure and can affect operations in the long run. There are dozens of ways you can fund your business, but here are a few of the most common:

  • Personal funds: You can use your own cash to fund your business, known as bootstrapping, or dip into your savings.
  • Loans or grants: Apply for traditional loans from a bank or credit union, or you can consider applying for grants (which don’t require repayment). If you’re starting a small business, you might also qualify for an SBA loan.
  • Crowdfunding: You can raise money from people online. A popular way to do this is through a crowdfunding platform, like Kickstarter.
  • Investment: Seek funding from angel investors or a venture capital firm. Angel investors are wealthy individuals who invest in startups in exchange for equity. Venture capital is a type of private equity financing that provides capital for early-stage companies with high-growth potential.

2. Know the rules

Researching things like permits and licenses can be tedious, but it’s also a step you can’t skip if your business is to see the light of day. Look up your local ordinances on any permissions or information you might need before getting started. If you’re feeling overwhelmed with all the information you find, consider speaking to a lawyer or other expert who can walk you through the process. You can even talk to city officials about specific questions you have—many of them are available to speak with you if you make an appointment. Knowing the rules now will help you from dealing with unexpected complications later.

3. Know your resources

Did you know that many local Chambers of Commerce can help you find the information you need for almost any industry? You can meet others in your field of work, learn from new business owners like yourself, and gain some very important knowledge on making your business a success. Some of these resources are even free to access and use—the ones that aren’t may still be worth your time and money to explore further. You can also consider talking to friends or colleagues who have recently undergone the process of opening a new business to get even more useful information about everything you need to know to open your business.

4. Know your community

Whether you’re opening a franchise of a well-known national company or starting up a shop of your very own, it’s crucial to know the community you’ll be part of. There will likely be many opportunities for you to participate in local events or activities and you will also get to know the people who may become your customers. Talk to other local businesses about ways they interact with the community. If everyone else on the block is decorating their storefronts for the holidays, go find some seasonal decals to add to your windows. Showing that you’re part of the neighborhood you sell to will help your customers see your full value.

5. Know your “why”

Starting a new business isn’t easy (you already know that). And some days may be discouraging, whether you have few customers to serve or are still dealing with electrical work that’s taking forever to finish. On those days, remember why you wanted to start a business in the first place. What motivated you to take this step? Write your answer down and place it somewhere you can access it easily to remind you of why you’re doing this in the first place. You can even share your motivation with others so they can help you remember what you love about what you do.

Bottom line

Opening a business takes a lot of work—but you can also find a lot of reward. You have the opportunity to make a difference in some way in your community, so plan ahead, get familiar with the basics, take advantage of your resources, and remember your reason for taking this step. By this time next year, your business may just be a household name.