In this episode, Chris Picciurro, CPA, and John Tripolsky break down the IRS’s brand-new form: Schedule 1-A (Form 1040), created to handle new deductions introduced by the One Big Beautiful Bill Act (OB3).

Starting in the 2025 filing year, millions of taxpayers will use this form to claim deductions like No Tax on Tips, No Tax on Overtime Pay, Automobile Loan Interest, and Enhanced Deductions for Seniors.

Chris explains how these new “between-the-lines” deductions work, who qualifies, and why knowing your marginal tax rate is more important than ever.

KEY TAKEAWAYS
✅ Schedule 1-A is brand-new and will apply to millions of taxpayers starting in 2025.
✅ Includes four major new deductions under OB3.
✅ Each deduction has unique income phaseouts.
✅ Accurate documentation and understanding of eligibility are essential.
✅ Always verify if your state conforms to the new federal deductions.

RESOURCES
• Teaching Tax Flow Website: www.teachingtaxflow.com
• Defeating Taxes Community: www.defeatingtaxes.com
• Teaching Tax Flow YouTube Channel: www.youtube.com/@teachingtaxflow

EPISODE SPONSOR
Wealth Builders Mortgage Group
Strategic mortgage solutions for real estate investors.
Visit www.wealthbuildersmortgagegroup.com

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• (00:00) - Exploring IRS Schedule 1A and Investor Lending Strategies
• (01:56) - Exploring New Tax Deductions and Schedule 1A Implications
• (10:42) - Understanding No Tax on Overtime for Self-Employed Individuals
• (15:04) - Understanding New Tax Deductions and Their Broad Impact
• (20:30) - Exploring Tax Strategies and Resources on Teaching Tax Flow Podcast

In Episode 159 of the Teaching Tax Flow Podcast, hosts John Tripolsky and Chris Picciurro, CPA, tackle one of the most talked-about provisions of the One Big Beautiful Bill Act (OB3).. No Tax on Tips rule.

This episode cuts through the noise to clarify what “no tax” really means, who qualifies, and how tipped workers and self-employed individuals can take advantage of this new deduction starting in 2025.

Chris breaks down eligibility factors, income phase-outs, and which occupations are recognized as “customarily tipped.” From servers and stylists to rideshare drivers and entertainers, this new rule has far-reaching implications, but it’s not as simple as it sounds. The hosts also explore examples illustrating how this temporary deduction applies between 2025 and 2028, why voluntary tips matter, and what both employees and employers need to track to stay compliant.

KEY TAKEAWAYS
• The No Tax on Tips deduction (effective 2025 – 2028) allows qualifying workers to deduct up to $25,000 of voluntary tips from taxable income.
• Applies to both employees and self-employed individuals in occupations that customarily receive tips.
• Only voluntary cash or card tips qualify — automatic “service charges” are not eligible.
• Social Security and Medicare (FICA) taxes still apply — this affects only federal income tax.
• Phase-outs begin at $150 K (single) / $300 K (MFJ); full phase-out at $400 K (single) / $550 K (MFJ).
• Married couples must file jointly to claim the deduction.
• Proper record-keeping of all voluntary tips is essential for compliance and deduction accuracy.

RESOURCES
• Teaching Tax Flow Website: https://www.teachingtaxflow.com
• Defeating Taxes Community: https://www.defeatingtaxes.com
• YouTube Channel: https://www.youtube.com/@teachingtaxflow

EPISODE SPONSOR
Sunsets & Dinks
Save 15% at https://www.teachingtaxflow.com/pickleball with code TTF15

🎧 Listen on your favorite podcast platform:
👉 Spotify https://bit.ly/3KdmtJL
👉 Apple Podcasts https://apple.co/3ZkyEtX
👉 Amazon https://amzn.to/4qmdqa5
👉 iHeart https://bit.ly/iheart-TTF

• (00:01) - Exploring IRS Policy on No Tax for Tips
• (01:38) - Temporary Tax Exemption on Tips from 2025 to 2028
• (05:13) - Understanding Qualified Tips and Occupational Eligibility for Tax Exclusion
• (11:01) - Understanding Tip Deductions and Income Phase-Outs for Tax Returns
• (16:33) - Teaching Tax Flow Podcast Offers Tax Tips and Investment Advice

In this Episode of the Teaching Tax Flow Podcast, hosts Chris and John are joined by Jeremy Wells, PhD, CPA, EA, to unravel one of the most misunderstood areas in tax strategy — Material Participation.

Jeremy, known for blending his academic background with real-world tax expertise, breaks down what truly defines material participation and why it matters so much for real estate investors, high-income earners, and business owners. This episode provides a clear and actionable discussion of IRS Section 469, passive activity rules, and how to correctly apply the “seven tests” to determine whether income is passive or active.

Listeners will gain practical insights on documentation, common misconceptions, and how education remains key to staying compliant while maximizing benefits.

Key Takeaways

• Material participation determines whether you can use passive losses to offset active income.

• The IRS defines seven tests for material participation under Section 469 — understanding which applies to your situation is critical.

• Proper documentation (time logs, spreadsheets, or tracking apps) is essential for substantiating material participation claims.

• Not every real estate investor qualifies as a “real estate professional” for tax purposes — W-2 employees often don’t meet the test.

• Continuous education is vital for both tax professionals and clients to navigate evolving tax law and avoid misinformation.

Notable Quotes

• “We can’t really shut down bad information. All we can do is fight against it with good information.” — Jeremy Wells

• “The goal here, if you’re the taxpayer, is to try to have active income offset with those passive losses.” — Jeremy Wells

• “Just because you have a real estate license doesn’t make you a real estate professional for tax purposes necessarily.” — Jeremy Wells

• “You need to keep that contemporaneous log… just like mileage tracking for your real estate portfolio.” — Jeremy Wells

• “Education is still a key part of the work that I’m trying to do.” — Jeremy Wells

Resources

• Teaching Tax Flow Website: https://www.teachingtaxflow.com

• Defeating Taxes Community: https://www.defeatingtaxes.com

• Teaching Tax Flow YouTube Channel: https://www.youtube.com/@TeachingTaxFlow

Episode Sponsor:
Strategic Associates, LLC
Roger Roundy
www.linkedin.com/in/roger-roundy-86887b23

• (00:00) - Demystifying Material Participation for Taxpayers and Investors
• (02:51) - From Academia to Accounting: A Journey of Career Change
• (07:17) - Understanding Material Participation and Passive Activity Loss Rules
• (17:33) - Understanding Real Estate Professional Status for Tax Purposes
• (21:20) - Tracking Hours and Activities for Real Estate Tax Benefits
• (26:00) - Jeremy Wells Discusses Tax Education and Client Engagement