Longtime tax professional offers insight to key changes for 2025

WASHINGTON — For Terri Bain, a seasoned H&R Block tax professional with 27 years of experience, tax season in rural Iowa is more than just crunching numbers. It’s about understanding the unique needs of small-town clients and offering personalized services.

Coming from the rural area of Mt. Pleasant, now living in Trenton, and working in her office in Washington, Bain knows how rural communities work and how to best serve them as a tax professional. She works closely with individuals, families, small business owners, and even clergy members, helping them maximize their returns and plan for the future.

“In small towns, you see a bit of everything,” Bain said. “It’s never the same every day.”

Having started her career in Des Moines, Bain eventually transitioned to rural tax preparation.

“It’s different here,” she explained. “In a big city, it’s often straightforward — mostly wage earners with simple returns. In rural areas, you get a wider variety of cases, from self-employed individuals to multigenerational family businesses.”

During her time working in Leon with H&R Block, Bain says her office became almost like a legal office at times, “because there's just not many resources there.”

Bain emphasizes the importance of building relationships with her clients.

“You get to know people on a personal level,” she said. “We see the same faces year after year, and we’re invested in helping them succeed. That level of trust is something you don’t always find in larger cities.”

Unlike urban offices where clients may feel like just another number, Bain’s office can offer personal touches because they know their clients so well. Bain knows when her clients get married, have children, and start businesses. That combined with the personal level of trust, gives Bain the opportunity, as she sees changes for the tax season roll in, to apply those directly and efficiently to her clients.

In addition to filing taxes, Bain’s office offers a range of services, including bookkeeping and small business support. She and her team stay current by completing over 32 hours of training annually, ensuring they can handle everything from simple returns to more complex cases involving businesses and property.

According to Bain, the 2025 tax season brings several changes that she wants her clients to be aware of.

Form 1099-K payment threshold lowered

One significant update involves the reporting threshold for third-party payment services like Square, Venmo and Cash App with a Form 1099-K.

Bain explained that “The 1099-K, which is the form you get when you're doing like a third-party payment, like, if you go and use, like a Square payment the farmers market or something like that.”

Previously, the IRS only required a Form 1099-K to be issued if payments exceeded $20,000. Now, the threshold has been lowered to $5,000, according to IRS guidelines.

“This change is aimed at capturing income from the ‘gig economy,’” Bain said.

She further explained that it is not about penalizing people who send money to their family or friends but ensuring that self-employed individuals report their income properly.

She advised taxpayers who frequently use payment apps to clearly label transactions.

“If you can justify that the payments are personal and not business-related, you’re fine,” Bain said. “But for those running small businesses, this is something they need to be prepared for.”

Education Savings Plans no longer “use it or lose it”

Another notable update involves 529 Education Savings Plans. Historically, these plans allowed families to save for a child’s education with certain tax advantages, but unused funds could only be transferred to another beneficiary or withdrawn with penalties.

Now, according to the IRS, unused funds can be rolled over into a Roth IRA under specific conditions, with a lifetime limit of $35,000.

“This is a game-changer for families,” Bain said. “It encourages people to save for their children’s future without worrying about losing the funds if the child doesn’t go to college.”

She explained that the rollover option provides greater flexibility and long-term benefits, allowing families to repurpose the funds for retirement savings.

According to Bain, these Roth IRA options are even better retirement savings options for this younger population for many reasons.

If a younger person puts this money into a Roth IRA instead of a different retirement account, they put it in after-taxes and the money is invested. Any money earned on the investments is not taxed.

This may not seem like the best option initially, but Bain explains that a student or young adult will be making significantly less money and paying less taxes at the time the account is created than they would at most any other time in their life.

“Right now, a college student or high school students are not making that much money, so they're all in that lower tax bracket,” Bain said. “So, it's not even that tax rates go up, but when you are paying taxes on $10,000 versus $70,000 you're going to be paying in the higher tax brackets on that upper end of the income.”

Unpaid stimulus checks pop-up again

Bain also highlighted an important issue regarding unclaimed stimulus payments from 2021. According to recent news from the IRS, some taxpayers who didn’t receive their full stimulus payments may still be eligible to claim those funds.

“The IRS has started issuing payments to those who didn’t receive theirs originally,” Bain said. “But they’re sending them to the address or bank account listed on the 2021 tax return, so if people have moved or changed banks, they might not receive it.”

She urged affected individuals to contact the IRS directly to resolve any issues. The best way to start is by visiting IRS.gov or calling the IRS’s helpline.

With tax season often comes a flood of headlines about new rules and changes, some of which can cause unnecessary panic. Bain encourages taxpayers to verify information with reliable sources before getting concerned.

“There’s a lot of hype out there,” she said. “It’s important to check the source of the information. Is it coming from the IRS or a reputable finance site, or is it just a random post online?”

She advises taxpayers to consult their tax professionals if they have questions.

“We stay up-to-date on the latest changes and can help clients understand what actually applies to them.”

Comments: AnnaMarie.Kruse@southeastiowaunion.com