Federal Tax News for Individuals: August 2025

The Tax Exempt Rules Have Changed for Some

The IRS is clearing the way for churches to endorse or oppose political candidates without the fear of losing their tax-exempt status. This reverses decades of legal precedent. A recent court filing (click here for details) essentially revokes the enforcement of the 1954 Johnson Amendment. That amendment prohibited nonprofits from endorsing or opposing candidates in order to remain tax-exempt entities. Note that during the intervening decades, there's been only one instance, in 1992, where the IRS revoked a church's exempt status because of a political opposition. The IRS now likens a religious institution's endorsement of a candidate to a "family discussion," according to the court filing.

Is that Yard Sale Income Taxable?

Summer is when many people clean out closets, hold yard sales and sell items online. Is that money taxable? If you sell personally owned items, you generally only have to report income if you receive more than you paid for the items (or the price of a gift that you sell). Most items decrease in value over time, so chances are you're incurring a loss and don't need to report a sale. But if you're fortunate enough to buy an item for $1, then find out it's an antique that you sell for a small fortune, the sale is likely taxable. Keep accurate records. Also, if an occasional sale becomes an ongoing activity, the IRS may decide you're running a taxable business. Contact us with questions.

Beware the "Synthetic Identity"

You may have heard the term "deepfake" in the news. In a recent blog, the Association of Certified Fraud Examiners (ACFE) calls this "synthetic identity." It's not new, but it's growing fast. Using AI and other tools, fraudsters blend real and fake data to create convincing identities. Some pose as IRS agents, law enforcement or other authorities who may threaten victims with fines or imprisonment. They may demand money or personal info, which could then be used to steal identities and assets. As old scams lose effectiveness, the ACFE urges everyone to be alert for scams that rely on deepfakes and fake documents. Identity verification should be a priority. Click here to learn more.

In a Disagreement with the IRS, What Can You Do?

Taxpayers in a dispute with the IRS may want to explore mediation. Often referred to as "alternative dispute resolution," mediation offers a faster, more streamlined, less stressful path to resolution. It's a voluntary, nonbinding process, meaning both parties retain full control and aren't required to accept the outcome. Mediation can help avoid lengthy appeals and costly court battles. It's especially helpful for taxpayers with limited disputes or those seeking a quicker resolution during an audit. But it doesn't replace the audit or collection process and doesn't allow for the introduction of new evidence. We can help you through this process. Click here for more information.

An IRA Can Do More Than Grow Your Money

If you have a traditional or Roth IRA account, you're likely familiar with its retirement-saving benefits. What you may not know is that funds in your IRA can be used to purchase your first home or fund your child's higher education expenses. Indeed, exceptions for IRA withdrawals allow you to take a penalty-free distribution of up to $10,000 to buy or build a first home, meaning that you haven't owned a home in the past two years. Also, you can withdraw funds to pay qualified higher education costs for yourself, your spouse or your children. For students enrolled at least half-time, this includes tuition, fees, books, and room and board. Contact us for additional details.