IRS CEO Frank Bisignano said the agency will be vigilant in looking out for fraud in new tax breaks on tips and overtime created by the 2025 GOP tax-and-spending law, as millions claim the benefits.
The number of filers for both the tips and overtime tax breaks—two of President Donald Trump’s flagship campaign promises— is surging past expectations. Over 4.6 million taxpayers have claimed the tips deduction and nearly 20 million have benefited from the overtime break, according to the Treasury Department, raising concerns from tax experts about overstated claims.
“You should count on us being diligent at every corner to make sure that everything is appropriate both in tax returns and people, how they’re treated,” Bisignano said Thursday at an event at a Social Security Administration field office in Brooklyn.
Generally, those earning tipped income can deduct up to $25,000 per year and employees earning overtime pay can deduct up to $12,500. While the IRS has released several guidance projects on both breaks, key definitions and reporting requirements are tricky to parse through. It’s likely leaving some taxpayers over claiming accidentally and others using ambiguity as an opportunity when they don’t qualify.
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