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October Extended Due Date Just Around the Corner

Article Highlights:

• October 15, 2025, is the extended due date for 2024 federal 1040 returns.
• Late-filing Penalty
• Interest on Tax Due
• Other October 15 deadlines

If you could not complete your 2024 tax return by April 15, 2025, and are now on extension, that extension expires on October 15, 2025. Failure to file before the extension period runs out can subject you to late-filing penalties.

There are no additional extensions (except in designated disaster areas), so if you still do not or will not have all the information needed to complete your return by the extended due date, please call this office so that we can explore your options for meeting your October 15 filing deadline.

If you are waiting for a K-1 from a partnership, S-corporation, or fiduciary (trust) return, the extended deadline for those returns is September 15 (September 30 for fiduciary returns). So, you should probably make inquiries if you have not yet received that information.

Late-filed individual federal returns are subject to a penalty of 5% of the tax due for each month, or part of a month, for which a return is not filed, up to a maximum of 25% of the tax due. If you are required to file a state return and do not do so, the state will also charge a late-file penalty. The filing extension deadline for individual returns is also October 15 for most states.

In addition, interest continues to accrue on any balance due, currently at the rate of just over .5% per month.

If this office is waiting for some missing information to complete your return, we will need that information at least a week before the October 15 due date. Please call this office immediately if you anticipate complications related to providing the needed information, so that a course of action may be determined to avoid the potential penalties.

Additional October 15, 2025, Deadlines – In addition to being the final deadline to timely file 2024 individual returns on extension, October 15 is also the deadline for the following actions:

• FBAR Filings – Taxpayers with foreign financial accounts, the aggregate value of which exceeded $10,000 at any time during 2024, must file electronically with the Treasury Department a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR). The original due date for the 2024 report was April 15, 2025, but individuals have been granted an automatic extension to file until October 15, 2025.
• SEP-IRAs – October 15, 2025, is the deadline for a self-employed individual to set up and contribute to a SEP-IRA for 2024. The deadline for contributions to traditional and Roth IRAs for 2024 was April 15, 2025.
• Special Note – Disaster Victims – If you reside in a Presidentially declared disaster area, the IRS provides additional time to file various returns, make payments and contribute to IRAs. Check this website for disaster related filing and paying postponements.

Please call this office for extended due dates of other types of filings and payments and for extended filing dates in disaster areas. Please don’t procrastinate until the last week before the due date to file your extended returns. Final note: if for whatever reason you miss the October 15 deadline, you should still file your return as soon thereafter as possible.

Exploring Tax Opportunities to Pay Off Student Loans

Article Highlights:

• Qualified Tuition Plans
• Employer Payments
• Paying Principal vs. Interest
• Public Service Loan Forgiveness
• Income-Driven Repayment Plans
• State-Level Programs
• Death or Disability Forgiveness

Paying off student loans can be a significant challenge for many graduates. However, leveraging tax-advantaged strategies can alleviate some of this burden. In this article, we’ll explore various tax opportunities to help pay off student loans, including Section 529 plans, Section 127 employer payments, and strategies related to paying principal versus interest. We’ll also highlight new provisions and permanency established by the One Big Beautiful Bill Act (OBBBA).

Qualified Tuition Plans: Qualified Tuition Plans (sometimes referred to as Section 529 plans) are plans established to help families save and pay for education expenses in a tax-advantaged way and are available to everyone, regardless of income.

These plans allow taxpayers to gift large sums of money for a family member’s education expenses, while continuing to maintain control of the funds. The earnings from these accounts grow tax-deferred and are tax-free, if used to pay for qualified education expenses. Here’s how they can help manage student loans:

• Tax-Free Withdrawals for Educational Expenses: 529 plans offer tax-free withdrawals for qualified educational expenses, including student loan repayments up to a lifetime limit of $10,000 per beneficiary.
• Recent Changes Under OBBBA: The OBBBA has expanded the uses of 529 funds. However, it’s important to note that any distributions from a 529 plan made for the purpose of paying student loans will not allow the beneficiary to claim student loan interest deductions.

Employer Payments: With education becoming a key benefit for recruits, many employers offer educational assistance:

• What Section 127 Covers: Under Section 127, employers can offer up to $5,250 annually in tax-free educational assistance, which can include student loan repayments.
• Permanency Due to OBBBA: This benefit was made permanent by the OBBBA legislation, offering a long-term planning opportunity for employees.

Paying Principal vs. Interest: When deciding how to allocate payments, understanding the tax implications can be crucial:

• Interest Deduction: For taxpayers itemizing their deductions, they are allowed to deduct student loan interest up to $2,500 per year. Thus, where possible it would be beneficial to allocate payments from Sec 529 plans and employer payments to principle and the taxpayer to pay the interest.
• Strategic Approaches: Balancing payments between principal and interest can optimize both tax benefits and debt reduction speed.

Additional Sources and Methods: Besides Sec 529 and Sec 127, other strategies can also aid in managing student loans:

• Public Service Loan Forgiveness (PSLF): The Public Service Loan Forgiveness (PSLF) program is a significant federal initiative designed to alleviate the financial burden of student loans for individuals committed to careers in public service. Established to incentivize and reward employment in essential public sectors, PSLF targets employees working full-time for qualifying employers, including government agencies, 501(c)(3) non-profit organizations, and certain other non-profit entities dedicated to public services. To benefit from PSLF, borrowers must make 120 qualifying monthly payments under a qualifying repayment plan while working with an eligible employer. Unlike many loan forgiveness programs, the PSLF discharges forgiven debt tax-free.
• Income-Driven Repayment Plans: Though not directly offering tax benefits, these plans can reduce monthly payments, enabling borrowers to use savings elsewhere, possibly toward tax-advantaged accounts.
• State-Level Programs: Some states offer tax incentives or repayment assistance programs for student loans. Check if your state provides such a benefit.

Death or Disability Forgiveness: It’s important to recognize the specific provisions related to student loan discharge under unfortunate circumstances:

• Tax-Free Discharge: Typically, student loans discharged upon death or total and permanent disability are excluded from taxable income. Emphasize planning for these situations to ease burdens on family or affected individuals.
• OBBBA Amendments: Significant changes have occurred with the OBBBA, where such discharge exclusions are reinforced, ensuring they remain effective well into the future.

Conclusion: A mindful approach to student loan repayment, utilizing various tax-advantaged opportunities and keeping abreast of legislative changes, can dramatically ease the financial pressure. Consultation with a tax professional can further personalize these strategies based on individual circumstances.

Uncertainty Is the New Normal: How Small Businesses Can Stay SteadyThe Economy Feels Mixed — and That’s Okay

If you’ve read the headlines lately, you know the signals are…confusing.

• GDP is strong.
• Interest rates may be heading lower.
• Inflation is easing, but not “gone.”
• Tariffs are making imports more expensive.

So is the economy strong? Slowing? Recovering? The truth is—it depends on who you ask. And for small business owners, that fog of uncertainty is the hardest part.

Uncertainty isn’t just an economic headline. It’s what keeps you up at night, wondering: Do I hire? Do I wait? Do I raise prices or hold steady?

Why Uncertainty Hurts More Than “Bad News”

When the outlook is unpredictable, planning becomes a guessing game. You can’t control the headlines, but you can control how your business responds. That’s where steady cash flow management, flexible budgets, and advisory support change everything.

How Small Businesses Can Adapt in Uncertain Times

1. Get a Grip on Cash FlowCash flow is your oxygen. Monitor it weekly, not quarterly. Use forecasting tools or dashboards that flag red zones before they become crises.

2. Build Flexible BudgetsRigid budgets snap in unpredictable markets. Scenario planning—“what if tariffs rise another 10%?”—lets you prepare before costs hit.

3. Diversify Where You CanFrom suppliers to revenue streams, diversification lowers risk. Even small shifts—like adding a second vendor—protect your business against shocks.

4. Tier Your Spending ControlsNot every dollar deserves equal treatment:

• Must control tightly: payroll, rent, core services.
• Flexible: marketing, equipment, travel.
• Growth bets: new hires, product launches.

This gives you a clear plan for what to trim (and what to protect) if the ground shifts.

Opportunity Inside the Fog

Uncertainty doesn’t only create risk—it opens doors. When competitors freeze, you can:

• Negotiate better supplier terms.
• Attract talent that others are too hesitant to hire.
• Double down on client loyalty while others cut service.

Strong planning plus calm execution turns uncertainty into opportunity.

The Big Picture: SMB Resilience Wins

• Lower rates and moderating inflation could spark growth.
• Small business optimism remains cautiously strong.
• With smart financial controls, you’ll be positioned to adapt faster than competitors.

Uncertainty isn’t going away. But with the right systems in place, it doesn’t have to run your business.

Next Step

Talk to our firm about building cash flow cushions, forecasting tools, and financial controls tailored to your business. With a plan in place, you’ll feel calmer, more confident, and better prepared for whatever comes next.

Because clarity—even in uncertain times—is a competitive advantage.

Vehicle Loan Interest Deduction A Restrained Tax Benefit

Article Highlights:

• The Deduction
• The Limitations: A Narrow Pathway to Eligibility
• Personal Use Vehicle
• No Recreational Vehicles
• Vehicle Loan
• Final Assembly
• Highway Use
• Income Limits
• Limited Availability
• The Enduring Question of Benefit Versus Burden

In the swirling complexities of tax legislation, even well-intentioned provisions can seem like offers of relief that arrive weighed down with restrictions. The OBBBA provision, which allows taxpayers to deduct up to $10,000 of interest paid on passenger vehicle loans, is poised to be one such measure. On the surface, it beckons with the promise of financial relief; however, for many taxpayers, the reality will be a confounding array of limitations that may render the deduction more symbolic than substantive.

The Limitations: A Narrow Pathway to Eligibility

The introduction of this provision is aimed at providing some respite amid the financial demands of owning a vehicle. Yet, the deductions are not as straightforward as they might appear. A myriad of limitations tightly gird this provision, potentially excluding a significant portion of taxpayers eager for relief.

• Personal Use Vehicle: To begin with, the provision caters exclusively to personal-use vehicles weighing in at 14,000 pounds or less. Any vehicle used for business, regardless of necessity or lack of corporate fleets, is unapologetically excluded. This distinction negates opportunities for small business owners or entrepreneurs who often blur the lines between personal and professional vehicle use. Furthermore, the provision applies only to new vehicles—a frustrating restriction for those who consciously choose to buy used cars, perhaps for economic or environmental reasons.
• No Recreational Vehicles: Although the definition of a passenger vehicle includes cars, minivans, vans, SUVs, pickup trucks, or motorcycles, recreational vehicles (RVs), fail to meet the criteria for qualified vehicles. Recreational vehicles encompass a variety of motorhomes and campervans.
• Vehicle Loan: The demand for the loan to be secured by the vehicle introduces another level of complication. A car must be held as collateral, and while this may not be an unusual requirement for an auto loan, it accentuates the notion of risk rather than relief to the taxpayer.One would think family and friends would be allies in such financial undertakings, but the provision explicitly disallows loans from these sources. Similarly, lease financing is also deemed unfit for this deduction, limiting options for those who prefer or require the flexibility of leasing over buying.
• Final Assembly: Perhaps one of the most daunting limitations is the requirement for final assembly of the vehicle to occur within the United States. The globalization of the automobile industry is such that even American brands often have some assembly lines abroad. Consequently, this restriction might serve more as a geopolitical statement than a practical guideline for taxpayers counting on financial relief.Moreover, the mandated list of qualifying vehicles, anticipated from the government, is still merely a promise. Without this list, taxpayers tread uncertain ground, unsure whether their chosen vehicle will ultimately qualify for the deduction.
• Highway Use: Adding to the complexity is the constraint that the vehicle must be manufactured for use on public streets, roads, and highways. This means that niche markets—such as those who buy golf carts or other specialized vehicles—will find themselves excluded, with no recourse under the current legislation.
• Income Limits: Income levels play yet another confounding role in the eligibility for this deduction. With a ceiling set at a modified adjusted gross income (MAGI) of $100,000 for single filers and $200,000 for joint filers, the phase-out of the deduction looms large. For each $1,000 of income surpassing these thresholds, the deduction diminishes by $200. Once the MAGI reaches $149,000 for single filers or $249,000 for joint filers, the deduction is entirely moot—the provision becomes obsolete for those hovering in the upper limits of the middle class.For instance, consider a single filer with a MAGI of $120,000. For these additional $20,000 over the threshold, the deduction shrinks by $4,000, resulting in a paltry remaining deduction of $6,000. Under these strictures, only taxpayers effectively within the 22% tax bracket can capture any significant benefit, and even then, the reduction in liability seems less than commensurate with the provision’s intent.

  Should a taxpayer fall into the more modest 12% tax bracket, the deduction offers little solace—just a $12 decrease in liability for every $100 of interest deducted. In contrast, those in the 22% bracket witness a $22 reduction per $100, underscoring the inequitable assist the provision extends across income levels.

• Limited Availability: This provision is temporary, only available in 2025 through 2028 after which terminates unless extended by Congress.

The Enduring Question of Benefit Versus Burden

In the end, the OBBBA provision stands as a complex and confining measure within tax legislation. Its onerous limitations highlight the incongruities in navigating tax benefits—often leaving taxpayers with more questions than answers, and with benefits that seem increasingly out of reach. As it begins its tenure from tax year 2025 through 2028, taxpayers are left to wonder whether this interest deduction is a beacon of relief or an elusive concession under the guise of benefit.

Despite the numerous limitations that encircle the OBBBA provision, there is a bright spot that merits attention: the deduction’s accessibility to both those who itemize their deductions and those who opt for the standard deduction. This flexibility grants a wider net of eligibility, ensuring that taxpayers are not faced with the additional burden of reshaping their entire tax strategy to benefit from this provision. Whether a taxpayer meticulously itemizes every deductible expense or opts for the simplicity of the standard deduction, they have the opportunity to leverage this interest deduction.

Contact this office if you have questions.

Occupations Qualified for Tip Deduction Released

Article Highlights:

• Draft List of Occupations:
  o Beverage & Food Service
  o Entertainment and Events
  o Hospitality and Guest Services
  o Home Services
  o Personal Services
  o Personal Appearance and Wellness
  o Recreation and Instruction
  o Transportation and Delivery
• Eligibility Requirements
• Deduction Limitations
• Other Considerations

On September 2, 2025, the Treasury Department released a draft list of 68 occupations eligible for the new “no tax on tips” deduction. This deduction is part of the “One Big Beautiful Bill Act,” signed into law on July 4, 2025, and applies to federal income taxes for the 2025—2028 tax years.

The deduction is available for a maximum of $25,000 in qualifying tips per person, per year. It is structured as a “below-the-line” deduction, meaning it is available to taxpayers who take the standard deduction, but is not used to compute adjusted gross income (AGI).

Here is the Treasury’s draft list of occupations:

Beverage & Food Service:

• Bartenders
• Wait staff
• Food servers, non-restaurant
• Dining room and cafeteria attendants and bartender helpers
• Chefs and cooks
• Food preparation workers
• Fast Food and Counter Workers
• Dishwashers
• Host staff, restaurant, lounge, and coffee shop
• Bakers

Entertainment and Events:

• Gambling dealers
• Gambling change persons and booth cashiers
• Gambling cage workers
• Gambling and sports book writers and runners
• Dancers
• Musicians and singers
• Disc jockeys (except radio)
• Entertainers and performers
• Digital content creators
• Ushers, lobby attendants and ticket takers
• Locker room, coatroom and dressing room attendants

Hospitality and Guest Services:

• Baggage porters and bellhops
• Concierges
• Hotel, motel and resort desk clerks
• Maids and housekeeping cleaners

Home Services

• Home maintenance and repair workers
• Home landscaping and groundskeeping workers
• Home electricians
• Home plumbers
• Home heating/air conditioning mechanics and installers
• Home appliance installers and repairers
• Home cleaning service workers
• Locksmiths
• Roadside assistance workers

Personal Services

• Personal care and service workers
• Private event planners
• Private event and portrait photographers
• Private event videographers
• Event officiants
• Pet caretakers
• Tutors
• Nannies and babysitters

Personal Appearance and Wellness

• Skincare specialists
• Massage therapists
• Barbers, hairdressers, hairstylists and cosmetologists
• Shampooers
• Manicurists and pedicurists
• Eyebrow threading and waxing technicians
• Makeup artists
• Exercise trainers and group fitness instructors
• Tattoo artists and piercers
• Tailors
• Shoe and leather workers and repairers

Recreation and Instruction

• Golf caddies
• Self-enrichment teachers
• Recreational and tour pilots
• Tour guides and escorts
• Travel guides
• Sports and recreation instructors

Transportation and Delivery:

• Parking and valet attendants
• Taxi and rideshare drivers and chauffeurs
• Shuttle drivers
• Goods delivery people
• Personal vehicle and equipment cleaners
• Private and charter bus drivers
• Water taxi operators and charter boat workers
• Rickshaw, pedicab, and carriage drivers
• Home movers

The requirements for the OBBB tip exclusion are a set of temporary tax deductions for qualified tipped workers, available for tax years 2025 through 2028. The deduction is taken on an individual’s tax return and is subject to income limitations.

Eligibility Requirements: To be eligible for the deduction, a worker must meet the following criteria:

• Be a qualified tipped worker: Must be an employee or independent contractor in an occupation that customarily and regularly received tips before 2025. See the draft list of qualifying occupations.
• Have qualified tips: The tips must be voluntarily paid by a customer. This includes tips received in cash, charged on a credit card, or from a tip-sharing arrangement. Mandatory service charges are not eligible.
• Properly report tips: The tips must be reported to the IRS on either a Form W-2 (for employees) or Form 1099 (for independent contractors).
• File jointly if married: If married, the couple must file a joint tax return to claim the deduction.
• Provide a Social Security Number (SSN): Anyone claiming the deduction must include their SSN on their tax return.

Deduction Limitations: The maximum deduction is limited and phases out for high-income earners:

• Maximum deduction: The maximum annual deduction is $25,000.
• Income phase-out: The deduction is gradually reduced for taxpayers with a modified adjusted gross income (MAGI) over a certain amount:
  • Single filers: The deduction begins to phase out for MAGI over $150,000.
  • Married filing jointly: The deduction begins to phase out for MAGI over $300,000.

Other Considerations:

• Does not apply to payroll taxes: While tips are deductible from the worker’s income when figuring their federal income tax, they are still subject to Social Security and Medicare taxes or self-employment tax in the case of independent contractors.
• Temporary provision: The tip deduction is a temporary measure, scheduled to expire after December 31, 2028.
• Not tax-free: This is a deduction, not an exemption. So, the worker will still have to report all tip income, which will then be reduced by the deduction amount.
• State tax implications: The effect on state income taxes will depend on the worker’s state’s tax laws.

In conclusion, understanding which occupations qualify for tip deductions is essential for both employees and employers seeking to maximize their tax benefits. By staying informed about the specific criteria that define qualified tips and knowing how different occupations fit into this framework, individuals can ensure compliance while optimizing their tax strategies. As tax laws continue to evolve, it remains crucial for stakeholders to stay updated on legislative changes and seek professional advice as needed to navigate the complexities of tip income and deductions effectively.

Contact this office with questions and assistance.

Act Now – Last Chance to Leverage the Work Opportunity Tax Credit Before It Sunsets in 2025!

Article Highlights:

• Understanding the Work Opportunity Tax Credit
• Eligible Target Groups
• Credit Amounts and Limitations
• Certification Process
• Fast-tracked Certification for Veterans
• When the Credit is Not Available
• Implications for Tax-Exempt Employers
• The Urgency to Act

The Work Opportunity Tax Credit (WOTC) has long been a valuable tool for employers looking to leverage tax savings while providing employment opportunities to individuals from specified target groups. As the credit stands to sunset after December 31, 2025, without any Congressional action to extend it, this may represent the final opportunity for businesses to capitalize on its benefits. This article delves into the intricacies of the WOTC, including the qualifications, targeted groups, eligible working hours, and the certification process that employers must be aware of to make the most of this potential tax savings.

Understanding the Work Opportunity Tax Credit: The WOTC is a federal tax credit available to employers’ hiring individuals from certain groups who have historically faced significant barriers to employment. The aim is to incentivize employers to select candidates from these groups, thus helping to diversify and strengthen the workforce. Eligible individuals must commence their employment before January 1, 2026, to qualify under the current legislation.

Eligible Target Groups: The WOTC focuses on a variety of target groups, including but not limited to:

1. Veterans: Particularly those unemployed for at least four weeks or are service-connected disabled veterans.
2. Long-term Unemployed: Individuals unemployed for 27 consecutive weeks or more.
3. Ex-Felons: Individuals with difficulty finding employment due to their past convictions.
4. Supplemental Nutrition Assistance Program (SNAP) Recipients: Individuals who have received food stamps in the past 6 months.
5. Temporary Assistance for Needy Families (TANF) Recipients: Those who have received assistance within the last 2 years.
6. Designated Community Residents and Summer Youth Employees: Individuals aged 18 to 39 residing in Empowerment Zones.
7. Vocational Rehabilitation Referrals: Those with physical or mental disabilities who have been referred through a rehabilitation agency.

The crucial aspect of the WOTC is ensuring that these individuals start their employment before the defined deadline, despite Congressional habits of extending the credit in the past.

Credit Amounts and Limitations: The WOTC allows employers to claim a tax credit for a portion of the wages paid to these eligible employees. The amount varies based on the target group and the number of hours worked:

• General Rule: Up to 40% of the first $6,000 paid to or incurred on behalf of an employee, translating to a maximum credit of $2,400 per employee.
• Veterans: For disabled veterans, the credit can reach up to $9,600 if certain conditions are met.
• Long-term Unemployed: The credits for this group can be substantial, with provisions allowing for credits up to $5,000.

To qualify, an employee must work at least 120 hours. If the employee works at least 400 hours, employers can claim the full 40% of the first-year wages. If between 120 and 399 hours, the credit rate is reduced to 25%.

Certification Process: Securing WOTC requires navigating the certification process with the State Workforce Agency (SWA). Employers need to submit IRS Form 8850, the Pre-Screening Notice and Certification Request for the Work Opportunity Credit, along with the Department of Labor’s Employment and Training Administration’s (ETA) Form 9061 or 9062 within 28 days of the eligible employee’s start date.

Fast-tracked Certification for Veterans: Veterans generally face a more streamlined certification process. Given the emphasis on supporting veterans, there are expedited procedures that ensure a quicker determination of eligibility, allowing employers to swiftly access the benefits tied to hiring veterans.

When the Credit is Not Available: Certain restrictions apply to the availability of the WOTC:

• Relatives and Dependents: An employer cannot claim the credit for hiring their spouse, children, or any other dependents.
• Majority Owners: In cases where the employer is the majority owner of the business, hiring themselves or any other major stakeholders does not qualify for the WOTC.
• Federal Subsidized Employment Programs: Wages paid under specific federal subsidized employment programs may not be used towards the WOTC.

Implications for Tax-Exempt Employers: While tax-exempt organizations such as 501(c) entities can benefit from the WOTC, the credit mechanics differ. These organizations can only claim the WOTC for hiring qualified veterans, and the credit can only be applied against the employer Social Security tax.

The Urgency to Act: With the looming sunset on December 31, 2025, businesses need to act swiftly if they have not already capitalized on the WOTC. Unless Congress intervenes—which has been the historical pattern but is not guaranteed—this significant tax credit will no longer be available. Furthermore, despite the past trends of extension, the lack of current Congressional action makes this deadline more pressing than ever before.

Employers looking to reduce their tax liability while making impactful hiring decisions should prioritize understanding and utilizing the WOTC. By doing so, not only do they gain financially, but they also contribute positively to the broader societal goals of employment for those facing systemic barriers. Time is of the essence, and ensuring all certifications and documentation are in order promptly will be critical to reaping the benefits of this important soon-to-expire tax credit.

Contact this office with questions and how this credit might apply to our business.

Understanding the Estate and Gift Tax Changes Under the One Big Beautiful Bill Act

Article Highlights:

• Basics of the Estate and Gift Tax Exclusion
• Estate and Gift Tax Exclusions: Key Adjustments
• Impact on Generation-Skipping Transfers
• Benefits of the Portability Election
• Strategic Implications for Wealth Management

The One Big Beautiful Bill Act (OBBBA) recently introduced substantial changes in the realm of estate and gift tax planning. These changes present new opportunities for taxpayers. The legislation modifies critical aspects of the estate tax exclusion, making long-term planning both more urgent and more strategic for affluent taxpayers.

Basics of the Estate and Gift Tax Exclusion: The estate and gift tax exclusion is the amount that can be excluded from federal estate tax. If the value of a decedent’s estate is less than the exclusion amount for the year of death ($13.99 million in 2025), no federal estate tax is owed and no estate tax return is required, but in some cases filing an estate tax return may still be prudent (see Benefits of the Portability Election below).

If the value of gifts one individual gives to another person during a year is greater than that year’s annual gift tax exclusion ($19,000 for 2025), the individual making the gift must file a gift tax return (IRS Form 709), but often will owe no gift tax. This is because the gift giver can dip into their combined lifetime estate and gift tax exclusion and apply it to the excess gift amount. When the individual passes away, a reconciliation must be done to see if the combination of excess gifts and the value of the individual’s estate exceeds the lifetime estate and gift tax exclusion, which varies from year to year. This is done on IRS Form 706.

Estate and Gift Tax Exclusions: Key Adjustments: The OBBBA has effectively “permanently” set the estate and gift tax exclusion at $15 million per individual starting in 2026, adjusted for inflation in the following years. This decision is a continuation of the trend initiated by the Tax Cuts and Jobs Act of 2017 (TCJA), which doubled the previous $5 million exclusion to $10 million, again indexed for inflation, but only through 2025. Prior to the OBBBA, the expectation was that this exclusion would drop significantly to about $7 million, essentially rolling back to the pre-TCJA levels, adjusted for inflation. However, with the OBBBA’s intervention, a more favorable scenario for high-net-worth individuals has been preserved.

This adjustment helps taxpayers engage in more precise planning for their estates, allowing them to pass on more wealth without triggering tax obligations. It offers a level of stability and predictability that can be pivotal in both long-term estate planning and immediate asset management strategies.

Impact on Generation-Skipping Transfers: In tandem with the estate and gift tax exclusions, the Generation-Skipping Transfer (GST) tax exclusion has also been aligned. The GST tax is a federal tax levied on transfers that skip a generation, such as from grandparents directly to grandchildren, bypassing the parents. Under OBBBA, the GST exclusion mirrors the estate and gift tax exclusion, set at $15 million from 2026 and indexed thereafter. This move curbs the potential tax-free transfer across generations, ensuring that wealth passed in such a manner is adequately taxed while still allowing for strategic planning opportunities to mitigate tax exposure.

Benefits of the Portability Election: An often-overlooked strategy for married couples in estate planning involves the portability election, which can be particularly beneficial upon the death of the first spouse. This election allows the surviving spouse to utilize any unused portion of the deceased spouse’s estate and gift tax exclusion. By leveraging this mechanism, couples can effectively maximize the tax exclusions available to them.

For example, if the estate of a spouse who dies in 2026 does not use their full $15 million exclusion, the remainder can transfer to the surviving spouse’s exclusion, potentially doubling the couple’s tax-free transfer capability. This process can significantly alleviate the financial burden on the surviving spouse and provide more flexibility and security in managing and distributing their estate as desired. It is an essential tool in a comprehensive estate planning strategy, particularly under the current tax environment shaped by the OBBBA.

To take advantage of this election, the executor of the estate of the first spouse to die must file a timely Form 706, even if there is no estate tax owed.

Strategic Implications for Wealth Management: The changes introduced by the OBBBA necessitate a fresh look at existing estate plans. Taxpayers who had previously braced themselves for a reversion to lower exclusion thresholds now have the opportunity to further leverage the increased exclusions in their planning strategies. This means reevaluating current plans to make the most of the permanent $15 million exclusion cap, aligning it with long-term financial goals and family wealth aspirations.

For estate planning professionals, the OBBBA offers both a challenge and an opportunity. The permanence of these provisions requires planners to incorporate them into dynamic and flexible estate plans that can withstand the test of inflation, economic fluctuations, and potential future legislative changes. Deploying gifts, trusts, and other tools efficiently will be critical in optimizing these tax benefits.

Conclusion: The estate and gift tax landscape, shaped by the One Big Beautiful Bill Act, presents complex but rewarding planning opportunities. With increased exclusions, aligned GST provisions, and the beneficial portability election, taxpayers and estate planners can navigate these waters effectively to ensure wealth preservation across generations. As such, now is an ideal time for affluent individuals to consult with their tax advisors and estate planners to reassess and optimize their strategies.

The IRS Just Got Leaner – But Not Softer on Enforcement

The IRS is going through what you might call an identity crisis. Thousands of employees have been laid off right in the middle of tax season, including auditors, tech staff, and even customer service reps. Throw in yet another commissioner swap and a partial reset on their modernization plans, and you’ve got a recipe for confusion.

And here’s the kicker: confusion at the IRS doesn’t mean less enforcement. It usually means more automation, fewer humans to talk to, and longer waits for everyone else.

Customer Service? Don’t Count On It

Think of the IRS right now as an understaffed call center. Reduced phone support, fewer walk-in centers, and slower processing times mean that if your return gets flagged, it could sit there… and sit there.

Refunds delayed. Notices piling up. Stress levels: climbing.

Enforcement: Smarter, Not Softer

Yes, audit staffing has been slashed. But don’t mistake that for mercy. The IRS is shifting gears and leaning into automation and AI to spot inconsistencies. That means crypto transactions, offshore accounts, and suspicious deductions are more likely than ever to trigger a letter.

And enforcement isn’t random. The IRS has made clear it’s targeting high-income taxpayers and complex cases — think business owners, real estate investors, and anyone with large deductions or overseas holdings. If you fall into one of these categories, assume you’re on their radar.

When it comes to collections? They’re dusting off the old tools: bank levies, wage garnishments, even door-knocks from Revenue Officers. AI doesn’t sleep — and it doesn’t lose paperwork.

Red Flag Watchlist for 2025

If you’re in any of these categories, expect a sharper eye on your return:

• Cryptocurrency transactions – unreported gains are low-hanging fruit.
• ERC or PPP claims – IRS is cracking down on fraud and aggressive filings.
• Offshore accounts – FBAR and FATCA enforcement are heating up.
• High deductions or credits – especially for small businesses and self-employed taxpayers.
• High-income filers – the IRS is prioritizing audits of wealthy individuals.

Tip: If one (or more) of these fits you, get documentation in order before filing. A tax pro can help you preempt problems rather than scramble after the fact.

Why a Tax Pro Is Your Secret Weapon

Here’s the good news: you don’t have to navigate this mess alone. A seasoned pro knows how to:

• Cut through the red tape. While everyone else is waiting on hold, pros know back channels and proven strategies like First-Time Abatement or structured installment plans.
• Stop false alarms. When algorithms overreach, a pro can push back with logic and documentation.
• Protect you from penalties. From high-net-worth audits to offshore reporting, the right strategy today can prevent years of pain tomorrow.

In a world where the IRS is both shrinking and sharpening, having a pro in your corner isn’t optional — it’s insurance.

What Taxpayers Should Do Right Now

• File early and electronically.
• Document everything — especially crypto, business, or side hustle income.
• Stay ahead of new rules (like the recently passed No Tax on Tips Act).
• Call in help if your return is anything more than straightforward.

The Bottom Line

The IRS is a paradox in 2025: smaller in size, bigger in bite. They’re rolling out fewer humans, more automation, and sharper tools for enforcement.

For taxpayers, that means two things:

1. Don’t assume you’ll slip through the cracks.
2. Don’t assume you can handle it all alone.

Because while the IRS figures itself out, you still have to figure out your taxes. And the smartest move you can make this year? Have a seasoned pro in your back pocket.

Contact us today to get expert guidance before the IRS comes knocking.

Tariffs Just Handed You Growth. Now Comes the Hard Part.

Your order book is fuller than ever. Buyers who once sourced overseas are knocking on your door. Tariffs and trade wars are pushing work back to U.S. soil. You’re in demand.

But here’s the problem no one warns you about: growth this fast can break you.

The policies fueling today’s boom could flip overnight. The people you need to hire? They don’t exist in enough numbers. And those shiny new contracts you signed? Without the right clauses, they could trap you if tariffs swing the other way.

This is what hypergrowth feels like. Thrilling. And terrifying.

The Big Picture: Why You’re Growing So Fast

Right now, global pharma firms are pouring billions into U.S. facilities to hedge against tariffs. GM is building a $3.5B EV battery plant in Indiana to avoid Chinese supply chains.

The message is clear: being U.S.-based is suddenly a competitive advantage. Your customers are ready to pay for it.

But here’s the catch—tariffs are a policy, not a promise. Tomorrow’s headlines could undo today’s opportunities. That’s why scaling fast without a strategy is like building a factory on sand.

The Hidden Traps of Hypergrowth

• Policy whiplash. Tariffs today. Rollbacks tomorrow. The last thing you want is to invest millions in capacity that evaporates with one policy change (how tariffs upend supply chains).
• Hiring panic. You need skilled machinists, welders, engineers—yesterday. The temptation is to hire fast, train later. But weak hires compound into quality issues, OSHA violations, and even cultural breakdowns.
• Supply chain choke points. You’re no longer just making product—you’re now juggling suppliers, tariffs, and customs paperwork. That one missing component? It can hold up millions in orders (tariffs reshaping supply chains).
• Contracts that corner you. If you’re not baking in “change-in-law” clauses, price adjustments, and exit triggers, you’re betting your margins on D.C. politicians (strategic insights on tariffs).

Growth without guardrails is risk dressed up as opportunity.

What Smart Manufacturers Are Doing Differently

They’re not just producing more. They’re building resilience into their DNA.

• They diversify suppliers—not just in the U.S., but in allied “friend-shoring” countries where tariffs aren’t weaponized (friendshoring explained).
• They scenario-test—running drills on what happens if tariffs rise, suppliers fail, or policy shifts. So nothing catches them flat-footed.
• They lean on automation—like Keen’s U.S. shoemaking plant, which used robotics to expand output without blowing up payroll.
• They fortify contracts—future-proofing against tariff reversals or sudden policy pivots.
• They protect cash flow—using supply chain finance and liquidity buffers to avoid getting crushed when margins tighten (supply chain finance under tariffs).

Stories That Prove the Point

• Auburn Manufacturing doubled sales by going all-in on local supply chains, proving that resilience sells (Auburn Manufacturing).
• MP Materials built rare-earth capacity in Texas and secured $500M from Apple by planning for volatility, not stability (MP Materials).

These aren’t just wins. They’re blueprints.

Your Playbook for Managing Growth Without Breaking

1. Pause before you pounce. Growth is good, but build forecasts around multiple tariff scenarios.
2. Hire slow, train fast. Prioritize culture and quality—then invest in upskilling to fill gaps.
3. Automate where it hurts. Let machines take pressure off your labor shortages.
4. Rework contracts. If the law changes tomorrow, your agreements should flex with it.
5. Keep liquidity strong. Growth eats cash. Make sure your financial buffers scale too.

Growth Without Strategy Is Just Risk in Disguise

Yes, tariffs are fueling your momentum. But without foresight, they can just as easily fuel your downfall. The winners in this moment aren’t the ones who scale the fastest—they’re the ones who scale the smartest.

Contact us today to design your growth strategy—so tariffs and trade wars become opportunities, not landmines.

How the Adoption Credit Can Ease Your Path to Parenthood

Article Highlights:

• Overview of the Adoption Credit
• Eligibility and Definitions
• Financial Considerations
• Specific Circumstances and Rules
• Adoption Process Essentials
• Tax Benefits Beyond the Adoption Credit

Are you in the process of or thinking about adopting? The tax code includes an adoption credit which is a significant benefit available to taxpayers who adopt a child, providing financial relief for eligible expenses. For the 2025 tax year, there have been notable enhancements to the adoption credit.

Overview of the Adoption Credit: The adoption credit is designed to assist adoptive families by offsetting some of the costs associated with adoption. In 2025, the adoption credit is capped at $17,280 for qualified expenses per adoption (not per return). A pivotal update this year is that part of the credit, up to $5,000, is refundable. This new feature allows adoptive families to receive a cash refund if the credit exceeds their total tax liability.

Eligibility and Definitions

• Eligible Child: For the purposes of the adoption credit, an eligible child is defined as any individual

Read More

Understanding the New Deduction for Overtime Under the OBBBA: A Comprehensive Guide

Article Highlights:

• Defining Deductible Overtime: Beyond the Surface
• Maximum Deduction and Income-Based Limitations
• Modified Adjusted Gross Income
• Effective Date and Temporary Application
• Married Filing Joint Stipulation and SSN Requirement
• Impact on Withholding and Other Considerations
• Navigating the Temporary Overtime Deduction

The recent passage of the One Big Beautiful Bill Act (OBBBA) marks a significant shift in the tax landscape, bringing with it a range of changes aimed at easing the financial burden on American workers. Among these changes, the introduction of a new deduction for overtime pay is of particular interest. This article will explore what constitutes deductible overtime under the OBBBA, the specifics of the deduction, its limitations, and why it’s crucial for taxpayers to understand these newfound regulations.
Defining Deductible Overtime: Beyond the Surface
The OBBBA introduces an above-the-line deduction for overtime premium pay, which might not be as straightforward as it appears or what a worker envisioned when first hearing about it. The deduction applies specifically to “qualified overtime compensation,” defined as the portion of overtime pay that exceeds the regular rate of pay under the Fair Labor Standards Act of 1938. This means that not all overtime compensation is deductible; only the premium portion is eligible. This subtle distinction is crucial for taxpayers and tax preparers to consider when calculating potential deductions.

For example, if a worker has a standard pay rate of $40 per hour and earns overtime pay at a rate of $55 per hour, the deductible portion is the $15 premium for each overtime hour worked, not the entire $55. Understanding what portion of overtime counts toward this deduction can significantly influence the overall tax savings for a worker.

Maximum Deduction and Income-Based Limitations

The OBBBA sets limits on the deduction amount taxpayers can claim in a year. The maximum allowable deduction is capped at $12,500 for individual filers and $25,000 for those filing a joint return. However, these benefits are further subject to modifications depending on the taxpayer’s Modified Adjusted Gross Income (MAGI).

MAGI is a critical concept in determining eligibility for this deduction. It is calculated by taking the adjusted gross income (AGI) and adding back certain deductions and exclusions, such as those related to foreign earned income. The MAGI-based limitation reduces the deduction by $100 for every $1,000 that a taxpayer’s MAGI exceed $150,000 for single filers or $300,000 for joint filers. Therefore, taxpayers with higher incomes might find their potential deductions diminished or eliminated, emphasizing the importance of accurately calculating MAGI to fully capture eligible tax benefits.

Modified Adjusted Gross Income

This deduction is not a permanent addition to the tax code. It applies to taxable years starting in 2025 and is set to sunset after 2028. This temporary nature requires taxpayers and preparers to be aware of both the starting point for when this financial relief becomes available and its conclusion. Timely adjustments in financial planning and tax strategies can ensure maximum benefits are captured during this window.

Married Filing Joint Stipulation and SSN Requirement

To claim the deduction for qualified overtime compensation, a married individual must file jointly with their spouse. This stipulation necessitates that married couples coordinate their tax strategies to take full advantage of this deduction. Moreover, taxpayers must provide their Social Security Number (SSN) on the tax return to qualify. Failure to include the SSN is treated as a mathematical or clerical error, potentially leading to an adjustment of the return.

Impact on Withholding and Other Considerations

Withholding adjustments are an important consideration for both employers and employees following the implementation of this deduction. Starting in 2025, the Secretary of the Treasury will modify withholding procedures to accommodate the new deduction, which could impact payroll processes. Employers need to stay informed about these changes to ensure compliance and help employees understand their revised withholdings.

It is essential to note that this deduction reduces only income tax, not contributions to the Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare. Therefore, while the deduction can ease income tax burdens, it doesn’t affect the withholding or payment of FICA taxes, which is an important distinction when considering overall tax liability.

Navigating the Temporary Overtime Deduction

The overtime deduction introduced by the OBBBA represents a substantial opportunity for tax savings, particularly for those who frequently earn overtime. However, understanding the nuances—such as what constitutes qualified overtime, the effects of MAGI, and procedural requirements like joint filing and SSN inclusion—is imperative. As this deduction is available only through 2028, tax preparers and taxpayers must act quickly to incorporate it into their strategies and optimize their tax outcomes during its period of effectiveness.

While this deduction provides temporary relief, its impact has the potential to be significant. Individuals should prepare to adapt their financial planning and payroll operations to maximize this benefit, all while staying vigilant of its temporary nature to avoid unforeseen adjustments when it phases out after 2028.

Tax Break for Businesses: 100% Bonus Depreciation is Back Plus New Expensing of Qualified Production Property

Article Highlights:

• Historical Context
• Tax Benefits of Bonus Depreciation
• Qualification Criteria for Bonus Depreciation
• Qualified Improvement and Property Issues
• Revoking Bonus Depreciation and AMT Implications
• Business Automobiles and Other Depreciation Rules
• Issues Addressed by the Recent Reinstatement
• Qualified Production Property

The reinstatement of bonus depreciation is a critical component of recent U.S. tax legislation aimed at fostering economic growth. The 2017 Tax Cuts and Jobs Act (TCJA) had already put significant emphasis on bonus depreciation, but its permanent reinstatement under the “One Big Beautiful Bill Act” at 100% further emphasizes its importance, especially after considering the economic ramifications of the pandemic. This article explores the tax benefits, historical context, applicability, and specific rules surrounding bonus depreciation, ultimately outlining the recent changes in its reinstatement.

• Historical Context: Originally Enacted to Stimulate the Economy – Bonus depreciation was first introduced as part of the Job Creation and Worker Assistance Act in 2002, allowing businesses to immediately deduct a substantial amount of the cost of qualifying property, rather than having to recover the cost as depreciation over a number of years. Initially, the deduction was set at 30% but was later increased to 50% and eventually to 100% during specific economic downturns.The TCJA significantly altered bonus depreciation by allowing a 100% first-year deduction for qualified property, which was a substantial incentive for businesses. This provision was aimed at encouraging capital procurement and economic growth. However, the TCJA also included a sunset provision that began phasing out the bonus depreciation rate starting in 2023, and by 2027 no bonus depreciation would have been allowed.
• Tax Benefits of Bonus Depreciation – Bonus depreciation allows businesses to fully deduct the cost of assets in the year they are placed into service, providing immediate tax relief and encouraging investment. This benefit enhances a company’s cash flow by reducing taxable income, making it a powerful incentive for purchasing new assets.
  However, utilizing bonus depreciation effectively requires careful planning. For example, the Section 199A deduction is based on qualified business income (QBI), and writing off large capital purchases can reduce an entity’s profit, consequently decreasing the Sec 199A deduction. Conversely, reducing taxable income might help avoid certain phase-outs and limitations associated with 199A.
• Qualification Criteria for Bonus Depreciation – Qualifying property generally includes tangible property with a recovery period of 20 years or less, computer software, water utility property, and qualified improvements and productions. Recovery periods are set by the IRS. For example, most business vehicles have a recovery period of 5 years, while it is 7 years for most office equipment. No bonus depreciation is allowed for real property since the recovery period is either 27.5 or 39 years, depending on how the real property is used.The TCJA expanded the scope of eligible property to include both new and used qualifying property, enhancing the attractiveness of investing in second-hand equipment. Public utility properties and dealer properties related to vehicles are specifically excluded, adding a layer of complexity.
• Qualified Improvement and Property Issues – Qualified improvement property initially experienced legislative challenges. The intent under the TCJA was to combine properties such as leasehold, restaurant, and retail improvements into a category eligible for bonus depreciation under a 15-year MACRS recovery period. However, an oversight initially excluded these properties, later corrected by the CARES Act.
• Revoking Bonus Depreciation and AMT Implications – Typically, opting out of bonus depreciation can only be revoked with IRS consent unless made on a timely filed return, allowing revocation within six months on an amended return. One noteworthy benefit is that property with claimed bonus depreciation is exempt from alternative minimum tax (AMT) adjustments, aligning AMT depreciation relief with regular tax purposes.
• Business Automobiles and Other Depreciation Rules – Special rules and deduction limitations apply to business automobiles categorized as “luxury autos.” The depreciation limit is augmented by $8,000 in years when bonus depreciation is permitted, as established by the TCJA. It is not addressed in OBBBA so it is assumed the extra amount will continue.Related party rules, and the application of Section 179, which requires pre-bonus depreciation adjustments, add further complexity. (Section 179 provides another way to write off purchase of some business property without having to depreciate the asset’s cost, but the deduction will need to be recaptured if business use drops to 50% or less in a year after the year placed in service.)
• Issues Addressed by the Recent Legislation – The OBBBA reinstatement extends the 100% deduction for qualified property purchased and placed in service after January 19, 2025. OBBBA has made bonus depreciation permanent. For qualifying property placed in service between January 1, 2025, and January 19, 2025, the bonus depreciation remains at 40%.This continuity provides businesses with long-term planning capabilities and aligns investments with broader economic policies intended to spur growth.
• Qualified Production Property – The “One Big Beautiful Bill Act” also introduced a provision to promote manufacturing in the U.S. Under pre-OBBBA law, taxpayers were generally required to deduct (depreciate) the cost of business-related nonresidential real property over a 39-year period. And bonus depreciation was generally limited to tangible personal property, not real estate.Effective for property placed in service after July 4, 2025, OBBBA generally, allows taxpayers to immediately deduct 100% of the cost of certain new factories, certain improvements to existing factories, and certain other structures. Specifically, this provision allows taxpayers to deduct 100% of the adjusted basis of qualified production property in the year such property is placed in service.Qualified Production Property refers to specific portions of nonresidential real property that meet a set of criteria:o The property must be used by the taxpayer as an integral part of a qualified production activity.o It must be placed in service within the United States or any possession of the United States.

  o The original use of the property must commence with the taxpayer.

  o Construction of the property must begin after January 19, 2025, and before January 1, 2029.

  o The property must be designated by the taxpayer in an election on the taxpayer’s tax return. The IRS will issue instructions on how to make this election.

  o The property must be placed in service before January 1, 2031.

  o Any portion of a property that is used for offices, administrative services, lodging, parking, sales activities, research activities, software engineering activities, or certain other functions is ineligible for this benefit

• Production Machinery: Even though manufacturing machinery that does not qualify as qualified production property is not expensed under this provision, it will generally qualify for 100% bonus depreciation that is reinstated by OBBBA.
• Qualified Production Activity: Generally, a “Qualified Production Activity” is defined as follows:1. Activities Involved: It refers to the manufacturing, production (limited to agricultural and chemical production), or refining of a qualified product. These activities should result in a substantial transformation of the property comprising the product.2. Qualified Product: A qualified product refers to any tangible personal property that is not a food or beverage prepared in the same building as a retail establishment in which such property is sold.In summary, for an activity to qualify under this section, it must involve significant production or transformation processes, excluding certain types of agricultural and chemical productions.Recapture rules apply in certain cases where, during the 10-year period after qualified production property is placed in service, the use of the property changes. When the property is sold, to the extent of the bonus depreciation taken, any gain will be ordinary income rather than capital gain,

The reinstatement of bonus depreciation is a vital tool for economic rejuvenation, providing businesses with immediate tax incentives to make capital investments. While it offers substantial benefits, understanding the complexities and planning strategically around QBI deductions, AMT implications, and specific qualifications is essential. Amid legislative nuances and phased-out provisions, bonus depreciation remains a keystone in strategic business planning for enduring economic development. The addition of the qualified production property provides a huge incentive for building production facilities in the U.S. While thought of as a deduction for big business, it can also apply to small manufacturing facilities.

If you are in business and have questions about how the Bonus Depreciation can benefit your business, please contact this office.

Last Chance: The One Big Beautiful Bill Countdown on Key Energy Tax Credits

Article Highlights:

• One Big Beautiful Bill Act
• Home Solar Energy Credits
• Home Energy Efficient Improvements Credit
• Credits for Electric Vehicles (EV)
  o New EVs
  o Previously Owned EVs
• The Urgency to Act
• Call to Action

In recent years, as the conversation about climate change has intensified, the federal government sought to encourage homeowners and consumers towards sustainable energy solutions by providing tax credits for various green initiatives. The installation of solar panels, upgrading to energy-efficient home systems, and purchasing electric vehicles (both new and used) have all been incentivized. However, a sweeping legislative change known colloquially as the “One Big Beautiful Bill” Act significantly alters the landscape of these tax credits, accelerating their expiration and thus requiring consumers to mobilize and act quickly if they wish to take advantage of the related tax benefits.

Home Solar Energy Credits – The Residential Clean Energy Credit has been a linchpin in encouraging homeowners to invest in solar electric properties. Prior to the new legislation, this credit offered a significant financial incentive, allowing a 30% deduction from federal taxes of the cost of installing solar systems. This applied to installations of qualified solar electric property, solar water heating property, geothermal heat pumps, and wind energy systems.

Under previous regulations, expenditures made for property placed in service through December 31, 2032, were eligible for the credit. However, the “One Big Beautiful Bill” mandates a new, aggressive sunset date: December 31, 2025. This means that homeowners must have their systems installed and functional by this deadline to benefit. It’s crucial for homeowners to not only install the solar energy property, but also ensure a building inspector’s sign-off before the curtains fall on this credit.

Home Energy Efficient Improvements Credit – The Energy Efficient Home Improvement Credit was offered to taxpayers improving their residence with qualified energy efficiency improvements. Homeowners could claim 30%, up to $1,200 annually, of the cost associated with improvements such as high-efficiency HVAC systems, upgraded insulation, exterior doors, and energy-efficient windows and skylights.

This credit was originally available for qualifying property placed in service by December 31, 2032. However, the new legislative act changes this, imposing a new expiration date of December 31, 2025. This fast-approaching deadline means homeowners looking to capitalize on this tax incentive need to act quickly. Notably, efficiency improvements often require final approval from local building inspectors, further underscoring the necessity for immediate action.

Credits for Electric Vehicles (EV)

1. The New EV Credit: The Clean Vehicle Credit, designed to encourage the purchase of new clean vehicles, has similarly seen shifts. This federal incentive provided a credit of up to $7,500 for each new EV placed in service, contingent on meeting critical mineral and battery component requirements. The aim was to motivate domestic manufacturing and the development of reliable, sustainable supply chains.The maximum cost of the vehicle (manufacturer’s suggested retail price (MSRP)) cannot be more than $80,000for vans, pickups and SUVs, and $55,000 for others. In addition, the vehicle must be assembled in the U.S.While prior law allowed eligibility for purchases through 2032, the act now terminates this benefit for vehicles acquired post-September 30, 2025. This acceleration demands that consumers fast-track their buying decisions to avail themselves of the credit.
2. The Previously Owned EV Credit: Similarly, the Previously Owned Clean Vehicles Credit encouraged purchases of used electric vehicles. This credit offered the lesser of $4,000 or 30% of the vehicle’s sale price, with restrictions on qualifying vehicles, as well as income caps for purchasers to be eligible, limits on sale prices not exceeding $25,000, and requirements mandating that sellers must be registered dealers.Initially set to cease in 2032, the new legislation advances this credit’s expiration to September 30, 2025. Prospective buyers must act swiftly and strategically, especially as vehicle inventories adjust in response to the regulatory shift.

The Urgency to Act – This comprehensive shift in energy-focused tax credits, facilitated by the “One Big Beautiful Bill,” communicates a clear message to consumers and homeowners: act now or risk missing out on financial incentives encouraging the adoption of sustainable technologies.

Consumers venturing into energy improvements and environmentally friendly vehicles must rev up their planning, procurement, and installation timelines. The reduction of these tax credits, once aimed at easing the burden of going green, indicates a notable policy shift that contradicts previous trends in government-backed incentives for sustainable practices.

Call to Action – For those contemplating renewable energy investments or the addition of clean vehicles to their household, the message is urgent yet clear—complete your installations and purchases promptly. Ensure all necessary inspections and paperwork are finalized well in advance of the adjusted deadlines.

As these federal tax credits prepare for their impending departure, the chance to capitalize on them shrinks by the day. The “One Big Beautiful Bill” has set the stage for a contentious legislative landscape in environmental initiatives, stressing the necessity for decisive action to close the book on this chapter of incentivized green energy transitions.

If you have questions related to qualifications and deadlines for the credits, contact this office.

The 2025 Guide to Small Business Tax Deductions You Can’t Afford to Miss

When it comes to running a successful small business, every dollar counts. Yet every year, many owners miss out on valuable tax deductions — and with them, the chance to strengthen their cash flow and reinvest in growth.

In 2025, smarter tax planning isn’t optional. It’s a financial strategy that can give your business a real edge. Here are deductions every small business should be reviewing this year.

Key Deductions to Review

Home Office Expenses
If you use part of your home exclusively for business, you may qualify to deduct a portion of your housing costs — from rent or mortgage to utilities and internet.

100% Bonus Depreciation
Purchases like computers, office furniture, and equipment may qualify for full upfront deductions instead of being depreciated over time, putting cash back in your business now.

Health Insurance Premiums
Self-employed owners may be able to deduct premiums for themselves and their family reducing both personal and business expenses.

Marketing and Advertising
Investments in your website, digital advertising, and marketing campaigns not only grow your business — they’re also fully deductible.

Retirement Contributions
Contributions to a SEP IRA, SIMPLE IRA, or 401(k) help secure your financial future while lowering taxable income today.

The Cost of Missing Out

Every deduction you capture strengthens your bottom line. Every deduction you miss is money lost — money that could have funded payroll, new technology, or expansion.

Bonus: Planning Ahead for 2025

Strong tax planning isn’t just about this year — it’s about preparing your business for continued success. As we look forward, here are some areas to keep on your radar:

• R&D Expensing Under the OBBBA
  New legislation now allows eligible businesses to immediately expense qualifying U.S.-based research and development costs. For some, it may even be possible to amend prior returns and reclaim refunds — a direct boost to cash flow.
• Bonus Depreciation is Back under OBBBA
  The One Big Beautiful Bill Act permanently restored 100% bonus after January 19, 2025 for qualified property. A significant benefit for businesses of all sizes.
• Capital Investments
  Timing your purchases of equipment, software, or technology strategically can maximize deductions and improve efficiency.Hiring and Payroll Credits
  If you plan to expand your team, look into available credits and incentives designed to offset the cost of new hires and training.
  
  
• Succession and Exit Planning
  Even if retirement or transition isn’t right around the corner, early planning helps maximize the value of your business and reduce risk for the future.Digital Strategy and Client Acquisition
• In today’s AI search environment, a modern online presence is no longer optional. It’s directly tied to revenue growth and competitiveness.

Let’s Maximize Your Deductions — and Your Growth

Tax planning should do more than meet deadlines. It should strengthen your cash flow, fuel your growth, and prepare you for the opportunities ahead.

Schedule a 2025 planning session with our team and let’s make sure your business is ready to thrive.

Unravelling Education Savings: Mastering 529 Plans to Maximize Tax Benefits

Article Highlights:

• Tax-Advantaged Savings Plans
• Who Can Contribute?
• Maximum Contribution Without Gift Tax
• The 5-Year Advance Contribution Rule
• Additional Contributions During the 5-Year Period
• State Limitation on Sec 529 Contributions
• Paying Tuition Directly and Avoiding Gift Tax Issues
• Qualified Uses of 529 Plan Funds
  o Tuition and fees
  o Books, supplies, and equipment
  o Special needs services
  o Room and board
  o K-12 Education
  o Apprenticeships and Additional Education Expenses
•  Taxation and Penalties on Non-Qualified Distributions
• Rollover Options
  o Rollover to an ABLE Account
  o IRA Rollover for Unused Funds

Section 529 plans are tax-advantaged savings plans designed to encourage saving for future education costs. They are legally known as “qualified tuition plans” and are sponsored by states, state agencies, or educational institutions. With rising education expenses, these plans offer a valuable option for families to invest in the future of a child’s education. Let’s delve into the specifics of who can contribute, the contribution limits, and the various uses of these funds, including recent updates under the “One Big Beautiful Bill” Act (OBBBA).

Who Can Contribute? A 529 plan can be funded by anyone—parents, grandparents, relatives, or friends. There is no restriction on who can make contributions, or what the contributor’s income is, as long as the total contributions for the beneficiary do not exceed the plan’s limits. This flexibility makes 529 plans a popular gift option for birthdays, holidays, or special occasions.

Maximum Contribution Without Gift Tax: Contributions to a 529 plan are considered gifts under the federal tax code. As of 2025, individuals can contribute up to the annual gift tax exclusion limit of $19,000 per beneficiary without triggering the requirement to file a gift tax return. This amount is adjusted annually for inflation, allowing for potential increases in future years. For example, a married couple could contribute a total of $38,000 to their grandchild’s 529 plan in 2025, provided they hadn’t made other gifts to the grandchild that reduced the available gift tax exclusion.

The 5-Year Advance Contribution Rule: One of the unique features of 529 plans is the ability to “superfund” an account by front-loading contributions. This rule allows individuals to contribute up to five times the annual gift tax exclusion amount in a single year without incurring gift taxes, provided they do not make additional gifts to the same beneficiary over the subsequent four years. For 2025, this means contributing a lump sum of up to $95,000. Superfunding a 529 plan while the intended beneficiary is young will allow the funds to grow tax free for a longer time.

Additional Contributions During the 5-Year Period: If the annual gift tax exclusion limit increases during the five-year period after a lump-sum contribution has been made, it is possible to make an additional contribution up to the new limit without incurring gift taxes. For instance, if the limit increases due to inflation adjustments, contributors can take advantage of the increased exclusion amount.

State Limitation on Sec 529 Contributions: The maximum contribution limit for Section 529 plans can vary significantly by state, as each state sets its own limit based on its estimates of the future costs of education. However, the typical range for maximum account balances across most states is from $235,000 to over $550,000 per beneficiary. It’s crucial to check the specific limit for the state plan you are interested in, as these caps are intended to cover qualified education expenses and are periodically adjusted to account for rising education costs. Also, of note: individuals are not limited to plans from their home state.

Paying Tuition Directly and Avoiding Gift Tax Issues: Grandparents often play a pivotal role in supporting a child’s educational journey, and many might contemplate utilizing their personal investment strategies to fund a family member’s education, believing they can achieve better returns than a 529 plan offers. However, for those who prioritize giving substantial financial support without impacting gift tax implications, it’s important to understand the benefits of direct tuition payments. The gift tax rules provide a strategic advantage by not considering the direct payment of tuition to an educational institution as a taxable gift. This allows grandparents to pay tuition bills directly without incurring gift tax consequences, enabling them to simultaneously maintain their investment portfolios while contributing significantly to a grandchild’s education in a tax-efficient manner. This approach not only aids in reducing estate value but also maximizes support for education without impinging upon annual gift tax exclusion limits.

Qualified Uses of 529 Plan Funds: 529 plan funds can be used for a vast range of educational expenses. These include:

• Tuition and fees for college, university, or eligible postsecondary institutions.
• Books, supplies, and equipment required for courses.
• Computers, peripheral equipment and internet access.
• Special needs services for a beneficiary with special needs, necessary for enrollment or attendance.
• Room and board for students enrolled at least half-time.
• K-12 Education: The OBBBA has expanded the use of 529 plans to cover more K-12 education expenses, permitting tax-free distributions of up to $20,000 annually per beneficiary for tuition and related expenses at public, private, or religious schools, starting January 1, 2026. From 2018 through 2025 only tuition of up to $10,000 per year was allowed as a tax-free distribution for K-12 expense. Among the newly eligible expenses are books or other instructional materials, online educational materials, tuition for tutoring or educational classes outside of the home, fees for achievement tests and advanced placement tests, and fees related to enrolling in colleges and universities.
• Apprenticeships and Additional Education Expenses: New provisions under the OBBBA and other recent legislation have expanded the types of qualified expenses to include costs associated with registered apprenticeship programs and “qualified postsecondary credentialing expenses.”

Taxation and Penalties on Non-Qualified Distributions: While 529 plans offer tax-free growth and withdrawals for qualified expenses, distributions not used for qualified education expenses are subject to income tax and a 10% penalty on the earnings portion. The contributions, which were made with after-tax dollars (i.e., they weren’t tax deductible), are not taxable, but the appreciation of those contributions is.

The IRS does offer exemptions from the 10% penalty in certain situations, such as if the beneficiary receives a scholarship. In these scenarios, the penalty is waived, although the earnings would still be subject to income tax.

Rollover Options:

• Rollover to an ABLE Account – Under the ABLE Act, funds in a 529 plan can be rolled over into an Achieving a Better Life Experience (ABLE) account for the same beneficiary or a qualifying family member without incurring income taxes or penalties. This option allows for flexibility if the original beneficiary needs support for disability-related expenses rather than educational costs.
• IRA Rollover for Unused Funds – The SECURE Act 2.0 introduced a provision allowing up to $35,000 in leftover 529 plan funds to be rolled over into a Roth IRA for the designated beneficiary. This provides a way to utilize any excess funds that were originally earmarked for education by rolling the excess amount into a tax-advantaged retirement account. However, eligibility for a Roth IRA and contribution limits remain applicable, and the $35,000 rollover limit is a lifetime limit.

In conclusion, Section 529 plans offer a multifaceted and flexible approach to saving for education. They provide tax advantages while allowing contributors to offer significant support for a beneficiary’s educational journey. With recent legislative updates, such as those under the OBBBA, the scope and utility of 529 plans have expanded, encompassing a wider array of educational uses and offering additional financial planning options through rollovers to ABLE accounts and IRAs. As education costs continue to rise, these plans remain an essential tool for families planning for the future.

Consulting with a tax professional can provide invaluable assistance in providing personalized advice tailored to individual circumstances, helping to optimize educational savings strategies and ensure compliance with gift tax rules. If you’re considering a strategy involving 529 plans, reaching out to this office is a prudent step to ensure your plan aligns with current tax laws and best practices.

From Side Hustle to Six Figures: Turning Your Small Business Into a Scalable Firm

It started as a side hustle — a few clients, a few late nights, maybe some extra cash to ease the budget. But now the calls are coming in faster. The demand is growing. And you’re starting to wonder: Am I ready to take this full-time?

The leap from side hustle to six figures is exciting — but it’s also a turning point. Done right, it can transform your life. Done wrong, it can drain your energy, your finances, and your confidence.

Here’s how to scale smartly in 2025.

Step 1: Make It Official

Registering as an LLC or S-Corp isn’t just about paperwork — it’s about protecting your personal assets and unlocking tax strategies that let you keep more of what you earn. The right structure now saves you from costly headaches later.

Step 2: Build a Financial Foundation

Growth demands clarity. That means:

• A separate business bank account
• Reliable bookkeeping (no more spreadsheets)
• A plan for quarterly tax payments
• Regular financial check-ins

This foundation doesn’t just keep you compliant — it gives you the numbers you need to make smart decisions with confidence.

Step 3: Stop Doing Everything Yourself

Every growing business hits a wall where the founder simply can’t do it all.
Whether it’s outsourcing payroll, automating your client intake, or hiring part-time help, letting go of lower-value tasks frees you up to focus on growth.

Step 4: Create a System for Customers — Not Just Leads

Six-figure businesses don’t happen by accident. They happen when you have a system:

• A clear story that speaks to your ideal customer
• A website designed to convert, not just inform
• Consistent follow-up to build lasting relationships

The goal isn’t just more leads — it’s the right leads, and the processes to keep them coming back.

Step 5: Invest Back Into Your Dream

The smartest business owners use their first surge of income to fuel more growth — marketing, better technology, or professional support. Every reinvested dollar is a step closer to the business (and life) you want.

Your Side Hustle Is Ready — Are You?

The difference between a side hustle and a six-figure firm isn’t just time. It’s intention. It’s knowing when to stop treating your work as a “maybe” and start building it as a business.

Let’s Build Your Growth Plan Together

If you’re ready to turn your side hustle into a sustainable, six-figure business, we’re here to help. From choosing the right structure to planning your taxes and scaling smartly, we’ll guide you every step of the way.

Schedule a growth consultation today and let’s make 2025 the year your side hustle becomes your future.

Got an IRS Notice? Here’s How to Handle It Without Losing Sleep

Few things can rattle a business owner faster than seeing “Internal Revenue Service” on an envelope. The instinct is to panic. But the truth? An IRS notice doesn’t automatically mean you’ve done something wrong.

In 2025, notices are more common than ever. Many are generated automatically when systems flag something for review — a missing form, a math discrepancy, or a question about deductions. The real danger isn’t the letter itself — it’s how you handle it.

Why the IRS Sends Notices

Notices may arrive for reasons such as:

• Adjustments to income or deductions reported
• Questions about tax credits or payments
• Mismatched data between your return and third-party reporting
• Requests for additional documentation

The IRS wants clarification — not confrontation. But if the notice is ignored or mishandled, small issues can grow into costly problems.

What Not to Do

• Don’t ignore it. Penalties and interest grow quickly.
• Don’t call the IRS unprepared. Miscommunication is common.
• Don’t guess. A hasty response can make matters worse.

What You Should Do Right Away

1. Open the notice immediately. Understand the issue and the deadline.
2. Gather supporting documents. Returns, statements, and receipts matter.
3. Reach out to our office. As experienced advisors, we know how to translate IRS language and respond effectively.

Why Acting Quickly Matters

Every missed deadline limits your options — and every day you wait adds stress that pulls you away from running your business. Timely action often means quick resolution, sometimes without even writing a check.

Let’s Handle This Together

Your time should be spent growing your business — not losing sleep over an IRS letter. We’ll work with you to respond correctly, protect your bottom line, and put this issue behind you.

Contact us today and let’s resolve your IRS notice so you can get back to what matters most.

Qualified Small Business Stock (QSBS): A Huge Tax Benefit

Bri

Article Highlights:

• What is Qualified Small Business Stock (QSBS)?
• What Stock Qualifies as QSBS?
• The Tax Benefits of QSBS
• Maximum Exclusions and Updated Legislation under OBBBA
• Disqualifications and Special Cases
• Transfers, Passthroughs, and Rollover Opportunities
• Understanding Tax Rates and Exclusions
• Alternative Minimum Tax (AMT) and Electivity

Qualified Small Business Stock (QSBS) offers a compelling tax advantage for investors aiming to support small business ventures. Introduced as a part of the Revenue Reconciliation Act of 1993, QSBS enables investors to exclude a considerable portion of their capital gains from taxable income under Section 1202 of the Internal Revenue Code or to elect to roll over the gain into other QSBS. This article explores important facets of QSBS—from its definition to its complex tax treatments.

What is Qualified Small Business Stock (QSBS)? QSBS refers to shares held in a C corporation that qualify for tax benefits outlined in Section 1202. Not every C corporation stock meets the criteria; specific conditions around issuing corporations, holding periods, and more must be satisfied.

What Stock Qualifies as QSBS? To qualify as QSBS, stock must be issued by a domestic C corporation that actively conducts a qualified trade or business. Key qualifications include:

• Small Business Status: At the time of stock issuance, the corporation’s gross assets must not exceed $50 million ($75 million after July 4, 2025) before and after the issuance.

• Active Business Requirement: At least 80% of the corporation’s assets must be actively used in the conduct of the qualified trade or business.
• Qualified Trade or Business: Most service-oriented businesses, such as health, law, and financial services, as well as farming and operating hotels, restaurants or similar businesses, are excluded. The business should engage primarily in qualifying activities.

The Tax Benefits of QSBS: One of the most attractive features of QSBS is the potential to exclude up to 100% of the capital gains from the sale of such stock. Here’s how the exclusions have evolved for stock acquired:

• Before 2009 amendments: 50% exclusion on capital gains.
• Post-2009 amendments and before the 2010 Small Business Jobs Act: 75% exclusion.
• After the 2010 Small Business Jobs Act and before the OBBBA change: 100% exclusion for stock acquired between September 28, 2010, and before July 5, 2025.

Maximum Exclusions and Updated Legislation under OBBBA: The One Big Beautiful Bill Act (OBBBA), effective for stock acquired after July 4, 2025, introduced new exclusions:

• 50% for three-year holds
• 75% for four-year holds
• 100% for five-year holds

For stocks acquired prior to July 5, 2025, the investor’s excludable gain is limited to $10 million or ten times the taxpayer’s adjusted basis in the QSBS, whichever is greater. For stock acquired post-July 4, 2025, the limit increases to $15 million with inflation adjustments in future years.

Disqualifications and Special Cases: Certain conditions render stock ineligible for QSBS benefits:

• Disqualified Stock: Stock acquired via repurchase from the same corporation within two years.
• S Corporation Stock: Entity status disqualifies S corporation stock from qualifying unless converted to C corporation status.

Transfers, Passthroughs, and Rollover Opportunities

• Gift Transfers: QSBS can be transferred as a gift; the recipient inherits the holding period, maintaining potential eligibility for tax benefits.
• Passthrough Entities: Partnerships and S corporations may hold QSBS, with each partner potentially benefiting from QSBS exclusions, assuming specific conditions are met.
• Gain Rollover Election under Section 1045: Allows deferral of gains from sale of QSBS held for more than 6 months. When this option is elected, the gain not taxed reduces the basis of the acquired stock. The QSBS gain exclusion can be used later when the replacement stock is sold and after it has been held the required number of years.

Understanding Tax Rates and Exclusions

Not all gains are excludable under Section 1202. Additionally:

• Non-excludable QSBS gains do not qualify for the 0%, 15%, or 20% capital gains rates, instead subjecting the gains to a maximum tax rate of 28%.

Alternative Minimum Tax (AMT) and Electivity – Exclusions under QSBS were once considered a preference item for AMT, but recent amendments remove its consideration as AMT preference. The treatment under Section 1202 is generally automatic given eligibility is met, without an explicit elective procedure.

QSBS offers significant tax savings and encourages investments in domestic small businesses. By understanding the qualifications, benefits, and limitations, investors can more effectively strategize their portfolios to harness QSBS provisions.

Remaining informed and consulting with this office can ensure compliance and optimization of tax benefits.

Launching a Bright Financial Future: Tax Benefits for Your Children

Article Highlights

• Trump Accounts:
  o Introduction
  o Contribution Rules
  o Distribution Guidelines
  o Government Contributions
  o Timing
• Section 529 Plans: Time-Tested Education Savings
  o What is a 529 Plan?
  o Contributions and Gift Tax Considerations
• Employing a Child in a Family Business
  o Income Tax Benefits
  o Retirement Account Contributions
• Additional Strategies

Setting up a child’s financial future can be one of the most impactful gifts parents, grandparents, relatives, and friends can provide. By leveraging various tax-advantaged accounts and strategies, you can not only contribute to a child’s immediate financial needs but also lay a foundation for lifelong financial security. Here’s a comprehensive look at the options available, including the recently introduced Trump Accounts, Section 529 plans, and other beneficial strategies.

Trump Accounts: A New Tax-Advantaged Tool

• Introduction to Trump Accounts – Trump Accounts, established by recent tax reforms, are a novel type of tax-deferred investment vehicle created to encourage savings for children. These accounts can be opened by parents or guardians for children under 18 who are U.S. citizens and have a Social Security number. Contributions can come from various sources, including parents, relatives, employers, non-profit entities, and in some cases the federal government. They are essentially a type of individual retirement account (IRA) but without the requirement that the child have earned income.
• Contribution Rules – Annual contributions to Trump Accounts are capped at $5,000 (will be automatically adjusted for inflation). Interestingly, contributions from tax-exempt entities, like foundations, do not count towards this limit, provided they benefit a qualified group of children. It’s important to note that no contributions can be made by anyone once the child reaches age 18. Contributions to Trump Accounts are not tax deductible.
• Distribution Guidelines – Generally, distributions from a Trump account cannot be made until the account holder turns 18. However, it’s worth noting that withdrawals of earnings, but not the original contributions, before the age of 59½ are subject to ordinary income tax and a 10% early distribution penalty unless they qualify for any of many exceptions afforded to IRAs.
• Government Contributions: To generate interest in the Trump Accounts Congress created a pilot program wherein the federal government contributes $1,000 into the account of every eligible newborn child. This contribution is for U.S. citizens born between January 1, 2025, and December 31, 2028. The contribution is treated as if the child made a $1,000 payment against their income tax, with the amount getting credited back to their Trump Account. This automatic initiative is designed to kick-start savings and investment for the child’s future, encouraging early financial planning and helping families build a foundation for long-term financial growth. Additionally, if the account is not opened by the time the first tax return is filed where the child is claimed as a qualifying child dependent, the Secretary of the Treasury will establish the account on the child’s behalf, ensuring that no eligible child misses out on this benefit.
• Timing — It is anticipated that parents (and others) will be able to make the first contributions to Trump Accounts in mid-year 2026. Watch for more details as the government works out the logistics of these new accounts, such as how to establish a Trump Account, over the next few months.

Section 529 Plans: Time-Tested Education Savings

• What is a 529 Plan? A Section 529 plan is a tax-advantaged savings account specifically designed to save for education expenses. It provides a platform to accumulate funds that grow tax-deferred and can be withdrawn tax-free when used for qualified education expenses.
• Contributions and Gift Tax Considerations:
  
  o Who can contribute? Parents, grandparents, and even family friends can contribute to a 529 plan on behalf of a child. There are no income restrictions on who can open or contribute to these plans.o Annual Contribution Limits: To avoid gift tax implications, contributions should remain within the annual gift tax exclusion limits, $19,000 per beneficiary (as of 2025) for single filers and $38,000 for married couples.o 5-Year Lumping Strategy: Contributors can front-load the account by making five years’ worth of contributions at once. This strategy allows up to $95,000 (or $190,000 for married couples) per beneficiary without incurring gift taxes, assuming no other gifts are made during the five years.Additionally, if the annual gift tax exclusion increases during this five-year period, contributors have the flexibility to make makeup contributions, aligning with the new exclusion limits, and further enhancing the potential investment into the child’s future education savings.o Uses and Flexibility: Funds from a 529 plan can be used for a variety of education-related expenses, including tuition, fees, books, and even room and board when attending college. Recent law changes have expanded the allowable use of 529 plan funds to include up to $20,000 ($10,000 if paid before July 4, 2025) per year for K-12 tuition and related expenses. Costs of certain apprenticeship programs are also eligible. If the original beneficiary doesn’t need the funds, the account owner can change the beneficiary to another family member.

  o Rollover Opportunities: In situations where the funds in a 529 plan exceed educational needs, the Secure Act 2.0 allows rollovers of up to $35,000 from a 529 plan to a Roth IRA for the beneficiary, provided the 529 has been open for at least 15 years. This option ensures that the savings are not wasted and continue to benefit the recipient’s financial health.

Employing a Child in Family Business: The Benefits: Engaging a child in meaningful work within a family business or elsewhere not only instills a strong work ethic but also presents various tax advantages.

• Income Tax Benefits:o Reasonable Compensation: For employing a child in a parent’s business, the child can earn up to the standard deduction amount tax-free. For 2025, this is $15,750, meaning the child doesn’t have to pay federal income tax on earnings below this threshold.o Business Deductions: The wages paid to children can be deducted as a business expense, which helps reduce the taxable income of the business and potentially lowers overall tax liability. Additionally, if the parent’s business is not incorporated—meaning it operates as a sole proprietorship or a partnership where both partners are the child’s parents—the wages paid to the child are not subject to FICA taxes (Social Security and Medicare taxes) if the child is under the age of 18, providing an added tax advantage by lowering employment tax expenses.
• Retirement Account Contributions: A child’s earned income opens the door to funding a retirement account early.o Roth IRA: If they have earned income, children can contribute to a Roth IRA, up to the lesser of their earned income or the annual contribution limit ($7,000 for 2025). The contributions grow tax-free, and withdrawals in retirement are also tax-free, providing a significant financial advantage.
  A Roth IRA is often considered an excellent choice for children with minimal taxable income due to several unique features and benefits:§ Tax-Free Growth: Contributions to a Roth IRA are made with after-tax dollars, and the investments grow tax-free. Given that children are likely in the lowest tax bracket, the tax-free growth aspect is highly beneficial over the long term.§ Tax-Free Withdrawals in Retirement: Qualified withdrawals from a Roth IRA are tax-free, which means that both the contributions and the substantial growth that can occur over decades are not taxed upon withdrawal, maximizing the money available in retirement.§ Flexibility: Contributions (but not earnings) to a Roth IRA can be withdrawn at any time for any reason without penalty or taxes. This accessibility makes it a flexible option if the child needs the money for unplanned expenses.

  § Maximizing the Power of Compounding: Starting a Roth IRA early gives the investments more time to benefit from compound interest. Even small contributions can grow significantly over a long period, creating a sizable nest egg for retirement.

  § No Required Minimum Distributions (RMDs): Unlike traditional IRAs, Roth IRAs do not require minimum distributions during the account holder’s lifetime. This allows funds to potentially grow untouched or be passed on to heirs.

  § Earning Income Requirement: Opening a Roth IRA for a child requires that the child have earned income. Encouraging children to earn and contribute to their own retirement funds can instill a savings habit and financial responsibility early on.

  These features make the Roth IRA an appealing option to begin a child’s journey toward financial independence and retirement savings, especially when their income is low and the tax impact is minimal.

Additional Strategies: Other Financial Boosts

• Saving for Retirement Early: Even minors are eligible to have a Roth IRA if they have earned income.
• Teaching Financial Responsibility: Encouraging savings habits early, whether through structured accounts like a Trump Account and 529 plans or personal savings programs, fosters lifelong financial discipline.
• Encouraging Entrepreneurial Ventures: If your child shows interest in launching their own small business or providing services, such as tutoring or dog walking, this experience can also lead to early financial growth, teach important money management skills, and generate income that can fund savings or retirement accounts.

Conclusion: The array of financial vehicles available today, from Trump Accounts to 529 plans and beyond, offer a robust toolkit for shaping a child’s financial future. These options not only help in covering educational and immediate expenses but also build a financial framework that supports investment acumen and retirement savings. By taking full advantage of these tools, those eager to support a child’s financial journey can effectively set them on the right foot for a prosperous future. Whether it’s starting a savings account, employing them in a family business, a summer job, or ensuring their education is funded, these strategies cement a legacy of financial security and prudence that will benefit future generations.

If you have questions related to any of these tax benefits, please contact this office.

A Smarter Way to Read Your Business’s Health: The Balance Sheet Deep Dive

Starting a business is more than revenue and expenses—it’s about knowing what you truly own, what you owe, and what your venture is worth. That’s where a balance sheet comes in: a snapshot that tells the story of your business’s financial condition in a single glance.

Why Every Business Needs a Balance Sheet

• A Clear Snapshot, Every Time
  A balance sheet lists your assets, liabilities, and equity as of a specific date, showing where your business stands in financial terms. It connects seamlessly with your income and cash flow statements, forming a complete financial picture.
• From Guesswork to Smart Moves
  Rather than hoping for the best, you’ll see if your cash flow is healthy, if customers are paying on time, or if liabilities are creeping up. A balance sheet helps you catch trouble early and capitalize on strengths.

Assets = Liabilities + Equity: The Core Equation

At the heart of the balance sheet is this simple formula:

Assets = Liabilities + Equity

• Assets: Anything you own—cash, equipment, inventory.
• Liabilities: What you owe—loans, unpaid bills.
• Equity: What’s left for you once liabilities are paid.

Think of it like balancing a scale—everything you own must equal what you owe plus what you’ve earned.

Why Software Beats Spreadsheets

You could track everything manually, but that’s time-consuming and risky. With QuickBooks®, the math happens automatically—your balance sheet stays accurate and always up-to-date, no spreadsheet gymnastics needed.

You can run reports any time and even customize them—filtering by period or type—making review and decision-making smoother than ever.

Balance Sheets in Action: What to Track

Balance sheets are powerful tools for spotting trends, planning investments, or just staying on top of your financial game.

We don’t just hand you reports. We help you interpret them, act on them, and plan ahead. With expert guidance from our team, you’ll know exactly where you stand—and where to go next.

Ready for clarity—and confidence?

Book a “Financial Check-In” session with this office today. We’ll help you set up or optimize your balance sheets and use them to drive smart decisions.

September 2025 Individual Due Dates

2025 Fall and 2026 Tax Planning

Tax Planning Contact this office to schedule a consultation appointment.

September 10 – Report Tips to Employer

If you are an employee who works for tips and received more than $20 in tips during August, you are required to report them to your employer on IRS Form 4070 no later than September 10. Your employer is required to withhold FICA taxes and income tax withholding for these tips from your regular wages. If your regular wages are insufficient to cover the FICA and tax withholding, the employer will report the amount of the uncollected withholding in box 8 of your W-2 for the year. You will be required to pay the uncollected withholding when your return for the year is filed.

September 15 – Estimated Tax Payment Due

The third installment of 2025 individual estimated taxes is due. Our tax system is a “pay-as-you-earn” system. To facilitate that concept, the government has provided several means of assisting taxpayers in meeting the “pay-as-you-earn” requirement. These include:

• Payroll withholding for employees;
• Pension withholding for retirees; and
• Estimated tax payments for self-employed individuals and those with other sources of income not covered by withholding.

When a taxpayer fails to prepay a safe harbor (minimum) amount, they can be subject to the underpayment penalty. This penalty is equal to the federal short-term rate plus 3 percentage points, and the penalty is computed on a quarter-by-quarter basis.

Federal tax law does provide ways to avoid the underpayment penalty. If the underpayment is less than $1,000 (the de minimis amount), no penalty is assessed. In addition, the law provides “safe harbor” prepayments. There are two safe harbors:

• The first safe harbor is based on the tax owed in the current year. If your payments equal or exceed 90% of what is owed in the current year, you can escape a penalty.
• The second safe harbor is based on the tax owed in the immediately preceding tax year. This safe harbor is generally 100% of the prior year’s tax liability. However, for taxpayers whose AGI exceeds $150,000 ($75,000 for married taxpayers filing separately), the prior year’s safe harbor is 110%.

Example: Suppose your tax for the year is $10,000 and your prepayments total $5,600. The result is that you owe an additional $4,400 on your tax return. To find out if you owe a penalty, see if you meet the first safe harbor exception. Since 90% of $10,000 is $9,000, your prepayments fell short of the mark. You can’t avoid the penalty under this exception.

However, in the above example, the safe harbor may still apply. Assume your prior year’s tax was $5,000. Since you prepaid $5,600, which is greater than 110% of the prior year’s tax (110% = $5,500), you qualify for this safe harbor and can escape the penalty.

This example underscores the importance of making sure your prepayments are adequate, especially if you have a large increase in income. This is common when there is a large gain from the sale of stocks, sale of property, when large bonuses are paid, when a taxpayer retires, etc. Timely payment of each required estimated tax installment is also a requirement to meet the safe harbor exception to the penalty. If you have questions regarding your safe harbor estimates, please call this office as soon as possible.

CAUTION: Some state de minimis amounts and safe harbor estimate rules are different than those for the Federal estimates. Please call this office for particular state safe harbor rules.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA: https://www.fema.gov/disaster/declarations
IRS: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

September 2025 Business Due Dates

September 15 – S Corporations

File a 2024 calendar year income tax return (Form 1120-S) and pay any tax due. This due date applies only if you requested an automatic 6-month extension. Provide each shareholder with a copy of their Schedule K-1 (Form 1120-S) or a substitute Schedule K-1 and, if applicable, Schedule K-3 (Form 1120-S) or substitute Schedule K-3

September 15 – Corporations 

Deposit the third installment of estimated income tax for 2025 for calendar year corporations.

September 15 – Partnerships

File a 2024 calendar year return (Form 1065). This due date applies only if you were given a 6-month extension. Provide each partner with a copy of their Schedule K-1 (Form 1065) or a substitute Schedule K-1 and, if applicable, Schedule K-3 (Form 1065) or substitute Schedule K-3 (Form 1065).

September 15 – Social Security, Medicare and Withheld Income Tax

If you are an employer and the monthly deposit rules apply, September 15 is the due date for you to make your deposit of Social Security, Medicare, and withheld income tax for August 2025. This is also the due date for the nonpayroll withholding deposit for August 2025 if the monthly deposit rule applies.

Weekends & Holidays:

If a due date falls on a Saturday, Sunday or legal holiday, the due date is automatically extended until the next business day that is not itself a legal holiday.

Disaster Area Extensions:

Please note that when a geographical area is designated as a disaster area, due dates will be extended. For more information whether an area has been designated a disaster area and the filing extension dates visit the following websites:

FEMA: https://www.fema.gov/disaster/declarations
IRS: https://www.irs.gov/newsroom/tax-relief-in-disaster-situations

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