Getting Married Soon? Tax Considerations for Newlyweds Article Highlights: Filing Status Deductions New Spouse’s Past Liabilities Combining Incomes Healthcare Insurance Spousal IRA Capital Loss Limitations Impact on Parents’ Returns Social Security Administration Internal Revenue Service U.S. Postal Service Withholding & Estimated Tax Payments Health Insurance Marketplace You think planning a wedding ceremony is complicated? Wait till you see the possible tax issues involved. If you are getting married this year, there is a long list of things you need to be aware of and plan for before tying the knot that can have a significant impact on your taxes. And there are a number of tax-related actions you should take as soon as possible after marriage. Considerations Before Marriage  1. Filing Status — For tax purposes, an individual’s filing status is determined on the last day of the tax year. Thus, regardless of when you get married during the year, you and your new spouse will be treated as married for the entire year and, therefore, can no longer file as single individuals or use the head of household status as you may have done prior to this marriage. Your options are to file using the married joint status, combining your incomes and allowed deductions on one return, or to file two separate returns using the married filing separate status. The latter is not the same as the single status you may have used in the past and can include some negative tax implications. Filing separately in community property states (Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin) can additionally be complicated. Also, the terms of a prenuptial agreement, if you have one, can affect your filing status choice. 2. Deductions — The standard deduction for each year is inflation adjusted and for 2025 for a married couple is $30,000 and for a single individual is $15,000. So, if both of you have been filing as single and taking the standard deduction, there is no loss in deductions. However, if in past years one of you had enough deductions to itemize and the other took the standard deduction, after marriage you would either have to take the joint standard deduction or itemize, which might result in a loss of some amount of deductions. There could also be an overall reduction of the standard deduction if one or both of you previously filed as head of household. 3. New Spouse’s Past Liabilities — If your new spouse owes back federal taxes, past state income tax liabilities or past-due child support or has unemployment income debts to a state, the IRS will apply your future joint refunds to pay those debts. If you are not responsible for your spouse’s debt, you are entitled to request your portion of the refund back from the IRS by filing an injured spouse allocation form. 4. Combining Incomes — Individuals filing jointly must combine their incomes, and if both spouses are working, combining income can trigger a number of unpleasant surprises, as many tax benefits are eliminated or reduced for higher-income taxpayers. The following are some of the more frequently encountered issues created by higher incomes: Being pushed into a higher tax bracket. Causing capital gains to be taxed at higher rates. Reducing the childcare credit which begins to phase out when your combined incomes (MAGI) reach $400,000. The childcare credit may be reduced if either or both of you have a child and you both work, because a lower percentage of expenses applies as income increases. The possible loss or reduction of the earned income tax credit which applies to lower income individuals. Limiting the deductible IRA amount. Triggering a tax on net investment income that only applies to higher-income taxpayers. Causing Social Security income to be taxed. Reducing or eliminating medical itemized deductions. Filing separately generally will not alleviate the aforementioned issues because the tax code includes provisions to prevent married taxpayers from circumventing the loss of tax benefits that apply to higher-income taxpayers by filing separately. On the other hand, if only one spouse has income, filing jointly will generally result in a lower tax because of the lower joint tax brackets. In addition, some of the higher-income limitations that might have applied to an unmarried individual with the same amount of income may be reduced or eliminated on a joint return. Filing as married but separate will generally result in a higher combined income tax for married taxpayers. The tax laws are written to prevent married taxpayers from filing separately to skirt around a limitation that would apply to them if they filed jointly. For instance, if a couple files separately, the tax code requires both to itemize their deductions if either does so, meaning that if one itemizes, the other cannot take the standard deduction. Another example relates to how a married couple’s Social Security (SS) benefits are taxed: on a joint return, none of the SS income is taxed until half of the SS benefits plus other income exceeds $32,000. On a married-but-separate return, the taxable threshold is reduced to zero. Aside from the amount of tax, another consideration that married couples need to be aware of when deciding on their filing status is that when married taxpayers file jointly, they become jointly and individually responsible (often referred to as “jointly and severally liable”) for the tax and interest or penalty due on their returns. This is true even if they later divorce. When using the married-but-separate filing status, each spouse is only responsible for his or her own tax liability. 5. Healthcare Insurance – If either or both of you are obtaining health insurance through a government Marketplace, your combined incomes and change in family size could reduce the amount of the premium tax credit to which you would otherwise be entitled, requiring payback of some or all of the credit applied in advance to reduce your monthly premiums. More complicated yet, if either or both of you are included on your parent’s’ Marketplace policy, those insurance premiums must be allocated from the parents’ return to your return. 6. Spousal IRA — Spousal IRAs are available for married taxpayers who file jointly where one spouse has little or no compensation; the deduction is limited to the smaller of 100% of the employed spouse’s compensation or $7,000 (2025) for the spousal IRA. That permits a combined annual IRA contribution limit of up to $14,000 for 2025. For each spouse age 50 or older, the maximum increases by $1,000. However, the deduction for contributions to both spouses’ IRAs may be limited if either spouse is covered by an employer’s retirement plan. 7. Capital Loss Limitations — When filing as unmarried, each individual can deduct up to $3,000 of capital losses on their tax return for a possible combined total of $6,000, but a married couple is limited to a single $3,000. 8. Impact On Parents’ Returns — If your parents have been claiming either of you as a dependent, they will generally lose that benefit. In addition, if you are in college and qualify for one of the education credits, those credits are only available on the return where your dependency applies. That generally means your parents will not be able to claim the education credits even if they paid the tuition. 9. Impact on State Return — Some states require taxpayers to use the same filing status on their state return as they did on the federal return. When deciding which filing status is more beneficial for you, you should also consider how your state return will be affected.  Things To Take Care of After Marriage:  1. Notify the Social Security Administration − Report any name change to the Social Security Administration so that your name and SSN will match when you file your next tax return. Informing the SSA of a name change is quite simple. The Social Security Administration provides an online site to accomplish this task. Your income tax refund may be delayed if it is discovered that your name and SSN don’t match at the time your return is filed. 2. Notify the IRS – If you have a new address, you should notify the IRS by sending Form 8822, Change of Address. 3. Notify the U.S. Postal Service – You should also notify the U.S. Postal Service when you move so that any IRS or state tax agency correspondence can be forwarded. 4. Review Your Withholding and Estimated Tax Payments – If both you and your new spouse work, your combined income may place you in a higher tax bracket, and you may have an unpleasant surprise when preparing your return for the first year of your marriage. On the other hand, if only one of you works, filing jointly with your new spouse can provide a significant tax benefit, enabling the working spouse to reduce their withholding or estimated tax payments. In either case, it may be appropriate to review your withholding (W-4 status) and estimated tax payments, if any, to make sure that you are not going to be under-withheld and that you don’t set yourself up to receive bad news for the next filing season. The IRS provides a W-4 Webpage that provides links to the form and a tax withholding calculator. 5. Notify the Marketplace — If you or your spouse has purchased health insurance through a government Marketplace, you must notify the Marketplace of your change in marital status. If you were included on a parent’s health insurance policy through a Marketplace, then the parent must notify the Marketplace. Failure to notify the Marketplace can create tax-filing problems. If you have any questions about the impact of your new marital status on your taxes, please call this office.  
Taxpayers Living Abroad, June 16, 2025, Is an Important Filing Deadline Article Highlights: Americans Living and Working Abroad Extension Requests Report of Foreign Bank and Financial Accounts (FBAR) Statement of Foreign Financial Assets Estimated Tax Payments Estimated Tax Safe Harbors June 16, 2025, is the due date both forAmericans living and/or working outside the U.S. to file their 2024 federal income tax returns and for the second estimated tax payment for 2025. Here are some important details for both. Americans Living and/or Working Abroad – While most U.S. taxpayers’ 2024 tax returns were due April 15, 2025, an automatic 2-month extension applies to U.S. citizens and resident aliens (i.e., green card holders), and those with dual citizenship, living and/or working outside the U.S. The due date for these individuals to file their 2024 federal income tax returns is June 16, 2025. A taxpayer qualifies for the June 16 filing deadline if both their tax home and residence are outside the U.S. and Puerto Rico, or they were serving in the military outside the U.S. and Puerto Rico on the regular due date of their return. A statement should be included with the return that indicates which of the two situations applies. Merely being outside the U.S. on vacation or due to a temporary job assignment on the return due date isn’t a qualifying reason for an extension. Qualifying taxpayers living and/or working abroad who can’t meet the June 16 deadline can request an extension of time to file giving them until October 15 to submit their returns and avoid the late filing penalties. Taxpayers should file their extension requests electronically by June 16 to avoid arguments with the IRS over whether the extension was filed on time. The other option is to paper file for an extension using Form 4868, checking box 8, that you are “out of the country.” Be aware the extension – whether filed electronically or on paper – is only for a filing extension and not an extension to pay your tax liability. To be valid the extension must include a reasonable estimate of your tax liability and payment to avoid late payment penalties. Please contact this office for assistance in completing and filing an extension. U.S. Citizens Abroad May Also Need to File an FBAR – U.S. citizens and resident aliens, whether residing in the U.S. or out of the country, with a foreign bank or financial account exceeding the threshold noted in the following paragraph need to file Form 114, Report of Foreign Bank and Financial Accounts (FBAR). This reporting requirement is separate from, and in addition to, any reporting required either on Form 1040, Schedule B, or Form 8938.The FBAR isn’t filed with the IRS but is filed electronically using the Bank Secrecy Act (BSA) filing system. Taxpayers need to file an FBAR if they had an interest in, or signature or other authority over one or more foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2024. Because of this low threshold, taxpayers with any foreign assets should check to see if the FBAR reporting requirement applies to them as the penalties for failure to file an FBAR are extreme. Although theFBAR due date for 2024 reports was April 15, 2025, FinCEN grants an automatic extension, to October 15, 2025, to anyone who missed that original deadline. In addition to filing an FBAR, certain taxpayers may also need to file Form 8938, Statement of Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain nonresident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. The 8938 is attached to the taxpayer’s individual income tax return, but if the taxpayer isn’t required to file an income tax return, then the 8938 isn’t required either. Estimated Tax Payments – For those required to make estimated tax payments, the next 2025 estimated tax payment is also due on June 16, 2025.Unlike employees, who have income, Social Security, and Medicare taxes withheld from their wages, self-employed individuals must prepay their taxes by making quarterly estimated tax payments. These are referred to as estimated tax payments because the self-employed individual must estimate his or her net earnings for the year and pay taxes on a quarterly basis according to that estimate. Failure to do so will result in interest penalties. The self-employed are not the only ones who are subject to estimated tax requirements, which also apply to anyone who has income that is not subject to withholding taxes and even to those whose taxes are not sufficiently withheld. Thus, if you have income from stock sales, property sales, investments, rental income, alimony from a pre-2019 divorce, partnerships, S-corporations, inherited pension plans, or other sources that are not subject to withholding, you may also be required to pay estimated taxes. Failing to do so may result in an underpayment penalty. Others subject to making estimated payments are individuals who must pay special taxes such as the 3.8% tax on net investment income or the employment tax on household employees. Although these payments are called “quarterly” estimates, the periods they cover do not usually coincide with a calendar quarter. Quarter Period Covered Months Due Date* First January through March 3 April 15 Second April and May 2 June 15 Third June through August 3 September 15 Fourth September through December 4 January 15  * If the due date falls on a Saturday, Sunday, or holiday, the payment is due on the next business day. An underestimate penalty does not apply if the tax due on a return (after withholding and refundable credits) is less than $1,000; this is the “de minimis amount due” exception. When the tax due is $1,000 or more, underpayment penalties are assessed. These underpayment penalties are determined on a quarterly basis, so an underpayment in an earlier quarter cannot be made up for in a later quarter; however, an overpayment in an earlier quarter is applied to the following quarter. The amount of an estimated tax installment payment is determined by estimating one fourth of the taxpayer’s tax for the entire year. When the income is seasonal, sporadic, or the result of a windfall, the IRS provides a special form on which the underpayment penalty can be figured based on actual income for the period. For individuals who do not want to take the time to calculate their quarterly taxes but who still want to avoid the underpayment penalty, Uncle Sam provides safe-harbor estimates. However, even these can be tricky. Generally, a taxpayer can avoid an underpayment penalty if his or her withholding and estimated payments are equal to or greater than: 90% of the current year’s tax liability or 100% of the prior year’s tax liability. However, these safe harbors do not apply if the prior year’s adjusted gross income is over $150,000, in which case, the safe harbors are: 90% of the current year’s tax liability or 110% of the prior year’s tax liability. Sometimes, individuals who have withholding on some (but not all) of their sources of income will increase that withholding to compensate for the additional income sources that have no withholding. Although this may work, withholding adjustments are not as precise as quarterly payments and should be used with caution. This office can assist you in filing your individual tax return and FBAR, estimating “quarterly” payments, adjusting withholding, and setting up safe-harbor payments. Please call for assistance.

When Consumers Pull Back: What Small Businesses Need to Know Right Now It starts small.
Fewer cars on the dealership lot.
Half-empty restaurants on a Friday night.
A “maybe next year” when customers talk about their next big vacation. It’s not your imagination.
Consumer behavior is shifting — and small businesses are feeling it. When uncertainty rises (tariffs, policy shifts, rising prices), people don’t always rush to react.
They hesitate.
They delay.
They tighten their budgets, even before their wallets force them to. And if you’re a small or mid-sized business owner?
You need to be reading these signals — fast — and adapting your plans to match. 1. Delayed Buying Decisions Are the New Normal In a world where prices feel unpredictable and supply chains aren’t a sure thing, customers aren’t eager to “buy now, ask questions later.” They’re waiting. Waiting for: Prices to stabilize More certainty about their finances More confidence in their purchasing decisions What it means for you:
If your business depends on quick sales or impulse buys, it’s time to rethink.
Customers are taking longer to convert — and you’ll need to nurture, educate, and reassure them more than ever before.  2. Travel and Dining Take a Hit (Even If It’s Temporary) Travel bookings and restaurant reservations are some of the first luxuries to go when uncertainty creeps in. Consumers are saying: “Let’s wait until next year to take that trip.” “Maybe we’ll cook at home tonight instead.” “Let’s skip the splurge weekend away.” If you’re in the hospitality, food, or service industries:
Even small hesitations stack up.
Fewer bookings.
Fewer tips.
More unpredictability. You can’t wait for the “good times” to come back.
You have to adjust your offers, your marketing, and even your pricing strategies to stay competitive now. 3. Price Sensitivity Is Creeping into Every Industry Tariffs often mean increased material costs.
Increased material costs often mean higher prices at the register.
And consumers? They notice. Even customers who once didn’t blink at a few extra dollars are now: Comparing prices Shopping for deals Putting off non-essential upgrades or purchases Translation:
The value you deliver has to be crystal clear.
No more assuming your customers will stick around “just because.” You’ll need to tighten up your messaging, double down on loyalty strategies, and maybe even create flexible offers that meet people where they are right now, not where they were two years ago. 4. What This Means for SMB Planning and Operations Tariff shifts and economic uncertainty aren’t just stories on the news.
They ripple straight into Main Street — and your business. Here’s what smart small businesses are doing right now: Updating cash flow forecasts for longer sales cycles Building stronger customer communication plans to maintain trust Reevaluating marketing budgets to double down where it matters Diversifying offerings to meet new spending patterns Investing in customer loyalty because keeping a client is cheaper than chasing a new one In other words:
They’re planning for today’s reality, not yesterday’s. And they’re staying flexible enough to pivot when consumer behavior shifts again. Your Customers Are Changing. Are You Ready? You don’t have to guess what’s next. Our team helps small and mid-sized businesses like yours read the shifts, adjust smartly, and stay resilient — even when the ground is moving under everyone’s feet. Contact us today and let’s create a plan that keeps your business moving forward, no matter what comes next.

Understanding Filing Requirements and Non-Compliance Penalties for Exempt Organizations Article Highlights: Annual Filing Requirements Understanding Which Form to File Due Dates and Extensions Online Filing Options Consequences of Late Filing or Non-Filing Monetary Penalties for Filing Non-Compliance Other Considerations Staying Informed and Compliant Navigating the labyrinth of return filing requirements for tax-exempt entities can seem daunting at first glance. However, understanding these requirements is crucial for maintaining your organization’s tax-exempt status and ensuring compliance with the Internal Revenue Service (IRS). This comprehensive guide will walk you through the various forms that may need to be filed, their specific requirements, due dates, online filing options, and the consequences of late or non-filing. By the end of this article, you’ll have a clearer understanding of the process and how to navigate it efficiently. Annual Filing Requirements – Tax-exempt organizations are required to file an annual information return or notice with the IRS unless an exception applies. Among the organizations excepted from filing the annual forms are religious organizations, church-affiliated schools under the college level, and certain political organizations. The primary forms involved are Forms 990, 990-EZ, 990-PF, 990-BL, and the 990-N (e-Postcard). The specific form your organization needs to file depends on its financial activity, assets, and type. Understanding Which Form to File Form 990 – Form 990, the “Return of Organization Exempt from Income Tax,” is required for organizations with gross receipts of $200,000 or more, or total assets of $500,000 or more. It’s also necessary for certain other organizations, such as those operating hospital facilities or sponsoring donor-advised funds. Form 990-EZ – This is the “Short Form Return of Organization Exempt from Income Tax,” and is for organizations with annual gross receipts less than $200,000 and total assets at the end of the tax year less than $500,000. Form 990-N (e-Postcard) – Small organizations with annual gross receipts normally $50,000 or less may file Form 990-N, a simple electronic notice. However, certain organizations, despite their small size, are required to file Form 990 or 990-EZ instead. Form 990-PF -Every private foundation, regardless of its revenue or assets, must file Form 990-PF annually. This form is the “Return of Private Foundation or Section 4947(a)(1) Trust Treated as Private Foundation.” Form 990-BL – Is for black lung benefit trusts with gross receipts more than $50,000. Those with gross receipts of $50,000 or less may file Form 990-N. Due Dates and Extensions – The due date for these forms is the 15th day of the fifth month following the end of an organization’s tax year. For example, if your tax year ends on December 31, your filing deadline is May 15 of the following year. Organizations can request an automatic six-month extension using Form 8868. Online Filing Options – The IRS encourages electronic filing for its convenience and efficiency. Forms 990, 990-EZ, and 990-PF must be e-filed. Form 990-N must be filed online using the Form 990-N Electronic Filing System (e-Postcard). The IRS provides resources and links for online filing on its website. Consequences of Late Filing or Non-Filing – Failing to file the required form for three consecutive years will result in automatic revocation of your organization’s tax-exempt status. This is a significant penalty that can affect an organization’s operations and donations. Monetary Penalties for Filing Non-Compliance -Tax-exempt organizations are subject to monetary penalties for not filing their required annual returns or notices, or for filing them late, under various circumstances. Penalty amounts may be adjusted annually for inflation, and the amounts shown below are for returns required to be filed in 2025. The penalties and conditions under which they apply are as follows: Late Filing of the Return – Organizations with annual gross receipts exceeding $1,274,000 are subject to a penalty of $125 for each day the failure to file continues, with a maximum penalty for any one return of $63,500. This penalty applies from the day after the due date of the return until the return is filed. Failure to File Electronically – Tax-exempt organizations required to file electronically but fail to do so are deemed to have not filed the return, even if a paper return is submitted. This is considered a failure to file. Incomplete or Incorrect Filing – If an organization files an incomplete return, such as by failing to complete a required line item or part of a schedule, or if the return contains incorrect information, penalties can also be imposed. Responsible Person(s) Penalty – If the organization doesn’t file a complete return or doesn’t furnish correct information and fails to comply within a fixed time after the IRS sends a letter, a penalty of $10 a day can be charged to the person responsible, with a maximum penalty of $6,000 for any one return. Disclosure Requirements – Exempt organizations that fail to file required disclosures are subject to a nondisclosure penalty of $125 for each day the failure continues, with a maximum penalty for any one disclosure of $63,500. If the IRS makes a written demand for disclosure and the organization fails to comply by the specified date, the penalty is $125 for each day after the date specified by the IRS until disclosure is made, with a maximum penalty for any one disclosure of $12,500. These penalties highlight the importance of tax-exempt organizations filing their required returns and notices on time and accurately to avoid financial penalties and other consequences such as the revocation of tax-exempt status. Other Considerations – Beyond the primary forms, tax-exempt organizations may need to file additional forms depending on their activities. For instance: Employee Payroll Forms – Form 941, the Employer’s Quarterly Federal Tax Return, is used by employers to report to the IRS wages paid to employees, federal income tax withheld from employees, both the employer’s and employees’ share of Social Security and Medicare taxes, and additional Medicare Tax withheld from employees.

Employers must file Form 941 quarterly even if they have no taxes to report, unless they filed a final return, received an IRS notification that they’re eligible to file Form 944 (an annual return), or meet certain exceptions. This form is used to ensure that employment taxes are reported and paid accurately and on time.

Unrelated Business Income – Tax-exempt organizations with gross income from an unrelated business of $1,000 or more must file Form 990-T, Exempt Organization Business Income Tax Return, and potentially pay unrelated business income tax (UBIT) on that income.

Unrelated Business Income (UBI) refers to the income generated from any trade or business that is regularly conducted by an exempt organization and is not substantially related to the performance of the organization’s tax-exempt purpose or function, except as a means of producing funds. The concept of UBI is crucial for tax-exempt entities because it determines the extent to which these organizations may engage in business activities without jeopardizing their tax-exempt status or incurring tax liabilities.

Employee Benefit Plan Reporting – If the exempt organization has an employee benefit plan, a series Form 5500 must be filed. The purpose of this form is to assure that employee benefit plans are operated and managed in accordance with certain prescribed standards. It must be electronically filed and is due by the last day of the seventh month after the plan year ends, or typically July 31 for a calendar-year plan. A filing extension of 2½ months is available by filing Form 5558 prior to the due date deadline. Form 5558 may be paper filed. State Filing Requirements – State additional filing requirements may vary. Staying Informed and Compliant – The IRS offers a wealth of resources to help tax-exempt organizations stay compliant. Their Charities and Nonprofits webpage, along with the StayExempt.irs.gov site, provides interactive workshops, mini-courses, and a free e-newsletter to keep you informed of the latest news and requirements. Filing requirements for tax-exempt entities are an essential aspect of maintaining your organization’s compliance and tax-exempt status. By understanding which forms apply to your organization, adhering to due dates, and taking advantage of online filing options, you can navigate the filing process more smoothly. Remember, staying informed and proactive in your filing obligations is key to avoiding penalties and ensuring your organization continues to thrive. Contact this office with questions and for assistance meeting your exempt organizations filing requirements and avoiding non-compliance issues.

How the Social Security Fairness Act and Lump-Sum Election Can Maximize Your Benefits Article Highlights: The Impact of the Social Security Fairness Act Social Security Lump-Sum Election Taxation Options for Lump-Sum Payments Taxation in the Year of Receipt Lump-Sum Election Method How Each Method Works Selecting the Optimal Taxation Method Professional Assistance for Optimal Decision Making On January 4, 2025, President Biden signed into law the Social Security Fairness Act, a significant milestone in addressing long-standing issues within the Social Security system. This new legislation eliminates two controversial provisions: the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO). These provisions have historically reduced the Social Security benefits of certain public servants, including teachers, law enforcement officers, and postal workers, who transitioned to other employment forms later in their careers. The Impact of the Social Security Fairness Act The primary beneficiaries of this act are those whose Social Security benefits were previously diminished by WEP and GPO. As a result of the new law, these individuals will experience an average monthly increase of roughly $360 in their benefits. Starting in 2024, the adjustments are applicable going forward, ensuring that affected beneficiaries receive enhanced financial security in their retirement. Moreover, starting February 24, 2025, the Social Security Administration (SSA) began disbursing retroactive benefits, increasing monthly benefits for those impacted by WEP and GPO. Eligible beneficiaries receive a one-time retroactive payment covering the increased benefit amounts back to January 2024, marking the official cessation of WEP and GPO. These payments are systematically processed, and beneficiaries whose monthly benefit amounts are adjusted, or due retroactive payments will receive notification from the SSA. This proactive communication ensures transparency as the changes take effect, aided by a structured update process. Social Security Lump-Sum Election When recipients of Social Security benefits receive a lump-sum payment, they are faced with a critical decision regarding how these funds are taxed. Beneficiaries have two options: to have the entire lump sum taxable in the year it is received or to use the “lump-sum election” method. Taxation Options for Lump-Sum Payments Taxation in the Year of Receipt

When a lump sum is reported as income in the year it’s received, the entire amount is subject to the beneficiary’s current marginal tax rate. This option is straightforward but may not be the most tax-efficient if the lump sum pushes the taxpayer into a higher tax bracket, resulting in a significant tax liability. Lump-Sum Election Method

The lump-sum election, alternatively known as the “method of election,” allows the lump sum to be taxed as if it had been received in the year or years it was originally due. This approach offers potential tax savings, distributing the tax impact over multiple years. This can be especially beneficial if the beneficiary was in a lower tax bracket in those earlier years. How Each Method Works Taxation in Year of Receipt: This method involves summing the total lump sum with other income for that tax year, thus potentially increasing the overall taxable income. It requires beneficiaries to report the entire payment amount on their tax returns, influencing their Adjusted Gross Income (AGI) and possibly affecting eligibility for certain deductions or credits. Lump-Sum Election: Under the lump-sum election, beneficiaries calculate the tax owed as if the lump sum had been received in prior years. This requires recalculating the tax for those preceding years, considering how much was “received” each year, and ascertaining the combined tax impact for the current filing year. This option requires additional paperwork and potentially consulting with a tax professional to ensure accuracy and compliance with IRS regulations. Here’s how it works:

1.    Refiguring Past Taxes: The taxpayer recalculates the Social Security benefits for the year(s) to which the lump-sum payment applies. This involves applying the prior year(s) tax rules, including income, deductions, and exemptions that were applicable then.

2.    Using Worksheets: The IRS provides detailed worksheets in Publication 915 to facilitate this calculation. These worksheets guide taxpayers through the process of determining how much of their Social Security payments would have been taxable in each relevant year if they had been received on time.

3.    Comparative Analysis: Once the refigured tax amounts are calculated, taxpayers compare the total taxes they would have paid using this method against simply adding the entire lump-sum to the current year’s income. They then elect the method which results in lower taxable benefits.

4.    Reporting: If the lump-sum method proves advantageous, taxpayers must report their decision by checking a box on their tax return (typically Form 1040 or 1040-SR) and providing the relevant figures for total and taxable benefits. Selecting the Optimal Taxation Method Making an informed decision on which taxation option to choose depends on careful evaluation of individual financial circumstances. Factors include the current tax bracket, changes in income over the years, and potential eligibility for deductions or credits that could mitigate tax liability. For many, the lump-sum election may present significant tax savings, particularly for retirees on fixed incomes who may have experienced fluctuations in income. This method can result in a smaller incremental tax consequence, thereby preserving more of the lump sum for essential expenses. Professional Assistance for Optimal Decision Making Determining the best course of action for taxation on lump-sum Social Security payments can be a complex process, demanding a comprehensive understanding of tax laws and personal financial situations. For taxpayers who have received a lump-sum payment, professional guidance can ensure they choose the option that minimizes their tax burden, optimizes their financial outcomes, and aligns with long-term financial planning goals. At our firm, we are knowable in navigating the complexities of Social Security benefits taxation. Our expertise can assist you in examining your unique situation, exploring the tax implications of lump-sum payments, and estimating the most advantageous method. Contact us today to discuss your options and secure peace of mind the lump-sum payment is being taxed to your best benefit.
Market Jitters? Smart Tax Moves Boomers Should Be Thinking About Now If you’re near retirement — or already there — market dips hit differently. When you’re still in your 30s or 40s, a downturn is just a blip on a long timeline.
When you’re in your 50s, 60s, or beyond?
It feels a lot more personal. A lot more urgent. You’re not just managing money anymore.
You’re managing peace of mind. Here’s the good news:
Even when markets wobble, there are still smart, proactive moves you can make — especially when it comes to your taxes — to protect your retirement lifestyle. And no, we’re not talking about investment advice.
(You have enough people yelling about the stock market already.) We’re talking about practical tax and planning strategies you can control, no matter what Wall Street is doing. 1. Take Advantage of Tax-Loss Harvesting If some of your investments have lost value, you might be able to use that to your advantage at tax time. Tax-loss harvesting means selling investments at a loss to offset gains elsewhere, potentially lowering your overall tax bill. Even if you’re not selling everything, realizing some losses can: Offset capital gains (short-term or long-term) Reduce taxable income up to a certain limit Help you rebalance your portfolio without a huge tax hit Important: this isn’t about panic-selling.
It’s about being strategic with what’s already down — and turning a temporary setback into a real-world tax benefit. 2. Consider “Bunching” Your Deductions Thanks to the higher standard deduction, many retirees don’t itemize anymore.
Which means smaller deductions (like medical expenses or charitable gifts) often don’t help much year to year. But when economic uncertainty hits, bunching your deductions can make a big difference. How it works: Instead of spreading charitable donations or big medical procedures over a few years… You group them into a single year to push your deductions higher than the standard deduction. One “bunched” year = bigger write-offs = bigger tax savings.
The next year, you can go back to the standard deduction if it makes more sense. 3. Be Smart About Retirement Withdrawals Down markets make withdrawal strategies even more important. You don’t want to sell investments at a low just to fund basic expenses.
But you also don’t want to blindly pull from tax-deferred accounts without considering the tax hit. Now is the time to work with a tax professional on: Strategic withdrawals that balance taxable, tax-deferred, and tax-free accounts Required Minimum Distributions (RMDs) planning if you’re 73 or older Minimizing spikes in taxable income that could trigger higher Medicare premiums or other taxes In short:
The order you withdraw money matters, especially when markets are shaky. 4. Keep an Eye on Roth Conversion Opportunities Market downturns can actually create opportunities for Roth conversions. When account values are lower, you can potentially convert more assets to a Roth IRA with a smaller tax bite. The benefit?
Future withdrawals from Roth accounts are tax-free. If you’re near retirement, doing smaller, strategic conversions during down years can create more flexibility and lower taxes later. But be careful:
Roth conversions impact taxable income now — so planning (not guessing) is critical. 5. Remember: Tax Planning Isn’t Just for April 15 In an unpredictable economy, smart tax moves aren’t about scrambling in March.
They’re about planning all year long. Adjusting strategies if income drops or rises Timing deductions Managing your income streams carefully Being ready to pivot if new tax laws or incentives pop up The goal:
Make your money last longer by legally reducing what you owe and keeping more of what you’ve earned. Because you didn’t spend decades building your savings just to let taxes take more than their share now. Smart Moves Start with a Smart Plan You deserve more than generic advice. Our team works closely with Boomers and near-retirees to build customized tax plans that stay flexible — no matter what the markets or headlines are doing. Contact us todayand let’s make sure your next moves are the right ones for you.

Summer Employment for Your Child Article Highlights Higher Standard Deduction IRA Options Typical Summer Jobs for Young Adults Self-Employed Parent Employing Your Child Tax Benefits Summer jobs for kids offer more than just extra cash—they provide valuable life lessons and skills that can benefit young individuals in their personal and professional lives. Whether they are saving up for a special purchase, gaining work experience, putting the money away for the future or simply looking to spend their time productively, summer jobs can be a transformative experience. Summer is almost here, and your children may be looking for a summer job. The standard deduction for single individuals increased from $14,600 in 2024 to $15,000 in 2025, meaning your child can now make up to $15,000 from working without paying any income tax on their earnings. In addition, they can contribute the lesser of $7,000 or their earned income to an IRA. If they contribute to a traditional IRA, they could earn up to $22,000 tax free, by combining the standard deduction and the maximum allowed deductible contribution to an IRA for 2025 of $7,000. However, looking forward to the future, a Roth IRA with its tax-free accumulation and distributions would be a better choice. But the contributions to a Roth IRA are not deductible. Even if your child is reluctant to give up any of their hard-earned money from their summer or regular employment, if you have the financial resources, you could gift them the funds to make the IRA contribution, giving them a great start and hopefully a continuing incentive to save for retirement. Examples of traditional summer and even some year-round part time jobs for young adults: Fast Food Services – Flipping burgers and conjuring up lattes and cappuccinos are iconic summer jobs and a quintessential entry-point into the workforce for many young individuals. Working at a fast-food chain can provide teenagers with valuable skills and experiences that serve as a strong foundation for future careers. The worker’s employer will issue a Form W-2 that reports their year’s wages and any income tax and FICA withheld. If the worker received tips, these may have already been included in the reported wages, but if not, then the tips will need to be reported separately on their tax return, so the worker should keep a record of the tips received. Babysitting – teaches responsibility and childcare skills. Kids can start by offering their services to neighbors or family friends, gradually building a reputation as a reliable care provider. It’s essential to know basic first aid and undergo a safety course to gain the trust of parents. The income earned while babysitting may be taxed, but generally sitters don’t receive W-2s from the parents who have hired them to tend to their children. Even so, the income may still be reportable, depending on the sitter’s total income for the year. Lawn Mowing and Gardening -Lawn mowing and gardening are great ways for kids to earn money while enjoying the outdoors. These jobs teach important skills such as time management, work ethic, and basic business management. Kids working for themselves can offer package deals for regular services to maintain a steady stream of income. If the child is hired by a company that provides gardening services, the child’s income should be reported on a Form W–2; otherwise, just as with a babysitter, the income may still be reportable, depending on the child’s total earnings for the year. Lifeguarding -For older teens who are strong swimmers, lifeguarding at a community pool or beach can be an ideal summer job. It requires certification in CPR and first aid, which provides vital life-saving skills. The child should be treated as an employee and receive a W-2 form from the employer. Pet Sitting and Dog Walking – Animal lovers can turn their passion into a summer job by offering pet sitting and dog walking services. This job teaches responsibility and empathy towards animals while allowing kids to enjoy the company of pets. Earnings from these activities may be reportable and taxable, depending on the amount earned, and it is unlikely that the child will be issued a Form W-2. Art and Craft Sales -Those who have a talent for art and crafts can create and sell their product at local markets or online platforms. This job fosters creativity and teaches marketing and entrepreneurship skills. If the artist is doing this activity as a hobby, all of the sales will be reportable if they are required to file a tax return. If the child intends this to be a business, then only the excess of the sales amount over the cost of materials and supplies would be taxable. Of course, in either scenario if the child’s standard deduction is greater than the income from their sales, none of this income will be taxable. Online Tutoring – Kids who excel in academics can offer online tutoring services to younger students. This job reinforces their own knowledge while helping them develop teaching and communication skills. The child should keep track of their earnings from these services, as they may be reportable depending on the child’s total income for the year. Social Media Management – Teens who are adept at social media can offer management services to small businesses looking to expand their online presence. This can involve content creation, scheduling posts, and engaging with followers. If the teen is hired as an employee, the employer will issue a Form W-2 at the end of the year. The teen is “free-lancing” the earnings from this activity should be documented as they may need to be reported on the child’s tax return. App or Game Development – For tech enthusiasts, creating apps or games can be both a learning experience and a profitable venture. Plenty of free resources and platforms are available to help kids get started with coding and development. Whether the child is doing this as a hobby or intending it to be a business and is being compensate for their time or expertise other than as an employee, the child should keep a record of their earnings as it may be taxable. These are just a few examples of jobs typically available to young adults and the associated tax implications of earnings from these types of work. Self-employed Parents Employing a Child – With vacation time just around the corner and employees heading out for their summer vacations, if you are self-employed, you might consider hiring your children to help out in your business. Financially, it makes more sense to keep the family employed rather than hiring strangers, provided, of course, that the family member is suitable for the job. Rather than helping to support your children with your after-tax dollars, you can instead hire them in your business and pay them with tax-deductible dollars. Of course, the employment must be legitimate and the pay commensurate with the hours and the job worked. A reasonable salary paid to a child reduces the self-employment income and tax of the parents (business owners) by shifting income to the child. Example: Let’s say you are in the 24% tax bracket and own an unincorporated business. You hire your child (who has no investment income) and pay the child $16,000 for the year. You reduce your income by $16,000, which saves you $3,840 of income tax (24% of $16,000), and your child has a taxable income of $1,000, $16,000 less the $15,000 standard deduction, on which the tax is $100 (10% of $1,000). If the business is unincorporated and the wages are paid to a child under age 18, the pay will not be subject to FICA (Social Security and Medicare taxes) since employment for FICA tax purposes doesn’t include services performed by a child under the age of 18 while employed by a parent. Thus, the child will not be required to pay the employee’s share of the FICA taxes, and the business won’t have to pay its half either. Example: Using the same information as the previous example, and assuming your business profits are $130,000, by paying your child $16,000, you not only reduce your self-employment income for income tax purposes, but you also reduce your self-employment tax (HI portion) by $429 (2.9% of $16,000 times the SE factor of 92.35%). But if your net profits for the year were less than the maximum SE income ($176,100 for 2025) that is subject to Social Security tax, then the savings would include the 12.4% Social Security portion in addition to the 2.9% HI portion. A similar but more liberal exemption applies for FUTA, which exempts from federal unemployment tax the earnings paid to a child under age 21 while employed by his or her parent. The FICA and FUTA exemptions also apply if a child is employed by a partnership consisting solely of his or her parents. However, the exemptions do not apply to businesses that are incorporated or a partnership that includes non-parent partners. Even so, there’s no extra cost to your business if you’re paying a child for work that you would pay someone else to do anyway. Retirement Plan Savings. Referring to our original example, if the child had a made a traditional IRA contribution of $7,000 the taxable income and the tax would zero. So, it might be appropriate to make a Roth IRA contribution instead, especially since the child has so many years before retirement and the future tax-free retirement benefits will far outweigh the current $100 savings. Of course, some children will not be thinking about retirement at their young age and may object to contributing to an IRA. If that is the case, perhaps you as the parent, or even the grandparents, can make a gift of the IRA contribution, which can grow to big bucks by the time the child reaches retirement age. Benefits of Summer Jobs for Kids Skill Development: Summer jobs help children develop essential skills such as communication, teamwork, and problem-solving. Financial Literacy: Earning money teaches kids about budgeting, saving, and financial responsibility from a young age. Work Ethic: Holding a job instills a strong work ethic and the value of hard work. Independence and Confidence: Working outside the home encourages independence and boosts confidence. Tax Implications Introduced: A summer job may be the first time that a working child or young adult becomes aware of the tax system. In conclusion, summer jobs provide a wealth of opportunities for kids to learn, grow, and earn. By exploring different options, they can find a job that suits their interests and skills, paving the way for future success. If you have questions related to your child’s employment or hiring your child in your business, please give this office a call.

May 5th Resumption of Federal Student Loan Collections Article Highlights: Historical Pause in Collections Current Debt Situation Mechanisms of Collection Communication and Engagement Efforts Support and Resources for Borrowers Enhanced Income-Driven Repayment (IDR) Process Outreach and Partnerships As the U.S. Department of Education charts a new path post-pandemic, one significant move is the resumption of federal student loan collections. This initiative, set to commence on May 5, marks the end of a years’ long hiatus in collections on defaulted loans that began in March 2020 due to the COVID-19 pandemic. Here’s an in-depth look at what this means for borrowers and the broader implications. Background and Current Landscape 1. Historical Pause in Collections: The federal government had paused the collection on student loans as a relief measure during the pandemic. This moratorium allowed borrowers some breathing room during an unprecedented economic downturn. However, the pause not only deferred repayment but resulted in a growing number of loans entering default, with numbers reaching concerning levels. 2. Current Debt Situation: As of now, approximately 42.7 million borrowers owe over $1.6 trillion in federal student loans. Among these, more than 5 million borrowers have defaulted, having missed payments for over 360 days, some for over seven years. This has created a situation where a quarter of the federal loan portfolio could soon be in default. Resumption of Collections 1. Mechanisms of Collection: The collections will resume through the Treasury Offset Program, enabling involuntary collection actions such as withholding tax refunds and garnishing wages. The Department of Education, through its Office of Federal Student Aid (FSA), will also employ Administrative Wage Garnishment (AWG), which can demand employers withhold up to 15% of a borrower’s disposable income. 2. Communication and Engagement Efforts: The resumption of collections will be coupled with extensive outreach efforts. Borrowers will receive emails from FSA advising them on repayment options, such as income-driven repayment or loan rehabilitation. Furthermore, over the next two months, the FSA plans to conduct a robust communications campaign aimed at boosting borrower awareness and engagement. Support and Resources for Borrowers -To ease the transition back into repayment, the Department of Education is enhancing support systems: Enhanced Income-Driven Repayment (IDR) Process: This process will streamline enrollment into IDR plans, eliminating the need for annual income recertification, which simplifies the borrowers’ experience. Outreach and Partnerships: Collaborations with states, educational institutions, and other stakeholders will play a critical role in guiding borrowers back to repayment. Tools like the Loan Simulator and AI Assistant (Aiden) are being introduced to assist borrowers in choosing the most suitable repayment plan. Implications and the Road Ahead – The decision to resume collections is seen as necessary to maintain financial responsibility among borrowers and avert potential taxpayer burdens due to defaulted loans. According to the Department, resuming collections aligns with efforts to safeguard taxpayers and ensure that loans, which were willingly undertaken, are repaid. However, this move also underlines the need for a structured and compassionate approach to assist borrowers re-entering repayment, many of whom are emerging from the financial strain imposed by the pandemic. As the education sector continues to adapt, the focus remains on balancing fiscal responsibility with borrower support, preventing further financial crises while encouraging economic stability. This thorough approach by the Department of Education reflects a significant shift towards reinstating financial order and ensuring a sustainable path forward for borrowers and the federal loan portfolio alike. Student Loan Interest Tax Deduction — Taxpayers who have not been paying their loans during the hiatus may have forgotten that there is an “above-the-line” deduction (i.e., a deduction when figuring adjusted gross income (AGI) and available even if not itemizing deductions) for interest payments due and paid on any “qualified student loan,” regardless of when a taxpayer first incurred the loan. A qualified student loan is generally one used to pay qualified higher education expenses, i.e., tuition, room and board, and related expenses for attending post-secondary educational institutions, including certain vocational schools, and certain institutions offering postgraduate training. The maximum deduction per year is $2,500. This is a per return limit, not a per student limit. However, the amount of the interest that is deductible is phased out for married taxpayers filing a joint return when their modified AGI is $170,000 – $200,000. For unmarried individuals, the phaseout range is $85,000 – $100,000. When income exceeds the top of the phaseout range, no amount of the interest is deductible. No deduction is allowed for those using the married separate filing status. Lenders that receive $600 or more of student loan interest during the year must file Form 1098-E with the IRS. A copy of it, or an acceptable substitute, must be provided to the borrower. Thus, someone paying less than $600 of student loan interest per year may not receive a 1098-E form, but may still be entitled to a student loan interest deduction if they have documentation of the amount paid. Please contact this office if you have questions about the student loan interest deduction.

Cash Flow Is King (Again): How Small Businesses Can Stay Strong in Uncertain Times Some headlines say a recession’s coming.
Others say the economy’s surprisingly strong.
Meanwhile, you’re over here trying to run a business and wondering if you should be stepping on the gas or tapping the brakes. Here’s the truth:
No matter what happens next, cash flow will decide who weathers the storm… and who gets caught off guard. Because even in good times, businesses don’t fail because of a lack of profit.
They fail because they run out of cash. If you’re a small or mid-sized business owner, now’s the time to tighten up — without panicking. Here’s how. 1. Know Your Numbers (Better Than Ever) It sounds obvious.
But a lot of small businesses don’t have a real grip on: How much cash is actually coming in (and when) How much cash is going out (and where it’s going) How long they could operate if sales slowed down tomorrow Get serious about cash flow forecasting.
Look 3, 6, even 12 months ahead.
And don’t just build one forecast, build a few: A “best case” scenario A “most likely” scenario A “tighten the belt” scenario Because hope isn’t a strategy.
Options are. 2. Watch Your Expenses Like a Hawk When cash is flowing, it’s easy to get loose. Monthly subscriptions pile up.
That extra part-time hire feels harmless.
You add a few “nice to haves” to the office or the marketing plan. Now is the time to get ruthless — not scared, but smart. Audit every expense Kill anything that doesn’t directly drive revenue or efficiency Renegotiate contracts where you can Delay non-critical upgrades and investments Think lean, not cheap.
Cut fat, not muscle. 3. Speed Up Receivables, Slow Down Payables Cash flow isn’t just about how much you earn.
It’s about when you collect and when you pay. Speed up your inflows: Invoice immediately (not at the end of the month) Offer small discounts for early payments Enforce payment terms politely but firmly Slow down your outflows: Negotiate longer payment terms with vendors Take full advantage of any grace periods without damaging relationships Time payments carefully without risking penalties In uncertain times, timing matters as much as totals. 4. Build (or Rebuild) Your Emergency Fund You don’t need a war chest worthy of a Fortune 500 company.
But you do need a buffer. Even setting aside one month’s operating expenses can buy you precious time if sales slow or unexpected costs pop up. Three months? Even better. Cash reserves give you options — the option to keep your team, maintain inventory, market strategically — when others are panicking. Start small if you have to.
Consistency wins. 5. Stay Flexible and Stay in the Game Will we get a recession? A boom? A little of both?
No one knows for sure. What matters is being ready either way. The businesses that survive uncertain times aren’t necessarily the biggest, or even the smartest.
They’re the ones that can bend without breaking. Flex your offers if customer demand shifts Watch your inventory levels carefully Keep marketing, but double down on what works Stay close to your customers and suppliers And most of all, keep calm.
Panic is expensive. Planning Ahead Means Sleeping Better at Night You don’t have to figure this out alone. Our team helps small and mid-sized businesses map out cash flow strategies, budget smarter, and build scenario plans that keep them resilient, no matter what the economy throws their way. If you want more confidence, more clarity, and a stronger financial cushion for the road ahead, we’re ready to help. Contact us today to get started.

When Your Supply Chain Gets Shaky: How SMBs Can Stay Strong If the last few years have taught us anything, it’s this: no supply chain is bulletproof. Ships stall. Tariffs hike. Materials vanish into thin air. And suddenly the parts you counted on — the parts your customers counted on — are stuck somewhere between here and nowhere. These disruptions aren’t just inconvenient if you’re running a small or medium-sized business (SMB). They’re the kind of thing that can slam your revenue, sour your client relationships, and leave you scrambling to survive. But here’s the thing:
Disruption doesn’t have to spell disaster.
With the right moves now, you can not only weather the storms, but you can also come out stronger than ever. Here’s how. 1. Map Your Risks Before They Map You It’s tempting to think, “This won’t happen to us.”
(Spoiler: it might. And probably when you can least afford it.) Inventory shortages, shipping delays, supplier shutdowns — they don’t send a heads-up first. Now is the time to map your supply chain, end-to-end: Where are your critical materials sourced? Who are your Tier 1 and Tier 2 suppliers? Are you relying on a single vendor for any essential piece of the puzzle? Get it all down on paper.
Identify the bottlenecks.
Spot the single points of failure. Because what you don’t know can and will hurt you. 2. Build (Actual) Relationships with Your Suppliers Transactions are nice. Relationships are better. When supply gets tight, guess who suppliers prioritize?
The customers they know. The ones they hear from regularly. The ones who don’t just call when they need something yesterday. Start building those relationships now. Reach out regularly. Ask about their challenges. Be the customer they want to help when times get tough. It doesn’t guarantee you’ll be first in line, but it massively boosts your odds compared to staying silent. 3. Plan for Flexibility, Not Perfection Forecasting today is like playing darts in the dark.
Nobody can predict every disruption. But you can build in enough flexibility to survive the unexpected: Keep buffer inventory for your highest-margin or critical items Source from multiple suppliers, even if it costs a little more Negotiate flexible contracts that let you adjust quickly Invest in supply chain visibility tools so you can spot problems earlier If the past few years have shown us anything, it’s that rigidity kills.
Flexibility wins. 4. Rethink, Realign, Rebuild — Before You’re Forced To Sometimes, a supply chain shake-up is more than just a headache.
It’s a wake-up call. Maybe it’s time to rethink how you get your products to market. Localize suppliers where you can to shorten timelines. Invest in smarter inventory management systems. Explore product innovations that rely less on hard-to-get materials. Expand into new markets that give you more geographic diversity. The companies that thrive through disruptions aren’t the ones crossing their fingers for “normal” to come back.
They’re the ones building better models before the next curveball comes flying. Ready to Future-Proof Your Supply Chain? You don’t have to figure this all out on your own.
Our team works with small and mid-sized businesses to create supply chain action plans that actually work, without the corporate jargon and cookie-cutter advice. Let us help you map your risks, build resilience, and set your business up for long-term wins. Contact us today to get started.