Tax rules aren’t set in stone…what worked last year might not work this year. If you’re not keeping your tax strategy up-to-date, you could be inviting a bigger bill from the IRS. In this month’s issue, we’re breaking down practical tax tips to help you stay ahead and keep more of what you earn.

Also learn how to lower your property tax bill, financial tips that sound like common sense, and how to graduate with zero student loan debt.

As always, should you have any questions, please call. And feel free to forward this information to someone who could use it!

Key Tax Planning Topics to Consider

The U.S. tax code is constantly changing. What saved you money last year might cost you this year. Between shifting income thresholds, changing deduction rules, and overlooked credits, you now need to stay focused on your tax plan throughout the year.

Here are several bits of tax wisdom that can help you lower your bill to the IRS.

1) Phaseouts matter (a lot).

A lot of tax breaks, such as child tax credits, tax benefits for college costs, or the new senior deduction don’t disappear all at once. Instead, they phase out slowly as your income rises. This means earning a bit more could quietly cost you some of these benefits.

What you can do: Keep an eye on how much income you’re showing on paper and how it will impact these phaseouts. You might be able to stay in the sweet spot so you don’t lose the value of your deductions or credits by putting more into your retirement account or timing when you receive certain payments.

2) Are itemized deductions going the way of the dinosaur? Not so fast!

Yes, the standard deduction is now higher than ever ($31,500 for married couples, $15,500 for singles in 2025), which has made itemizing less common. But with an increase of the state and local tax (SALT) deduction from $10,000 to $40,000, you may be shifting back to itemizing your deductions without realizing it.

What you can do: Don’t assume you’ll be taking the standard deduction again this year. Add up your potential itemized deductions, especially if your expenses vary, to see how close you are to being able to itemize. Consider bunching charitable contributions or property taxes into one year to clear the standard deduction hurdle.

3) Timing is everything (especially with capital gains).

If you sell assets held longer than a year, you’ll likely qualify for long-term capital gains rates (0%, 15%, or 20%). But miss that time by even a day and you could pay ordinary income rates, which can be nearly double. Strategic timing can also help you harvest losses to offset gains and reduce your overall tax bill.

What you can do: If possible, hold investments that are profitable for at least one year and a day before selling to qualify for lower tax rates. Use end-of-year tax-loss harvesting to offset gains, and stagger sales across tax years if needed.

4) Don’t sleep on the Qualified Business Income deduction.

If you’re a small business owner, self-employed, or even a gig worker, you may be eligible for a 20% deduction on your qualified business income. Planning how and when revenue hits your books could make or break your eligibility for this significant deduction.

What you can do: Review how your business is structured and how much income you’re reporting. You may be able to reduce taxable income through retirement contributions, shifting income between years, or reclassifying your business activities.

5) Tax-deferred doesn’t mean tax-free.

Traditional 401(k)s and IRAs offer tax deferral, not tax elimination. When you withdraw funds in retirement, you’ll pay ordinary income tax on the distributions. If you expect to be in a high tax bracket in retirement, it may be a better idea to contribute to a Roth account now and pay taxes up front.

What you can do: Schedule a planning session to discuss whether diversifying your retirement accounts between traditional and Roth makes sense for your situation. Also consider planning for the timing of distributions from these accounts to be as tax efficient as possible. Run long-term tax projections to decide which type of contribution makes sense today. Consider partial Roth conversions during lower-income years.

Tax planning isn’t a once-a-year scramble, but rather a year-round strategy. And with these pieces of prevailing tax wisdom, you can be better prepared to cut your tax bill.

Please call if you have any questions about your tax situation.

Financial Tips That Sound Like Common Sense

When it comes to personal finance, guidance is often delivered in quick, confident soundbites:

• Open a high-yield savings account!
• Sign up for a rewards credit card!
• Buy your food in bulk to save money!

On the surface, these suggestions sound like common sense. But managing your money is rarely this simple, as what works brilliantly for one person might not be the best move for someone else. Here’s a closer look at a few common financial tips and how the hype holds up in practice.

#1 – High-yield savings accounts: A favorite low-risk move

Why they sound great: High yield savings accounts (HYSAs) are often promoted as a simple way to make your cash work harder. While a standard savings account may pay just 0.01% interest, many HYSAs offer more than 4% APY, a major boost if you’re building an emergency fund or saving for short-term goals.
The reality check: Everyone should consider better yields for their everyday funds. To not do so is simply giving this money away to the bank. But you need to be smart. Putting this money in CD’s often includes a hefty early withdrawal penalty. So find accounts with reasonable rates and then know how to transfer the money penalty-free to transaction accounts when you need it. Remember, a 4% yield on $5,000 provides approximately $200 every year. Would you be willing to take $200 and throw it on the street? Most banks hope the answer is yes, so they can pick it up.

Worth the hype? Yes, for the savvy consumer. While it won’t change your financial situation, it helps establish best practices and encourages active management of your financial life.

#2 – Credit card rewards: Free money or clever marketing?

Why they sound great: The pitch is to earn cash back, travel points, or perks for spending money you were going to spend anyways. Some cards even have generous sign-up bonuses worth hundreds of dollars.
The reality check: Credit card rewards can be lucrative, but only if you pay your balance in full every month. The second you start carrying a balance and paying interest, these rewards vanish into the void – lost in never-ending interest charges. Many cards also have annual fees, category restrictions, or minimum spend requirements that can lead you to overspend for the sake of earning points.

Worth the hype? Yes, but only for those who DO NOT carry a balance from month to month. If you’re debt-averse and organized, rewards cards are a tool, not a trap.

#3 – Buying in bulk: The Costco/Sam’s Club effect

Why it sounds great: The logic is simple: buying in bulk means paying less per unit. Warehouse clubs and bulk shopping apps promise you’ll save a fortune on everything from cereal to toilet paper.
The reality check: Bulk buying can indeed slash your cost per item, but only if you use it and have the space to store it. So be careful with perishables you can’t consume in time. And know your storage limits, especially for bulky items like paper towels.

Worth the hype? If you have a large family the savings are easy to obtain. If not, you simply need to be a smart shopper or shop with a friend or two to share the bulk purchase and the savings.

Financial tips are great, but only if you understand how they work and make them work for you and your situation.

Ideas to Identify and Manage Problem Accounts

As a small business, once you decide to extend credit to a customer, you now have a financial stake in continuing that relationship even if you suspect there might be trouble brewing.

Here are some ideas to help you manage this risk.

1) Develop a rating system.

Score each customer with a number. The number represents to whom you will sell on credit and how much risk you are willing to take. Also have scores that represent customers you will not bill and those who you will no longer take orders from because of credit risk. Develop a system to objectively assign the score. Payment history and external credit scoring reports are both good indicators of whether a particular customer will be an acceptable credit risk.

2) Consider credit applications.

Create a simple credit application. The application should be signed by the responsible party to pay the bill. If large credit amounts are expected, get a person to take personal responsibility to pay the bill. This will provide an additional means to collect your money should the company fail to pay. You will need this signed document if you wish to use a collection agency to collect delinquent accounts.

3) Look at history.

Those to whom you provide a credit line must have their payment history monitored. If they are habitually late payers, reduce their credit line. If they frequently miss payments, move them to prepay only.

4) Create a notes section on your customer records.

Use this to record what a late paying customer tells you. Over time, this will reveal the customers who are honest and the customers who fail that test. This idea also provides continuity of communication for the customer that tries to tell different employees different stories.

5) Develop a collection system.

The best credit rating system starts with a receivable aging report run once a month. This will quickly show you current trouble customers and potential trouble customers. When a bill ages through the report, know what you are going to do to collect bills at 30 days, 60 days, 90 days and anything older than that.

6) Look for other signs of trouble.

Train your team to be on alert for:

• Customers paying smaller invoices while larger invoices go unpaid.
• The customer fails to return your phone calls or shows annoyance at your inquiries.
• Your requests for information, such as updated financial statements, are ignored.
• The customer places multiple, large orders and presses you for a higher credit limit.
• The customer tries to coax you into providing a good credit report to another supplier.
• You get word that the customer’s credit rating has been downgraded.

Remember, great customers can have sincere problems paying a bill.

By having a good credit rating system, you can more readily identify the customers you want to accommodate to pay their bills and those customers whose activity should be suspended because they are truly problem accounts.

Upcoming dates:

October 15

– Filing deadline for extended 2024 individual and C corporation tax returns

Property Taxes: What Every Homeowner Should Know

Property taxes are still on the upswing in many parts of the U.S.

To help get a handle on your property taxes, here’s a look at what goes into determining your bill and a few ideas that may help to reduce it.

Background

Property taxes are typically calculated using two factors:

• The assessed value of your property (set by your local assessor)
• Your local tax rate (set by schools, counties, fire departments, etc.)

Why this matters: Even if your home’s value doesn’t change, your tax bill can go up if any of the taxing authorities raise their rates. And while setting the tax rates is usually a legislative process, establishing the value of your property often has judgement applied.

Ideas to lower your property tax bill

Understand and adhere to the calendar. Challenging the value of your property requires an understanding of the process for doing so AND hitting the proper deadlines. If there’s an appeals process, know it and make sure you meet their deadlines or you could be out of luck for that year.

Challenge your property’s assessed value. You have the right to appeal your property’s assessment by filing a formal appeal with your local assessor. If you can show your home was assessed for more than it’s worth compared to similar homes, you might get your tax bill reduced. If you want to appeal, you need to act fast. There are typically just a few weeks each year to appeal your assessment. So mark the date and gather evidence early if you plan to dispute it. But do your homework! Collect actual sales of similar properties that show a lower sales price, and be ready to defend the condition of your property if it is an older home. Assessors are quick to dismiss complainers with no facts to back them up.

Claim all exemptions and eligible tax breaks. Contact your local assessor’s office to see what exemptions you can claim. Many states and counties offer breaks for veterans, people with disabilities, low-income households, older residents and those in designated areas like historical districts or disaster zones.

Compare local tax rates before you buy or move. Property taxes are determined locally by counties, cities, or school districts, which means two identical homes in nearby ZIP codes can have drastically different tax bills. So always check the local tax rate before you buy or move. Look at the history of property taxes in your target neighborhood and see how it changed over the past several years. Then compare it with other homes in the area to ensure the rate increase is consistently applied.

Calculate the tax impact of renovations before building. Adding a new deck or renovating your kitchen may increase your home’s assessed value, especially if the county finds out through permits or a property inspection. So even if you don’t sell your home, upgrades can mean a bigger tax bill. Some areas reassess properties automatically after building permits are pulled. So always factor in long-term tax implications when upgrading your home.

Review your lot details for unused land. Your property tax bill covers not only the value of your house, but also the value of your land. If part of your property can’t be used, like wetlands, steep slopes, or areas with easements, ask your assessor if your bill can be adjusted.

Property taxes are one of the few taxes you can actually fight and get lowered. But you can’t do that if you don’t understand how the system works.

So don’t just pay the bill without looking at it. There’s often money to be saved if you understand the details.

Be Debt-Free: Graduate With Zero Student Loans

Here’s how to join the growing number of students graduating debt-free, often by using unconventional approaches.

A growing number of students are saying no to paying for higher education with student loans.

Serve before studying: Military service. Military enlistment remains one of the most reliable routes to a fully-funded education. The Post-9/11 GI Bill not only covers in-state public tuition or contributes toward private schools, but also provides housing stipends, book allowances, and even the option to transfer unused benefits to a spouse or child. Active-duty personnel and reservists can also qualify for other tuition assistance programs that cover college courses taken during service.
Potential tradeoffs: Enlistment requires several years of service, during which you may face deployments, relocations, and the demands of military life. While these experiences can provide leadership skills and career discipline, they also delay immediate entry into civilian education or employment.

The gap year that pays off. Delaying college to work full-time is another strategy for avoiding student loans. By taking a gap year, or even several years, students can earn a steady income, build savings, and gain valuable work experience before stepping onto a campus. Postponing college also gives students time to clarify their goals. A year or two in the workforce provides insights on career paths that can be used to make more intentional choices about their fields of study.
Potential tradeoffs: Taking time away from academics can make it harder for some to get back into a rhythm of rigorous coursework. Some students risk losing academic momentum altogether. A delayed start also means graduating later, which can postpone entry into certain careers.

Beating the clock: Accelerated and AP credit. Students may be able to enter college with a head start, sometimes as a sophomore instead of a freshman, by maximizing Advanced Placement (AP) courses or dual-enrollment credits while still in high school. In addition to AP credits, some universities now offer formal three-year or accelerated degree tracks designed to condense a traditional four-year program into a shorter time frame.
Potential tradeoffs: The pace of accelerated education can be demanding. Students often carry heavier course loads, enroll in summer or winter sessions, and have less flexibility for internships, study abroad, or part-time work. In some cases, moving through requirements quickly can limit the exploration of different majors or electives.

Employer-sponsored degrees. More companies are offering tuition assistance or direct sponsorship for employees pursuing degrees or certifications as the competition for talent increases. Some companies partner directly with universities or online programs, creating a simple pathway for workers to earn degrees in fields related to their jobs. Many employers now extend these opportunities beyond management, also offering assistance to front-line workers in retail, hospitality, healthcare, and manufacturing.
Potential tradeoffs: Balancing work and study can be challenging, often stretching degree timelines to five or more years. Some programs require employees to remain with the company for a set period after graduation, tying educational opportunities to job loyalty.

While student loans remain the norm for many, the rise of debt-free graduates shows that alternatives do exist.

These paths may be unconventional, but they show that a college degree or technical certification doesn’t have to mean decades of repayment.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

As the dust settles on the July tax bill signed into law, and the IRS starts to figure out how to implement tax-free tips and overtime, the rest of us need to move into the planning phase of the tax year. To help keep tax planning top of mind is an article about common tax myths. Each of them reinforce the need to periodically review your tax situation to be as efficient as possible.

There is also an article discussing ways to create a planning partnership with parents, children and grandparents as it relates to a smooth transition as we all age. Plus an interesting article to consider if you are a sole proprietor concerning the need to incorporate your business.

As always, should you have any questions please call. And feel free to forward this information to someone who could use it!

As a freelancer or contractor, at some point you may wish to incorporate and be taxed as an S corporation. Here’s a closer look at the process of becoming an S corporation and when switching might make sense for you.

The main benefits of S corporations

– Self-employment tax savings. As a sole proprietor, you’re required to pay a 15.3% self-employment tax (which includes Social Security and Medicare) on your entire income. However, with an S corporation, you can split your income into two parts: a reasonable salary (which is subject to self-employment taxes) and distributions (which are subject to income taxes but not self-employment taxes).

– Pass-through taxation. Similar to sole proprietorships, S corporations are considered pass-through entities. This means that the business itself doesn’t pay income taxes. Instead, profits and losses pass through the business to the owner’s personal tax return. Profits of a C corporation, on the other hand, are taxed twice – once at the entity level, and again on the owner’s tax return.

– Legal protection. If there is a risk of possible legal action, an S corporation can potentially help protect your personal assets from your business assets. For example, this can be especially helpful if you are in the contractor trade and the customer makes a claim against the fulfillment of your contract.

While transitioning from a sole proprietor to an S corporation can certainly result in significant tax savings, there are a few trade-offs to consider.

Trade-offs to consider

Most of the trade-offs are centered around administrative requirements and potential costs. These include:

– Running payroll. Even if you’re the only employee, you’ll need to set up payroll and withhold taxes. Many business owners use a payroll service to handle this.

– Separate tax filing. Your business will now need to file a Form 1120-S tax return with a March 15th due date in addition to your personal tax return.

– Accountants or bookkeepers are typically used. Most S corporation owners work with professionals to handle bookkeeping and tax filings.

– Reasonable salary requirement. The IRS expects owners to pay themselves a fair market wage. Underpaying yourself to avoid taxes can lead to penalties.

– State-level requirements. Some states have minimum franchise taxes or annual fees for corporations and LLCs, regardless of income.

When it makes sense to switch

Switching to an S corp generally becomes worth considering when your net income (after expenses) is in the range of $75,000 to $100,000 or more per year.

Here’s an example:
Assume you earn $120,000 in net income as a consultant.

• As a sole proprietor, you’d pay self-employment tax on the full amount, about $18,000.
• As an S corp, if you pay yourself a reasonable salary of $60,000, you’d only pay payroll taxes on that amount, roughly $9,200. The remaining $60,000 in profit would be subject to income taxes but not payroll taxes.

That’s a potential tax savings of nearly $9,000 per year.

Switching from a sole proprietor to S corp can offer real tax advantages, but it’s not a one-size-fits-all solution. It’s usually best practice to review your situation once per year to ensure your business is organized properly.

The Truth Behind Common Tax Myths

Tax myths can spread quickly, leading to costly mistakes or missed opportunities. Here are several common tax myths along with best practices to help you stay grounded in reality.

Myth: Moving into a higher tax bracket means you’ll take home less money

Reality: The U.S. tax system is progressive, meaning your income is taxed in layers. There are currently 7 different layers, with tax rates ranging from 10% to 37%. When you enter a higher tax bracket, only the portion of income above the bracket threshold gets taxed at the higher rate, not your entire income.

Best Practice: Know your marginal tax rate! This is the tax rate of the next dollar you earn. By understanding this you can do your own calculations on the impact of any additional income you earn.

Myth: Getting a tax refund means you did something right.

Reality: A tax refund means you overpaid your taxes. It’s your money, coming back to you – without interest. Getting a big refund might feel great, but from a cash flow perspective, you’re better off adjusting your withholding so you keep more of your paycheck each month.

Best Practice: Review last year’s tax return, then update the numbers to reflect your situation for the current year. Factor in the latest changes such as tax-free tips, tax-free overtime, and increased standard deductions, including the new $6,000 deduction for seniors. Once you’ve made these adjustments, revisit your paycheck withholdings to make sure they’re on track.

Myth: You can deduct all your expenses if you’re self-employed.

Reality: Not quite. While being self-employed certainly opens up more deduction opportunities, not every expense qualifies. Only ordinary and necessary business expenses can be deducted. That family trip overseas doesn’t qualify unless it was genuinely work-related (and even then, only parts of it might qualify).

Best Practice: Set up a dedicated business bank account to handle all income and expenses related to your work. Then establish a regular schedule to transfer funds into your personal account for all non-business spending. And don’t commingle funds with your personal expenses. The IRS may be quick to throw out ALL expenses if they see this occurring.

Myth: You don’t have to report income if you didn’t receive a Form 1099.

Reality: If you earn money, the IRS expects to hear about it, regardless of whether you received a Form 1099. Many people assume that if a client or gig platform doesn’t send you a 1099, then that income doesn’t need to be reported on your tax return. But that’s not how it works. The tax code requires you to report all income, no matter how it’s documented – or if it’s not documented at all.

Best Practice: Keep a list of past 1099s to help you remember which clients or platforms have paid you before, and to double-check if you earned income from them again this year.

Please call if you have any questions about your tax situation.

7 Low-Cost Ways to Keep Customers Coming Back

Winning a customer in today’s economy is only half the battle. Keeping them is where long-term success lies.
Fortunately, customer retention doesn’t always require big budgets or elaborate marketing campaigns. With creativity, consistency, and genuine care, you can inspire customers to return again and again.

Here are seven cost-effective strategies to help you build lasting loyalty.

1. Start a simple loyalty program.

You don’t need expensive tools to run a great loyalty program. Simple punch cards, stamps, or email tracking work well, especially for small businesses. The key is offering rewards that customers value, like free products or exclusive discounts. Keep rewards achievable and rules clear to encourage repeat business and stand out.

2. Communicate consistently (but respectfully).

Regular contact builds trust and familiarity. Use emails, texts, or social media to share tips, news, and offers that add value, not just sales pitches. Monthly check-ins keep you memorable without overwhelming customers. Personalizing messages by referencing past purchases shows you care and pay attention to their needs.

3. Add personal touches to every interaction.

Customers remember how you make them feel more than the specifics of the product or service. A handwritten thank you note, remembering their name, or asking about their last purchase or visit goes a long way. For online businesses, personalized follow-up emails or custom packaging inserts can create that same warm, human connection. These touches cost little but have a big impact on customer perception and loyalty.

4. Ask for feedback. And act on it.

Asking customers for feedback is a cost-effective way to build relationships. Use surveys, comment cards, or brief conversations to learn what works and what doesn’t. Always follow up, thanking them and sharing any changes made. This shows them that you value their input and are committed to improving their experience.

5. Offer exclusive access or insider perks.

Customers enjoy feeling in the know. Give loyal shoppers early product access, event invites, or sneak peeks. Simple perks like private shopping hours or exclusive discounts can make them feel valued and part of a special group. These low-cost gestures build strong emotional connections and loyalty.

6. Build a community around your brand.

Customers return when they feel connected. Encourage community through social media groups, events and workshops. For example, a coffee shop might host a latte art contest, or a fitness studio can put on a wellness challenge. These activities build relationships and make your business a meaningful part of your customers’ lives.

7. Surprise and delight.

Small, unexpected acts of kindness can turn casual customers into loyal advocates. It doesn’t require costly gifts, either. Free upgrades, treats, or surprise discounts work with many customers. These moments create memorable experiences and encourage customers to share their positive stories, strengthening your relationship and boosting word-of-mouth referrals.

Retention strategies don’t need to drain your budget. Start with one or two of these ideas, adapt them to your own customer base, and expand from there.

Upcoming dates

September 15

– Filing deadline for extended 2024 calendar-year S corporation and partnership tax returns

– 3rd quarter installment of 2025 estimated income tax is due for individuals, calendar-year corporations and calendar-year trusts & estates

October 15

– Filing deadline for extended 2024 individual and C corporation tax returns

Family Teamwork: A Smooth Transition Through the Ages

As you get older, so do your parents and grandparents. And at some point, the need for support and transition becomes unavoidable. If you’re lucky, the shift happens gradually. But without planning, it can arrive suddenly and feel overwhelming.

Here are some suggestions to make the transition smoother for everyone involved.

Parents (or grandparents!) – Proactively plan

– Talking to your children or grandchildren about money, health, and living arrangements are not normally addressed. Your goal is to be prepared should you be faced with an emergency. This way you can avoid making key decisions in emergencies, such as in the ER, after a fall, or under emotional strain.

What you can do:

Make it legal.

If you have not already done so, set up a will, power of attorney, and healthcare directive. Most states have a preferred legal format that is often accompanied with a list of questions. Walk through this document with your children, and while it may seem awkward, remember they may need to be the one carrying out your wishes. Without these, your children may face expensive and drawn-out legal battles just to act on your behalf.

Share your financial picture.

Start small. It may be as simple as providing a place to get a list of your accounts and passwords if needed. Your children don’t need every detail, but they need enough to understand resources, debts, and insurance coverage.

Clarify wishes for care.

Do you want to age in place? Would you consider assisted living? Who do you trust to make medical decisions if you can’t? What funeral arrangements make sense?

Children – Initiate conversations sooner rather than later

– This isn’t about taking control from your parents, but rather it’s about being ready to help when it’s needed. Ideally your parents are having these conversations with you periodically, but if not you may find that you need to step into this void.

How you can help:

Learn their wishes now.

Ask where they’d like to live if living alone becomes unsafe, and what kind of care they would like. Or explore a plan to stay in their house, if that’s their wish. Who knows, they may already have a robust plan in place, but then you’ll know!

Understand available resources.

Know which bank accounts, insurance policies, and retirement funds exist, and where to find documents. Also get a general feel if there are adequate funds in place to navigate the next phase of life.

Build your own plan.

Prepare financially and emotionally for the possibility that you may need to help cover costs or coordinate care.

Become a resource.

Pay attention to changes in laws, then relay this information to your parents. An example is the extra $6,000 senior deduction passed into law in July. By staying alert, you can ensure your parents are taking full advantage of the opportunities made available to them.

Know the tax tools available

– Money is often the biggest stress point in transitioning to new living arrangements or higher levels of care. But many families overlook the tax credits, deductions, and programs that can ease the financial burden. Here are some key areas to explore:

Medical Expense Deductions.

If medical and long-term care expenses exceed 7.5% of your income, they may be deductible, including in-home care, assisted living (if medically necessary), and medical equipment.

Dependent Care Credit.

You may qualify for this credit if you pay for the care for a dependent parent while working.

Claiming a Parent as a Dependent.

If you provide more than half of your parent’s support, you might be able to claim them as a dependent, which can further reduce your taxable income.

State-Specific Credits.

Some states offer tax breaks for care giving or senior housing. Check your state’s tax agency for details.

Health Savings Accounts.

These accounts can be used tax-free for qualifying medical expenses for your parents if they’re considered dependents, even if they’re not on your insurance.

Get started today

– The problem isn’t that children and parents don’t care about transition planning…it’s that they think there’s plenty of time to do it. Unfortunately, this is not always the case. Here’s how you can start taking action today:

Schedule a first meeting.

Don’t wait for the right moment. Put it on the calendar.

Break it into small pieces.

Talk about housing one week, finances the next. Avoid trying to solve everything at once.

Document agreements.

Even informal notes can be a lifesaver later.

Review regularly.

Life changes. So should the plan.

If handled properly, these planning discussions build a level of trust and create a level of partnership. The sooner you start talking and planning, the more control you’ll have over choices, costs, and comfort.

Beyond Your Credit Score: What Really Reflects Your Financial Health

A credit score is often treated like a financial grade. It’s the number people look at when you are applying for a loan, renting an apartment, or even getting a job.

But while it’s important in certain situations, it doesn’t tell the full story of your financial health. In fact, it misses some of the most important pieces.

What a credit score really measures

– Your credit score is primarily designed to help lenders assess how likely you are to repay borrowed money.

– It looks at factors like your payment history, credit utilization, length of credit history, types of credit, and recent credit inquiries. In other words, it’s a tool for measuring how you manage debt, not how you manage money overall.

– You can have an excellent credit score and still struggle financially. You can also have a lower credit score and be in a strong financial position because you avoid using credit altogether.

What really matters for financial health

– If your goal is long-term financial stability and peace of mind, there are more meaningful metrics than your credit score. Here’s what you should pay attention to:

Cash flow mastery.

This is the foundation of your finances. Are you consistently spending less than you earn? Positive cash flow gives you the flexibility to save, invest, and plan for the future. Even if your income isn’t high, managing it wisely can make a big difference.

Emergency readiness.

An emergency fund helps protect you from unexpected events such as a job loss, medical expenses, and home repairs. Having three to six months of living expenses saved can prevent you from going into debt during a crisis.

Debt load and structure.

How much you owe, and what kind of debt it is, plays a major role in your financial health. High-interest consumer debt, such as credit card balances, can be a major drain. On the other hand, low-interest, long-term debt (like a mortgage or student loan) may be more manageable.

Savings and investments.

Building wealth takes time and consistency. Regular saving, even in small amounts, can have a big impact. A credit score doesn’t measure this, but your future self will.

Financial knowledge.

Understanding how your money works is essential, such as knowing how interest compounds, how taxes affect your income, and knowing how to set financial goals. You don’t need to be an expert, but increasing your financial literacy over time helps you make smarter decisions and avoid costly mistakes.

Confidence around money.

Financial health isn’t just about numbers. It’s also about how you feel. You might have a great credit score but still feel anxious every time you check your bank account. Feeling stable and secure is a sign that your financial system is working for you.

Your credit score is just one small piece of the puzzle. It matters when you’re borrowing money, but it’s not a full measure of how well you’re doing financially. Treat it like a tool – useful in the right context, but not the final word.

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Over time, you’ll find that keeping customers isn’t just less expensive than finding new ones, it’s also far more rewarding.

The One Big Beautiful Bill Act (OBBBA) passage does a lot to make expiring tax laws more permanent for 2026 and beyond. But it also makes substantial changes to the 2025 tax landscape.

This month’s newsletter covers some of the major changes impacting your taxes for this year and action steps to take to ensure you’re taking full advantage of the changes.

One article covers the new tax free tip and tax free overtime features in the bill, while a second article covers tax changes impacting families and their children.

Another article focuses on the main changes impacting businesses, both small and large.

As always, should you have any questions please call. And feel free to forward this information to someone who could use it!

Tip and Overtime Tax Breaks Require Your Attention

Best advice? Be prepared NOW!

Two new major tax changes, No Tax on Tips & No Tax on Overtime, are introduced in the One Big Beautiful Bill Act (OBBBA) passed on July 4, 2025. Here’s what you need to know about these two tax breaks, along with questions that still need answered before filing your 2025 tax return.

How much you can deduct

• No Tax on Tips. You can deduct up to $25,000 in qualified tips from your federal taxable income. The deduction phases out above $150,000 ($300,000 for joint filers).
• No Tax on Overtime. Up to $12,500 in qualified overtime pay can be deducted from your taxable income ($25,000 for those filing jointly). The deduction also phases out over $150,000 ($300,000 for joint filers).

Who qualifies

– Obvious jobs such as servers and bartenders will likely qualify to deduct their tips. But there are plenty of other occupations who frequently or occasionally receives tips. The IRS is mandated to provide a more detailed list of what tips will qualify. Until this is done, there will be some uncertainty.
Regarding overtime, the tax bill uses the Department of Labor’s definition of working beyond 40 hours in a single workweek for non-exempt employees. The deduction only applies to the overtime portion of the pay (the one-half of time-and-a-half). But there’s still some gray areas. For example, what happens if a worker is compensated via a bonus or comp time instead of an hourly wage?

Reporting is key

– Employers are required to separately report qualified tips and qualified overtime on an employee’s Form W-2 or a contractor’s Form 1099. The problem is that 1099s do not currently have a spot to report tips (the W-2 currently has a box for allocated tips), while both W-2s and 1099s don’t have a spot to report overtime.

– There’s also withholding questions. While there’s a tax break for tips and overtime up to a certain dollar amount, this only applies to federal income taxes. Tips and overtime are still subject to other taxes, including Social Security, Medicare, and state income taxes. Employers will have to distinguish between income that’s fully taxable, and income that’s only subject to Social Security, Medicare, and other taxes.

2025 is a transition year

– The OBBBA addresses some of this uncertainty by allowing 2025 to be a transition year before the tax-free income must be reported on reformatted W-2s and 1099s. And it’s a good thing because the 2025 format is already approved and been provided to printers and software companies.

More details to come

– The IRS is mandated within the OBBBA to come up with what it will accept as proof of your 2025 earnings. Until that guidance is published you should:

• Immediately compile your overtime and tip income from the beginning of the year.
• Retain any documentation that can prove the amount you are going to claim.
• Review your pay stubs to see if tip and overtime income is tracked separately from your normal earnings. If so, you may have what you need. If not, contact your employer immediately and ask what they are planning to do to provide proper documentation.

The IRS says it will publish more guidance by mid- to late October.

So stay tuned as these and other questions will hopefully be answered long before you must file your 2025 tax return.

The Self-Employed Pricing Trap (And How To Escape It)

If you’re self-employed, there’s a good chance the rates you charge for your services are too low. Maybe you started out charging less to gain experience or attract clients, then never adjusted.

This is the self-employed pricing trap: a cycle of undervaluing your work, attracting price-sensitive clients, and feeling stuck when it’s time to raise your rates. It’s a common challenge, but one you can overcome.

Why Self-Employed Workers Undercharge

Several factors make it easy to undercharge for your services:

• Lack of clear benchmarks. Without a set salary range or standard pricing guide, self-employed professionals aren’t sure what to charge, and usually decide on a lower amount.
• Fear of losing work. Raising rates can feel risky. Many worry that higher prices will drive clients away, especially when winning consistent work feels uncertain.
• The Grateful to Be Here mindset. There’s a tendency to equate opportunity with obligation, feeling like you should accept whatever rate is offered just to stay busy or build goodwill.

These patterns are understandable, but they can quietly undermine your business if left unaddressed.

The Escape Plan: Raising Your Rates With Confidence

• Do the math. Calculate what you need to earn annually, factoring in expenses, taxes, and non-billable time. From there, work backwards to a sustainable hourly or project rate.
• Conduct a competitive review. Know who your competition is, and what they charge. Consider what you do that is unique to your product or service. If you discover you’re already charging more, then you’ll need to defend why your pricing is supported by your point of difference.
• Communicate clearly. If you raise your rates and present it with hesitant, uncertain language, customers will pick up on it. Instead, consider approaching your rate change as a natural step in your business growth. Because it is. You’ve gained experience, improved your skills, and that progression deserves to be reflected in your pricing.
• Set boundaries for existing clients. It’s okay to keep legacy clients at old rates for a while, but put an expiration date on it. For example you can say, As a thank-you for being an early supporter, I’m offering you your current rate until [specific date], after which I’ll be adjusting to reflect my updated services. Or offer a private sale at a specified time for long-standing customers. This allows them time to adjust while keeping your business moving forward.
• Charge for the outcome, not the time. If you are a service or contractor business, consider moving away from hourly rates and toward value-based pricing where possible. Customers care less about how long something takes you to do and more about what it does for them.
• Practice saying it out loud. Literally. While getting ready in the morning. In front of the mirror. The more comfortable you are stating your price, the more credible it will sound.

When you finally raise your rates, something interesting happens: You get better customers. Not always immediately, but over time the ones who respect your value stick around. The ones who were looking for cheap labor vanish.

Even more importantly, your pricing begins to align with your experience and goals. You move from reactive decisions to more intentional, confident ones.

Upcoming dates:

September 15
– Filing deadline for 2024 calendar-year S corporation and partnership tax returns on extension

– Due date for 3rd quarter installment of 2025 estimated income tax for individuals, calendar-year corporations, and calendar-year trusts & estates

New Tax Law Lightens Compliance for Small Businesses

The One Big Beautiful Bill Act of 2025 (OBBBA) expands several business tax benefits while easing certain compliance obligations. Here’s a summary of the key provisions affecting small businesses.

– Form 1099. The $600 reporting threshold for Form 1099-NEC and other 1099s is increased to $2,000, with this threshold to be indexed for inflation starting in 2027.

     Tax Planning Tips: Update your accounting software to track vendor payments against the $2,000 threshold. This avoids unnecessary 1099 preparation and aligns with the new requirement. And while the reporting threshold is now higher, it’s still a good idea to collect W-9 forms from all vendors and contractors before issuing payments. This ensures you’re prepared in case payments exceed the threshold.

– Form 1099-K. The $600 reporting threshold scheduled to go into effect in 2026 is rolled back to the old threshold of $20,000, along with the dual requirement of 200 or more transactions.

    Tax Planning Tips: Don’t rely solely on receiving a 1099-K to report income. Many businesses won’t meet the new reporting threshold but are still legally required to report every dollar earned. If your transaction count is high, however, be aware of how quickly you might approach the 200 transaction mark. Also consider labeling business and personal accounts separately on platforms like Venmo and PayPal. Mixing funds could cause reporting errors, especially as platforms enhance their 1099-K tracking capabilities.

– Qualified Business Income (QBI) deduction. The QBI deduction of 20% is now permanent. There’s also a minimum deduction of $400 for taxpayers who have at least $1,000 of qualified business income.

    Tax Planning Tip: Most independent contractors and gig workers who receive Form 1099 are eligible for the QBI deduction. However, if your business is classified as an Specified Service Trade or Business (businesses in health, law, accounting, financial services and others) this tax break begins to phase out when your income exceeds $197,300 (single) or $394,600 (married) in 2025.

– Section 179 deduction and bonus depreciation. Businesses can use the Section 179 deduction to write off up to $2.5 million of qualifying property in 2025, up from $1.25 million under the previous law. If you’d rather use bonus depreciation, the ability to write off 100% of qualified property is reinstated as of January 19, 2025 through the end of 2029.

   Tax Planning Tips: Businesses can often use both Section 179 and bonus deductions in the same year. Section 179 is generally applied first, followed by bonus depreciation for any remaining balance. But remember, this deduction only relates to the timing of the deduction, not the total amount of the deduction.

These are some of the new tax bill’s provisions that will affect most businesses across the U.S.

Please call to discuss these and other provisions from the new tax bill that may affect your business.

What the New Tax Bill Means for Parents

Deductions, credits and more

The One Big Beautiful Bill Act of 2025 (OBBBA) contains a number of tax breaks for parents. Here’s a summary of what’s in the bill for families, including planning tips to make the most of each tax break.
– Parents get a permanent increase to the child tax credit. The child tax credit increases to $2,200 (up from $2,000) and is now permanent. The refundable portion stays at $1,700, with future adjustments tied to inflation.

     Planning Tip: If your adjusted gross income will approach $200,000 (single) or $400,000 (married), look for ways to reduce your income to avoid phasing out the credit. Strategies like contributing more to retirement accounts, health savings accounts, or flexible spending accounts can help keep you below the limit and maintain your eligibility for the full credit.

– Student loan cancellation is tax-free. Forgiveness of student loans due to death or permanent disability is now permanently excluded from taxable income.

     Planning Tip: Review disability paperwork for accuracy and ensure it is completed and submitted through the appropriate loan service office or the Department of Education’s Total and Permanent Disability discharge process. If you’re a parent borrower (such as with a PLUS loan), consider including this tax benefit in your estate or disability planning discussions.

– Adoption tax credit. $5,000 of the $17,280 adoption tax credit in 2025 is now refundable, even for families with little or no income tax liability.

     Planning Tip: To take full advantage of the non-refundable portion of the credit (up to $12,280), you’ll need to have a tax liability. Consider delaying certain deductions or, if possible, shifting taxable income into the year you claim the credit so you can take advantage of the non-refundable portion of the credit. But remember that the credit starts to phase out at $259,190 of income.

– Trump accounts. Each child born between January 1, 2025, and December 31, 2028, will receive a $1,000 tax-advantaged investment account at birth. Parents, grandparents, and qualified organizations can contribute up to $5,000 per year, until the year before the child turns 18. Funds can be withdrawn starting the year the child turns 18.

     Planning Tip: There are still many unanswered questions about this new account and its related tax break. There are also other, and potentially better, options to save for your child, including Roth IRAs. So while we wait for more clarification, consider using alternative tax-free or tax-advantaged accounts for your child.

– 529 Education Plans. The annual limit for K–12 tuition withdrawals doubles to $20,000 per student. These funds can now also cover books, tutoring, online materials, home school costs, and educational therapies for children with disabilities. 529s can also be used for post-secondary teaching certifications and trade programs.

     Planning Tip: While contributions to a 529 plan aren’t deductible on your federal tax return, you can front-load up to five years’ worth of the annual gift tax exclusion into a single year. The 2025 exclusion is $19,000, so you can contribute up to $95,000 (5 x $19,000) to a 529 plan per beneficiary (up to $190,000 if married).

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

Our tax rules have always been a bit of a maze – complex, cryptic, and full of fine print. And yet, certain topics keeping popping up over and over again. In this month’s newsletter, we provide answers to some of the most common tax questions.

Also read about how custodial accounts can be a great way to teach kids about saving and investing if you understand the trade-offs.

Please pass this information on to anyone that may find it useful and call if you have any questions or concerns.

Upcoming dates:

July 31

– Filing Deadline: Form 5500 Annual Return of Employee Benefit Plan

Custodial Accounts for Kids: Understanding the Trade-offs of This Great Teaching Tool

Many parents rely on piggy banks and birthday cash to teach kids about money. But more are now turning to custodial accounts – a hands-on way for children to learn about saving and investing.

While these accounts offer great learning opportunities, they also come with several trade-offs worth planning for.

What you gain by using custodial accounts

– Custodial accounts are managed by a parent or grandparent until a child turns 18 or 21 (depending on the state). There are two primary types of accounts:

• UGMA (Uniform Gifts to Minors Act) – only basic assets are allowed, such as cash, stocks, bonds, mutual funds and ETFs
• UTMA (Uniform Transfers to Minors Act) – also allows other types of assets, such as real estate, art, and intellectual property

In addition to providing children a way to learn the basics of saving and investing, here are several other advantages of using custodial accounts:

• Simple and accessible. Easy to set up at most banks and brokerages.
• Potential tax benefits. A portion of your kids unearned income is taxed at the child’s lower tax rate.
• No contribution limits. Custodial accounts don’t cap how much you or your child can contribute to the account.
• Flexibility. The account’s money can be used for anything that benefits your child, not just education.

While custodial accounts can be great for teaching kids about money, they do come with several trade-offs you’ll need to consider.

Trade-off #1 : The Kiddie Tax

Custodial accounts can trigger something called the kiddie tax. Here’s how it works.

In 2025, the first $1,350 of your child’s unearned income is tax-free. The next $1,350 is taxed at your child’s tax rate (usually no more than 12%). Any unearned income above $2,700 ($1,350+ $1,350) is taxed at the parents’ rate, which can be as high as 37%!

What to do instead: If your child has earned income, a Roth IRA for minors offers tax-free growth and avoids the kiddie tax entirely.

Trade-off #2: Impact on Financial Aid

Custodial accounts are counted as a child’s asset on the Free Application for Federal Student Aid (FAFSA). Student assets are assessed at a much higher rate (20%) than parent assets (5.64%). This means that $10,000 in a custodial account can reduce financial aid eligibility by $2,000 or more.

What to do instead: If you’re saving for college, consider a 529 plan. The account owner retains control, the funds grow tax-free, and qualified withdrawals are tax-free as well. Plus, 529 plans are treated more favorably in financial aid calculations.

Trade-off #3: Loss of Control

Once the child comes of age, they can spend the money however they want. If your goal was to fund education but your 18-year-old wants to buy a motorcycle instead, you’re out of luck.

What to do instead: Spread your child’s earned income around multiple types of accounts. Put some in a 529 plan or other education account. Contribute another amount to a traditional or Roth IRA in the child’s name. And make a deposit into a custodial account that your child can (eventually) do whatever they want with.

Bottom Line

– Custodial accounts still have their place, especially for general-purpose savings or teaching financial responsibility. But it’s important to understand the trade-offs and long-term implications.

Common Tax Questions

What everyone is wondering

Here are several of the most common tax questions and their answers. But like most things, there can be exceptions, so if in doubt always ask for help.

– What happens to a loan if it’s forgiven?

The IRS generally considers the canceled amount as taxable income, unless an exception applies. This means you may have to report the forgiven debt on your tax return and pay income taxes on it. Lenders typically issue a Form 1099-C for canceled debts, which you must include on your tax return.

– Does my child need to report cash earned from a lemonade stand?

Yes, the cash your child earned for helping a neighbor is taxable. The IRS doesn’t care if it came from mowing lawns, babysitting, or lemonade stands, earned income is earned income. Your child may not end up owing any income taxes, though, thanks to the single taxpayer standard deduction of $15,000 in 2025. But they’ll still be on the hook for Social Security and Medicare taxes.

– Are my rewards earned on a credit card taxable?

Taxation of any extras you earn with a credit card – including miles, discounts, even cash back – are not taxable if you had to pay to get them. Other rewards that you receive, for example a reward for signing up for a card or for referring a new cardholder, are considered taxable income per the IRS.

– Does my employer contribution count towards the 401(k) limit?

Your employer’s matching contributions do not count toward your maximum contribution limit, which for this year is $23,500. If you’re 50 or older, you can sock away an additional $7,500 (for a total of $31,000) this year.

– What happens to loans from my retirement account if I change jobs?

When you switch jobs, you must pay back any loans borrowed from your employer-sponsored retirement account within a short amount of time. If the loan isn’t paid back, the outstanding balance is considered a distribution that is subject to income taxes and an early withdrawal penalty.

– Do I really need to report gifts given to people?

Yes, but only if you give more than $18,000 ($36,000 if married) in 2025 to any one person. It must be reported to the IRS on a gift tax return. That’s because the IRS keeps track of gifts you’re allowed to make over the course of your lifetime, which in 2025 is $13,990,000 ($27,980,000 if married). Only after reaching this lifetime dollar amount will you need to actually make a gift tax payment.

– Do I have to report a loss?

You may think the IRS isn’t interested in losses you incur, such as when you sell a stock at a loss or if your business loses money. The reality is that you should always report losses on your tax return because you can use them to offset income under certain conditions. In addition, most losses can be carried forward to future years to offset income.

Reputation Rescue: Smart Ways to Handle Bad Business Reviews

A negative online review can be frustrating, especially when you work hard to provide a great product or service.

How you respond to the negative review, though, may matter more than the review itself.

Here are several ideas for handling this type of feedback and how it could actually turn into a great opportunity to showcase your business.

– The best defense is a great offense.

You don’t have to address negative reviews if you never have them in the first place. Proactively identify possible negative experiences and encourage customers to respond directly to you to resolve their issues.

– Know your dissatisfied reviewer.

Before responding, conduct research on the customer. Are they habitual complainers? Online forums have created many of these types of customers. On the other hand, people easily get frustrated with poor service and are simply at their wit’s end. It’s important to know the difference.

– Fix the problem!

When you get a negative review, identify the customer and contact them directly. Then work with them to solve their problem. If a solution is not possible, be willing to cancel their service or refund their money.

While you may not like the solution if the customer is unreasonable, at least they are not out any money.
Then consider the experience a gift. You either now have a process that can be improved or you have identified a complainer you do not want as a customer. Either way, your business is better off! Once this is done, ask the customer to rave about how you solved their problem!

– Write your response.
Remember, your written response to the complaint is meant for future readers of the complaint. Your response should contain the following elements:

• Acknowledge the customer’s feelings
• Restate the problem
• Explain how you solved the problem
• Encourage the complainer to contact you directly in the future so you can handle their issue more effectively than through a public forum
• Avoid acting defensive, over-apologetic, or getting into a back-and-forth discussion

Today’s online review culture gives entirely too much power to a few complainers. Your goal is to use these systems to your advantage to find new buyers by showing great customer service!

From Chaos to Covered: Your Family’s Financial Emergency Blueprint

Building and reviewing an emergency plan can help your family know what to do in a crisis – especially if the next one is financial.
Here’s how to create your own family financial emergency plan, stress-test your budget, and build a great financial foundation.

Step 1: Assess your current financial situation.

Start by gathering the following information:

• Income sources. Document all incoming money, including salaries, wages, side gigs, and passive income.
• Fixed expenses. These are expense you pay at consistent intervals, such as your rent or mortgage, utilities, insurance, or internet access.
• Variable expense. This includes items like groceries, gas, and entertainment.
• Discretionary spending. These are the nice-to-have but not necessary expenses such as shopping, hobbies, and certain subscriptions.

Step 2: Simulate a job loss or income cut.

Next, simulate a scenario where one or both income earners lose their jobs or face a significant pay cut. Ask the following questions:

• How long can you continue meeting essential expenses?
• What would be your first financial response? (cutting discretionary spending or using savings)
• What resources are available? (emergency fund, severance, unemployment benefits)

Now rebuild your budget assuming this new, lower income level. Prioritize essential categories such as housing, food, utilities, & healthcare.
This exercise help you pinpoint which expenses can be eliminated or reduced.

Step 3: Build an emergency fund.

Financial experts recommend saving 3 to 6 months’ worth of living expenses. If this amount feels out of reach, aim for one month of essential expenses and build from there.

Step 4: Identify candidates for cutbacks.

Pinpoint which expenses you could immediately pause or cancel in a crisis. Then develop a cutback plan in writing. This becomes your go-to response plan, allowing you to act quickly with no emotion or debate.

Step 5: Create an income recovery strategy.

Increasing your income can speed up recovery. Brainstorm income replacement options in advance such as side hustles or freelance work; gig economy jobs like ride sharing, delivery, or tutoring; selling unused items online; accessing short-term assistance programs; tapping into a professional or industry network for job leads.

Step 6: Practice communication and assign roles.

While creating your financial emergency plan, bring your family together and assign roles:

• Who handles bills and payments?
• Who checks into benefits and aid?
• How will you explain the situation to children in age-appropriate ways?

Step 7: Review and repeat.

Your financial emergency plan isn’t a one-time task. Schedule reviews every 6 to 12 months or after any major life event like a new job, having a baby, or moving.

Creating a family financial emergency plan doesn’t guarantee immunity from hardship. But it does provide clarity, direction, and peace of mind. It also ensures that when the unexpected happens, you’re not starting from scratch.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.

The tax code isn’t just long – it’s tricky. For every deduction or credit that can lower your bill, there’s a sneaky rule waiting to catch you off guard. In this issue, learn about several common tax traps that can surprise anyone.

Also in this issue: If you’re picking up a seasonal job, we break down how that extra income could impact your taxes. We’re also pulling back the curtain on credit card fine print—revealing what banks don’t always advertise.

And for the curious minds, we explore the hidden lives of your everyday gadgets and what they’re doing behind the scenes.

Please pass this information on to anyone that may find it useful and call if you have any questions or concerns.

Upcoming dates:

June 16

– Second quarter estimated tax payments are due on Monday, June 16th.

If you are scheduled to make an estimated payment and haven’t done so yet, make sure you make your payment online or put your check in the mail by the end of the day on Monday!

Here are the links to make payments online:

IRS: https://www.irs.gov/payments

NJ: https://www1.state.nj.us/TYTR/jsp/IndTaxLoginJsp.jsp

What Banks Don’t Tell You About Credit Cards

Credit cards may offer convenience and opportunities to build credit, but they also come with terms and conditions that aren’t always advertised.

Here are several credit card secrets that banks may not tell you about.

Minimum payments are a trap.

Banks design minimum payments to look appealing (typically 2% to 3% of your balance). But paying only the minimum allows interest to grow on your remaining balance, which can result in you paying two or three times (or more!) of the original purchase price over time. If possible, pay your credit card balance in full each month.

Interest rates are negotiable.

If you’ve been a reliable customer and consistently make payment on time, there’s a good chance your bank might lower your annual percentage rate if you ask. Simply call the customer service number on the back of your card and ask if you can lower your rate. Banks prefer to keep loyal customers rather than risk losing them to competitors.

The high cost of rewards programs.

Banks design these programs to encourage spending, which increases the likelihood that cardholders will carry a balance and pay interest. Some rewards cards also have high annual fees that can erode the value of the rewards you earn. To truly benefit from rewards programs, only use your card for planned purchases and pay off the balance in full each month.

Late fees are avoidable.

Many credit card issuers offer a grace period for late payments. If you miss your payment due date, call your bank immediately and explain the situation. This can often result in the bank waiving its late fee, especially if it’s your first offense. Banks don’t widely advertise this because they profit significantly from late fees.

Introductory offers have strings attached.

Offers like 0% interest or bonus rewards often come with terms and conditions that are easy to overlook. For example, some rewards programs require you to spend a certain amount within the first three months to qualify for the bonus. If you don’t read the fine print, you might miss out on the offer or end up spending more than you intended. Always understand the requirements before applying for a new card.

Banks monitor your spending habits.

Banks track your spending patterns and use this data to their advantage. For example, if you consistently pay off your balance in full, you might not be as profitable to them, which could result in fewer promotional offers. On the other hand, customers who carry balances and pay interest may receive more marketing for additional financial products. Being mindful of your spending habits can help you avoid falling into costly traps that are pushed by banks.

Credit cards can be a valuable financial tool, but only if you understand how they work and how to avoid the hidden pitfalls.

By paying off your balance in full, negotiating fees and rates, and leveraging rewards strategically, you can take control of your credit card rather than letting it control you.

Money Management Tips for Couples

Couples consistently report finances as the leading cause of stress in their relationship. Here are a few tips to avoid conflict with your long-term partner or spouse.

Be transparent.

Be honest with each other about your financial status. As you enter a committed relationship, each partner should learn about the status of the other person’s debts, income and assets. Any surprises down the road may feel like dishonesty and lead to conflict.

Frequently discuss future plans.

The closer you are with your partner, the more you’ll want to know about the other person’s future plans. Kids, planned career changes, travel, hobbies, retirement expectations — all of these will depend upon money and shared resources. So discuss these plans and create the financial roadmap to go with them. Remember that even people in a long-term marriage may be caught unaware if they fail to keep up communication and find out their spouse’s priorities have changed over time.

Know your comfort levels.

As you discuss your future plans, bring up hypotheticals: How much debt is too much? What level of spending versus savings is acceptable? How much would you spend on a car, home or vacation? You may be surprised to learn that your assumptions about these things fall outside your partner’s comfort zone.

Divide responsibilities, combine forces.

Try to divide financial tasks such as paying certain bills, updating a budget, contributing to savings and making appointments with tax and financial advisors. Then periodically trade responsibilities over time. Even if one person tends to be better at numbers, it’s best to have both members participating. By having a hand in budgeting, planning and spending decisions, you will be constantly reminded how what you are doing financially contributes to the strength of your relationship.

Learn to love compromising.

No two people have the same priorities or personalities, so differences of opinion are going to happen. One person is going to want to spend, while the other wants to save. Vacation may be on your spouse’s mind, while you want to put money aside for a new car. By acknowledging that these differences of opinion will happen, you’ll be less frustrated when they do. Treat any problems as opportunities to negotiate and compromise.

Watch Out For These Tax Surprises

Our tax code contains plenty of opportunities to cut your taxes.

There are also plenty of places in the tax code that could create a surprising tax bill. Here are some of the more common traps.

Home office tax surprises.

If you deduct home office expenses on your tax return, you could end up with a tax bill when you sell your home in the future. When you sell a home you’ve been living in for at least 2 of the past 5 years, you may qualify to exclude from your taxable income up to $250,000 of profit from the sale of your home if you’re single or $500,000 if you’re married. But if you have a home office, you may be required to pay taxes on a proportionate share of the gain.

For example, let’s say you have a 100-square-foot home office located in a garage, cottage or guest house that’s on your property. Your main house is 2,000 square feet, making the size of your office 5% of your house’s overall area. When you sell your home, you may have to pay taxes on 5% of the gain. (TIP: If you move your office out of the detached structure and into your home the year you sell your home, you may not have to pay taxes on the gain associated with the home office.)

Even worse, if you claim depreciation on your home office, this could add even more to your tax surprise. This depreciation surprise could happen to either a home office located in a separate structure on your property or in a home office located within your primary home. This added tax hit courtesy of depreciation surprises many unwary users of home offices.

Kids getting older tax surprise.

Your children are a wonderful tax deduction if they meet certain qualifications. But as they get older, many child-related deductions fall off and create an unexpected tax bill. And it does not happen all at once.

As an example, one of the largest tax deductions your children can provide you is via the child tax credit. If they are under age 17 on December 31st and meet several other qualifications, you could get up to $2,000 for that child on the following year’s tax return. But you’ll lose this deduction the year they turn 17. If their 17th birthday occurs in 2025, you can’t claim them for the child tax credit when you file your 2025 tax return in 2026, resulting in $2,000 more in taxes you’ll need to pay.

Limited losses tax surprise.

If you sell stock, cryptocurrency or any other asset at a loss of $5,000, for example, you can match this up with another asset you sell at a $5,000 gain and – presto! You won’t have to pay taxes on that $5,000 gain because the $5,000 loss cancels it out. But what if you don’t have another asset that you sold at a gain? In this example, the most you can deduct on your tax return is $3,000 (the remaining loss can be carried forward to subsequent years).

Herein lies the tax trap. If you have more than $3,000 in losses from selling assets, and you don’t have a corresponding amount of gains from selling assets, you’re limited to the $3,000 loss.

So if you have a big loss from selling an asset in 2025, and no large gains from selling other assets to use as an offset, you can only deduct $3,000 of your loss on your 2025 tax return.

Planning next year’s tax obligation tax surprise.

It’s always smart to start your tax planning for next year by looking at your prior year tax return. But you should then take into consideration any changes that have occurred in the current. Solely relying on last year’s tax return to plan next year’s tax obligation could lead to a tax surprise.

Please call to schedule a tax planning session so you can be prepared to navigate around any potential tax surprises you may encounter on your 2025 tax return.

Be Prepared for Surprise Business Expenses

Getting a bill for an unexpected expense can put a dent in your business’s cash flow. Here are some tips your business can use to handle these unforeseen bumps in the road.

Stick to a reconciliation schedule.

Know how much cash you have in your bank account at any given time. This is done by sticking to a consistent bank reconciliation schedule. Conventional wisdom suggests reconciling your bank account with bills paid and revenue received once a month, but you now have the ability to reconcile your cash every day. Perpetual reconciliation is easier to do if your business has fewer transactions. It may seem a bit much, but with the correct team in place, you will be prepared for surprises as they happen.

Create a 12-month rolling forecast.

This exercise projects cash out twelve months. Each new month you drop the prior month and add another month one year out. This type of a forecast will reflect the ebbs and flows of cash throughout the year and identify times that you’ll need more cash, so when a surprise bill shows up, you know exactly how it will impact your ability to pay it. If you have lean months, you may wish to explore creating a line of credit with your bank to be prepared for any surprises.

Build an emergency fund.

Getting surprised with an unexpected business expense isn’t a matter of if it will happen, but when. Consider setting money aside each month into an emergency fund to be used only in case of a significant expense. A longer term goal could be to save enough money to cover 3 to 6 months of operating expenses.

Partner with a business advisor.

Even small businesses sometimes need help keeping their cash flow in line and avoiding unexpected expenses. Please call if you have any questions about organizing your business’s cash flow and preparing for surprises.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.

Reading through tax law isn’t something most people do for fun. But what if the laws are interesting or strange? In this month’s newsletter, test your knowledge about quirky tax laws with our annual tax quiz.

There’s also a list of questions to review to make sure you’re prepared as we approach the April 15th filing deadline.

Also in this edition, read through several ideas for making your spring cleaning a little more fun, and learn about answers to some of life’s pressing questions such as Why do socks always vanish?

Please pass this information on to anyone that may find it useful and call if you have any questions or concerns.

Upcoming dates:

April 15

– Individual income tax returns for 2024 are due

– First quarter 2025 estimated tax payments are due

It’s Tax Day!

Here are some last-minute details and tips

With the individual tax-filing deadline on Tuesday, April 15th, if you have not already done so, now is the time to complete all filing arrangements and payments.

While this information is provided in our filing instructions, it makes sense to provide this information to everyone, whether you have filed or not.

If you have not already done so, ask yourself these questions:

1. Did you sign your e-file authorization form?

IRS Form 8879 needs to be signed before your taxes can be e-filed. If filing jointly, your spouse needs to sign as well. If you haven’t already, please return the signed form ASAP to ensure that your taxes can be e-filed on time. But don’t sign it before reviewing the tax return. Remember, this signature means you agree with the accuracy of the tax return.

2. Do you need more time to file?

If you are not ready to file your taxes before the April 15th deadline, you can file for a six-month extension. Be aware that it is only an extension of time to file — not an extension of time to pay taxes you owe. You still need to pay all taxes by April 15th!

3. Do you owe money?

If yes, make your tax payment now! The IRS has several payment options. If mailing a payment, include Form 1040-V and ensure the mail is postmarked on or before April 15th. Sending the payment by certified mail will ensure you have proof of a timely payment. Late payments, even by one day, are subject to IRS penalties and interest.

4. Do you need to deposit funds into your IRA or HSA?

If you claim an IRA or HSA contribution on your tax return for the 2024 tax year, all deposits to those accounts need to be made by April 15th. Once completed, save proof of the contribution with your 2024 tax files.

5. Do you need to make an estimated tax payment?

The first quarter estimated tax payment for 2025 is also due by April 15th. If you owe taxes for 2024, making 2025 estimated payments might make sense for you. A quick way to calculate a first quarter payment is to divide the taxes you paid in 2024 by four, then adjust this number for any paycheck withholdings. Send your payment along with Form 1040-ES to the IRS by April 15th. Then schedule a tax-planning meeting to determine the best approach for the remainder of the year.

If you do miss a deadline, file your return and pay the taxes as soon as you can to stop the accruing of interest and penalties.

Customer Retention Metrics You Need to Know

Your business’s ability to retain customers is one of the most important components to sustained growth and profitability. Here are the three retention metrics useful for every business owner.

• Retention rate. Most customer retention is measured over a set period of time, typically one year. To determine your rate, take a look at the number of customers who ordered from you last year. Then see what percent of them order at least once from you over the current year. If you measure this percent each month you can see how your retention builds throughout the year. The key is to compare your retention rate to the same period in prior months and years. A rising rate means you are on the right track; a shrinking rate means you need to make changes. According to the Harvard Business Review, a 5% increase in your retention rate increases profits by 25% to 95%!
  Part 1 – Cut’em Nail Salon Example: Cut’em Nail Salon starts the year with 700 active clients. They add 300 new customers during the year, and their active client base is 800 at the end of the year. On the surface things look good, right? This increase of 100 clients is over 14%! But when you calculate the retention rate, it is 71.4% (800 clients minus 300 new clients means 500 of last year’s clients still use Cut’em. 500 divided by 700 equals 71.4%). What happened to the 200 customers that did not return? Cut’em doesn’t know if this is good or bad news, as it only makes sense when comparing it to the last few years’ retention performance.
• Existing customer revenue percentage. Core customers almost always contribute the most to your sales. But how much? To figure out your returning customer revenue percentage, start with a list of revenue by customer for the last 12 months. Identify the returning customers and add up revenue attributed to them. Divide that number by your total revenue. Use this information to balance your spending between new customer acquisition and retaining your core customers. If you are like most businesses, you will realize there is tremendous value in spending more time and effort on retention, even when your business is full!
  Part 2 – Cut’em Nail Salon Example: Assume the nail salon’s total revenue is $1 million and the revenue from the 500 returning clients is $900,000. In this case, the core customers represent 90% of the revenue but only 62.5% (500 divided by 800) of the customers!
• Most valuable customers. Now identify which customers spend the most and buy the most often. Odds are, many of your top customers have similar characteristics. In the end, your goal is to keep these customers happy and get more just like them!
  Part 3 – Cut’em Nail Salon Example: In the example above, the average revenue per client is $1,250 per client or over $100 per month ($1 million divided by 800 clients). If the top 20 clients represent $100,000 in revenue or $5,000 per client, you can quickly see how important they are!

The key take away is that sustained growth and profitability comes from the core customers you retain each year. And the best place to start is to calculate and understand your retention numbers and their trend.

Annual Tax Quiz – Quirky Tax Facts!

From quirky tax laws to surprising deductions, this fun 10-question multiple choice quiz will test your knowledge about interesting tax facts from here and around the world. Let’s see how you do—answers are at the end!

1. Given our British origins, let’s start with a fun English tax fact. What was taxed in England during the 17th century, resulting in an abundance of bald heads?A. Hats
   B. Hair powder
   C. Wigs
   D. Shampoo
   • Answer: C – Wigs
     In 1795, England taxed wig powder, causing many to stop wearing wigs altogether.
2. Which U.S. president introduced the first federal income tax?A. Abraham Lincoln
   B. George Washington
   C. Franklin D. Roosevelt
   D. Theodore Roosevelt
   • Answer: A – Abraham Lincoln
     The first federal income tax was introduced in 1861 to fund the Civil War. As promised, after the war ended, so too did the income tax, only to be re-introduced in the early 1900s.
3. What strange item did the IRS allow a bodybuilder to deduct as a business expense?A. Body oil
   B. Protein shakes
   C. Tanning lotion
   D. Ostrich eggs
   • Answer: A – Body oil
     The IRS allowed a bodybuilder to deduct body oil as it was deemed ordinary and necessary for his competitions.
4. In which country was a window tax imposed, leading to bricked-up windows in older buildings?A. France
   B. England
   C. Germany
   D. Italy
   • Answer: B – England
     The window tax was introduced in 1696, with many homeowners bricking up their windows to avoid the tax.
5. What is the nickname for the U.S. tax system due to its progressive nature?A. Robin Hood Tax System
   B. Pay-As-You-Go
   C. Tax the Rich System
   D. The Graduated Tax
   • Answer: D – The Graduated Tax
     The U.S. tax system is called graduated because rates increase with income levels. It is also known as a progressive tax system.
6. What popular children’s activity was taxed in Arkansas in 1990, sparking outrage?A. Playgrounds
   B. Hula hoops
   C. Swing sets
   D. Clown shows
   • Answer: B – Hula hoops
     Arkansas briefly taxed hula hoops in 1990, considering them a recreational activity.
7. Which of the following pets were successfully deducted as a business expense?A. A cat used for pest control in a junkyard
   B. A dog trained to sniff out counterfeit money
   C. A parrot that served as an office greeter
   D. A goldfish for calming customers
   • Answer: A – A cat used for pest control
     A junkyard owner successfully deducted a cat’s care as a business expense.
8. What is the origin of the word tax?A. It comes from the Latin word taxo, meaning I evaluate.
   B. It derives from Old French taxer, meaning to split.
   C. It originates from Greek, meaning to take.
   D. It stems from the ancient Sanskrit word for tribute.
   • Answer: A
     It comes from the Latin word taxo, meaning I evaluate.

How Did You Score?

6–8 Correct: Impressive! You’ve got a solid grasp on quirky tax facts.
3–5 Correct: Not bad! Your brain knows a bit of interesting tax trivia.
0–2 Correct: You live a wonderful life, unencumbered with unusual tax laws in your memories.

As always, should you have any questions or concerns regarding your tax situation please feel free to call.