Fall is now upon us meaning there are only three months left to consider making smart moves to manage your tax obligation. With this in mind, why not review the tips included here to see if there is an area or two worthy of your attention.
Plus consider a deeper dive into the long held idea of creating an emergency fund. When you look at it, you see that there are different kinds of emergencies, each with their own specific needs. So included this month are some ideas to consider to reduce the chance an emergency will take ahold of you and your family.
All this and more ideas and tips as we round out the year together. As always, feel free to call if you wish a review of your situation and pass this information along to someone who might find it useful.
Upcoming Dates & Reminders:
October 15
– Filing deadline for extended 2025 individual and C corporation tax returns
Tax Questions Worth Asking Before Year-End
Take a few minutes to ask yourself the following tax questions as we approach the last several months of 2026.
The answers could uncover a problem – or an opportunity – while there’s still time to do something about it.
Am I going to owe or get a refund?
A large tax refund isn’t necessarily good or bad. The better question is whether that money would be more useful throughout the year or as a lump sum at tax time. For example, a $3,000 refund represents about $115 from every biweekly paycheck. Would having that extra money throughout the year help with monthly expenses, saving, or paying down debt? Or does receiving $3,000 at once make it easier to accomplish a larger financial goal? Review your withholding before year-end to decide which approach works best for your family.
Did I have extra income that didn’t have withholdings?
Think about any money you made outside your regular paycheck. Maybe you did some freelance work, picked up a side gig, earned rental income or made money from investments. Unlike a paycheck, taxes may not have been taken out before that money landed in your pocket. Add it all up before year-end so you have a better idea of what it could mean for your tax bill and whether you should make an extra tax payment now.
Did I experience any major life events?
Think about what changed in your household during the year. Marriage, divorce, a new baby, a child leaving home, retirement, or the death of a loved one can all affect your tax return. So can less obvious changes such as beginning to support an aging parent or having a child start college. Bringing these changes up before year-end can uncover tax credits, deductions or planning opportunities that might otherwise get missed until it’s too late to act.
Did I have any transactions that would cause a taxable event?
Selling stocks is an obvious example, but taxable events can come from many places. Did you sell real estate, cryptocurrency, a business interest or another valuable asset? Did you exercise stock options or receive proceeds from an investment? Review any significant financial transactions you made during the year. Knowing about gains and losses before December 31st may also provide opportunities for additional tax planning before the year closes.
Did I change jobs?
A job change can create several possible tax issues. Your new employer may withhold taxes differently, especially if your income changed significantly during the year. You may also have received a bonus, severance payment, unused vacation payout, or other compensation from your former employer. And don’t forget about your old retirement plan. Before year-end, review your withholdings, retirement contributions and anything else that changed when you switched jobs.
A little tax planning now can make filing your 2026 return a lot less surprising.
Please call if you’d like to discuss these and other questions about your tax situation.
Rethinking Your Emergency Fund
We’re told to build an emergency fund for life’s unexpected expenses. But the word unexpected can cover a lot of financial territory.
A major car repair? Emergency. Unplanned medical bill? Emergency. Job loss? Definitely an emergency. Before long, you may find yourself relying on that one pot of money for all sorts of expenses that don’t fit neatly into the monthly budget.
Here are a few ways to rethink your emergency savings and prepare for the financial surprises you may not be able to predict but can still plan for.
Plan for categories, not catastrophes.
You can’t predict exactly what will happen, when it will happen or what it will cost, but you can anticipate many categories of financial surprises. Identify the risks most relevant to your circumstances, such as vehicle repairs, home maintenance, medical expenses, pet care or an unexpected loss of income. Thinking in categories can make an otherwise vague savings goal more concrete and help you decide which financial risks deserve the most attention.
Give predictable surprises their own space
Some expenses are unpredictable in timing but predictable in existence, making them good candidates for regular monthly savings. Setting aside money for categories such as vehicle replacement or home repairs means the expense can still be unexpected, but the money doesn’t have to be. Even relatively small monthly contributions can build a reserve that keeps the next broken appliance, veterinary bill, or trip to the mechanic from competing with every other financial priority.
Give your emergency fund a narrower job
Once some of those irregular-but-foreseeable categories have their own funding, decide what you want your emergency fund to cover. Maybe its primary responsibility is to replace income. Maybe it’s simply the financial backstop for something you genuinely didn’t anticipate. Giving that money a clearer purpose can also make it easier to determine how much you actually need instead of relying on a single rule of thumb.
When the balance goes down, your plan may be working
There’s something psychologically difficult about spending savings. You work hard to make the number go up, so watching it fall feels like moving backwards. But if money was deliberately saved for car repairs, home repairs, income interruptions or life’s other financial disruptions, using it isn’t necessarily a setback. In fact, being able to pay an unexpected bill without taking on debt or disrupting the rest of your budget is exactly what those savings are meant to accomplish.
The next step is to continue saving to replenish your emergency account.
Sometimes the best emergency plan isn’t predicting the emergency. It’s making sure the money is ready before you know what it will need to replace.
By giving different kinds of financial surprises their own place in your savings plan, the next unexpected expense may feel a little less like an emergency.
Hiring Family Members – What You Need to Know!
Many business owners hire their children, their spouse, or other family members to work in their business. Sometimes this works out well. Other times it causes problems.
Here are some of the key pros and cons of putting family members on your payroll.
Hiring your children
Hiring your kids for a part-time job often has more tax advantages and fewer drawbacks than hiring others. The financial advantage is that if you’re paying your child to do useful work, the business gets a tax deduction for the wages paid. Your child will probably pay little or no income tax, and the after-tax wages stays in the family.
To ensure the wages are fully deductible the child must be doing a real job that helps the business, and the wages must be reasonable for the work performed. Keep detailed records of hours worked and pay salary regularly, preferably on the same schedule as other employees. In other words, treat your child just like any regular employee.
In addition, depending on how your business is organized and the age of your child, you may be able to avoid paying Social Security, Medicare, and unemployment on their wages. To qualify, you must be a sole proprietor or a husband-wife eligible partnership and your child must be under the age of 18.
Hiring your spouse or other relatives
An advantage to hiring your spouse or other relatives is that you have an employee whom you know well, and who may be more motivated or more flexible than a non-family member. And in many family-owned businesses, it’s a powerful way to train the next generation who will take over leadership of the company.
That same familiarity can bring disadvantages, however. Few families are without some internal or intergenerational conflict, and that can be disastrous if it spills over into the workplace. You must also consider the effect on other employees. Any sign of favoritism or unequal treatment can cause resentment and ruin the motivation of other employees.
Be cautious moving forward
There are plenty of businesses where hiring family members has worked out just fine, but other businesses where it didn’t work out.
So think long and hard before you bring family members into the business. Talk to them and to your key employees beforehand so everyone understands and is comfortable with their roles in the company.
As always, should you have any questions or concerns regarding your tax situation please feel free to call.
