Love and Money: Must-have Financial Conversations for Engaged Couples

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Spring weddings are in full bloom, and May is one of the most popular months to tie the knot. For engaged couples, the to-do list seems endless. But between choosing flowers and finalizing a menu, there’s one critical conversation that many future grooms and brides-to-be avoid: Money.

Talking about finances early on can set the foundation for a strong financial partnership — or tear relationships apart down the road. Nobody wants to discover their partner’s child support obligations while doing their first joint tax return.

Now’s your chance to put it all on the table. Here are essential money questions every couple should be asking before walking down the aisle:

Are you a spender or a saver?

Maybe you grew up clipping coupons while your partner’s family never thought twice about splurging. How do you expect to handle this as a couple? Talk openly about your spending philosophies, budgeting styles and what financial security means to each of you, so can understand and respect each other’s point of view.

How will you tackle debt?

Recent data reveals that 54% of people believe a partner with debt may be a reason for divorce.

Whether it’s car payments, outstanding credit cards or medical bills, share what you each owe and create a realistic repayment strategy. Will you pay down debt before buying a house? Balance debt repayment with saving? Also think about how you can avoid accumulating more debt as a couple.

How will you split the bills?

Every couple needs a clear path for covering shared expenses. Some couples split everything 50/50 while others contribute based on their income. One partner may shoulder the mortgage while the other pays all the miscellaneous household expenses. The key is finding an arrangement that feels fair to both of you.

Who will handle which financial responsibilities?

Even if you merge finances completely, someone has to pay the bills, manage investments and file taxes. Decide together who handles which tasks, and how you’ll both stay informed about your overall financial picture.

Will you choose joint accounts, separate accounts or somewhere in between?

Some couples prefer fully merged finances. Others like separate accounts to retain financial independence. And many choose a hybrid. A Bankrate survey found that 62% of couples keep at least some money separate from each other. Consider your comfort levels and what makes the most sense for your marriage.

What are your retirement goals?

Do you both want to retire at the same age? How much are you saving, and is it enough? If you’re still in your 20s and 30s, the power of compound interest is on your side. But every year you delay saving could cost you tens of thousands of dollars by age 65. Review employer 401(k) matches and IRAs, and make sure you’re both contributing to a shared future.

Have you addressed wills, beneficiaries and powers of attorney?

Marriage changes your legal status, and your estate planning documents need to reflect that. These documents ensure that if something happens to one of you, the other isn’t left fighting legal battles during a difficult time. Create or update your wills, beneficiary designations and life insurance policies, and establish powers of attorney so you can make medical and financial decisions for each other if needed.

Start your marriage on solid financial ground

As you plan a future together, make room for these financial discussions. The experts at Magone & Company can help. Call us today at (973) 301-2300 to help address your financial concerns with confidence before saying “I do.”

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance specific to your business situation.

 

More Money, Same Problems: Understanding Lifestyle Inflation

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It’s the beginning of a new year, and maybe you landed a promotion with a generous raise. But before you start browsing new house listings or book a dream vacation for your entire family, here’s an uncomfortable truth we see at Magone & Company every day: Most people who get big pay bumps end up no better off financially a year later.

And this has a lot to do with lifestyle inflation.

Lifestyle inflation is when spending habits rise right along with your income, preventing you from building the wealth you thought that raise would bring.

With discussions around the One Big Beautiful Bill impacting tax policy and take-home pay, responding strategically to changes in your income has never been more critical. What you do with that extra money determines your financial future.

Here’s what we recommend:

First, cover the essentials. Before considering any big upgrades, make sure your priorities are handled. For example, build a fully funded emergency cash reserve to cover three to six months of expenses.

Maximize your retirement contributions to take advantage of compound growth, and take steps to eliminate high-interest debt that’s costing you every month.

Lock in savings. Treat raises like they don’t exist! As your paychecks grow, redirect a portion of each one to a savings account, retirement contributions or debt payoff.

So even as you spend some of your new income, you’re still protecting your building and protecting your financial future.

Set percentage-based goals. Commit to saving a consistent percentage rather than a fixed dollar amount.

For example, if you saved 15% when earning $80,000, keep saving 15% when you earn $100,000. This ensures your wealth building scales with your income.

Maintain visibility. Track your spending using apps or spreadsheets. Small expenses like extra subscriptions that you don’t use, or frequent coffee runs can accumulate quickly. But monthly reviews can help identify these patterns.

Implement a waiting period. Wait on the extravagant purchases. You may want to impose a three-to-six-month cooling-off period or even holding off an entire year. If you still need or want the upgrade after that allotted time, plan and set a budget rather than making an impulse decision.

Calculate the real cost of upgrades. So you’ve waited, and now you want to pull the trigger on financing a new car. But first, take the monthly cost and multiply it out.

A $300 monthly car payment increase costs $3,600 annually. Over five years, that’s $18,000. Seeing the true cost may help you figure out if the upgrade is really worth it.

Focus on experiences over possessions. A weekend trip with family or going back to school to learn a new skill may bring you more joy than another tech gadget or wardrobe makeover.

Experiences create lasting memories, connections and personal growth while the excitement of new purchases can fade quickly.

Make it count

Financial success requires balance. As your income grows, you can improve your quality of life, but not at the expense of your financial foundation.

Your next raise is an opportunity to make smarter financial decisions. Don’t hesitate to reach out to the Magone & Company team with any questions about your long-term financial health strategy.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance specific to your business situation.

 

 

Self-Employment Tax Planning: Start Now or Pay Later

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Working for yourself can be great, but it can also be quite… taxing.

Being your own boss comes with incredible perks — like working where you want and when you want — but the tax side of things can be a bit more complex than when you had an employer handling everything.

To help avoid any unpleasant tax surprises, here are some key rules to keep you in good standing with the IRS.

You have to report income and expenses on Schedule C of Form 1040. As a self-employed worker, you’ll wind up owing taxes on your net profit.

The upside? Your business expenses get deducted against your gross income and not as itemized deductions. And if you have a bad year and lose money, you can usually deduct those losses against your other income.

You’ll have to pay self-employment taxes. For 2025, you’ll pay 15.3% on your first $176,100 of net earnings, then 2.9% on anything above that.

If you’re a high earner, you’ll pay an extra 0.9% Medicare tax once you hit $200,000 if filing individually or $250,000 if married filing jointly. The silver lining? You can deduct half of what you pay in self-employment tax.

You might qualify for a pass-through deduction. If your business generates qualified business income, you may be able to deduct up to 20% of it.

The pass-through deduction is applied after most of your other deductions, meaning it reduces your final taxable income. The good news is you can claim it whether you itemize your deductions or take the standard deduction.

Your home office expenses may be deductible. Working from your home? Your home office can be a dedicated room, part of a room or even a separate building on your property that’s used to conduct business.

You may quality for the home office deduction on all direct expenses, as well as part of your indirect expenses that are related to working from home.

You’re responsible for quarterly estimated tax payments. Since no employer is withholding taxes from your income, you’re on the hook for paying the IRS four times a year.

You can deduct your health insurance premiums as a business expense. This means you get to deduct 100% of your premiums, compared to the regular medical expense deduction that only kicks in after you’ve spent over 7.5% of your income on medical costs.

You must maintain complete records of your income and expenses. In order to claim the full amount of deductions you’re entitled to receive, be sure to keep careful documentation of your expenses.

Be aware that some expenses — like car costs, travel and meals — come with extra rules and recordkeeping requirements or limitations on deductibility.

You may consider setting up a retirement plan. This can be a great tax savings strategy, allowing you to deduct what you contribute now and only pay taxes when you withdraw the money later.

Look into retirement plan option like a SIMPLE plan or SEP IRA, which require less paperwork but still offer solid tax benefits. In 2025, business owners may contribute up to 25% of their total earnings or a maximum of $70,000 into their SEP IRA.

You’ll need to handle payroll taxes for your employees. Hiring a team to work for you? That means getting a taxpayer ID number and dealing with withholding, adding a whole new layer of administrative responsibility to your business.

Questions? The CPAs at Magone & Company can help support you in achieving the most favorable tax situation as a self-employed worker or small business owner. Give us a call at (973) 301-2300 to learn more.

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your unique circumstances.

What Happened to Your State and Local Tax Deductions?

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New limits on state and local tax (SALT) deductions have created some serious tax planning challenges for many of our clients.

These limits are responsible for increasing tax bills for millions of Americans. And even if you’ve never heard of SALT deductions, you’ve probably still felt the impact, especially if you live somewhere with high property taxes or state income taxes.

Here’s what every taxpayer should understand about the changes.

Looking back on the “good old days”

Not too long ago, you could deduct pretty much all of your state and local taxes without worrying about limits. This included:

  • State, local and foreign real property taxes
  • State and local personal property taxes
  • State, local and foreign income taxes

What’s changed?

Starting in 2018, Congress put a cap on these deductions. All of those state and local tax deductions mentioned above are now limited to a combined total of $40,000 for 2025. If you’re married filing separately, you only get half that amount. And if your adjusted gross income is over $500,000, this limited deduction starts to phase out.

There’s an important exception: These limits don’t apply if you paid those taxes for business purposes or investment activities. So if you own rental property or run a business, those related taxes can still be fully deductible.

And there’s one area that got even stricter. If you own foreign property (like a vacation home in Italy), you can no longer deduct the property taxes you pay as a personal itemized deduction.

Minimizing the SALT cap impact

Feeling the pinch from these limitations or not sure how they apply to your specific situation? Contact the experts at Magone & Company or give us a call today at (973) 301-2300.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your situation.

 

 

Taking Tax Advice from Social Media? Think Again

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If a tax credit or deduction sounds too good to be true, it probably is.

There’s been a dramatic spike in suspicious refund claims, thanks to misleading social media advice and criminals posing as tax professionals. In fact, social media fraud even popped up on the IRS’ “Dirty Dozen” list, urging taxpayers to steer clear of bogus offers or advice.

Social media schemes aim to fool innocent scrollers with deceptive content, ranging from non-existent Employee Retention Credits (ERC) to elaborate phishing operations designed to steal personal information. What makes them even more dangerous is how legitimate they appear, often using official-looking graphics as they prey on people’s financial stress and vulnerabilities with the promise of easy money.

Heeding the red flags

As CPAs, we’ve pretty much seen it all. Here are some false social media claims to watch out for:

  • Influencer endorsements without disclosure of paid partnerships
  • Cryptocurrency-related tax “loopholes” that promise to eliminate tax liability
  • System “glitches” that allow people to claim credits multiple times
  • Foreign tax haven schemes to avoid U.S. taxes
  • “AI-powered” tax strategies that claim to find hidden deductions

These scams tend to follow predictable patterns. They may post a universal claim like, “This is the credit the IRS doesn’t want you to know about!” Or they may offer an unrealistic promise like getting your refund in 24 hours. But any post that requests your personal information and the pressure to act immediately should be treated as a clear warning sign.

Putting up a solid defense

Social media is great for many things, but tax planning isn’t one of them. Always proceed with caution:

  • Research independently. If you see a tax strategy advertised online, research it through official IRS publications and consult with a qualified professional about its validity before making any moves. Remember, legal tax strategies require documentation. If someone tells you record-keeping isn’t necessary, walk away.
  • Don’t share information online. When it comes to taxes, the IRS will never contact you via email, social media or text. And legitimate tax professionals will only conduct business through secure, encrypted channels and established office locations — not over Facebook.
  • Always verify credentials. Only work with licensed tax professionals who are credentialed through state licensing boards and other professional organizations.
  • Trust your instincts. Nobody is giving away free money. Scammers rely on creating urgency and FOMO, so taking time to think things through is one of your strongest defenses.

Social media tax schemes can cost you big money, hefty penalties, damaged credit and even your dignity. Don’t hesitate to reach out to the tax professionals at Magone & Company for support.

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your unique circumstances.

New Tax Break: Deduct Interest on Your Car Loan Through 2028

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Planning to finance a car, truck or SUV in the near future? There may be some good news waiting for you come tax time.

Thanks to a temporary tax break, eligible buyers can deduct the interest paid on qualifying loans on vehicles financed between now and 2028.

Before you head to the dealership, here’s a breakdown of what you need to know to take advantage of this opportunity.

How much can you deduct?

The new deduction allows you to claim up to $10,000 per year in interest paid on qualifying vehicle loans. It’s an “above-the-line” deduction, meaning it reduces your adjusted gross income whether you itemize or take the standard deduction.

If you’re eligible, you can claim the deduction annually for interest paid each year through 2028.

But if your modified adjusted gross income hits certain limits, you’re out of luck:

  • $100,000 for single filers
  • $200,000 for married filing jointly

What vehicles qualify?

To be eligible for this deduction, your vehicle must check the following boxes:

  • A new car, minivan, van, SUV, pickup truck or motorcycle
  • Gross vehicle weight rating under 14,000 pounds
  • Final assembly in the U.S.

What are the loan requirements?

The loan must be originated between January 1, 2025, and December 31, 2028, and used exclusively for personal use only (no business or commercial vehicles). Plus, you’ll need to list the vehicle’s VIN on your tax return when claiming the deduction.

Making the most of this opportunity

The requirements are specific, but the potential tax savings could be worth it. Be sure to keep detailed records of your interest payments and ensure your vehicle meets all requirements.

Need help keeping more of what you earn? Tax planning can help. Reach out or give us a call today at (973) 301-2300.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your situation.