Nick Magone, CPA, CGMA, CFP®

One Big Beautiful Bill: What Every Family Should Know About the New Tax Law

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The tax landscape just shifted — dramatically.

President Trump recently signed the “One Big Beautiful Bill” into law, bringing the most significant tax changes in years. From employees and families to entrepreneurs and charitable donors, this new legislation may impact your 2025 tax return and beyond.

Let’s break down the key changes: 

Your tax rates just got locked in. Remember those lower tax rates from 2017 that were set to expire? They’re now permanent. The top tax rate stays at 37%, and all the existing brackets will continue to adjust for inflation each year. So what you’re paying now is what you’ll keep paying.

More of your income is protected from taxes. Starting with your 2025 tax return, the standard deduction increases to:

  • $15,750 for single filers
  • $31,500 for married couples filing jointly

This means more of your income is shielded from federal taxes, and fewer people will need to itemize deductions to get the highest tax benefits.

There are new ways to save on charitable giving. Even if you don’t itemize deductions, you can now deduct charitable contributions. In fact, you can deduct up to $1,000 ($2,000 for married couples) for cash donations to qualified public charities, right off the top.

Plus, the Educational Choice for Children Act creates a tax credit (not just a deduction) of up to $1,700 for donations to scholarship organizations that help families pay for private K-12 education.

There’s an increase in state tax relief (temporarily). If you live in a high-tax state and itemize deductions, you’ll want to pay attention to this one. The cap on state and local tax (SALT) deductions has been temporarily raised to $40,000 through 2029 — a huge jump from the previous $10,000 limit. Note that this benefit phases out for higher earners with income starting at $500,000, so not everyone will qualify for the full amount.

Other changes to be aware of:

Service workers may deduct up to $25,000 in tip income while overtime workers may deduct up to $12,500 in overtime pay

  • Car buyers can deduct up to $10,000 in interest on loans for U.S.-made vehicles
  • Effective for 2025 through 2028, individuals who are age 65 and older may claim an additional deduction of $6,000
  • Parents of children born between 2025 and 2028 can open special savings accounts that come with a $1,000 government-funded starting deposit
  • Child tax credit increases to $2,200 per child
  • The estate and gift tax exemption jumps to $15 million per person

Guiding you through change

If you have questions about how these changes affect your family or your long-term financial plans, we’re here to help. Contact the experts at Magone & Co to ensure you’re taking advantage of every benefit available to you under the new law. 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 business situation.

Maximizing Financial Aid: Strategies Every Family Should Know

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Navigating the complex world of college financial aid can be overwhelming for parents and students alike. But with a holistic, proactive approach, you can significantly improve your aid potential and reduce college costs.

Here are some tips and strategies to help transform the college dream of an affordable education into your family’s reality.

Plan early. Financial aid preparation is a multi-year process. Ideally, begin strategic planning as early as freshman or sophomore year of high school. This includes:

  • Carefully managing family assets and income
  • Understanding how different financial moves can impact aid eligibility
  • Exploring available scholarship opportunities and eligibility

Understand the Free Application for Federal Student Aid (FAFSA) calculation. The FAFSA is the form you complete, but the Expected Family Contribution (EFC) is the output that results from the information you provide on that form. The EFC is critical in determining aid eligibility. The formula heavily weights income, but there are several factors that influence this calculation:

  • Parent’s income and assets
  • Student’s income and assets
  • Number of children in college
  • Family size and household income

Remember, not all assets are treated equally. Retirement accounts, primary home equity and life insurance are typically excluded from aid calculations, while investment accounts and cash savings tend to carry more weight.

Manage assets and income strategically. Smart financial positioning in the years before college can dramatically improve aid outcomes. To maximize aid potential, consider these financial strategies:

  • Avoid large cash transfers to student accounts before filing FAFSA
  • File FAFSA using prior-prior year tax returns, allowing time to plan
  • Prioritize parent-owned 529 plans, which have minimal impact on aid calculations
  • Consider timing of bonuses, capital gains or other significant income when possible
  • If possible, defer income or accelerate deductions in the years preceding your FAFSA submission

Explore multiple aid sources. Federal aid is just one piece of the college funding puzzle. It’s important to diversify your approach.

  • Research institutional scholarships and merit-based scholarships
  • Investigate state-specific grant programs
  • Consider private scholarship opportunities
  • Explore work-study programs

Compare colleges. The right school choice can make a substantial difference in your overall financial commitment. Not all colleges distribute aid equally.

  • Review financial aid packages from multiple schools
  • Look beyond top-tier schools to institutions offering more generous aid packages
  • Consider schools where your student might be a top candidate for merit aid

Repeat the process every year. Financial aid isn’t a one-time event. To continue receiving aid and optimizing your aid amount, it’s recommended that you:

  • Appeal financial aid decisions if family circumstances change
  • Reapply for FAFSA each year
  • Explore additional funding sources annually

An action plan for college affordability

Remember, every dollar saved in financial aid is another dollar in your pocket. With careful planning, you can make college more affordable and accessible for your child.

 

W-2 or 1099? Navigating Worker Classification with Confidence

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Are you classifying your workers correctly as W-2 employees or 1099 independent contractors? This distinction carries costly legal implications and tax consequences that impact both your business and your workers.

Here’s a breakdown of the differences and why they matter to your bottom line.

The basics: W-2 vs. 1099

A W-2 employee works directly for your company under your control and direction. You determine when, where and how they perform their duties. On the other hand, a 1099 contractor operates as their own business entity, providing services to your company while maintaining autonomy over how they complete their work.

But how does the IRS determine worker status? When evaluating whether someone is an employee or independent contractor, the IRS analyzes three critical categories:

  • Behavioral control. Who directs how work is performed, including instructions, training methods and supervision requirements?
  • Financial control. Who controls the economic elements of the work relationship, examining factors like the worker’s investment, opportunity for profit or loss and payment structure?
  • Type of relationship. How do both parties view their connection, considering factors like relationship permanency and provision of traditional employee benefits such as insurance and paid time off?

The business-wide impact of worker classification

Each classification carries its own distinct set of requirements and implications that directly impact your bottom line, compliance status, management approach and more.

Taxes. As an employer of W-2 employees, you withhold income taxes, Social Security and Medicare from their paychecks and contribute the employer’s portion of these taxes. You pay federal and state unemployment taxes and must issue a W-2 form by January 31 showing annual wages and tax withholdings.

In comparison, 1099 employees are responsible for their own tax obligations, including self-employment taxes. There are no FICA or unemployment tax requirements.

Cost. While hiring independent contractors might seem less expensive no benefits costs, reduced payroll taxes), the calculation isn’t always straightforward.

Contractors typically charge higher rates to cover their self-employment taxes and benefits. However, the flexibility of scaling contractor relationships up or down based on business needs can be a valuable perk.

Control and legal protection. With W-2 employees, you maintain greater control over work processes, schedules and training. But this control comes with additional legal protections under employment laws.

Independent contractors, however, offer expertise without requiring the same level of day-to-day management.

Business planning. W-2 employee relationships typically create more stable, consistent teams but require longer-term financial commitments. Independent contractor relationships provide greater flexibility and specialized expertise that can be brought in precisely when needed.

When developing both short and long-term business plans, understanding the appropriate mix of employment relationships becomes a strategic advantage for resource allocation and organizational agility.

The right choice for your business

When it comes to worker classification, getting it right the first time is always less expensive than fixing it after an audit. Ask your CPA for clarity, or give us a call at (973) 301-2300 to see how our business advisory services can help you remain compliant with employment regulations.

 

Demystifying the Non-profit Audit Process

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Navigating the world of non-profit audits can feel overwhelming — especially for organizations focused on their mission rather than financial procedures and compliance.

But understanding audit requirements and best practices is critical for maintaining transparency, accountability and donor trust.

During our 30+ years as non-profit auditors, we’ve seen nearly every situation under the sun, and answered thousands of questions about the non-profit audit process. Here’s a short Q&A we’ve compiled to help your organization boost its knowledge and prepare for potential audits with confidence.

What is an independent audit?

An independent audit involves a comprehensive review of a non-profit’s financial records, accounting systems and operational procedures by an external professional. This independent professional is typically a certified public accountant (CPA), working under a service contract rather than as an employee.

Throughout the process, the auditor examines the non-profit’s financial statements to verify their compliance with Generally Accepted Accounting Principles (GAAP), noting any discrepancies between the two. The GAAP are established by the Financial Accounting Standards Board and serve as the standard framework for financial reporting.

The CPAs at Magone & Co can also provide risk management services, due diligence and make recommendations for improving internal controls.

Why are non-profits required to undergo an independent audit?

Requirements for audits typically arise from:

  • Government agencies requesting audited financial statements
  • Non-profits spending $750,000+ in federal funds annually
  • State/local government service contracts
  • State charitable registration requirements for fundraising
  • Private foundation grant application processes
  • Banking requirements for loan approval

Whether your non-profit requires a review, compilation or complete audit of your financial statements, we’ll impart the appropriate level of assurance to satisfy your donors.

What states require an independent audit?

State audit requirements for non-profits vary significantly across state lines. Most require independent audits under specific conditions, like annual revenue or contribution thresholds.

The majority of states also require submission of audited financial statements when renewing charitable registration or non-profit status.

However, your non-profit may be exempt from these requirements even in states with audit laws, as exemptions often depend on specific factors like annual gross income or contribution levels detailed in each state’s legislation.

States with mandatory audits for all non-profits include California, Hawaii, Illinois, Maine, New York, West Virginia and Rhode Island. Find out the laws for your specific state.

Why should a non-profit conduct an audit, even if not required by law?

Beyond legal requirements, non-profits may choose to undergo independent audits for several reasons:

  • Enhanced credibility. Voluntary audits demonstrate your organization’s commitment to financial transparency — a quality increasingly expected by donors and the public.
  • Funding access. Many foundations, private funders and government agencies require audited financial statements as part of their application process, making audits necessary for accessing certain funding opportunities.
  • Governance best practices. An audit provides your board with professional assurance that financial statements are error-free, helping them fulfill their fiduciary responsibilities. Audits also serve as guardrails to identify internal financial controls that may be necessary to avoid opportunities for misappropriation of organizational funds.

At Magone & Co, our goal is to instill confidence that your records are an accurate representation of the current financial condition of your organization

From compliance to assurance

Remember, an audit is ultimately a tool that helps ensure your non-profit has the financial foundation it needs to pursue its mission effectively for years to come. Learn why you may need an external auditor to get the job done right.

For specific questions regarding your non-profit organization, contact the expert CPAs at Magone & Company for guidance.

Financial Reporting 101 for Small Business Owners

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New to running a business? While passion and hard work are crucial, financial reporting is integral to your company’s success.

Financial reports are detailed documents that provide a thorough overview of your company’s financial performance and position. They can help you:

  • Make strategic decisions
  • Ensure compliance with tax and legal requirements
  • Attract and secure potential investors or loans
  • Cut unnecessary expenses
  • Understand your business’s financial trends

Take control of your business’s financial health. These six financial reports that can help transform how you manage and grow your business.

  1. Income statement. Is your revenue growing? Are expenses creeping up unexpectedly? An income statement generally reveals your business’s cost of goods sold, operating expenses, net profit or loss and other metrics that are indicative of whether you’re making or losing money. By regularly reviewing your income statement, you can also identify areas of high spending and gain a broader understanding of your business’s profitability.
  2. Balance sheet. A balance sheet captures your business’s financial position at a specific moment, breaking down your assets, liabilities and your equity. It offers insights into your business’s net worth, helps track long-term financial stability and is essential for securing loans. That’s why it’s important to verify all entries monthly, ensure accuracy of asset valuations and check for outdated or irrelevant entries to proactively manage your business’s finances.
  3. Cash flow statement. Is your core business financially sustainable? What is your company’s overall operational efficiency? Positive revenue doesn’t always mean positive cash flow. That’s why tracking your cash flow is so important. This statement displays how cash moves in and out of your business, which can help predict cash shortages, manage day-to-day operations and make more strategic financial decisions.
  4. Inventory valuation report. An inventory valuation reports help manage your business’s physical assets, tracking current inventory levels, cost of inventory, value of existing stock and inventory turnover rates. It can be very beneficial in helping to track performance metrics like inventory turnover rate and in optimizing your inventory purchasing decisions
  5. Accounts receivable aging report. This report is like your financial watchdog, tracking outstanding customer invoices, how long invoices have been unpaid and which customers are slow to pay up. Use this report to follow up on late payments and improve your cash collection process.
  6. Accounts payable aging report. While an accounts receivable aging report manages what you’re owed, an accounts payable aging report helps you manage what you owe. This report provides a rundown of delinquent bills and expenses and payment due dates. Having a handle on your upcoming payments can help prevent late fees and penalties, and assist in your business’s cash flow planning.

Knowledge is power when it comes to your business’s financial health. That’s why the tax experts at Magone & Company can help you best understand your financial reports, interpret them and use the data to make informed decisions.

Reach out to our collaborative team 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 business situation.

The New Tax Audit Landscape: Protecting Your Financial Future

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With advanced technologies and stricter compliance standards, tax audits are evolving. And as a result, they’re transforming how individuals and businesses approach their financial reporting.

Navigating today’s audit landscape requires vigilance and strategic planning. Here are five risk factors — and mitigation tips — to plan for:

High-income earners
Complex financial portfolios present more opportunities for potential tax discrepancies. That’s why tax authorities are focusing on high-income earners.

To combat this trigger, impacted individuals may consider:

  • Implementing a multi-layered verification process for all income
  • Creating a robust digital filing system for financial records, including back-up copies of all critical financial documents
  • Collaborating with tax professionals that specialize in high-net-worth financial management

Tax return errors
From simple miscalculations to complex reporting mistakes, the IRS is zeroing in to reduce errors and close tax gaps. The most common errors include incorrect Social Security numbers, mismatched names, math mistakes and inconsistent income reporting across different forms.

Critical prevention strategies include:

  • Using official IRS forms and publications as reference
  • Maintaining updated records and accurate personal information
  • Addressing income or deduction inconsistencies quickly and proactively

Cryptocurrency transactions

Cryptocurrency and digital assets have created a challenging regulatory environment. As a result, the IRS is developing increasingly sophisticated mechanisms to track and tax these transactions.

How you can you build a solid defense?

  • Documenting every cryptocurrency transaction meticulously
  • Keeping a detailed transaction log with corresponding market values
  • Staying updated on emerging digital asset tax laws and regulations

Uncommon business expenses

Unusual business expenses may appear suspicious when they lack clear business purpose or blur the line between personal and professional spending. Entertainment costs, vehicle expenses, home office deductions and travel expenditures frequently raise red flags.

By making strategic moves now, you can prove the legitimacy of these expenses if and when an audit arises:

  • Meticulously documenting every expense and save all receipts
  • Creating a clear narrative of business purpose for each expense
  • Making sure expenses are proportional to business income and being prepared to provide a comprehensive explanation if audited

Deductions

Sizeable deductions can increase your chances of an audit — especially in 2025. A careful deduction management strategy requires substantiating, categorizing and defending business and personal expenses:

  • Understanding industry-specific standards and maintaining a comprehensive and organized record-keeping system
  • Ensuring that every claimed expense has a legitimate, verifiable business connection
  • Segregating personal and business expenses through dedicated financial accounts, keeping detailed receipts with clear descriptions

If there’s something that makes the IRS take a second look, an audit may be inevitable.

By staying informed, you can transform potential audit stress into a proactive tax strategy. Don’t hesitate to reach out to the tax professionals at Magone & Company for guidance.

 

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.