Business Taxes

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 the One Big Beautiful Bill Means for Your Business

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The One Big Beautiful Bill (OBBB) legislation represents an overhaul of the federal tax landscape, introducing dramatic changes to taxes, credits and deductions that will impact taxpayers across all income levels. And everyone from entry-level employees to Fortune 500 CEOs will be affected.

The good news is that once you wrap your head around these changes, your business may benefit from opportunities to optimize your tax strategy. Here’s what you need to know:

  • Paid family and medical leave credit. Now a permanent credit, employers can choose between two methods for calculating the credit: a percentage of wages paid to qualifying employees during family and medical leave, or a percentage of premiums paid for insurance policies providing paid family and medical leave. Additionally, employers may now elect to include employees with at least six months of service (reduced from one year).
  • Employer-provided childcare credit. Effective in 2026, the OBBB increases the credit percentage for “qualified childcare expenditures” from 25% to 40% for regular businesses and 50% for eligible small businesses. The maximum credit is $500,000 ($600,000 for eligible small businesses). Beginning in 2027, all amounts are subject to annual inflation adjustments.
  • Employee exclusion for employer-paid student loans. The OBBB permanently extends the employee exclusion for qualifying employer student loan payments. Starting in 2026, the current $5,250 maximum exclusion amount will be adjusted annually for inflation.

What’s next?

Stay in the know as additional guidance and regulations are released, and reach out to the tax planning experts at Magone & Company to get your questions answered.

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 the Tax Benefits of Your Remote Workforce

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The pandemic fundamentally altered how many U.S. businesses operate. Distributed teams and flexible arrangements have become permanent fixtures rather than temporary fixes.

For employers and workers, this also means new opportunities and challenges for tax planning and compliance.

The reality of remote workers

Companies have discovered that productivity doesn’t require physical proximity. In fact, 60% of remote workers report their flexible work arrangement has boosted their ability to get work done and meet deadlines. This proven effectiveness means that today’s employers may have teams spanning cities and states, creating complex tax implications that extend beyond traditional office-based considerations.

Comprehensive tax credit and incentive (TC&I) analysis has become essential for businesses supporting remote teams. These specialized programs provide detailed assessments of available opportunities, breaking down qualification requirements and implementation strategies tailored to your specific business model.

TC&I experts examine your operations, identifying federal, state and local programs that align with your workforce distribution, ensuring you’re capturing every available benefit while maintaining full compliance across all jurisdictions where your employees work.

Navigating the nexus challenge

Before your businesses can capitalize on these opportunities, you must establish and manage nexus obligations.

State tax nexus determines where your business has sufficient connection to warrant tax obligations, and remote employees can create these connections in states where you’ve never maintained a physical presence.

Each state has different standards for establishing nexus through employee activities. Some require minimal employee presence to trigger obligations, while others have higher thresholds. Getting nexus right requires a proactive approach:

  • Conduct regular nexus assessments. Implement regular reviews of employee locations and activities to identify new potential nexus obligations before they become compliance issues.
  • Establish clear remote work policies. Develop guidelines that address tax implications of employee relocations and temporary work arrangements.
  • Engage multi-state tax professionals. Partner with specialists who understand the nuanced requirements across different jurisdictions.

Credits that reward a remote work strategy

Once your nexus obligations are properly managed, the evolving work landscape has expanded access to numerous tax credit opportunities for remote employers. For example:

  • State-specific remote work incentives. Various states offer credits for companies hiring remote workers or relocating operations.
  • Home office deduction optimization. While limited for employees, businesses can structure arrangements to maximize legitimate office-related deductions.
  • Technology investment credits. Many jurisdictions offer incentives for investments in equipment and software that enable remote collaboration.
  • Economic development incentives. Location-specific credits may be available when remote workers are based in designated economic zones.

Making the most of your remote workforce

Regular assessment of your workforce distribution, combined with strategic implementation of available credit programs, positions your business to thrive. Learn how the experts at Magone & Co 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 business situation.

 

Breaking Down The One Big Beautiful Bill for Businesses

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Recently enacted tax legislation known as The One Big Beautiful Bill was passed by Congress and signed into law on July 4, 2025.

This new legislation brings immediate relief in several key areas while creating strategic decisions that require prompt attention. Here’s a summary of the most critical provisions that may impact your business:

Research and Development (R&D) expensing. Businesses can once again fully deduct domestic R&D expenses in the year they’re incurred. Small businesses can amend 2022-2024 tax returns to claim immediate R&D deductions previously capitalized which may generate refunds and improve cash flow.

Large corporations cannot amend prior years but can take the full remaining deduction in 2025 or split it between 2025 and 2026.

Research credit coordination. New rules require choosing between claiming the full R&D tax credit or taking the full expense deduction, as you can no longer maximize both.

If you claim the Section 41 research credit, you must reduce your R&D deductions by the same amount. Alternatively, you can elect a smaller credit to preserve your full deduction.

Business interest limitation. The bill’s business interest deduction now limits returns to the more favorable 30% of EBITDA calculation, reversing the restrictive EBIT-based rules that had been in effect since 2022. This change is permanent, eliminating previous uncertainty about future policy shifts.

The key improvement is that depreciation and amortization are back in the calculation base, increasing the threshold for allowable interest deductions. This benefits manufacturers and other capital-intensive businesses that were hit hard by the previous rules.

But there’s one important clarification: Capitalized interest (interest added to asset costs rather than immediately deducted) must now be included in the limitation calculation, with the 30% cap applied to capitalized interest first before current deductible interest.

Foreign-derived income changes. The foreign-derived income deduction is being scaled back in two phases. The deduction rate drops permanently from 37.5% to 33.34% for tax years beginning after 2025. And starting mid-2025, income from selling intangible property and depreciable assets won’t qualify for the deduction, and only expenses directly tied to qualifying foreign income can reduce the benefit.

The 100% bonus depreciation is back for all qualifying equipment and property purchased after that date. This reverses the phase-down schedule that reduced the benefit to 60% in 2024 and 40% in early 2025. The reinstatement applies to plant, equipment and tangible personal property, including both new and used assets. There’s also a special elective provision for manufacturing and refinery property placed in service through 2031, giving these businesses additional flexibility in timing their depreciation benefits.

International tax changes. Starting in 2026, Global Intangible Low-Taxed Income (GILTI) rules are being renamed Net CFC Tested Income (NCTI), affecting businesses with foreign operations.

The deduction rate drops from 50% to 40%, which increases the effective tax rate from approximately 13.1% to 12.6% (around 14% when factoring in foreign tax credits). The previous exclusion for tangible asset investments is eliminated, meaning all foreign income is now subject to tax under these rules.

In addition, the foreign tax credit rate increases from 80% to 90%, and rules for allocating deductions against this income are being tightened to exclude interest and R&D expenses from the calculation base.

Next steps for your business

The One Big Beautiful Bill offers substantial tax relief, but maximizing these benefits requires proactive planning and strategic decision-making now. The professionals at Magone & Co can help. Reach out to our knowledgeable 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 Geography of Work: A Business Guide to State Tax Nexus

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The pandemic accelerated a massive shift to remote work, revolutionizing the way we do business. Fast-forward five years, and approximately 22 million U.S. employees continue to log in from home. It’s also not uncommon for employees to work in different states than their employer.

This new reality of distributed teams has transformed the traditional understanding of state tax nexus — the connection between a business and a state that triggers tax obligations. Understanding these evolving tax implications isn’t just about compliance; it’s about making strategic decisions that could significantly impact a company’s bottom line and operational flexibility.

For employers, understanding the state tax nexus has never been more critical.

Decoding state tax nexus: Beyond the office walls

Traditionally, physical presence determined nexus — offices, warehouses or retail spaces — but remote work has expanded its definition.

These new nexus triggers may require employers to implement employee tracking systems and regularly review their multi-state tax obligations to ensure they’re in good standing:

  • Employee location. Having even one employee working remotely in a state can establish nexus, potentially creating tax responsibilities in that jurisdiction.
  • Revenue thresholds. Many states have economic nexus laws that require tax registration based on total revenue generated within the state, regardless of physical presence.
  • Temporary work arrangements. Short-term remote work and even employee travel can unexpectedly create tax obligations, even if an employee is only working temporarily from another state.

Unlike traditional nexus rules, there’s also an economic nexus that focuses on revenue thresholds, transaction volumes and digital interactions, rather than physical presence. Employee locations, digital service delivery and distributed workforce models can all simultaneously trigger multiple state tax obligations, creating a complex compliance landscape.

To avoid noncompliance, businesses may need to develop and implement sophisticated strategies to address a range of intricate tax implications:

  • Tracking employee locations and work patterns
  • Understanding varying state tax regulations
  • Maintaining accurate records of remote work arrangements
  • Calculating potential tax liabilities across multiple jurisdictions

Building a tax-compliant remote work infrastructure

The key to managing tax nexus obligations is to transform obstacles into manageable processes.

  • Develop clear policies. Create comprehensive remote work guidelines that address pre-approval requirements for out-of-state work, duration limits for temporary relocations, tax implications notification procedures and more.
  • Invest in employee training. Implement regular training programs focusing on location reporting requirements, tax compliance procedures, documentation protocols and state-specific regulations.
  • Create compliance checkpoints. Establish periodic review processes, including regular economic threshold monitoring, annual compliance audits and state registration reviews.
  • Leverage technology solutions. Utilize advanced tools for real-time location tracking, automated tax calculations, multi-state compliance reporting and economic nexus monitoring.
  • Partner with the experts. By working with a trusted tax professional, businesses can have peace of mind they’re getting the proper guidance and expertise to address the tax nexus challenges of remote workers.

The CPAs at Magone & Company can help your remote operations remain compliant and minimize your tax liability. Reach out 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

Keeping Main Street Strong: Protecting Small Business Tax Relief

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Small businesses face a critical tax challenge as a significant tax deduction is set to expire at the end of 2025. But the Main Street Tax Certainty Act aims to provide a lasting solution.

Initially introduced in the 2017 Tax Cuts and Jobs Act, the Main Street Tax Certainty Act is proposed legislation to make the 20% pass-through business income tax deduction permanent. This benefit allows eligible small businesses — including sole proprietorships, partnerships and S corporations — to reduce their taxable income, provide tax stability and support continued economic growth.

What this means for Main Street USA

Small businesses, which create local and drive economic growth, are experiencing significant pressures — from economic uncertainty to rising prices to a labor shortage.

By offering a commonsense solution to strengthen these businesses, the Act seeks to enhance their resilience and arm them with a competitive edge, ultimately supporting the long-term success of small towns across the U.S.

The deduction supports 2.6 million jobs and contributes $325 billion to the U.S. economy. Permanent tax relief would enable:

  • Improved financial planning
  • Increased investment in workforce and technology
  • Enhanced competitiveness against larger corporations

The bill requires broader bipartisan support in order to be signed into law. Small business owners are encouraged to stay informed about the legislation, lobby their local Congressional representatives and consult tax professionals about impending impacts.

Navigating tax changes with confidence

If you have questions about how this potential change could affect your tax strategy, the tax experts at Magone & Company can help guide your business with a sound financial plan. Reach out today at (973) 301-2300.