Tax Tips for Individuals

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.

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.

The One Big Beautiful Bill (OBBB) introduced sweeping changes to tax credits and deductions that will impact individuals and families across all income levels.

Whether you’re just starting your career, raising a family or planning for retirement, these changes are likely to impact your bottom line. Here’s what you need to know:

• Dependent care assistance. The OBBB raises the annual tax-free limit for employer-provided dependent care assistance to $7,500 ($3,750 for married filing separately), effective for tax years beginning after 2025.
• Moving costs. Also effective for tax years after 2025, the OBBB eliminates the moving expense deduction and exclusion for most taxpayers. Exceptions remain for active-duty armed forces members relocating due to military orders and permanent change of station, as well as a new exception added for U.S. intelligence community employees and appointees relocating due to assignment changes.
• Bicycle commuting expenses. The OBBB ends the tax-free treatment of employer bicycle commuting reimbursements.
• 529 plans post-secondary credentialing expenses. The OBBB expands 529 plan qualified expenses to include “post-secondary credentialing expenses.” Eligible credentials include state or federally issued occupational/professional licenses, apprenticeship completion certificates registered with the Department of Labor and credentials defined under the Workforce Innovation and Opportunity Act.
• Information reporting, Forms 1099-NEC and 1099-MISC. Beginning with 2026 payments, the reporting threshold increases from $600 to $2,000 (with inflation adjustments starting in 2027). Backup withholding requirements are updated accordingly.
• Tips deduction. There’s a new deduction allowing up to $25,000 for “qualified tips,” phasing out for taxpayers with a modified adjusted gross income (MAGI) over $150,000 ($300,000 joint filers). The IRS must publish a list of tip-receiving occupations and update withholding procedures by 2026. This deduction expires after 2028.
• Overtime deduction. The new deduction allows up to $12,500 ($25,000 for joint filers) for qualified overtime compensation as defined under the Fair Labor Standards Act, with the same MAGI phaseout thresholds as the tips deduction. This deduction expires after 2028.

Keeping more money in your pocket 

Stay informed as additional guidance becomes available, and consider how these changes might affect your personal tax situation. Don’t hesitate to reach out to the experts at Magone & Company for guidance on optimizing your tax 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 that is specific to your business situation.

By the time your CPA is preparing your tax return, most opportunities to minimize taxes have already passed.

The truth is that many people don’t know the difference between tax preparation and tax planning. While both are crucial for your financial health, they serve completely different purposes and happen at different times of the year.

Understanding tax preparation

Tax preparation focuses largely on compliance and maintaining good standing with the IRS. It’s about documenting what happened in the previous tax year and making sure you comply with current tax laws. When you compile your W-2s, 1099s and receipts for your yearly taxes, you’re engaging in tax preparation.

This process involves calculating your taxable income, identifying eligible deductions and credits, and completing the necessary forms to file your return, so you can report your financial activity accurately and pay the right amount to Uncle Sam.

But by the time you’re sitting down to prepare your return, it’s too late to change most financial decisions for that tax year. You can’t go back and contribute more to your 401(k) or restructure investment sales to minimize capital gains. That’s why tax planning is so important.

Failing to plan is planning to fail

Tax planning is a proactive, forward-thinking approach that examines your entire financial picture to identify opportunities for tax savings. Effective planning considers multiple variables like your current income, expected future earnings, retirement timeline, investment objectives, life events and family situation. The goal is to help you make smarter decisions throughout the year that position you for optimal tax outcomes.

For example, tax planning might involve timing the sale of investments to offset gains with losses or converting traditional IRA funds to Roth IRAs during lower-income years. It may also include estate planning considerations, such as gifting strategies that reduce future tax burdens for your heirs.

So while tax preparation focuses on one year at a time, tax planning takes a multi-year view of your financial life.

Tax planning and preparation: Better together

Tax preparation ensures you remain compliant with current tax laws and avoid penalties, and keeps you out of trouble with the IRS. On the other hand, tax planning helps you maximize your financial potential, keeping more money in your pocket. Both are crucial for your financial success.

Clients who rely solely on tax preparation risk unexpected tax bills and missed opportunities come tax season. But those who embrace tax planning are in a better position to build long-term wealth. Small moves — like increasing retirement contributions and utilizing tax-advantaged health savings accounts — can result in big savings over time.

Your best bet? Work with professionals who understand both tax preparation and planning. The tax experts at Magone & Company can help you make the most of your tax situation. Contact us at (973) 301-2300 to learn if you’re leaving money on the table.

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.

Did you know that 25% of American taxpayers consider their tax refund free money? In fact, 26% of taxpayers report using their refund to treat themselves to things they normally wouldn’t buy, like clothing and accessories (45%), electronics (40%) and shoes (37%).

Instead of spending your next refund on items that will come and go, think about how you can use it to accelerate your financial future.

Whether you receive $500 or $5,000, the following strategies can help transform your refund into a foundation for long-term financial security.

Eliminate high-interest debt. The path to wealth begins with breaking free from debt. Every dollar you owe represents money that could be working for you through investments and savings. Your best bet is to tackle high-interest obligations first — credit cards, personal loans and payday advances — where interest rates can be as high as 15-25%.

By eliminating these costly debts, you’re freeing up monthly cash flow for wealth-building initiatives.

Open a strategic savings account. Whether you’re planning a home purchase or a dream vacation, establishing separate savings accounts for specific objectives keeps you motivated and organized. Consider automating your savings by setting up direct deposits or scheduled transfers from another account.

This “pay yourself first” approach removes the temptation to spend and ensures consistent progress toward achieving your goals.

Build an emergency fund. Financial emergencies can derail your savings in an instant. An adequate emergency fund ideally contains three to six months of essential living expenses and minimum debt payments.

By building a financial cushion, you’re protecting your investments from premature withdrawals as well as accumulating new debt when unexpected costs arise.

Boost your retirement savings. Compound growth makes time your most powerful wealth-building tool, transforming small contributions today into substantial retirement funds tomorrow. Check out these powerful growth scenarios.

Maximize contributions to tax-advantaged accounts like traditional or Roth IRAs for immediate deductions or tax-free growth. Self-employed individuals may explore SEP IRAs for higher limits.

Invest in home improvements. Home improvements can increase your property value while improving your quality of life. Focus on projects with strong return on investment, including kitchen updates, bathroom renovations or additional square footage.

Remember, your primary residence is likely your largest asset, and maintaining and improving it protects and grows that investment.

Create multiple income streams. Use your tax refund as seed money for generating additional income. This could mean starting a side business, using it as a downpayment to purchase a rental property or buying equipment for freelance work.

Even small additional income sources can compound significantly over time when reinvested wisely.

Enhance your earning potential. The best investment you can make is often in yourself. Use your refund for education, professional certifications or skill development that can increase your earning capacity.

For example, you may complete a degree, learn new technology skills or obtain industry certifications to boost your professional value — and your salary. Higher earnings create more opportunities for saving, investing and building wealth throughout your career.

Seize the opportunities

Your tax refund is money you’ve already earned that’s waiting for you to put it to work. Instead of spending it, invest it in your financial future. Find out how the tax experts at Magone & Company can help ensure you receive the maximum return based on your unique situation. Reach out today.

The above information is provided for general education purposes and should not be considered financial or tax advice. Please consult your accountant or financial advisor for advice specific to your situation.