Tax Tips for Individuals

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.

 

Understanding Your NJ Cryptocurrency Tax Obligations

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As cryptocurrency investments have become increasingly mainstream, staying compliant with both federal and New Jersey state tax requirements is more crucial than ever.

Whether you’re trading Bitcoin or collecting NFTs, understanding your tax obligations can help ensure you’re maintaining compliance — and avoiding costly penalties. Here’s a quick overview:

How do crypto taxes work?

The cryptocurrency tax landscape evolved significantly in 2024, bringing big changes to reporting requirements.

The IRS classifies cryptocurrencies and other virtual currencies as property. That means you’re required to report any cryptocurrency you receive as income and pay capital gains on any increase in value when sold.

In New Jersey, cryptocurrency profits are subject to state income taxation, with rates up to 10.75%. So if you sell your cryptocurrency holdings at a profit, these capital gains must be included in your total taxable income.

Additionally, income from cryptocurrency transactions is subject to federal taxation under IRS guidelines. Federal law is requiring stricter transaction reporting standards, replacing earlier cryptocurrency reporting forms with a new Form 1099-DA.

The updated requirements also mandate that exchanges report not only the proceeds from sales but also include cost basis data when such information is available.

That’s why it’s important to maintain accurate records of crypto transactions and report your income on both state and federal tax returns.

What triggers a taxable event?

Any action that involves acquiring or disposing of cryptocurrency can create a taxable event. This includes:

  • Converting or trading one cryptocurrency to another (e.g., Bitcoin to Ethereum)
  • Cashing out and selling cryptocurrency for U.S. dollars
  • Making purchases using cryptocurrency or business transactions accepting cryptocurrency as payment for goods or services
  • Receiving “free” cryptocurrency through airdrops or hard forks

Staying ahead of your cryptocurrency tax obligations

Whether you’re an experienced crypto investor or just getting started, proper tax planning and accurate reporting are essential. And while exchanges now provide more detailed reporting, you’re still obligated to:

  • Report any taxable cryptocurrency transactions to the IRS
  • Maintain your own comprehensive records of transactions across different platforms and digital wallets
  • Keep track of trades
  • Maintain documentation of cost basis for any digital assets

To stay compliant under these new requirements, the tax pros at Magone & Company can help you accurately navigate your crypto reporting. Give us a call today at (973) 301-2300 for assistance.

 

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

Beat the Clock on Tax-saving Strategies

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This year’s tax deadline is almost here. But the good news is you still have time to make some strategic moves to potentially reduce your tax burden and maximize your financial benefits for 2024.

Here are some last-minute tax-savings opportunities you shouldn’t overlook:

Take advantage of a Health Savings Account (HSA). If you have a high-deductible health plan, contributing to an HSA offers triple tax advantages: tax-deductible contributions, tax-free growth and tax-free withdrawals for qualified medical expenses. For the 2024 tax year, the HSA contribution limits are:

  • Individual coverage: $4,150
  • Family coverage: $8,300
  • Additional catch-up contribution if you’re 55 or older: $1,000

Maximize retirement contributions. If you haven’t already maxed out your IRA contributions for the tax year, you can still contribute up to $7,000 until April 15 — plus another $1,000 in catch-up contributions if you’re 50 or older. These contributions may be tax-deductible depending on your income and whether you have a workplace retirement plan.

Consider a SEP IRA. If you’re self-employed or have freelance income, a SEP IRA is one of the simplest ways to shelter your income. You can contribute up to 25% of your net earnings from self-employment, with a maximum of $69,000 for 2024. Like traditional IRA contributions, you have until Tax Day to make SEP IRA contributions for the previous year.

Reconsider itemizing. Most tax filers choose to take the standard deduction rather than itemize. But this doesn’t mean that you shouldn’t itemize, depending on your circumstances. For example, if you pay a great deal of mortgage interest, itemizing may work in your favor. Take time to add up potential itemized deductions such as:

  • Mortgage interest
  • State and local taxes
  • Charitable contributions
  • Medical expenses over 7.5% of your adjusted gross income
  • Gains from a home sale
  • Losses from disaster or theft

Don’t overlook education costs. The American Opportunity Credit offers up to $2,500 per eligible student, while the Lifetime Learning Credit provides up to $2,000 per tax return. Eligible students may claim these credits for qualified education expenses paid during the tax year.

Review tax credits. In addition to education credits, check your eligibility for other potential tax-saving credits, such as:

  • Child and Dependent Care Credit
  • Earned Income Tax Credit
  • Residential Energy Credits for home improvements
  • Electric Vehicle Credit

Making these smart tax moves before the deadline can significantly impact your tax bill and potentially increase your refund. But tax situations can be complex, and it’s always wise to consult with a qualified tax professional.

At Magone & Company, our expert CPAs can help you achieve the most favorable tax situation based on your unique situation. See if our consultative, relationship-based approach to financial wellness is right for you.

 

 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 tax situation.

 

Found Money: Common Tax Deductions You May Have Missed

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Every year, taxpayers inadvertently leave money on the table by overlooking deductions that are rightfully theirs for the taking. The tax code actually offers many legitimate deductions that are IRS-approved and yours for the taking — as long as you claim them. So when tax season rolls around, be sure you’re getting every penny you deserve.

Mortgage interest

If you own a home and have a mortgage, you can deduct the interest you pay on that loan. When you’re in the early years of your mortgage, your savings can be substantial as the majority of your payments go toward interest. And depending on where you live, you may be able to deduct state and local taxes, including property taxes, which can further reduce your tax liability.

Mortgage points

When you take out a mortgage, you may pay “points” — an upfront fee that lowers your interest rate. These points are usually tax-deductible in the year they are paid, even if you don’t itemize.

Home sale costs

Selling your home? The costs associated with the sale, such as real estate commissions, title insurance and legal fees, can be used to offset the capital gains tax on the sale. This helps reduce your overall tax burden.

Home office deduction

If you use a portion of your home regularly and exclusively for business purposes, you may be able to deduct your direct and direct expenses of running a business from your home office, including rent, utilities, insurance and other home-related expenses. Does your home fit the bill? Find out.

Continuing education and professional development costs

Are you or your dependents pursuing higher education? This deduction covers qualified education expenses for eligible students, allowing you to deduct up to $4,000 of qualified expenses, such as tuition and fees. Parents may also deduct interest payments on certain student loans from qualified lending institutions.

Ongoing training and education related to your current job may also be tax-deductible, even if your employer doesn’t reimburse you. As long as the training maintains or improves your job skills, it can qualify.

Medical and dental deductions

Medical and dental expenses that aren’t reimbursed by your insurance may be deducted to the extent your annual total exceeds 7.5% of your adjusted gross income. But to qualify for medical deductions, you must also itemize. When adding up your medical costs, be sure to include the cost of traveling to your doctor or medical facility for treatment, including your out-of-pocket expenses for gas, oil, repairs, parking and tolls.

Long-term care insurance is also a deductible medical expense. As long as your employer or spouse’s employer doesn’t subsidize the insurance, you may deduct an increasing portion of your premium as you age.

Legal and professional fees

Did you know that fees paid to lawyers, accountants, financial advisors and other professionals can sometimes be deducted? This can include the cost of tax preparation, estate planning and even consulting for starting a new business.

Don’t leave money on the table

The professionals at Magone & Company can help you navigate the deductions and tax credits your entitled to claim. Call us 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 tax situation.

The IRS’ “Dirty Dozen” — What Tops This Year’s List? Part 2

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Nearly one in three Americans (31%) report being a victim of online financial fraud or cybercrime.

When it comes to protecting your money and your identity, knowledge is power. Here’s a recap of the last six scams on the IRS’s 2024 “dirty dozen” list.

7.  “Ghost” tax return preparers. Be wary of “professionals” who claim they can help you obtain tax credits or refunds that you don’t even qualify for. Watch for red flags like a high fee based on the size of the intended return or their refusal to include their PTIN (IRS Preparer Tax Identification Number) on the return. These ghost preparers can even steal your entire refund before pulling their disappearing act.

8. Trusting social media. This is a message that sadly bears repeating: Social media platforms like Instagram and TikTok are not reliable sources for tax advice. If a Facebook ad suggests filing inaccurate W-2 forms to increase your tax return, for example, don’t give it a second thought. Remember, just because it’s on the internet does not make it true. Always consult with your tax professional.

9. Spearphishing. A targeted form of phishing, spearfishing aims to deceive businesses or individuals within an organization, typically via email. According to the IRS, scammers can pose as new clients or even as an HR department looking to score sensitive employee data. Always use extra caution when opening emails and clicking links. And think twice before sharing any information.

10. Faux art deductions. Taxpayers may deduct an art donation from their tax bill, but beware of deducting it at an inflated valuation. The IRS warns of “promoters” who sell discounted art with the promise it’s worth more, so it can be donated for a hefty write-off. Don’t fall victim to false claims of deductions on art donations. Uncle Sam will eventually find out.

11. Fake tax avoidance techniques. Taxpayers should be on high alert when encountering any schemes that assure you ways to avoid paying taxes. For example, syndicated conservation easement agreements may inflate tax deductions by exaggerating the value of investments. Bottom line: You can’t avoid paying the IRS.

12. International schemes. Individuals should be cautious of offers to contribute to foreign or overseas retirement accounts. Hiding money offshore as a tax reduction strategy can land you in hot water with the IRS.

As scammers continue their relentless attempts to commit fraud, heed the IRS’s warnings to maintain your identity, your reputation and your bank account. For a quick refresh, check out scams one through six. And don’t hesitate to reach out to the tax professionals at Magone & Company with any questions.

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.