What everyone should know The recently passed One Big Beautiful Bill Act (OBBBA) addresses some tax law uncertainty while creating several benefits impacting your 2025 tax return. One of these benefits is a new $6,000 deduction for seniors. Here is what you need to know.
The Changes Personal exemptions are gone! First and foremost, the law permanently eliminates personal exemptions. Without the change, exemptions were scheduled to be reintroduced in 2026. New senior benefit. But the law also introduces a new senior deduction of $6,000 per individual with these requirements:
Joint filers: $150,000 to $350,000 Example: Mickey and Minnie Mouse, both 96 years old, file a joint tax return and have $200,000 in modified adjusted gross income. Their new senior exemption will be $9,000. It is reduced by $3,000 [6% times ($200,000 - $150,000)]. Tips you can use
There are a lot of details in OBBBA that impact you or someone you know. With a quick review you can see if you will need some assistance. When this happens, call for help. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA
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You need tip tracking NOW! The One Big Beautiful Bill Act (OBBBA) makes tip income tax-free. But as with any new tax law, the fine print matters, and some of these details still need clarification.
Here is what you should know. The basic facts From January 1, 2025 through December 31, 2028 you can deduct up to $25,000 as a deduction equal to the amount of qualified tips you receive during the year. These tips must be included on IRS approved statements furnished to the individual in order to take advantage of the deduction. There is an income limit of $150,000 for single filers and $300,000 for joint filers. This income limit is modified adjusted gross income, including the tips. The deduction amount is reduced (but not lower than zero) by $100 for each $1,000 in excess of these amounts. Example: Joanie Tipster, a single filer, with modified adjusted gross income of $155,000 is $5,000 in excess of the limit. So her tip deduction will be reduced by $500 which equals ($5,000/$1,000) x $100. Qualified Tips To qualify as a tip:
A list of qualifying business will be published on or before December 31, 2025, however the tax bill specifically mentions the following:
The fine print matters To receive the deduction:
What action to take If you think you may qualify for this deduction, here are some tax tips to consider:
Congress is very aware that there will be the temptation to reclassify taxable income into tip income to take advantage of this law change, so it's tasking the IRS to develop guidelines to keep this from happening. Stay tuned. There is more to come. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA What you need to know With the passage of the One Big Beautiful Bill Act or OBBBA, many of the temporary tax laws set to expire at the end of 2025 have been made permanent. This week's tip summarizes the changes to several of the more popular deductions and credits, while the tax tips over the next few weeks will cover individual topics to help you understand how the major changes may impact you and your situation.
For individuals Many temporary tax provisions are made permanent This includes:
Other Changes
And several items completely new for 2025 thru 2028!
For Businesses
This is a lot to cover in a single tax tip. So the tips over the next several weeks will focus on individual topics to help you navigate how these changes may impact your situation. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA One Big Beautiful Bill Act: Tax deductions for working Americans and seniors If you use an installment sale to help sell property, you can benefit from tax deferral and possibly lower your overall tax bill. But you need to watch out for certain tax traps if you do.
Installment sale defined Generally, you create an installment sale when you receive payments for sold property in the tax year of the sale and at least one other tax year. For instance, if you sell real estate for a profit in 2025 and receive payments in 2025 through 2028, your real estate transaction is an installment sale. Tax implications An installment sale creates a tax event in each year you receive payments. In the above example, part of your gain is taxable in 2025 and each year through 2028. Note that property held longer than one year qualifies for favorable capital gains tax treatment. The current tax rate on long-term capital gains is from 0 to 20 percent, compared with the top ordinary income tax bracket of 37 percent. You also have the ability to pay all the tax due on the sale up-front, to avoid paying tax on the installments in future years. In some cases you'll reduce your overall tax bill this way, though it may require some help with tax planning. Benefits of an installment sale With an installment sale, you may be able to lower your total tax on the sale of the property by spreading this income out over several years. In addition, the buyer will often pay a rate of interest to you higher than a typical bank loan for the remainder of the amount due. Installment sale tax traps Related parties caution. If you sell property to a related party and the property is then disposed of within two years, in most cases all the remaining tax comes due immediately. The tax law definition of related parties is more expansive than you might think. It includes:
Depreciation recapture potential. Also be cautious if you took any depreciation on the property in prior years. In some circumstances you will owe extra tax related to that depreciation when you sell the property. Gains not losses. Be aware that installment sale treatment is only available for gains, not losses. Other special rules may apply, so reach out if you need advice specific to your situation. Of course, tax discussions now in Congress might impact how installment sales and long-term capital gains are taxed in the future. If you're planning an installment sale, consider reaching out for a consultation to discuss the tax implications. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA  Summer is usually the time for relaxing, but it can also be a time for tax savings, especially if you’re still reeling from an unexpectedly large tax bill in April. Here are four timely tips:
Rent your home. If you rent out your main home or a vacation home part of the time, you may be entitled to deductions like other landlords. This includes the rental-related portion of mortgage interest, property taxes, repairs, utilities, and insurance. Keep in mind, if your personal use exceeds certain limits, you can’t deduct a loss. And if you rent for less than 14 days, the rental income is tax free! Send young kids to camp. Depending on your situation, you may be able to claim a Child and Dependent Care Tax Credit for the cost of sending children under age 13 to summer day camp. However, the cost of overnight camp doesn’t qualify for the credit. Hire your child. If you have an older child looking for employment this summer, hire them to work for your business. Reasonable wages are deductible by the business and your child will likely owe little tax, if any, on the earnings. Plus, they may be eligible for other employee benefits. Take a business trip. Spend some time seeing a different city this summer while you're on a business trip. When you travel for business, you can generally deduct expenses — including airfare, lodging and 50 percent of the cost of meals — attributable to the business portion of the trip. But you must spend more time on business matters while you’re away than you do on sightseeing or other personal activities. Leverage a child's earned income. If you have a young worker who earns money from mowing lawns or babysitting, be sure to keep track of their earnings. While they will probably earn too little to pay tax, this earned income allows the young worker to open a Roth IRA. You could even decide to gift money into the account as long as it's less than the earned income amount. Finally, summer is a great time to create a full-year tax projection. Use this information to determine if the steps you're taking now will help you avoid a large tax bill at the end of the year. Call today to schedule a review of your situation to help manage your full-year tax bill. "Tax Tips" are published to provide current tax information, tax-cutting suggestions, and tax reminders. If you would like more information on anything in "Tax Tips," or if you'd like to be on our mailing list to receive other tax information from time to time, please contact our office. The tax information contained in this site is of a general nature and should not be acted upon in your specific situation without further details and/or professional assistance. We are trusted CPA advisors servicing Burr Ridge, Hinsdale, Willowbrook, Darien, Naperville, and all Chicagoland area. Do you need assistance with your business and/or personal tax returns? Would you like to have a trusted source for your accounting, allowing you additional time to focus on increasing your business? Do you use QuickBooks, or plan to in the future, for your accounting? We include these in all our service packages, customized to fit your personal or business needs. We are currently accepting new clients. Your initial consultation is free, so you have nothing to lose and everything to gain. Our experienced staff is available to help you streamline your accounting, giving you more free time for yourself. Set up an appointment today by calling (630) 320-3720 or email us at [email protected]. For more free resources, such as Tax Organizers, and Record Retention Schedules, access our website www.monarchaccountinggroup.com. Mia Verc, CPA; Janice Papais, CPA |
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