During the recent chaos of Federal employment moves over the past couple of weeks, two actions will impact how filing your tax return this year could go and how to prepare accordingly.
Voluntary termination
After being offered voluntary termination, approximately 75,000 employees across all departments of the federal government took up the executive branch’s offer. What isn't known at this time is what areas of government services will be impacted.
6,500 terminations at the IRS
As part of the executive branch’s trimming of the government, all newly-hired IRS employees were terminated. This includes about 6,500 new hires (approximately 6% of all IRS employees) as part of the IRS's recent workforce expansion. For those that follow the news, this trimming appears to be politically motivated as the recent expansion of their workforce was a fairly partisan affair.
What it means for you this tax season
The remaining staff are unsettled. There will be greater workload, sadness, and uncertainty about job security for the remaining staff at the IRS. This means getting your questions answered may be more difficult.
IMPACT: If you need a question answered by the IRS, be prepared to wait longer. You may also find it more difficult to get a qualified answer. Should you speak with an IRS representative, try to show some compassion for their situation.
Open questions may take longer to close. As you may recall, during the pandemic the IRS suspended the mailing of notices to taxpayers. When the backlog of notices was turned back on, many taxpayers found themselves facing potential liens because prior notices were never sent. Until the mailing of notices were turned back on, many these taxpayers were unaware of any problems with their tax records. This backlog still exists and will get worse.
IMPACT: You'll probably have a hard time getting someone on the phone who can help with your particular problem. And responses to your mailed replies to IRS notices is taking a very long time. So be prepared to respond multiple times concerning the same issue. Consider sending all correspondence to the IRS using certified mail so there is evidence should you need to prove the timeliness of YOUR replies.
Don’t expect audit rates to go down. Audit rates are already extremely low, with a significant portion of the audit activity now being identified automatically through computer generated correspondence audits. The irony here is that given the progressive nature of the individual tax system, the majority of tax is paid by a minority of taxpayers. Audits will still naturally follow the potential for a return-on-investment for the time spent auditing a particular tax return.
IMPACT: Double check your 2024 tax return documents for missing items. This is especially true for all 1099s! And double check that they are correct. If you report an incorrect dollar amount, you can almost guarantee you will see a notice from the IRS. And be prepared to defend your deductions with proper documentation.
It's unfortunate that the idea of voluntary compliance to help fund our government is so chaotic and more political than ever. The best approach is to comply with the tax rules and adjust according to the situation. And this is where our service can help.

In its most recent annual report to Congress, the Taxpayer Advocacy Service outlines troublesome trends it sees in the processing and administration of tax returns and taxpayer support. By law, the National Taxpayer Advocate’s report must identify the 10 most serious problems taxpayers face in their dealings with the IRS and make administrative and legislative recommendations to address those problems. One of the most critical issues identified in their recent report:
Continuing delays in resolving identity theft cases
Per the report, “For cases closed by the IRS’s Identity Theft Victim Assistance (IDTVA) unit in Fiscal Year 2024, the average time it took the IRS to resolve identity theft cases and issue refunds to the affected victims was almost two years.”
Talk about frustrating! It currently takes up to two years to get a victim’s tax records corrected and receive a refund when you have already been made a victim by the ID thief!
While the Taxpayer Advocacy Service is recommending changes, it will take some time to implement by the IRS. So what do you do in the meantime? Here are some tips:
File early. If you have any reason to believe your identity is compromised, file your tax return as early as possible. For example, if you received notices during the year from any businesses that their records may be compromised and exposed some of your personal information, this is a signal that you may be at risk.
Check your credit reports. Remember, each year the three major credit agencies are required to provide copies of your credit report free of charge. The beginning of the year is a great time to check. If you see anything fishy, file your tax return immediately. These reports can be ordered at: AnnualCreditReport.com
Consider the IRS Identity Protection PIN program. While not for everyone, if you are worried about IRS Identity theft, sign up to receive a unique id or PIN to be used when filing your federal tax return. While it can be a hassle, it will help avoid anyone else filing using your identification.
In the meantime, there is hope that the Taxpayer Advocacy report will motivate the IRS or someone in Congress to take action to help victims receive more timely resolution to their problem.
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FIN-2025-CTA1 February 18, 2025
FinCEN Extends Beneficial Ownership Information Reporting Deadline by 30 Days;
Announces Intention to Revise Reporting Rule
The on then off then on again requirement for small businesses to report their beneficial owners to the federal government is now on again with a new reporting deadline of March 21, 2025. This represents a "stay" of a judge's order to eliminate the requirement. In other words, the filing requirement may be removed, but until it is, most small businesses need to still file the report.
Should you file the report for your business?
Per the notice:
Notably, in keeping with Treasury’s commitment to reducing regulatory burden on businesses, during this 30-day period FinCEN will assess its options to further modify deadlines, while prioritizing reporting for those entities that pose the most significant national security risks. FinCEN also intends to initiate a process this year to revise the BOI reporting rule to reduce burden for lower-risk entities, including many U.S. small businesses.
The current ruling says yes...but it probably will change if you can read into this notice. Here is a link to the announcement: FinCEN Announcment

In late December, the IRS announced plans to issue automatic payments to eligible people who did not claim the Recovery Rebate Credit on their 2021 tax returns. The payments should be received in late January. No action is needed for eligible taxpayers to receive the credit with a maximum payment of $1,400.​

Background
As part of various COVID-19 relief programs, the federal government issued Economic Impact Payments and a Recovery Rebate Credit. The latter was to be awarded on 2021 income tax returns. Upon reviewing internal data, the IRS determined that approximately one million taxpayers overlooked claiming this refundable credit. The IRS would not typically take proactive actions to pay out this money...instead the agency would normally remind taxpayers to claim any and all refunds before the statute of limitations runs out, which in this case is April 15, 2025. But in a surprise to many, the IRS is deciding to be proactive in this case.

What you need to know
No action is required on your part. If you or a family member is eligible for the credit, the IRS will automatically deposit the money in the direct deposit account noted on your 2023 tax return. If no bank account is noted, you will receive a paper check. Things to note:

• Should you receive a payment, it is legitimate. There should also be a letter from the IRS explaining the payment.
• Most taxpayers already received this credit. So no need to call wondering if you are going to get a payment. While $2.4 billion in payments going out is no small number, it only represents a small percentage of total payments to all taxpayers.
• Double check 2021 non-filers. If you know of someone who did not file a 2021 tax return, it may be worth looking at doing so before April 15, 2025 or the ability to claim this credit goes away.

"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

Mileage rates for travel are now set for 2025.

The standard business mileage rate increases by 3 cents to 70.0 cents per mile. The medical and moving mileage rates stay at 21 cents per mile. Charitable mileage rates remain unchanged at 14 cents per mile.​

2025 New Mileage Rates

If you have not already done so, now is the time to review your tax situation and make an estimated quarterly tax payment using Form 1040-ES. The 4th quarter due date for the 2024 tax year is now here.​

Due date: Wednesday, January 15, 2025

You are required to withhold at least 90 percent of your 2024 tax obligation or 100 percent of your 2023 federal tax obligation.* A quick look at your 2023 tax return and a projection of your 2024 tax return can help determine if a payment is necessary. Here are several other things to consider:

Underpayment penalty. If you do not have proper tax withholdings, you could be subject to an underpayment penalty. The penalty can occur if you do not have proper withholdings throughout the year. So a fourth quarter catch-up payment may not help avoid an underpayment penalty if you didn't pay enough taxes in prior quarters.

Self-employment taxes. Remember to also pay your Social Security and Medicare taxes, not just your income taxes. Creating and funding a savings account for this purpose can help avoid a cash flow hit each quarter when you pay your estimated taxes.

Don't forget state obligations. With the exception of a few states, you are often required to make estimated state tax payments when required to do so for your federal tax obligations. Consider conducting a review of your state obligations to ensure you meet these quarterly estimated tax payments as well.

*If your income is over $150,000 ($75,000 if married filing separate), you must pay 110% of last year’s tax obligation to be safe from an underpayment penalty.


"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

As a reminder, tax season is also tax scam season for savvy criminals. As you prepare to file your tax return, here are some things to know to reduce your risk of having your valuable personal information stolen. These tips are provided by the IRS and other experts.


• Scam sources are typically over the phone, email and even in person!
• The IRS DOES NOT initiate contact by email or request personal or financial information in this format.
• The IRS typically initiates contact via mail.
• On rare occasion the IRS will call. When this happens, get the IRS agent’s name and badge number. Then hang up and call the IRS independently (not the phone number they give you). Better still, call your tax professional!
• Email phishing. If you receive a suspicious email DO NOT OPEN IT or any links. Do not reply or open attachments. Report it to [email protected].
• Phone scams. Do not give personal information to unsolicited phone calls from the IRS. Even if it looks legitimate. Scammers are getting good at spoofing legitimate phone numbers on your caller id. Report the caller ID and call back number to the IRS using [email protected]. Put IRS phone scam in the subject line.
• Payment. Only pay the US Treasury directly. DO NOT pay anyone else, even if they threaten you. No one is allowed to collect money directly from you.

Finally, the IRS and Federal Trade Commission have tons of material regarding these thieves and their techniques. Become familiar with them and reach out for help, as a tax professional may be able to help read through the scam.
===============================
FinCEN BOI reporting requirement on hold once again
Required filing of beneficial owner information (BOI) on FinCEN.gov continues its roller coaster judicial journey. On December 26th, the requirement to file is (for now) officially on hold once again pending further judicial review. Last week the injunction to halt the filing requirement was overturned leaving your business until January 13, 2025 to file your report. Now that ruling is suspended. Go to FinCEN.gov to learn more.​


"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

The beginning of each year is a great time to start next year's tax planning. One area to help reduce your tax obligation, that benefits from an early in the year start, is leveraging your kids to the fullest using the kiddie tax rules.​

Background

The term kiddie tax was introduced by the Tax Reform Act of 1986. The rules are intended to keep parents from shifting their investment income to their children to have it taxed at their child's lower tax rate. In 2025 the law requires a child's unearned income (generally dividends, interest, and capital gains) above $2,700 be taxed at their parent's tax rate.

Applies to

• Children under the age of 19
• Full-time students under the age of 24 and providing less than half of their own financial support
• Children with unearned incomes above $2,700

Who/What it does NOT apply to

• Earned income (wages and self-employed income from things like babysitting or paper routes)
• Children that are over age 18 and have earnings providing more than half of their support
• Children over age 19 that are not full-time students
• Gifts received by your child during the year

How it works

• The first $1,350 of unearned income is generally tax-free
• The next $1,350 of unearned income is taxed at the child's (usually lower) tax rate

The excess over $2,700 is taxed at the parent's rate either on the parent's tax return

Planning thoughts
So while your child's unearned income above $2,700 is a problem, you will still want to leverage the tax advantage up to this amount. Here are some ideas:
Create accounts in your child's name. Establish a Uniform Transfers to Minor Act (UTMA) account at your favorite bank and/or investment institution. This will allow you to manage assets in the name of a minor child. Then gift cash or investments into the account. Gains and interest in the UTMA account will now create unearned income in the name of the child. Be aware of annual gift limits to keep reporting simple (currently $19,000 per individual per year in 2025). Build these accounts to provide up to $2,700 in unearned income each year.
Maximize your lower tax investment options. Look for gains in your child's investment accounts to maximize the use of your child's kiddie tax threshold each year. You could consider selling stocks to capture your child's investment gains and then buy the stock back later to establish a higher cost basis.
Be careful where you report a child's unearned income. Don't automatically add your child's unearned income to your tax return. It might inadvertently raise your taxes in surprising ways by reducing your tax benefits in other programs like the American Opportunity Credit.
Leverage gift giving. Each year, if your children are not maximizing tax-free investment income consider gifting additional funds to allow for unearned income up to the kiddie tax thresholds.
Properly managed, the kiddie tax rules can be used to your advantage. But be careful as your child reaches their legal adult age, this part of the tax code can create an unwelcome surprise if not handled properly.

================================
Small Business ALERT:
Department of Justice FinCEN Judicial order is overturned.
What this means. All firms must register their beneficial owners (BOI) through the FinCEN application as originally dictated by the law. The law was ruled an overreach by a judicial order earlier this month, but in an emergency ruling the Justice Department got the order overturned. The original filing deadline of 12/31/24 is now extended to 1/13/25. If you are a small business and have not registered your owners you will need to ensure you comply. Go to www.FinCEN.gov and review the information.


"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

The Child & Dependent Care Credit provides a reduction in taxes to offset the cost of daycare when you are employed. The maximum amount of the credit is $3,000 for one dependent or $6,000 for two or more qualifying persons.*​

To take advantage of the credit here is what you need to know.

1. Qualified dependent(s). Your dependent must be under the age of 13. A spouse or older dependent who is physically or mentally unable to care for themselves can also qualify.
2. Earned Income. You must have earned income to support the credit.
3. Qualified daycare expenses. You must actually incur the care expense for the qualified dependent.
4. Financial support requirement. You must maintain the home and financial support for the qualified dependent (more than half the cost and more than half the year).

Here are some tips;

• Partial expense coverage. The credit only covers a percentage of your qualified care expenses. The amount depends on your income with a high of 35% of qualified expense down to a low of 20% of the daycare expense.
• Obtain proper ID. Most daycare organizations will provide you with an expense summary at the end of each tax year. This form will tell you how much you spent in care and will provide you with the proper tax id for their organization. If you have someone else caring for your dependent, make sure you receive their tax information. It will be needed when you file for the credit on your tax return.
• Not equal. If you have two or more qualified dependents, the daycare expenses do not have to be equal for each of them. For example, you could use $5,000 for one dependent and $1,000 for the rest of them.
• Education expenses. Pre-school, nursery and other educational programs can qualify if levels are lower than kindergarten. Full-day kindergarten fees DO NOT qualify.
• Leverage summer. Summer day camps and similar activities can qualify for the credit. So too can hiring a nanny to care for the kids while you are at work and the kids are out of school.

Other details apply. Please ask for help if you wish to review your situation.

*Note: If your employer provides daycare reimbursement as a benefit on your W-2, the employer benefit is limited to $5,000 or $2,500 if married filing separate or single. You can still use excess daycare expenses to maximize your credit to the full $3,000/$6,000 amount.


"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

Each year the IRS publishes the top dozen tax scams it encounters over the prior year. One of them that makes an all too common appearance on their list is the phishing scam. Here is what you need to know.​

Phishing requires bait
Phishing is the act of creating a fake e-mail or website that looks like the real thing. This bait is then used to reel you into the scam by asking for private information. This includes your name, address, or phone number. It could also include potentially dangerous ID theft information like your Social Security number, a credit card number or banking information. The bait is often very real looking - just like correspondence from the IRS or the IRS website.

How to avoid the lure
How do you know the phishing is fake? Here are some tips.

1. The IRS never initiates contact via email. If you get an unsolicited e-mail from the IRS requesting a response, do not reply! Instead forward the email to [email protected].
2. Never click or download. Perhaps even more important, never click on a link or open a file on a suspicious email. This is true even if the email comes from someone you know. Too often phishing comes from someone impersonating someone you know.
3. Know the website. This includes the appearance, but more importantly the address. The valid address for the IRS is www.irs.gov. For Social Security, the address is www.ssa.gov.
4. They may already have info about you. Good phishers already have parts of your identity, so just because they know things like your middle name and birth date does not make them legitimate.
5. Phishing over the phone. Phishing can also take place over the phone. If you receive an unsolicited phone call, get the person’s name and ID, then hang up. Then go to the IRS (or vendor) website, write down their phone number and call them back using this phone number. Most fake calls are ended quickly when taking this approach.
6. Don’t forget social media. Phishing can also happen via social media and texting. Virtually every digital resource has the potential to be used as a tool for theft.

What do phishers do?
When the phishers have your information, they can file false tax returns requesting refunds, steal bank account information, set up fake credit cards, establish false IDs, plus much more. Remember, if it smells like a phish, it probably is!


"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