Tip 1: Expect a letter first

In almost every case, the IRS will send you a letter by standard mail if it needs to contact you. This will alert you to expect future communication from the agency and instruct you on the best ways to contact them. If you receive an unexpected or suspicious letter from the IRS, it should include a form or notice number that is searchable on the IRS website at www.irs.gov. If something doesn’t look right, you can call the IRS help desk at 1-800-829-1040 to question it.

Tip 2: Never over email

Don’t respond to any email communications supposedly from the IRS. Don’t click on any links. Delete the email or forward it to phishing@irs.gov to help catch the scammers. The IRS will never initiate contact with you using email. A common scammer trick is to send emails to taxpayers using accounts and graphics that imitate the agency’s logo. These emails may threaten imprisonment or fines if you don’t pay up or promise an extra refund if you send money to “prepay” your taxes. Often, the emails contain links to an official-looking fake website to collect payments. Clicking on them may also trigger the installation of virus programs on your computer.

Tip 3: Proper phone call etiquette

After notification via the USPS, the real IRS may call to discuss options for handling delinquent taxes or an audit. A real IRS agent or a debt collector won’t demand immediate payment without giving you an opportunity to question or appeal the bill. Nor will they threaten lawsuits, arrest, or deportation. Their tone should not be hostile or insulting. Finally, if they ask for payment, they should only ask you to make payments to the United States Treasury.

If you get a call from the IRS or an IRS debt collector, politely ask for the employee’s name, badge number, and phone number. They shouldn’t hesitate to provide this information. You should then end the call and dial the IRS at 1-800-366-4484 to confirm the person’s identity.

Tip 4: Check in-person visits

Ask the person for their credentials. Every IRS agent can produce two forms of credentials: a pocket commission card and a personal identity verification card issued by the Department of Homeland Security, also known as an HSPD-12. Never provide sensitive information or confirm information they may have without first independently verifying they are legitimate representatives of the IRS. If you have concerns, call the IRS at 1-800-366-4484 to confirm the person’s identity.

You do not need to navigate this problem on your own. Call immediately for assistance. It is good to have a knowledgeable expert on your side. As always, feel free to contact our RRBB advisors for more information or if you have any questions.

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What is due on the April 15 deadline?

You are required to withhold or prepay enough tax during the 2026 tax year. In general, that means paying at least one of these amounts:

• 90% of your 2025 total tax bill
• 100% of your 2026 federal tax bill
• If your income is more than $150,000, or $75,000 if married filing separately, you must pay 110% of your 2025 tax obligation to avoid an underpayment penalty on your 2026 tax return

A quick review of your 2025 tax return, along with a projection of your 2026 tax obligation, can help you decide whether you need to make a quarterly payment in addition to what is already being withheld from your paychecks.

What should I consider before paying the estimated tax?

• Underpayment penalty. If you do not have proper tax withholdings throughout the year, you could be subject to an underpayment penalty. A quick payment at the end of the year may not be enough to avoid the penalty.
• W-2 withholdings. A W-2 withholding payment can be made at any time during the year and be treated as if it were made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 wage withholdings to make up the difference.
• Self-employment taxes. In addition to paying income taxes, self-employed workers must also pay Social Security and Medicare taxes. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter to pay your estimated taxes.
• Your refund. An alternative way to pay your first quarter estimated tax is to apply some or all of your tax refund.
• Paying more in the first quarter. By paying a little more than necessary in the first quarter, you can be in a position to adjust future estimated tax payments downward later this year if your tax obligation trends lower than you originally thought.

Do I need to make a quarterly payment?

Take a quick look at your tax return to see the amount of tax you paid last year. Then:

1. Divide that amount by the number of paychecks you receive each year
2. Compare that number to your most recent paycheck
3. Check whether enough is being withheld from each paycheck

Talk to your employer if you decide you need to adjust your withholdings to cover next year’s tax bill. Contact our RRBB advisors if you have any questions or need assistance.

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IRS Notice CP53E

• No bank account. Your tax return did not include a direct deposit account.
• Name mismatch. You file a joint tax return, but you have the refund direct deposit into a bank account with only one name on it. Or the name on the bank account simply does not match the name on your tax return.
• Bank rejection. For whatever reason, your bank rejects the deposit. Either you have an error in the account or routing number, or the bank simply rejects the transaction for an unknown reason.

What to do

1. Try to understand the error. Do this first so that you know what action to take. Otherwise, you risk repeating the error and not solving your problem.
2. 30 days to respond. You have 30 days to respond to the notice by going to irs.gov/CP53E. It will direct you to either create or log in to your IRS ID.me account. Then follow the instructions to correct the error.
3. Use the “Where’s My Refund?” online service to track your refund status. This is a good tool for tracking your refund, even if you do not receive a CP53E notice. You will need your Social Security number, the exact amount of your refund, your filing status, and your tax year. This can be found at irs.gov/refunds.
4. Wait. What the notice DOES NOT tell you is that if you do not respond, the government will still issue a paper check. But it will take up to six weeks. In this case, double-check your address to ensure it is valid.

Do not:

• Try to get the IRS to fix it. The IRS cannot take your bank account information over the phone. They will direct you to create or log in to your online account.
• Get someone else to correct it. Unfortunately, you have to fix this one yourself. The IRS does not want you to file an amended tax return to fix this problem. And you should not grant anyone other than you access to your online account.
• Do nothing. If you do not receive your refund in a timely manner, take action. The problem may not be related to a direct deposit error. In this case, the first place to start is the “Where’s My Refund?” page service.

A quick note on payments

If you owe taxes, you can still pay by paper check. This is not the government’s preferred method of receiving funds, but it is still available to you.

The problem is so bad that the head of the Treasury and the Ways and Means committee are making noise with the IRS to find solutions. So if you receive a notice, your sole consolation appears to be that you are not alone. Contact our RRBB advisors for more information or if you have any questions.

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Last-minute tax tips

1. Did you sign your e-file authorization form? IRS Form 8879 requires your signature before you can e-file your taxes. If you are filing jointly, your spouse must also sign. If you haven’t already, please return the signed form ASAP to ensure that your taxes can be e-filed on time. But don’t sign it before reviewing the tax return. Remember, this signature means you agree with the accuracy of the tax return.
2. Do you need more time to file? If you are not ready to file your taxes before the initial April 15th deadline, you can file for a six-month extension. Be aware that it is only an extension of time to file, not an extension of time to pay taxes you owe. You still need to pay all taxes by April 15th!
3. Do you owe money? If yes, make your tax payment now! The IRS website has several payment options. If mailing a payment, include Form 1040-V and ensure the postmark is on or before April 15th. Sending the payment by certified mail will ensure you have proof of a timely payment. Late payments, even by one day, are subject to IRS penalties and interest.
4. Do you need to deposit funds in your IRA or HSA? Did you claim an IRA or HSA contribution on your tax return? For the deduction to be valid for 2025, all deposits to those accounts must be made by April 15th. Once completed, save proof of the contribution with your 2025 tax files.
5. Do you need to make an estimated tax payment? The first quarter estimated tax payment for 2026 is also due by April 15th. If you owe taxes for 2025, making 2026 estimated payments might make sense for you. A quick way to calculate a first-quarter payment is to divide the taxes you paid in 2025 by four, then adjust this number for any paycheck withholdings. Send your payment along with Form 1040-ES to the IRS by April 15th. Then schedule a tax-planning meeting to determine the best approach for the remainder of the year.

Next steps

If you do miss a deadline, file your return and pay the taxes as soon as you can to stop the accruing of interest and penalties. If you have any questions or want to get started, contact our RRBB advisors today.

The post Last-minute details, tips, and freebies for Tax Day appeared first on RRBB.

Commonly overlooked deductions

1. State sales tax alternative. You can choose to deduct state and local sales taxes rather than state income taxes on a return using itemized deductions. This is especially useful for residents of states without state income taxes. It can also be used if you made enough purchases during the year that your state sales tax deduction is larger than your state income tax deduction. This is especially important this year as the limit for this itemized deduction category moves from $10,000 to over $40,000!
2. Mortgage discount points. When you buy a home, you can generally deduct the cost of mortgage discount points to lower your interest rate. A point is a fee equal to one percent of the mortgage amount, and it lowers your mortgage’s interest rate. When you refinance a mortgage, you spread the cost of your points over the life of the mortgage. Many taxpayers forget that when they sell their home, they can immediately deduct the remaining points they haven’t used.
3. Re-invested dividends. Many automatically reinvest their dividends within their portfolios. These dividends are taxed when they are paid to you each year, so it is easy to forget to make this adjustment to your tax bill when you sell them at a later date. While this makes your capital gain calculation a bit more complex, knowing this helps you avoid paying too much in tax.

Additional deductions for parents

1. Student loan interest. You can deduct up to $2,500 in interest paid on student loans from your tax return. This is true even if someone else helps you pay your loans. Parents who have co-signed student loans (creating a legal obligation for the debt) often forget that they are now also eligible for the deduction on payments they make.
2. Child and dependent care. If you are working and paying for daycare, review this credit on your tax return and with your employer. Both may offer a meaningful tax benefit to you. The same holds true for married couples when both work or are looking for work. And if the benefit exists through your employer, you may still be able to take advantage of the credit through the IRS as long as the qualified expenses are not double-counted.
3. Making alimony and child support mistakes. While most people who pay alimony know it’s tax-deductible for those who pay it on divorce decrees finalized before the end of 2018, it is easy to forget that it is not taxable income to those receiving it if your divorce was after this date or there was an amendment to your divorce decree after this date. And remember, this law change also impacts the taxability and deductibility of child support payments.

Deductions for small business owners

1. Self-employment deductions. There are many benefits commonly overlooked by sole proprietors and S corporation business owners. Chief among them are:
   • 1/2 of the self-employment tax
   • Health insurance premiums: Pay special attention to your W-2 to see whether the premium was added to income and whether it is deductible in your situation
   • Contributions to retirement plans: Remember, a quick way to reduce your taxable income is to contribute to a retirement plan, such as a SEP IRA, before filing your tax return
   • The QBI deduction: Find out whether you qualify and whether your business activity is subject to income limitations for this valuable tax break
2. Other small business tax breaks. There are several other special business incentives in the tax code. This includes special depreciation rules for the now-permanent research credit.

As with any part of the tax code, certain qualifications must be met, and limits apply. Please contact our RRBB advisors for help if you think any of these ideas apply to you.

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Tax-free income

1. Tax-free interest. Municipal bond interest is tax-free at the federal level. This includes bonds issued by a state or municipality. The tax-free benefit increases as your income rises, but be careful to ensure the underlying municipality is not in dire financial condition.
2. Health insurance premiums. Health insurance premiums are tax-free. There is constant talk about changing this. For now, this benefit can be paid in pre-tax dollars for most people.
3. Income from Roth IRA and Roth 401(k) accounts. While contributions to these retirement savings accounts are subject to tax, any future earnings on those contributions are tax-free at the federal level as long as you are meeting the holding period and distribution rules.
4. Health Spending Accounts (HSA). Contributions and earnings in these health-related spending accounts are tax-free as long as the proceeds in the account are paying for qualified health care expenses.
5. Child support received. Unlike alimony received, child support income is federally tax-free.
6. Car pool revenue. While commuting expenses are not generally deductible, any reimbursement of your commuting expenses by fellow passengers is not reportable as income.
7. Home sale gains. Up to $250,000 ($500,000 for married filing jointly) of capital gains on a sale of your principal residence can be tax-free.
8. Tax-free tips. From 2025 through 2028, up to $25,000 of your tip income (single or married filing jointly) can be excluded from income. While the deduction cannot exceed your reported income, it phases out at a generous $150,000 ($300,000 for joint filers). But you must prepare to prove it with a proper W-2, 1099, or Form 4137.
9. Tax-free overtime. Also running from 2025 through 2028, up to $12,500 ($25,000 for joint filers) of the overtime portion of your pay is not taxed. It is available with the same income phaseouts as noted within tax-free tips.
10. Certain employer compensation. In addition to health care premiums, several employee benefits are not taxable. All have limits, but every tax-free dollar is money in your pocket. These include most airline miles earned on business credit card expenses, certain employee-provided tuition expenses, qualified adoption expense reimbursements, up to $50,000 in employer-paid term life insurance, flexible spending accounts for dependent care and health care, and commuting expense benefits for parking and mass transit commuting.

Take advantage

Remember, any time you can pay for something using pre-tax dollars, it’s like giving yourself a raise! So ensure you’re taking advantage of all your federal tax-free income opportunities. As always, feel free to contact our RRBB advisors with any questions or for more information.

The post Ten sources of tax-free income everyone should know appeared first on RRBB.

Understanding the difference

To help illustrate the difference between a credit and a deduction, here is an example of a single taxpayer making $50,000 in 2025.

• Tax Deduction: Gee I. Johe earns $50,000 and owes $5,000 in taxes. If you add a $1,000 tax deduction, he’ll decrease his $50,000 income to $49,000 and owe about $4,800 in taxes. A $1,000 tax deduction decreases Gee’s tax bill by $200, from $5,000 to $4,800.
• Tax Credit: Now, let’s assume Gee has a $1,000 tax credit versus a deduction. Gee’s tax bill decreases from $5,000 to $4,000, while his $50,000 income stays the same. A $1,000 tax credit decreases your tax bill from $5,000 to $4,000.

In this example, your tax credit is five times as valuable as a tax deduction. Credits are generally worth much more than deductions. However, there are several hurdles you have to clear before being able to take advantage of a credit.

Child Tax Credit example

To illustrate, consider the popular Child Tax Credit. Here are three hurdles:

1. Meet basic qualifications. You can claim a $2,200 tax credit for each qualifying child you have on your 2025 tax return. The good news is that the IRS’s definition of a qualifying child is fairly broad, but there are enough nuances that Hurdle #1 could get complicated. And then to make matters more complicated.
2. Meet income qualifications. If you make too much money, you can’t claim the credit. If you’re single, head of household, or married filing separately, the child tax credit completely goes away if your taxable income exceeds $240,000. If you’re married filing jointly, the credit disappears above $440,000 of income.
3. Meet income tax qualifications. To claim the entire $2,200 child tax credit, you must owe at least $2,200 of income tax. For example, if you owe $3,000 in taxes and have one child who qualifies for the credit, you can claim the entire $2,200 credit. But if you only owe $1,000 in taxes, the maximum amount of the child tax credit you can claim is $1,700.

Take the tax credits…but get help!

The bottom line is that tax credits are usually more valuable than tax deductions. But tax credits also come with lots of rules that can be confusing. Please contact our RRBB advisors to schedule a tax planning session to make sure you make the most of the available tax credits for your situation.

The post Understanding tax credits vs. deductions appeared first on RRBB.

After tax filing

• If you get a big refund, adjust your withholdings. A large refund may feel rewarding, but it often means you gave the government an interest-free loan for the entire year. This money could have been used for debt reduction, savings, or investments instead. After filing, revisit your Form W-4 and run a 2026 projection. Fine-tuning your withholding improves monthly cash flow and reduces the likelihood of over-correcting later in the year.
• If you have a big tax bill, review estimated tax payments. A significant balance due is more than an inconvenience. It may signal under-withholding or insufficient quarterly estimates. Early in the year is the ideal time to correct course. Review income sources, especially self-employment, investment, or bonus income, and adjust estimated payments accordingly.

Tax law changes

• Plan now to take advantage of the $1,000 above-the-line charitable donation deduction. With an above-the-line charitable deduction available ($2,000 for married couples), thoughtful giving becomes even more strategic. Consider your cash flow to optimize donation timing. Spreading contributions across the year may make budgeting easier while ensuring you fully utilize the deduction.
• Pay attention to no tax on tips and overtime. Accurate tracking becomes essential if you receive tips and/or overtime income. Confirm how your employer reports this income and ensure payroll systems reflect proper treatment. Employers and business owners must also review compliance procedures. Understanding how these earnings are classified early in the year helps prevent reporting errors and maximizes any available benefit.

Future prep

• Review retirement contribution limits for 2026. Confirm contribution limits for IRAs, 401(k)s, and other qualified plans for 2026, and evaluate whether you can increase deferrals. Even modest monthly adjustments can significantly reduce taxable income over the course of a year. Starting early also makes it easier to reach maximum contribution thresholds without straining year-end cash flow.
• Plan HSA contributions and medical expenses. Health Savings Accounts offer a rare triple tax benefit. They are deductible contributions, tax-free growth, and tax-free qualified withdrawals. Review eligibility, contribution limits, and anticipated medical expenses for 2026. Coordinating planned procedures, prescriptions, or ongoing care with your funding strategy can enhance the tax benefit while keeping healthcare spending organized and predictable.
• Take into account life events. Major life changes often reshape your tax profile. Marriage can alter filing status and bracket exposure. Divorce may affect dependency claims and support payments. A new child can unlock credits and deductions. Anticipating these shifts allows you to update withholding, adjust estimated payments, and plan eligibility for credits before the year unfolds.

Start tax planning

The most effective tax strategies are built early. Use your filed 2025 tax return as a starting point, make adjustments now, and give your 2026 plan room to work in your favor. If you have any questions or want to get started, contact our RRBB advisors today.

The post Your tax planning cycle starts now appeared first on RRBB.

Income thresholds matter

If your gross income is less than the federal standard deduction, you usually do not need to file a tax return. This is because the deduction effectively eliminates any taxable income. The amounts for 2025 are:

If you or your spouse is over the age of 65, the income required to file a tax return goes up by $1,600 ($3,200 if both spouses are age 65 or over). If you’re single or head of household, the income required to file a tax return increases by $2,000. So, for example, a single person age 65 or older does not need to file a federal tax return if their gross income is $17,750 or less. But not so fast! There is a new senior deduction of $6,000 per person this year. This bonus deduction is subject to income thresholds of $75,000 for single filers ($150,000 for married filers). So even if you do not think you need to file, you may still want a review of your situation!

Other exceptions to the income limits

Like most tax laws, there are exceptions to the income limits mentioned above. Here are some common situations where filing a tax return still makes sense.

• You have federal or state withholdings. The only way to get money back that was withheld from a paycheck or a Form 1099 is to file a tax return. If you do not do so within three years, the government will absorb your refund. While the IRS is quick to let you know that you owe them money, there is no such program to let you know that a refund is due to you.
• You are eligible for a refundable credit. Refundable credits will pay you money even if you don’t owe income tax. For example, if you have a tax liability of $750, but you are eligible for a $1,000 tax credit, you normally can only receive the $750 tax benefit. But with a refundable tax credit, you can receive the additional $250, even without a tax liability. The most common examples of refundable credits are the Child Tax Credit, the Earned Income Tax Credit, the Premium Tax Credit, the Adoption Credit, and the American Opportunity Tax Credit.
• If you are a dependent. Special filing rules apply if you are a dependent on someone else’s tax return. If this is the case, filing rules vary depending on your age, earned income (such as wages), and unearned income (such as interest income). In this case, it is usually best to review your situation. And do not file without talking to the primary taxpayer! You will have to straighten our a big tax hassle.
• Other reasons. Sometimes, filing a tax return can serve other purposes. This includes using your tax return to obtain financing or to receive college financial aid. Another reason is to limit the amount of time your tax return can be audited. Once a tax return is filed, the audit time limit clock starts. After 3 to 4 years, the IRS can no longer audit most tax returns. However, if you don’t file the return, then the audit clock never starts. So sometimes filing a zero-owed tax return makes sense to start that audit clock.

So, do you need to file a tax return?

When in doubt, make a quick call to determine if filing is required for you. Contact our RRBB advisors today!

The post Do you need to file a tax return? appeared first on RRBB.

Easy-to-miss income sources

• Side gigs and freelance work. Extra projects and informal work sometimes feel more like favors than income. The IRS, though, still generally views any paid work as taxable. The upside is that these activities often have deductible expenses, which can help offset income when tracked from the start.
• Selling items online. Online selling often begins as a hobby or as a way to declutter your living space. But pay attention when your sales turn profitable or more regular. Knowing where this line is can help you determine when to step up your recordkeeping.
• Small amounts from accounts and apps. Taking a moment to note interest, bonuses, or app payments helps ensure these amounts are accounted for before tax time, when they are more likely to be flagged by automated reporting from the IRS and other tax authorities.
• Refunds and reimbursements. Money coming back to you often feels like a non-event. Keeping brief notes about refunds and reimbursements makes it easier to confirm whether they’re taxable and ensures they’re treated correctly if questions arise later.
• Insurance payouts and settlements. Insurance payments usually need a review. Understanding what the payment covers helps determine whether and how to report it. This includes:
  • Replacement costs
  • Lost income
  • Another purpose
• Unemployment compensation. Keep all records. This one is often confusing because during COVID, the federal government temporarily made this income tax-free. It is no longer the case.

What you can do to avoid tax issues

To reduce the chances of missing these types of income, the following simple habits can make a meaningful difference:

1. Keep a running list of income sources. When money comes from outside a regular paycheck, make a quick note of it. A short entry on your phone or a simple spreadsheet creates a reliable reference later and reduces the chance of last-minute guesswork.
2. Save documents as you receive them. Tax forms, payout summaries, and transaction statements often arrive at different times. Placing them in a single digital or physical folder keeps everything in one place, so nothing is missing when you are ready to file.
3. Look at spam and junk email folders. Many vendors are now sending 1099s digitally via email. If they are tagged as spam, you may never see them. So keep a list, and if you are missing a form, check these folders.
4. Review accounts before preparing. Before the preparation of your tax return, scan your bank accounts, payment apps, and online platforms for deposits that may not feel like income. A quick review can catch items that didn’t generate an official tax form but still need to be reported.

If you have any questions or are ready to file your taxes, contact our RRBB advisors.

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