Start a 529 education savings plan

529 education savings plans are a great way to start saving for a baby’s future educational costs. These plans offer investments that grow tax-free as long as the funds go toward eligible education expenses (including elementary and secondary tuition). States administer these plans, but that doesn’t mean you are stuck with the plan available in your home state. Feel free to shop around for a plan that works for you. Starting to save early maximizes the amount of tax-free compound interest you can earn in the 18+ years you have before kids go to college.

Bonus tip for family and friends: Anyone can contribute up to $19,000 to the plan in 2026 for each child! In addition, there is a special provision for 529 plans that allows up to 5 years’ worth of gift contributions at once. This is a great estate-planning strategy for grandparents.

Update Form W-4

Every year, you need to review your tax withholdings, especially if you have dependents. Remember, the birth of a child brings new tax breaks, including the $2,000 Child Tax Credit and the Child and Dependent Care Credit for childcare expenses. These credits can be used now to reduce tax withholdings and increase take-home pay, helping cover the cost of diapers and other needs that come with babies and children.

On the other side of the coin, these benefits fall away as your kids grow older. The Dependent Care Credit is for children under age 13. The Child Tax Credit is available for children under age 17. You must plan accordingly.

Prepare for medical expenses

Having a baby is expensive. So is watching your kids grow up! Fortunately, there are ways to be tax-smart when covering predictable medical and dental expenses. The first step is to pay as many out-of-pocket expenses as possible with pre-tax money. Many employers offer tax-advantaged accounts such as a Health Savings Account (HSA) or a Flexible Spending Account (FSA). So check this out and fund these accounts as much as possible. And while it’s more difficult to claim medical expenses as an itemized deduction, it’s impossible to do so if you don’t keep receipts.

Children can be expensive. Contact our RRBB advisors to make sure you’re getting all the tax breaks you deserve for having kids!

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Step 1: Take inventory of your income sources

Most income falls into a few core categories like wages from an employer, self-employment, freelance work, investment earnings, and any side income you pick up along the way. Other types of income you may have include:

• Retirement income (pensions, Social Security, IRA, or 401(k) withdrawals)
• Rental income from real estate
• Business distributions (for S-corp or partnership owners)
• Interest from savings accounts or bonds

If you aren’t sure, take a moment and look at last year’s tax return. It’s a great place to start. Then consider any changes you expect.

Step 2: Get familiar with the different types of taxes

Not all income is taxed the same way. And these differences can add up quickly.

• Wages are subject to a progressive income tax from 0% to 37%. So know the rate your next dollar of tax will pay. Also, don’t forget wages are subject to payroll taxes like Social Security and Medicare (7.65%).
• Self-employment and freelance income are subject to the same tax rates as wages, except that most don’t automatically withhold taxes and may also be subject to self-employment tax (15.3%). So planning here needs to consider quarterly estimated tax payments.
• Investment earnings can be subject to a variety of tax rates, including interest and short-term capital gains (up to 37%), qualified dividends (0% to 20%), and long-term capital gains (0% to 20% depending on the holding period and income type).
• Retirement income may be fully taxable (up to 37%), partially taxable (varies), or tax-free (0% for certain Roth distributions).
• Rental income is generally taxed at ordinary income rates (up to 37%), though deductions can decrease your total taxable income.
• Business distributions vary by entity and may be taxed at ordinary income rates (up to 37%) or pass through with no additional tax at the distribution level (varies).

Step 3: Tips to manage your tax burden

• Align your tax payments with how you actually earn. If a growing portion of your income is coming from somewhere outside a traditional job, withholding alone may not cover your tax liability. W-2 income is handled automatically, but freelance, investment, or rental income often requires quarterly estimated payments to avoid penalties.
• Use withholding and estimates together. Adjust paycheck withholding to pair it with estimated payments when income is uneven or comes from multiple sources.
• Pay attention when your income changes. These income shifts can catch people off guard, leading to a higher tax bill if they don’t adjust their plan early in the year.
• Be intentional about when income and expenses hit. Sometimes you have control over when you earn income or pay expenses. Used correctly, adjusting your timing can help smooth out your tax bill, especially if you’re self-employed or have investment income.
• Check your plan throughout the year. Your income mix can change quickly, and small updates can make a big difference. A quick review during the year can help you stay on track and avoid surprises later.

By understanding your income sources, how each is taxed, and how to align your payments and timing strategies, you can take a more proactive approach to managing this year’s tax bill. Contact our RRBB advisors if you have any questions or are ready to create your 2026 tax plan.

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529 college savings plans

With a 529 plan, anyone can open a college savings plan for any current or future student as long as they are a U.S. resident, have a valid tax ID, and are 18 or over. The deposits are made using after-tax dollars. As long as the funds are for qualified educational expenses, there is no tax on the earnings on the investments in the account. The account is specifically for a beneficiary (including yourself), but the account holder controls the funds on their behalf.

Some states offer an annual deposit. Therefore, an individual can contribute up to the annual gift tax limit, currently $19,000 or $38,000 for a couple. The 529 plans are sponsored by individual states, but you are not required to open an account in your state of residence. You may wish to, however, as some states give you a tax break on your deposits.

Additionally, you can now use the funds to pay for kindergarten through 12th-grade education and college costs. Qualified expenses also include college tuition, fees, books, supplies, room & board, computers, and internet access.

How to take advantage

• Open it early. The sooner you start, the more money is available for education.
• Anyone can open the account. The beneficiary is the student, but the account holder can be almost anyone. Typically, this is a parent or grandparent, but it can also be an account for a nephew, niece, or family friend.
• Review multiple states’ plans. They are not all equal. Some states’ 529 plans provide better investment options and have better-managed returns than others.
• Roll over unused funds. If your youngster does not need the funds, you can transfer unused funds without tax implications as long as it is to a member of the family. This is pretty broad as it includes brothers/sisters, nephews/nieces, parents, cousins, in-laws, and even the account holder.
• Take full advantage of the benefit. You can now use the funds for more than college expenses. Up to $10,000 per year can be used for K-12 tuition, and $10,000 (lifetime limit) can be used for student loan repayments. Even registered apprenticeships qualify.
• No age limit. And unlike other programs, there is no age limit to contributions. States often impose limits on the aggregate value in accounts, so you need to be aware of them. But understand that at some point, other savings vehicles are often better tax instruments. This includes Roth accounts and other IRAs. There are no limits on the use of funds for qualified educational expenses.
• Funding multiple years. There is even a provision to fund multiple years of gifts (super gifting up to 5 years) in a single year. If you want to consider this option, it’s best to ask for help, as it will require some tax reporting.

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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.

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Segregation of duties

1. Segregate cash disbursements. Payment responsibilities should never rest with a single individual. One employee should review and approve vendor bills, while another processes the payment. The person preparing checks should not have the authority to sign them. Electronic payments and fund transfers require similar separation: one person initiates the transaction, another reviews the details, and a separate, authorized manager provides final approval. The same layered approach applies to purchase orders: one team member issues or requests the order, another approves it, and payment is released only after proper review. Dividing these duties ensures management has visibility into how funds are spent and significantly reduces the risk of error or misappropriation.
2. Segregate control of cash. Have an owner or manager occasionally spot-check incoming electronic transactions and tie them to the company bank account. If you receive physical checks, have an owner or manager open the mail before passing it on to accounting. That’s one way to detect unusual transactions before they’re recorded in the company books. Alternatively, you might ask someone outside accounting to open the mail and either prepare a deposit slip or perform a daily reconciliation of all transactions.
3. Segregate reconciliations. For companies with limited resources, a periodic review of bank reconciliations by someone outside accounting can serve as a mitigating control. Non-accounting personnel performing these reviews will need to be trained. They’ll need to understand the risks involved and the types of unusual or unsupported transactions needing further investigation. Cross-training staff also helps to ensure continuity of operations when accounting employees take vacations or leave the company. Or better yet, bring in an outside accounting expert to conduct periodic audits of key functions.

Safeguard your business

• Pay special attention to ACH receipts. Unlike physical checks, which leave a paper trail and involve multiple handling steps, ACH payments post directly to a bank account without anyone physically touching the money. This convenience reduces natural oversight points. If the same person has access to online banking and records receipts in the accounting system, errors or intentional misstatements may go undetected.
• Management by wandering around. As an owner, periodically review your bank accounts and their activity. Ask questions about large transactions. Even if you already know the answer, your team will know you are looking. The same goes with your general ledger. Get access to the ledger and periodically review the details for a few accounts. You may be surprised by what you find. Again, your questions will show your engagement, and the randomness of this activity will serve as a simple audit technique.

Segregation of duties can help your company track cash and prevent employee theft before it happens. Contact our RRBB advisors for more information or if you have any questions.

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Building early habits in your 20s

For many people, this decade is less about large balances and more about establishing patterns. Financial education outlets frequently emphasize the long runway available to younger savers. Investopedia.com discusses the long-term impact of starting early and allowing time to work in your favor. Common themes during this stage include:

• Developing a regular saving habit, even in small amounts
• Exploring employer-sponsored retirement plans, when available
• Learning basic investment concepts over time
• Treating retirement contributions as part of monthly expenses
• Expanding skills and experience that may increase earning potential

Adding structure in your 30s

As careers and family responsibilities grow, retirement planning often becomes more deliberate. For example, Charles Schwab provides a decade-by-decade overview of how retirement priorities may shift during this phase of life. Conversations during this decade often revolve around:

• Reviewing contribution levels as income changes
• Understanding how employer matching programs work
• Paying attention to debt and interest costs
• Considering how lifestyle decisions shape long-term finances
• Evaluating career growth or additional income opportunities

Taking inventory in your 40s

Mid-career can be a natural time to assess progress and revisit long-term projections. Many financial institutions have programs that address these topics. Topics frequently discussed include:

• Reviewing current balances alongside projected needs
• Understanding how high-interest debt may affect cash flow
• Identifying gaps between current savings and future income goals
• Revisiting contribution levels and investment allocations
• Checking Social Security earnings records for accuracy
• Considering whether new income streams may strengthen retirement readiness

Focus on the finish line in your 50s and 60s

As retirement moves closer, planning conversations often shift toward income timing and lifestyle expectations. AARP maintains a retirement resource center that covers considerations commonly discussed in the years leading up to retirement. Areas that frequently come into focus include:

• Continuing to save where possible
• Eliminating or reducing outstanding debt
• Thinking through retirement timelines and income sources
• Factoring healthcare and lifestyle preferences into cost expectations
• Clarifying what retirement may look like day to day

Retirement tips that apply at any age

No matter where you fall on the timeline, a few core ideas always support progress.

• Automate savings to remove decision fatigue
• Avoid comparing your progress to others with different circumstances
• Revisit your plan occasionally rather than ignoring it entirely
• Focus on what you can control today

The bottom line: Start where you are

Retirement planning is not about catching up to someone else’s path. It is about making the best decisions you can with the resources you have right now. Wherever you are starting from, taking action today creates options for tomorrow. As always, please contact our RRBB advisors with any questions or concerns regarding your situation.

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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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