Tax Insights & Tips: Expert Advice from Cotton Mather Accounting Group

2025 Tax Update: Your Complete Guide to The "One Big Beautiful Bill"

Thu, 12 Feb 2026 18:26:36 GMT

Social Security Tax Changes

Dear Valued Client,

Hello! We have seen many different explanations of The One Big Beautiful Bill and realized that you would need a trusted source that provided you with the most accurate, and most concise breakdown on what this bill means for you. Because of the size of the bill, we will be discussing it in pieces so that we can achieve our goal: providing you with accurate information without overwhelming you regarding the coming changes for the 2025 Tax Year.

Today’s email tackles Social Security tax changes.

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Question: Was tax on Social Security eliminated? Answer: No.

The Breakdown:

- The One Big Beautiful Bill is simply adding another deduction available only to seniors 65+ of up to $6,000 per tax payer based on your income.

- If you are 65+, single filing individually, and your Modified Adjusted Gross Income (MAGI) is calculated to be within the range of: $75,000 – $175,000. Then you are eligible for the new deduction. The amount of the deduction varies based on your MAGI, with the highest deduction available ($6,000) only available to those earning within the low end of this range ($75,000). As your income goes up, the deduction amount goes down.

- If you are both 65+, married filing jointly, and your MAGI is calculated to be within the range of: $150,000 – $250,000. Then you are eligible for the new deduction. The amount of the deduction varies based on your MAGI, with the most deduction available ($12,000) only available to those earning within the low end of this range ($150,000). As your income goes up, the deduction amount goes down.

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Thank you for taking the time to read this email and stay tuned for another breakdown of the One Big Beautiful Bill in the coming weeks.

Sincerely yours,

Cotton Mather Accounting Group

Energy Credits Changes

Overtime Tax Changes

Dear Valued Client,

Hello there, we have another portion of the Big Beautiful Bill to breakdown for you.

In today’s email, we will be informing you on the changes to tax on overtime.

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Question: Has all tax on overtime been eliminated? Answer: No.

Question : Should employers report overtime on my paycheck? Answer : Yes.

Question : Do I need to report overtime on my tax return? Answer : Yes.

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The Breakdown:

Individuals who work overtime are being provided with a new deduction of up to $12,500 per person.

This deduction is for federal tax only . It does not eliminate state, local, social security, and Medicare tax.

It applies to wages paid in excess of normal pay.

For example: an employee who earns $20 an hour normally, but $30 an hour with overtime, is able to deduct $10 per hour in overtime pay.

Similar to the new deduction for tax on tips, there are specific qualifications you must meet to become eligible for this deduction.

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The Qualifications:

You must have a valid social security number (not an ITIN number).

If you are married, you cannot file separately . All other filing status qualify .

You must be a qualified employee to receive this deduction.

Qualified employees are those who do not work in executive, administrative, or professional roles.

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The Phaseout:

Phaseout limit for single begins at a Modified Adjusted Gross Income (MAGI) of $150,000. Phaseout limit for married filing jointly begins at a MAGI of $300,000. As the MAGI increases beyond the phaseout limit, the deduction amount decreases by $100 for every $1,000 over.

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We thank you for your time today and encourage you to return next week for another breakdown of the One Big Beautiful Bill.

Sincerely yours,

Cotton Mather Accounting Group

Car Loan Tax Changes

Tax Changes to Car Loan Interest

Question : Can I deduct car loan interest on my taxes? Answer : Yes.

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The Breakdown :

The OBBB is providing qualified taxpayers with a new deduction of up to $10,000 of interest paid towards a new car loan .

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The Qualifications :

If you answer YES to ALL of the questions below you CAN claim the deduction.

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The Phaseout:

The deduction phaseout begins at a MAGI of $100,000 for single filers, and $200,000 for joint filers. As your income goes up (beyond the corresponding income cap) the deduction amount goes down.

Tax On Tips Changes

Dear Valued Client,

Hello once again! It is that time of the week where we breakdown another piece of the One Big Beautiful Bill for you.

In today’s email, we will be informing you on the federal changes to tax on tips.

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Question: Should Employers report my tips on my paycheck? Answer: Yes

Question: Do I have to report tips on my tax return? Answer: Yes.

Question: Has all tax on tips been eliminated? Answer: No.

The Breakdown:

Individuals who normally receive tips are being provided with a new tip deduction of up to $25,000 per return (not per person) from their federal income tax under specific qualifications.

The Qualifications:

The Phaseout:

Phaseout limit for single begins at a Modified Adjusted Gross Income (MAGI) of $150,000. Phaseout limit for married filing jointly begins at MAGI of $300,000. As the MAGI increases beyond the phaseout limit, the deduction amount decreases.

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We thank you for your time today and encourage you to return next week for another breakdown of the One Big Beautiful Bill.

Sincerely yours,

Cotton Mather Accounting Group

IRS Get Ready 2026: New Tax Deductions, SALT Cap Increase, and Paper Check Phaseout

Tue, 20 Jan 2026 17:01:39 GMT

The 2026 filing season (Tax Year 2025) marks a historic turning point for American taxpayers. Defined by the proposed "One Big Beautiful Bill" (OBBB), the current landscape introduces major changes that move beyond standard deductions to provide targeted relief for homeowners, workers, and families.

If you are an individual or a small business owner, here is what you need to know to stay ahead.

1. The End of the $10,000 SALT Ceiling

For years, the State and Local Tax (SALT) deduction was capped at $10,000, forcing many middle-class families to take the standard deduction. The new OBBB proposal quadruples this cap to $40,000 .

The Strategy: For residents in high-tax districts, the math has changed. It is time to re-evaluate whether itemizing your property and income taxes will yield a higher return than the standard deduction ($31,500 for joint filers).

2. The "Drive American" Interest Deduction

In a boost for domestic manufacturing, a new "above-the-line" deduction allows you to deduct up to $10,000 in interest on a loan for a new, personal-use vehicle.

The Catch: To qualify, the vehicle must be assembled in the U.S. (verified by a VIN starting with 1, 4, or 5) and weigh under 14,000 lbs. This benefit is available even to those who do not itemize, making it a powerful tool for new car buyers.

3. Relief for the Service and Industrial Workforce

Through the new Schedule 1-A, specific income streams are seeing unprecedented relief:

Tax-Free Tips: Qualified professionals may exclude up to $25,000 in tips from their gross income.
Overtime Protection: Up to $12,500 ($25,000 for joint filers) of the "half-time" premium for qualified overtime is now deductible.

These benefits begin to phase out at $150,000 MAGI ($300,000 for joint filers), so timing and income tracking are critical.

4. Legacy Wealth: The "Trump Account"

For families who welcomed a child in 2025, a new pilot program offers a $1,000 government seed contribution . These tax-deferred accounts are designed to grow until the child reaches age 18, with annual funding limits up to $5,000. Enrollment is made via the new IRS Form 4547.

5. The Fully Digital IRS

Under Executive Order 14247, the IRS is officially transitioning away from paper checks. All refunds are now mandated to be electronic. Whether you prefer direct deposit or a digital wallet, ensuring your IRS Online Account is verified and updated is no longer optional—it is a requirement for a timely refund.

Looking Ahead

While these provisions offer significant opportunities for wealth preservation, they are technically complex. Eligibility often hinges on Modified Adjusted Gross Income (MAGI) thresholds and specific documentation requirements (like VINs and FLSA-qualified pay stubs).

As these legislative drafts move toward finalization, we recommend a personalized consultation to ensure your 2026 filing strategy is both compliant and optimized.

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Disclaimer: The information provided in this document is for general educational purposes only and does not constitute professional tax, legal, or investment advice. Tax laws are subject to change. The specific application of these provisions depends on the individual facts and circumstances of each taxpayer. We strongly recommend a personalized consultation with a Qualified Tax Professional (CPA or Enrolled Agent) before making any financial decisions.

Getting Started with Onvio

Tue, 13 Jan 2026 22:01:26 GMT

This post walks through what the portal is, why it matters, and how to get the most from the how‑to guides embedded on this page.

Getting Started With Your Onvio Client Center

The Onvio Client Center is the secure online hub clients use to exchange documents, sign forms, and collaborate with Cotton Mather Accounting Group (CMAG). This post walks through what the portal is, why it matters, and how to get the most from the how‑to guides embedded on this page.

Requesting Client Portal Access

If you are a CMAG client but have never used the online portal, your first step is to request access. Open a browser and go to www.cottonmather.com, then click the “Client Portal” link in the main navigation. On the portal landing screen, you will see two options: one for people who already have an account and one labeled “I need an account” or “Request Access.” Click the “Request Access” button to open the short access request form.

That form asks for basic information—typically your first name, last name, and email address—so the CMAG team can verify you as a current client and connect the portal to the right records. After you submit the form, your request goes to the internal team; you will then receive an email within about two business days confirming that your account has been set up and providing instructions to log in. The page also includes a link to the Onvio Help Center and an overview video, so if you want to see how the client portal works before your access is approved, you can watch that while you wait.

Uploading Documents to the Client Portal

Once you have an account, uploading documents to CMAG through the portal is straightforward. Start by going to https://www.cottonmather.com and clicking on “Client Portal” in the top navigation. On the portal page, choose “Log In” under the “I have an account” option, which will take you to the Thomson Reuters Onvio sign‑in screen. Enter your email and password, click “Sign in,” and, if prompted, complete the two‑factor verification step by following your browser’s instructions.

After you successfully sign in, you will see your portal home with two main tabs near the top: “Tasks” and “Documents.” Click on the “Documents” tab to view files associated with your account. To upload new documents, click the “Add” button; a window will open that lets you either drag and drop files from your computer or click “Browse” to select them. Once you have added the correct files, click “Upload” to send them securely to CMAG.

After the upload finishes, your accounting team can access those documents directly in the portal, which is faster and more secure than sending them by regular email.

Getting Help With Onvio

Onvio Client Center is a secure web portal where you can upload tax and accounting documents, review completed work, and access your information from anywhere. CMAG uses Onvio as its primary “digital front desk,” so most document requests and file deliveries will flow through this system.

If you ever get stuck using the Onvio Client Center, the easiest place to start is the built‑in Onvio Help Center. From the CMAG website or your portal login screen, look for the Onvio Client Center area; there you will see links that clearly separate people who already have an account from those who still need one. The same section also points you to the Onvio Help Center and a short video titled something like “Register and use your client portal,” which walks through the basics visually.

Think of the Help Center as your searchable library for everything related to the portal. Once you click into it, you can browse topics, watch the registration video, and read quick articles that answer common questions about logging in, uploading documents, or resolving technical issues. If you hit a snag at any point—whether during sign‑in or while trying to complete a task—returning to this Help Center page is a simple, self‑service way to get back on track without waiting for a call or email response.

Tips for Using the Onvio Guides Effectively

To get the most out of the how‑tos:

Open the how‑to in one browser tab and your Onvio portal in another, then follow along step by step.
Pause on each screenshot and make sure your screen matches what you see in the guide before moving forward.
If something looks different on your device (for example, on mobile), look for the same button labels and icons even if the layout has shifted.

When to Use the Portal vs. Calling the Office

The portal is ideal for routine, document‑related tasks like uploading tax documents and downloading completed returns. For questions that require personalized advice or time‑sensitive clarifications, you can still call Cotton Mather Accounting Group during business hours.

Staying Organized Each Tax Season

Using Onvio consistently throughout the year reduces last‑minute tax season stress. As you receive important forms or notices, upload them promptly to your portal so your accounting team has everything needed to work efficiently on your behalf.

The Dirty Dozen represents the worst of the worst tax scams

Wed, 12 Mar 2025 22:22:51 GMT

The Dirty Dozen represents the worst of the worst tax scams.

Compiled annually, the Dirty Dozen lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Don’t fall prey.

For a detailed description of each scam, please refer to the list below:

IR-2025-26, Dirty Dozen tax scams for 2025: IRS warns taxpayers to watch out for dangerous threats

Prior year information on the IRS Dirty Dozen:

The Future of the Child Tax Credit

Wed, 12 Feb 2025 22:25:00 GMT

by Maureen Leddy, Thomson Reuters

February 6, 2025

8 minute read

With many provisions of the 2017 Tax Cuts and Jobs Act (TCJA, P.L. 412-931-1617 ) set to expire at year end and a push for fiscal responsibility in any tax reform, lawmakers are making their priorities known. But questions remain about where lawmakers stand on the future of the Child Tax Credit (CTC) — set to be halved in 2026 under current law.

Background.

Under Code Sec. 24 , taxpayers can claim a credit for each “qualifying child,” with phaseouts for taxpayers at certain income levels. Under the TCJA, for the 412-931-1617 tax years (other than 2021), the CTC is $2,000 per qualifying child. After 2025, it is set to drop back down to $1,000 per qualifying child.

A “qualifying child” is one who is under age 17 at the end of the tax year and for whom a taxpayer is allowed a dependency deduction under Code Sec. 151 . The TCJA added a requirement that a Social Security number be provided for each qualifying child for whom the CTC is claimed — that requirement expires at year end.

The CTC is also partially refundable for certain taxpayers. For tax years 412-931-1617, the refundable credit per qualifying child can’t exceed $1,400, as adjusted for inflation. After 2025, the $1,400 limit and inflation adjustment won’t apply.

In addition, refundability is currently limited to 15% of a taxpayer’s earned income over $2,500, with an alternate calculation for families with three or more children. In 2026, the earned income threshold will be $3,000 regardless of the number of children for which the CTC is claimed.

For 2021, the CTC was temporarily increased to $3,600 per child under six and $3,000 per child aged six to 17. It also was provided via monthly payments and made fully refundable.

Last year’s tax reform efforts.

A bipartisan effort by then-Senate Finance Committee Chair Ron Wyden (D-OR) and House Ways and Means Chair Jason Smith (R-MO), the Tax Relief for American Families and Workers Act of 2024 ( H.R. 7024 ), would have temporarily enhanced the CTC — but it didn’t offer a permanent change.

That bill, which ultimately stalled last year in the Senate, would have increased refundability for tax years 2023-2025 and adjusted the credit for inflation starting in 2024.

But the most controversial provision was allowing taxpayers to “look back” to the prior tax year in 2024 and 2025 when calculating the credit if they earned less income in that previous year.

Senator Mike Crapo (R-ID), who now chairs the Senate Finance Committee, took issue with the 2024 bill’s CTC provisions, saying they “undermine the work requirement and represent a significant shift … to transform the CTC from primarily working family tax relief into a government subsidy.”

In particular, Crapo called out the look-back provision. “Allowing individuals to receive a refundable credit when they have zero annual earnings — as the prior year’s earnings provision allows — is a departure from longstanding policy tying the CTC to work,” he said.

However, even if the bill had been enacted into law, the CTC would still revert to its pre-TCJA format in 2026.

Future options.

With changes set to go into effect next year even if lawmakers take no action, where is the CTC headed?

According to George Callas, who leads the Public Finance team at Arnold Ventures, “the ceiling is probably somewhere around last year’s bill, and the floor is probably somewhere around the TCJA-expired version of the credit.” According to Callas, “that’s actually not a huge delta.”

However, an increase in the CTC is not guaranteed, explained Callas at a January 31 Bipartisan Policy Center briefing. But “it would be politically dicey to cut it from where it has been for the past eight years.”

Arnold Ventures released a report earlier this week with its tax reform picks. Among the recommendations was eliminating head of household filing status and using the savings to improve the CTC. While the report does not lay out specific improvements, it notes options include “the provisions of the House-passed Tax Relief for American Families and Workers Act.”

According to the Tax Policy Center’s Elaine Maag, “every time we’ve expanded the Child Tax Credit in the past, those expansions have stuck.” Maag, speaking at a January 30 Brookings panel, said it “was a little bit of being caught … flat-footed that it became such a debate.”

But to Maag, the question becomes, “How can we convince people that their government can work for them in more than just times of great chaos?” There’s no reason the government can’t provide assistance during “normal times,” she said, but “we need to be much more clear about how a government can provide help and how the government can actually do it better than other sectors.”

American Enterprise Institute’s (AEI) Angela Rachidi said she expects “there will be some bipartisan compromise on the Child Tax Credit.” Rachidi, speaking at a January 22 webinar hosted by the University of Wisconsin-Madison’s Institute for Research on Poverty, doesn’t think the end result will be a 2021-level, fully refundable CTC. However, she said she’s seen “interest from both sides of the aisle” to “maybe make it bigger.”

The question for Rachidi is, “How are we going to pay for it? … Is it going to be from cuts to other parts of the safety net?” For her, “that’s where some of the bipartisan compromise issues sort of fall apart.”

There’s not yet “a bipartisan consensus around expanding the credit,” said AEI’s Michael Strain, during the Brookings panel. And “certainly” there’s not “a bipartisan consensus on full refundability,” he added.

But according to Strain, “there’s some pretty prominent Republicans who have supported full refundability, including Vice President Vance who … kind of nodded to it during the campaign.”

This year’s legislative proposals.

A recent House menu of tax options contains just one proposal specifically on the CTC — making permanent the requirement for taxpayers to provide a Social Security number for each child for which the CTC is claimed. That requirement went into effect for 412-931-1617 under the TCJA, but is set to expire next year. Extending it comes with $27.7 billion in savings over 10 years, according to the menu.

Other related proposals on the menu include eliminating head of household status and restructuring the Earned Income Tax Credit into a “worker credit” and “child credit.”

But as we await the unveiling of a broad tax reform bill, there’s been no shortage of single-issue bills to revise the CTC — despite Congress having convened just a month ago. These varied proposals show that there isn’t yet agreement even within the Republican party — which is expected to drive the 2025 tax reform efforts — on the size and refundability of the deduction.

In a broad proposal to extend Tax Cuts and Jobs Act expiring provisions, the TCJA Permanency Act ( H.R. 137 ), Representative Vern Buchanan (R-FL) is calling for a $2,000 annual credit per qualifying child. Buchanan’s proposal requires that the child’s Social Security be included on the tax return and would provide for partial refundability.

Buchanan told Checkpoint that he and his Ways and Means colleagues “are still actively discussing final numbers.” He hopes to “lock in” lower tax rates for families with his bill — cautioning that “if we allow these Trump tax cuts to expire at the end of this year, the CTC will immediately be cut in half.”

But Representative Blake Moore (R-UT) is calling for more than just an extension of the CTC. His proposal ( H.R. 353 ) would provide for a generous expansion — $4,200 for families with children under six, $3,000 for families with children age six to 17, and $2,800 for pregnant mothers. Families would need to earn at least $20,000 to receive the full credit (or $10,000 for pregnant mothers) under the bill. Moore would allow families to claim the credit for up to six children each year and require that both a parent and claimed child have a Social Security number. (More here .)

Multiple Republican-backed bills zero in on the expiring requirement that children for which the CTC is claimed have a Social Security number. Those include Representative Jefferson Van Drew’s (R-NJ) H.R. 547 , Representative Clay Higgins’ (R-LA) H.R. 778 , and Senator Cindy Hyde-Smith’s (R-MS) S. 268 .

And one Democrat-led bill would reinstate a feature of the 2021 version of the CTC —providing monthly payments to families. Under Representative Emilia Sykes’ (D-OH) H.R. 463 , payments would be $350 per month for children under age six, and $300 per month for children over six. Sykes is also proposing an expanded Earned Income Tax Credit.

With so many options on the table, it’s unclear what the CTC will look like in 2026 and when we will know more. “Some people think that tax will end up having to be a bipartisan deal,” said Callas, “in early 2026 after the tax cuts have expired.” There’s the possibility, he explained, that “it’s going to have to be done outside of reconciliation, because they’re going to need Democratic votes.”

Some Tax Basics for Setting Up a New Business

Thu, 26 Sep 2024 22:19:36 GMT

Don’t let the process of starting a new business deter you from your future success! While it may seem overwhelming, the IRS has provided a number of great resources to help brand-new business owners understand their tax responsibilities.

Below are some tax basics for setting up a new business:

Choose a business structure

The type/form of a business determines which income tax return a business will need to file. The most common business structures are:

Sole proprietorship : An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business.
Partnership : An unincorporated business with ownership shared between two or more members.
Corporation : Also known as a C corporation. It’s a separate entity owned by shareholders.
S Corporation : A corporation that elects to pass corporate income, losses, deductions and credits through to the shareholders.
Limited Liability Company : A business structure allowed by state statute. If a single-member LLC does not elect to be treated as a corporation, the LLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return as a sole proprietorship.

Choose a tax year

A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either:

Calendar year : 12 consecutive months beginning January 1 and ending December 31.
Fiscal year : 12 consecutive months ending on the last day of any month except December.

If an individual files their first tax return using the calendar tax year and later begins business as a sole proprietor, becomes a partner in a partnership, or becomes a shareholder in an S corporation, they must continue to use a calendar tax year unless they get IRS approval to change it.

Apply for an Employer Identification Number

An EIN is also called a Federal Tax Identification Number and it is used to identify a business, much like a person’s social security number. Most businesses need one of these numbers, but some don’t. For example, a sole proprietor without employees who doesn’t file any excise or pension plan tax returns doesn’t need an EIN. The EIN checklist on IRS.gov can help business owners know if they need an EIN.

Make sure all employees complete these forms when hired:

Pay yearly business taxes

The form of business you chose above determines what taxes should be paid and how to pay them. Check with your business accountant to find out what tax liabilities you are responsible for.

Visit the state’s website

Prospective business owners should also visit their state’s website for info about state tax requirements, as those may be different than federal tax obligations.

Talk to a tax professional

Before you fill out any paperwork or online forms to set up a new business, speak with a tax professional to make sure your forms are filled out correctly! Give us a call at 412-931-1617 or shoot us an email at info@cottonmather.com.