What’s Costing You More: Taxes or Poor Planning?

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By the time your CPA is preparing your tax return, most opportunities to minimize taxes have already passed.

The truth is that many people don’t know the difference between tax preparation and tax planning. While both are crucial for your financial health, they serve completely different purposes and happen at different times of the year.

Understanding tax preparation

Tax preparation focuses largely on compliance and maintaining good standing with the IRS. It’s about documenting what happened in the previous tax year and making sure you comply with current tax laws. When you compile your W-2s, 1099s and receipts for your yearly taxes, you’re engaging in tax preparation.

This process involves calculating your taxable income, identifying eligible deductions and credits, and completing the necessary forms to file your return, so you can report your financial activity accurately and pay the right amount to Uncle Sam.

But by the time you’re sitting down to prepare your return, it’s too late to change most financial decisions for that tax year. You can’t go back and contribute more to your 401(k) or restructure investment sales to minimize capital gains. That’s why tax planning is so important.

Failing to plan is planning to fail

Tax planning is a proactive, forward-thinking approach that examines your entire financial picture to identify opportunities for tax savings. Effective planning considers multiple variables like your current income, expected future earnings, retirement timeline, investment objectives, life events and family situation. The goal is to help you make smarter decisions throughout the year that position you for optimal tax outcomes.

For example, tax planning might involve timing the sale of investments to offset gains with losses or converting traditional IRA funds to Roth IRAs during lower-income years. It may also include estate planning considerations, such as gifting strategies that reduce future tax burdens for your heirs.

So while tax preparation focuses on one year at a time, tax planning takes a multi-year view of your financial life.

Tax planning and preparation: Better together

Tax preparation ensures you remain compliant with current tax laws and avoid penalties, and keeps you out of trouble with the IRS. On the other hand, tax planning helps you maximize your financial potential, keeping more money in your pocket. Both are crucial for your financial success.

Clients who rely solely on tax preparation risk unexpected tax bills and missed opportunities come tax season. But those who embrace tax planning are in a better position to build long-term wealth. Small moves — like increasing retirement contributions and utilizing tax-advantaged health savings accounts — can result in big savings over time.

Your best bet? Work with professionals who understand both tax preparation and planning. The tax experts at Magone & Company can help you make the most of your tax situation. Contact us at (973) 301-2300 to learn if you’re leaving money on the table.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your unique circumstances.

 

Transform Your Tax Refund into Long-term Wealth: 7 Strategic Moves

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Did you know that 25% of American taxpayers consider their tax refund free money? In fact, 26% of taxpayers report using their refund to treat themselves to things they normally wouldn’t buy, like clothing and accessories (45%), electronics (40%) and shoes (37%).

Instead of spending your next refund on items that will come and go, think about how you can use it to accelerate your financial future.

Whether you receive $500 or $5,000, the following strategies can help transform your refund into a foundation for long-term financial security.

Eliminate high-interest debt. The path to wealth begins with breaking free from debt. Every dollar you owe represents money that could be working for you through investments and savings. Your best bet is to tackle high-interest obligations first — credit cards, personal loans and payday advances — where interest rates can be as high as 15-25%.

By eliminating these costly debts, you’re freeing up monthly cash flow for wealth-building initiatives.

Open a strategic savings account. Whether you’re planning a home purchase or a dream vacation, establishing separate savings accounts for specific objectives keeps you motivated and organized. Consider automating your savings by setting up direct deposits or scheduled transfers from another account.

This “pay yourself first” approach removes the temptation to spend and ensures consistent progress toward achieving your goals.

Build an emergency fund. Financial emergencies can derail your savings in an instant. An adequate emergency fund ideally contains three to six months of essential living expenses and minimum debt payments.

By building a financial cushion, you’re protecting your investments from premature withdrawals as well as accumulating new debt when unexpected costs arise.

Boost your retirement savings. Compound growth makes time your most powerful wealth-building tool, transforming small contributions today into substantial retirement funds tomorrow. Check out these powerful growth scenarios.

Maximize contributions to tax-advantaged accounts like traditional or Roth IRAs for immediate deductions or tax-free growth. Self-employed individuals may explore SEP IRAs for higher limits.

Invest in home improvements. Home improvements can increase your property value while improving your quality of life. Focus on projects with strong return on investment, including kitchen updates, bathroom renovations or additional square footage.

Remember, your primary residence is likely your largest asset, and maintaining and improving it protects and grows that investment.

Create multiple income streams. Use your tax refund as seed money for generating additional income. This could mean starting a side business, using it as a downpayment to purchase a rental property or buying equipment for freelance work.

Even small additional income sources can compound significantly over time when reinvested wisely.

Enhance your earning potential. The best investment you can make is often in yourself. Use your refund for education, professional certifications or skill development that can increase your earning capacity.

For example, you may complete a degree, learn new technology skills or obtain industry certifications to boost your professional value — and your salary. Higher earnings create more opportunities for saving, investing and building wealth throughout your career.

Seize the opportunities

Your tax refund is money you’ve already earned that’s waiting for you to put it to work. Instead of spending it, invest it in your financial future. Find out how the tax experts at Magone & Company can help ensure you receive the maximum return based on your unique situation. Reach out today.

 

The above information is provided for general education purposes and should not be considered financial or tax advice. Please consult your accountant or financial advisor for advice specific to your situation.

Missed the Tax Deadline? Getting Your Business Back on Track

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Falling behind on tax filings can quickly put your business on the IRS’s radar.

Whether due to financial constraints, staffing shortages or organizational transitions, missing even a single filing deadline can make your business vulnerable to penalties, interest charges and potential compliance investigations that can impact your company’s financial health and reputation.

With a practical strategy in place, you can help mitigate any damage — before it’s too late. Keep the following tips in mind:

Time is not on your side. When addressing unfiled business returns, urgency is key. IRS failure-to-file penalties accrue at five percent of unpaid taxes per month, capped at 25%. And failure-to-pay penalties add 0.5% per month, also maxing out at 25%. The compounding result? A $10,000 tax liability that can add up to over $15,000 in just 24 months.

Plus, the statute of limitations for IRS assessment (typically three years) doesn’t begin until returns are filed, creating unlimited financial exposure that hangs over your business.

Voluntary disclosure is your best strategy. Don’t wait for the IRS to find you. Taking proactive steps to file back returns allows you to:

  • Maintain control over the narrative and presentation of information
  • Demonstrate good faith compliance efforts
  • Potentially qualify for penalty abatement programs

There are tactics to tackle documentation challenges. Reconstructing financial records for past periods can be daunting. Remember that the burden of proof falls on you as the taxpayer, so the more documentation you can provide, the better.

Start by:

  • Gathering all bank and credit card statements for the unfiled years
  • Collecting available expense receipts and income documentation
  • Securing prior year depreciation schedules if applicable
  • Retrieving copies of previously filed returns for context

Your catch-up approach matters when facing multiple unfiled years. Has your business gone multiple years without filing? The good news is that you don’t need to file everything simultaneously to catch up.

Consider these approaches:

  • Most recent return first: Filing current year returns establishes compliance going forward while you address back years.
  • Refund years first: If you’re expecting refunds, prioritize years still within the refund statute (generally three years).
  • Highest exposure first: Address years with significant tax liabilities to minimize ongoing penalty accrual.

The most important thing is to take action now. Each day that passes potentially increases your tax liability through additional penalties and interest.

 Looking ahead

After resolving your back tax issues, ensure your business remains in good standing by taking preventive measures to keep your tax compliance on track.

  • Schedule quarterly financial reviews with your team and accountant to identify potential issues early
  • Establish estimated tax payment schedules to avoid underpayment penalties
  • Develop document retention policies that support future compliance
  • Consider outsourcing tax compliance functions

At Magone & Company, we provide expert support and solutions to help you navigate complex tax laws, identify deductions and credits, minimize penalties and interest, and create systems to prevent future compliance issues. Don’t hesitate to reach out at (973) 301-2300 to schedule a no-obligation, confidential consultation.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your unique circumstances

 

 

Costly M&A Pitfalls (and How to Protect Your Deal)

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One of the most frequent questions we receive from our business clients is about the common pitfalls in mergers and acquisitions (M&A) and how to avoid them.

At Magone & Company, we advise many clients through M&A transactions, and here are the critical issues and key vulnerabilities that demand attention:

Valuation blind spots

I’ve watched several clients walk away from fair offers because they couldn’t separate their personal attachment from market reality. One closely held manufacturing company insisted their business was worth 60% more than comparable sales in their market — and ended up selling two years later for even less than the original offer they turned down.

Better approach: Get an independent business valuation early in the process. Understanding your true market value and the relevant metrics can help you recognize genuine opportunities and avoid holding out for unrealistic terms.

Inadequate due diligence

Last year, an automotive company reached out six months after they acquired an established dealership. They’d discovered inventory discrepancies and contract issues that completely changed their expected ROI. The problem? They’d been so excited about the opportunity that they’d rushed through the financial review process.

Better approach: Never compromise on due diligence; it’s essential for protecting your investment. Ensure thorough review of financial statements, contractual obligations and client relationships. This might mean losing some deals to faster competitors, but it also means avoiding disasters that could threaten the health of your entire business.

Cultural alignment challenges

We’ve seen too many clients rush into acquisitions without properly evaluating how their organizations will integrate. For example, if two organizations aren’t compatible in work styles and communication approaches, the result can be a very bumpy road filled with employee turnover and unsatisfied customers.

Better approach: Invest time upfront to evaluate cultural compatibility before finalizing any agreement. Have candid discussions about operational alignment and plan for potential challenges early in the process. Pay attention to communication styles, decision-making processes and workplace expectations.

Post-deal realities

A professional services client recently shared how their “successful” acquisition turned into an operational nightmare. Different HR and accounting systems, conflicting client management processes and unclear reporting structures created chaos that lasted for months.

Better approach: Map out your technology integration plan before the deal closes. Identify which systems you’ll keep, which processes need updating and how you’ll communicate changes to both teams. This planning phase is just as important as the negotiation itself.

Going it alone

Perhaps the most expensive mistake I see is business owners trying to handle complex transactions without proper support. One client saved money on consulting fees upfront but lost much more when poorly structured deal terms created unexpected tax consequences.

Better approach: Treat professional fees as an investment. The right legal, financial and tax guidance typically pays for itself through better deal structure and terms. M&A success comes from thorough preparation and realistic expectations. The clients who approach these transactions strategically — rather than emotionally — consistently achieve better outcomes.

Structure your deal for success

At Magone & Company, we specialize in guiding clients through M&A transactions while optimizing their tax outcomes. Contact us at (973) 301-2300 to discuss your specific situation.

 

This document is for informational purposes only and should not be considered tax or financial advice. Be sure to consult with a knowledgeable financial or legal advisor for guidance that is specific to your unique circumstances.

 

Nick Magone Named to Alliott Global Alliance North America Regional Advisory Committee

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Managing Partner Nick Magone has been appointed to the North America Regional Advisory Committee of Alliott Global Alliance (AGA), effective September 1, 2025. This appointment marks a significant milestone in Magone & Company’s renewed relationship with an organization that is one of the world’s fastest-growing global alliances.

AGA CEO Giles Brake says, “We are delighted to have Nick back with us and playing a vital role on our committee at a time of significant change for the accounting profession.”

Magone — a frequent speaker at professional organizations in the U.S. and internationally — has a long history with AGA, dating back over 15 years. He was previously involved with the Alliance through another member firm until 2008, and rejoined in 2024 with Magone & Company. The Alliance has grown tremendously since his earlier involvement, yet it maintains the collegial atmosphere and commitment to mutual success that sets it apart in the industry. 

Says Magone, “Since my firm joined AGA, I have seen firsthand the value of our global alliance in helping member firms navigate complex challenges and seize new opportunities. I look forward to working closely with colleagues across the region and worldwide to advance our shared goals, strengthen collaboration and ensure we continue delivering exceptional value to our members and their clients in an ever-evolving business landscape.”

About Alliott Global Alliance
Founded in 1979, and with 240 member firms operating out of 340 offices in over 100 countries Alliott Global Alliance is an international alliance of independent, law, accounting, and advisory firms. Each member shares a common goal: to learn and share knowledge, resources and opportunities to make the world smaller and their businesses stronger.

 

6 Identity Theft Prevention Tips

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At Magone & Company, we’ve seen firsthand how devastating identity theft can be for individuals and their families. Your personal and financial information is constantly at risk, facing relentless threats and increasingly sophisticated schemes. The good news? There are many preventive measures you can take to significantly reduce your vulnerability.

Here are some simple strategies that can help keep your identity — and your financial well-being — secure.

Lock down your Social Security number. These nine digits are the crown jewel for identity thieves. Treat your Social Security number with appropriate caution:

  • Provide your SSN only when required for tax documents, credit applications and other legitimate needs
  • Question any request for your SSN, especially via phone or email
  • Never carry your Social Security card in your wallet

Monitor financial statements. The earlier you catch unauthorized activity, the easier it is to address:

  • Review bank and credit card statements weekly
  • Set up account alerts for unusual activities or transactions
  • Reconcile medical bills against insurance statements to catch medical identity theft

Ramp up your digital security measures

The devices in your pocket and home can be either your strongest shield against identify theft or your greatest vulnerability. Digital security is non-negotiable:

  • Install and regularly update security software on all devices
  • Use unique, complex passwords for each financial account and enable two-factor authentication whenever available
  • Avoid conducting financial transactions on public Wi-Fi and use a VPN when accessing sensitive information away from home
  • Review privacy settings on all social media accounts regularly
  • Log out of banking and shopping sites after completing transactions

Protect against direct mail threats

Don’t forget that criminals continue to find easy pickings in unlocked mailboxes and recycling bins. Safeguard against physical threats:

  • Promptly remove mail from your mailbox after delivery, and put a hold on mail delivery when traveling
  • Use a locked mailbox or P.O. box for receiving mail
  • Shred documents containing personal information and be cautious about what you discard in regular trash
  • Opt for paperless statements whenever possible

Secure your medical information

Health records contain some of your most personal details. If criminals gain access, they can exploit your medical benefits and insurance coverage, and corrupt your health records with dangerous misinformation. Be sure to:

  • Keep your health insurance cards secure and report missing cards immediately
  • Review all Explanation of Benefits statements from your health insurance and question any services or treatments you don’t recognize
  • Be cautious about sharing medical information online
  • Like all other sensitive documents, shred medical documents before disposal

Take tax-specific precautions

Your tax return contains virtually every piece of information an identity thief covets — your Social Security number, income details, banking information for direct deposits and more. To help mitigate tax-related identity theft:

  • File your tax returns early, using secure electronic filing methods when possible
  • Know that the IRS will never initiate contact via email, text or social media
  • Use only reputable, certified tax preparation professionals
  • Consider applying for an Identity Protection PIN from the IRS

For more information on securing your personally identifiable information (PII), check out this Homeland Security tipsheet.