December 2025
2025 Fiduciary Tax Return Engagement Letter (GF)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state fiduciary income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your fiduciary tax returns, under the same terms. What Is the Scope of This Engagement? This engagement is limited to the professional services outlined above. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. Also, we will not prepare financial statements or perform valuations of any kind. We will prepare the above-referenced tax returns solely to assist you with your tax filing obligations with the IRS and applicable state and local tax authorities. Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. Note on Bookkeeping Assistance In some cases, we may determine that you require accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services are typically outside the [...]
2025 Entity Tax Return Engagement Letter
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state income tax returns, with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. What Is the Scope of This Engagement? This engagement is limited to the professional services outlined above. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely to assist you with your tax filing obligations with the IRS and applicable state and local tax authorities. Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. Note on Bookkeeping Assistance In some cases, we may determine that you require accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services are typically outside the scope of tax return preparation. As such, in most cases, we will provide you with referrals to bookkeepers. In limited cases, we may provide you with such assistance directly. In those cases, these services are intended to be nominal, are not a separate accounting or bookkeeping service, will fall under the scope of this engagement letter, and will be performed solely in accordance with the AICPA Code of Professional Conduct. In the event we conclude that such services are necessary to prepare your tax returns, we will bill you for the required services. You agree to pay for those required services. What Services Are Not Covered under This Engagement? (Most Are Offered as a Separate Engagement.) The following services are examples of services that are outside the scope of this engagement. However, we regularly assist clients with many of these matters. Should [...]
2025 Entity Tax Return Engagement Letter (CR)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state income tax returns, with all required accompanying forms, statements, and schedules. We will do so with the information you furnish to us as described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. What Is the Scope of This Engagement? This engagement is limited to the professional services outlined above. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. We will prepare the above-referenced tax returns solely to assist you with your tax filing obligations with the IRS and applicable state and local tax authorities. Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. Note on Bookkeeping Assistance In some cases, we may determine that you require accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services are typically outside the scope of tax return preparation. As such, in most cases, we will provide you with referrals to bookkeepers. In limited cases, we may provide you with such assistance directly. In those cases, these services are intended to be nominal, are not a separate accounting or bookkeeping service, will fall under the scope of this engagement letter, and will be performed solely in accordance with the AICPA Code of Professional Conduct. In the event we conclude that such services are necessary to prepare your tax returns, we will bill you for the required services. You agree to pay for those required services. What Services Are Not Covered under This Engagement? (Most Are Offered as a Separate Engagement.) The following services are examples of services that are outside the scope of this engagement. However, we regularly assist clients with many of these matters. Should [...]
2025 Gift Tax Return Engagement Letter (GF)
Dear Client: The Wolf Group, P.C. is pleased to provide you with the professional services described below. This letter confirms our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. The engagement between you and our firm will be governed by the terms of this agreement. What Is the Scope of This Engagement? We will prepare the following federal gift tax return for the year ended December 31, 2025: Form 709: United States Gift (and Generation-Skipping Transfer) Tax Return Federal and state law governs your obligation to file a gift tax return and pay gift tax. The Internal Revenue Service (IRS) considers a gift to be any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return. Under federal tax law, certain gifts are taxable and subject to an annual exclusion amount, which, for 2025, is $19,000 per taxpayer. In addition, a lifetime gift exemption amount applies, which for 2025, is $13,990,000. State law governing gift taxes may vary. A gift tax return is an individual filing; there is no joint gift tax return. Under certain circumstances spouses may elect to “split” gifts. If you are eligible for, and elect gift-splitting, we will also prepare your spouse’s gift tax return. We will not prepare any tax returns except those identified above, without your written request, and our written consent to do so. We will prepare your gift tax return based upon information and representations that you provide to us. We will not prepare financial statements or valuations of any kind. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify certain information. We will prepare the above-referenced gift tax return solely to assist you with your filing obligations with the IRS and state and local tax authorities as identified above. Our services are not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless from any and all claims arising from the use of the tax returns for any purpose other than complying with your tax filing obligations regardless of the nature of the claim, excepting claims arising from our gross negligence or intentional wrongful acts. The scope of our engagement is limited to the preparation of the gift tax returns listed above. It includes tax advice provided to you, as donor, regarding elections that can be made on gift tax returns. What Services Are Not Covered under This Engagement? (Some Are Offered as a Separate Engagement.) Tax planning services Our engagement does not include income, gift/transfer, or estate tax planning services. During the course of preparing the gift tax return identified above, we may bring to your attention potential tax savings strategies for you to consider as a possible means of reducing your taxes in subsequent tax years. However, we have [...]
2025 Gift Tax Return Engagement Letter
Dear Client: The Wolf Group, P.C. is pleased to provide you with the professional services described below. This letter confirms our understanding of the terms and objectives of our engagement and the nature and limitations of the services we will provide. The engagement between you and our firm will be governed by the terms of this agreement. What Is the Scope of This Engagement? We will prepare the following federal gift tax return for the year ended December 31, 2025: Form 709: United States Gift (and Generation-Skipping Transfer) Tax Return Federal and state law governs your obligation to file a gift tax return and pay gift tax. The Internal Revenue Service (IRS) considers a gift to be any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return. Under federal tax law, certain gifts are taxable and subject to an annual exclusion amount, which, for 2025, is $19,000 per taxpayer. In addition, a lifetime gift exemption amount applies, which for 2025, is $13,990,000. State law governing gift taxes may vary. A gift tax return is an individual filing; there is no joint gift tax return. Under certain circumstances spouses may elect to “split” gifts. If you are eligible for, and elect gift-splitting, we will also prepare your spouse’s gift tax return. We will not prepare any tax returns except those identified above, without your written request, and our written consent to do so. We will prepare your gift tax return based upon information and representations that you provide to us. We will not prepare financial statements or valuations of any kind. We will not audit or otherwise verify the data you submit to us, although we may ask you to clarify certain information. We will prepare the above-referenced gift tax return solely to assist you with your filing obligations with the IRS and state and local tax authorities as identified above. Our services are not intended to benefit or influence any third party, either to obtain credit or for any other purpose. You agree to indemnify and hold us harmless from any and all claims arising from the use of the tax returns for any purpose other than complying with your tax filing obligations regardless of the nature of the claim, excepting claims arising from our gross negligence or intentional wrongful acts. The scope of our engagement is limited to the preparation of the gift tax returns listed above. It includes tax advice provided to you, as donor, regarding elections that can be made on gift tax returns. What Services Are Not Covered under This Engagement? (Some Are Offered as a Separate Engagement.) Tax planning services Our engagement does not include income, gift/transfer, or estate tax planning services. During the course of preparing the gift tax return identified above, we may bring to your attention potential tax savings strategies for you to consider as a possible means of reducing your taxes in subsequent tax years. However, we have [...]
2025 Fiduciary Tax Return Engagement Letter
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state fiduciary income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your fiduciary tax returns, under the same terms. What Is the Scope of This Engagement? This engagement is limited to the professional services outlined above. We will not prepare any tax returns other than those identified above, without your written request, and our written consent to do so. Also, we will not prepare financial statements or perform valuations of any kind. We will prepare the above-referenced tax returns solely to assist you with your tax filing obligations with the IRS and applicable state and local tax authorities. Our services are not intended to benefit or influence any third party, including any entity or investment which may seek to evaluate your creditworthiness or financial strength. Note on Bookkeeping Assistance In some cases, we may determine that you require accounting and bookkeeping assistance solely for the purpose of preparing the tax returns. These services are typically outside the [...]
2025 Individual Tax Return Engagement Letter (CR)
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
2025 Individual Tax Return Engagement Letter
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
2025 Individual Tax Return Engagement Letter – For Joint Clients of The Wolf Group and CW Advisors
Dear Client: We look forward to providing you with tax return preparation services this year! The purpose of this letter is to specify the terms of our engagement and clarify the nature and extent of the services we will provide. This way, you know what to expect from us, and we can strive to deliver high-quality, seamless services. We seek to make our tax return process as straightforward and convenient as possible for you. Our goal is to minimize any hassle on your end while also making things as efficient as possible on our end. This allows us to deliver your returns expediently, while also bringing to bear a high level of technical expertise and personal service. It also helps us keep our costs down for all clients. What Services Are Covered under This Engagement? Preparation of U.S. Federal and State Returns With this letter, you are engaging us to prepare your 2025 U.S. and state individual income tax returns. We will do so with the information you furnish to us in the process described below. If you have taxable income or loss in a state or locality other than your resident state, we will generally prepare your nonresident state or locality returns, as well, unless you indicate in advance that you prefer we not prepare these nonresident filings. Preparation of Foreign Bank Account Reports (FBARs) If based on the information you have provided to us, we believe that you have a requirement to file FinCEN Form 114 (otherwise known as a Foreign Bank Account Report or “FBAR”), the preparation of your 2025 FBAR(s) will be covered under this engagement. If you prefer that we not prepare your FBAR(s), you may opt out by checking the appropriate box in your annual tax questionnaire or notifying us in writing. Preparation of Certain Dependent Tax Returns In some cases, a dependent or minor child under your care and supervision may be required to file a U.S. income tax return, state income tax return, and/or International Informational Report (e.g., FinCEN Form 114 (FBAR)). Generally, if you request that we prepare such forms on your dependent’s behalf, we will consider that service to be covered under the current engagement as a “dependent tax filing,” and we will bill the preparation to you based on our most recent tax preparation fee schedule. However, in some circumstances, we may require that the preparation be handled under a separate engagement, with an additional Engagement Letter to be completed by you, the parent or guardian. In that case, we will notify you of the requirement for a separate engagement. Preparation of Forms 3520 and 3520-A (Foreign Gifts, Foreign Inheritance, Certain Foreign Trusts & Foreign Pensions) If based on the information you have provided to us, we believe that you have a requirement to file Form 3520 and/or Form 3520-A, the preparation of those forms will be covered under this engagement. We will prepare those forms in conjunction with your individual tax returns, under the same terms. What Is [...]
November 2025
Calvin Tan
Areas of Expertise Coming Soon! Education Coming Soon! Languages Spoken English Senior Tax Manager Coming Soon!
October 2025
IRS Creates a New Form, Schedule 1-A, To Claim New Tax Deductions under the One Big Beautiful Bill Act (OBBBA)
Hoping to claim the new $6,000 additional deduction for seniors, or the new deductions for tip income, overtime income, or car loan interest? You can now see how these deductions will appear on your tax return. When the One Big Beautiful Bill Act (OBBBA), otherwise known as P.L. 119-21, was passed and signed into law on July 4, 2025, it introduced the following new tax provisions: No tax on tips – Now Internal Revenue Code 224 No tax on overtime – Now Internal Revenue Code 225 No tax on car loan interest – Now Internal Revenue Codes 163(h)(4) and 63(b)(7) It also introduced an additional deduction of $6,000 for seniors. Since these provisions did not previously exist, the IRS created an new form, Schedule 1-A, to enable taxpayers to take advantage of the OBBBA provisions. The form has yet to be finalized, but it gives a good indication of what you’ll need to do to claim the OBBBA deductions. What does Schedule 1-A include? The form is subdivided into six parts. Below, we give a summary of each section. Part I - Modified Adjusted Gross Income (MAGI) Amount To qualify for most of the OBBBA deductions, your income, specifically your “modified adjusted gross income (MAGI),” must be below certain thresholds. So, Part 1 of Schedule 1-A focuses on your MAGI. Since MAGI is not a term many people understand or know how to calculate, we previously posted a 2-part blog dedicated to MAGI for the OBBBA credits: Part 1, What Is MAGI, and Why Should You Care?, explains what it is and how to calculate your own MAGI. Part 2, Do You Meet the Income Requirements To Claim the New OBBBA Tax Benefits?, explains the income thresholds needed to qualify for the OBBBA deductihttps://thewolfgroup.com/blog/what-is-modified-adjusted-gross-income-magi-and-why-should-you-care/ons and how they work. Part I of Schedule 1-A takes the various subtotals of items in the MAGI calculation and computes your MAGI for OBBBA deduction purposes. Part II – No Tax on Tips Part II, No Tax on Tips, covers some of the requirements to qualify for the deduction of certain tip income, including: You must have a valid social security number. If married, you must file jointly to claim the deduction. This deduction is not available for married taxpayers filing separately. Your MAGI must be below $150,000 (or $300,000, if married filing jointly) to qualify for the full deduction. If your income is above that level, you may qualify for a partial deduction, as explained in Part 2 of our MAGI blog post. This part also compiles your qualified tip income, as reported on IRS Forms W-2, 4137, and/or 1099 (either 1099-MISC, 1099-NEC, or 1099-K). The Treasury Department has released a list of 68 professions that are occupations that allow qualified tip income. In addition, the IRS released proposed regulations related to this new tax law on September 26, 2025. Part III – No Tax on Overtime Part III, No Tax on Overtime, covers some of the requirements to qualify for the deduction of [...]
Do You Meet the Income Requirements To Claim the New Tax Benefits in the One Big Beautiful Bill Act?
Not sure what “modified adjusted gross income (MAGI)” is or how to determine whether yours qualifies you for newly available tax deductions and credits? Many of the new OBBBA tax benefits that are available beginning in 2025 or 2026 use MAGI to determine eligibility. In part 1 of this 2-part blog, we explain what MAGI is and how to calculate yours. Now, in part 2, we explain the different MAGI thresholds for the following new deductions and credits under the One Big Beautiful Bill Act (OBBBA), so you can calculate your own potential tax savings: An additional $6,000 tax deduction for qualified seniors An increase to the maximum deduction you can claim for state and local tax payments (a.k.a., the SALT cap) A new tax deduction for overtime pay A new tax deduction for tip income A new deduction for interest paid on new car loans An increased child tax credit This post focuses on MAGI eligibility for specific OBBBA benefits, but you can also employ broader tax planning strategies around the OBBBA tax law changes to reduce your tax burden in more substantial ways. As an example, see our post on tax planning around the timing of your charitable contributions. Keep in mind: Each benefit covered below has additional criteria (other than MAGI) that are not covered here, such as age or job-related qualifications, or stipulations on the types of expenses that count toward a credit. OBBBA benefit: An additional deduction of up to $6,000 is available for qualified seniors. What is the benefit? Effective in 2025 through 2028, certain taxpayers aged 65 and older will be able to receive an additional $6,000 deduction each, in addition to the current $1,600 additional standard deduction for seniors. What are the MAGI requirements? If you otherwise meet the standards to qualify for the benefit: To be fully eligible, your MAGI must be below $75,000 (or $150,000, if married filing jointly). To be partially eligible, your MAGI must be below $175,000 (or $250,000, if married filing jointly). If your MAGI exceeds these amounts, you are not eligible for the increased deduction amount, but you can still claim the regular deduction of $1,600 each. For those who are partially eligible, the phase-out rate for this benefit is 6%. That means that for each dollar that your MAGI exceeds the full-eligibility threshold, you must subtract $0.06 from the maximum allowable deduction. For example, if you file single, and your MAGI is $105,000, then your MAGI exceeds the $75,000 threshold by $30,000. Your maximum additional deduction of $6,000 must therefore be reduced by $30,000 x 6%, or $1,800. So, your additional senior deduction would be $4,200 (i.e., $6,000 - $1,800). OBBBA benefit: The maximum itemized deduction you can take for state and local tax payments (SALT cap) increases from $10,000 to $40,000. What is the benefit? Beginning in 2025, if you claim itemized deductions (rather than the standard deduction) on your tax return, you will be eligible to deduct up to $40,000 of your state [...]
What is “Modified Adjusted Gross Income (MAGI),” and Why Should You Care?
When the One Big Beautiful Bill Act (OBBBA) was passed in July 2025, it introduced many new deductions and credits, contingent on your income meeting certain thresholds. When defining those thresholds, OBBBA uses the term “modified adjusted gross income (MAGI).” The problem is, many taxpayers are not familiar with MAGI, let alone how to calculate it to determine whether they would qualify for the new tax benefits. Overall, understanding MAGI can help you: Evaluate your eligibility for specific OBBBA tax benefits, and Employ broader tax planning strategies around the OBBBA tax law changes, to reduce your tax burden in more substantial ways (as an example, see our post on tax planning around the timing of your charitable contributions). Below, in part 1 of this post, we explain the income terms the IRS uses in its numerous calculations and how you can estimate your own MAGI and eligibility for tax benefits. Later, in part 2 of this post, we explain the different MAGI thresholds for various OBBBA benefits, so you can calculate your own potential tax savings. What is MAGI, and how is it calculated? In general, MAGI is a measure of income that is meant to represent (approximately) the total income you earned during the year that is available to cover your various needs and purposes. This measure is then used to assess your eligibility for certain deductions and credits. To calculate your MAGI, you can follow the steps below: 1. Calculate your gross income. This is your total income before any deductions or credits. Gross income includes wages, interest, rental income, pension income, etc. 2. Calculate your “Adjusted Gross Income (AGI).” This is your gross income: a. Plus other amounts that provided some benefit to you (such as prizes, cancellation of debt, alimony, state tax refunds, etc.). You can find a list of these on Form 1040, Schedule 1, Part I. b. Minus specific deductions (such as Individual Retirement Account (IRA) contributions, student loan interest, etc.). You can find a list of these on Form 1040, Schedule 1, Part II. c. Minus specific “income exclusions.” These are amounts where some portion of the income is tax-exempt on your return, such as municipal bond interest or a percentage of your Social Security income. You can usually find these as the difference between the middle column and the right column on page 1 of your 1040. 3. Calculate your Modified Adjusted Gross Income (MAGI). This is your AGI with certain deductions or “income exclusions” reversed, to add them back into your income calculation. See below for further details. Why does MAGI reverse some of my AGI deductions? Although AGI is the most common income measure used to calculate eligibility for various tax benefits, Congress believed that AGI does not always give a complete picture of a taxpayer’s income. Consequently, Congress introduced “modified AGI” (MAGI). MAGI generally adds back to AGI: Certain amounts that were deducted for AGI (during step 2b above), where the tax code offers the deduction to promote certain [...]
The Best Way To Obtain an Individual Taxpayer Identification Number (ITIN)
For years, individuals who don’t qualify for a US social security number and need an ITIN have faced a long, challenging process. If you have applied for an ITIN before, you know that the process is more involved than just filling out the Form W-7 application form to provide your details. You also have to prove your identity by providing official documents. You have probably faced the questions: Do I trust the mail and US Internal Revenue Service (IRS) enough to send them my actual passport, birth certificate, or other papers? If I don’t want to send them the actual papers, how do I get certified copies that the IRS will accept? Do I need to travel somewhere to get certified copies, or do I still need to send away my actual documents to someone other than the IRS? Even those who follow the guidelines and provide what’s needed aren’t guaranteed success. The IRS rejects a high percentage of ITIN applications each year, for a variety of reasons, including some outside of the applicant’s control. So, what do you do? While there is no magic formula, the IRS is generally more likely to approve ITIN applications filed through a Certifying Acceptance Agent (CAA). The Wolf Group recently attended an IRS Tax Conference in New Orleans, LA, to stay abreast of the latest IRS developments, following IRS funding and staffing cuts this year. At the conference, IRS representatives shared that, for 2023, the most recent year for which statistics are available, the IRS rejected 22% of ITIN applications overall; whereas the rejection rate of applications filed by CAAs was only 12.27%. In this post: We recap the ITIN requirements Explain the steps to obtain an ITIN Give you the latest processing times and statistics on acceptance so that you have a realistic idea of what to expect Explain what a Certifying Acceptance Agent (CAA) is and where to find one Remind me: Who needs an ITIN? If you are required to pay US taxes (or need to be listed on a US tax return), and you don’t qualify for a social security number, you will need an ITIN. Examples of individuals who need an ITIN include: Foreign nationals who are not US tax residents but who earn rental income from or are selling a home in the US Foreign nationals who are not US tax residents but who earn other types of income from the US Foreign nationals who are married to a US tax resident and wish to file a joint US tax return with their US resident spouse Foreign nationals who spend enough days in the US during a given 3-year period that they become US tax residents Children or spouses of foreign nationals who move to the US for work assignments How do you obtain an ITIN? To obtain an ITIN, you must complete an IRS Form W-7 and provide documentation to confirm your identity and your connection to a foreign country. The following table from the Form W-7 [...]
September 2025
Tax Planning: Will You Get More Benefit from Making Charitable Contributions in 2025 or 2026?
Due to tax law changes passed in 2025, the timing of your charitable contributions may make a big difference in your tax bill. Some taxpayers will receive a much better benefit from accelerating their contributions and making them before the end of the 2025 calendar year. Some will receive a better benefit from holding off and making their contributions in 2026. The tax planning strategy that will be more advantageous to you depends on whether you claim the standard deduction or itemize your deductions. Remind me: What is the difference between standard and itemized deductions? On your tax returns, you can reduce your taxable income by claiming either: The standard deduction, which is one set amount, depending on your age, tax return filing status, and other factors. Itemized deductions, in which you add up certain kinds of expenses (subject to limits or thresholds) and claim the total amount as a deduction on your tax return. Examples of eligible expenses include medical expenses, mortgage interest, property taxes, state income taxes, and charitable contributions. In most cases, you can pick the option that works best for you each year. You are not locked in to one method or the other, so your tax preparer will generally assess which option gives you the better benefit each year. However, some filers, such as nonresidents and married individuals whose spouse files separately and claims itemized deductions, are required to itemize their deductions. Recent tax law changes affect who can deduct charitable contributions and how much you can deduct. On July 4, 2025, the One Big Beautiful Bill Act (OB3), otherwise known as P.L. 119-21, was signed into law. OB3 introduced a number of changes that Increase certain itemized deductions available to itemizers Decrease other itemized deductions available to itemizers Make available some additional deductions for “non-itemizers” (i.e., those claiming the standard deduction) Make available new deductions for both itemizers and non-itemizers. Some OB3 changes go into effect in the 2025 tax year, and others (such as those that apply to charitable contributions) do not go into effect until 2026. Most of the changes only apply to tax years 2025 through 2028, but a few of the changes are “permanent.” These changes and the timing differences of when they go into effect create a number tax planning opportunities for 2025 and the coming years. How do these changes affect itemizers who make charitable contributions? If you itemize, you should keep these four points in mind: 1. For charitable contributions, the changes to itemized deductions do not start until tax year 2026. Therefore, the rules you have been operating under since 2018 for charitable contributions remain the same for 2025. 2. Beginning in 2025, you must make more than 0.5% of your adjusted gross income (AGI) in charitable contributions to be eligible for a deduction. Example: You have adjusted gross income of $1,000,000. You make a $100,000 charitable contribution to a US charity on January 1, 2026. The new 0.5% floor rule disallows the first $5,000 of [...]
New Executive Order Lays Groundwork for “Gold Card” for US Residency
On September 19, 2025, President Trump signed an executive order formalizing the Gold Card as a new immigration path to residency in the United States. Per the order: To qualify for a Gold Card, a foreign individual must make an unrestricted gift of $1 million to the US Department of Commerce. The amount increases to $2 million if a corporation or similar business entity donates on the individual’s behalf. The order instructs the Secretaries of State and Homeland Security to treat the gift as evidence of: Exceptional business ability and national benefit under 8 U.S.C. 1153(b)(2)(A), and Eligibility for a national-interest waiver under 8 U.S.C. 1153(b)(2)(B), and thereby Eligibility for priority workers and employment-based immigrants under 8 U.S.C. 1153(b)(1)(A). The order gives the relevant agencies 90 days, until December 18, 2025, to implement the Gold Card program. Is the Platinum Card next? A special government website, which has been active for some time, provides information on the Gold Card and contains content indicating that the site may be used to accept Gold Card applications. In addition, it refers to a “Platinum Card” that was not listed in the September 19, 2025, executive order: “Sign up now and secure your place on the waiting list for the Trump Platinum Card. For a processing fee and, after DHS vetting, a $5 million contribution, you will have the ability to spend up to 270 days in the United States without being subject to U.S. taxes on non-U.S. income.” The information is active on the site, suggesting that another executive order may be coming soon. What are the tax implications of the Gold Card and Platinum Card? There are many unknowns about how the Gold Card will work from a tax perspective, and the Platinum Card raises additional questions. In the executive order, Section 3 provides some details on Gold Card implementation from an immigration perspective but no details related to tax. Before the One Big Beautiful Bill Act (OB3) was passed on July 4, 2025, the Senate’s version of the tax bill included a special new provision called, “Tax treatment of certain international entrepreneurs.” This may have been the Gold Card tax provisions; however, it did not contain any specific details and was dropped at the last moment. So, open questions abound. Specifically, will the tax laws and reporting requirements that apply to other US tax residents also apply to Gold Card holders? Little is known on the following questions: Will Gold Card holders be taxable on their worldwide income (like Green Card holders, US citizens, and other US tax residents)? Will Gold Card holders be subject to worldwide international informational reporting requirements, designed to reduce tax evasion (like Green Card holders, US citizens, and other US tax residents)? Will legislators need to amend IRC 7701(b)(1)(A) (i.e., the tax code section detailing US tax residency for Green Card holders and individuals who qualify for residency under the Substantial Presence Test) to add in Gold Card holders? Likewise, few details are available related to [...]
Take Advantage of Energy Tax Credits Before It’s Too Late
If you are planning to make energy-efficient home improvements or purchase an electric vehicle, you will want to act quickly. A number of energy tax credits that are currently available will be eliminated in 2025, some as early as September 30, 2025. Recent changes under the One Big Beautiful Bill signed into law on July 4, 2025, as Public Law 119-21, significantly change or phase out certain energy tax credits. Acting now could help you lock in valuable savings and lower your tax liability before these credits are no longer available. What are energy tax credits? Energy tax credits are incentives offered by the federal government to help you lower your tax liability when investing in renewable energy and energy-efficient technologies. By claiming these credits on your income tax returns, you can reduce your tax liability while making upgrades that save both energy and money. Examples include installing insulated windows or solar panels or purchasing an electric vehicle. Which energy tax credits end in 2025? Under the Inflation Reduction Act, signed into law in August 2022, several energy tax credits were extended through 2032, offering long-term benefits for energy-saving investments. Recent changes under the One Big Beautiful Bill, enacted in July 2025, have altered the energy tax credits by accelerating the expiration of certain credits, shortening the window to claim them. Below are examples of common energy credits that are expiring. Energy Efficient Home Improvement Credit As a homeowner, you can reduce your tax liability under Internal Revenue Code (IRC) Section 25C by making improvements that reduce the energy usage in your home, such as upgrading exterior windows and skylights, insultation, and air sealing materials or HVAC systems. You may be able to claim a credit up to $3,200. To qualify, these improvements must be completed by December 31, 2025. Residential Clean Energy Credit This credit falls under the IRC Section 25D, which allows you to claim a 30% tax credit on qualified installation costs of renewable energy systems, such as solar panels or battery storage that generate clean power for your residence. To qualify, these systems must be fully installed and placed in service by December 31, 2025. Clean Vehicle Credit This credit is available for the purchase of a new or used electric vehicle under IRC Section 30D and 25E. You may claim up to $7,500 for a qualifying new electric vehicle or up to $4,000 for a used electric vehicle. To receive this credit, your purchase of an electric vehicle must be made by September 30, 2025. Qualified Commercial Clean Vehicle Credit This tax credit is available to businesses under Section 45W, for the purchase of electric or fuel-cell vehicles that are used exclusively for commercial purposes. The deadline to purchase the vehicle in order to qualify for the credit is December 31, 2025. Am I eligible for energy tax credits? Your eligibility depends on several factors, including the type of property you own, the specific improvements or equipment you install, and in some cases, whether the [...]
August 2025
The IRS Will Stop Issuing Refunds via Paper Check in September 2025
If you typically receive your tax refunds—or any other type of US government payments—via paper check, you will need to start considering digital alternatives. What happened? On March 25, 2025, President Trump issued an executive order, called “Modernizing Payments To and From America’s Bank Account.” The order indicated the following: “Effective September 30, 2025, and to the extent permitted by law, the Secretary of the Treasury shall cease issuing paper checks for all Federal disbursements inclusive of intragovernmental payments, benefits payments, vendor payments, and tax refunds, except as specified in section 4 of this order.” This means that taxpayers who typically receive their federal tax refunds via check, as well as other government payments, will no longer be eligible to receive them in the mail by paper check after September 2025. Instead, the order expressed a preference to promote digital payment methods, such as: Direct deposits Debit card payments Digital wallets and real-time payment systems Other “modern electronic payment options” What do we know so far? The order explains the types of payments that the Treasury would no longer make via check, the date the Treasury would stop sending checks, and certain exceptions. The order lists the following exceptions and indicates that “individuals or entities qualifying for an exception under this section or other applicable law shall be provided alternative payment options”: “(i) individuals who do not have access to banking services or electronic payment systems; (ii) certain emergency payments where electronic disbursement would cause undue hardship, as contemplated in 31 C.F.R. Part 208; (iii) national security- or law enforcement-related activities where non-EFT transactions are necessary or desirable; and (iv) other circumstances as determined by the Secretary of the Treasury, as reflected in regulations or other guidance.” At the time of this post, the Treasury has not yet addressed details on how it will handle the exceptions or common obstacles. Typically, government departments follow a standard process to flesh out the necessary details. In this case, those details remain scant. On June 13, 2025, the National Taxpayer Advocate issued a request for comments to the Treasury on this order. The comments were due to the Treasury by June 30, 2025. As of the date of this post, the Treasury has not yet released the comments it received, nor has it issued any notices about hearings for proposed regulations. Does the order apply to state refunds, as well? The order does not apply to payments issued by individual states. State tax laws will still govern whether a state can or will send a paper check. Which taxpayers will this order affect? As of May 9, 2025, the IRS reports that 93,569,000 refunds were issued in the 2025 filing season. Estimates show that 6.4% of the refunds were sent via paper check, which equates to 5.9 million US taxpayers. Most of these taxpayers are individuals who either do not have access to a bank account or prefer not to share their banking information with the IRS. If you filed an extension for [...]
