317-398-9753
[email protected]
Your Business. Your Family. Our Priority.
A company owners’ potential for personal financial security usually depends on the success of the business. Our commitment and responsibility is to help keep your business running smoothly and to help achieve your personal financial goals. Whether you are a business or an individual, our specialized staff will provide you with assistance in all your tax, reporting, financial and business affairs.
We're proud members of:
Brammer & Yeend is an independently owned and operated member firm of CPA Connect, a companion association to CPAmerica International
Financial information and reporting should not be a diversion for business owners, instead, financial information should be accurate, available, and insightful. We leverage experience and technology to provide business owners with dynamic resources and management tools.
Our personal services are designed to help busy, successful families manage their finances and grow their wealth with confidence and peace of mind. We do this by working together with our business solutions, allowing us to partner with clients and coordinate business and personal planning in order to meet their most important goals.
We strive to provide excellent service and solutions that fit our client’s specific needs and are industry appropriate. Our experienced CPAs have worked with clients in a variety of industries and understand the intricacies of each and apply the best solution possible. Over the years we have serviced clients in industries including agribusiness, retail, construction, manufacturing, food & beverage and many more. Below are some of our industries where we have specialized experience and expertise.
For small business owners looking to expand operations, invest in equipment, or stabilize cash flow, access to the right financing can make all the difference. Business term loans are one of the most common forms of funding available—and for good reason. These loans offer predictable repayment schedules, fixed or variable interest rates, and a lump sum of capital that can be used for a wide range of business needs. Below, we’ll explore how business term loans work, their benefits and drawbacks, and what alternatives you might consider.
A business term loan provides a one-time lump sum that’s repaid over a set period, usually through monthly payments. These loans often carry fixed or variable interest rates and are commonly used to fund major expenses like equipment purchases, facility upgrades, or workforce expansion.
Term loans are available from banks, credit unions, and online lenders. To qualify, businesses generally need strong credit, healthy financials, and in some cases, collateral to secure the loan.
Once approved, your business receives the full loan amount upfront. You then repay the loan, plus interest, over a set term. The term length and interest rate can vary based on your credit, the loan amount, and the lender’s policies. Some loans require weekly payments, while others may offer more flexibility with monthly schedules.
Repayment terms are clearly defined, which makes budgeting and financial planning easier. However, it’s important to factor in origination fees, prepayment penalties, and other loan costs before signing an agreement.
There are three main types of business term loans, categorized by the length of the repayment term:
Pros:
Cons:
If a term loan doesn’t fit your needs, or if you might not qualify for one, consider these alternatives:
Business term loans can be a powerful tool for growth when used strategically. Whether you’re launching a new product, upgrading equipment, or opening a second location, understanding how these loans work—and how they compare to other funding options—can help you make informed financial decisions. Always weigh the costs, repayment terms, and overall impact on your cash flow before committing.
If you get paid through PayPal, Venmo, or CashApp for freelance work, side gigs, or online reselling, it’s important to know how IRS rules are changing in 2025. With stricter reporting requirements taking effect, even a small amount of side income could lead to tax obligations. Understanding what counts as taxable income, how Form 1099-K works, and how to prepare can help you avoid expensive surprises at tax time.
Digital payment platforms have become a common way to collect payments for services and sales. However, the IRS has struggled to track taxable income made through these apps, especially as the gig economy continues to grow. To address this issue, the IRS is gradually lowering the income threshold that requires platforms to report user earnings.
Here’s the updated timeline for Form 1099-K reporting:
These new requirements aim to improve income reporting accuracy for gig workers, freelancers, casual resellers, and others earning through digital platforms.
Not all payments received through PayPal or Venmo are subject to taxes. The IRS is specifically concerned with income generated through the sale of goods or services. Examples of taxable payments include:
On the other hand, non-taxable transactions include:
To avoid misclassification, make a habit of labeling transactions accurately within the app whenever possible.
These changes could impact more users than you might expect. You may now receive a 1099-K—even if your earnings are relatively low—if you:
If you’re casually earning side income, these rules mean your earnings could now be reported to the IRS.
One of the most effective strategies to stay compliant is to separate your personal and business transactions. Consider creating a dedicated account or payment app for your side hustle. Mixing business and personal payments can make it challenging to track deductible expenses, identify your actual earnings, and defend your tax return in case of an audit.
Form 1099-K reports the total gross amount of payments received through a digital platform. It does not reflect your profits or subtract any expenses, such as:
To avoid overpaying on taxes, you must track your net income separately. Use spreadsheets, apps, or accounting software to monitor revenue and record business-related expenses. Save receipts and invoices to support any deductions.
Here’s how to handle a 1099-K if you receive one during the 2026 tax season:
With the IRS keeping a closer eye on payment apps, staying organized is key. If you freelance, resell, or take on side gigs, keeping detailed records and separating business from personal transactions can help you stay prepared—and steer clear of tax-time surprises.
The U.S. Small Business Administration (SBA) has launched a new program through its “Made in America” campaign to help small businesses grow and support American manufacturing. This effort focuses on two main goals: making it easier for business owners to get loans and cutting down on complicated rules that can slow growth. The goal is to give small manufacturers more opportunities to expand and succeed. In this article, we’ll break down what the initiative includes and how you can take advantage of it.
One of the most significant parts of this new initiative is the SBA’s push to cut through red tape holding small manufacturers back. With a $100 billion plan to review and roll back outdated rules, the SBA wants to make it easier for businesses to grow, compete, and focus on what they do best—building and innovating.
To ensure real business owners have a say in what needs to change, the SBA has created the Red Tape Hotline. This tool lets you speak up about frustrating or unnecessary regulations and suggest ways to improve them. Your feedback could help shape smarter, more practical policies that actually work for small businesses.
By listening directly to the people who are impacted, the SBA hopes to simplify compliance, cut down on unnecessary costs, and help you get projects moving faster. Less red tape means more time and energy to focus on growth.
Access to funding has always been one of the biggest challenges for small business owners—especially when it comes to buying equipment, upgrading facilities, or expanding into new spaces. By updating its loan programs, the SBA is giving business owners more flexibility in how they can use loan funds, whether investing in new machinery, renovating a workspace, or purchasing property to support long-term growth. Popular SBA-backed loans like the 504 and 7(a) programs are also being improved to simplify the application process and open the door to more types of businesses.
These changes are designed to remove the stress of securing financing, so business owners can focus on growing their business, not jumping through hoops.
Rising input costs, complex supply chain dynamics, and increasing global pressure are shaping today’s small business landscape. For U.S.-based manufacturers, these challenges have made it harder to scale and remain competitive.
By cutting through red tape and easing access to funding, the SBA’s latest program empowers small manufacturers to modernize their operations, boost productivity, and bring more jobs back to American soil. This effort also aligns with a broader national push toward reshoring and economic resilience, especially in the wake of disruptions experienced during the pandemic.
Early action is key for small manufacturers looking to take advantage of these new opportunities. Here are a few ways to get started:
As these changes take shape, staying informed and engaged can help business owners adapt to the evolving economic landscape and position their companies for long-term success.
With the economy facing ups and downs—from rising interest rates to inflation and global trade issues—many Americans are reevaluating how they plan for retirement. One option that more people are exploring is converting traditional retirement accounts to a Roth IRA. While this strategy isn’t right for everyone, it can offer significant advantages, particularly when the market is down. In this article, we’ll explore the key benefits of Roth IRA conversions, as well as considerations to keep in mind to help you determine if this approach aligns with your retirement goals.
With ongoing market uncertainty, Americans are looking for retirement accounts that offer more tax stability and long-term benefits, such as the Roth IRA. Unlike a traditional IRA or 401(k), your money grows tax-free with a Roth IRA, and you won’t owe taxes when you take qualified withdrawals in retirement. Another benefit? Roth IRAs don’t require minimum withdrawals (RMDs) once you reach a certain age, giving you more flexibility and control over how and when you use your retirement income.
A Roth IRA conversion involves moving money from a tax-deferred retirement account, such as a traditional IRA or 401(k), into a Roth IRA. This process requires paying ordinary income taxes on the converted amount, but once the money is in the Roth, it grows tax-free and can be withdrawn tax-free in retirement.
A Roth IRA conversion is particularly appealing in a market downturn. Converting when account balances are lower reduces the immediate tax burden while building tax-free retirement income.
Market downturns might seem like the worst time to make financial moves, but they can create prime conditions for converting to a Roth IRA. When the stock market drops, the value of your retirement investments usually declines as well. If you transfer money into a Roth IRA during this dip, you’ll pay taxes on the lower account value. Then, when the market recovers, your investments can grow tax-free inside the Roth account.
For example, if your traditional IRA is worth $100,000 but falls to $75,000 due to a market decline, converting now means you’ll only pay taxes on the $75,000. If that money grows back to $100,000 or more when the market rebounds, that growth happens tax-free in your Roth IRA, and you won’t owe any taxes when you take the money out in retirement.
This strategy can turn a short-term market loss into a long-term tax advantage, especially if you believe your investments will recover over time. It’s a smart way to make the most of a down market while preparing for a more flexible retirement.
While converting to a Roth IRA can offer powerful tax benefits, it’s not the right move for everyone. Before making a decision, it’s important to think through a few key factors:
A Roth IRA conversion could be a smart move, especially during a market downturn, if you’re looking for a way to lower future taxes and gain more control over your retirement income. Converting when investment values are lower may help reduce your tax bill today while setting you up for tax-free growth in the years to come.
However, this strategy isn’t one-size-fits-all. Your income level, tax situation, age, and retirement goals all play a big role in whether a Roth conversion makes sense for you. A financial advisor or tax professional can help you weigh the pros and cons, run the numbers, and create a personalized plan that supports your long-term financial goals.
A tax refund provides a welcome financial boost, but instead of viewing this as a windfall to splurge on non-essential items on your wish list, consider smarter strategies that can significantly enhance your financial health. Here are some effective ways to utilize your tax refund to boost savings, pay off debt, and ultimately strengthen your financial position.
One of the smartest ways to use your tax refund is to build or replenish your emergency fund. Aim to save for three to six months’ worth of living expenses in case of unforeseen circumstances, such as job loss or medical emergencies. If your emergency fund is lacking, allocating a portion of your refund to this savings account can offer peace of mind and safeguard against future financial shocks.
Another smart move is to tackle your high-interest debt—especially if you carry balances on credit cards or personal loans. The interest on these debts can accumulate quickly, making it challenging to make headway on principal balances. By using your tax refund to pay down or eliminate this debt, you can save significantly on interest payments and improve your overall financial situation.
Focus on the highest interest rates first; this approach is often referred to as the “avalanche method” and can lead to faster long-term savings. However, if you think quick wins will keep your momentum going, consider using the “snowball method,” where you pay off the debt with the smallest balance first, then redirect the amount you were paying towards that debt to the next smallest debt, repeating the process until all debts are paid off.
Using your tax refund to boost your retirement savings is a smart, tax-efficient strategy that enhances long-term financial security. If you haven’t maxed out your annual contributions, consider investing in a tax-advantaged account like a 401(k) or traditional IRA. These contributions not only help grow your retirement fund through compound interest but may also lower your taxable income, reducing your tax liability for the current year. By prioritizing strategic, tax-advantaged investments, you can make the most of your refund while strengthening your financial future.
If you’re considering furthering your education or developing new skills, allocating your tax refund toward a college fund or professional development courses can yield significant returns. Higher education or specialized training can enhance your career prospects, potentially leading to higher income levels in the long run. Investing in yourself by taking steps to increase your earning potential is one of the smartest financial decisions you can make.
If you own a home or car, consider using part of your tax refund for necessary repairs or energy-efficient upgrades. While it may not be an immediate financial boost, investing in maintenance costs, like installing a new furnace or fixing your brakes, will help maintain value and functionality, and you’ll avoid bigger problems down the road.
Receiving a tax refund can feel like a financial gift, but the way you use those funds can help create a stronger financial foundation, leading to greater financial security.
The Social Security Fairness Act of 2025 is a significant policy change aimed at addressing long-standing concerns regarding the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). This legislation seeks to restore benefits to retirees who were previously affected by these provisions—public sector retirees, including teachers, firefighters, police officers, and federal employees. Many of these retirees are now eligible for retroactive Social Security payments. However, while receiving a lump-sum back payment may seem like a financial windfall, it can have important tax implications.
Here’s what retirees need to know about the potential tax consequences, income shifts, and Medicare considerations related to these retroactive payments.
Social Security benefits are subject to federal income tax based on your provisional income, which includes:
If your income exceeds certain thresholds, up to 85% of your Social Security benefits may be taxable. Receiving a lump-sum retroactive payment under the Social Security Fairness Act could push your income higher, leading to greater tax liability.
For example, if you were already near the 50% taxability threshold, a large back payment might increase the portion of benefits subject to tax.
Retroactive Social Security payments are considered income for the year they are received, not for the years they were originally due. This means:
Tax Planning Tip: The IRS allows retirees to use a lump-sum election method, which spreads the tax impact over multiple years instead of treating it all as current income. Consulting a tax professional can help determine the best approach for minimizing your tax liability.
Social Security payments are linked to Medicare Part B and Part D premiums, which are based on your Modified Adjusted Gross Income (MAGI). A lump-sum Social Security payment could result in higher Medicare premiums due to:
If your income increases significantly due to a retroactive Social Security payment, you might temporarily pay higher Medicare costs—even if your income decreases the following year.
While Social Security benefits are taxed at the federal level, state taxation varies widely. Some states fully exempt Social Security income, while others partially tax it or follow federal tax rules.
Check your state’s Social Security tax policy to understand potential liabilities, especially if you live in a state that partially or fully taxes benefits.
To avoid surprises, retirees who expect a lump-sum Social Security payment under the Fairness Act should consider the following:
If you’re receiving Social Security benefits and think the Social Security Fairness Act will impact your taxes, a tax professional can help you navigate these changes and develop strategies to manage your increased benefits. By planning strategically, you may be able to maximize your benefits while minimizing tax surprises.
Keeping an open line of communication is important to us. We invite you to reach out to us either by phone, email, or this form to ask questions, request an appointment or talk about any finance-related matter that comes to your mind.
317-398-9753
8 Public Square
Shelbyville, IN, 46176
Your Business. Your Family. Our Priority.
A company owners’ potential for personal financial security usually depends on the success of the business. Our commitment and responsibility is to help keep your business running smoothly and to help achieve your personal financial goals. Whether you are a business or an individual, our specialized staff will provide you with assistance in all your tax, reporting, financial and business affairs.
We're proud members of:
Brammer & Yeend is an independently owned and operated member firm of CPA Connect, a companion association to CPAmerica International
Financial information and reporting should not be a diversion for business owners, instead, financial information should be accurate, available, and insightful. We leverage experience and technology to provide business owners with dynamic resources and management tools.
Our personal services are designed to help busy, successful families manage their finances and grow their wealth with confidence and peace of mind. We do this by working together with our business solutions, allowing us to partner with clients and coordinate business and personal planning in order to meet their most important goals.
We strive to provide excellent service and solutions that fit our client’s specific needs and are industry appropriate. Our experienced CPAs have worked with clients in a variety of industries and understand the intricacies of each and apply the best solution possible. Over the years we have serviced clients in industries including agribusiness, retail, construction, manufacturing, food & beverage and many more. Below are some of our industries where we have specialized experience and expertise.
For small business owners looking to expand operations, invest in equipment, or stabilize cash flow, access to the right financing can make all the difference. Business term loans are one of the most common forms of funding available—and for good reason. These loans offer predictable repayment schedules, fixed or variable interest rates, and a lump sum of capital that can be used for a wide range of business needs. Below, we’ll explore how business term loans work, their benefits and drawbacks, and what alternatives you might consider.
A business term loan provides a one-time lump sum that’s repaid over a set period, usually through monthly payments. These loans often carry fixed or variable interest rates and are commonly used to fund major expenses like equipment purchases, facility upgrades, or workforce expansion.
Term loans are available from banks, credit unions, and online lenders. To qualify, businesses generally need strong credit, healthy financials, and in some cases, collateral to secure the loan.
Once approved, your business receives the full loan amount upfront. You then repay the loan, plus interest, over a set term. The term length and interest rate can vary based on your credit, the loan amount, and the lender’s policies. Some loans require weekly payments, while others may offer more flexibility with monthly schedules.
Repayment terms are clearly defined, which makes budgeting and financial planning easier. However, it’s important to factor in origination fees, prepayment penalties, and other loan costs before signing an agreement.
There are three main types of business term loans, categorized by the length of the repayment term:
Pros:
Cons:
If a term loan doesn’t fit your needs, or if you might not qualify for one, consider these alternatives:
Business term loans can be a powerful tool for growth when used strategically. Whether you’re launching a new product, upgrading equipment, or opening a second location, understanding how these loans work—and how they compare to other funding options—can help you make informed financial decisions. Always weigh the costs, repayment terms, and overall impact on your cash flow before committing.
If you get paid through PayPal, Venmo, or CashApp for freelance work, side gigs, or online reselling, it’s important to know how IRS rules are changing in 2025. With stricter reporting requirements taking effect, even a small amount of side income could lead to tax obligations. Understanding what counts as taxable income, how Form 1099-K works, and how to prepare can help you avoid expensive surprises at tax time.
Digital payment platforms have become a common way to collect payments for services and sales. However, the IRS has struggled to track taxable income made through these apps, especially as the gig economy continues to grow. To address this issue, the IRS is gradually lowering the income threshold that requires platforms to report user earnings.
Here’s the updated timeline for Form 1099-K reporting:
These new requirements aim to improve income reporting accuracy for gig workers, freelancers, casual resellers, and others earning through digital platforms.
Not all payments received through PayPal or Venmo are subject to taxes. The IRS is specifically concerned with income generated through the sale of goods or services. Examples of taxable payments include:
On the other hand, non-taxable transactions include:
To avoid misclassification, make a habit of labeling transactions accurately within the app whenever possible.
These changes could impact more users than you might expect. You may now receive a 1099-K—even if your earnings are relatively low—if you:
If you’re casually earning side income, these rules mean your earnings could now be reported to the IRS.
One of the most effective strategies to stay compliant is to separate your personal and business transactions. Consider creating a dedicated account or payment app for your side hustle. Mixing business and personal payments can make it challenging to track deductible expenses, identify your actual earnings, and defend your tax return in case of an audit.
Form 1099-K reports the total gross amount of payments received through a digital platform. It does not reflect your profits or subtract any expenses, such as:
To avoid overpaying on taxes, you must track your net income separately. Use spreadsheets, apps, or accounting software to monitor revenue and record business-related expenses. Save receipts and invoices to support any deductions.
Here’s how to handle a 1099-K if you receive one during the 2026 tax season:
With the IRS keeping a closer eye on payment apps, staying organized is key. If you freelance, resell, or take on side gigs, keeping detailed records and separating business from personal transactions can help you stay prepared—and steer clear of tax-time surprises.
The U.S. Small Business Administration (SBA) has launched a new program through its “Made in America” campaign to help small businesses grow and support American manufacturing. This effort focuses on two main goals: making it easier for business owners to get loans and cutting down on complicated rules that can slow growth. The goal is to give small manufacturers more opportunities to expand and succeed. In this article, we’ll break down what the initiative includes and how you can take advantage of it.
One of the most significant parts of this new initiative is the SBA’s push to cut through red tape holding small manufacturers back. With a $100 billion plan to review and roll back outdated rules, the SBA wants to make it easier for businesses to grow, compete, and focus on what they do best—building and innovating.
To ensure real business owners have a say in what needs to change, the SBA has created the Red Tape Hotline. This tool lets you speak up about frustrating or unnecessary regulations and suggest ways to improve them. Your feedback could help shape smarter, more practical policies that actually work for small businesses.
By listening directly to the people who are impacted, the SBA hopes to simplify compliance, cut down on unnecessary costs, and help you get projects moving faster. Less red tape means more time and energy to focus on growth.
Access to funding has always been one of the biggest challenges for small business owners—especially when it comes to buying equipment, upgrading facilities, or expanding into new spaces. By updating its loan programs, the SBA is giving business owners more flexibility in how they can use loan funds, whether investing in new machinery, renovating a workspace, or purchasing property to support long-term growth. Popular SBA-backed loans like the 504 and 7(a) programs are also being improved to simplify the application process and open the door to more types of businesses.
These changes are designed to remove the stress of securing financing, so business owners can focus on growing their business, not jumping through hoops.
Rising input costs, complex supply chain dynamics, and increasing global pressure are shaping today’s small business landscape. For U.S.-based manufacturers, these challenges have made it harder to scale and remain competitive.
By cutting through red tape and easing access to funding, the SBA’s latest program empowers small manufacturers to modernize their operations, boost productivity, and bring more jobs back to American soil. This effort also aligns with a broader national push toward reshoring and economic resilience, especially in the wake of disruptions experienced during the pandemic.
Early action is key for small manufacturers looking to take advantage of these new opportunities. Here are a few ways to get started:
As these changes take shape, staying informed and engaged can help business owners adapt to the evolving economic landscape and position their companies for long-term success.
With the economy facing ups and downs—from rising interest rates to inflation and global trade issues—many Americans are reevaluating how they plan for retirement. One option that more people are exploring is converting traditional retirement accounts to a Roth IRA. While this strategy isn’t right for everyone, it can offer significant advantages, particularly when the market is down. In this article, we’ll explore the key benefits of Roth IRA conversions, as well as considerations to keep in mind to help you determine if this approach aligns with your retirement goals.
With ongoing market uncertainty, Americans are looking for retirement accounts that offer more tax stability and long-term benefits, such as the Roth IRA. Unlike a traditional IRA or 401(k), your money grows tax-free with a Roth IRA, and you won’t owe taxes when you take qualified withdrawals in retirement. Another benefit? Roth IRAs don’t require minimum withdrawals (RMDs) once you reach a certain age, giving you more flexibility and control over how and when you use your retirement income.
A Roth IRA conversion involves moving money from a tax-deferred retirement account, such as a traditional IRA or 401(k), into a Roth IRA. This process requires paying ordinary income taxes on the converted amount, but once the money is in the Roth, it grows tax-free and can be withdrawn tax-free in retirement.
A Roth IRA conversion is particularly appealing in a market downturn. Converting when account balances are lower reduces the immediate tax burden while building tax-free retirement income.
Market downturns might seem like the worst time to make financial moves, but they can create prime conditions for converting to a Roth IRA. When the stock market drops, the value of your retirement investments usually declines as well. If you transfer money into a Roth IRA during this dip, you’ll pay taxes on the lower account value. Then, when the market recovers, your investments can grow tax-free inside the Roth account.
For example, if your traditional IRA is worth $100,000 but falls to $75,000 due to a market decline, converting now means you’ll only pay taxes on the $75,000. If that money grows back to $100,000 or more when the market rebounds, that growth happens tax-free in your Roth IRA, and you won’t owe any taxes when you take the money out in retirement.
This strategy can turn a short-term market loss into a long-term tax advantage, especially if you believe your investments will recover over time. It’s a smart way to make the most of a down market while preparing for a more flexible retirement.
While converting to a Roth IRA can offer powerful tax benefits, it’s not the right move for everyone. Before making a decision, it’s important to think through a few key factors:
A Roth IRA conversion could be a smart move, especially during a market downturn, if you’re looking for a way to lower future taxes and gain more control over your retirement income. Converting when investment values are lower may help reduce your tax bill today while setting you up for tax-free growth in the years to come.
However, this strategy isn’t one-size-fits-all. Your income level, tax situation, age, and retirement goals all play a big role in whether a Roth conversion makes sense for you. A financial advisor or tax professional can help you weigh the pros and cons, run the numbers, and create a personalized plan that supports your long-term financial goals.
A tax refund provides a welcome financial boost, but instead of viewing this as a windfall to splurge on non-essential items on your wish list, consider smarter strategies that can significantly enhance your financial health. Here are some effective ways to utilize your tax refund to boost savings, pay off debt, and ultimately strengthen your financial position.
One of the smartest ways to use your tax refund is to build or replenish your emergency fund. Aim to save for three to six months’ worth of living expenses in case of unforeseen circumstances, such as job loss or medical emergencies. If your emergency fund is lacking, allocating a portion of your refund to this savings account can offer peace of mind and safeguard against future financial shocks.
Another smart move is to tackle your high-interest debt—especially if you carry balances on credit cards or personal loans. The interest on these debts can accumulate quickly, making it challenging to make headway on principal balances. By using your tax refund to pay down or eliminate this debt, you can save significantly on interest payments and improve your overall financial situation.
Focus on the highest interest rates first; this approach is often referred to as the “avalanche method” and can lead to faster long-term savings. However, if you think quick wins will keep your momentum going, consider using the “snowball method,” where you pay off the debt with the smallest balance first, then redirect the amount you were paying towards that debt to the next smallest debt, repeating the process until all debts are paid off.
Using your tax refund to boost your retirement savings is a smart, tax-efficient strategy that enhances long-term financial security. If you haven’t maxed out your annual contributions, consider investing in a tax-advantaged account like a 401(k) or traditional IRA. These contributions not only help grow your retirement fund through compound interest but may also lower your taxable income, reducing your tax liability for the current year. By prioritizing strategic, tax-advantaged investments, you can make the most of your refund while strengthening your financial future.
If you’re considering furthering your education or developing new skills, allocating your tax refund toward a college fund or professional development courses can yield significant returns. Higher education or specialized training can enhance your career prospects, potentially leading to higher income levels in the long run. Investing in yourself by taking steps to increase your earning potential is one of the smartest financial decisions you can make.
If you own a home or car, consider using part of your tax refund for necessary repairs or energy-efficient upgrades. While it may not be an immediate financial boost, investing in maintenance costs, like installing a new furnace or fixing your brakes, will help maintain value and functionality, and you’ll avoid bigger problems down the road.
Receiving a tax refund can feel like a financial gift, but the way you use those funds can help create a stronger financial foundation, leading to greater financial security.
The Social Security Fairness Act of 2025 is a significant policy change aimed at addressing long-standing concerns regarding the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO). This legislation seeks to restore benefits to retirees who were previously affected by these provisions—public sector retirees, including teachers, firefighters, police officers, and federal employees. Many of these retirees are now eligible for retroactive Social Security payments. However, while receiving a lump-sum back payment may seem like a financial windfall, it can have important tax implications.
Here’s what retirees need to know about the potential tax consequences, income shifts, and Medicare considerations related to these retroactive payments.
Social Security benefits are subject to federal income tax based on your provisional income, which includes:
If your income exceeds certain thresholds, up to 85% of your Social Security benefits may be taxable. Receiving a lump-sum retroactive payment under the Social Security Fairness Act could push your income higher, leading to greater tax liability.
For example, if you were already near the 50% taxability threshold, a large back payment might increase the portion of benefits subject to tax.
Retroactive Social Security payments are considered income for the year they are received, not for the years they were originally due. This means:
Tax Planning Tip: The IRS allows retirees to use a lump-sum election method, which spreads the tax impact over multiple years instead of treating it all as current income. Consulting a tax professional can help determine the best approach for minimizing your tax liability.
Social Security payments are linked to Medicare Part B and Part D premiums, which are based on your Modified Adjusted Gross Income (MAGI). A lump-sum Social Security payment could result in higher Medicare premiums due to:
If your income increases significantly due to a retroactive Social Security payment, you might temporarily pay higher Medicare costs—even if your income decreases the following year.
While Social Security benefits are taxed at the federal level, state taxation varies widely. Some states fully exempt Social Security income, while others partially tax it or follow federal tax rules.
Check your state’s Social Security tax policy to understand potential liabilities, especially if you live in a state that partially or fully taxes benefits.
To avoid surprises, retirees who expect a lump-sum Social Security payment under the Fairness Act should consider the following:
If you’re receiving Social Security benefits and think the Social Security Fairness Act will impact your taxes, a tax professional can help you navigate these changes and develop strategies to manage your increased benefits. By planning strategically, you may be able to maximize your benefits while minimizing tax surprises.
Keeping an open line of communication is important to us. We invite you to reach out to us either by phone, email, or this form to ask questions, request an appointment or talk about any finance-related matter that comes to your mind.
317-398-9753
8 Public Square
Shelbyville, IN, 46176
