IRS

Mid-Year Tax Planning Guide 2025: Why Planning Beats Panic

As we approach the second half of 2025, the importance of tax planning for small to middle-class families has never been clearer. Recent legislative changes, inflation adjustments, and IRS enforcement trends underscore the value of early, strategic action. At JCox CPAs & Advisors, P.C., we believe proactive tax planning should be the norm, not the exception.

Why Be Proactive With Tax Planning?

Many taxpayers are familiar with tax preparation: the annual ritual of entering figures into software or handing paperwork to a preparer, then hoping for a refund or bracing for a bill. This process, while necessary, is reactive.

Tax planning is different. It's forward-looking. Rather than waiting until the end of the year, tax planning involves consistently evaluating your income, deductions, and credits throughout the year to ensure you're making smart decisions along the way. Whether you explore strategies on your own or work with a qualified tax advisor, planning in advance reduces surprises, identifies savings, and improves overall financial health.

Exclusive Offer: Tax Return Review + Free Mid-Year Planning

Did you file your 2024 tax return yourself or through another provider? JCox CPAs & Advisors is offering:

  • A detailed review of your 2024 tax return

  • A 40% discount on any necessary amended return

  • A complimentary mid-year 2025 tax planning session

We’ll help determine whether adjustments are needed and build a custom plan for the rest of the year, so you’re not caught off guard come filing season.

Key Legislative Changes and Relevant IRC Sections

1. Standard Deduction Increase – IRC §63(c)

The standard deduction for 2025 has increased to $30,000 for married couples filing jointly and $15,000 for single filers. This simplifies filing and reduces taxable income for many families, potentially eliminating the need to itemize deductions.

2. Updated Child Tax Credit – IRC §24

The Child Tax Credit has increased to $2,500 per qualifying child. However, income thresholds have been updated, and eligibility is now subject to tighter rules. A mid-year review helps determine whether you're maximizing your credit opportunities.

3. Raised SALT Deduction Cap – IRC §164(b)(6)

Taxpayers with adjusted gross income under $500,000 can now deduct up to $40,000 in state and local taxes. This may revive itemized deductions for those in high-tax states, especially when paired with mortgage interest or charitable contributions.

4. Tip and Overtime Income Relief – IRC §62(a)

New legislation now allows deductions for reported tip income and qualified overtime under above-the-line adjustments. This change benefits hourly and service industry workers who often face higher effective tax rates on variable income.

5. Estimated Payments and Withholding – IRC §6654 and §3402

Now is the time to review your W-4 or calculate estimated taxes to avoid underpayment penalties. Mid-year is ideal for making course corrections based on expected year-end income.

6. Retirement Planning Opportunities – IRC §219 and §414(v)

Contributions to IRAs and 401(k)s can reduce taxable income while securing your future. Catch-up contributions for taxpayers aged 50+ allow additional savings. Planning ahead helps ensure contribution deadlines aren't missed.

7. Business Owners: Optimize Now – IRC §179 and §199A

Self-employed individuals and pass-through entities should evaluate:

  • Equipment purchases for IRC §179 deductions

  • Compensation and qualified income for the 20% QBI deduction under IRC §199A

These choices can significantly reduce your overall tax bill, but require proper planning before year-end.

8. Estate and Gift Strategies – IRC §2503 and §2010

Annual gift exclusions remain at $18,000 per recipient. The elevated lifetime exemption under IRC §2010 remains available through 2025, but is set to sunset. Planning now ensures your wealth transfer strategy is optimized before potential changes take effect.

Final Thoughts: Plan With Purpose by Connecting With Us Today

Tax planning is not just about minimizing taxes—it’s about building financial resilience. The sooner you identify opportunities, the more leverage you have to act. Let’s make 2025 the year you lead your finances, not follow your filing.

Connect with JCox CPAs & Advisors today to get started with your custom mid-year strategy.

Schedule your meeting here

Get Prepared for Tax Filing 2024!

Here are some essential steps to help you get prepared:

  1. Gather Your Documents:

    • W-2s, 1099s, or other income statements

    • Business expense records if you're self-employed

    • Mortgage interest statements

    • Proof of charitable donations

    • Health insurance documentation

  2. Review Last Year's Return:

    • Look over your prior year’s tax return to ensure you don't miss any carryovers (e.g., deductions or credits) and to identify any possible changes.

  3. Plan for Deductions & Credits:

    • Don't forget about possible deductions for things like student loans, retirement contributions, or education expenses.

    • Consider tax credits like the Child Tax Credit or Earned Income Tax Credit.

  4. Track Any Life Changes:

    • Changes like getting married, having a baby, or buying a home could affect your tax situation. Make sure you account for these.

  5. Set Up Your Tax Payment Plan:

    • Estimate if you will owe taxes and start setting aside money now, or adjust your withholdings to avoid surprises.

  6. Consider Professional Help:

    • Tax laws are always changing, and getting professional advice ensures you don’t miss out on any savings or deductions you may qualify for.

Don't wait until the last minute! Plan ahead to ensure a smooth and stress-free tax season. If you need help getting started, reach out to us at JCox CPAs & Advisors! We’re here to make your tax filing easy and efficient.

A Comprehensive Guide for Sole Proprietors on Paying Quarterly Estimated Taxes

Understanding Sole Proprietorship

A sole proprietorship is the simplest and most common form of business structure. It is owned and operated by a single individual, meaning there is no legal distinction between the owner and the business. This structure offers full control to the owner and allows for simple tax reporting. However, it also means that the owner is personally liable for all debts and obligations of the business.

As a sole proprietor, you report your business income and expenses on your personal tax return, specifically using Schedule C (Form 1040). This form allows you to detail your profits and losses from your business activities.

Why Pay Estimated Taxes?

The IRS requires taxpayers, including sole proprietors, to pay estimated taxes if they expect to owe $1,000 or more in tax for the year. This is essential because sole proprietors typically do not have taxes withheld from their business income, unlike employees who have taxes withheld from their paychecks.

Steps for Paying Quarterly Estimated Taxes

1. Determine Your Tax Liability: Calculate your expected adjusted gross income (AGI), taxable income, taxes, credits, and other payments for the year.

2. Use IRS Form 1040-ES: Form 1040-ES is used for estimating your tax payments. It includes a worksheet to help you estimate your taxable income and tax liability.

3. Calculate Quarterly Payments: Divide your estimated tax liability by four to determine your quarterly payment amount.

4. Know the Due Dates: Estimated tax payments for sole proprietors are typically due on the following schedule:
   - First Quarter: April 15
   - Second Quarter: June 15
   - Third Quarter: September 15
   - Fourth Quarter: January 15 of the following year

5. Make Your Payments: Payments can be made electronically through the IRS Direct Pay system, or you can send a check or money order along with the payment voucher from Form 1040-ES.

6. Keep Accurate Records: Maintain accurate records of your income and expenses throughout the year.

Relevant Tax Codes and Forms

- Federal Forms:
  - Form 1040: U.S. Individual Income Tax Return, which includes income from your sole proprietorship.
  - Schedule C (Form 1040): Profit or Loss from Business, where you report your business income and expenses.
  - Form 1040-ES: Estimated Tax for Individuals.

- Georgia State Forms:
  - Form 500: Georgia Individual Income Tax Return, used to report income, deductions, and credits for state tax purposes.
  - Form 500-ES: Georgia Estimated Tax Payment Coupon, which is used to make estimated tax payments to the state.

Caution

The examples provided (below) assume that the sole proprietor is a Georgia resident who is a single filler. Tax laws and rates can vary significantly by state, so it’s essential to consult local regulations or reach out to JCox CPAs & Advisors, P.C. if you're operating outside of Georgia.

Example Breakdown

Example Scenario

- Total Expected Income for the Year: $50,000
- Total Expected Business Expenses: $15,000
- Filing Status: Single
- Standard Deduction for the Year: $13,850 (for 2023)

Step 1: Calculate Federal Tax Liability

1. Calculate Net Income:
   Net Income = Total Income - Total Expenses
   Net Income = 50,000 - 15,000 = 35,000

2. Adjust for Standard Deduction:
   Taxable Income = Net Income - Standard Deduction
   Taxable Income = 35,000 - 13,850 = 21,150

3. Apply Federal Tax Rates:
   The 2023 federal income tax brackets for a single filer are as follows:
   - 10% on income up to $11,000
   - 12% on income over $11,000 up to $44,725

   Calculate Tax:
   - First $11,000: 11,000 × 0.10 = 1,100
   - Remaining income ($21,150 - $11,000 = $10,150): 10,150 × 0.12 = 1,218
   - Total Federal Tax Liability: 1,100 + 1,218 = 2,318

4. Calculate Quarterly Payments:
   Quarterly Federal Estimated Tax Payment = Total Tax Liability / 4
   Quarterly Federal Estimated Tax Payment = 2,318 / 4 = 579.50

Step 2: Calculate Georgia State Tax Liability

1. Apply Georgia Tax Rates:
   Georgia uses a similar tax bracket system. The 2023 tax brackets for a single filer are:
   - 0% on income up to $750
   - 1% on income from $751 to $2,250
   - 2% on income from $2,251 to $3,750
   - 3% on income from $3,751 to $5,250
   - 4% on income from $5,251 to $7,000
   - 5% on income from $7,001 to $10,000
   - 5.75% on income over $10,000

2. Calculate Georgia Tax:
   Calculate Tax:
   - First $750: 750 × 0.00 = 0
   - From $751 to $2,250: (2,250 - 750) × 0.01 = 15
   - From $2,251 to $3,750: (3,750 - 2,250) × 0.02 = 30
   - From $3,751 to $5,250: (5,250 - 3,750) × 0.03 = 45
   - From $5,251 to $7,000: (7,000 - 5,250) × 0.04 = 70
   - From $7,001 to $10,000: (10,000 - 7,000) × 0.05 = 150
   - Over $10,000: (21,150 - 10,000) × 0.0575 = 643.75

  Total Georgia State Tax Liability:
   0 + 15 + 30 + 45 + 70 + 150 + 643.75 = 953.75

3. Calculate Quarterly Payments:
   Quarterly Georgia Estimated Tax Payment = Total Tax Liability / 4
   Quarterly Georgia Estimated Tax Payment = 953.75 / 4 = 238.44

Summary of Estimated Tax Payments

- Total Federal Tax Liability: $2,318
- Quarterly Federal Estimated Tax Payment: $579.50
- Total Georgia State Tax Liability: $953.75
- Quarterly Georgia Estimated Tax Payment: $238.44