Volume 2025 Number 5 - Year End Edition for All Clients

Steven L. Cox, CPA

Telephone: (919) 469-1773

Online at: carycpa.com or stevenlcoxcpa.com

Email: carycpa@nc.rr.com

Cary Office: 1135 Kildaire Farm Road

Suite 200

Cary, NC 27511 (year round)

Pictured Staff:

Steve Cox, CPA

Time to Prepare for a Smooth Tax Season

During the month of January, I will be distributing organizer/checklists, questionnaires and also engagement letters to all clients via email. The engagement letter is simply a summary of the services I will be providing plus the proposed fee. I need all clients to include the signed letter when submitting your tax documents, regardless of how they are submitted. In addition, the annual tax questionnaire provides me with important updates as to your tax situation that could potentially impact your tax return. Please be sure to take the time to complete the questionnaire and submit with your tax documents. Thanks very much.

The IRS encourages all taxpayers to set up an individual account on the IRS website by going to https://www.irs.gov/payments/online-account-for-individuals. IRS accounts can be used to do things such as access tax records, make & view payments, view payment history or create payment plans, view any balance owed, request & receive an identity theft PIN each year, view authorization requests such as those from lenders, and request a transcript of your tax data. I strongly encourage all clients to consider the identity theft PIN program, as that dramatically reduces the chances of a bad actor filing a tax return in your name.

If you received tips or overtime pay in 2025, I would strongly suggest including a copy of your final paystub with your submitted tax documents. These two tax laws changes were passed mid-year, but are retroactive back to the first of the year, so it will be useful to have as much documentation as possible.

In the Government Update and More Reminders & Changes articles below, there is additional detail regarding the IRS change from Executive Order 14247 where IRS disbursements (refunds) and receipts (final tax payments and estimated payments) will no longer be made or accepted by check. Please review this change and plan for any changes that you need to make. If you have opted to receive your tax refunds by check, you can either provide me with your bank account information for direct deposit purposes to be included with your e-filed return, or you will likely receive a prepaid debit card for your tax refund. If you typically pay your balance owed or make estimated payments by check, there is an IRS Direct Pay website for making payments or you can pay through your personal IRS account as noted above. There will also be retail partners where you can make IRS payments, such as CVS, 7-Eleven and Walmart.

If you need to make any type of appointment with Steve (in-person, Zoom or phone call), that can be done using the following link: https://go.oncehub.com/meetwithstevecoxcpa

Please avoid calling me on the phone with no notice as I have roughly 175 clients and cannot constantly field random calls - thanks very much.

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A NOTE OF HEARTFELT THANKS:

Sincere thanks for the messages of condolence and offers of help after the passing of my wife Robbie Cox on October 15th following a 9-year battle with blood cancer and a compromised immune system. My family and I miss her tremendously. December 17th would have been our 42nd wedding anniversary.

My apologies for a poor job of getting the word out to many of my CPA practice-related friends. Robbie's actual passing came quicker than expected and things were a bit chaotic.

Moving forward, I am fortunate to have a strong social network, including so many CPA clients and other recipients of this newsletter who I am happy and fortunate to call personal friends. Thanks so much for your friendship.

2025 Government Update

Updated Trump Account Rules

No More Checks To/From IRS

Medicare AI WISeR Model

In a recent newsletter, I reviewed the key elements of the "OB3" (One Big Beautiful Bill) that was passed over the summer. If you need a refresher, here is a link to that newsletter: https://conta.cc/4koaQvO.

Since that prior newsletter, some small changes have been made to the new "Trump Account" program based on IRS and Treasury Department guidance. Here is an updated synopsis of the program:

A Trump Account is a retirement-style investment account for children that can be opened for any child under age 18. The actual accounts will be opened starting in the middle of 2026. Children born from 2025 through 2028 will receive $1,000 from the federal government as a one-time "starter deposit". Up to $5K in after-tax money can be contributed per year. The money must be invested in low-cost U.S. stock index funds. Once the child is 18, the account is treated as a "traditional IRA". Under the latest rules, families must now sign up for Trump Accounts and will not be signed up automatically.

Other than the $1,000 contribution from the government, these accounts appear flawed because only the earnings (and not contributions) will be taxed decades later, creating a tremendous accounting challenge (see below). You are likely better off just opening an IRA for retirement purposes.

Here is the summary of the Trump Account program from Microsoft's Copilot AI: Because Trump Accounts use after‑tax contributions but still tax all the earnings, families must track their basis for the rest of the child’s life just to avoid being taxed twice. In reality, you will spend far more than the $1,000 federal seed money over 40–60 years paying accountants to maintain those records — and if the basis is ever lost, the IRS taxes the entire balance anyway. For most families, the administrative burden outweighs the benefit.

A reminder from the lead article above as well as the Reminders article below that per Executive Order 14247, the IRS is no longer disbursing funds or accepting payments via check. These articles address these changes in more detail.

For Medicare recipients, here is something to keep on your radar:

Beginning in 2026, traditional Medicare will start using advanced analytics to flag certain medical procedures for extra review before payment, similar to the systems already used in Medicare Advantage programs. Under an AI-based program called WISeR, a computer model — not your doctor — decides whether your procedure needs additional scrutiny, and a contractor reviews the paperwork before Medicare pays the claim. Most traditional Medicare beneficiaries won’t notice day‑to‑day changes, but providers in the pilot states should expect more prior‑authorization‑style oversight. The six pilot states for traditional Medicare added scrutiny in 2026 are New Jersey, Ohio, Oklahoma, Texas, Arizona and Washington.

More Reminders & Changes for a Smooth Tax Season

In order to stay in compliance with PCI (Payment Card Industry) standards which restrict vendors from having access to or maintaining customer debit/credit card information (to prevent breaches), my tax practice has moved to a new payment system from CPACharge where I will generally send an invoice to a client for a tax return prep fee and they key in the card or bank account information (I never see the card number). If a client requests that they give me a card number, I am allowed to key it into the CPACharge software on a one-time basis but the card number is not stored. Bank account information is generally stored in my software (not part of PCI) because clients want direct deposit of refunds and there is a new requirement (see next item) where direct payment (no checks) is required for payments to and from the IRS. Regarding check payment of fees to me, we will still allow "paper" clients who pick up their tax returns at the Cary office to pay their prep fees by check (as well as other payment options). Sharefile clients no longer have the option to pay by check as it slows down the wrap up process considerably.

While we are discussing electronic payment data, please note that the IRS recently announced that they were discontinuing paper check refund disbursements effective September 30, 2025. For those who do not have a bank account on file with the e-filed return, the primary alternative is a prepaid debit card. In addition, the IRS wants to discontinue the receipt of annual tax payments and quarterly estimated payments by check effective in 2026. The IRS has a "Direct Pay" website that is very easy to use and estimated/annual payments can be set up there. The URL is https://www.irs.gov/payments/pay-personal-taxes-from-your-bank-account. The State of North Carolina has no current plans to make a similar transition to electronic payments only. If a client needs assistance with keying IRS direct payments into the online system, I plan to offer assistance for a modest fee.

I plan to keep my practice going for as long as I am enjoying the work itself as well as the social interaction with clients. As I have done annually in recent years after each season, I have trimmed a certain number of clients from my database in order to make room for new clients and also slowly move toward the right number of clients as I "glide" toward an eventual retirement (no retirement plans at this point for at least 3 more years).

A few notes to help keep things running smoothly with my practice:

Beginning this tax season, payment by check for the prep fee will only be available to "paper document" clients who pick up their final tax packages at the Cary office with the receptionists, along with other payment methods available to those clients.

Clients who upload their documents digitally to Sharefile will have all payment options available (except check payment), which includes direct draft of bank account, credit/debit card, PayPal and Venmo. The Sharefile paperless process is meant to be quick and efficient, so wrapping up the process with a check payment is a bit self-defeating and causes a fast process to grind to a halt.

On a similar note, Sharefile users, who currently receive a final PDF of their return uploaded to their Sharefile folder, will no longer have the option of a printed paper copy of the return. This eliminates redundancy because the client can print the PDF at any time and it contains the exact same information that is found in a paper "green folder" copy of the return.

The new form for submitting medical and charitable itemized deductions category totals worked out well last tax season - please use this form (I don't want to see your routine medical receipts & detail just as much as you don't wish for others to see them). I will likely ask for some types of receipt copies if you have enough deductions to take the itemized total over the standard deduction, but that will typically be receipts over a certain dollar limit, such as charitable contributions over $1,000, etc.

When I send a draft copy of a return for your review (paper or Sharefile client), I will typically check back in with you if I haven't heard anything within a week. I know that my clients live busy lives. However, if I have to send multiple check-in emails over multiple weeks to get feedback on the draft, that might be something noted for post-tax season review of the potential client trim list (a polite warning). A good time for a reminder that if you have a substantial balance owed to the government, you can still e-file the return now and wait to make the tax payment until April 15th. Dragging out the tax preparation process gives you NO additional benefit as far as paying any government balance owed.

Again, thanks to all of my wonderful clients. If I prepared your 2024 tax return AND you are receiving this newsletter, it means that I am looking forward to having you return as a client for your 2025 tax return. If you discover or decide that you will not be returning, please send me an email so that I won't hold your spot. I turn away quite a few potential clients once I have reached a target number of clients, so please be respectful and let me know if you will not be using your spot. THANKS VERY MUCH !!

Year End Puzzle

Here is a question that has often been used in job interviews at major companies including Amazon. The purpose of the question is to assess the applicant's reasoning process and ability. See how you do.

You have 8 metal balls that appear identical in every way. However, one ball has a defect and is slightly lighter than the other 7 balls. You must determine which ball is the lighter one using a 2-pan scale, similar to the one pictured above. However, you can only use the scale TWICE. How do you determine which ball is the lighter one?

(Answer at bottom of newsletter)

By The Numbers

1. ZERO TO HERO - Finland’s capital, Helsinki, recently set a record of 12 straight months without a single traffic fatality, the first major European city to do so. This milestone is the result of its long-term “Vision Zero” strategy. More than half of city streets now have a 30 km/h (18.6 mph) speed limit, many roads have been narrowed using green buffers, separate walking, cycling, and public transit lanes have been created, and the number of speed cameras for enforcement have been increased – altogether significantly boosting overall traffic safety. [source: politic.eu]

2. THAT MAKES SCENTS - Disney theme parks deliver a full sensory experience by diffusing carefully crafted scents, such as the candy, popcorn and baked goods aromas that waft down Magic Kingdom’s Main Street, using “Smellitizers” that release various fragrances throughout the parks. Because scents are strongly tied to emotions and to building strong memories of experiences, Disney uses them to transport guests into different lands, attractions, and experiences. In Disney’s Polynesian Village Resort, for example, a hibiscus fragrance greets visitors in the lobby, evoking a Pacific island. Pirates of the Caribbean wafts musty, damp air scents with hints of gunpowder and saltwater, and the Haunted Mansion releases dust and mildew-like smells. Patented “scent blending” is used on rides that gradually shift between one aroma to another for seamless, cinematic-style scene transitions of smells. [source: fastcompany.com]

3. COOKIE DOUGH - Girl Scouts of the USA (GSUSA) announced a new cookie, Exploremores, inspired by rocky road ice cream, featuring chocolate wafers filled with marshmallow and toasted almond-flavored crème, and debuting in the 2026 cookie season. Also announced, S’mores and Toast-Yay! cookies will be retired after the 2025 season. Girl Scout cookie sales generate about $38 million annually. [source: cnn.com

4. HOTSPOTS - A study of internet use in 24 countries found that 28% of adults are online “almost constantly,” that 40% connect several times daily, and that 9% don’t use the internet at all. Japan leads the world in “almost constant” internet use, with 56% of adults online nearly all the time, followed by South Korea (50%), and Argentina, Israel, Spain, Turkey, and the U.S. (40% each). Countries with the highest rates of “no internet use at all” are India (33%), Nigeria (25%), and South Africa (25%). Frequent use is far greater in wealthier nations and among younger, more educated, and higher-income adults, with sharp gaps, as in Turkey, where only 12% of those 50+ but 64% of those under 35 are online almost constantly. [source: preresearch.org]

5. MONKEY BUSINESS - At Bali’s cliffside Uluwatu Temple, long-tailed macaque monkeys have run a daylight racket for decades – snatching sunglasses, watches, jewelry, wallets, and smartphones straight from tourists’ hands or bags, then literally bartering them back to human co-conspirators in exchange for Oreos, mangos, or even raw eggs. The monkeys have shown they understand what humans value, targeting iPhones and bags over hats and hair clips with “unprecedented economic recognition.” Their criminal handlers, called pawang, negotiate exchanges of foods the monkeys like in order to get them to drop their stolen human goods. The result is a bizarre spectacle that has left tourists shaken, valuables bent or broken, and the temple’s 600 monkeys firmly in charge of one of the world’s most audacious, and entertaining, criminal enterprises. [source: wsj.com]

6. HEAR ME OUT - In a counterintuitive trend, about 40% of adults under age 45 today use subtitles at least “often” when watching TV and movies, and about 30% in adults older than 45. The reasons are they find it easier to understand dialogue, especially in noisy or unclear audio conditions, they want to follow along more closely, especially when speech is fast, accented, or has complex vocabulary, they find it helpful while multi-tasking during shows, and they prefer reading in conjunction with hearing for clarity or comprehension. Surprisingly, those 60 and older are much more likely to say they “never” use subtitles. [source: apnews.com]

7. SEA CHANGE - Kroger grocery stores now sell about 1 million Sushi rolls per day across the chain. Kroger has sold sushi since 1991 but has seen sales jump by 50% since 2019. What for U.S. sushi lovers was once a splurge they could only get in a restaurant, is no longer the case thanks to better infrastructure for storing and transporting frozen seafood which allows for ordering it to-go and picking up at grocery stores, restaurants, gas stations, and entertainment venues. In 2024, the grocery store sushi market was worth $2.8B, up 7% from 2023. Sushi is now mainstream in the American diet. [source: nytimes.com]

8. POWER TRIP - Stargate – the OpenAI, Oracle, and SoftBank AI venture capital project backed by the White House – announced a $400 billion plan to build five new data centers to power OpenAI’s expansion (3 in Texas). Part of a $500 billion U.S. AI initiative, total spending could reach $1 trillion on energy and infrastructure. Each center will use about 7 gigawatts of power (enough for 8 million homes) at roughly $50 billion per gigawatt. The plan adds to a 1,100-acre Abilene, TX site, soon the world’s largest data center, with fiber optic cable long enough to reach the moon and back. Experts warn the growth could outpace demand and revenue, but CEO Sam Altman insists it’s justified and says, “We are growing faster than any business I’ve ever heard of before.” [source: apnews.com]

9. DUAL-ING DEGREES - Seeking to be more competitive in the job market, more U.S. college students are double-majoring. About 12% of 2023 - 2024 graduates earned more than one credential, up from 6% a decade earlier. Double majors surged 334% at Harvard, 317% at Belmont University, and 169% at UC San Diego between 2014 and 2024. At the University of Wisconsin-Madison, double majors are up 25%, with nearly 60% of computer science students choosing data science as their second major, a field the Bureau of Labor Statistics projects will see strong growth. [source: washingtonpost.com]

10. TICK, TICK, TICK - High blood pressure among young people has nearly doubled worldwide, with hypertension in those under 19 rising from about 3% in 2000 to about 6% in 2020. Researchers attribute the increase primarily to rising childhood obesity, higher salt consumption, and more sedentary lifestyles—trends reflected in global obesity data showing steady growth across regions. Improved screening has likely boosted detection, but evidence indicates the surge is largely real, not just a measurement artifact. The findings highlight growing long-term risks for cardiovascular disease and reinforce concerns about worsening youth health patterns over the past two decades. [source: semafor.com]

11. MECHANICAL MACHINATIONS - Chinese factories installed about 300,000 new robots last year – more than the rest of the world combined – compared with 34,000 in the United States. China now operates over 2 million robots, five times the U.S. total. This surge reflects a heavily government-subsidized push to make automation central to EV production, exports, and daily life for Chinese citizens. The shift, however, threatens manufacturing jobs, with estimates that up to 70% could eventually be affected by intelligent automation. The drive is partly a response to demographic pressures, as China’s falling birthrate and shrinking labor force will compel factories to rely more on machines going forward. [source: nytimes.com]

12. CREDIBILITY FOR SALE - Expert witnesses appear in roughly 80% of U.S. court trials, with no caps on fees, where high-profile cases can use 6 - 10 or more experts per side, such as the Depp-Heard trial, which paid out over $1 million in fees to experts for testimony. A 2017 Idaho murder case paid $210,000 to one psychologist. Experts typically bill hourly – averaging $425/hr for case prep and $550/hr for depositions and trial testimony – resulting in an average of $13,000 per case with 25 hours of work. Medical specialists like surgeons can charge the most, earning up to $1,400/hr, with lower skilled niche experts earning around $225/hr. The expert-witness industry exceeds $300 million nationally, with directories like SEAK listing more than 2,300 specialists and selling a one-day training seminar for $1,295, promising experts they can double their income. Success as an expert relies heavily on traits like confidence, poise, and eye contact (salesmanship), which jurors perceive as signs of credibility. 77% of experts reported a client’s lawyer pressured them to shape/change testimony to be more favorable to their client. [source: thehustle.com]

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News

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Winter Wolf Howl

NEWS YOU CAN USE:

Some year end tax and money saving ideas: 1. Max out tax-advantaged accounts such as contributions to 401(k) plans, HSAs, and FSAs, 2. Give smart - donate appreciated stock to avoid capital gains, bunch donations into one year for itemizing deductions, 3. Review all subscriptions and get rid of unused ones, 4. Check credit card benefits as many reset on January 1st, 5. Do some comparison shopping on your insurance policies, 6. Trim energy costs by replacing filters, sealing drafts and using a smart thermostat, 7. Check your tax withholding to avoid surprises during tax season, and 8. Declutter and sell unused items.

Medicare Part B standard premiums will rise substantially in 2026, going from the current $185/month to a rate of $202.90 next year. The annual cost of living increase for Social Security will be 2.8%. To qualify to contribute to an HSA (health savings account), the minimum annual deductible for the required "high deductible health plan" (HDHP) will rise slightly in 2026 to $1,700 for single coverage and $3,400 for family coverage. New in 2026, most bronze-level plans under the ACA will now qualify as HDHPs.

I've mentioned this before, but many people are finding that January 15th can often be a MUCH better time to start new year resolutions than January 1st. Consider spending the first two weeks of the year reflecting on where you are and what changes you would like to make. In mid-January, you are back in your normal routine and not in a "once a year" routine coming out of the extended holidays. Allow yourself to ease into your new routines gradually over time, rather than putting undue pressure on yourself starting on New Year's Day. On a related topic, the idea of a "Dry January" where no alcohol is consumed continues to grow in popularity.

For those over 50 who may be looking for part-time work to supplement income or for social reasons, many seniors are finding work with caregiver services, medical transportation, administrative or bookkeeping services, customer support, teaching & tutoring, retail and hospitality. Websites to assist with a search in this area include retirementjobs.com and also the AARP Job Board.

Note that the current administration ended the highly popular Direct File program on the IRS website where taxpayers who met income requirements could truly file their tax returns for free. We appear to be going back to private company "IRS partners" who claim to be free but find ways to charge users. It reminds us of the old joke that in a world of opposite Pros & Cons, the opposite of Progress is Congress.

Interesting tidbit for those who watch tennis matches - when new tennis balls are put into circulation during a match (6 balls), typically only 2 or 3 balls actually see most of the action. You have probably noticed how the players are given 3 or 4 balls as they walk up to serve, the balls are inspected and 2 balls are selected. The players are actually selecting one ball (with the least amount of felt) for their first serve so that it will go as fast as possible, and another ball (with the most amount of felt) for their second serve, which gives them more control on a serve where the priority is to land the ball in the service box. Hopefully, we won't see the pickleballers checking over the wiffle balls before each point anytime soon.

More money savings tips (for daily life) - 1. Save $10K per year by saving $27.40 per day, by watching money-draining habits such as daily premium coffee runs, subscriptions not used, or dining out too often, 2. Buy whole produce items at the grocery store and not pre-cut - whole items are cheaper and last longer with proper storage, 3. Keep a "use-first" bin in the fridge so nothing gets lost or wasted, 4. Install a programmable thermostat if you haven't already, 5. Make simple cleaners with vinegar, baking soda, and lemon, 6. Book flights midweek, set fare alerts, and stay flexible on airports, 7. Try one "no spend" weekend per month to reset habits, 8. Pay bills with autopay to avoid late fees, 9. Check your credit report annually on annualcreditreport.com to stay informed and protect your score, 10. And my often repeated favorite - split your grocery shopping between at least 2 grocery stores. Purchase your staple items that are the same at any store (detergent, non-perishables, pet food, etc.) at a store that specializes in low prices. Staple items are often as much as 75% of your total groceries. Use your savings to purchase items like meats & produce at a store that often has a higher quality section for those items.

News You Can Use to get a strange look from your friends: ask them if they knew that 1. Avocados, bananas and grapes are all considered berries while strawberries are not, 2. You can't hum while holding your nose (or tickle yourself) , 3. Sharks have been around longer than trees (by 50 million years), 4. The Earth's core is as hot as the surface of the Sun, 5. Honey never spoils, 6. There is a species of jellyfish that is immortal because it can revert back to its juvenile form once reaching maturity, a process that it can repeat over and over again, 7. The fastest spinning planet in our solar system is actually Jupiter, the largest, where a day is only 10 hours, 8. The footprints left by astronauts on the moon could last millions of years (no wind or water to wash them away), 9. The average cloud weighs as much as 100 elephants, and 10. The only planet in our solar system that rotates clockwise is Venus (the Sun rises in the west and sets in the east).

Best Purchase I Made Since Last Newsletter - Repainting of Steve's 2013 Honda Accord - many of you have figured out that I detest newer cars that are basically "rolling computers" that do things like shut off automatically at stoplights, brake themselves, or buzz you if the car thinks you aren't watching the road. I love my 2013 Honda Accord (only 85K miles) because it is a MACHINE, but it needed a "sprucing up" on the paint job. I finally moved forward and had Maaco repaint my baby, and I am very pleased how it turned out. The new color (San Moreno Red) is slightly more red than the previous color. And yes, that IS a trailer hitch on the back !!

Client Travel Guide:

Share some of your favorite getaway places !!

Send photos & descriptions to carycpa@nc.rr.com

Our theme is great places worldwide to spend New Year's Eve:

Edinburgh, Scotland - Hogmany is a 3 or 4 day festival to bid farewell to the prior year and bring in the new year. Torchlight processions, live music, and famous street parties turn the Scottish capital in a unique place to celebrate NYE.

Sydney, Australia - Sydney’s fireworks are among the first major displays globally, thanks to Australia’s time zone. Get close to the action of NYE with harbor dinner cruises or rooftop parties, or venture down to one the waterfront gardens for prime views.

Berlin, Germany - In buzzing Berlin, the famous Brandenburg Gate transforms into a vibrant party hub with live bands, DJs, and an impressive fireworks display at midnight. If you prefer to be indoors, there’s always Berlin’s legendary club scene with very cool New Year’s Eve events.

Answer to Puzzle above - First, divide the balls into 3 groups, with 3, 3 and 2 balls in the groups. Let's mark Group 1 as G1 and it contains Balls 1,2 and 3 (B1, B2, etc.). G2 contains B4, B5 and B6 while G3 contains only B7 and B8. Put G1 and G2 into the 2 pans on the scale. IF they balance, the lighter ball must be either B7 or B8 (from G3) and you can weigh those 2 on the 2nd weighing to determine the lighter ball.

IF G1 or G2 is lighter on the first weighing, the lighter ball must be within the lighter group. Let's say G1 is lighter (contains B1, B2 and B3). For the 2nd weighing, put the B1 ball in one pan and the B2 ball in the other pan. If they weigh the same, the lighter ball is B3. If B1 or B2 is the lighter ball, the 2nd weighing will show which one it is. No problem, right??