At Aurelius Family Office, we pretty much stick to our financial planning playbook, but every once in a while, we come across creative and somewhat unusual things that clients like you can do – legally and above board – to manage money, save more for retirement, or pay fewer taxes, either now or down the road.
Before we jump in, let’s take a look at some of the most recent changes and strategies you might not be aware of.
- The “new” Senior Deduction from last year’s tax bill
Did you know about the new Senior Deduction from your Federal taxable income? The One Big Beautiful Bill Act (OBBB Act), enacted in July 2025, introduced a new, temporary $6,000 senior tax deduction for eligible individuals (and $12,000 for a married couple) aged 65 and older, effective for the 2025 tax year. The deduction phases out above Modified Adjusted Gross Income (MAGI) of $75k (single)/$150k (joint). This deduction is available even if you itemize and is in addition to the existing standard deduction for seniors. This temporary benefit (2025-2028) provides relief for seniors, complementing the standard increases for age (e.g., +$2,000 for singles) and potentially helping itemizers, too, though IRS forms are required to claim it.
- While we’re discussing the OBBB, it’s also important to keep in mind: Social Security retirement income remains taxable for many people—here’s a quick refresher on how that works.
If you’re collecting Social Security and still working, I bet you did not think that up to 85% of your Social Security income could be taxable. If your Social Security is your only source of income, it is generally not taxable. However, about 40% of people who get Social Security have to pay income taxes on their benefits. The income thresholds are not adjusted for inflation, so more beneficiaries may pay taxes over time. Those Social Security retirement benefits may be taxable if your combined income (Adjusted Gross Income + nontaxable interest + 50% of benefits) exceeds $25,000 (single) or $32,000 (married filing jointly). Up to 50% or 85% of benefits may be taxable depending on income levels. Supplemental Security Income (SSI) is not taxable.
- Transitioning now to tax payments in retirement; what should you do once you stop working?
You probably know April 15 is the standard tax filing deadline, but if you’re retired, you’re expected to file quarterly estimated taxes. If you’ve spent your career as an employee, you’re likely used to taxes being withheld automatically. In retirement, though, you may be surprised to discover you must make estimated payments four times a year. For many retirees, filing just once a year is no longer enough. Failing to pay estimated taxes on time may mean owing penalties and interest on underpaid amounts.
As many retired clients know, we simplify taxes by running early-year projections and directing 100% of the retirement distribution to tax authorities. It’s as easy as one-and-done! That payment appears on your 1099-R, so there’s no need to search for proof come tax time. We’ll even calculate tax on that payment if needed.
- For one of my personal favorites……try multiple tax benefits from this strategy!
If you’re a small business owner with children, put them to work and avoid taxes on their income. It’s a genuine tax loophole! Pay your kids’ wages and put up to $5,000 in their Roth for Kids account for Roth tax benefits at an early age. Invest early and let the power of compounding work:
- If you follow IRS rules, hiring your child to work for your business can lower your taxable income, as you can deduct their salaries from your business income.
- If your child is under 18, and depending on the type of business you have (more on that below), you won’t have to take Social Security and Medicare taxes from their pay.
- Your child won’t have to pay taxes if their income for a given tax year is less than the standard deduction amount for that year (e.g., $15,750 for 2025).
- Because your child will have earned income, you can contribute to a Roth IRA on their behalf, subject to applicable IRA contribution limits. For minors, custodial Roth or SIMPLE plans may be formed.
A Few Other Not-So-Ordinary Things
You would know these hacks, perhaps without our guidance?
- You have 529 plans, but your prodigy got scholarship money? Don’t pay the 10% penalty on the accumulated income; distribute it to Roth IRAs.
- To roll over leftover 529 plan funds to a Roth IRA, the 529 must be at least 15 years old. Funds are transferred directly from the 529 plan to the beneficiary’s Roth IRA, which must be in the beneficiary’s name. Total rollovers are capped at $35,000 lifetime per beneficiary, subject to annual Roth IRA contribution limits. The beneficiary must have earned income equal to the rollover in the year of transfer, and any recent contributions or their earnings (from the past 5 years) are excluded from the rollover amount.
- Thinking of buying a car? The OBBB lets you deduct auto loan interest (see our recent post on Tips for Buying Cars).
- Given all the ups and downs of the Market, you might be sitting on a little extra cash. What are you doing with it? It’s likely time to see what interest rates your bank is paying on your Money Market accounts. (We can help you figure out if it makes sense to make a change…)
- Were you hit with any surprise medical bills this year? If so, when you do your taxes, take another look at your medical expense deductions; you can deduct unreimbursed medical and dental expenses that exceed 7.5% of your adjusted gross income (AGI).
- Are you still in the game and now work from home? Take advantage of the home office deduction. If you’re working from home as a retiree, you might qualify for the home office deduction, which allows you to deduct a portion of your housing expenses.
We believe these rules are a good place to start a conversation, but like a one-size-fits-all shirt, they work for everyone but don’t suit anyone perfectly. Real financial planning is more like a tailored shirt, made to fit you just right. If you want help building a plan that fits your needs, give us a call anytime. We enjoy helping our clients feel great about their plans.
Disclosures
Aurelius Family Office, LLC (“AFO”) is an SEC-registered investment adviser. Registration does not imply a certain level of skill or expertise. This communication is for informational purposes only and is not intended to provide specific investment, legal, tax, or other professional advice. Investments involve risk of loss. AFO is neither an attorney nor an accountant, and no portion of this content should be interpreted as legal, accounting or tax advice. For information regarding AFO’s services, fees, conflicts of interest, and related matters, please review our Form ADV at https://adviserinfo.sec.gov/firm/summary/323016. Visit us at https://aurelius.net/.
