Many taxpayers file extension requests that typically extend the deadline for filing their income tax returns by six months, from April 15th to October 15th for personal income taxes. One does not need to have a reason to file extension requests. The extension request pertains to the filing of the tax return as opposed to the payment of any tax owed. Failure to make sufficient payments by the original due date including a payment with the extension request can lead to the imposition of penalties.
For Federal purposes, in order to have a valid extension that avoids any penalties, total payments must equal at least 90% of the actual tax liability. This can be challenging especially for owners of pass-through entities where accurate K-1 income information is unavailable as of April 15th. For those taxpayers who are required to make quarterly estimated tax payments, a first quarter estimated payment for the year in progress is often tacked on to the extension payment to provide a cushion. Any resulting overpayment typically ends up being applied to the subsequent year.
State extension requirements vary by state. New Jersey only requires that 80% of the actual tax liability be paid to avoid incurring penalties. And only if a payment is being made is a NJ extension request required to be filed. New York follows the Federal threshold and requires the filing of an extension request even where no payment is being made. The same rules apply whether one is a state resident or nonresident filer.
If a taxpayer files their personal income tax returns prior to the April 15th due date, their tax returns are deemed filed on April 15 from which point the three year statute of limitations for either filing an amended tax return or for being audited begins. On the other hand, the actual filing date begins the three year statute of limitations for taxpayers on extension.
Filing an extension request generally allows for a delay in making retirement plan contributions until the extended due date. The one exception to this rule pertains to IRA contributions, which must be made by the original due date. Contact your Smolin representative with any questions you may have.
Last year’s One Big Beautiful Bill Act (OBBBA) terminated several clean energy tax incentives earlier than previously scheduled. You may qualify for a 2025 tax credit if you bought an electric vehicle or made eligible green home improvements last year. Remember, tax credits reduce your tax liability dollar-for-dollar (unlike deductions, which reduce the amount of income subject to tax). So tax credits are especially valuable.
If you bought an eligible clean vehicle by September 30, 2025, you may be able to claim one of these tax credits on your 2025 return:
New clean vehicle credit. Buyers of new electric and fuel cell vehicles may be able to claim a credit up to $7,500, depending on how the battery components and critical minerals were sourced. Vehicles that meet only one of the sourcing criteria may be eligible for a $3,750 credit. This credit was originally set to expire after 2032. But, under the OBBBA, it expired on September 30, 2025.
The maximum manufacturer’s suggested retail price for a vehicle to be eligible for the credit is $55,000 for cars and $80,000 for SUVs, trucks and vans. The vehicle also must have undergone final assembly in North America. In addition, the credit isn’t allowed for vehicles with any battery components from a “foreign entity of concern.” For you to qualify, your 2025 adjusted gross income (AGI) must not exceed $150,000 ($300,000 if you’re married filing jointly and $225,000 if you’re filing as a head of household).
Used clean vehicle credit. Buyers of used electric or fuel cell vehicles may be able to claim a credit of up to $4,000 or 30% of the purchase price — whichever is lower — if they bought the vehicle from a dealer. Like the new clean vehicle credit, this credit had been set to expire after 2032 but, under the OBBBA, it expired on September 30, 2025.
The maximum purchase price for a vehicle to be eligible for the credit is $25,000. For you to qualify, your 2025 AGI must not exceed $75,000 ($150,000 if you’re a joint filer and $112,500 if you’re a head-of-household filer).
If you made certain home upgrades in 2025, you may be eligible for one of these tax credits on your 2025 return:
Energy-efficient home improvement credit. This nonrefundable credit equals up to 30% of qualified expenses to make your home more energy efficient. The maximum credit you can claim for 2025 generally is $1,200. There are no AGI-based limits, but there are credit caps that vary by item. Some examples of 2025 credit limits are $150 for energy audits, $250 per exterior door ($500 total), $600 for windows and $2,000 for heat pumps (superseding the usual $1,200 limit). Before the OBBBA, the law set the credit to expire after 2032.
Residential clean energy credit. This nonrefundable credit equals 30% of the cost of eligible renewable energy systems such as solar, wind and geothermal installations. There generally are no caps or AGI-based limits. Before the OBBBA, the law set the credit to expire after 2034.
One more clean energy credit you might be able to claim on your 2025 return is the alternative fuel vehicle refueling property credit. You may be eligible if last year you installed equipment at your home to recharge electric vehicles. The credit equals 30% of the installation cost, up to $1,000 per charging port.
Even if you didn’t install a charging port in 2025, you still have time. Install one by June 30, 2026, and you may be able to claim the credit on your 2026 return next year.
Not sure if you qualify for clean vehicle or green home improvement credits? Contact your Smolin representative.
Welcome back to Follow the Money. In the first article, we looked at how hidden transactions can shift the entire direction of a case. This month, we’re turning to something that tends to be quieter, harder to spot, and often more damaging in the long run: companies inflating what they own and downplaying what they owe.
These issues arise regularly in shareholder disputes, post-acquisition cases, and partnership breakups. On the surface, the financials may look polished. But once you start testing the numbers, you see where the story falls apart. That’s where forensic accounting becomes less about crunching numbers and more about understanding what someone was trying to achieve—and how far they were willing to go to get there.
Most of the time, the motivation is simple: to look better than you really are.
When litigation enters the picture, these distortions can change the economic landscape of a dispute. A couple examples that show up often:
We’ve all seen what happens when this behavior scales. WorldCom capitalized billions of expenses. Enron shifted debt and investment risk into entities no one was meant to scrutinize. While most cases aren’t that dramatic, the underlying tactic is familiar—polished numbers masking fragile foundations.
In practice, certain patterns show up again and again. Some of the most common include:
A simple indicator: sudden appreciation or revaluation adjustments inconsistent with history.
2. Improper Capitalization
When expenses that should be recorded in the income statement are instead booked as assets, earnings immediately look better. Repairs, routine maintenance, and certain development costs are frequent targets.
3. Hidden or Understated Liabilities
Pressure from lenders, investors, and internal performance metrics often influences poor management’s decisions.
4. Numbers That Don’t Match Behavior
This includes:
When the story being told by the numbers doesn’t align with economic reality, it’s worth taking a closer look.
Our work isn’t about catching someone with a single “gotcha” moment. It’s a layered approach—building a full picture from many angles:
1. Source Document Testing
Invoices, contracts, appraisals, and inventory counts—what’s on paper often contradicts what’s recorded in the system. In one matter I handled, a physical inventory walkthrough immediately revealed discrepancies that the books had masked for years.
2. Analytical Testing
Ratio analysis, trend reviews, and comparisons to industry benchmarks highlight where numbers diverge from what’s typical or expected.
3. Data Analytics
Transaction-level records often show timing issues or unusual behavior. Deleted entries, edited fields, or clusters of adjustments around financial close dates can be especially telling.
4. Lifestyle or Net Worth Comparisons
Sometimes, the simplest test is comparing reported income to public or observable spending patterns. When someone shows a lifestyle their reported income can’t support, it’s usually not because they found coupons or received discounts.
5. Third-Party Confirmation
Banks, vendors, customers, appraisers—independent sources help confirm or contradict what the company has represented.
Visual tools—charts, schedules, and flow diagrams—help clarify patterns that otherwise get lost in spreadsheets.
Uncovering asset inflation or hidden liabilities doesn’t just adjust the math—it changes the interpretation of events:
Early forensic involvement prevents parties from anchoring themselves to numbers that shouldn’t have been trusted in the first place.
Financial statements are supposed to reflect the truth. But when someone chooses to manipulate them, the inconsistencies eventually surface. The challenge is knowing where to look—and asking the right questions at the right time.
AUTHOR BIO:
Charles “CJ” Pulcine, CPA, CFF is a Manager in Smolin’s Forensic and Valuation Services practice, specializing in forensic accounting, fraud investigations, and litigation support. He is a licensed Certified Public Accountant in New Jersey and holds the Certified in Financial Forensics (CFF) credential.
With more than seven years of experience in forensic accounting, financial audits, and fraud investigation, CJ works with businesses and legal counsel on financial fraud investigations, commercial litigation support, matrimonial litigation, business valuation analyses, and shareholder disputes. His work focuses on uncovering hidden transactions, tracing assets, and analyzing financial misconduct.
As a member of Smolin’s forensic team, CJ supports attorneys throughout the litigation lifecycle, including asset tracing, damages analysis, and preparation of financial evidence for mediation, depositions, and trial. He practices out of Smolin’s Red Bank, New Jersey office.
You know your 2025 federal income tax return is due April 15, 2026. But do you know what else has an April 15 deadline? If you don’t, you could miss out on valuable tax-saving opportunities or become subject to interest and even penalties.
It may be 2026, but you can still make a 2025 contribution to a traditional or Roth IRA until April 15. For 2025, eligible taxpayers can contribute up to $7,000 ($8,000 if they’re age 50 or older). The limit applies to traditional and Roth IRAs on a combined basis.
If you contribute to a traditional IRA, you may be able to deduct the amount on your 2025 income tax return. But if you (or your spouse, if applicable) participate in a work-based retirement plan such as a 401(k) and your income exceeds certain limits, your deduction will be subject to a phaseout.
Roth contributions aren’t tax-deductible, but qualified distributions will be tax-free. Roth contributions are subject to an income-based phaseout, whether or not you (or your spouse) participate in a 401(k) or similar plan. If your Roth IRA contribution is partially or fully phased out, you can make nondeductible traditional IRA contributions instead, assuming you’re otherwise eligible.
Be aware that the 2025 IRA contribution deadline is April 15 regardless of whether you file for an income tax return extension.
If you own a business or are self-employed, you still can reduce your 2025 tax liability by making deductible contributions to a Simplified Employee Pension (SEP) plan by April 15. If you don’t already have a SEP in place, you can contribute for 2025 as long as you set up the plan by the contribution deadline. The 2025 contribution limit is 25% of your eligible compensation up to $70,000 (though special rules apply if you’re self-employed).
Keep in mind that, if you have employees who work enough hours and meet other qualification requirements, generally they must be allowed to participate in the plan. And you’ll have to make contributions on their behalf at the same percentage you contribute for yourself.
If you file to extend your 2025 return, you have until the extended October 15 deadline to set up your plan and make deductible 2025 contributions.
If you’re unable to file your individual return by April 15, you generally must file for an extension (Form 4868) by April 15 to avoid failure-to-file penalties. But this isn’t an extension of the tax payment deadline. If you expect to owe taxes, you should project and pay the amount due by April 15 to minimize interest and late payment penalties.
If you live outside the United States and Puerto Rico or serve in the military outside these two locations, you’re allowed an automatic two-month extension without filing for one. But you still must pay any tax due by April 15.
If you make estimated tax payments, the first 2026 payment is due April 15. You can be subject to penalties if you don’t pay enough tax during the year through estimated tax payments and withholding. Generally, you’ll need to make estimated tax payments if you have taxable income without withholding, such as self-employment income, interest, dividends or capital gains from asset sales, and will likely owe $1,000 or more when you file your 2026 tax return next year.
For you to avoid penalties, your estimated payments and withholding must equal at least 90% of your tax liability for 2026 or 110% of your tax for 2025 (100% if your adjusted gross income for 2025 was $150,000 or less or, if married filing separately, $75,000 or less). Paying the appropriate amount of estimated taxes on time can help you avoid or reduce interest and penalties.
If you’re the trustee of a trust or the executor of an estate that follows a calendar tax year, you may be required to file an income tax return (Form 1041) for the trust or estate — and pay any tax due — by April 15. Filing is required when a trust or estate has gross income of $600 or more during the tax year or if any beneficiary is a nonresident alien.
For the year of death, a Form 1041 must also be filed for the deceased to report any income, as well as deductions and credits, up until the date of death. If the deceased’s assets immediately passed to the heirs, a Form 1041 generally won’t be required because the estate won’t have any post-death income.
If you’re not ready to file Form 1041 by April 15, you can file an automatic five-and-a-half-month extension (Form 7004) to September 30, 2026 (or a six-month extension to October 15, 2025, if it’s a bankruptcy estate). But any tax due still needs to be paid by April 15.
As you can see, depending on your situation, you may have more to do by April 15 than just file your Form 1040. And this isn’t a complete list. For example, April 15 is also the deadline for individuals to file a federal gift tax return and a Report of Foreign Bank and Financial Accounts (FBAR). Contact your Smolin representative, to identify which April 15 deadlines apply to you and get help meeting them so you stay compliant, reduce risk, and potentially save on taxes.
Personal interest expense generally can’t be deducted for federal tax purposes. There are, however, exceptions. Here are four, one of which is a new break under the One Big Beautiful Bill Act (OBBBA), which was signed into law in 2025.
Perhaps the most well-known interest expense deduction, home mortgage interest may be deductible if you itemize deductions rather than claiming the standard deduction. You generally can deduct interest on mortgage debt incurred to purchase, build or improve your principal residence and a second residence. Points paid related to your principal residence also may be deductible.
The OBBBA made permanent the Tax Cuts and Jobs Act’s (TCJA’s) reduction of the mortgage debt limit from $1 million to $750,000 for debt incurred after December 15, 2017, with some limited exceptions. But the OBBBA also generally made mortgage insurance premiums deductible as mortgage interest — though not until the 2026 tax year. So you can’t deduct these premiums on your 2025 return.
The OBBBA allows eligible individuals — whether or not they itemize — to deduct some or all of the interest paid on a loan taken out after 2024 to purchase a qualifying new car, minivan, van, SUV, pickup truck or motorcycle with a gross vehicle weight rating under 14,000 pounds. For 2025 through 2028, you can potentially deduct up to $10,000 each year. But various requirements and limits apply.
One of the most significant requirements is that the vehicle’s “final assembly” must occur in the United States. An important limit to be aware of is that the deduction is phased out starting at $100,000 of modified adjusted gross income (MAGI) or $200,000 for married couples filing jointly. The deduction is completely phased out when MAGI reaches $150,000 ($250,000 for joint filers).
If you have student loan debt, you may be able to deduct the interest, subject to various rules and limits. You don’t have to itemize to claim the deduction, and the maximum deduction is $2,500. The interest must be for a “qualified education loan,” which means a debt incurred to pay tuition, room and board, and related expenses to attend a post-high-school educational institution, including certain vocational schools. Post-graduate programs may also qualify.
For 2025, the deduction begins to phase out for single taxpayers when MAGI exceeds $85,000 ($175,000 for joint filers). The deduction is unavailable for single taxpayers with MAGI of more than $100,000 ($205,000 for joint filers). Married taxpayers must file jointly to claim this deduction. Taxpayers who can be claimed as a dependent on another tax return aren’t eligible.
Investment interest — interest on debt used to buy assets held for investment, such as margin debt used to buy securities — may be deductible. But you can’t deduct interest you incurred to produce tax-exempt income. For example, if you borrow money to invest in municipal bonds, which are exempt from federal income tax, you can’t deduct the interest.
Perhaps more significant, your investment interest deduction is limited to your net investment income, which, for the purposes of this deduction, generally includes taxable interest, nonqualified dividends and net short-term capital gains, reduced by other investment expenses. In other words, qualified dividends and long-term capital gains aren’t included (unless you elect to treat them as nonqualified dividends or short-term capital gains subject to the higher tax rates that apply to those types of income). Any disallowed interest is carried forward. You can then deduct the disallowed interest in a later year if you have excess net investment income.
If you’re wondering whether you can claim any interest expense deductions on your 2025 return, please contact us. We can calculate your potential deductions and help you determine if there are steps you can take this year to maximize your deductions when you file your 2026 return next year.
To learn more, contact your Smolin representative.
Including a letter of instruction in your estate plan is a simple yet powerful way to communicate your personal wishes to your family and executor outside of formal legal documents. While not legally binding, the letter can serve as a road map to help those managing your estate carry out your wishes with fewer questions or disputes.
Contents of your letter
What your letter addresses largely depends on your personal circumstances. However, an effective letter of instruction must cover the following:
Documents and assets. State the location of your will and other important estate planning documents, such as powers of attorney, trusts, living wills and health care directives. Also, provide the location of critical documents such as your birth certificate, marriage license, divorce documents and military paperwork.
Next, create an inventory — a spreadsheet may be ideal for this purpose — of all your assets, their locations, account numbers and relevant contacts. These may include, but aren’t necessarily limited to:
Don’t forget about liabilities. Provide information on mortgages, debts and other loans your family should know about.
Digital assets. At this point, most or all of your financial accounts may be available through digital means, including bank accounts, securities and retirement plans. It’s critical for your letter of instruction to inform your loved ones on how to access your digital accounts. Accordingly, the letter should compile usernames and passwords for digital financial accounts as well as social media accounts, key websites and links of significance.
Funeral and burial arrangements. Usually, a letter of instruction will also include particulars about funeral and burial arrangements. If you’ve already made funeral and burial plans, spell out the details in your letter.
This can be helpful to grieving family members. You may want to mention particulars like the person (or people) you’d like to give your eulogy, the setting and even musical selections. If you prefer cremation to burial, make that abundantly clear.
Provide a list of people you want to be contacted when you pass away and their relevant information. Typically, this will include the names, phone numbers, addresses and emails of the professionals handling your finances, such as an attorney, CPA, financial planner, life insurance agent and stockbroker. Finally, write down your wishes for any special charitable donations to be made in your memory.
To learn more, contact your Smolin representative.
Choosing an executor is one of the most important decisions in the estate planning process. This person (or institution) will be responsible for carrying out your wishes, managing assets, paying debts and taxes, distributing property to beneficiaries and more.
Your first instinct may be to name your spouse, adult child or other close family member as executor. While that decision may feel natural, it’s not always the best choice. Co-appointing a professional advisor alongside a trusted family member can provide a more effective and balanced solution.
Your executor has a variety of important duties, including:
For someone without financial, legal or tax expertise, these responsibilities can feel overwhelming — especially while grieving. Even highly capable family members may lack the time or experience needed to administer an estate efficiently.
Mistakes can result in delays, disputes or even personal liability. Executors are legally responsible for acting in the best interests of the estate and its beneficiaries. If errors occur — such as missed tax deadlines or improper distributions — the executor may be held accountable.
When a family member serves as sole executor, emotional tensions can arise. Sibling rivalries, blended family dynamics or disagreements about asset values can quickly escalate.
Even when everyone has good intentions, beneficiaries may question decisions about timing, asset sales or expense payments. The executor may feel caught between honoring the deceased’s wishes and preserving family harmony. Needless to say, these situations can strain relationships, sometimes permanently.
A practical alternative is to name both a trusted family member and a professional advisor, such as a CPA, estate planning attorney or corporate fiduciary, as co-executors. This structure can offer several key benefits, such as:
Technical expertise. A professional advisor can bring knowledge of tax law, probate procedures, accounting requirements and regulatory compliance. This reduces the risk of costly mistakes and helps ensure deadlines are met.
Objectivity. A neutral third party can help mediate disagreements and make decisions based on fiduciary standards rather than emotions. This can protect family relationships and minimize conflict.
Shared responsibility. Administering an estate can be time consuming. Dividing responsibilities allows the family member to focus on personal matters while the professional handles technical and administrative tasks.
Continuity and stability. If a family member becomes overwhelmed, ill or otherwise unavailable, a professional co-executor can provide continuity. Estates often take months — or even years — to settle.
Co-appointing a professional doesn’t mean excluding family involvement. In fact, it often enhances it. The family member remains involved in decision-making and ensures that your personal wishes and family values are honored. Meanwhile, the professional ensures that legal and financial matters are handled efficiently and correctly.
For larger or more complex estates — such as those involving business ownership, multiple properties or significant investments — this collaborative model can be especially valuable. Contact a Smolin representative if you have questions about having co-executors or choosing them.
Missing direct deposit information could delay your tax refund by six weeks or more.
The IRS has begun issuing CP53E notices to taxpayers who requested refunds but did not include bank account information for direct deposit on their 2025 Form 1040.
When bank information is missing from Form 1040, the IRS must issue a paper check instead of a direct deposit, resulting in significant refund delays and unnecessary follow‑up.
If you are expecting a refund, be sure your bank account information is included when your tax return is prepared. Direct deposit is the fastest way to receive your refund. Additionally, always review your Form 1040 carefully to ensure accuracy.
To learn more about CP53E notices and how to avoid refund delays, visit Understanding your CP53E notice.
