Loaning Money to Family | Senior Tax Deduction

THE JANUARY BAROMETER: In 1972, the late Yale Hirsch introduced the January Barometer phenomenon. Short version—if the S&P 500 is up in January, stocks often have a “good” year.

IDLE CASH: Cash management is often ignored. Life gets busy. Cash is squirrelled away in a number of different banks and accounts. But it’s a huge variable for future financial ability—and it has nothing to do with making more or spending less money. It’s just habit and discipline. After taxes and inflation, CDs, money market accounts, savings, and checking accounts are not helping you preserve purchasing power. Give your idle cash a job.

NEW SENIOR TAX DEDUCTION: Starting with 2025 tax returns, seniors aged 65 or older can claim a new tax deduction of up to $6,000 for individuals or $12,000 for married couples filing jointly.

Key Eligibility Requirements:

• Must be 65+ by December 31, 2025
• Modified adjusted gross income (MAGI) of $75,000 or less (individual) or $150,000 or less (married couples)
• Higher earners may qualify for a reduced deduction or no deduction at all

Important Details: This is a tax deduction, not a tax credit, meaning it reduces your taxable income rather than directly reducing your tax bill. For example, if you have $60,000 in taxable income, this deduction would lower it to $54,000, potentially resulting in a larger refund or lower tax liability.

Limited Duration: This deduction is currently scheduled for tax years 2025-2028 only. What happens after 2028 will depend on future legislation.

How to Claim: Your CPA, EA, or tax preparer will identify your eligibility and apply the deduction based on your age, income, and filing status.

Q4 CONSUMER SPENDING: The consumer, the largest contributor to US GDP, is continuing to spend.

LOANING MONEY: It’s easy to get asked for money from friends and family. Before long, someone is going to ask you for money, maybe even a loan. You might be shocked at how much they ask for.

Questions to consider before you say “yes”:

• To preserve the relationship, should you consider a gift instead of a loan?
• If you don’t get paid back, what are the real-life implications for you & your family?
• How will your annual family 4th of July BBQ or college roommate annual ski trip be impacted if _________ (enter name here) chooses not to pay you back?
• How will the loan terms and conditions be documented or enforced? See IRS rules.
• If the borrower dies, is there life insurance in place to cover the debt?
• Is the borrower’s spouse aware of the recent “ask”?
• Do you have or need any evidence of the hardship or need that is causing them to ask for a loan?
• Is there any history of gambling, addiction, or mismanagement from the borrower?
• Why do you feel compelled to help?

Be wise. Create healthy boundaries. When needed, learn to say no.

THE RESTAURANT WITH 1 EMPLOYEE: Worth the watch.

*The views expressed represent the opinions of Compass Ion Advisors, LLC, as of the date noted and are subject to change. These views are not intended as a forecast, a guarantee of future results, an investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial, or legal advice or service to any person. The information contained has been compiled from sources deemed reliable, yet accuracy is not guaranteed.

Additional information, including management fees and expenses, is provided on our Form ADV Part 2 available upon request or at the SEC’s Investment Adviser Public Disclosure website here. Past performance is not a guarantee of future results.