Returning Value Blog

If you’re claiming deductions for business meals or vehicle expenses, expect the IRS to closely review them. In some cases, taxpayers have incomplete documentation or try to create records months (or years) later. In doing so, they fail to meet the strict substantiation requirements set forth under tax law. Tax auditors are adept at rooting out inconsistencies, omissions, and errors in taxpayers’ records, as illustrated by one recent U.S. Tax Court case. (T.C. Memo. 2024-82)

The IRS recently released the 2026 inflation-adjusted amounts for Health Savings Accounts (HSAs).Employees will be able to save a modest amount more in their HSAs next year.

Many businesses turn to independent contractors to help manage costs, especially during times of staffing shortages and inflation. If you’re among them, ensuring these workers are properly classified for federal tax purposes is crucial. Misclassifying employees as independent contractors can result in expensive consequences if the IRS steps in and reclassifies them. It could lead to audits, back taxes, penalties, and even lawsuits.

For many businesses, accounts receivable (AR) are more than just a line item on the balance sheet. This account provides a key indicator of potential cash flow, customer relationships and overall financial health. So proactive AR management is critical. The AR aging report has long been a cornerstone of expediting collections and reducing credit risk, but it’s taken on greater significance with the implementation of new accounting rules for recognizing credit losses.

Some tax sins are much worse than others. An example is failing to pay over federal income and employment taxes that have been withheld from employees’ paychecks. In this situation, the IRS can assess the trust fund recovery penalty, also called the 100% penalty, against any responsible person.

As a business owner, you may be eligible to claim home office tax deductions that will reduce your taxable income. However, it’s crucial to understand the IRS rules to ensure compliance and avoid potential IRS audit risks. There are two methods for claiming this tax break: the actual expense method and the simplified method. Here are answers to frequently asked questions about the tax break.

Businesses in certain industries employ service workers who receive tips as a large part of their compensation. These businesses include restaurants, hotels, and salons. Compliance with federal and state tax regulations is vital if your business has employees who receive tips.

The nationwide price of gas is slightly higher than it was a year ago, and the 2025 optional standard mileage rate used to calculate the deductible cost of operating an automobile for business has also gone up. The IRS recently announced that the 2025 cents-per-mile rate for the business use of a car, van, pickup, or panel truck is 70 cents. In 2024, the business cents-per-mile rate was 67 cents per mile. This rate applies to gasoline and diesel-powered vehicles as well as electric and hybrid-electric vehicles.

New and used “heavy” SUVs, pickups, and vans placed in service in 2025 are potentially eligible for big first-year depreciation write-offs. One requirement is that you use the vehicle more than 50% for business. If your business usage is between 51% and 99%, you may be able to deduct that percentage of the cost in the first year. The write-off will reduce your federal income tax bill and your self-employment tax bill, if applicable. You might get a state tax income deduction too.

Owners’ equity is the difference between the assets and liabilities reported on your company’s balance sheet. It’s generally composed of two pieces: capital contributions and retained earnings. The former represents the amounts owners have paid into the business and stock repurchases, but the latter may be less familiar. Here’s an overview of what’s recorded in this account.