Latest IRS News
For Small Businesses

U.S. Bookkeeping Resource

Published since September 2010 | Updated November 22, 2025

On this page you'll find the latest IRS News and essential small business information relevant to ... the hard working ... self-employed ... U.S. business owner who does their own bookkeeping.

Be sure to visit IRS's video portal for videos on numerous small business matters. The portal is located at irsvideos.gov.

...

Pour yourself a a cool glass of water ...

then spend your break glancing over the IRS News for items that may be of interest to your business ...

or poke about other bookkeeping pages to book mark and come back to later when you have more time.

Notice to Site Visitor

I initially developed this page as a handy reference for myself. While I do my best to ensure it is accurate and complete, I make it available for your use with the understanding that I cannot be held liable for errors and/or omissions. Please make yourself familiar with my site policies prior to relying on any of the information on this site.

Life's up and downs provide windows of opportunity
to determine your values and goals

Think of using all obstacles as stepping stones
to build the life you want

-- Marsha Sinetar --

Quarterly Interest Rates Announced

November 13, 2025

IRS have announced that interest rates will remain the same for the first quarter of 2026.

More >> IRS Quarterly Interest Rate Details

OBBBA Payroll & Employee Benefits Changes for Small Business Owners

October 15, 2025

While reviewing the latest payroll and employee benefits changes for 2026, I found this BDO USA analysis [1] of the One Big Beautiful Bill Act (OBBBA) that highlights several important changes for U.S. small business owners with employees. Here's my takeaways after reading the article.

The One Big Beautiful Bill Act (OBBBA) introduced significant payroll and employee benefits changes that U.S. small business owners need to understand and prepare for. Most provisions take effect in 2026, giving you time to update your systems and processes.

Key Changes Affecting Small Business Owners

• "No Tax on Tips" Deduction (2025–2028)
  
  Employees in qualifying tip-based occupations can deduct up to $25,000 in tips on their personal tax returns. Here is an important to note for employers. You must continue withholding federal income and payroll taxes on all tips as usual. This is a personal income tax deduction employees claim on their Form 1040. It is not a payroll tax exemption.
  
  Employers must track and report "qualified tips" separately starting in 2026.
  
  For 2025, approximate qualified tips earned and report to employees (consider using W-2 Box 14). The IRS published a list of qualifying tip-based occupations on September 22, 2025.

• "No Tax on Overtime" Deduction (2025–2028)
  
  Employees can deduct up to $12,500 ($25,000 joint filers) in qualified overtime on personal returns. Note: (1) Only FLSA-required federal overtime qualifies (not state/local or contractual overtime). (2) Only the premium portion qualifies (the "half" in time-and-a-half).
  
  Action needed: Track FLSA overtime separately from other overtime. Report qualified overtime to employees for 2025 (use W-2 Box 14 or separate statement).

• Higher Form 1099 Reporting Threshold
  
  Effective 2026, the threshold increases from $600 to $2,000 for Form 1099-NEC and 1099-MISC. Starting in 2027, the threshold is indexed for inflation. This change only affects Form 1099-NEC and 1099-MISC for independent contractors. You must still issue a W-2 to every employee, regardless of how much you paid them.
  
  Action needed: Update your vendor payment tracking and contractor onboarding procedures

• Permanent Employee Benefit Enhancements (2026 and beyond)
  
  The Student Loan Repayment of $5,250 annual tax-free assistance now permanent (an indexed for inflation).
  
  The Dependent Care FSA contribution limit increases to $7,500 ($3,750 married filing separately.)
  
  The Paid Family & Medical Leave Credit is now permanent and expanded.
  
  The Employer Child Care Credit has increased to $500,000 ($600,000 for small businesses).

• New: Trump Accounts for Employee Children
  
  Employers can contribute up to $2,500 tax-free to employee children's Trump accounts. It is available for U.S. citizen children under 18 with Social Security numbers. No contributions allowed before July 4, 2026.
  
  Action needed: Consider offering as a new employee benefit.

What You Need to Do Now

For 2025 (Immediate):

• Approximate and report qualified tips and overtime to affected employees.
• Use W-2 Box 14 or provide separate statements.

Before 2026:

• Update payroll systems to track qualified tips and overtime separately.
• Review and update benefit plan documents.
• Adjust vendor payment processes for new $2,000 Form 1099 threshold.
• Prepare employee communications about new deductions.
• Consider whether to offer Trump accounts as an employee benefit.

Many of these changes require system updates and new reporting capabilities. Contact your payroll service provider to ensure they're ready for 2026 reporting requirements.

[1] Read the full October 2, 2025 BDO USA analysis for a deeper dive. OBBBA Introduces Key Payroll & Employee Benefits Changes.

Payroll Compliance Reminders

While implementing OBBBA changes, remember these ongoing payroll fundamentals:

• Employees claiming exempt from FITW are not exempt from FICA taxes.
• New hires who haven't submitted a W-4 must have withholding calculated as single with zero adjustments.
• Vacation buy-backs should be taxed as supplemental wages.

MORE >> For comprehensive guidance on managing payroll compliance, see my Payroll manual and supporting articles series of articles. U.S. Employee Payroll Taxes manual and supporting articles

Note: This new item focuses on provisions most relevant to small business owners with employees. As with all complex tax related issued, it is prudent to consult with your tax professional regarding your specific situation.

One Big Beautiful Bill Act of 2025

September 1, 2025

While reviewing the latest cross-border tax developments, I found this BDO Canada analysis [1] of the One Big Beautiful Bill Act (OBBBA) that highlights several important changes for small business owners. Here's my takeaways after reading the article.

The One Big Beautiful Bill Act (OBBBA) was signed into U.S. law on July 4, 2025. It introduces significant tax reforms affecting small business owners on both sides of the border. Here's what self-employed individuals and small business owners need to know:

Key Changes for Small Business Owners

• Controlled Foreign Corporation (CFC) Rules Modified
  
  U.S. citizens and Green Card holders who own Canadian private companies need to pay attention. The 'GILTI' tax has been renamed 'Net CFC Tested Income' (NCTI). The minimum effective foreign corporate tax rate necessary to offset U.S. tax increases from 13.125% to 14%. Impact to U.S. persons owning more than 50% of Canadian private companies is they may face additional U.S. tax if Canadian corporate tax rates (especially with small business deductions) don't meet the 14% threshold. Most CFC changes take effect in 2026.

• New 1% Excise Tax on Remittance Transfers
  
  Effective in 2026, a 1% tax applies to certain cash transfers sent outside the U.S.. The good news is routine transfers from U.S. financial institutions to Canadian banks using regular banking channels are exempt. The tax primarily targets cash, money orders, and similar physical instruments sent through remittance transfer providers. Regular business banking transactions should not be affected.

• Estate Tax Planning Gets More Certainty
  
  Estate and gift tax exemption increases to $15 million in 2026 (indexed for inflation). An important change is there is no sunset clause. This change is permanent. It provides planning certainty for business owners with U.S. assets or real estate.

What This Means for You

If you're a U.S. citizen or Green Card holder operating a Canadian business:

• Review your corporate structure before 2026.
• Calculate whether your effective Canadian tax rate meets the new 14% threshold.
• It would be prudent to consult with a cross-border tax professional.

If you regularly transfer funds between the U.S. and Canada:

• Standard banking transfers remain unaffected.
• Avoid using cash-based remittance services (such as Western Union, MoneyGram, Ria Money Transfer) to minimize the 1% excise tax.

Most provisions take effect in 2026, giving business owners time to plan and adjust their structures accordingly.

[1] Read the full August 26, 2025 BDO Canada analysis for a deeper dive. Understanding the One Big Beautiful Bill Act: What Canadian individuals need to know.



Note: This summary focuses on small business cross border implications. As these are complex issues, it would be wise to consult with a qualified tax professional regarding your specific situation.

2025 Standard Mileage Rate

REMINDER You will need your business mileage and total mileage for 2024 tax preparation. Make a note to get your odometer reading as close to December 31 as possible.

December 19, 2024

The  IRS released the 2025 standard mileage rate today. The standard mileage rate for business miles driven will increase to 70.0 cents per mile from 2024's rate at 67 cents per mile. See Notice 2025-5 which also contains optional 2025 standard mileage rates as well as maximum FMV of 2025 employer-provided autos.

The rates apply to electric, hybrid, gasoline and diesel-powered vehicles.

The Journal of Accountancy has a good summary of Rev Proc 2019-46 - guidance on standard mileage rules updated for TCJA - that was released on November 15, 2019.

For the period 2018 to 2025, the Tax Cuts and Job Act (TCJA) suspended the miscellaneous itemized deduction under Sec. 67 for unreimbursed employee business expenses. This means the standard mileage rate CANNOT be used for claiming deductions for unreimbursed employee business expenses from 2018 to 2025. The exception is for members of the U.S. armed forces on active duty, who can still use this deduction. In other words, if you are a regular employee incurring business-related travel expenses without reimbursement from your employer, you cannot deduct these expenses using the standard mileage rate during this time frame. However, if you are an active duty military member of the U.S. armed forces, you may still be eligible to use the standard mileage rate for deductions related to moving expenses that are not reimbursed.

The TCJA also repealed the moving expense deduction for individual taxpayers. With the exception of the U.S. armed forces on active duty, this will be in effect from 2018 to 2025.

Medical rates / moving rates for U.S. armed forces will remain the same as 2024 at 21 cents per mile while charitable rates continued to hold steady at 14 cents per mile as the rate is set by statute. See the IRS news for more information:

https://www.irs.gov/newsroom/IRS increases the standard mileage rate for business use in 2025; key rate increases 3 cents to 70 cents per mile 

Audit-Ready Tip - Mid-Year Rate Changes
In rare years when the IRS adjusts rates mid-year (like they did in 2011 due to gas price spikes), you'll need to track mileage for each rate period separately. If this happens, the IRS will announce it prominently. For example, in 2011 you had to log your auto mileage from January to June AND July to December. Then you also needed your business mileage and total mileage for both periods for 2011 tax preparation. So you needed to get your odometer reading as close to June 30 as possible as well as at December 31.

IRS Business Tax Account Now Available

December 16, 2024

"The Internal Revenue Service continues to open its Business Tax Account (BTA) to a growing number of business taxpayers, expanding the useful features available. 

The latest expansion makes this online self-service tool for business taxpayers available to C corporations. In addition, a person who can legally bind the corporation, known as a Designated Official (DO), can now access BTA on behalf of their S corporation or C corporation. 

New features also include tax return, tax account and entity transcripts for the current tax year and some previous tax years, with some transcripts now available in Spanish."

Sole proprietors have full access to features and business information and can add employees to the account.

Read More >> IRS Business Tax Account

Source: IRS Newswire FS-2024-31

2025 Social Security Wage Base

2025 Withholding Tax Tables Available Now

December 9, 2024

In early December, 2024, the IRS released Publication 15-T Federal Income Tax Withholding Methods detailing the 2025 withholding payroll taxes and new income tax withholding tables.

The employer rate remains unchanged at 6.2%. The wage base increased to $176,100. Medicare rates remain at 1.45% for both employee and employer with no wage base limit. The additional medicare tax withholding of 0.9% for employees earning in excess of $200,000 ($250,000 for married couples filing jointly) remains in place. Income tax rates from recent years remains in effect.

Income tax withholding tables were adjusted by COLA. MoneyChimp.com has a great tool showing you the different federal tax brackets by year.

Publication 15, (Circular E) will be revised and released in mid-December, 2024.

What This Means For You

• Update your payroll software or spreadsheets with the new wage base.
• Review your own reasonable compensation if you're an S-corp owner.
• If you're planning to hire in 2025, budget for these rates.
• Canadian readers, this information is U.S.-specific. CRA releases CPP/EI rates and tax withholding tables separately.

EVERGREEN MINI-TUTORIAL
Understanding Federal Income Tax Withholding (FITW)

If you're a solopreneur thinking about hiring your first employee (or you've just hired one) federal income tax withholding can feel like a black box.

Here's the Cole's Notes version. When you pay an employee, you don't just hand over their gross wage. You withhold federal income tax based on what they indicated on their Form W-4, then you send that withheld amount to the IRS on their behalf (along with Social Security and Medicare taxes).

The withholding tables in Publication 15-T tell you how much to withhold based on (1) their filing status (single, married, head of household), (2) number of dependents or allowances claimed, and (3) their pay frequency (weekly, biweekly, monthly).

You're not calculating their actual tax bill. You're making an educated guess so they don't owe a fortune (or get a huge refund) at year-end.

You are probably wondering why this matters to you. Well, it's because you are legally responsible for withholding the right amount. Under-withholding can leave your employee with a surprise tax bill (and frustration aimed at you). Over-withholding means they're giving the government an interest-free loan.

Most payroll software handles this automatically once you enter the W-4 info. If you're doing it manually, Publication 15 walks you through it step-by-step.

One last thing. Withholding tables change almost every year because of inflation adjustments. That's why the IRS releases new tables each December. Set a reminder to check for updates so you're not using last year's numbers.

Tracing History - Introduction of Additional Medicare Tax

January 7, 2013

The American Taxpayer Relief Act introduced a 0.9% additional Medicare tax on high earners (above $200,000 individual / $250,000 joint). This additional tax is borne 100% by the employee; employers do not match it. The Medicare tax was also expanded to cover investment income for high-income individuals.

1099-K threshold changes affected by OBBBA of 2025
July 2025

The One Big Beautiful Bill Act (OBBBA) changed the Form 1099-K reporting threshold for 2025, returning it to the previous threshold of $20,000 and 200 transactions. This supersedes the phased-in plan announced by the IRS in Notice 2024-85. 

Before the OBBBA became law in July 2025, the IRS had outlined a transition plan in Notice 2024-85 to gradually lower the threshold, which would have been $2,500 for the 2025 tax year. However, the OBBBA effectively repealed the $600 threshold that was established by the American Rescue Plan Act of 2021 and restored the higher, original threshold. 

Therefore, for the 2025 tax year, third-party payment networks (like PayPal, Venmo, or online marketplaces) will only be required to issue a Form 1099-K to individuals who receive over $20,000 in payments AND (not or) have more than 200 transactions.

Audit Ready Tip
Even though the threshold is back to $20,000/200 transactions for 2025, the IRS still matches 1099-K amounts to reported income. If you receive a 1099-K, make sure your tax return reflects that income (or explains legitimate differences like refunds or personal transactions). Keep records that reconcile your payment processor reports to your books.

1099-K threshold for 2025 announced

November 29, 2024

The IRS issued Notice 2024-85 on November 26, 2024 guidance on transition relief for TPSOs (third-party settlement organizations). They are also known as payment apps and online marketplaces.

"TPSOs will be required to report transactions when the amount of total payments for those transactions is more than $5,000 in 2024; more than $2,500 in 2025; and more than $600 in calendar year 2026 and after."

The announcement also provided that the IRS will not assess penalties under sections 6651 (late filing and late payment of tax) or 6656 (late deposit of tax) for a TPSO’s failure to withhold and pay backup withholding tax during the calendar year for calendar year 2024. It will begin assessing penalties in 2025.

TPSOs that have performed backup withholding for a payee during calendar year 2024 must file a Form 945 and a Form 1099-K with the IRS and furnish a copy to the payee.

KPMG notes that "the transitional relief provided by Notice 2024-85 is limited to payments made in settlement of third-party network transactions and does not apply to payment card transactions that are also reportable on Form 1099-K."

More >> IRS Form 1099-NEC vs 1099-MISC vs 1099-K: What's The Difference

Tracing History

Filing Deadline Alignment

September 1, 2016

Beginning with the 2017 tax year, Form 1099-MISC (and other information returns) must be filed with the IRS by January 31, matching the W-2 deadline. Previously, paper 1099s were due February 28 and electronic filings March 31.

This change allowed the IRS to begin matching information returns to tax returns earlier in the filing season to detect identity theft and refund fraud, which had become increasingly prevalent. The earlier deadline also applies to Form 1099-K.

Audit Ready Tip
This earlier deadline also means you need to collect W-9s from contractors and reconcile your payments by mid-January, not late February—a habit worth building into your year-end routine.

IRS Matching Program Begins

August 27, 2013

The IRS began matching Form 1099-Ks to business returns to identify underreported income, establishing the IRS's enforcement approach for third-party payment reporting.

Initially, the IRS sent specialized notification letters (5035, 5036, 5039, 5043) to businesses with discrepancies. Today, this matching is part of the IRS's ongoing Automated Underreporter (AUR) program, and the IRS continues to send notices when they find mismatches.

If your reported gross receipts don't align with your 1099-K amounts, expect to receive a CP2000 notice or other correspondence requesting an explanation or proposing additional tax. This underscores the importance of reconciling payment processor reports to your books and explaining any differences (refunds, chargebacks, personal transactions) on your tax return.

Form 1099-K Introduced

January 11, 2012

Form 1099-K was introduced for payment processors (PayPal, Amazon, credit card companies, banks) to report payments exceeding $20,000 and 200 transactions. Payments reported on 1099-K must be excluded from Form 1099-MISC to avoid duplicate reporting. All income must be reported on tax returns regardless of whether a 1099-K or 1099-MISC is received.

IRS Vehicle Depreciation Limits For Small Business Owners
OBBBA (One Big Beautiful Bill Act) of 2025 Changes
July 2025

The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, permanently restored 100% bonus depreciation for qualifying property acquired after January 19, 2025.

The OBBBA also significantly increased Section 179 expensing limits from $1,250,000 to $2,500,000 for 2025, with the phase-out threshold rising to $4,000,000 from $3,130,000.

This is a game-changer for business vehicle purchases, particularly heavy vehicles over 6,000 lbs GVWR. The key impact for heavy vehicles (SUVs, pickups, vans over 6,000 lbs) purchased after January 19, 2025 is they can potentially be fully deducted in year one using bonus depreciation with no dollar cap.

The luxury auto depreciation caps for small vehicles (≤6,000 lbs) remain unchanged from the February 2025 IRS announcement.

2025 IRS Vehicle Depreciation Limits For Small Business Owners
February 2025

On February 12, 2025, the IRS updated the depreciation deduction limits for vehicles first placed into service in 2025 in Revenue Procedure 2025-16. 

After three years, rates decreased for automobiles to which bonus depreciation is applied to $20,200 for 2025 ($20,400 for 2024). The term "passenger automobiles" included trucks and vans.

If bonus depreciation does not apply, the 2025 first-year limitation is $12,200 ($12,400 in 2024), and the succeeding years' limitations are the same as for vehicles eligible for the bonus depreciation.

The succeeding-year limitations for bonus and no bonus are:

• 2nd tax year - $19, 600 (2024 - $19,800)
• 3rd tax year -  $11,800 (2024 - $11,900)
• Each succeeding year - $7,060 (2024 - $7,160)

Fixed and variable rate (FAVR) increased the standard automobile to $61,200 ($62,000 in 2024) including light trucks and vans. The term "passenger automobiles" includes trucks and vans. See Notice 2025-05 (released January 14, 2025) for more information.

These limits must be prorated for business use of your personal vehicle when it is less than 100%. You must use the straight line ADS method if your business use is below 50%. In other words, this means you would not be eligible for bonus depreciation.

Year One Limits	Auto Bonus Rules	Auto No Bonus Rules
2025	$20,200	$12,200
2024	$20,400	$12,400
2023	$20,200	$12,200
2022	$19,200	$11,200
2021	$18,200	$10,200

Limits	Year Two	Year Three	Remaining Years
2025	$19,600	$11,800	$7,060
2024	$19,800	$11,900	$7,160
2023	$19,500	$11,700	$6,960
2022	$18,000	$10,800	$6,460
2021	$16,400	$9,800	$5,860

EVERGREEN MINI-TUTORIAL
Understanding IRS Vehicle Depreciation Rules
Last Updated: November 2025 (reflects OBBBA changes)

Note: This new item focuses on provisions most relevant to small business owners with employees. As with all complex tax related issued, it is prudent to consult with your tax professional regarding your specific situation.

If you use a vehicle for business, understanding IRS depreciation limits can save you thousands. But the rules are confusing. Here's what you need to know.

Understanding the Two Types of Vehicles
The IRS treats business vehicles very differently depending on their size. The dividing line is 6,000 pounds GVWR (Gross Vehicle Weight Rating). This weight rating is NOT how much your vehicle weighs when you drive it—it's the maximum total weight the manufacturer says it can safely carry, including passengers and cargo.

Why does this matter?
Because Congress decided years ago that they didn't want businesses writing off expensive luxury cars too quickly. So they created special rules called "luxury auto limits" under Section 280F that cap how much you can deduct each year on smaller vehicles, even if the vehicle costs $100,000.

Type 1. Small Vehicles (6,000 lbs GVWR or Less)
These include most cars, minivans, crossovers, small SUVs, and compact pickups. If your vehicle weighs 6,000 pounds or less according to its GVWR, you're stuck with the "luxury auto" depreciation caps. This means even if you buy a $75,000 luxury sedan and use it 100% for business, the IRS will only let you deduct a maximum of $20,200 in the first year (2025, with bonus depreciation). The rest gets spread over many years using the annual limits.

Examples of vehicles typically under 6,000 lbs: 

• Sedans (Honda Accord, Toyota Camry, BMW 5-series)
• Minivans (Honda Odyssey, Toyota Sienna)
• Small SUVs (Honda CR-V, Toyota RAV4, Mazda CX-5)
• Compact pickups (Ford Maverick, Honda Ridgeline)

Type 2. Heavy Vehicles (Over 6,000 lbs GVWR)
These include most full-size SUVs, large pickups, and cargo vans. Because these are considered "work vehicles," Congress decided not to apply the luxury auto caps to them. This means if you buy a qualifying heavy vehicle and use it more than 50% for business, you can potentially deduct much more (or even the entire cost) in the first year using bonus depreciation. There's no annual dollar cap like there is for small vehicles.

However, there's a catch. If you use Section 179 expensing (instead of bonus depreciation), SUVs and crossovers between 6,000 and 14,000 lbs have a special cap of $31,300 for 2025. But pickups and vans with a cargo bed (no rear passenger seating) don't have this cap.

Examples of vehicles typically over 6,000 lbs:

• Full-size SUVs (Chevy Tahoe, Ford Expedition, Cadillac Escalade)
• Full-size pickups (Ford F-150, Chevy Silverado, Ram 1500)
• Cargo vans (Ford Transit, Mercedes Sprinter, Ram ProMaster)
• Heavy-duty trucks (Ford F-250/350, Chevy 2500/3500)

How to Find Your Vehicle's GVWR
You don't need to guess which category your vehicle falls into. Every vehicle has a sticker. It's usually on the driver's door jamb (the frame area you see when you open the driver's door). This sticker shows the GVWR in pounds. Look for wording like "GVWR: 6,850 lbs" or "Gross Vehicle Weight Rating: 5,850 lbs".

If the number is 6,000 or less, you're subject to the luxury auto limits. If it's 6,001 or more, you're in the heavy vehicle category with much better depreciation options.

Audit Ready Tip - Take a photo of this sticker when you buy a business vehicle. You'll need it for your tax records. It proves which depreciation rules apply to your vehicle.

Section 179 vs. Bonus Depreciation: What's the Difference?
Both methods let you deduct vehicle costs faster, but they work differently. Here's what matters for solopreneurs:

Feature	Section 179 Expensing	Bonus Depreciation
How it works	You elect to "expense" (deduct immediately) qualifying property	Automatic "extra" first-year depreciation allowance
2025 overall limit	$2,500,000 (across all business assets) as per OBBBA	No dollar cap
SUV-specific limit	$31,300 cap for SUVs/crossovers over 6,000 lbs	No cap for any heavy vehicles
2025 rate	Up to 100% of cost (within limits)	100% (purchased after Jan 19, 2025) or 40% (purchased before Jan 20, 2025)
Income limitation	Cannot create a loss; limited to taxable income	Can generate a Net Operating Loss
Control	You decide which assets to apply it to	Applies automatically to all qualifying property (unless you elect out)
Phase-out	Begins at $4,000,000 in total purchases	No phase-out

Which is Better for Vehicles?

Vehicle Type	Best Method for 2025	Why
Small vehicle (≤6,000 lbs)	Doesn't matter much	Luxury auto caps limit you either way
Heavy SUV/crossover (>6,000 lbs)	100% Bonus Depreciation	No cap vs. $31,300 Section 179 cap
Heavy pickup/van (>6,000 lbs)	100% Bonus Depreciation	No cap; Section 179 also has no cap for these, but bonus is simpler

How Does The Section 179 Phase-Out Work?
The Section 179 phase-out reduces the maximum deduction a business can take, dollar-for-dollar, once the total amount spent on qualifying equipment exceeds a specific spending limit. This mechanism is designed to direct the tax incentive toward small- and mid-sized businesses. The phase-out applies to businesses purchasing over $4 million in assets annually.

Practical tip: For heavy vehicles purchased after January 19, 2025, use 100% bonus depreciation for maximum first-year deduction.

The Critical 50% Business Use Rule
To qualify for bonus depreciation or Section 179 on any vehicle, your business use must exceed 50%. You must track the date of each trip, the destination (or route), the business purpose, and the odometer readings (start and end of year, plus periodic readings).

This matters because without documentation, the IRS can disallow your entire deduction. You need to keep records "contemporaneously" (as you go, not reconstructed at tax time). If business use drops to 50% or below in a later year, you may face "recapture" (paying back previous deductions).

Audit red flag: The IRS scrutinizes vehicle deductions heavily. Good records = audit protection.

There is a simpler alternative if you don't want to track depreciation, actual expenses, and deal with the recapture rules. It is the standard mileage rate.

Note for Self-Employed: The FAVR rates mentioned above apply only to employer reimbursement programs. As a self-employed person, you'll use either the standard mileage rate or actual expense method with depreciation limits.

Historical Vehicle Depreciation Limits (2021-2025)

Use these tables when preparing amended returns or completing backwork.

Year One Limits	Auto Bonus Rules	Auto No Bonus Rules
2025	$20,200	$12,200
2024	$20,400	$12,400
2023	$20,200	$12,200
2022	$19,200	$11,200
2021	$18,200	$10,200

Limits	Year Two	Year Three	Remaining Years
2025	$19,600	$11,800	$7,060
2024	$19,800	$11,900	$7,160
2023	$19,500	$11,700	$6,960
2022	$18,000	$10,800	$6,460
2021	$16,400	$9,800	$5,860

TCJA Section 179 Guidance 

December 24, 2018

The IRS issued Revenue Procedure 2019-08 ... guidance on Section 179 expenses and Section 168 (g) depreciation affected by the Tax Cuts and Job Act (TCJA). The rules, in general, apply to 2018 tax years on.

See the IRS news for more information at newsroom/irs-issues-guidance-on-section-179-expenses-and-section-168g-depreciation-under-tax-cuts-and-jobs-act

2026 COLA

October 24, 2025

Social Security Administration released the cost of living adjustment (COLA) for 2026 on October 24, 2025. It was a bit later than usual due to the government shutdown. There will be a 2.8% increase for 2026.  The 2025 COLA increase was 2.5% and 3.2% in 2024.

The 2026 Social Security wage base is indexed to the national average wage index and is usually announced at the same time as COLA. The Social Security tax maximum will rise to $184,500 (2025 in $176,100).

Maximum employee Social Security (OASDI) tax for 2026 will be $11,439.00 (6.2% of the $184,500 wage base). Employers match the same amount. For the self‑employed, the OASDI maximum is $22,878.00 (12.4%).

Medicare payroll tax rate is 1.45% (employee) + 1.45% (employer), no wage cap. The Additional Medicare Tax of 0.9% applies to employee wages above $200,000 (with filing‑status thresholds on the tax return); employers do not match this additional tax. The rates will remain unchanged in 2026. 

What This Means For You:

• Update SE tax and payroll estimates using the new wage base.
• S‑corp owners should revisit reasonable compensation and 2026 withholding.
• Refresh your bookkeeping templates and payroll software for the 2026 settings.

I have updated the Self Employment Tax (SECA) Table and FICA Employee Payroll Taxes Table on this site to reflect the 2026 changes.

Sources: Social Security Press Office Releases> 2025-10-24> Social Security Announces 2.8 Percent Benefit Increase for 2026. (You can filter by year), SSA COLA overview: https://www.ssa.gov/cola/

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PREVIOUS IRS NEWS RELATED TO THIS TOPIC
to assist with backwork

Year	COLA	Social Security Wage Base	Max Employee SS Tax (6.2%)
2026	2.8%	$184,500	$11,439.00
2025	2.5%	$176,100	$10,918.20
2024	3.2%	$168,600	$10,453.20
2023	8.7%	$160,200	$9,932.40
2022	5.9%	$147,000	$9,114.00
2021	1.3%	$142,800	$8,853.60
2020	1.6%	$137,700	$8,537.40
2019	2.8%	$132,900	$8,239.80

Note: SSA COLA is based on CPI‑W; the Social Security wage base is indexed to the National Average Wage Index (NAWI). IRS inflation adjustments are separate (brackets, standard deduction, retirement/HSA limits, etc.) and use chained CPI‑U, announced each fall.

Medicare payroll tax has no wage cap (1.45% employee + 1.45% employer), with an additional 0.9% tax above certain thresholds. Medicare Part B premiums are personal insurance costs and are separate from the Medicare payroll tax that appears on paychecks. Medicare Part B premiums are released by The Department of Health and Human Services.

Optional methods (Schedule SE): In low‑profit or loss years, you may elect the farm or nonfarm 'optional methods' to compute self‑employment tax to earn up to four quarters of coverage. Eligibility rules and dollar limits change each year and are separate from COLA and the wage base. See the current Schedule SE instructions and Publication 334.

Forecasts: The SSA Trustees Report publishes 10‑year projection tables for future COLAs (planning estimates only). Actual COLA is set each October using CPI‑W, and the Social Security wage base is indexed to the National Average Wage Index. For the latest projections, see the SSA Trustees Report (see 'Assumptions' tables). Use the estimates cautiously as projections change with inflation and wage trends.

Per-Diem Rates For Business Travel
FY 2026 Rates: Effective October 1, 2025 - September 30, 2026

September 30, 2025

What Changed from 2025? Good news! The core rates held steady for FY 2026.

What Changed from 2025?

Rate Component	FY 2025	FY 2026	Change
Standard M&IE (meals & incidentals)	$68	$68	No change
High-cost M&IE (IRS high-low)	$86	$86	No change
Low-cost M&IE (IRS high-low)	$74	$74	No change

What you need to verify
Cities can be added or removed, and some have seasonal rates (e.g., ski resorts in winter). Verify additions/removals in the IRS high-cost locality list found in 2026 Notice 2025-54. 

Important Change 2026
The One Big Beautiful Bill Act (OBBBA) of 2025 permanently repealed the deduction for unreimbursed employee travel expenses starting in 2026. From 2018-2025, these expenses were not deductible for most employees due to the TCJA (Tax Cuts and Jobs Act) of 2017.

Best practice
Get reimbursed through an accountable plan when possible—it's better tax treatment for both you and your employer.

Here's where you can get more information from official sources. Just google them to find them.

• GSA Per Diem Lookup Map (find rates by city)
• IRS 2026 Notice 2025-54 (official high-low rates & locality list)
• IRS Publication 463 (travel expense rules)

CONUS Rates at a Glance

FY 2026 CONUS Per Diem — GSA vs IRS (High-Low) vs Transportation Industry

Item	GSA Standard CONUS	IRS High-Cost (High-Low)	IRS Low-Cost (High-Low)	Transportation M&IE (CONUS)	Transportation M&IE (OCONUS)
Total Per Diem	$178	$319	$225	N/A	N/A
Lodging	$110	$233	$151	N/A	N/A
Meals & Incidentals (M&IE)	$68	$86	$74	$80	$86
Incidentals Only	$5	$5	$5	$5	$5
Non-Standard Area Range	$68–$92	N/A	N/A	N/A	N/A

Here's historical rates in case you have backwork.

GSA Standard CONUS Per Diem — FY 2019 to FY 2026

Fiscal Year (Oct 1 to Sep 30)	Standard Total	Lodging	M&IE	M&IE NSA Range
FY 2019	$149	$94	$55	$55–$76
FY 2020 & FY 2021	$151	$96	$55	$55–$76
FY 2022	$155	$96	$59	$59–$79
FY 2023	$157	$98	$59	$59–$79
FY 2024	$166	$107	$59	$59–$79
FY 2025 & FY 2026	$178	$110	$68	$68–$92

IRS Special Per Diem (High-Low) — FY 2019 to FY 2026

Fiscal Year (Oct 1-Sep 30)	High Total	High Lodging	High M&IE	Low Total	Low Lodging	Low M&IE	Transp. M&IE (CONUS)	Transp. M&IE (OCONUS)	IRS Notice
FY 2019	$287	$216	$71	$195	$135	$60	$66	$71	2018-77
FY 2020	$297	$226	$71	$200	$140	$60	$66	$71	2019-55
FY 2021	$292	$221	$71	$198	$138	$60	$66	$71	2020-71
FY 2022	$296	$222	$74	$202	$138	$64	$69	$74	2021-52
FY 2023	$297	$223	$74	$204	$140	$64	$69	$74	2022-44
FY 2024	$309	$235	$74	$214	$150	$64	$69	$74	2023-68
FY 2025	$319	$233	$86	$225	$151	$74	$80	$86	2024-68
FY 2026	$319	$233	$86	$225	$151	$74	$80	$86	2025-54

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Sidebar: If you find the rules for business travel deductions very complicated ... and who doesn't ... take a look at this flowchart which simplifies the complicated.

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2023 Deposit Requirements for Employment Taxes

September 27 , 2022

The IRS has updated Notice 931, Deposit Requirements for Employment Taxes, to reflect the tax deposit rules for the 2023 tax year. These rules do not apply to FUTA. See Form 940 instructions for depositing FUTA.

If you file Form 941, Employer's Quarterly Federal Tax Return, your lookback period for 2020 begins July 1, 2021 and ends June 30, 2022.

You are a monthly depositor if you report $50,000 or less of Form 941 taxes for the lookback period ... and a semiweekly depositor if you report more than $50,000 of Form 941 taxes.

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PREVIOUS IRS NEWS RELATED TO THIS TOPIC
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March 16, 2011

2011 Form 941

The IRS now has the 2011 Form 941 with instructions available on their website.

Form 941 is the Employer's Quarterly Federal Tax Return form.

The notice discusses electronic deposit requirements that came into effect on January 1, 2011. The IRS announced in IR-2010-02 that the Treasury would no longer maintain the Federal Tax Deposit Coupon (Forms 8190 and 8109-B) system after December 31, 2010. As of January 1, 2011, federal tax deposits, including FUTA, are all made using electronic funds transfer payment system (EFTPS).

You may also want to look at (and perhaps subscribe to) the Social Security Administration's (SSA) / IRS Spring 2011 publication for employers called SSA/IRS Reporter. There is a one page article on page 4 outlining the Tax Changes for Small Businesses.

It covers:

• Health Insurance Deduction Reduces Self-Employment Tax
• General Business Credit for Employers
• Small Businesses Can Benefit from Higher Expensing/Depreciation Limits
• Depreciation Limits on Business Vehicles
• 50 or 100 Percent Bonus Depreciation
• Small Businesses To Use EFTPS for Deposits Beginning in 2011

There is also a good article on Spring Cleaning of Your Payroll Records by the American Payroll Association (APA). The APA will be holding a one day course between June 13 and June 24 this year in cities across the country.

Lots of other information in this quarterly newsletter.

IRS Meals and Entertainment Deductions
Updated July 2025

On July 4, 2025, the One Big Beautiful Bill Act (OBBBA) passed, and it's bringing some significant changes to how you can deduct business meals; specifically the meals you provide to your employees at the office.

Let me walk you through what's changing, what's staying the same, and why this matters if you're doing backwork for 2024, 2025, or 2026.

The Key OBBBA Changes (2026 Forward)

The big change is employer-provided meals for convenience drop from 50% deductible to 0% deductible after December 31, 2025.

What does that mean in plain English?
If you've been providing catered lunches for your team during long work days, or keeping the break room stocked with snacks, or buying pizza when everyone's working late ... those expenses were 50% deductible through 2025. Starting January 1, 2026, they're not deductible at all.

What's Staying the Same

• Business meals with clients or while traveling are still 50% deductible (this hasn't changed).
• Entertainment expenses are still 0% deductible (no change since TCJA in 2018). If meals are provided as part of an entertainment event, the food and beverage must be purchased or invoiced separately to be deductible
• Company-wide social events (like your annual holiday party) are still 100% deductible.
• Meals included as taxable compensation on employee W-2s are still 100% deductible

Complex Nuances Notes

• If you bill a client and properly substantiate/identify the meals, the client (not you) is the one subject to the 50% cap.
• 'Office snacks' are treated like other employer-provided meals - 50% deductible through 2025; 0% beginning 2026 (subject to the offshore/remote exceptions mentioned in Tracing History).
• The 100% deduction for company events applies when the event primarily benefits non–highly compensated employees.
• Travel meals remain subject to the 50% limit, even when using per diems.
  
• “Employer‑provided convenience meals” mostly matters only if you have employees and a workplace. Solo WFH owners buying their own meals at home are still not deductible. Client / travel meals remain 50%.
• If you have employees, reimbursement under an accountable plan doesn’t make meals 100% deductible. The 50% cap typically applies to the party that ultimately bears the cost unless treated as wages.

Why This Matters for Bookkeepers

If you're doing backwork or catch-up bookkeeping, you need to know which year you're working in. The rules for office snacks in 2024 are different from 2026.

This is why I always encourage you to (1) code expenses by category AND date, (2) keep detailed receipts (who attended, business purpose), and (3) separate food from entertainment on receipts when possible

When tax time rolls around, your CPA will thank you. And if you ever face an audit, you'll have everything organized by year with the correct deduction rate applied.

For clarity for bookkeepers, reimbursements under an accountable plan don’t turn meals into a 100% deduction. The 50% limit generally applies to whoever ultimately bears the cost (unless included in wages).

Jump to M&E Mini-Tutorial

Tracing History: How We Got Here

If you're just doing current-year bookkeeping, you can skip this section. But if you're catching up on prior years or just curious how we ended up with such complicated rules, here's the story.

2017 and Earlier: The "Good Old Days"
Before 2018, life was simpler:

• Entertainment with clients: 50% deductible
• Business meals: 50% deductible
• Office snacks and employee meals: 100% deductible

2018: The Tax Cuts and Jobs Act (TCJA)
Trump's first term brought major tax reform. The TCJA eliminated the deduction for entertainment expenses entirely which meant no more writing off golf games or concert tickets with clients, even if you discussed business.

The IRS issued guidance (Notice 2018-76 and IR-2018-195) clarifying entertainment was 0% deductible, business meals with clients were still 50% deductible (if you're present, it's not lavish, and it's with a business contact), and office snacks and on-site employee meals were dropped from 100% to 50%.

To deduct the food/beverage portion when entertainment is involved (e.g., a game or concert), the food must be purchased / invoiced separately from the entertainment. This is a best practice habit that should be a steadfast rule if you want audit ready books.

2021-2022: Pandemic Relief
The Consolidated Appropriations Act (December 2020) temporarily boosted the deduction for restaurant meals to 100% for 2021 and 2022. This was meant to help the struggling restaurant industry during COVID-19.

2023-2025: Back to Normal (Sort Of)
After the temporary boost expired, we returned to the TCJA rules of business meals with clients at 50%, office meals at 50%, and entertainment at 0%.

2025: OBBBA Changes Everything (Again)
And now, the OBBBA (passed July 4, 2025) eliminates the deduction for employer-provided convenience meals starting in 2026.

Post-2025 Exceptions:
OBBBA includes narrow exceptions for meals in offshore/remote resource and maritime settings. Most small, home‑based businesses can ignore this.

EVERGREEN MINI-TUTORIAL
Setting Up Your Chart of Accounts
Last Updated: November 2025

Here's where good bookkeeping habits save you headaches later. I recommend setting up separate accounts (or sub-accounts) for different types of meals. Here is one suggested account structure:

• 6500 - Meals & Entertainment (parent account)
• 6510 - Business Meals - Client/Travel (50% deductible)
• 6520 - Office Meals - Employee Convenience (50% through 2025; 0% after)
• 6530 - Company Events (100% deductible)
• 6540 - Entertainment (0% deductible)

You are probably wondering why you should separate them? Because when December 31, 2025 rolls around, you'll need to know exactly which expenses fall under which rule. And if you're doing bookkeeping for multiple years (catch-up work), you can apply the correct deduction rate for each period.

Now that you know how to track these expenses, let's make sure you're deducting the right ones in the first place.

IRS Guidance on Meals - 5 Point Meal Deduction Checklist

Back in 2018, the IRS issued guidance on meals deductions under the TCJA. Notice 2018-76 laid out five points necessary to claim an allowable business meal expense. They are still applicable even after the OBBBA changes of 2025. Let's take a look at how you can determine if your expense qualifies:

1. The expense is an ordinary and necessary expense under S162(a) paid or incurred during the taxable year in carrying on any trade or business;
2. The expense is not lavish or extravagant under the circumstances;
3. The taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages
4. The food and beverages are provided to a current or potential business customer, client, consultant, or similar business contact; and
5. In the case of food and beverages provided during or at an entertainment activity, the food and beverages are purchased separately from the entertainment, or the cost of the food and beverages is stated separately from the cost of the entertainment on one or more bills, invoices, or receipts. The entertainment disallowance rule may not be circumvented through inflating the amount charged for food and beverages.

Before you code that lunch receipt to 6510, make sure it checks these boxes. It's a habit that helps keep your books audit ready and may just protect you if you're ever audited.

Note: This news item focuses mainly on meals and entertainment (M&E) rules for solopreneurs, WFH business owners and bookkeepers. It is not comprehensive but may touch on other measures affecting M&E. As these are complex issues, it would be wise to consult with a qualified tax professional regarding your specific situation.

Your Action Items

Here's what to do right now.

1. Review your chart of accounts - Make sure you can separate client meals from office meals.
2. Update your expense policies - If applicable, let employees know that office meal reimbursements are changing.
3. Keep better records - Make it a habit (be meticulous) to note who attended, the business purpose, and whether it was a client meal or employee meal on the receipt.
4. Talk to your tax preparer - Especially if you've been deducting a lot of employee meals.

Remember: Consistent habits beats perfection. You don't need to have this figured out perfectly today. Start with one habit. Maybe it's just adding 'client meal' with details or 'office meal' with details to your receipt notes. That small step will save you hours of detective work later.

What This Means Going Forward

Look, I get it. These rules are frustrating. Just when you build a habit around the 50% rule, they change it to 0%.

But here's the thing. This is exactly why good bookkeeping habits matter. When you track expenses clearly from the start (with good descriptions, proper categories, and supporting documentation) you can adapt to rule changes without tearing your hair out.

The rules will keep changing. Your habits shouldn't.

Set up your accounts once. Code expenses consistently. Keep good records. And when the next tax law change comes (and it will), you'll be ready.

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PREVIOUS IRS NEWS RELATED TO THIS TOPIC
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Sole Proprietor Returns Due October 16

October 11, 2017

Sole proprietors, who filed for the automatic 6 month extension on IRS Tax Form 4868, have income tax returns that are due on Monday, October 16.

It is not IRS news that the IRS has three ways it can hit your pocket where it hurts when a return isn't filed and/or paid on time. They are late payment penalties, interest charges and late filing penalties.

Interest charges and late payment penalties began on April 15 for sole proprietors on any return with a balance due. The extension was only for filing the tax return ... not on balances owing.

If you have a balance due and don't file your return by October 15, you will also face late filing penalties.

If you have no tax due and don't file your return by October 15, there will NOT be a late filing penalty because the penalty is calculated on tax owing. However, Wayne Davies of Make Your Life Less Taxing, often reminds his readers that you only have three years to file to obtain any refund owing ... otherwise the amount owed to you is lost.

IRS 2014 Tax Season Opens January 20

January 1, 2015

The IRS will begin accepting 2014 tax returns on January 20, 2015 following Extenders Legislation.

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2013 Tax Season To Open Late

January 3, 2014

Tax season will be starting January 31, 2014.

October 22, 2013

The IRS has announced that due to the recent government shutdown, the 2014 tax season will open late. Processing of 2013 returns will begin sometime between January 28 and February 4, 2014 instead of the planned date of January 4, 2014.

For more details, see IRS Newswire IR-2013-82.

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IRS Now Accepting All 2012 Forms

March 5, 2013

Over the weekend, the IRS completed reprogramming and testing of its systems for tax-year 2012 including all remaining updates required by the American Taxpayer Relief Act (ATRA) enacted by Congress in January.

It is now accepting all 2012 forms.

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IRS To Accept Tax Returns with Education Credits, Depreciation Next Week

February 11, 2013

Yesterday, the IRS began processing tax returns that contain Form 4562, Depreciation and Amortization.

On February 14, the IRS plans to start processing Form 8863, Education Credits.

It will start accepting the remaining forms affected by the January legislation arising from The American Taxpayer Relief Act the first week of March.

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Tax Season Opens Late for 1040 Filers

January 11, 2013 (Updated January 18, 2013)

While the IRS announced Tuesday that they were opening the tax season for 1040 filers on January 31, 2013, that won't be the case if you file forms 3800, 4562, or 5695. The tax law changes from late legislation (see The American Taxpayer Relief Act) means they need time to do programming changes and testing.

You can expect to be able to file sometime late February / early March.

The 2013 tax tables and adjustments for inflation were also released today. See Rev. Proc. 2013-15.

Farmers and fishermen's deadline has been extended from March 1 to April 15.

IRS News Source: IRS Newswire IR-201302

Maximum Values for Employer-Provided Vehicles
December 2024

This section applies to employers who provide company-owned vehicles to employees. If you're self-employed and own your vehicle personally, this doesn't apply to you. Use the standard mileage rate or actual expense method instead.

The IRS released the maximum values for employer-provided vehicles first made available for employee use in 2025. These values are used when calculating the taxable fringe benefit for personal use of company vehicles.

Year	Cents Per Mile Method	Fleet Average Method	Notice
2025 Maximum	$61,200	$61,200	2025-05
2024 Maximum	$62,000	$62,000	2024-08
2023 Maximum	$60,800	$60,800	2023-03
2022 Maximum	$56,100	$56,100	2022-03
2021 Maximum	$51,100	$51,100	2021-23
2020 Maximum	$50,400	$50,400	2020-05
2019 Maximum	$50,400	$50,400	2019-34

If a vehicle's value exceeds this amount, employers cannot use the cents-per-mile or fleet-average methods. Instead, they must use the general fair market value (FMV) lease value method or a Fixed and Variable Rate (FAVR) allowance plan, which has separate cost limitations.

The actual cents-per-mile rate for business use is a separate figure used in the calculation of the personal use benefit, not the maximum value threshold of the vehicle itself. 

Previously, separate, lower maximum values were calculated for passenger automobiles versus trucks/vans. Prior to 2018, due to the Tax Cuts and Jobs Act (TCJA) and a lack of data for separate calculations, the IRS set a single, higher base maximum value of $50,000 for all employer-provided vehicles (including cars, trucks, and vans) for both the cents-per-mile and fleet-average rules.

Transition rules for 2018 or 2019 were provided, allowing employers who previously did not qualify to switch to either the cents-per-mile or fleet-average rule if their vehicles met the new, unified maximum values.

The new, unified $50,000 base value (which is adjusted for inflation in subsequent years) was a significant increase and allowed more employers to use these simplified valuation methods. For example, here are the rates for 2015-2017.

Valuation	Vehicle	2017 Maximum	2016 Maximum	2015 Maximum
Cents-per-mile	passenger vehicle	$15,900	$15,900	$16,000
Cents-per-mile	truck or van	$17,800	$17,700	$17,500
Fleet Average	passenger vehicle	$21,100	$21,200	$21,300
Fleet Average	truck or van	$23,300	$23,100	$22,900

EVERGREEN MINI-TUTORIAL
Understanding Employer-Provided Vehicle Valuation Methods

This applies to employers who provide company-owned vehicles to employees for both business and personal use.

It matters because when an employee uses a company vehicle for personal trips, that's a taxable fringe benefit. The employer must calculate the value of that personal use and report it as wages on the employee's W-2.

Three IRS-Approved Valuation Methods

1. Cents-Per-Mile Method  multiplies personal miles by the IRS business mileage rate (70¢ for 2025). It is only available if the vehicle's fair market value (FMV) doesn't exceed the annual maximum ($61,200 for 2025).
2. Fleet-Average Method uses an industry-average value instead of the specific vehicle's value. It is only available if the vehicle's FMV doesn't exceed the annual maximum ($61,200 for 2025) AND you maintain a fleet of 20+ vehicles.
   
3. Lease Value Method uses the IRS Annual Lease Value tables based on the vehicle's FMV. It is required if the vehicle exceeds the maximum value or if you choose not to use a simplified method. There is no vehicle value limit.
   

The key point to remember is the maximum values in the table above are eligibility thresholds, not the actual taxable benefit amount. They determine which valuation method you're allowed to use.

For Example 
You provide an employee a 2025 sedan worth $55,000 (under the $61,200 limit). The employee drives 15,000 miles total; 3,000 are personal miles. Using cents-per-mile method, the calculation would be: 3,000 miles × $0.70 = $2,100 taxable fringe benefit. You (the employer) report $2,100 as additional wages on their W-2.

Record-Keeping Requirement
Employees must keep a mileage log showing business vs. personal use. Without documentation, the IRS may treat all use as personal (100% taxable).

For The Self-Employed
These rules don't apply to you. If you own your vehicle personally and use it for business, use the standard mileage rate (70¢/mile for 2025) or actual expense method with depreciation.

Some Refunds Delayed in 2017

September 2016

A major change for 2017:

"Beginning in 2017, a new law requires the IRS to hold refunds on tax returns claiming the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit (ACTC) until mid-February. Under the change required by Congress in the Protecting Americans from Tax Hikes (PATH) Act, the IRS must hold the entire refund — even the portion not associated with the EITC and ACTC — until at least Feb. 15. This change helps ensure that taxpayers get the refund they are owed by giving the agency more time to help detect and prevent fraud."

Source: IR-2016-117 

Business Returns Due September 15th

September 1, 2016

Corporations and partnerships who filed for extensions have income tax returns that are due Thursday September 15.

IRS has three ways it can hit your pocket where it hurts when a return isn't filed on time. They are late payment penalties, interest charges and late filing penalties.

If you filed for an extension but have a balance due ... bad news ...

Interest charges and late payment penalties began on March 15 for corporations and April 15 for partnerships for any return with a balance due.

If you have no tax due and don't file your return by the deadline, you will be assessed a late filing penalty.

The late filing penalty is steep ... $195 for each month or part of month the return is late ... up to 12 months. But wait ... there is more. That figure is multiplied by the number of partners or shareholders in the business. Yikes! So if you file just one day late and there are two partners, the late filing penalty would be $390! Just one day late!

Source: www.irs.gov> businesses> small business/self-employed

New Due Dates in 2017 For W2 and W3

January 25, 2016

Under the heading "What's New" in the instructions for W-2s and W-3s, a new due for 2017 is released. Beginning in 2017, the forms must be submitted to the SSA by January 31 instead of February 28 for paper filing and March 31 for electronic filing.

The number of slips issued before you must efile is also changing in some states. Some are 50, others are 10 before mandatory filing kicks in.

These new deadlines also apply to 1099s.

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Affordable Care Act 101 

October 8, 2013

The SBA.gov is offering free webinars every Thursday at 2 pm ET throughout the month of October. The webinar is help small business owners learn what the Patient Protection and Affordable Care Act means for your business.

Topics to be discussed include:

• Small business tax credits (available to businesses and tax-exempt non-profits)— who’s eligible for them and how to claim them
• Marketplace updates
• Shared responsibility
• Cost containment
• Tools and resources available for small businesses interested in learning more about the law

You can register here.

While there, check out their articles explaining how the Act affects you if you:

• are self-employed
• have less than 25 employees
• have up to 50 employees
• employ 50 plus employees

At the end of each article you will find a link to an interactive tool to help you find and compare health plans.

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Reporting Requirements for Health Coverage Released

September 16, 2013

Section 6055 (Reg-132455-11) requires providers of minimum essential health coverage to report information verifying the taxpayer is covered. Reporting for 2014 is voluntary.

Section 6056 (Reg-136630-12) provides requires large employers (over 50 employeees) are subject to reporting to the employees and IRS the coverage offered to full-time employees. Reporting for 2014 is voluntary.

You may also be interested in Notice 2013-54 - Application of Market Reform and other Provisions of the Affordable Care Act to HRAs, Health FSAs, and Certain other Employer Healthcare Arrangements. This notice cover health reimbursement options (HRAs); group health plans that reimburse the employee; and health flexible spending arrangements (health FSAs).

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IRS Issues Final Regulations on Individual Health Care

August 28, 2013

The IRS issued final regulations this week for shared responsibility payment - Section 5000A (Reg-148500-12). A penalty is applied on individuals who do not have basic minimum health insurance coverage. It goes into effect in 2014.

Under the Affordable Health Care Act, individuals now share responsibility for health care coverage with the government, insurers, and employers. Exemptions are explained along with shared payment responsibility payment upon filing an income tax return.

You can find more information in The Treasury Deparment's Fact Sheet: Individual Shared Responsibility for Health Insurance Coverage and Minimum Essential Coverage Final Rules.

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W2 Information Reporting Break

October 25, 2012

A reminder that businesses with less than 250 W-2s in 2011 are exempt from the W-2 reporting requirements for health insurance. This reporting exemption remains in effect until the IRS rescind it.

See Notice 2012-9 Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage (issued January 23, 2012) for the 2012 reporting requirements. This notice supersedes Notice 2011-28.

The best way to deal with this publication is to make a table while your are reading; list what needs to be reporting, what doesn't need to be reported and what is optional reporting.

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August 7, 2011

I'm just looking at the AIPB quiz (based on their June 2011 The General Ledger publication) in the August 1, 2011 Bookkeeping Tips free enewsletter ... wow that was a mouthful!

It mentions that small employers (those with fewer than 250 Form W-2) have been given a break.

They do not need to comply with W-2 reporting requirements until further notice. This reporting break is referring to the transitional relief for employee information reporting requirements on the cost of an employeee's health care benefits (employer provided health care coverage).

See IRS Notice 2011-28 Interim Guidance on Informational Reporting to Employees of the Cost of Their Group Health Insurance Coverage for more details. This notice provides interim guidance that generally applies to Forms W-2 beginning with 2012.

You might also want to visit the IRS News notice titled Employer-Provided Health Coverage Informational Reporting Requirements: Questions and Answers. See Question 4 for information on this particular small employer break.

IRS Notice 2010-69 Interim Relief with Respect to Form W-2 Reporting of the Cost of Coverage of Group Health Insurance Under § 6051(a)(14) also discusses this break.

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October 19, 2010

2011 W-2 Health Insurance Reporting Optional

The IRS news wire IR-2010-103 released the draft W-2 form for 2011 on Oct 12, 2010. Employers use the W-2 form to report wages and employee tax withholding. The draft W-2 form has the codes required to report health insurance coverage.

The new requirement for employers to report the cost of coverage under an employer-sponsored group health plan has been made optional for 2011. The amounts reportable are not taxable.

Read more on the IRS website at Newsroom> IRS Releases Draft W-2 Form for 2011; Announces Relief for Employers

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Claiming New Health Care Tax Credit

December 2, 2010 Update

The IRS Newswire IR-2010-117 released the final version of Form 8941 as well as Instructions for Form 8941 and Notice 2010-82 Section 45R – Tax Credit for Employee Health Insurance Expenses of Small Employers.

Notice 2010-82 expands on Notice 2010-44, 2010-22 I.R.B. 717.

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September 8, 2010

Yesterday, the IRS Newswire IR-2010-096 released a draft of Form 8941 so that small businesses can claim the new health care tax credit. The final version is expected later this year.

The amount calculated on the form will be part of your general business credit on your income tax return.

This credit is "designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In 2010, the credit is generally available to small employers that contribute an amount equivalent to at least half the cost of single coverage towards buying health insurance for their employees."

More information and a link to the draft form can be found on the IRS website www.irs.gov> Newsroom

You will also find a step by step guide on the Small Business Health Care Tax Creditat http://www.irs.gov/pub/irs-utl/3_simple_steps.pdf .

Safeguarding Taxpayer Data

October 12, 2015

This may be interesting to attend even for Canadian bookkeepers. 

IRS 90-minute Oct. 20 webinar “Data Thefts and Protecting Client Information.” The broadcast will include:

• The dangers of data theft for tax professionals and clients
• Legal requirements and best practices to better protect taxpayer information 
• New steps tax professionals should take if they suffer a loss of taxpayer data 
• A first-hand account from a practitioner who experienced a theft 
• A live Q&A with IRS Executives, Subject Matter Experts and guest CPA

Certificates of completion are being offered. Earn 1 CE credit – Federal Tax. Register here: https://www.webcaster4.com/Webcast/Page/445/10887

The IRS also has a published guide on the topic see ... Safeguarding taxpayer data is a top priority for the IRS. Publication 4557 "Safeguarding Taxpayer Data-A Guide for Your Business" has been updated to include information on identity theft, references and important links. This revised Publication 4557, replaces the October 2008 edition.

Source: e-News for Tax Professionals Issue Number: 2015-40

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IRS Small Business Items of Interest

July 5, 2012 - Updated February 2016

IRS has an online webinar that covers business taxes for the self-employed. There are 9 lessons. It covers Schedule C, paying taxes electronically, retirement plans, hiring employees and contractors, payroll, tax deposits, hiring people who live in the US but aren't citizens. You can watch the archived webinar at irsvideos.gov> Small Business Taxes: The Virtual Workshop.

You can also find an archived webinar on Day Care businesses. It covers recordkeeping, business use of home, computing and reporting depreciation. You can watch it at irsvideos.gov> Tax Related Guidance for Child Care Providers.

Rev. Rul. 2012-18 provides guidance on the tax treatment of tips vs. service charges. It is worth a quick read. Rev. Rul. 2012-18 supersedes the guidance in Rev. Rul. 95-7, 1995-1 C.B. 185. See IRB 2012-26 for the details.

Source: e-News for Small Business Issue Number: 2012-14

Electronic Signatures

May 16, 2014

The IRS approved electronic signatures for Form 8879 on March 11, 2104.

The CPA Advisor has a great article on this at cpapracticeadvisor.com/news/11357868/irs-approves-e-signatures-on-form-8879.

Repair Regulations: When to Expense vs. Capitalize
Updated November 2025
Rule Effective January 1, 2014

The IRS provides two key ways for small businesses to deduct purchases right away instead of capitalizing them: the de minimis safe harbor and the materials-and-supplies rules.

The IRS sets a de minimis safe harbor threshold that allows businesses to immediately expense certain low-cost items. Since 2016, the threshold is $2,500 for businesses without an applicable financial statement (AFS). If you have (and use) accounting procedures to expense items under a set amount and you make the annual election, you may expense tangible property up to $2,500 per invoice, or per item as substantiated by the invoice, even if it lasts more than 12 months.

Heads up! You can apply the $2,500 threshold per invoice or per item as shown on the invoice. If the invoice total is at or below $2,500, you can expense the whole invoice. If the invoice total is above $2,500 but shows individual items priced at or below $2,500, you can expense those items. You cannot use “per invoice” to expense a single item that costs more than $2,500.

You can find the rules in Treas. Reg. §1.263(a)-1(f) and Notice 2015-82, and plain-English summaries in IRS Pub. 535 and Pub. 946. Search IRS.gov for “de minimis safe harbor” for details.

Source: Treas. Reg. §1.263(a)-1(f); Treas. Reg. §1.162-3; Notice 2015-82; Rev. Proc. 2015-20)

EVERGREEN MINI-TUTORIAL
Understanding the Repair Regulations

Before 2014, small businesses often used informal thresholds ($500 or $1,000 at that time) regardless of useful life based on GAAP guidelines. In 2014, the IRS formalized the rules to create consistency and reduce disputes during audits.

The Basic Test

“Materials and supplies” (tangible property) are items you use up within 12 months or that cost $200 or less. These are generally deductible when used.

The exception is for incidental items. If you keep routine supplies on hand and don’t track usage or on‑hand amounts (and they aren’t inventory), you may deduct them when purchased. Think fuel, fasteners, janitorial supplies, not equipment or high‑cost items. Most self‑employed won’t need to worry about this distinction. It mainly applies to routine maintenance supplies you keep on hand and don’t track. If you stock significant quantities or track usage (e.g., contractors, manufacturers), treat them as nonincidental and deduct when used.

Separately, the de minimis safe harbor lets you expense tangible property up to $2,500 per invoice or per item (non‑AFS), or $5,000 (AFS), if you have the required accounting procedures and make the annual election.

If neither applies and the cost is to acquire or improve an asset that lasts more than 12 months, you generally capitalize it and depreciate over its useful life.

You are probably wondering, 'What does capitalize mean?'. Let me explain. Instead of deducting the full cost in the year of purchase, you (1) record the item as an asset on your balance sheet, (2) depreciate it over its useful life (3, 5, 7 years, etc.), and (3) track it separately in your fixed asset register.

Let's look at some common examples.

Expense Immediately Examples

• Office supplies (pens, paper, toner) or cleaning supplies are consumed within 12 months.
• Small tools (hammer, screwdriver) or tech accessories (USB cables, phone chargers) are $200 or less, they are supplies. If they are over $200 but at or below $2,500, you may expense under the de minimis safe harbor.
• A printer costing $350 can be expensed under the de minimis safe harbor even if it lasts 3–5 years (assuming you meet the safe harbor requirements).

Examples of When You Must Capitalize The Expenditures

• A commercial-grade printer/copier costing $5,800 is over $2,500 and is expected to last 5-7 years.
  
• A conference room furniture set costing $4,200 is over $2,500 and will last 7-10 years.

The Exception - Section 179 and Bonus Depreciation
If an item must be capitalized, you may still be able to deduct some or all of it in year one using Section 179 or bonus depreciation (separate rules from the de minimis safe harbor). See the Vehicle Depreciation section for more on these accelerated deduction methods.

Important Distinction
The $2,500 de minimis threshold is separate from Section 179 limits. The de minimis safe harbor determines whether you expense up front on your tax return. Section 179 and bonus depreciation determine how quickly you can deduct amounts that are capitalized.

De Minimis Safe Harbor Election
To use the de minimis safe harbor, you must: (1) have accounting procedures in place at the start of the year to expense amounts under a set dollar limit (written is required if you have an AFS), (2) expense these amounts on your books, and (3) attach an annual election statement to your timely filed tax return (including extensions). No Form 3115 is required for this election.

Businesses With Financial Statements
If your business has an AFS (for example, an audited financial statement), the de minimis threshold is $5,000. Most solopreneurs and small businesses without audited financials use the $2,500 threshold.

Audit Ready Tip

Keep invoices and receipts organized by year and make sure your books show the same expensing policy you use on your tax return. Your fixed asset register should list items you capitalize.

The IRS may ask you to justify why items over the threshold were expensed versus capitalized. Your bookkeeping software's fixed asset register is your best defense.

Key Takeaway

1. Items used within 12 months or that cost $200 or less are “materials and supplies” and are generally deductible when used.
2. Durable items at or below $2,500 ($5,000 with an AFS) can be expensed under the de minimis safe harbor if you meet the requirements.
3. If an item doesn’t qualify under those rules, capitalize it and consider Section 179 or bonus depreciation to accelerate the deduction.

Where to Learn More

• IRS Publication 535 (Business Expenses)
• IRS Publication 946 (How to Depreciate Property)
• Instructions for Form 3115 (Application for Change in Accounting Method)
• Treas. Reg. §1.263(a)-1(f) (de minimis safe harbor)
• Treas. Reg. §1.162-3 (materials and supplies)
• Search IRS.gov for "tangible property regulations" or "de minimis safe harbor"

US Shutdown and How It Affects IRS

October 1, 2013

The IRS released this special notice earlier today:

"Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal."

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IRS Closing Due to Budget & Sequester

May 15, 2013,

The IRS announced the following today:

"... additional details about the closures planned for May 24, June 14, July 5, July 22 and Aug. 30, 2013.

Due to the current budget situation, including the sequester, all IRS operations will be closed on those days. This means that all IRS offices, including all toll-free hotlines, the Taxpayer Advocate Service and the agency’s nearly 400 taxpayer assistance centers nationwide, will be closed on those days. IRS employees will be furloughed without pay. No tax returns will be processed and no compliance-related activities will take place.

The IRS noted that taxpayers should continue to file their returns and pay any taxes due as usual.

... Where the last day for responding to an IRS request falls on a furlough day, the taxpayer will have until the next business day."

Wikipedia explains that sequestration refers to budget cuts to particular categories of federal spending that began on March 1, 2013 as an austerity fiscal policy.

Source: IRS Newswire

Search Warrants

May 25, 2013

The IRS announced this past week that they will now obtain search warrants when looking for email communications stored by your internet service provider. For more information, see IRS Policy Statement 4-120.

How To Claim Retroactive Transportation Fringe Benefits

January 17, 2013

IRS has released the procedures to retroactively refund the FICA tax paid on 2012 excess transit benefits prior to the reinstatement of parity rates in The American Tax Relief Act. See IRS Notice 2013-8 Application of Retroactive Increase in Excludible Transit Benefits.

If you are interested in simpler instructions than the IRS Notice, JOA has a good article (January 16, 2013) on this by Sally P. Schreiber titled "Retroactive procedures implement qualified transportation fringe benefits parity for 2012".

The JOA article explains:

1. The special rules for employers that have not yet filed their final Form 941 for 2012.
2. The rule for employers that already filed final fourth quarter Form 941 for 2012.
3. Special instructions for Forms W-2.

You can find my Employee Fringe Benefits table here.

 

2013 IRS Forms and Publications

January 7, 2013

Just a general note to let you know that the IRS will have the following forms and/or publications available for 2013 later this month:

• Publication 15-B Employer's Tax Guide to Fringe Benefits
• Form W-4 Employee's Withholding Allowance Certificate - your employees should be submitting new ones to you if any of their circumstances have changed ... and you should process them prior to doing your first 2013 payroll

The release of the 2013 forms has been delayed due to the late passage of The American Taxpayer Relief Act.

See the Social Security Online's User Handbook for Tax Year 2012 for all of your 2012 W-2 electronic filing options.

The free W-2/W-3 online filing application for the 2012 tax year became available on the Social Security website in late November 2012. You can file 50 W-2's for each W-3 submittd ... and you can now also submit for the 2010 and 2011 tax year if you are delinquent. SSA also has a webacst on how to file your W-2's online.

You can also download AccuWage software (free Social Security software) to check your W2 report for errors so you can locate and fix errors BEFORE filing your W-2/W-3 reports.

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December 22, 2011

2012 IRS Forms and Publications

Just a general note to let you know that the IRS has the following forms and/or publications available for 2012:

• Publication 15-B Employer's Tax Guide to Fringe Benefits
• Form W-4 Employee's Withholding Allowance Certificate - your employees should be submitting new ones to you if any of their circumstances have changed ... and you should process them prior to doing your first 2012 payroll

The free W-2/W-3 online filing application for the 2011 tax year became available on the Social Security website on December 5th.

2013 Tax Figures for US Bookkeepers

October 19, 2012

For bookkeepers who prepare taxes for their clients, and who have registered with the IRS for their PTINs (IR 2010-106), you will find 2013 cost of living adjustments (COLA) for retirement and non-retirement plans on the IRS website. Search for "2013 cola" to find the latest IR news.

Your 2013 reference is IR-2012-77, Rev Proc 2012-41, 2012-45 IRB.

Your 2012 reference is IR-2011-103, Rev Proc 2011-52, 2012-45 IRB.

Your 2011 references are IR 2010-108, Rev Proc 2010-40, 2010-46 IRB.

IRS Power Outage Notice

August 22, 2012

Here is a heads up! The IRS shut down will affect the online payment agreement application, the employer identification numbers and other systems from 1:00 a.m. Thursday August 30 to noon Tuesday September 4.

A computing center is having their electrical replaced and upgraded.

IRS Website Redesign

August 22, 2012

The new IRS website platform will go live on August 30. The look and feel of the site has also given the site a face lift.

If you have any links and/or references to the site, make sure you go in and check them after August 30.

Their news information says, "The new platform will allow IRS to deliver services at a faster pace to keep up with demands for online services."

IRS Recordkeeping Requirements for Small Business Owners

August 10, 2012

The IRS sent out a Summer Tax Tip regarding recordkeeping documents for small business owners:

"Typically, keep all your employment tax records for at least four years after the tax becomes due or is paid, whichever is later. Also, keep records documenting gross receipts, proof of purchases, expenses and assets. Examples include cash register tapes, bank deposit slips, receipt books, purchase and sales invoices, credit card charges and sales slips, Forms 1099-MISC, canceled checks, account statements, petty cash slips and real estate closing statements. Electronic records can include databases, saved files, e-mails, instant messages, faxes and voice messages."

Source: IRS Tax Tips Issue Number: 2012-16

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November 23, 2010.

IRS Phone Forum on Recordkeeping - December 1, 2010

This free phone forum will discuss why small businesses need to keep adequate books and records ... and how to maintain them. The IRS examination process will also be presented.

Listen to the archived recording at irsvideos.gov> small business> video portal> all phone forums> Recordkeeping Phone Forum

... or you can find the link through irs.gov> Businesses> Small Business and Self-employed Center> IRS Video Portal.

IRS Reporting Rental Real Estate

August 10, 2012

IRS News For Small Business

The IRS released guidance on reporting rental real estate activity correctly:

"Individuals who are not real estate professionals are generally subject to passive activity loss limitations even if they materially participate in the rental. Real estate professionals report rental real estate activities in which they materially participated as non-passive. But, real estate professionals who do not materially participate in the rental activity are generally subject to passive activity loss limitations. Publication 925, Passive Activity and At-Risk Rules, includes information on who qualifies as a real estate professional and passive activity limits."

Source: e-News for Tax Professionals Issue Number: 2012-32

Temporary Payroll Tax Cut Continuation Act of 2011
The Middle Class Tax Relief and Job Creation Act of 2012

December 23, 2011 (Updated February 23, 2012)

February 23, 2012 Update

IRS released a revised Form 941 which will enable the reporting for the extended payroll tax cut under The Middle Class Tax Relief and Job Creation Act of 2012.

In the IRS Newswire Number IR-2012-27, it also stated that ...

"The new law also repeals the two-percent recapture tax included in the December legislation that effectively capped at $18,350 the amount of wages eligible for the payroll tax cut. As a result, the now repealed recapture tax does not apply."

The Temporary Payroll Tax Cut Continuation Act of 2011 was set to expire at the end of February, 2012.

Click here to go to the revised Form 941.
Click here for access to the news release.

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Original Post December 23, 2011

IRS announced today the extension of the reduced payroll tax rate that has been in effect for 2011.

I have updated the Self Employment Tax table to reflect the 2012 changes as well as the FICA Employee Payroll Taxes Table to reflect The Temporary Payroll Tax Cut Continuation Act of 2011.

Employers have until January 31, 2012 at the latest to implement the new tax rate.

IRS-2011-124 explains that the Congress negotiated a NEW recapture provision.

"[The recapture provision] applies only to those employees who receive more than $18,350 in wages during the two-month period (the Social Security wage base for 2012 is $110,100, and $18,350 represents two months of the full-year amount). This provision imposes an additional income tax on these higher-income employees in an amount equal to 2 percent of the amount of wages they receive during the two-month period in excess of $18,350 (and not greater than $110,100).

This additional recapture tax is an add-on to income tax liability that the employee would otherwise pay for 2012 and is not subject to reduction by credits or deductions. The recapture tax would be payable in 2013 when the employee files his or her income tax return for the 2012 tax year. With the possibility of a full-year extension of the payroll tax cut being discussed for 2012, the IRS will closely monitor the situation in case future legislation changes the recapture provision."

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December 7, 2010 (Updated December 17, 2010)

IRS News For Small Business
Tax Cuts To Be Extended
2010 Tax Relief Act Passed By Congress

The President has agreed to extend tax cuts for two years for the middle class (individuals earning less than $200,000 and families earning less than $250,000) and the rich, extend unemployment benefits for 13 months, as well as payroll tax reduction on Social Security contributions for one year.

Also to be extended are the earned income tax credit, child care credit, and the American Opportunity Tax Credit for students.

Businesses will see an enhanced first-year depreciation deduction and a two-year AMT (alternative minimum tax).

The proposed one year payroll tax decrease would be 4.2% from the current 6.2% as a way to increase employee's take home pay.

This list is not exhaustive but just gives you an idea of what is included. This agreement means it is unlikely taxes will increase on January 1, 2011.

Update December 17, 2010 - The Senate passed the tax cuts be extended on December 15, and the House followed on December 16.

IRS Webinar - Small Business Tax Compliance Priorities

December 16, 2011

Mark this one on your calendar.

The IRS are holding a free webinar on January 11, 2012 11:00 Pacific Time to explain IRS Small Business/Self-Employed (SB/SE) Division top compliance priorities (i.e. what they will be looking for when auditing) in 2012 and challenges for 2012. An overview discussions of priorities by the IRS Compliance Director will cover:

-SB/SEs approach to compliance and working with tax professionals
-Exam’s National Research Project, field audit coverage plans and new pilot programs
-Collection’s Fresh Start initiatives and new operating unit
-Campus Compliance plans for improving Automated Under Reporter (AUR) and their Centralized Offer-in-Compromise programs

You can register at:

http://www.visualwebcaster.com/IRS/83902/reg.asp?id=83902

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June 17, 2011

Examination Process for Employment Tax Returns

The IRS are holding a free one hour webinar to explain what to expect from an employment tax examination. It will cover the examination process and results, statute of limitations, taxpayer and appeal rights as well as settlement agreements and payment options.

You can register at:

http://www.visualwebcaster.com/IRS/78923/reg.asp?id=78923

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March 2, 2011

Business Taxes For The Self-Employed

It's been awhile since I found anything I thought would be of interest to small business owners. This news might be of interest to you.

The IRS is offering a free webinar of March 29, 2011 on the basics of business taxes for the self-employed. It will provide an overview of reporting profit or a loss, business expenses, business record keeping requirements and estimated tax payments.

You can register here:

http://www.visualwebcaster.com/IRS/77024/reg.asp?id=77024

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October 28, 2010

IRS Webinar Common Employment Tax Issues

In the most recent edition of e-News for Small Business, the IRS invites small business owners to a November 3 webinar. Items to be discussed are:

Employment Tax National Research Project
Worker Classification
Fringe Benefits
Compensation for Sub S Corporation Officers
Back-up Withholding

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September 8, 2010 (Updated August 16, 2013)

IRS Audit Process

What do you do if you receive an IRS audit notice?

The IRS released a new video series in August called Your Guide to an IRS Audit. The series takes you through the three different types of audits ... correspondence, office and field ... showing you step by step what you need to do.

It is broken into 10 lessons so you don't have to watch it all in one sitting.

It explains:

• the different audit notices
• the selection process
• how to organize your records for the auditor
• what happens at your first appointment
• what happens if you do or don't agree with the audit findings

... and more. You can find the videos at www.irsvideos.gov/audit

You may also want to watch the YouTube video of Tax Tips:Record Keeping deals data retention requirements as well as organizing the receipts themselves. Common Tax Return Mistakes is another YouTube video you may want to check out.

The IRS also has various audit technique guides by industry on their site.

Bloomberg Businessweek reported on July 17, 2013, that Daniel Werfel, the new head of IRS would tell Congress their criteria for selecting small businesses for audit: "Tax returns are run through a computer program and scored for compliance risk, and filers deemed most likely to have run afoul are selected for audits".

Highway Use Tax Returns Due Nov. 30

November 18, 2011

The IRS is reminding truckers that their July, August, September and/or October 2011 Form 2290 is due to be filed by November 30.

The IRS says that "you will not be liable for any late filing penalty or interest if you meet this due date. Beginning November 1, 2011, we will provide a stamped (receipted) Schedule 1 to those who file and pay their tax."

As of July 1, 2011, an authorized e-filer can e-file your 2011 Excise tax.

Visit the IRS Trucking Tax Center at www.irs.com for more information.

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July 18, 2011

Heavy Highway Vehicles Get a Tax Break

The IRS announced last Friday that they are giving truckers a 3 month extension on their highway use tax return.

Form 2990 for the tax periods that fall between July 1 and September 30th, should NOT be filed and payments should NOT be made prior to November 1, 2011.

For vehicles brought into use during the July to November period, they are not required to have proof that the tax was paid if it can be shown that it was purchased during the previous 150 days.

For more information, go to the IRS website and locate Businesses> Newsroom> IRS Gives Truckers Three-Month Extension; Highway Use Tax Return Due Nov. 30 .

FUTA Surtax Expires

June 11, 2011 (Updated July 5 and August 18, 2011)

August 18, 2011 update

IRS has more information on the expiration of the FUTA surcharge in Headliner Volume 312 at http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/IRS-Reminds-Taxpayers-that-FUTA-Surcharge-has-Expired .

Keep an eye out for a revised Form 940 that will provide space for the two different rates. It is expected the form will be available before the January 31, 2012 due date.

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July 5, 2011 Update

Renee Daggett of Admin Books explains in their July 5th newsletter that the IRS did in fact lower the FUTA rate to 6.0% from 6.2% as of July 1, 2011.

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June 11, 2011

Google/Bing "FUTA surtax expires" and a lot of articles come up but nothing on the IRS website. Near the top of Google's search list CCHGroup.com (a Wolters Kluwer business) reports that the 0.2% surtax is set to expire on June 30, 2011. If congress doesn't take action, the FUTA tax rate would drop to 6% from 6.2% on July 1, 2011.

The President has proposed to make the FUTA surtax permanent.

I am a member of the National Association of Certified Professional Bookkeepers (NACPB). Their latest payroll tax update report* - June 10, 2011 explains thatemployers need to track the pre and post June 30 FUTA taxable wages if legislation is not enacted.

Form 940 will be revised if the surtax is not extended.

The same update says employers will not be penalized if their 3rd and 4th quarters omit the 0.2% surtax if the tax is retroactively reinstated after the fourth quarter.

So why can't you find anything on the IRS website? It seems this information is dissemanted in payroll industry conference calls. There is a note under "What's New" in the Instructions for Form 940 that the tax rate is scheduled to decrease. (See August 18th update for IRS link.)

*P.S. NACPB has a number of newsletters that are free when you visit their website or sign up. Look under "Tips" on their menu bar.

**The AIPB recommends that in addition to tracking FUTA wages periods separately, continue to accrue 0.8% for your third quarter just in case Congress retroactively imposes an extension.

December 28, 2010

IRS News For Small Business
U.S. Payroll Reminder - EITC

A reminder that EITC (Earned Income Tax Credit) has been eliminated for 2011. Do not make any more EITC payments to employees after December 31, 2010.

This also means the W-5 Form - Earned Income Credit Advance Payment Certificate is eliminated.

Reference: AIPB Free Newsletter Bookkeeping Tips dated December 27, 2010

December 7, 2010

IRS News For Small Business
Federal Tax Return Preparers - New Rules

If you are looking for up-to-date information regarding the new rules for federal tax return preparers, I recommend you head on over to The National Association of Registered Tax Preparers (NARTP) at www.nartp.org.

Once there, click on News > New IRS Requirements for Tax Return Preparers for a comprehensive reference on what you need to know.

You'll find the PTIN requirements at IRS website www.irs.gov> Tax Professionals> PTIN Requirements.

IRS has also published FAQs that are very helpful. You'll find it at www.irs.gov> Tax Professionals> PTIN Requirements> Get Help (right hand side mid way down)> Read the FAQ's.

Questions 7 and 8 under Scenarios deal with bookkeepers who prepare Forms W-2, Forms W-3, and Forms 941. So for example if you are a bookkeeper who prepares Form 941, you may need a PTIN. The answer depends on whether you get to exercise any discretion or independent judgement.

December 6, 2010

IRS News For Small Business
Tax Deposit Reminder

This is a reminder that "deposits made at an authorized financial institution will no longer be accepted after December 31, 2010. Instead, deposits can be made using EFTPS online with a computer or by telephone. For making deposits by telephone call 1-800-555-4477 (business), 1-800-316-6541 (individual), or TDD 1-800-733-4829."

October 30, 2010

IRS News For Small Business
Tanning Tax Due Nov. 1

Tanning service providers are being reminded by the IRS that November 1 is the due date for the first payment of the new 10% tanning tax.

You make payment on Form 720 Quarterly Federal Excise Tax Return.

The IRS announcement says, "The tax went into effect on July 1. Providers of indoor tanning services collect the tax at the time the purchaser pays for the tanning services. The provider then pays these amounts to the government, quarterly, along with IRS Form 720."

If you need or want more information, go to www.irs.gov> businesses> Small Business/Self-Employed> Articles> Excise Tax on Indoor Tanning Services Frequently Asked Questions.

Reference: IR-2010-73 June 11, 2010

October 28, 2010

IRS News For Small Business
IRS Accepts Taxpayer e-Records

The most recent edition of e-News for Small Business says the IRS will begin accepting taxpayer books and records in electronic format. The IRS agents have recently been trained in QuickBooks software.

As it is now standard business practice to keep books using accounting software, the IRS is responding to 2008 Tax Forums where tax professionals and small business owners requested this change.

"Electronic files should be provided on a CD, DVD, or flash/jump drive to ensure security of the files. E-mail should not be used to transmit the electronic records."

You can read more on auditing accounting records in electronic format at www.irs.gov> businesses> small business/self-employed> more topics> IRS stakeholder partners' headliners> IRS Headliner Volume 303 released October 15, 2010 IRS Begins Accepting Taxpayer Records in Electronic Format

September 24, 2010

IRS News For Small Business
Tax Package Mailing Ends

IRS e-News announced this week that business (and individual) tax mailing packages ends due to the growth of e-File and as a way to reduce costs. Look for a postcard in early October with instructions on how get your online forms and how to file your tax return(s).

Forms that will no longer be mailed include include packages 1040, 1065, 1120, 1120S and publication 393

P.S. I rarely do live links any more to government sites as the links seem to move around at times. If I give you the path to cut and paste into your browser, you should still be able to search for the item if it was moved for some reason. Few things bug me more than clicking on links that no longer work.