Tax scammers continue to target taxpayers through email, text messages, phone calls and regular mail. They often try to create urgency or fear to trick victims into sharing sensitive information or sending money. The IRS warns taxpayers to remain cautious because scammers continually change tactics to steal personal and financial information.

IRS impersonation scams

First and foremost, know that the IRS will never contact you by email, text or social media channels about a tax bill or refund. Most IRS initial communications are sent through regular mail. So if you get a call or message saying it’s the IRS and asking for your Social Security number, it’s someone trying to steal your identity and defraud you. Remember that the IRS already has your Social Security number.

Here are some common impersonation-related schemes to be aware of:

Phone calls. AI-generated voices and spoofed caller IDs to impersonate IRS agents are becoming more common. Scammers may leave urgent messages threatening arrest, penalties or legal action unless immediate payment is made. The IRS stresses that it won’t demand immediate payment over the phone.

Text messages and emails. Scammers use text messages and emails containing fake IRS links or QR codes to direct taxpayers to fraudulent websites designed to steal personal or financial information. These messages often claim there’s a problem with a refund, tax return or IRS account to try to create panic and pressure taxpayers into responding quickly.

Fake IRS notices. One current scheme takes advantage of growing confusion about the IRS CP53E notice. This is a notice related to tax refunds and bank account information. As the IRS shifts from paper checks to direct deposit, it’s mailing these notices to taxpayers who may need to add or update their banking details. Unfortunately, the IRS is sometimes mistakenly sending the notices when a taxpayer has already provided this information, creating confusion. Now fraudsters are sending fake versions of the notice in an attempt to steal taxpayers’ sensitive information. If you receive an IRS CP53E notice, verify its authenticity before acting. Don’t click links or scan QR codes.

Malware. In scams to infect computers and phones with malicious software, a phony email claims to come from the IRS. The subject line often states that the message is a notice of underreported income or a refund. There may be an attachment or a link to a bogus web page with your “tax statement.” When you open the attachment or click on the link, malware is downloaded to your device. This malware can give criminals remote access to your device and allow them to search for passwords, banking information and other sensitive data to help them steal your assets or your identity.

Other tax scams

The IRS recommends that taxpayers create an account to securely access their tax information. The account lets you view your refund status, make payments, check your balance and more. But be cautious. Scammers may offer account setup “help” so they can collect your sensitive data. Or they may use stolen personal information to access your account without authorization. Once inside an account, they may attempt to redirect refunds, obtain tax records or use the information to commit additional identity theft. Create and always access your account directly through IRS.gov, don’t share your information with unsolicited third parties, and check your account regularly.

Also watch out for fake online tax deduction calculators. These digital tools are intended to steal personal information and money from unsuspecting users. They’re often accompanied by false promises about new or expanded tax credits and deductions. The IRS says you should use calculators only on sites that end in .gov (such as irs.gov) or of well-known tax software companies. Also, be wary of any calculator that guarantees its result. Legitimate calculators can only produce estimates. And, as always, be suspicious of claims that seem “too good to be true,” such as unusually large tax savings.

The IRS also warns taxpayers to avoid other schemes involving questionable refund claims or credits promoted online or through social media. Promoters may encourage taxpayers to file inaccurate forms or claim credits they don’t qualify for. Improper claims can lead to refund delays, audits, penalties and other enforcement actions.

Reporting fraud

The IRS has launched a “Report fraud” webpage to simplify confidential reporting of suspected tax fraud or scams. It consolidates multiple IRS fraud-reporting options into a single location, allowing taxpayers to report suspected scams, tax evasion or other tax-related misconduct in one place: irs.gov/help/report-fraud.

If you’ve been a victim of identity theft, consider obtaining an Identity Protection Personal Identification Number (IP PIN). Issued by the IRS, this unique six-digit number helps prevent criminals from filing a fraudulent tax return using your Social Security number. It’s valid for one year and is automatically replaced after expiration. You can expect to receive a new one each year in mid-December to early January. You can apply online or get one at a Taxpayer Assistance Center. Once you receive your IP PIN, be sure to safeguard it. Use it only on Forms 1040.

Stay alert

Tax-related scams continue to evolve, so it’s important to be cautious when receiving unexpected phone calls, messages or even letters involving taxes, refunds or financial information. If you receive a questionable communication related to a tax return we prepared, contact us before responding. We can also answer other questions you have about protecting yourself from tax-related fraud.

The post Protect Yourself From Fraudsters Impersonating the IRS and Other Tax Scams first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

Although your business may seem big to you, you may wonder how the government classifies it for tax purposes. If your organization qualifies as a “small business,” you may enjoy several important tax advantages. But the rules for specific tax provisions vary. So, depending on your size, you might be eligible for some so-called small business breaks but not others. Here’s a closer look.

No universal definition

Under federal tax law, there’s no one definition of a small business. Instead, several definitions apply depending on the context, various criteria and certain thresholds. Criteria may include a business’s:

• Gross assets,
• Gross receipts, and
• Number of shareholders and employees.

Even if a criterion such as gross receipts is the same across definitions, different thresholds may apply. Also, for some purposes, the tax code might define a small business in more than one way. Depending on how your performance and operations change over time, you might meet the government’s definition of a small business one year but not the next year.

5 special breaks for certain small businesses

The Section 448(c) gross receipts test serves as a common eligibility standard for several tax provisions available to qualifying small businesses. Under this test, your business may qualify for five potential tax breaks if it had average annual gross receipts of $25 million or less for the prior three-year period. This threshold is adjusted for inflation — for 2026, businesses that had average gross receipts up to $32 million are eligible for:

1. Cash accounting. You’re generally permitted to use the cash method of accounting for tax purposes even if you have inventories or use the accrual method for financial reporting. With certain exceptions, larger businesses — particularly those that carry inventory — must use accrual accounting. Using the cash method will likely allow you to defer more taxable income than you could under the accrual method.

2. Inventory simplification. You’re generally exempt from complex inventory accounting rules and may account for inventories by:

• Treating them as nonincidental materials and supplies, or
• Conforming to the inventory method you use in your financial statements or books and records.

Treating inventories as nonincidental materials or supplies allows you to deduct their cost when they’re “used or consumed.” Final IRS regulations clarify that materials aren’t used and consumed until the inventory is sold. So businesses can’t treat raw materials as used and consumed when converted into work-in-progress or finished goods.

3. Relief from UNICAP rules. You’re exempt from the uniform capitalization (UNICAP) rules, which require taxpayers to capitalize certain direct and indirect production costs to inventory, rather than deduct them when incurred. Not only can these rules increase your tax liability, but they also make tax reporting more complex.

4. Exemption from the business interest deduction limitation. You’re not subject to the cap on business interest write-offs, which generally limits deductions of net business interest expense to 30% of adjusted taxable income.

5. The completed contract method. If your business is in construction, manufacturing or another industry where long-term contracts are common, you may use the completed contract method rather than the percentage-of-completion method to account for long-term contracts expected to be completed within two years. The completed contract method allows you to defer tax until the contract is substantially complete, while the percentage-of-completion method can accelerate the tax.

When determining your business’s gross receipts, you may need to include those earned by certain related entities, such as those with common control. Special rules apply to organizations in existence for less than three years. Also, tax shelters, including syndicates, don’t qualify for small business status, even if their gross receipts are below the threshold.

Sizing up your business

Of course, these five relief measures aren’t the only tax-saving opportunities for small business owners at the federal and state levels. And determining eligibility can be more complicated than it appears. We can help evaluate your eligibility for these breaks and others — and develop a long-term plan that’s tailored to your situation. Contact us to explore the potential tax benefits of small business status.

The post What’s a “Small Business,” and Why Does It Matter? first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

Many taxpayers are receiving unexpected IRS Notice CP53E letters recently, creating confusion about whether the communication is legitimate and why the IRS is requesting bank account information.

The notice is being sent to some taxpayers who owed money on their 2025 tax returns, as well as some who were already expecting refunds but did not include direct deposit information when filing. In many cases, tax professionals believe the refunds are connected to IRS recalculations of underpayment penalties, particularly those impacted by disaster relief provisions.

The purpose of Notice CP53E is to allow the IRS to issue refunds electronically through direct deposit. This effort aligns with the federal government’s broader push toward electronic payments under Executive Order 14247.

Taxpayers who receive the notice should respond carefully and only through official IRS channels. The IRS recommends using your Individual Online Account to securely provide banking information within 30 days of the notice date. If no action is taken, the IRS will typically mail a paper check approximately six weeks after the notice date.

Because scammers are already circulating fake versions of CP53E notices, taxpayers should remain cautious. Never provide personal or banking information through links in emails, text messages, or unofficial websites. Always navigate directly to the official IRS website to verify notices and update account information.

If you receive Notice CP53E and are unsure whether it is legitimate or how to respond, working with a qualified tax professional can help you avoid delays, fraud risks, or processing issues. Contact us with any questions.

The post IRS Notice CP53E: What Taxpayers Need to Know first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

Large stock market gains in recent years, coupled with some significant volatility in 2026, have left many investors with portfolios that are out of balance with their desired asset allocation. If you haven’t rebalanced recently, it may be time to do so. But you also must consider the tax implications. Careful planning can minimize the tax cost of rebalancing.

What does rebalancing mean?

When you built your investment portfolio, you took several factors into account, such as your performance goals, risk tolerance and age, to arrive at an allocation across asset classes (such as money market funds, stocks and bonds) and subcategories (such as small-cap vs. mid-cap vs. large-cap U.S stocks and U.S. Treasury vs. municipal bonds). When one asset class (or subcategory) outperforms, it will become a larger portion of your portfolio than your original asset allocation. This situation can potentially increase your risk and cause your portfolio to no longer align with your goals.

To keep your asset allocation in alignment, monitor your portfolio regularly and rebalance it as needed. Rebalancing involves selling some investments in classes that have become overweighted, usually appreciated stocks and mutual fund shares. You then reinvest the proceeds in other asset classes to help achieve your desired allocation. But the gain you recognize from selling appreciated investments will be currently taxable — unless the investments are held in tax-advantaged retirement accounts, such as 401(k)s and IRAs.

Taxable brokerage accounts

When you file your tax return, your recognized capital gains for the year are netted against your recognized capital losses. If your gains in your taxable accounts exceed your losses, you have a net capital gain.

If a net capital gain is from investments held for more than a year, it will be taxed at the federal long-term gains rate. Most individuals will pay 15%, but, depending on your income, the rate could be 0% or 20%. Also depending on your income, you may owe the 3.8% net investment income tax (NIIT) on all or part of your net long-term gain. Depending on your state, you might owe state income tax, too.

If you have a net capital gain from investments held for one year or less, it will be taxed at the short-term gains rate. This is your ordinary federal income tax rate, which may be as high as 37%. You may also owe the NIIT on all or part of your net short-term gain. And, again, you might owe state income tax.

If losses in your taxable accounts for the year exceed your gains, you have a net capital loss. You can deduct the loss against up to $3,000 of ordinary income ($1,500 if you’re married and file separately). Any remaining net capital loss is carried over to next year.

Tax-advantaged retirement accounts

If you sell assets held in a tax-advantaged retirement account, the resulting gains and losses affect your account balance. But they have no tax impact until you start taking withdrawals.

If it’s a non-Roth account, the taxable portion of withdrawals (generally any amount attributable to appreciation or to contributions that were pretax or deductible) will be taxed at your ordinary federal income tax rate. Depending on your state, you may also owe state income tax.

If it’s a Roth account, qualified withdrawals will generally be income-tax-free for federal purposes. This includes withdrawals attributable to appreciation.

Tax-smart strategies

If you have both taxable and tax-advantaged accounts, consider them together when rebalancing your portfolio. For example, let’s say your overall portfolio across brokerage and retirement accounts has become overweighted in large-cap U.S. stocks. You can save taxes for the current year if you sell some of this appreciated stock from a retirement account because the gain won’t be taxed.

Sometimes selling appreciated assets in a taxable brokerage account will be necessary to achieve rebalancing goals. In this case, look to see if there are also assets in that account (or another taxable account) that you can sell at a loss. The recognized loss can offset some or all of your capital gains on the appreciated assets you sell. Remember that selling assets at a loss in your tax-advantaged retirement account won’t provide a current-year tax loss.

If you need to sell appreciated assets in a brokerage account and you won’t be able to recognize enough losses to offset your gains, try to sell assets you’ve held more than one year. That way, the gain will be taxed at your lower long-term gains rate.

Rebalancing involves not only selling assets in classes that have become overweighted but also using the proceeds to buy assets in classes that have become underweighted. As you invest in new assets, consider which assets make more sense to hold in taxable vs. tax-advantaged accounts.

It generally makes sense to hold the investments you think will generate the highest long-term returns in a Roth account, because you can eventually take the resulting income and gains out free of federal income taxes. And if you do a lot of short-term trading that would generate high-taxed short-term gains in a taxable brokerage firm account, it makes sense to do the trading in a tax-advantaged retirement account.

Look beyond current tax consequences

Despite the significant impact taxes can have, don’t make investment decisions — including those related to rebalancing your portfolio — based primarily on current-year tax consequences. You should also consider investment goals, time horizon, risk tolerance, investment-specific factors, fees and the long-term tax consequences. If you have questions or would like more information about investment portfolio rebalancing, contact us.

The post Tax Mitigation Strategies When Rebalancing Your Investment Portfolio first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

A new tax-advantaged way to help children build up savings for the future was created by the One Big Beautiful Bill Act (OBBBA): Trump Accounts (TAs). Under a pilot program, you can make an election to set up a TA for your U.S. citizen child born in 2025 through 2028 and the federal government will fund the account with $1,000 of free money. But older children also are eligible for TAs as long as they have a Social Security number and are under 18 at the end of the tax year; they just aren’t eligible for the $1,000 government contribution.

Getting started

One way to set up a TA is to file Form 4547, “Trump Account Election(s),” along with your 2025 federal income tax return. But the form doesn’t have to be filed with a tax return; it can be filed anytime through an online portal that is expected to be available this summer.

After July 3, 2026, you and any other individual, such as a grandparent, can begin making annual TA contributions of up to a combined limit of $5,000 (adjusted for inflation starting in 2028) until the year your child turns 18.

The $1,000 government contribution doesn’t count against the annual limit. So, if your child is born this year, up to $5,000 could be contributed to his or her TA in 2026 on top of the $1,000 from the government.

Other contributions

Employers can set up a TA contribution program. After July 3, 2026, employers can contribute and deduct up to $2,500 annually (adjusted for inflation starting in 2028) to a TA for an eligible under-age-18 employee or an employee’s eligible under-age-18 dependent. (Employers can’t contribute more than $2,500 per employee, even if an employee has multiple eligible dependents.) These contributions count against the $5,000 annual contribution limit. Employer contributions are excluded from the employee’s taxable income.

State, local or tribal governments and tax-exempt 501(c)(3) organizations can also make tax-free contributions to TAs under rules to be established by the IRS. These qualified general contributions aren’t subject to the $5,000 annual contribution limit and must be provided to all children within a qualified group, as defined.

Tax treatment and other requirements

Contributions aren’t deductible for individual contributors, but the account earnings can grow tax-deferred as long as they’re in the account. Generally, no distributions can be taken from the TA before the year your child turns 18.

Until the year your child turns 18, the account can invest only in certain eligible investments. These are mutual funds or exchange traded funds that 1) track a qualified index, 2) don’t use leverage, 3) don’t charge fees of more than 0.1% of the invested balance, and 4) meet other criteria that may be set by the IRS.

After age 18

In the year your child turns 18, the TA will transition into a traditional IRA. It will become subject to the familiar federal income tax rules governing traditional IRA contributions and distributions.

So, your child will have to have earned income to make any further contributions to the account. But those contributions will be deductible if he or she is eligible, and the higher IRA annual contribution limit will apply.

Also starting with the year your child turns 18, distributions can be taken. But the distributions will generally be at least partially taxable, and IRA early withdrawal penalties could also apply. So it’s best to leave the account untouched so that it can continue to grow tax-deferred.

Weighing your options

If your child is eligible for the $1,000 government contribution, you’ll want to set up a TA to at least get this free money and take advantage of the tax-deferred growth on it. And it can be an even more powerful savings tool if you also make contributions.

Say you put $5,000 a year into your child’s TA for the first 17 years of his or her life after collecting the $1,000 of free money from the government in Year 1. If the account earns 5% annually, it will be worth about $138,000 by the time your child turns 18. Say your child leaves the money invested in what’s now a traditional IRA until age 65. If the account continues to earn 5%, it will grow to almost $1.44 million. Once your child starts having earned income, he or she can make additional contributions to what is now a traditional IRA and have an even bigger account balance at retirement.

However, before making TA contributions, consider whether other tax-advantaged savings options might better achieve your goals. For example, if you want to build up funds for your child’s education, contributing to a Section 529 savings plan may be a better fit. Distributions used to pay qualified education expenses will be tax-free, and some or all of any remaining balance after your child graduates can eventually be converted to a Roth IRA, with tax-free distributions.

Learn more

TAs are worth considering, especially if you can afford to make significant annual contributions. If you have questions about TAs or want more information about other tax-advantaged savings options to benefit your children — or grandchildren — contact us.

The post How the New Trump Accounts for Children Will Work first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

If you own a business or are self-employed and haven’t already set up a tax-advantaged retirement plan, consider establishing one before you file your 2025 tax return. If you choose a Simplified Employee Pension (SEP), you’ll be able make deductible 2025 contributions to it, saving you taxes. Not only is the SEP deadline favorable, but SEPs are easy to set up and the contribution limits are generous. If you have employees, you’ll generally have to include them in the SEP and make contributions on their behalf, which are also deductible.

Deadlines in 2026 for 2025

A SEP can be established as late as the due date (including extensions) of the business’s income tax return for the tax year for which the SEP is to first apply. For example:

• A calendar-year partnership or S corporation has until March 16, 2026, to establish a SEP for 2025 (September 15, 2026, if the return is extended).
• A calendar-year sole proprietor or C corporation has until April 15, 2026 (October 15, 2026, if the return is extended) because of their later filing deadlines.

The deadlines for limited liability companies (LLCs) depend on the tax treatment the LLC has elected. The business has until these same deadlines to make 2025 contributions and still claim a deduction on its 2025 return.

Simple setup

A SEP is established by completing and signing the very simple Form 5305-SEP, “Simplified Employee Pension — Individual Retirement Accounts Contribution Agreement.” Form 5305-SEP isn’t filed with the IRS, but it should be maintained as part of the business’s permanent tax records. A copy of Form 5305-SEP must be given to each employee covered by the SEP, along with a disclosure statement.

You’ll then make deductible contributions to your SEP account, called a “SEP-IRA,” and, if you have employees, to each eligible employee’s SEP-IRA. Employee accounts are immediately 100% vested. Your contributions on behalf of employees will be excluded from their taxable income. When SEP distributions are taken, likely in retirement, they’ll be taxable.

Discretionary, potentially large contributions

Contributions to SEPs are discretionary. You, as the business owner, can decide what amount of contribution to make each year. But be aware that, if your business has employees other than yourself, contributions must be made for all eligible employees using the same percentage of compensation as for yourself.

For 2025, the maximum contribution that can be made to a SEP is 25% of compensation (or approximately 20% of net self-employed income) of up to $350,000, subject to a contribution cap of $70,000. (The 2026 limits are $360,000 and $72,000, respectively.)

Right for you?

While SEPs are much simpler than most other tax-advantaged retirement plans, they’re subject to additional rules and limits beyond what’s discussed here. To learn more, contact us. We can help you determine whether a SEP is right for you and, if so, assist you with setting it up — and maximizing your 2025 tax savings.

The post There’s Still Time to Set Up a SEP and Reduce Your 2025 Taxes first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

Normally, businesses must furnish certain information returns to workers and submit them to the federal government by January 31. But this year, that date falls on a Saturday. So the deadline is the next business day, which happens to be Groundhog Day: February 2, 2026.

W-2s for employees

By February 2, employers must furnish and/or file these 2025 forms:

Form W-2, Wage and Tax Statement. Form W-2 shows the wages paid and taxes withheld for the year for each employee. It must be furnished to employees and filed with the Social Security Administration (SSA). The IRS notes that “because employees’ Social Security and Medicare benefits are computed based on information on Form W-2, it’s very important to prepare Form W-2 correctly and timely.”

Form W-3, Transmittal of Wage and Tax Statements. Anyone required to file Form W-2 must also file Form W-3 to transmit Copy A of Form W-2 to the SSA. The totals for amounts reported on related employment tax forms (Form 941, Form 943, Form 944 or Schedule H) for the year should agree with the amounts reported on Form W-3.

1099-NECs for independent contractors

The February 2 deadline also applies to Form 1099-NEC, Nonemployee Compensation. This form generally must be furnished to independent contractors and filed with the IRS if the following conditions are met:

• You made a payment to someone who wasn’t your employee,
• The payment was for services in the course of your trade or business,
• The payment was to an individual, partnership, estate, or, in some cases, a corporation, and
• You made total payments of at least $600 to the recipient during the year.

You may have heard that the One Big Beautiful Bill Act, signed into law in 2025, increased the threshold to $2,000. That change goes into effect for payments made this year (that will be reported on the 2026 1099-NECs you’ll furnish and file in early 2027). The threshold will be annually adjusted for inflation beginning in 2027.

Other forms

Your business may also have to furnish a Form 1099-MISC to each person to whom you made certain payments for rent, medical expenses, prizes and awards, attorney’s services, and more. The deadline for furnishing Forms 1099-MISC to recipients is also February 2.

The deadline for submitting these forms to the IRS depends on the filing method. If you’re filing on paper, the 2026 deadline is March 2 (because the normal February 28 deadline falls on a Saturday this year). If you’re filing them electronically, the deadline is March 31.

Furnish and file on time

When the IRS requires you to “furnish” a form to a recipient, it can be done in person, electronically or by first-class mail to the recipient’s last known address. If 2025 W-2 or 1099-NEC forms are mailed, they must be postmarked by February 2.

Don’t cast a shadow over tax filing season by missing the Groundhog Day deadline. Failing to meet applicable deadlines (or include the correct information on the forms) may result in penalties. Contact us with any questions about Form W-2, Form 1099-NEC or other tax forms and the applicable filing requirements. We’d be happy to answer them and help you stay in compliance.

The post Is Your Business Ready for the Tax Deadline That’s on Groundhog Day This Year? first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

The IRS is opening the filing season for 2025 individual income tax returns on January 26. This is about the same time as when the agency began accepting and processing 2024 tax year returns last year, despite IRS staffing having been significantly reduced since then. Here are answers to some FAQs about filing.

When is my 2025 return due?

For most individual taxpayers, the deadline to file a 2025 return or an extension is April 15. Individuals living outside the United States and Puerto Rico or serving in the military outside those two locations have until June 15.

When must 2025 W-2s and 1099s be provided to me?

To file your tax return, you need all your Forms W-2 and 1099. February 2 is the deadline for employers to issue 2025 W-2s to employees and, generally, for businesses to issue Forms 1099 to recipients of any 2025 interest, dividend or reportable miscellaneous income payments (including those made to independent contractors).

Normally these forms must be furnished by January 31. But this year, that date falls on a Saturday. So the deadline is the next business day, which is Monday, February 2.

If you haven’t received a W-2 or 1099 by the deadline, contact the entity that should have issued it. But remember that if a form is provided to you via mail instead of digitally, February 2 is the postmark deadline. So you might not receive it until several days after that.

Are there benefits to filing early?

One benefit is that if you’re getting a refund, you’ll likely get it sooner. The IRS expects to issue most refunds in less than 21 days from filing, as it has in recent years.

However, it’s possible that the reduced IRS staffing could cause delays during tax season this year. Other factors could also impact refund timing. The IRS cautions taxpayers not to rely on receiving a refund by a certain date, especially when making major purchases or paying bills.

How can filing early reduce my tax identity theft risk?

Tax identity theft occurs when someone uses your personal information — such as your Social Security number — to file a fraudulent tax return and claim a refund in your name. One of the simplest yet most effective ways to protect yourself from this type of fraud is to file your tax return as early as possible.

The IRS processes returns on a first-come, first-served basis. Once your legitimate return is in the system, thieves will have a tougher time filing a false return under your identity.

What’s the impact of the paper check phaseout for refunds?

As required by Executive Order 14247, the IRS is phasing out paper tax refund checks for individual taxpayers. For the 2025 tax year, the IRS will request banking information on all tax returns when filed to issue refunds via direct deposit or electronic funds transfer (EFT). For taxpayers without bank accounts, options such as prepaid debit cards, digital wallets or limited exceptions will be available.

Direct deposits and EFTs generally speed up refunds. They also avoid the risk that a paper check could be lost, stolen or returned to the IRS as undeliverable.

If I file early and owe tax, will I have to pay it when I file?

Even if you file early, your deadline for paying tax owed is April 15. However, if you didn’t pay enough in withholding and estimated tax payments for 2025 to meet certain rules (or didn’t make estimated tax payments on time), you could still owe penalties and interest. Paying before April 15 may reduce them.

What if I can’t pay my tax bill in full by April 15?

If you don’t pay what you owe by April 15, you’ll likely be subject to penalties and interest even if you met the withholding and estimated tax payment requirements for 2025. You should still file your return on time (or file for an extension) because there are failure-to-file penalties in addition to failure-to-pay penalties.

Paying as much as possible by April 15 will reduce interest and penalties because a smaller amount will be outstanding. Then request an installment payment plan for the rest of the liability.

Under what circumstances can I file for extension?

Generally, anyone is eligible to file an automatic extension to October 15 for individual tax returns; you don’t have to provide a reason why you can’t file on time. But you must file Form 4868 to request the extension by April 15 to avoid being subject to a failure-to-file penalty.

Remember that an extension of time to file your return doesn’t grant you any extension of time to pay your taxes. You should estimate and pay any taxes owed by April 15 to help avoid, or at least minimize, late payment penalties and interest.

What should I do next?

Contact us to answer any other tax filing questions you have or to discuss getting started on your 2025 return. We can prepare your return accurately and on time while helping to ensure you claim all the tax breaks you’re entitled to.

The post Tax Filing FAQs for Individuals first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

With 2025 in the rear view mirror and the tax filing deadline on the road ahead, it’s a good time for businesses to start gathering information about their deductible expenses for 2025. But what’s deductible (and what’s not) might not be as clear-cut as you think.

Most business deductions aren’t specifically listed in the Internal Revenue Code (IRC). The general rule is what’s stated in the first sentence of IRC Section 162, that you can write off “all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business.” In addition, you must be able to substantiate the expenses.

Ordinary and necessary

In general, an expense is ordinary if it’s considered common or customary in the particular trade or business. For example, a landscaping company’s costs for fuel and routine maintenance on its lawn equipment would typically qualify as ordinary expenses because such costs are customary for that type of business.

A necessary expense is defined as one that’s helpful or appropriate. For instance, a retail store that invests in security cameras may be able to operate without them, but the expense is helpful for reducing theft and protecting employees and customers.

To be deductible, an expense must be both ordinary and necessary. An ordinary expense may be unnecessary because the amount isn’t reasonable in relation to the business purpose. For example, let’s say a construction business upgrades to premium, top-of-the-line tools when standard professional-grade tools already meet job requirements. Tool purchases are ordinary, but excessive upgrades may be unreasonable and, thus, unnecessary.

Cases in point

The IRS and courts don’t always agree with taxpayers about what qualifies as a deductible business expense. Often substantiation is the primary issue. Sometimes the question hinges not on the expense itself, but on whether the taxpayer was actually operating a trade or business.

For example, the U.S. Tax Court denied deductions claimed by an engineering firm owner for the value of his own time spent developing a program. Self-performed labor isn’t “paid or incurred,” the court noted. Therefore, it’s not deductible. The court disallowed other deductions due to insufficient records and lack of a clear business purpose.

In another case, a taxpayer engaged in real estate activities. His business expense deductions were denied by the Tax Court. The court ruled that the activities didn’t constitute an active trade or business. Instead, the real estate was held for investment purposes. In addition, the deductions weren’t substantiated because adequate records weren’t kept. The taxpayer appealed. The U.S. Court of Appeals for the Ninth Circuit agreed with the Tax Court. The court ruled the taxpayer “failed to provide sufficient evidence of his claimed deductions.”

What can you deduct for 2025?

Determining the deductibility of business expenses can be complicated, and proper substantiation is critical. We can help you determine what you can deduct on your 2025 tax return. Contact us for assistance.

The post Not All “Business” Expenses Are Tax Deductible first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..

Did you know there’s a tax-advantaged way to save for the expenses of a person with a disability that’s similar to saving for college expenses with a Section 529 plan? Achieving a Better Life Experience (ABLE) accounts can help fund qualified disability expenses for an eligible beneficiary. The SECURE 2.0 Act, signed into law in 2022, made changes that will allow more people to be eligible for ABLE accounts beginning in 2026. The One Big Beautiful Bill Act (OBBBA), signed into law July 4, 2025, has made certain enhancements to them permanent.

The benefits

ABLE accounts can be created by eligible individuals to support themselves, by family members to support their dependents, or by guardians for the benefit of the individuals for whom they’re responsible. Anyone can contribute to an ABLE account.

The OBBBA made permanent the ability of the designated beneficiary to claim the saver’s credit for contributions he or she makes to his or her ABLE account. The maximum saver’s credit for an individual for 2025 and 2026 is $1,000.

While contributions aren’t tax-deductible, the funds in the account are invested and grow tax-deferred. Distributions used to pay eligible expenses are tax-free. (If distributions are used for nonqualified expenses, the portion of the distribution that represents earnings on the account is subject to income tax — plus a 10% penalty.)

Having an ABLE account generally won’t affect the beneficiary’s eligibility for the government benefits to which he or she is entitled. ABLE accounts have no impact on Social Security Disability Insurance (SSDI) payments or Medicaid eligibility.

However, ABLE account balances in excess of $100,000 are counted toward the Supplemental Security Income (SSI) program’s $2,000 individual resource limit. Therefore, an individual’s SSI benefits are suspended, but not terminated, when his or her ABLE account balance exceeds $102,000 (assuming the individual has no other assets). In addition, distributions from an ABLE account to pay housing expenses count toward the SSI income limit.

Expanded eligibility

Eligible individuals must be blind or disabled. For 2025 and prior years, the individual must have become so before turning age 26. But under SECURE 2.0, this age increases to 46 beginning on January 1, 2026.

To be eligible, individuals generally must be entitled to benefits under the SSI or SSDI programs. Alternatively, individuals can become eligible if a disability certificate is filed with the IRS.

Qualified expenses

Distributions from an ABLE account are tax-free if used to pay for expenses that maintain or improve the beneficiary’s health, independence or quality of life. These expenses include:

• Education,
• Housing,
• Transportation,
• Health and wellness,
• Assistive technology, and
• Personal support services.

Employment support expenses also qualify.

Setting up an account

Like 529 plans, ABLE accounts are established under state programs, and there are many choices. An account may be opened under the program of a state other than the one where the individual resides (as long as the state allows out-of-state participants). The funds in an account can be invested in a variety of options, and the account’s investment directions can be changed up to twice a year.

Be aware that an eligible individual can have only one ABLE account. Also, there’s an annual contribution limit of $19,000 for 2025 and $20,000 for 2026. The OBBBA made permanent the ability to roll over 529 plan funds to an ABLE account without penalty, as long as the ABLE account is owned by the beneficiary of the 529 plan or a member of the beneficiary’s family. Such rolled-over amounts count toward the annual contribution limit.

However, if the beneficiary works, he or she can also contribute part, or all, of his or her income to the account. (This additional contribution is limited to the poverty-line amount for a one-person household.)

A new opportunity

If you or someone in your family became disabled or blind after turning 26 but before age 46, the expansion of ABLE account eligibility in 2026 provides a new opportunity for tax-advantaged savings. To learn more about the tax benefits and other financial considerations, contact us.

The post More Individuals With Disabilities Will Be Eligible for Tax-Advantaged ABLE Accounts in 2026 first appeared on Burkett Burkett & Burkett Certified Public Accountants, P.A..