If you don't file a required federal tax return, the IRS has the legal authority to file one for you. This is called a Substitute for Return (SFR), authorized under IRC §6020(b). The IRS doesn't create an SFR out of goodwill—it creates one using the income information documents (W-2s, 1099s) it has on file for you, without any of your deductions, credits, or favorable filing status. The result is almost always a dramatically inflated tax liability. And that inflated liability

Short-term rental platforms like Airbnb, VRBO, and Hipcamp have made it easy to turn a spare room or vacation property into income. What they haven't made easy is understanding the tax consequences. Short-term rental income doesn't fit neatly into a single tax category—depending on how many days you rent and how much time you spend managing the property, it can be treated as passive rental income, active business income, or even excluded from gross income entirely. Getting th

Small business owners who want to help employees pay for health insurance but cannot afford, or do not want to manage, a traditional group health plan may have two alternatives to consider: the Qualified Small Employer Health Reimbursement Arrangement, or QSEHRA, and the Individual Coverage Health Reimbursement Arrangement, or ICHRA. Both arrangements can allow employers to reimburse eligible employees for individual health insurance premiums and qualified medical expenses on

If your business carries debt—whether a line of credit, equipment loans, commercial real estate financing, or acquisition debt—you may be affected by the Section 163(j) limitation on the business interest expense deduction. Before 2018, interest on legitimate business debt was generally fully deductible. The Tax Cuts and Jobs Act capped that deduction for larger businesses and introduced a formula that limits deductible interest based on a percentage of a metric called Adjust

Not filing a tax return is a more common problem than most people admit. Life gets complicated—a business fails, a personal crisis hits, the numbers feel overwhelming, or the fear of what's owed makes the problem feel easier to ignore than to face. The IRS has a systematic process for addressing non-filers, and it's a process that gets progressively more expensive and intrusive the longer someone waits. Understanding what actually happens—and why voluntary compliance almost a

Cryptocurrency isn't a fringe asset class anymore—small business owners are using it to pay contractors, accept customer payments, hold it as an investment, and make purchases. And the IRS has been unambiguous since 2014: cryptocurrency is property for federal tax purposes, not currency. Every transaction involving crypto has potential tax consequences, including transactions that feel routine. Beginning with certain 2025 digital asset transactions reported in 2026, the IRS i

Restaurants, contractors, nail salons, food trucks, retail cash operations—these businesses face more IRS scrutiny than businesses that process most transactions digitally. It's not a presumption of guilt. It's a recognition that cash is harder to trace, and the IRS has developed specific methods for reconstructing income when books and records don't tell the full story. Knowing those methods helps you understand what your records need to prove. Why Cash Businesses Draw More

The Tax Cuts and Jobs Act introduced a limitation that surprises many business owners who have a large loss year: the excess business loss limitation under IRC §461(l). In plain English, this rule can stop you from using all of your business loss against other income in the current year. That does not mean the loss disappears. It means part of the deduction may be delayed and carried forward. This is one of the reasons tax planning across years matters. A loss year is not jus

The Offer in Compromise is one of the most misunderstood and oversold products in the tax resolution industry. The ads promise pennies on the dollar. The reality is a financial analysis where the IRS calculates how much it believes it can reasonably collect from you over the remaining collection period—and if that number is at least as large as your balance, your offer will be rejected. Here's how the IRS actually evaluates one. What an OIC Is An Offer in Compromise is an agr

Pass-through losses from an S-Corp or partnership flow through to your personal return on Schedule K-1. But a K-1 loss doesn't automatically translate into a deduction. Multiple limitation systems — including basis, at-risk, and passive activity loss rules — can block or defer that deduction, sometimes for years. Understanding how these work prevents surprises on your return and helps you plan around them. Basis Limitations In an S-Corp or partnership, your ability to deduct

If you're self-employed and paying for your own health insurance, you may be entitled to deduct 100% of your premiums without itemizing. It's one of the few above-the-line deductions that directly reduces your adjusted gross income, which can ripple through your entire return—affecting other calculations on the return, including QBI in some cases, eligibility for certain credits, and ultimately your tax bill. Many business owners either miss this entirely or set it up incorre

Starting a business often means losing money before making it. The IRS actually accounts for this. The Net Operating Loss (NOL) rules allow you to offset future profitable years with losses from less profitable ones—which is one of the reasons tax planning across years matters more than looking at any single year in isolation. What Is an NOL? A Net Operating Loss can occur when allowable deductions exceed income for the year, after the NOL rules make specific adjustments. Not

S-Corp owners often pay for business expenses out of pocket—mileage, home office, phone, supplies—and then either forget to reimburse themselves or run expenses through the S-Corp account in ways that create tax problems. An accountable plan solves this. It's not complicated, but getting it wrong costs money, and most S-Corp owners either don't have one at all or have one that doesn't actually work. Why This Matters for S-Corp Owners Specifically Unlike a sole proprietor, an

Making the S-Corp election is theoretically straightforward: file Form 2553, get confirmation, done. In practice, Form 2553 has a surprising number of failure points, and many business owners don't discover the problem until they're mid-audit or trying to prepare returns years after the fact. Here's where the election goes wrong. Missing the Filing Deadline For a calendar-year entity, the S-Corp election is generally due no more than 2 months and 15 days after the beginning o

Starting a business costs money before you make any. Market research, legal fees, training, licenses, state filing fees—all of this happens before you open. The IRS has specific rules for how these pre-opening costs are treated, and a lot of new business owners either miss the deduction entirely or get the timing wrong. Here's how it actually works. What Are Startup Costs? Startup costs are amounts paid or incurred to investigate the creation of an active business or to creat

Most people use lien and levy interchangeably. In IRS collection, they are not the same thing—not even close. The confusion matters because the correct response to each is completely different, and getting them mixed up means you're solving the wrong problem. What a Federal Tax Lien Is A federal tax lien is a legal claim the IRS places against all of your property—real estate, financial accounts, personal property, business assets—to secure a tax debt. It's a public notice th

There has been a lot of confusion around Form 1099-K over the last few years. For a long time, many small sellers and freelancers only received Form 1099-K if they had more than $20,000 in payments and more than 200 transactions through a third-party payment platform. Then the threshold became a moving target, which created a lot of panic and bad information online. But the more important point never changed: The 1099-K does not create the tax liability. The income does. If y

Retirement planning is one of the few areas where the tax code is genuinely trying to help you. As a self-employed business owner, you have access to retirement vehicles that allow you to contribute significantly more than a traditional employee—and, in many cases, deduct contributions within IRS limits. The three most common options for small business owners are the SEP-IRA, the Solo 401(k), and the SIMPLE IRA. Each one fits a different situation. SEP-IRA (Simplified Employe

If your business owes payroll taxes, you might assume that's a business problem. The IRS disagrees. Under the Trust Fund Recovery Penalty (TFRP), the IRS can assess the unpaid employee portion of payroll taxes directly against individuals—piercing through the business entity entirely and going after personal assets. This is one of the few places in tax law where the protection a business entity normally provides simply disappears. What Are Trust Fund Taxes? When you run payro

Closed sign Closed sign Closing a business isn't just a business decision—it's a tax event. The IRS has specific expectations for what needs to happen when you shut down operations, and skipping these steps creates problems that follow you long after the doors close. Most owners focus on the operational side and never think through the tax side until it's too late. Filing Final Returns Every entity type has a required final return process. For a sole proprietor filing on Sche