by Amanda O'Brien | Accounting News, IRS, News, Newsletter, Tax, Tax Planning, Tax Planning - Individual
If you owe back taxes and you’re expecting a refund this year, you might be wondering if the IRS will keep it.
In some cases, yes. In others, no. Whether the refund reaches your bank account depends on several factors.
If you have unpaid federal tax debt, the IRS can apply your current refund to that balance before sending you any money. And in some situations, your refund can also be applied to other debts, such as student loans or child support.
When the IRS Keeps Your Refund
If you owe federal taxes from a previous year, the IRS will usually apply any refund to that outstanding balance automatically (even if you have an installment agreement with the IRS for those back taxes). You should receive a notice explaining how much of your refund was applied to your debt and how much remains owed.
Treasury Offset Program
The Treasury Offset program allows the federal government to take your tax refund to pay off certain debts. Back taxes are at the top of that list.
Other debts include:
- Past-due federal student loans
- Unpaid child support
- State income tax debt
- Certain unemployment compensation debts
If your refund is taken through the Treasury Offset Program, you will receive a written notice detailing the original amount, the amount taken, and the agency that received the payment.
If you believe the offset was made in error, contact the agency that received the payment, not the IRS.
What Happens If Your Refund Doesn’t Cover What You Owe?
If your refund doesn’t fully cover your tax debt, the IRS will take the entire amount and apply it to your balance, even if you’ve been making on-time payments to a payment installment agreement. And interest and penalties will continue to accrue.
Options When Owing Back Taxes
Owing back taxes to the federal government feels overwhelming, but there are options available. The key is taking action instead of avoiding the issue. These options include:
- Installment agreement: This agreement allows you to pay off your debt over time in monthly payments. Taxpayers can usually set this up online themselves, and it’s the simplest solution if you can afford monthly payments.
- Currently Not Collectible (CNC) status: This is an option for taxpayers facing significant financial hardship. This agreement allows you to pay off your debt over time in monthly payments. Taxpayers can usually set this up online themselves, and it’s the simplest solution if you can afford monthly payments.
- Offer in Compromise: This option allows you to settle your tax debt for less than you owe. The IRS does not approve these easily. You need to prove you can’t pay the full amount owed, and you likely won’t be able to, so accepting less than the full amount is actually in the IRS’s best interest. You’ll need to prove hardship or that there’s real doubt about the amount owed.
Adjust Your Withholding Going Forward
Once you’ve dealt with your back taxes, think about adjusting your paycheck withholding. Submitting a new W-4 form to your employer can help prevent underpayment in future years.
Don’t Wait for the IRS to Act
The worst thing you can do when you owe back taxes is nothing. The debt isn’t going to disappear, and the penalties will keep piling up. The sooner you address it, the more options you’ll have. Your refund might be gone this year, but dealing with the problem now prevents a bigger mess down the road.
by Amanda O'Brien | Accounting News, News, Newsletter
Health savings accounts (HSAs) are one of the best tools for saving on healthcare costs. And beginning this year, more Americans than ever will qualify for HSAs, thanks to the One Big Beautiful Bill (OBBB), which was passed last July. Read on to learn what’s changing, who qualifies, and how these updates could offer savings on healthcare costs.
What Is an HSA?
An HSA is a special type of savings account Americans can use to pay for qualified medical expenses. Contributions are tax-deductible, the money grows tax-free, and withdrawals are tax-free for qualified medical expenses. Unlike flexible spending accounts (FSAs), HSAs don’t have a “use it or lose it” rule, so your funds roll over each year. And you keep the account even if you change jobs or retire. Until now, HSAs have been available only to people enrolled in high-deductible health plans (HDHPs), but the OBBB changed that.
Bronze and Catastrophic ACA Health Plans Now Qualify
As of January 1, 2026, anyone enrolled in a bronze or catastrophic health plan sold through the Affordable Care Act (ACA) marketplace now qualifies for an HSA plan. Before, these plans didn’t meet the IRS’s strict HDHP requirements. This update opens the door for millions more people, especially younger adults and people who choose lower-premium coverage, to start saving for healthcare expenses.
Direct Primary Care Now Covered
Under the OBBB, people using Direct Primary Care (DPC) can now pair it with an HSA. DPC is a subscription model where patients pay a monthly fee to a doctor or practice for unlimited primary care visits. Now, as long as the fee stays under $150 per month for individuals (under $300 for families), HSA funds can be used to pay for those services. This gives patients more flexibility and control over their healthcare budgets.
Telehealth Services No Longer Disqualify Patients for HSA Eligibility
In the past, if a patient’s HDHP covered telehealth visits before they met the deductible, it could wipe out their HSA eligibility for the year. However, the OBBB allows HDHPs to cover telehealth visits before the deductible is met. That means a patient’s health plan can cover virtual doctor visits upfront (or with a small copay), and they can still contribute to their HSA. Patients are no longer forced to choose between the convenience of telehealth and their savings goals.
These updates make HSAs more accessible, especially at a time when healthcare costs are on the rise, and more patients are using telemedicine. An HSA can build a cushion for future costs, making it an often overlooked retirement savings vehicle.
by Amanda O'Brien | Accounting News, Business Growth, News, Newsletter, Small Business
When it comes to increasing the value of a small business, focusing on top-line growth won’t give you the whole picture. Revenue alone doesn’t always equal value, and a bigger business isn’t always a better one. If your long-term goal is to build a valuable business with options for your eventual exit plan, here’s what you need to know.
Focus on Fundamentals
Growth looks good on paper, but without the right foundation, a business isn’t actually valuable. What truly builds value is a combination of profitability, liquidity, and operational efficiency.
- Profitability: You’re earning real income after expenses – proof that your business model actually works. High revenue with razor-thin margins won’t attract serious buyers.
- Liquidity: You have cash on hand to meet obligations and weather storms. Strong liquidity shows potential buyers and lenders that your business can handle surprises. It also gives you flexibility to invest in growth opportunities.
- Efficiency: You’re using your people, systems, and resources well. If your team is constantly putting out fires or if you’re stuck doing everything yourself, your business isn’t running efficiently. Inefficiency cuts into profits, increases burnout, and lowers the value of your business.
Together, these create a business that’s financially healthy and attractive to potential buyers.
Know Your Margins
To increase your business’s value, you need to know your true margins. Not just on the macro level. You should be tracking each project, service, or product. And it’s not enough to know your numbers in isolation. How do they compare to industry benchmarks? Potential buyers will want to know how your margins compare to competitors. This gives you negotiating power when it’s time to sell.
Build a Business That Can Run Without You
One of the biggest red flags for buyers is a business that falls apart when the owner steps away. If everything depends on your decisions and your moves, the business isn’t really transferable. To increase value, build a team you trust, define roles clearly, document your processes, and establish systems for day-to-day operations.
Keep Clean Books
Potential buyers want transparency, so be prepared to show accurate and current financials. If you want to sell someday, or even just know your business’s true value, you’ll need:
- Three years of clean financial statements
- Properly categorized income and expenses
- Clean records – no blending of personal and business transactions
Good accounting isn’t just about taxes. Messy books create doubt. This can weaken your negotiating power and ultimately lower your sale price.
Think Like a Buyer, Plan Like a Seller
It might seem counterintuitive, especially for startups and young companies, but the most valuable businesses are built with an exit strategy in mind. The choices you make now should move you toward a profitable and transferable company. Whether you decide to sell, step back, or pass on, focusing on strong fundamentals creates real value and sets you up for a better future.
by Amanda O'Brien | Accounting News, News, Newsletter, Small Business
When the federal government shuts down, businesses across the nation feel the effects, especially for those that rely on federal programs, work directly with federal agencies, or operate near government properties. This article explains how government shutdowns affect small businesses, from contracts to SBA loans, so you can be prepared for the next one.
Contractors On Hold
Many small businesses have contracts with federal agencies. These include:
- Construction
- Landscaping
- Facilities maintenance
- IT and cybersecurity
- Environmental assessments
- Logistics
- Financial audits
- Biotech and defense R&D
- HR consulting and administrative support
When a shutdown happens, payments for these contracts often stop. While some government employees might receive back pay once the government reopens and normal operations resume, small businesses may not get reimbursed for delayed work. All of this leads to paused projects, lost revenue, and tough decisions regarding payroll, such as delaying paychecks, cutting hours, or even laying off employees until payments resume.
Even a short shutdown disrupts cash flow. And if your margins are already thin, it can be crushing.
Local Businesses Take a Hit Too
A government shutdown also hurts the businesses that support government workers and tourists. When federal offices close, surrounding businesses like restaurants, hotels, retail stores, and coffee shops see fewer customers. These businesses depend on the consistent weekday foot traffic from government employees.
Likewise, when museums and national parks are closed or limiting services, surrounding businesses take a hit.
SBA Loan Applications Freeze
The SBA’s Capital Access Financial System (CAFS) and E-Tran system go offline during a shutdown. Lenders can’t submit new applications, and business owners can’t get approved for new loans. So, each day the government is shut down, approximately 320 small businesses are blocked from accessing about $170 million in SBA-guaranteed loans. That includes loans under key programs like 7(a) and 504. And once the government reopens, the backlog of applications typically leads to long delays.
What Small Business Owners Should Know
First and foremost, build cash reserves so your business is prepared for a future government shutdown. If you’re applying for SBA loans when a shutdown occurs, prepare your documentation fully, so when the government reopens, you’re ready to go and less likely to fall behind in the backlog.
If you’re a service or retail business that depends on tourism and traffic from parks or federal buildings, start thinking now about how you can diversify your customer base. As we just witnessed, the duration of shutdowns is unpredictable, and having a broader customer reach can help offset the loss of foot traffic.
Government Shutdown Q&A
Q1: How does a government shutdown affect small businesses?
A government shutdown impacts small businesses through delayed federal contract payments, reduced foot traffic near government buildings, and halted SBA loan applications.
Q2: Do SBA loans get processed during a government shutdown?
No. SBA’s CAFS and E-Tran systems go offline during a shutdown, preventing lenders from submitting applications and creating a backlog when government operations resume.
Q3: How can small businesses prepare for a government shutdown?
Small businesses should build cash reserves, diversify their customer base, and prepare SBA loan documentation in advance to avoid delays once systems reopen.
by Amanda O'Brien | Accounting News, News, Newsletter, Tax, Tax Planning, Tax Planning - Individual
President Trump’s One Big Beautiful Bill (OBBB) introduced several tax changes designed to boost take-home pay and simplify the tax code. Some major adjustments include nontaxable income, gift limits, estate tax exemption, and overtime deductions. Here’s a look at these changes and how they could affect your taxes.
Nontaxable Income
Nontaxable income is income that is excluded from federal taxation by the IRS. Some examples include child support, alimony, workers’ compensation, financial gifts, disaster relief payments, and Roth IRA contributions (not gains). In an effort to simplify tax filings and increase take-home pay for workers, the OBBB broadens the scope of what is treated as “nontaxable” for certain types of income, specifically tips and qualified overtime.
Overtime Pay
Before the OBBB, overtime pay was fully taxable. It was counted as part of a worker’s regular wages for federal income tax. The OBBB implemented a deduction of up to $12,500 ($25,000 for joint filers) in overtime pay. This lowers taxable income for hourly and shift workers. However, this deduction is only valid from 2025 through 2028.
The deduction phases out above $150,000 MAGI (modified adjusted gross income) for single filers and $300,000 for joint filers.
Tip Income
Under the OBBB, eligible workers can deduct up to $25,000 annually from taxable income for “qualified tips.” To qualify, tips must be paid via cash, check, debit or credit card, or electronic payments through an app. Again, this is valid from 2025 through 2028, and tips are still subject to Social Security and Medicare taxes.
It’s important to point out that automatic gratuities, such as those added to large parties, are not considered voluntary, so they won’t qualify for the deduction.
Gift Limits
The annual federal gift tax exclusion increased from $18,000 to $19,000 per individual, meaning a financial gift up to that amount won’t trigger taxes or filing requirements for the benefactor or the recipient.
Estate Tax Exemption
The federal estate tax exemption is the amount that can be passed to heirs without federal estate tax. Beginning in 2026, this amount is increasing from $13.99 million to $15 million per person. This means that married couples can shield up to $30 million from federal estate tax. This exemption is permanent and is tied to inflation, so the limit will rise over time, giving families the ability to pass on more wealth tax-free.
With the OBBB legislation, lawmakers set out to make the tax code simpler and more worker-friendly, with more income treated as nontaxable or deductible, higher gift and estate tax thresholds for family wealth transfers, and some relief for overtime earners and tip workers. It’s not a total overhaul, but these changes could lead to a less painful tax season for some taxpayers.
