5 Financial Surprises That Could Haunt Your Business Before Year-End

Every year, social media is flooded with "tax hacks" promising huge refunds, massive deductions, and ways to avoid paying taxes. While some strategies have a basis in tax law, many are oversimplified, misleading, or completely false. Following bad tax advice can result in audits, penalties, interest, and costly mistakes. Before you act on something you saw on TikTok, Facebook, Instagram, or YouTube, here's what you need to know. 1. "Start an LLC and Write Off Everything!" -MYTH- One of the most common tax myths is that forming an LLC suddenly makes personal expenses tax deductible. An LLC is simply a legal business structure. It does not change the rules regarding what expenses qualify as business deductions. To be deductible, expenses must be both ordinary and necessary for your business. Common red flags include: Personal groceries Family vacations Everyday clothing Personal vehicle expenses without mileage records If the expense would have existed whether you owned a business or not, it's probably not deductible. 2. "Everyone Qualifies for a Huge Fuel Tax Credit Refund!" -MYTH- The Fuel Tax Credit is not available to everyone. This credit generally applies to fuel used for specific off-highway business purposes, such as: Farming operations Commercial fishing Off-road business equipment Refrigerated trailer units Certain other qualifying business activities Claiming this credit requires detailed documentation, including fuel purchase records, equipment ownership information, usage logs, invoices, and dates of use. Improperly claiming this credit has become so common that it has drawn significant IRS attention. 3. "Self-Employed People Can Claim Thousands in COVID Sick Leave Credits!" -MYTH- These credits applied only to specific tax years and qualifying circumstances. Unfortunately, many online promoters have encouraged taxpayers to file amended returns claiming credits they do not qualify for. As a result, taxpayers may face: Delayed refunds IRS audits Penalties and interest Repayment of improperly claimed credits If someone guarantees a large refund based on a COVID-related credit, proceed with caution. 4. "Pay Your Children and Get Huge Tax Deductions!" -MYTH- (Sort Of) Hiring your children can be a legitimate tax strategy—but only when done correctly. To qualify: Your child must perform actual work. Compensation must be reasonable for the services provided. Proper payroll and employment records must be maintained. IRS Red Flag : Paying a young child thousands of dollars for minimal or nonexistent work, such as claiming a five-year-old earned $20,000 for "modeling" services. When structured properly, hiring family members can be beneficial. When abused, it can create significant problems. 5. "Take a Vacation, Post a Business Photo, and Write Off the Entire Trip!" -MYTH- A vacation does not become a business expense simply because you answer emails, make a phone call, or post a business-related photo. For travel expenses to be deductible, the primary purpose of the trip must be business. Be sure to maintain: A travel itinerary Receipts Dates of business activities Meeting notes Names of individuals you met with Documentation of business purposes Only expenses directly related to legitimate business activities may qualify for a deduction. 6. "Rent Your Home to Your Business and Deduct Thousands!" -PARTIALLY TRUE- This strategy is often referred to as the "Augusta Rule," and it can be legitimate when properly implemented. To qualify: Fair market rent must be charged. Actual business meetings or events must take place. The property can be rented for no more than 14 days per year. Proper documentation must be maintained. Documentation should include: A written rental agreement Meeting agendas Attendance records Meeting minutes Evidence supporting the rental rate One benefit of this strategy is that rental income received for qualifying rentals of 14 days or less is generally not subject to federal income tax. However, the transaction must be legitimate and properly documented. 7. "Donate Used Items and Claim Huge Deductions!" -MYTH- Charitable donations are deductible only at their fair market value—not what you originally paid for them. Taxpayers should maintain: Donation receipts Itemized lists of donated property Reasonable fair market value estimates Appraisals when required In addition, many taxpayers receive little or no tax benefit from charitable contributions unless they itemize deductions. Keeping accurate records is essential to supporting your deduction if questions arise later. Final Thoughts If a tax strategy sounds too good to be true, it probably is. Social media can be a great place to find business ideas and educational content, but it should never replace professional tax advice. Before claiming a deduction or credit based on something you saw online, consult with a qualified tax professional.  A quick conversation today could save you thousands of dollars in penalties, interest, audits, and unnecessary stress tomorrow.

We’re excited to share some wonderful news with our clients, partners, and community—our firm has once again been recognized in the Best of NWA 2025 awards ! This year, we are honored to receive: Gold for Best Accounting Firm Gold for Bookkeeping Silver for Business Consulting Awards like these are especially meaningful to us because they reflect the trust and confidence our clients place in our team every day. Your support, referrals, and continued partnership are what make achievements like this possible. As we reflect on this recognition, we’re reminded of why we do what we do. At Byrd & Massey, our focus has always been on providing dependable accounting services, thoughtful tax solutions, and strategic business guidance tailored to the needs of small businesses. This acknowledgment encourages us to continue improving, growing, and finding new ways to better serve you. We don’t take your trust lightly. Every return prepared, every set of books balanced, and every consultation we provide is done with a commitment to professionalism, integrity, and attention to detail. Your financial success will always remain at the heart of our work. We are truly grateful for the relationships we’ve built over the years and proud to be part of such a supportive community. Thank you for allowing us to be a part of your journey—we look forward to continuing to grow alongside you for many years to come. — The Team at Byrd and Massey

A new tax law — often referred to as the Big Beautiful Bill — has officially passed, bringing several important updates for individuals, families, homeowners, and small business owners. To make everything easy to understand, we’re launching a 10-part series highlighting the most important changes and how they may affect your taxes in 2025 and beyond. Here’s a quick overview of what the series will cover: 1. Standard Deduction Is Staying Higher The increased standard deduction will not drop in 2026. 2. Lower Tax Brackets Are Staying in Place Current tax brackets and lower rates are now permanent. 3. Child Tax Credit Increase Families may see a higher credit per child. 4. New Overtime Pay Deduction (2025–2028) A new deduction for qualified overtime income, even with the standard deduction. 5. New Tip-Income Deduction Tip earners can deduct taxable tip income (2025–2028). 6. Car-Loan Interest Deduction (U.S.-Assembled Cars Only) Interest on qualifying auto loans becomes deductible for 2025–2028. 7. SALT Deduction Cap Increase The cap rises dramatically from $10,000 to $40,000, with phaseouts (2025–2029). 8. New Deduction for Seniors 65+ Older taxpayers receive an additional deduction through 2028. 9. Continued Small Business & Self-Employed Benefits QBI stays, bonus depreciation continues, and write-off opportunities remain.  10. Smart 2025 (and beyond) Tax-Planning Tips Practical steps to make the most of the new changes. We’ll be publishing each of these posts individually on Instagram and Facebook so you can maximize every deduction and credit available. Stay tuned — there’s a lot of good news to share! With so many tax changes on the horizon, knowledge truly is power. Stay tuned as we unpack each update in our upcoming series — small insights now can lead to smarter decisions all year long.

We have some exciting news to share with you! We're moving! Our New Location will be 2618 SE J St. #4, Bentonville, AR 72712. We are expecting to move in Mid-July, but please call first if you have any questions! Our phone number and email address will remain the same.

There are two types of educational credits to help students in their continuous pursuit of knowledge: The American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit (LLC). Understanding both is important if you attend college or have kids who do because it can greatly help with your tax bill. American Opportunity Tax Credit (AOTC) This undergraduate tax credit is a partially refundable credit that is good for the first four years in college and assists with students’ expenses such as qualified tuition expenses, school fees, and course materials. You can claim up to $2500 PER student each year; however, your modified adjusted gross income is a factor when claiming this credit. See the numbers below: Based on Modified Adjusted Gross Income (To claim FULL credit) Individual - $80,000 or less Married Filing Jointly - $160,000 Based on Modified Adjusted Gross Income (To claim REDUCED credit) Individual - Less than $90,000 Married Filing Jointly - Less than $180,000 To claim the AOTC credit, you will need the following: A TIN or Social Security Number A 1098-T (or tuition statement) from an eligible educational institution* Be pursuing a degree or other recognized education credential Be enrolled at least half time for at least one academic period beginning in the tax year Not have claimed the AOTC or the former Hope credit for more than four tax years Not have a felony drug conviction at the end of the tax year *Note: If you were not issued a 1098-T, you may still be able to claim the credit by showing proof of payment to the eligible educational institution attended. Lifetime Learning Credit (LLC) This tax credit is for undergraduate, graduate, and professional studies which includes any courses you take to improve job skills. The LLC is exactly that, for a lifetime. The credit never runs out if you are enrolled and taking courses from an eligible educational institution. You, your spouse, or dependent can receive a $2,000 tax credit every tax year. Based on Modified Adjusted Gross Income (To claim $2000 tax credit) Individual - Less than $90,000 Married Filing Jointly - Less than $180,000 To claim the LLC, you need: A 1098-T (or tuition statement) from an eligible educational institution Cannot also claim the AOTC If you do not receive a 1098-T, provide receipts of tuition and other approved expenses, such as course materials. Student Loans If you are one of millions of taxpayers with student loans, then you are already familiar with form 1098-E. Be sure to keep an eye out for yours. Student loan servicers will be sending notifications out this month. Hoping for help with the burden of student loans? There’s an interest deduction for that! According to the IRS, you may deduct the “lesser of $2500 that you paid throughout the previous year OR the amount of interest you actually paid during the year.” The amount phases out when you reach the annual limit for your filing status. For more information on educational and student loan credits click here and if you would like to see the format of the tax form for each credit, visit this link here . As always, we are here to help navigate the ins and outs of tax season. Send your questions to us via your client portal by clicking here to log in. We are happy to help and remember, we’re easy to talk to!

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The Corporate Transparency Act (CTA) went into effect on January 1, 2024. As a result, non-exempt companies (almost all closely held businesses, including LLCs, corporations, and limited partnerships) that are registered to do business within any state in the US (reporting companies) are required to file initial and updated reports (BOI Report) to the US Treasury Department’s Financial Crimes Enforcement Network (FinCEN) about their beneficial owners and company applicant. A “beneficial owner” is an individual who either controls 25% of the ownership interests, or directly or indirectly exercises substantial control over the reporting company. Non-owners (such as managers, officers, directors, etc.) can also be beneficial owners for purposes of the CTA. A “company applicant” is a person responsible for the reporting company’s initial formation or registration. There are 23 types of entities that are exempt from filing BOI reports; however, most entities will not be exempt. For reporting companies formed prior to January 1, 2024, the initial BOI reports are due by January 1, 2025. For reporting companies formed on or after January 1, 2024, and before January 1, 2025, the initial BOI reports are due within 90 days of formation. For reporting companies formed on or after January 1, 2025, the initial BOI reports are due within 30 days of formation. An updated BOI report MUST be filed within 30 days for any changes in the information given about the reporting company or its beneficial owners. For additional information, here is a link to the website for filing. In general, the following information is required to be included to be in the BOI report: Reporting Company Full legal name Any trade or doing business as (dba) name Address for principal place of business in the US Jurisdiction of formation/registration Taxpayer identification number (TIN) Beneficial Owners & Company Applicants Full legal name Date of birth Unique identifying number (i.e. driver's license or passport) Current address Image of the identifying document Failure to comply with the CTA can result in a civil penalty of $500 per violation per day, and a criminal fine and/or imprisonment of up to 2 years. Because the consequences of failing to report are significant, we are alerting you so that you may take whatever action is necessary to comply based on your unique circumstances. PLEASE NOTE: For purposes of clarification, Byrd and Massey will NOT be filing any BOI reports with FinCEN at this time.

Birth Year Acknowledgement If you were born in 1950 or earlier, you should have already started taking your Required Minimum Distributions (RMDs). For those born between 1951 and 1959, you have a bit more time. You can wait until April 1st of the year after you turn 73 to begin taking your RMDs. Those born in 1960 or later will have until April 1 st of the year after turning 75. It's crucial to stay informed and compliant with these regulations to avoid any unnecessary penalties. If you have any questions or need assistance, consult with your financial advisor to ensure you're on the right track. Subsequent RMDs After taking your first RMD, all future RMDs must be taken by December 31 st of each year. If you delay your first RMD until April 1 st of the following year, you will need to take TWO distributions in that year, one by April 1 st and the other by December 31 st . This can have significant tax implications. To ensure you make the best financial decisions, we strongly recommend discussing your RMD strategy with a financial advisor . Stay informed and plan ahead! First RMD Deadline for IRAs If you turned 73 in 2024, a first RMD must be taken by April 1, 2025. This applies to ALL types of IRAs, including SEP and SIMPLE IRAs; however, Roth IRAs are an exception. Roth IRA owners are not required to take RMDs during their lifetime . First RMD Deadline for 401(k) and Other Defined Contribution Plans If you are still working and do not own more than 5% of the company sponsoring your retirement plan, you may be able to delay your first RMD until after retirement. This exception applies exclusively to workplace retirement plans and does not extend to IRAs, SEP IRAs, or SIMPLE IRAs. To discuss tax planning strategies, you can book an advisory appointment online or by giving us a call at 479-876-5599. We are happy to help!

If you have recently married, purchased a home, or had a baby, you are likely aware of the significant life adjustments such milestones present! But you may not realize that major life changes usually have tax implications associated with them. Here are a few things to consider when major life events happen: Getting Married -- What is the best filing status for our financial situation? Should we update our withholding? Buying a House – Do I get a tax break when I buy a house? Having a Baby – Will I be eligible for the child tax credit? Changing Jobs – I’m making more money. Should I bump up my withholding? Sending Kids to College – Can I claim tax credits and deductions for the education-related expenses I paid for my child? Does it make more sense for my child to take the credits? Going Through a Divorce – What filing status do I qualify for after a divorce? Getting Ready to Retire – Should I be concerned about the tax implications of required minimum distributions? Will I pay taxes on my Social Security benefits? If you are a Returning Tax Client , the above questions can be addressed via a note enclosed with your tax organizer and documents, and your CPA will review and acknowledge it accordingly. If you are new to the firm, a sit-down meeting is required so a CPA can understand your previous year and current tax situation moving forward. There is no fee for this meeting; however, should you need to discuss tax planning in a more detailed manner, you can schedule an advisory appointment online or give us a call at 479-876-5599. As always, we are here to help and we're easy to talk to!