HF Accounting

If the IRS audits your income tax return, you may need to produce documentation. In general, the IRS has three years to assess additional tax, starting from the date the return was filed or due, whichever is later. For example, if you filed your 2022 return by the April 18 deadline in 2023, the IRS generally has until April 18, 2026, to assess a tax deficiency. So you potentially can discard records related to that return after April 2026. But records should be held longer in certain situations. And you should keep copies of your returns forever. Call us at (217) 275-8786 with questions.

Companies that engage in research and development activities may qualify for a federal tax credit for some of those expenses. The research credit is complicated to calculate, and not all research activities are eligible. But the tax savings can be significant. Certain taxpayers may even be able to use the credit to offset employer-paid payroll taxes or the owners’ alternative minimum tax obligations.

We can help you navigate the complexities of claiming this credit, including how it works, which costs may qualify and how it interacts with the deduction for research and experimentation costs. Call us at (217) 275-8786 to discuss your business’s eligibility and quantify the potential benefits.

Two federal tax breaks can help offset the cost of accessibility improvements. In 2026, qualifying small businesses (with $1 million or less in gross receipts or no more than 30 full-time employees in 2025) may claim the Disabled Access Credit. It’s generally worth 50% of eligible accessibility costs (up to a $5,000 maximum). Businesses of any size may also deduct up to $15,000 per year for qualified architectural and transportation barrier removal. You can claim both benefits in the same year, but not for the same expense. New construction isn’t eligible for either break. If you’re planning upgrades, call us at (217) 275-8786 to help you make the most of these incentives.

How you capitalize your C corporation isn’t just an accounting matter — it’s a tax-saving opportunity. You can set up funds supplied by shareholders as either capital contributions (equity) or loans (debt). Future withdrawals by equity investors may result in double taxation. Conversely, repayments of shareholder loans are generally tax-free, while interest payments are taxable to the shareholder and deductible by the corporation. This setup provides a more tax-efficient way to get money out of your company. However, the IRS may reclassify shareholder loans as equity if not properly structured and documented. Contact us at (217) 275-8786 to evaluate your options and determine what’s right for your situation.

In strategic planning, it can be hard for business owners to step back and evaluate opportunities objectively. An external advisory board can offer fresh, independent perspectives and seasoned guidance, especially when handling high-stakes, complex transactions. A board’s involvement can elevate professionalism, strengthen credibility with stakeholders and support smarter long-term decisions. Contact us at (217) 275-8786 to explore how creating an advisory board, or optimizing your current one, can help your business grow.

Many parents begin saving with 529 college savings plans when their children are young. Contributions aren’t tax deductible, but they grow tax deferred. Earnings used to pay qualified education expenses can be withdrawn tax-free. Earnings used for other purposes may be subject to income tax plus a 10% penalty. What if you have a large 529 plan balance but your child doesn’t need all the money for college? Available since 2024 is the option to transfer unused funds in a 529 plan to a Roth IRA for the same beneficiary, without tax or penalties. These rollovers are subject to several rules and limits, including that the plan must have existed for at least 15 years. Contact us at (217) 275-8786 to learn more.

Do your employees pay out of pocket for business travel, meals or supplies? With a properly structured “accountable plan,” reimbursements are tax-free to employees and deductible for your business. (Remember, meals are generally only 50% deductible.) Without an accountable plan, reimbursements count as taxable wages and trigger income taxes for the employee and payroll taxes for both the employee and your business. Contact us at (217) 275-8786 to help ensure your reimbursement practices comply with the tax rules and minimize unintended tax consequences.

If you own a business, you may wonder if you can deduct the costs of having your spouse accompany you on business trips. To qualify, your spouse must be your employee. This means you can’t deduct the airfare or meals of a spouse, even if his or her presence has a business purpose, unless the spouse is an actual employee of your business. If your spouse isn’t an employee, you can still deduct the costs of driving your own car or renting one to reach your destination. And you can write off the hotel costs you would have paid if traveling alone. Contact us at (217) 275-8786 if you have questions.

An IRS levy is a legal action that allows the agency to seize your property to pay a tax debt. This can include taking funds from your bank accounts, garnishing your wages or claiming other assets, such as your car or house, to cover your tax balance. Levies don’t happen without warning. They generally happen after multiple notices and missed deadlines. Additionally, the IRS must send you a Final Notice of Intent to Levy and give you the right to request a hearing. If you receive notice of a levy, don’t ignore it! Acting quickly may help you prevent or release a levy. We’re here to help. Call us at (217) 275-8786.

Most people appreciate inheritances. But in some cases, they may turn out to be too good to be true. Income in respect of a decedent (IRD) may create a surprise tax bill for those inheriting certain types of property. Fortunately, there may be ways to minimize the IRD tax bite. For the most part, property you inherit isn’t included in your income for tax purposes. Items that are IRD, however, do have to be included — although you might be entitled to a deduction in relation to them. One common IRD item is the deceased’s last paycheck, received after death. Other common IRD items include pension benefits and amounts in a deceased person’s IRA at death. Contact us at (217) 275-8786 with questions.

If you’d like to arrange for a transfer of wealth through multiple generations, consider a dynasty trust. Assets are taxed just once, when they’re initially transferred to the trust. There’s no estate or generation-skipping transfer tax due on any subsequent appreciation in value. A drawback is that the trust is irrevocable. This means it generally can never be revised. Call us at (217) 275-8786 for more details.