Feature Articles
What to Know If You Receive an IRS Notice
Receiving an IRS letter can be unsettling, but identifying the reference code determines the exact steps to take:
- CP12: Mathematical error correction that changes your refund.
- CP14: Notice of unpaid balance due requiring prompt attention.
- CP49: Notice that an overpayment or refund was applied toward another outstanding tax obligation.
- CP2000: Proposed adjustment based on 1099 or W-2 income mismatches reported by third parties.
- Letter 4883C: Identity verification hold requiring return verification over the phone or online.
The IRS Criteria for Distinguishing Hobbies From Businesses
While all income must be reported, expenses are deductible only if an activity is classified as a legitimate for-profit business. The IRS evaluates nine factors, including whether you keep separate business books, your expertise, time invested, and history of profitable years (presumed for-profit if profitable in 3 of the last 5 years).
Common Growth Mistakes Small Businesses Make
Scaling too quickly without adequate working capital, failing to monitor gross margins, and expanding product lines without reviewing cash conversion cycles often jeopardize expanding companies.
Tax Tips
- Are College Scholarships Tax-Free? Qualified tuition and book scholarships are tax-free, but amounts applied toward room, board, and travel are treated as taxable income.
- Business Mileage Rate Boost: Updated 2026 standard mileage rates provide an increased deduction per mile for business driving.
- Why You May Want a Roth 401(k): Paying taxes on contributions today locks in tax-free distributions throughout retirement regardless of future rate increases.
