Real Answers to
Real Tax Questions

Tax software works fine for simple W-2 returns with no major life changes. But if you have self-employment income, investment gains, rental property, a major life event (marriage, divorce, new baby, home purchase), or you're not sure whether you're leaving deductions on the table — a CPA typically pays for itself. We often find credits and strategies that software simply doesn't ask about. A one-time consultation can tell you whether DIY is right for your situation.

The standard federal deadline for individual returns is April 15. If you need more time to file, you can request a free 6-month extension to October 15 — but this does not extend the time to pay any taxes owed. Taxes due must still be paid by April 15 to avoid interest and penalties. If you miss the deadline without an extension, the IRS charges a failure-to-file penalty (typically 5% per month on unpaid tax) plus interest. The sooner you file, the smaller the penalty.

A refund is simply money you overpaid throughout the year — it's not a bonus. Common reasons your refund shrinks or you end up owing:

• You changed jobs and your new employer withheld at a different rate
• You got a raise, bonus, or freelance income that pushed you into a higher bracket
• You stopped claiming a dependent (e.g., a child turned 17 and the Child Tax Credit reduced)
• Your W-4 withholding elections are out of date
• You had investment gains from selling stock or property

We can review your withholding and help you avoid surprises next year.

Most people take the standard deduction ($14,600 single / $29,200 married filing jointly for 2024). If your itemized deductions exceed that, it's worth itemizing. Common itemized deductions include:

• Mortgage interest and property taxes (up to $10,000 SALT cap)
• Charitable contributions
• Large unreimbursed medical expenses (over 7.5% of income)
• Student loan interest (income limits apply)
• Contributions to a traditional IRA or HSA

We'll run the numbers both ways to make sure you take whichever gives you the bigger benefit.

Side income is taxable, and it's not just income tax — you also owe self-employment tax (15.3% for Social Security and Medicare). The good news: you can deduct legitimate business expenses against that income (home office, equipment, software, mileage, etc.). If you expect to owe more than $1,000 in taxes, the IRS requires you to make quarterly estimated tax payments (due April, June, September, and January). We can help you set up a simple system so you're never caught short at filing time.

Big life events almost always affect your taxes. Here's the quick summary:

• Marriage: Your filing status changes. Depending on your combined incomes, you may benefit from filing jointly — or in some cases, separately. Update your W-4s right away.
• New baby: You may qualify for the Child Tax Credit ($2,000/child), Child and Dependent Care Credit, and potentially the Earned Income Tax Credit.
• Home purchase: Mortgage interest and property taxes may be deductible. You'll also want to understand the rules around future home sale exclusions.

These events are exactly when a proactive conversation with a CPA is most valuable.

Don't panic — and don't ignore it. Most IRS notices are not full audits; many are automated letters about a specific item or a math correction. Read it carefully to understand exactly what the IRS is asking. Do not call the IRS without first consulting a CPA or tax professional. We can review the notice, determine whether a response is needed, and represent you if necessary. The worst thing you can do is ignore correspondence — it only escalates the issue.

The general rule: keep tax returns and supporting documents for at least 3 years from the filing date (the standard IRS audit window). However:

• Keep records for 6 years if you underreported income by more than 25%
• Keep records indefinitely if you filed a fraudulent return (or never filed)
• Keep records related to property until you sell it, plus 3 years after
• Employment tax records should be kept for at least 4 years

When in doubt, keep it. Digital storage makes this easy.

The "best" structure depends on your income level and goals — but here's the quick breakdown:

• LLC (Single-Member): Taxed as a sole proprietor by default. Simple, but you pay self-employment tax on all net profit.
• S-Corporation: You pay yourself a "reasonable salary" (subject to payroll taxes) and take the rest as distributions (not subject to SE tax). This can save thousands once your profit exceeds roughly $50K–$60K.
• C-Corporation: Pays its own flat 21% corporate tax rate. Can be advantageous for businesses reinvesting heavily, but double-taxation on dividends is a consideration.

We analyze your actual numbers to find which structure puts the most in your pocket. This is one of the highest-ROI conversations a business owner can have.

If it's ordinary and necessary for your business, it's generally deductible. Common categories include:

• Home office (dedicated space used regularly and exclusively for business)
• Vehicle/mileage (business use only — keep a log)
• Software, subscriptions, and equipment
• Professional services (legal, accounting, consulting)
• Marketing, advertising, and website costs
• Business insurance premiums
• Retirement plan contributions for yourself and employees
• Business meals (50% deductible)
• Education and training directly related to your work

Good bookkeeping throughout the year ensures you capture every deduction. That's where we come in.

If you expect to owe $1,000 or more in federal taxes for the year (after withholding and credits), you're generally required to make estimated payments. The 2024 due dates are:

• April 15 — Q1 (January–March)
• June 17 — Q2 (April–May)
• September 16 — Q3 (June–August)
• January 15 — Q4 (September–December)

Underpaying can result in an underpayment penalty. We help business owners set aside the right amount each quarter so there are no surprises in April.

It depends on your business structure. If you're a sole proprietor or single-member LLC taxed as a disregarded entity, you don't run payroll — you just pay self-employment taxes on net profit. If you've elected S-Corp status, the IRS requires you to pay yourself a reasonable salary through payroll before taking distributions. Skipping this is one of the most common (and costly) S-Corp mistakes. We can set up and manage payroll so compliance is never a headache.

Think of it this way: a bookkeeper records what happened — categorizing transactions, reconciling accounts, keeping your books current. A CPA interprets what the numbers mean, advises on tax strategy, prepares your returns, and helps you plan ahead. Both matter. Many small businesses use a bookkeeper for day-to-day records and a CPA for strategy and tax filing — at MBM, we handle both under one roof, which means nothing falls through the cracks between the two.

Section 179 lets you deduct the full cost of qualifying equipment or software in the year you buy it, rather than depreciating it over several years. For 2024, the deduction limit is $1,220,000. This can significantly reduce your taxable income in the year of purchase — great for managing cash flow and tax timing. You can also combine Section 179 with bonus depreciation for even larger write-offs. If you're planning a significant equipment or technology purchase, let's talk before you buy — the timing matters.

This is non-negotiable for any business owner. Commingling personal and business funds leads to bookkeeping nightmares, missed deductions, and potential legal exposure if you operate as an LLC or corporation. The basics:

• Open a dedicated business checking account the moment you start your business
• Get a business credit card for all business purchases
• Pay yourself a formal owner's draw or salary — don't just pull money whenever you need it
• Never pay personal expenses directly from the business account

Clean books make tax time faster, cheaper, and far less stressful.

The IRS expects you to keep records that support every item on your return. At minimum, you should retain:

• Bank and credit card statements (all business accounts)
• Receipts for all deductible expenses
• Invoices sent and received
• Payroll records (if applicable)
• Mileage logs for any vehicle use
• Contracts and agreements
• Prior-year tax returns

Keep business records for at least 3–7 years. Our client portal makes secure document storage simple — everything is in one place when you need it.

DIY bookkeeping can work early on, but it often becomes a hidden cost as your business grows — hours spent on books are hours not spent on your actual work. Signs it's time to bring in a professional:

• You're spending more than a few hours a month on finances
• Your books are behind or you're not sure if they're accurate
• You have employees or contractors (payroll and 1099s add complexity fast)
• You're not confident you're capturing all your deductions
• You want a financial picture to make smart growth decisions

Most of our business clients find that professional accounting pays for itself quickly in time saved and taxes reduced.