Fractional Controller & CFO | Small Business Accounting Blog

Fractional Accounting for Small Businesses and Startups

How the 2025 Standard Deduction Can Put More Money in Your Pocket

The standard deduction may be higher in 2025

For the 2025 tax year, your standard deduction can be significantly higher than in prior years, especially if you are age 65 or older or are blind. Below is a clear walkthrough you can use as an educational blog post for readers planning their 2025 taxes.

2025 Standard Deduction Basics

For 2025, the standard deduction is larger than it was in 2024, and it continues to be the default choice for most taxpayers who do not itemize deductions. The exact amount depends on your filing status.

2025 standard deduction by filing status

Filing status2025 standard deduction
Single$15,750
Married Filing Separately$15,750
Married Filing Jointly$31,500
Qualifying Surviving Spouse$31,500
Head of Household$23,625 dollars

The above amounts are the base amount and can be increased if you or your spouse are 65 or older or blind.

Extra Standard Deduction for Age 65 or Blind

If you are age 65 or older, blind, or both, you may be entitled to an additional standard deduction amount on top of the base figure for your filing status. This long‑standing rule continues in 2025, but the dollar amounts are higher due to inflation adjustments.

What this means for You:

The add‑on is calculated per qualifying person (you and, if applicable, your spouse). The 2025 add‑on amounts are:

  • For Single or Head of Household:
    • $2,000 if you are 65 or older or blind.
    • $4,000 if you are both 65 or older and blind.
  • For Married Filing Jointly, Married Filing Separately, or Qualifying Surviving Spouse (per spouse):
    • $1,600 for each spouse who is 65 or older or blind.
    • $3,200 for each spouse who is both 65 or older and blind.

New Enhanced Deduction for Seniors:

  • The 2025 tax year introduces a new temporary enhanced deduction often described as a “senior bonus” for those 65 and older. An additional $6,000 dollars per qualifying person age 65 or older can be added to the standard deduction, on top of both the base amount and the regular age/blind add‑on, however, this amount is subject to an income phase‑out, so higher‑income seniors may see this extra benefit being reduced or eliminated.

Let’s walk through a couple of examples for greater clarity:

Example 1: Single filer, age 65 or older (not blind) and the senior enhancement is not phased out.

Their 2025 standard deduction would be:

  • Base standard deduction (Single): $15,750.
  • Age 65 or older add‑on: $2,000.
  • Senior enhancement (65+): $6,000.

Total potential standard deduction: $23,750 (15,750 + 2,000 + 6,000).

Example 2: Married Couple Filing Jointly both 65 or older

Consider a married couple, both age 67, filing jointly, neither blind, and under the phase‑out thresholds.

Their 2025 standard deduction could look like this:

  • Base standard deduction (Married Filing Jointly): $31,500
  • Age 65 or older add‑on: $1,600 dollars per spouse, so $3,200 combined
  • Senior enhancement: $6,000 dollars per spouse, so $12,000 combined.

Total potential standard deduction: $46,700 ($31,500 + $3,200 + $12,000).

Key Highlights for 2025 Tax Filers

For 2025, the standard deduction provides a robust tax reduction for those who are 65 or older with income below the phase out provisions based upon AGI.

Where can I get more information or help?

150 Days of an Additional 15% Tariff

Trump is invoking Section 122 of the Trade Act of 1974

Trump is invoking Section 122 of the Trade Act of 1974, enabling him to bypass Congress and impose a 15% tax on imports from around the world. The new tariffs would come under a law that restricts them to 150 days.

This is the new baseline, often layering on top of the already active, higher-duty, or industry-specific measures such as:

•Section 232 – National Security Tariffs on steel, aluminum, copper, and softwood lumber

•Sector-Specific Duties: Tariffs on automobiles, auto parts, pharmaceuticals, and certain electronics

•Furniture and Household Goods: current 25% tariff on certain upholstered furniture, kitchen cabinets, and vanities

Textiles and apparel from Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, and Nicaragua will remain duty-free under the Dominican Republic-Central America Free Trade Agreement.

One Big Beautiful Bill on Tax Credits for Individuals

A tax credit directly reduces the income tax a person owes, dollar‑for‑dollar. For example, if a taxpayer qualifies for a $1,000 credit, their tax bill can be reduced by $1,000, regardless of their tax bracket. Some credits are refundable, meaning if the credit exceeds the tax owed, the taxpayer may receive the difference as a refund. Others are non-refundable or partially refundable, which affects whether unused credit can generate cash back or only reduce tax to zero.

Core nonrefundable tax credit

IRS Issue Number Tax Tip 2026‑10 groups several key nonrefundable credits that many individuals may be able to use on their 2025 returns:

  • Child Tax Credit (CTC)
    The Child Tax Credit helps families with qualifying children under age 17 at the end of the tax year who meet relationship, residency, support, and be a U.S. citizen, U.S. National or a U.S. resident alien. For 2025, the maximum credit is up to $2,200 per qualifying child. The credit phases out at higher income levels based on long‑standing CTC phase‑out thresholds, so higher‑income clients may receive a reduced benefit.
  • Child and Dependent Care Credit
    This credit helps taxpayers paid qualified expenses for the care of a qualifying individual to enable you (and your spouse, if filing a joint return) to work or actively look for work. A qualifying person generally is a dependent under the age of 13, a disabled spouse or dependent of any age who is incapable of self-care and who lives with you for more than half of the year.  Taxpayers must have earned income (with some exceptions for a disabled or student spouse) and must provide the eligible care provider information (name, address, EIN or social security number) on their return.
  • Saver’s Credit
    The Saver’s Credit rewards eligible taxpayers for contributing to retirement plans like IRAs, 401(k)s, and certain other qualified plans. The maximum credit is $1,000 ($2,000 if married filing jointly).  The exact size of the Saver’s Credit depends on how much you contribute and your income level, as represented by your adjusted gross income (AGI) and filing status. For those married filing jointly the credit is phased out with an AGI of more than $79,000 and for single filers with an AGI of more than $39,500.

Refundable tax credits

Refundable credits are particularly valuable because they can create or increase a refund even when tax liability is low or zero:

  • Premium Tax Credit
    The Premium Tax Credit helps eligible individuals and families who purchase health coverage through the Health Insurance Marketplace pay their premiums. The credit amount is based on household income relative to the federal poverty line, family size, and the cost of benchmark plans in the taxpayer’s area. If you receive the benefit of advance payments of the premium tax credit to help pay your insurance premiums, you will be required to file Form 8962, Premium Tax Credit (PTC), with your tax return for the year of coverage. Use the information from Form 1095-A, Health Insurance Marketplace Statement, to complete the Form 8962 and reconcile your advance payments of the premium tax credit with the premium tax credit you are allowed on your tax return.
  • Adoption Tax Credit
    The Adoption Tax Credit helps offset qualified adoption expenses, such as adoption fees, court costs, attorney fees, and certain travel expenses. The credit is available to taxpayers who finalized an adoption in 2025 or started the adoption process before 2025. The maximum amount, for 2025, is $17,280 per eligible child. The refundable amount is up to $5,000 per qualifying child. However, any nonrefundable amount carried forward can’t be used to calculate a refundable portion for future tax years.
  • American Opportunity Tax Credit (AOTC)
    The AOTC provides tax relief for qualified higher‑education expenses during the first four years of post‑secondary education for eligible students. The credit amount is up to $2,500 per year and up to $1,000 is refundable.

Documentation, compliance, and avoiding scams

Tax Tip 2026‑10 underscores that taxpayers must retain documentation to prove eligibility for any credit they claim, including proof of child relationships and residency, care expenses, tuition payments, retirement contributions, health coverage, and fuel usage. Good record‑keeping not only supports accurate returns but also streamlines responses if the IRS requests verification.

1099s Are Coming: What Business Owners Need to Know Before January 31st

If your business paid contractors, landlords, or attorneys, there is a good chance you have 1099 filing obligations—and the IRS is not known for its sense of humor when it comes to missed forms. 

What Is a 1099, Really?

“1099” is not one form, but a family of information returns used to report various types of non-wage income to both the IRS and the recipient. For most small and mid-sized businesses, the key players are Form 1099-NEC for nonemployee compensation and Form 1099-MISC for certain miscellaneous payments like rents and legal fees.

While W‑2s are for employees, 1099s are for most nonemployees you pay in your business or nonprofit organization. Getting this line wrong can trigger penalties, payroll tax exposure, and some very uncomfortable IRS letters.  To help you determine whether someone is an independent contractor or an employee, see Pub. 15-A.

1099-NEC vs 1099-MISC

Here’s a quick side‑by‑side you can use in the blog to clarify the most common confusion:

Feature1099-NEC1099-MISC
Primary purposeReport nonemployee compensation and attorney fees paid to a law firm.Report certain miscellaneous payments for each person to whom you have paid during the year. (rents, prizes and awards, etc.)
Typical recipientsIndependent contractors, consultants, freelancers, and attorneys paid in connection with legal servicesLandlords, recipients of prizes/awards and certain other payments
Dollar threshold$600 or more $600 or more

Go to IRS.gov/Form1099MISC or IRS.gov/Form1099NEC or General Instructions for Certain Information Returns at IRS.gov/1099GeneralInstructions

Who You May Need to Issue a 1099 To

From a practical business-owner standpoint, year-end 1099 reviews typically focus on the following categories:

  • Nonemployee service providers: Independent contractors, consultants, and other nonemployees you paid in your trade or business are often reported on Form 1099-NEC once total payments reach the $600 threshold for the year.
  • Landlords and property owners: Rent payments made during the year are generally reported on Form 1099-MISC if they meet the reporting threshold.
  • Attorney Fees: Payments made to attorneys, including law firms, and are reportable on Form 1099-NEC, even when paid to incorporated entities.

Now is the time to ensure you have all of your W-9 information so the 1099’s are accurate and backup withholding risks are minimized.

Note – Typically, there are exceptions to 1099 reporting for payments made to corporations, however, a detailed review with your tax accountant is necessary to determine what exceptions may apply.

Key Considerations – 1099-MISC

  • Generally, payments to a corporation (including a limited liability company (LLC) that is treated as a C or S corporation) do not have to be reported on Form 1099-MISC
  • Reportable payments to corporations – The following payments made to corporations must generally be reported on Form 1099-MISC:
  • Deceased employee’s wages – When an employee dies during the year, you must report the accrued wages, vacation pay, and other compensation paid after the date of death.  Whether the payment is made in the year of death or after the year of death, you must also report the payment to the estate or beneficiary on Form 1099-MISC.
  • Rent Payments:
    • Real estate rent paid during the year for office space. However, you do not have to report these payments on Form 1099-MISC if you paid them to a real estate agent or property manager.
    • Machine rentals (for example, renting a bulldozer to level your parking lot). If the machine rental is part of a contract that includes the use of the machine.

Key Considerations – 1099-NEC

  • Payments to attorneys – The term “attorney” includes a law firm or other provider of legal services. Attorneys’ fees of $600 or more paid in the course of your trade or business are reportable in box 1 of Form 1099-NEC, under section 6041A(a)(1).
  • Include fees, commissions, prizes and awards for services performed as a nonemployee, and other forms of compensation for services performed for your trade or business by an individual who is not your employee.
  • Exchanges of services between individuals in the course of their trades or businesses. For example, an attorney represents a painter for nonpayment of business debts in exchange for the painting of the attorney’s law offices. The amount reportable by each on Form 1099-NEC is the FMV of their own services performed.
  • Fees paid by one professional to another, such as fee-splitting or referral fees.

Key Deadlines – When to File

  • File and furnish a copy of Form 1099-NEC on paper or electronically by February 2, 2026
  • File Form 1099-MISC by February 28, 2026, if you file on paper, or March 31, if you file electronically

If you are using QBO then visit intuit’s tutorial on how you can create and file your 1099’s from the data already in Quickbooks. QBO tutorial to filing 1099’s in Quickbooks

The above does not constitute tax advice and is for informational purposes only. Please consult your tax advisor.

Don’t lose six figures due to poor internal controls

A Cautionary Tale for Small Business Owners

An article featured in a Local Newspaper highlighted an office manager who wrote checks to herself for over 4 years, allegedly stealing more than $200,000 from her employer.

This isn’t just a shocking headline; it’s a crucial cautionary tale for every small business owner. It’s common for dedicated office managers or administrative staff to handle bookkeeping to save costs. While convenient, this practice can create massive, unseen risks when proper oversight is missing.

The core issue is a lack of internal controls. When one person has the authority to both write checks and manage the books, there is no system of checks and balances. This is why segregation of duties is not just corporate jargon; it’s a fundamental principle for protecting your assets.

Key controls to implement include:

  • Ensuring the person who authorizes payments is different from the person who makes them.
  • Having a separate individual reconcile bank accounts from the one handling daily transactions.
  • Requiring owner or senior manager review and approval of all bill payments and financial statements each month.
  • Utilize credit card payments or ACH in conjunction with Spend Management platforms like Ramp, Bill.com, or Stampli that centralizes AP, approvals, and supporting documents all in one platform.

Many business owners believe they are saving money by avoiding professional accounting help. However, as this $200K case illustrates, the potential cost of fraud, undetected errors, and inaccurate financial reporting can be catastrophic. Proactive accounting and financial oversight are not an expense; they are a critical investment in your company’s long-term health and security.

From Chaos to Clarity: How Designers Can Master Cash Flow in Q4

Creative Interior Designers and Graphic Designers thrive on ideas, not accounting software and spreadsheets—but consistent profit requires more than great design

In the creative world, passion sometimes overshadows the practical details—like tracking each project’s true costs or monitoring client payments while new expenses pile up. As the year winds down, this disconnect becomes painfully obvious. Suddenly, tax season looms, vendors expect payment, and that “profitable project” turns out to be a money pit in disguise.

Common challenges for creative businesses:

  • Slow-paying clients (We can help manage your AR to identify those slow paying clients before it takes a toll on your business)
  • Unexpected expenses (We can help you put together a budget for your larger projects to help you stay on track)
  • Tracking costs per project – (To ensure you price your projects profitably it is essential to not just track total revenue and total expenses but understand and measure the revenue and expenses per job)

Let Q4 be the wake-up call and the perfect time to partner with an accounting solution for financial insights, to eliminate chaos, and start the new year confidently, creatively, and with positive cash flow.

Contact Tekio Advisors Today!

Fractional Controller & CFO | Small Business Accounting Blog