Note: This article is for general educational purposes and is not tax, legal, or accounting advice. Business owners should confirm details with a qualified tax professional before making filing decisions.
Every tax season produces a few memorable stories: the person who forgot to report crypto gains, the small business owner who discovered a shoebox is not a bookkeeping system, and, of course, the taxpayer who somehow believes the government owes them enough money to buy a private island and perhaps a backup island for tax records.
One of the most jaw-dropping refund stories involved a Georgia woman accused of filing a state tax return claiming a refund of more than $94 million. Investigators reportedly invited her to pick up the check at a bank inside a grocery store. Instead of walking away with generational wealth, she walked into an arrest. That is one way to turn “Where’s my refund?” into “Where’s my lawyer?”
The story is funny from a distance, but it also makes a serious point for entrepreneurs, freelancers, and small business owners: a tax refund is not a bonus prize. It is the result of tax payments, credits, deductions, and documentation. When the numbers are real, a refund can be perfectly legitimate. When they are fantasy, the refund request becomes a flashing neon sign that says, “Please audit me.”
So let’s use the largest tax refund request story as a springboard into something useful: smart, legal, and practical tax tips for business owners who want to reduce taxes without starring in a government press release.
What Happened With the $94 Million Refund Request?
The infamous case involved a taxpayer accused of filing a false Georgia state tax return that claimed roughly $99 million in income and a refund of more than $94 million. The numbers alone were enough to make tax officials pause. Very few people earn that kind of income, and even fewer expect to pick up a refund check at a supermarket bank counter like they are collecting a rotisserie chicken.
According to local reporting at the time, investigators said the taxpayer repeatedly called to ask when the refund would be ready. That persistence helped officials build the case. The lesson is not simply “do not claim a fake $94 million refund,” although that is certainly a strong start. The deeper lesson is that tax systems look for patterns, mismatches, unusually large claims, and documentation gaps.
Business owners often operate in areas where legitimate deductions can be substantial: vehicles, equipment, payroll, rent, software, travel, advertising, insurance, professional services, retirement contributions, and more. But legitimate does not mean casual. The bigger the claim, the stronger the proof should be.
Why Large Refunds Get Extra Attention
Large refund claims are not automatically suspicious. A corporation may overpay estimated taxes. A business may carry back losses where allowed. A startup may qualify for research credits. A company may amend a return after discovering an error. These things happen in the real world.
However, large refund claims can trigger extra review. Under IRS procedures, certain large federal refund or credit claims must be reviewed and reported to the Joint Committee on Taxation. For many taxpayers, the threshold is more than $2 million, while C corporations generally face a higher $5 million threshold. That does not mean the refund is improper. It means the government wants a detailed explanation before cutting a very large check.
For smaller businesses, the same principle applies at a smaller scale. A $20,000 refund for a freelancer who usually owes tax may raise questions. A Schedule C business that reports high revenue one year and enormous losses the next may need clear records. A company claiming credits after receiving aggressive marketing from a third-party promoter should slow down and verify eligibility.
The Real Goal: Pay the Right Amount, Not the Lowest Imaginary Amount
The best tax strategy is not “pay nothing.” It is “pay the correct legal amount and keep enough documentation to prove it.” Some business owners become so focused on reducing tax that they forget taxes usually follow profits. If your business owes tax, that may mean it made money. Congratulations. The IRS is not the only one who noticed.
A smart owner views taxes as part of cash-flow management. You track income, estimate payments, plan deductions, review credits, and keep records throughout the year. Waiting until April to think about taxes is like waiting until the smoke alarm screams to ask whether you own a fire extinguisher.
Tax Tip #1: Keep Records Like Your Future Self Is Your Auditor
Good records are the foundation of every legitimate deduction. Business owners should track gross receipts, expenses, inventory, payroll, contractor payments, asset purchases, mileage, and reimbursements. A bank statement alone may show that money left your account, but it may not prove the business purpose.
For example, a $2,400 charge at an electronics store could be a business laptop, a gaming setup for your nephew, or an emotional-support espresso machine. The receipt, invoice, and business notes tell the story. Keep digital copies. Use accounting software. Reconcile accounts monthly. Attach receipts to transactions while you still remember what happened.
Simple recordkeeping system for small businesses
At minimum, keep separate business bank accounts, save receipts by category, track invoices, maintain payroll records, and document cash transactions. If you drive for business, keep a mileage log that includes date, destination, purpose, and miles. If you work from home, keep a floor plan or calculation showing the business-use space.
Tax Tip #2: Understand “Ordinary and Necessary”
Most business deductions must be ordinary and necessary. “Ordinary” generally means common and accepted in your trade or industry. “Necessary” means helpful and appropriate for your business. It does not have to be absolutely required, but it does need a real business purpose.
A graphic designer deducting design software makes sense. A food blogger deducting recipe-testing ingredients may make sense. A plumber deducting tools and van expenses may make sense. A consultant deducting a luxury vacation because they answered one client email from a hotel balcony is, shall we say, creatively ambitious.
When in doubt, ask three questions: Is this directly connected to my business? Is the amount reasonable? Can I prove it with records? If the answer to any question is “not really,” do not force it.
Tax Tip #3: Do Not Mix Personal and Business Spending
Commingling funds is one of the fastest ways to create tax chaos. Use a dedicated business bank account and credit card. Pay yourself through owner draws, payroll, or distributions depending on your entity type. Avoid buying groceries, birthday gifts, and business inventory on the same card unless you enjoy turning bookkeeping into detective work.
Separating accounts also makes deductions cleaner. Your accountant can review business transactions faster, your financial statements become more accurate, and your audit defense becomes stronger. Clean books do not guarantee a lower tax bill, but messy books almost always guarantee stress.
Tax Tip #4: Take the Home Office Deduction Carefully
The home office deduction can be valuable for qualified business owners, but it is not a magic spell. The space generally must be used regularly and exclusively for business. “Exclusively” is the part that trips people up. A desk in the corner of a guest room may qualify if the area is truly dedicated to work. A kitchen table that hosts breakfast, homework, and inventory packing probably does not.
The simplified home office method allows a standard deduction of $5 per square foot, up to 300 square feet. That means the maximum simplified deduction is $1,500. The regular method may produce a larger deduction for some taxpayers, but it requires tracking actual home expenses and allocating the business-use percentage.
Choose the method that fits your facts, not the one that sounds more exciting on social media.
Tax Tip #5: Track Vehicle Expenses Before You Forget the Trip
Business mileage is a common deduction for owners, consultants, real estate professionals, contractors, delivery businesses, and service providers. For 2026, the IRS standard mileage rate for business use is 72.5 cents per mile. Taxpayers who qualify may use the standard mileage method or the actual expense method, depending on their situation and the vehicle rules.
The key is documentation. A vague note saying “drove a lot for business” will not win awards. Use a mileage app or spreadsheet that records the date, starting point, destination, business purpose, and miles. Also remember that commuting from home to a regular workplace is generally personal, not business mileage.
Tax Tip #6: Plan Estimated Taxes Like a Grown-Up Business
Many business owners do not have tax withheld from a paycheck. That means they may need to make estimated tax payments during the year. Estimated taxes can cover income tax, self-employment tax, and other obligations. If you underpay or pay late, penalties can apply even if you eventually file a return and get a refund.
A practical approach is to review profit quarterly. Set aside a percentage of net income in a separate tax savings account. Update projections when revenue jumps, expenses fall, or you land a large contract. The goal is to avoid the classic April surprise: discovering your “profit” is currently parked in inventory, ads, equipment, and a very confident bank balance that forgot about taxes.
Tax Tip #7: Do Not Ignore Self-Employment Tax
Self-employed individuals often focus on income tax and forget self-employment tax. That tax covers Social Security and Medicare. If your net self-employment income reaches the filing threshold, you may need to file Schedule SE and pay self-employment tax in addition to income tax.
The good news is that self-employed taxpayers can generally deduct one-half of self-employment tax as an adjustment to income. That deduction does not eliminate the tax, but it softens the impact. Build it into your planning so it does not feel like a surprise guest at dinner who brought no dessert.
Tax Tip #8: Use Retirement Plans as Legal Tax Tools
Retirement contributions can help business owners build wealth while reducing taxable income, depending on the plan and eligibility. Options may include a SEP IRA, SIMPLE IRA, solo 401(k), or employer-sponsored plan. The right choice depends on income, employees, cash flow, administrative costs, and long-term goals.
For example, a solo consultant with no employees may consider a solo 401(k). A business with employees may need a plan that follows nondiscrimination and contribution rules. Do not choose a retirement plan from a random internet comment. Choose it with a tax professional or financial advisor who understands your entity, payroll, and growth plans.
Tax Tip #9: Review Business Credits, Not Just Deductions
Deductions reduce taxable income. Credits reduce tax directly. That is why business credits deserve attention. Common areas include research activities, work opportunity hiring credits, certain energy investments, and other industry-specific credits.
Startups conducting qualified research may be able to use a portion of the research credit against payroll taxes if they meet the rules. The maximum payroll tax credit election for qualified small businesses increased to $500,000 for tax years beginning after 2022. This can be especially useful for early-stage companies with payroll but little income tax liability.
Credits are powerful, but they are also technical. Avoid promoters who promise that “everyone qualifies.” Everyone does not qualify. That phrase should make your wallet hide under the desk.
Tax Tip #10: Be Careful With Employee Retention Credit Claims
The Employee Retention Credit helped many eligible employers during the pandemic, but it also attracted aggressive promoters and questionable claims. Business owners who filed ERC claims through a third party should keep eligibility documentation, payroll records, government order analysis if relevant, and proof that the same wages were not improperly used for multiple benefits.
If a promoter charged a large contingency fee, used vague eligibility language, or said your business qualified without reviewing your facts, get an independent review. A refund that looks wonderful today can become painful later if the IRS disallows it and adds penalties or interest.
Tax Tip #11: Choose a Real Tax Preparer, Not a Ghost
A paid tax preparer should sign the return and include a valid Preparer Tax Identification Number. A “ghost preparer” refuses to sign, asks the taxpayer to file as if they prepared the return themselves, or promises huge refunds without documentation. That is not tax planning. That is a smoke machine wearing a calculator costume.
Remember: you are legally responsible for what appears on your return, even if someone else prepared it. Choose a credentialed professional when your business becomes more complex. Ask questions. Review the return before filing. Make sure refunds are deposited into your account, not the preparer’s account.
Tax Tip #12: Know Your Entity Type and Its Tax Forms
Your business structure affects how income is reported and taxed. Sole proprietors often report business activity on Schedule C. Partnerships file partnership returns and issue K-1s. S corporations and C corporations have separate filing rules. Employers may need payroll tax forms. Some businesses may owe excise taxes or state-level taxes.
Choosing an LLC does not automatically create tax savings. An LLC is a legal structure, while federal tax treatment may be sole proprietor, partnership, S corporation, or corporation depending on elections and facts. Before switching entity types, compare payroll costs, compliance, state fees, reasonable compensation rules, and administrative burden.
Tax Tip #13: Use Accountable Plans for Reimbursements
If your business has employees, including owner-employees in certain entities, an accountable plan can help reimburse legitimate business expenses properly. The plan should require a business connection, timely substantiation, and return of excess reimbursements. When structured correctly, reimbursements may be deductible to the business and not treated as taxable wages to the employee.
This can be especially useful for S corporation owners who personally pay business expenses. Instead of leaving expenses unreimbursed, the business may reimburse them under a documented plan. The paperwork is not glamorous, but neither is losing deductions because the process was sloppy.
Tax Tip #14: Smooth Out Tax Surprises With Monthly Reviews
A monthly tax review does not need to be dramatic. Look at revenue, expenses, profit, payroll, estimated tax payments, sales tax, contractor payments, and major purchases. Ask whether anything changed. Did you hire employees? Buy equipment? Move offices? Start selling in new states? Launch a subscription product? Take on investors?
Tax planning is easier when done before December 31. After year-end, many choices are locked. During the year, you can adjust estimated payments, accelerate or delay certain expenses where appropriate, fund retirement plans, clean up receivables, and prepare documentation.
Tax Tip #15: Never Let the Refund Become the Strategy
A refund is not always a sign of brilliant planning. Sometimes it means you overpaid during the year. For a business owner, cash flow matters. Sending too much money to the government early may leave less cash for inventory, payroll, marketing, or emergency reserves.
The better target is accuracy. If you receive a modest refund because planning worked, fine. If you owe a manageable amount because cash stayed in the business, also fine. But chasing the biggest possible refund can lead to bad decisions, weak deductions, risky credits, and the kind of tax return that attracts attention for all the wrong reasons.
Experience-Based Lessons for Business Owners
After working around business content, entrepreneur stories, and tax-season disasters for years, one pattern becomes obvious: most tax problems do not begin with evil genius. They begin with disorganization. The owner is busy selling, hiring, shipping, designing, consulting, repairing, coding, posting, or putting out the daily fires that come with running a business. Taxes become “future me’s problem.” Unfortunately, future me often arrives holding a penalty notice.
The most successful business owners treat taxes as a management system, not an annual panic event. They do not wait until the accountant asks for documents. They already have receipts categorized, income reconciled, payroll reports saved, mileage logs updated, and estimated taxes reviewed. Their books may not be perfect, but they are alive. They can answer basic questions: Which product line is profitable? Which clients are slow to pay? Which expenses grew faster than revenue? How much cash is truly available after taxes?
One practical habit is the “Friday finance hour.” Set aside one hour every week to review transactions, upload receipts, send invoices, pay bills, and update a tax savings account. It is not exciting, but neither is discovering that your “great month” was only great because you forgot payroll taxes, sales tax, and contractor payments. A weekly rhythm turns tax planning from a monster into a house cat. Still annoying sometimes, but manageable.
Another lesson: cheap tax help can become expensive. A simple return may not require a high-priced advisor, but once a business has employees, inventory, multiple states, large equipment purchases, investors, or credits, professional guidance can pay for itself. A good tax professional does more than enter numbers. They ask uncomfortable questions before the IRS does. They explain trade-offs. They help you avoid deductions that look tempting but do not survive contact with the rules.
Business owners should also build a “proof folder” for major tax positions. If you claim a home office, keep measurements and photos of the dedicated workspace. If you claim mileage, keep logs. If you claim research credits, keep project notes, payroll details, technical uncertainty documentation, and expense calculations. If you hire family members, keep job descriptions, time records, and reasonable wage support. The point is simple: if a deduction matters, prove it like it matters.
Finally, do not copy another business owner’s tax strategy without understanding the facts. Your friend’s S corporation, your competitor’s vehicle deduction, or a TikTok creator’s “secret write-off” may not fit your business. Taxes depend on entity type, income level, state rules, documentation, business purpose, and timing. The best tax plan is boring in the best possible way: legal, documented, repeatable, and aligned with how the business actually makes money.
Conclusion: The Best Refund Is the One You Can Defend
The $94 million refund story is entertaining because it is so outrageous. But for business owners, it is also a reminder that tax returns are not wish lists. They are financial statements under penalty of perjury. The goal is not to create the biggest refund. The goal is to build a business that keeps clean records, claims legitimate deductions, uses available credits, pays taxes on time, and avoids unnecessary risk.
Smart tax planning is not about hiding income or inventing expenses. It is about understanding the rules and organizing your business so the numbers tell the truth clearly. Do that, and your tax return becomes less scary, your cash flow becomes more predictable, and your refundlarge or smallbecomes something you can defend without needing to meet investigators at a grocery store bank counter.
