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John Sanchez

Trump Accounts Are Here: What Parents and Business Owners Need to Know

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Trump Accounts are officially here, and we are beginning to get questions from clients about whether they should open one.

For many families, the answer is fairly straightforward: if you have an eligible child who qualifies for the government’s $1,000 contribution, there is little reason to leave that money on the table.

But there is more to these accounts than the $1,000.

For business owners in particular, Trump Accounts introduce a new employee benefit opportunity that may be worth considering.

Here is what you need to know.

What Is a Trump Account?

The One Big Beautiful Bill Act created Trump Accounts as a new type of individual retirement account for children.

A parent, guardian, or other authorized individual can establish an account for an eligible child who has a Social Security number and has not turned age 18 before the end of the year in which the election is made.

Although the account belongs to the child, special rules apply while the child is under age 18.

Contributions began July 4, 2026.

Some Children Get $1,000 from the Federal Government

This is the provision receiving most of the attention.

The federal government will make a one-time $1,000 contribution to the Trump Account of an eligible child who:

  • was born between January 1, 2025, and December 31, 2028;
  • is a U.S. citizen; and
  • has a valid Social Security number.

The parent or other authorized person must make the election to establish the account and request the $1,000 contribution.

The $1,000 government contribution does not count against the normal annual contribution limit.

What About Children Born Before 2025?

This is an important distinction.

Your child does not have to be born between 2025 and 2028 to have a Trump Account.

An eligible child under age 18 with a Social Security number can generally have an account established.

The 2025-through-2028 birth-date requirement applies specifically to the $1,000 federal contribution.

So, if you have a 10-year-old, for example, you may still be able to establish and fund a Trump Account. You simply would not receive the government’s $1,000 seed contribution.

How Much Can You Contribute?

During the account’s growth period, the general annual contribution limit is currently $5,000.

That limit applies collectively to most contributions from:

  • parents;
  • grandparents;
  • other family members or friends;
  • the child; and
  • employers.

The $5,000 limit is scheduled to be adjusted for inflation after 2027.

Certain government and charitable contributions, including the $1,000 federal pilot contribution, are outside this annual limit.

How Is the Money Invested?

Trump Accounts are intentionally restrictive while the child is young.

During the growth period, investments generally must be held in qualifying mutual funds or exchange-traded funds that track broad indexes consisting primarily of U.S. companies.

An S&P 500 index fund is the easiest example.

The investment generally cannot use leverage, and annual fees and expenses cannot exceed 0.1 percent.

The idea is relatively simple: invest the money broadly and inexpensively and allow it to compound for many years.

Can the Child Take the Money Out?

Generally, no distributions are permitted during the growth period, subject to limited exceptions.

The special Trump Account growth-period rules end on December 31 of the year the beneficiary turns 17.

After the growth period ends, most of the special Trump Account restrictions disappear and the account generally becomes subject to the rules applicable to a traditional IRA.

That distinction is important.

A Trump Account should not be viewed as simply another savings account where parents can deposit money and withdraw it whenever the child needs something.

This is designed as a long-term investment account.

The Business-Owner Opportunity

This is where Trump Accounts become particularly interesting for many of our clients.

Beginning in 2026, an employer may establish a written Trump Account contribution program and contribute toward the Trump Account of an employee or an employee’s dependent.

The employer contribution can be as much as $2,500 per employee per year.

If the program satisfies the applicable requirements, the employer contribution is generally:

  • deductible by the employer; and
  • excluded from the employee’s taxable income.

The employer contribution does count toward the overall $5,000 annual contribution limit.

That creates a potentially valuable new employee benefit.

For example, assume a business establishes a qualifying program and contributes $1,500 to the Trump Account of an employee’s child.

The business generally receives a deduction for the contribution, while the employee does not recognize the $1,500 as taxable compensation.

For employers looking for additional ways to attract and retain employees with families, this deserves consideration.

Don’t Rush the Employer Strategy

There is an important caveat.

Employer contributions require a separate written Trump Account contribution program, and nondiscrimination requirements apply.

The IRS and Treasury are still developing the regulatory framework. In fact, proposed regulations addressing employer contributions and nondiscrimination rules were published in September 2026.

In other words, this is not something we recommend handling informally by simply paying money into selected employees’ children’s accounts.

The benefit needs to be structured correctly.

Trump Account or 529 Plan?

We don’t view this as an either/or decision.

A 529 plan remains one of the strongest tools available when the primary objective is funding education. Qualified education withdrawals can generally be made tax-free.

A Trump Account serves a different purpose. It is structured more like a long-term retirement and investment vehicle.

For many families, the cleanest approach may eventually involve using both:

  • a 529 plan for education; and
  • a Trump Account for longer-term wealth accumulation.

The appropriate mix depends on the family’s goals.

What About a Roth IRA for Your Child?

Business owners should also be careful not to abandon an existing strategy simply because Trump Accounts are new.

If your child legitimately works in your business and has earned income, funding a Roth IRA can still be an extremely powerful strategy.

Unlike a Trump Account, Roth IRA contributions require earned income. But qualified Roth distributions can ultimately be tax-free.

Trump Account contributions generally do not require the child to have earned income.

That means these accounts solve different problems.

For some business-owner families, we may ultimately recommend using a combination of:

  1. reasonable wages for legitimate work performed by the child;
  2. a Roth IRA funded from the child’s earned income;
  3. a Trump Account; and
  4. a 529 plan where education funding is also a priority.

There is no reason to force every objective into one account.

What Should You Do Now?

If you have a child born between 2025 and 2028, the first step is simple:

Make sure you claim the $1,000 federal contribution.

Parents and other authorized individuals can currently submit Form 4547, Trump Account Election(s) through their IRS Individual Online Account.

For children who don’t qualify for the $1,000 contribution, the decision requires a little more thought. We would compare the Trump Account with the family’s existing 529, Roth IRA, custodial accounts, and overall savings strategy before simply adding another account.

For business owners, the employer contribution provision is also worth watching. It could become an attractive addition to an employee benefits package, but the written-plan and nondiscrimination requirements need to be addressed before implementation.

Bottom Line

Trump Accounts are not a replacement for 529 plans, Roth IRAs, or other established planning strategies.

They are another tool.

But a free $1,000 contribution for an eligible child is worth claiming, and the ability for businesses to make tax-favored contributions for employees and their dependents could make these accounts much more significant over time.

As with most tax planning, the question isn’t simply whether a strategy exists.

The better question is whether it fits with everything else you’re already doing.

If you have questions, don’t hesitate to contact me.

Twitchco: This Court Case Gives Your ERC Protective Claim Teeth

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his Court Case Gives Your ERC Protective Claim Teeth

If you received an Employee Retention Credit (ERC) refund in 2026 for wages paid in 2020 or 2021, you may have an opportunity to recover the tax you pay on that refund.

The IRS currently says that if you failed to reduce your wage deductions in the original years, you should report the receipt of an ERC refund in 2026 as taxable income in 2026. We have previously recommended following that guidance and filing a protective refund claim to preserve your rights while the legal issues are resolved.

A recent court case, Twitchco, gives that strategy additional support.

In Twitchco, a federal court ruled that the IRS could not use the “tax benefit rule” to tax an improper deduction from a tax year that was already closed by the statute of limitations. That reasoning may apply to many ERC recipients because the wage deductions became improper in 2020 or 2021—not when the refund check arrived in 2026.

This does not mean every taxpayer will win their ERC protective refund claim. The legal authority is limited; other courts have reached different conclusions, and the IRS is expected to defend its position aggressively. Your filing dates, the jurisdiction you live in, and the specific facts of your ERC claim can all affect the strength of your case.

For that reason, the protective refund claim remains the most prudent strategy for most taxpayers. It allows you to comply with current IRS guidance while preserving your right to a refund if the courts ultimately reject the IRS’s position.

 

Sell Now, Pay the IRS Later: Defer Capital Gains for Decades

If you’re planning to sell highly appreciated real estate, a closely held business, or private company stock, don’t let the tax consequences become an afterthought. There may be a way to defer the capital gains tax for years—even decades—but only if you plan before the sale.

One strategy worth considering is a deferred sales trust. Instead of selling your asset directly to the buyer, you first sell it to an independent trust in exchange for an installment note. The trust then completes the sale to the buyer. Because you receive payments over time rather than all at once, you generally pay the capital gains tax as those payments are received.

The biggest advantage is that the full pre-tax sale proceeds can remain invested instead of immediately being reduced by taxes. That allows more money to compound over time and may provide a steady stream of retirement income.

Unlike a Section 1031 exchange, a deferred sales trust does not require you to purchase replacement real estate within strict deadlines. It can also provide greater investment flexibility if you’re ready to move beyond real estate.

This strategy, however, is not for everyone. Because the IRS scrutinizes these transactions, they require careful planning before you sign a binding sales agreement, and the trust must be genuinely independent. In addition, unlike a 1031 exchange, a deferred sales trust generally does not preserve the step-up in basis that heirs may receive when appreciated real estate is held until death.

 

How to Find Your 2026 Section 199A Deduction with Multiple Businesses

If you own more than one business, you may be missing out on a larger Section 199A deduction without even realizing it.

The Section 199A deduction allows many owners of sole proprietorships, partnerships, and S corporations to deduct up to 20 percent of their qualified business income. Even better, Congress has now made this deduction permanent, which means proper planning is more valuable than ever.

When you own multiple businesses, the calculation becomes much more complicated. Depending on your taxable income, you may have the opportunity to combine, or “aggregate,” certain businesses for purposes of computing the deduction. In the right circumstances, aggregation can substantially increase your tax savings.

Taxpayers with higher incomes can enhance the deduction by the amount of W-2 wages paid or business property owned. One business may have plenty of wages but little income, while another has strong profits but few wages. If the businesses qualify for aggregation, combining them can produce a significantly larger deduction than what results from calculating each business separately.

Businesses that generate losses require special attention as well. A loss from one business can reduce the deduction available from your profitable businesses, making accurate calculations especially important.

The rules governing aggregation are highly technical, and not every business qualifies. In addition, if you elect to aggregate, you generally must continue using that approach in future years unless the facts change.

 

Protect Your Home-Office Deduction from Spouse, Second Business

The home-office deduction can produce substantial tax savings, especially when it converts what would otherwise be commuting miles into deductible business mileage. But many business owners accidentally put this valuable deduction at risk.

If you use your home office for more than one purpose, each use must qualify under the tax rules. A single non-qualifying use can jeopardize the deduction.

One of the biggest traps involves W-2 employment. Federal law now permanently denies employees a home-office deduction on their personal tax returns. That means if you use the same office for both your self-employed business and your W-2 job, your employee use can threaten the deduction for your business.

The same caution applies if you operate multiple businesses from the same office. Each business must independently qualify for the home-office deduction. Likewise, if you share the office with your spouse, your spouse’s use must also qualify—unless you split the room so each spouse uses a separate portion exclusively.

If your business operates as either an S or a C corporation, there is still a way to benefit from a home office. Rather than claiming the deduction personally, the corporation can reimburse your home-office expenses through an accountable plan.

The consequences of losing the home-office deduction can extend beyond the office itself. You may also lose valuable business mileage deductions if the IRS reclassifies your trips as non-deductible commuting.

 

S Corp. Owners: Don’t Lose 2026 Dental, Vision, Medicare Breaks

If you own more than 2 percent of an S corporation, your dental, vision, and Medicare premiums can qualify for the same valuable tax treatment as your major medical insurance premiums.

To secure the deductions, follow the same three-step process for all qualifying premiums.

First, your S corporation must either pay the premiums directly or reimburse you after you provide proof of payment. Second, the corporation must include the premiums in box 1 of your Form W-2, but not in box 3 or 5. Third, you claim the combined medical, dental, vision, and qualifying Medicare premiums as the self-employed health insurance deduction on your individual tax return.

Qualifying Medicare costs can include Part B, Part D, Medicare Advantage, Medigap, and certain voluntarily paid Part A premiums. Even when Social Security deducts Medicare premiums directly from your benefits, your corporation can reimburse you if you provide documentation, such as your Form SSA-1099 or Medicare statement.

Two important limitations apply.

You generally cannot claim the deduction for any month when you or your spouse qualified for subsidized health coverage through another employer. In addition, your total deduction cannot exceed your box 5 Medicare wages from the S corporation. Therefore, your salary should be high enough to cover the combined amount of all medical, dental, vision, and Medicare premiums

Qualifying premiums paid for relatives who work for the corporation may require the same W-2 treatment. The family attribution rules can apply even when those relatives own no stock directly.

 

Dealer or Investor? Deducting the Loss on Your First Flip

If your first house-flipping project ended in a loss, don’t assume you’re limited to deducting only $3,000 per year. Depending on your specific facts, you may qualify to deduct the entire loss in the current year.

The key issue is whether the IRS views you as a real estate dealer or as an investor. Investors generally face the $3,000 annual limit on capital losses. Dealers, however, report their activity as a business, allowing losses to offset ordinary income in full. In many cases, dealer treatment can also reduce self-employment tax.

Qualifying as a dealer depends on more than the number of properties you have sold. The IRS and the courts look at your overall business intent and activities. Factors include why you purchased the property, the extent of your rehabilitation work, how quickly you marketed the property for sale, and whether you conducted the activity in a businesslike manner.

But dealer status is not always an advantage. If future flips generate profits, those profits become ordinary income rather than capital gains. Dealer property also does not qualify for Section 1031 exchanges or installment-sale reporting.

If you intend to build a house-flipping business, good records are essential. Maintain a written business plan, keep separate books and bank accounts, track your time, and consistently report the activity as a business from year to year.

 

Tax Plan: Buy $500,000 of Goods on December 20 and Expense Them

If your business sells merchandise, there may be a valuable year-end tax planning opportunity that many small-business owners overlook.

Under today’s tax rules, many qualifying small businesses can deduct the cost of inventory when it is purchased and paid for—even if the goods remain on the shelf at year-end. But there is one critical requirement: your bookkeeping must support that treatment.

The tax law allows businesses with average annual gross receipts of less than $32 million to use simplified inventory accounting methods. If your accounting records consistently expense merchandise purchases when they are made, your tax deduction can generally follow those books. That can produce a substantial deduction before year-end.

On the other hand, if your accounting system records purchases in an inventory asset account and deducts them only when the goods are sold, your tax deduction generally must wait until the sale occurs.

The key is consistency. You cannot change your accounting method in December simply to create a larger deduction. In fact, changing inventory accounting methods usually requires IRS approval. Likewise, purchases must be genuine business transactions—not simply exist to generate a tax deduction. The merchandise must be received and paid for before year-end, and the purchase must make business sense.

If your business expects a profitable year, reviewing your inventory accounting method before year-end could produce meaningful tax deferrals. While this strategy generally postpones taxes rather than permanently eliminate them, improving cash flow by delaying taxes can still provide a significant financial advantage.

If you have questions, don’t hesitate to contact me.

A Little-Known Way to Pay Family and Save on Taxes

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Many business owners overlook a powerful strategy that allows them to pay family members, reduce taxes, and avoid payroll taxes altogether.

You likely know the traditional approach: hire your child and put them on payroll. That strategy works well for younger children in a sole proprietorship. But once your child turns 18—or if you operate as a corporation—payroll taxes usually apply.

In the right situation, a lesser-known alternative offers a better outcome.

You can hire a family member for a “one-time project” instead of ongoing work. This structure allows you to deduct the payment at your higher tax rate while your family member reports the income at a much lower rate—often with little or no tax liability.

For example, you might pay your college-age child to design a website, create marketing materials, or complete a facility upgrade. If you structure the work as a true one-time project—not a continuous or recurring one—the income avoids employee status and thus payroll taxes for both you and the child. It also avoids 1099 independent contractor status and thus self-employment taxes for the child.

This approach can generate meaningful savings. In one scenario, a $23,225 payment produced over $7,800 in net family tax savings.

To make this strategy work, you must follow several key rules:

  • Define a clear, one-time project with a specific scope.
  • Pay a reasonable, fixed amount upon completion of the project.
  • Avoid hourly wages or ongoing tasks.
  • Maintain simple documentation and proof of completion.
  • Ensure the arrangement supports proper worker classification.

This strategy depends heavily on proper structure and execution. If you treat the work as ongoing employment, you risk having your child or other family member classified as an employee or a 1099 independent contractor.

When done correctly, this approach efficiently shifts income, minimizes taxes, and keeps compliance simple.

Do You Need a W-2 for Spouse-Employee 105-HRA Benefits?

If you employ your spouse in your business and use a Section 105-HRA to deduct family medical expenses, you may be wondering whether issuing a W-2 is necessary.

The good news is, from a tax law standpoint: a W-2 is not required. IRS guidance and court decisions confirm that medical reimbursements under a properly structured Section 105-HRA can qualify as reasonable compensation—even if they are the only form of pay and are not reported as wages.

So why do some business owners still issue a W-2?

The answer lies in trade-offs:

Tax impact. Adding W-2 wages generally does not produce meaningful tax savings. In many cases, it slightly increases overall tax liabilities due to interactions between self-employment taxes and income taxes.

Administrative burden. Issuing a W-2 means running payroll, including quarterly filings, year-end reporting, and ongoing compliance. This creates additional time and cost burdens as well as the potential for penalties.

Audit perception. A no-wage setup (large benefits, zero wages) is technically valid but may appear unusual. Adding a salary makes the arrangement look more conventional and may reduce IRS scrutiny.

Bottom line. This decision is not about saving taxes—it’s about choosing between simplicity and optics. Skipping the W-2 keeps things lean and compliant, while adding it may provide peace of mind at the cost of added complexity.

Lawyer Burned by Fake AI Tax Cases—Don’t Be Next

Artificial intelligence (AI) is all the rage today. AI tools like ChatGPT, Claude, Grok, and Perplexity are being used for everything, including legal research. But beware! AI is not perfect. It’s not even intelligent.

AI doesn’t think like a human, and it has no internal fact-checker. It produces new content by analyzing vast amounts of prior works (“training data”) to identify underlying patterns and structures. It then makes probabilistic predictions about the next word in its answer. In short, it predicts words, not truth.

And AI frequently lies—AI developers call this “hallucinating.” One survey of general-purpose AI tools found that they hallucinate 58 percent to 82 percent of the time on legal queries. What about AI tools specially designed for legal research? These tools are more reliable, but they still hallucinate 17 percent to 34 percent of the time.

One attorney found this out the hard way when he apparently relied on AI to perform legal research. He ended up submitting a brief in Tax Court that contained fake and inaccurate legal citations. The Tax Court was not amused. He lost his case. This was a first for the Tax Court, but other courts have fined attorneys who submitted fake legal research generated by AI.

Tax questions are particularly difficult for AI to answer correctly because tax law is complex and constantly changing. If you use AI for research, always instruct it to provide a citation to primary authority for every legal claim, and check that reference yourself.

Many courts are now requiring attorneys to disclose whether they used AI in court filings and to certify that a human has independently reviewed any AI-generated document.

The IRS has recently advised its employees to avoid becoming overly reliant on AI tools. It says they should use those tools to assist and augment their work, not replace their own critical thinking and judgment. This is good advice for everyone.

HSAs After Death: What You Need to Know

Health Savings Accounts (HSAs) are a great way to save money.

Unlike any other tax-advantaged account, they provide a triple tax benefit:

  • Contributions are tax-deductible.
  • Monies inside the HSA grow tax-free.
  • Withdrawals are tax-free if used for medical expenses.

Withdrawals after age 65, if not used for medical expenses, are subject to regular income taxes.

Some wealth advisors counsel HSA owners to treat their accounts like a super IRA—to maximize their contributions and make few or no withdrawals for medical expenses. By the time they retire, they could have a substantial amount saved in their accounts. They can withdraw the money tax-free to pay medical expenses, or withdraw it for non-medical expenses and pay regular income tax.

But HSA owners need to understand that after they die, the tax code treats HSAs very differently from IRAs or 401(k)s.

If your spouse is your HSA beneficiary (as is normally the case for married people), the account will automatically go to your spouse upon your death, with no taxes due. Your HSA becomes your surviving spouse’s HSA.

If you don’t have a spouse as your beneficiary, your HSA automatically ends on the date you die.

Your non-spouse beneficiary—whether a child or someone else—will receive the funds and have to pay regular income tax on them that year. This is very different from the tax treatment for inherited IRAs or regular 401(k)s; non-spouse IRA and 401(k) beneficiaries have 10 years to withdraw all the money from the account and pay tax on it.

Sooner or later, every HSA will have a non-spouse beneficiary, whether because the HSA’s owner never married, they got divorced, or their spouse predeceased them. The HSA is generally not the best vehicle for passing your wealth to the next generation.

If someone other than your spouse is your HSA beneficiary, you can reduce the tax hit they’ll face when you die by making tax-free withdrawals from your account to reimburse yourself for past medical bills you paid. These include not just doctor bills but also dentist bills, vision care, and many other expenses.

It doesn’t matter how old these bills are as long as you paid them after you established your HSA and didn’t deduct them on your taxes. However, you must have proper documentation for them. You can take such reimbursements anytime, but it is definitely something to consider if you become seriously ill and don’t expect to live much longer.

All HSA owners should get in the habit of keeping receipts for their medical expenses. There are HSA expense-tracking apps that can make it relatively easy to maintain this documentation.

Don’t Make This Costly Portability Election Mistake

The One Big Beautiful Bill Act (OBBBA) permanently increased the federal estate and gift tax exemption to a whopping $15 million per person for 2026 and later. You can give away while alive and/or bequeath at death this much money or property free of federal estate and gift tax.

If you’re married, you and your spouse each get a $15 million exemption. Thus, your combined estate and gift tax exemption is $30 million for 2026 (it’s adjusted for inflation each year).

But married couples don’t automatically get the combined exemption of up to $30 million. Rather, when one spouse dies, the executor of their estate must file an estate tax return, even if it isn’t otherwise required, and make a “portability election”—that is, they must direct the IRS to “port” (transfer) the deceased spouse’s unused exemption to the living spouse.

A recent Tax Court case shows that making a portability election can be fraught with risk.

To make filing an estate tax return solely to elect portability as simple as possible, the IRS allows the executor to use a simplified reporting procedure and provide a single estimate of the entire estate’s value instead of providing fair market values of all the estate’s assets.

Key point. The executor can use simplified reporting only if the entire estate is left to the surviving spouse and/or to charity.

The Tax Court (in Estate of Rowland) recently held that the executor improperly used simplified reporting where a deceased spouse left property in trust to grandchildren. As a result, the court disallowed the executor’s portability election, and the surviving spouse lost the deceased spouse’s $3.7 million unused estate tax exemption, resulting in $1.5 million in extra estate tax due when the surviving spouse died.

This case is a wake-up call to all married couples and their estate planners. Portability offers the simplest planning strategy to maximize the couple’s combined exclusion amount. But the executor of the deceased spouse’s estate must follow the proper reporting procedures to make a valid portability election.

Executor instructions for a portability election are now especially important after Rowland, to ensure that portability is not lost entirely due to inadequate estate return preparation.

If you have questions, don’t hesitate to contact me.

Brutal IRS Trap Wipes Out Goodwill Clothing Deductions

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Brutal IRS Trap Wipes Out Goodwill Clothing Deductions

If you donate clothing or household goods to charity, there’s an IRS trap you need to know about.

In a recent Tax Court case, a taxpayer lost a $6,760 charitable deduction—not because the donations were improper, but because his documentation failed to meet strict technical requirements. The court didn’t question his generosity. It denied the deduction because the receipts and Form 8283 were incomplete.

Here’s the key issue: For non-cash donations over $250, you must obtain a contemporaneous written acknowledgment from the charity. For donations over $500, you must also maintain detailed records showing what you donated, when you acquired the items, and their cost or basis. Form 8283 must be completed accurately, including donation dates and fair market values.

Generic receipts that say “miscellaneous household items” are not enough. And once an audit begins, you cannot fix missing documentation afterward. The deduction is simply lost.

The safest approach is proactive. Before donating, prepare a detailed list of items, including descriptions and estimated values; take photographs; and provide the list to the charity so it can reference the list in its acknowledgment. Keep all supporting records with your tax files.

The bottom line: Good intentions are not sufficient. With charitable deductions, documentation is everything.

SE Rules for Converting a Business Vehicle to Personal Use

If you are a sole proprietor and considering converting a business vehicle to personal use, it’s important to understand the tax consequences before making the switch.

While the conversion itself may appear simple, the tax impact can arise either immediately or later—and sometimes in unexpected ways.

If you used the IRS standard mileage rate for the business vehicle, the conversion to personal use is generally not a taxable event. But depreciation is built into each mileage deduction (for example, 35 cents of the 72.5-cent 2026 rate counts as depreciation).

When you later sell the vehicle, you must calculate a gain or loss based on the vehicle’s adjusted business basis. Many taxpayers overlook the fact that a deductible business loss may still be available years after conversion. Importantly, only the business portion of the loss is deductible, and any gain attributable to the business portion is taxable.

By contrast, if you used the actual expense method—especially with bonus depreciation or Section 179 expensing—the rules are less forgiving. A drop in business use to 50 percent or less triggers Section 280F recapture immediately.

This requires you to recompute depreciation using the straight-line method and pay tax on any excess previously deducted. Later, when you sell the vehicle, you must again calculate gain or loss based on the adjusted basis. In these cases, converting the vehicle creates a two-step tax consequence: recapture now, and potential gain or loss later.

One final caution: selling the vehicle to a related party (such as a spouse, parent, child, or sibling, or a corporation you control) can permanently disallow a loss deduction. To preserve potential tax benefits, make your sale to an unrelated third party.

How a $7,970 Tax Case Cost the IRS an Extra $34,081

Fighting the IRS can be extremely time-consuming and expensive. But if you prevail against the IRS, it is possible to get the court to make an award of attorney fees so you don’t have to pay them all out of your own pocket.

It’s not easy to get a court to award attorney fees against the IRS. Ordinarily, you must not only win your case, but also show that the IRS’s position was not “substantially justified”—something that is very hard to do in most cases.

But there is a way to get around the substantially justified requirement: make a “qualified offer” to the IRS. This is an offer to settle the case for a specified amount. When you do this, you can get an award of attorney fees if you ultimately prevail in the case—that is, if the IRS’s final result is no better than your offer.

You can make a qualified offer

  • during the IRS examination (audit) after a 30-day letter,
  • while the case is being appealed,
  • after filing a Tax Court petition,
  • during Tax Court litigation, or
  • in a refund suit in the district court or the Court of Federal Claims.

A recent Tax Court case shows how powerful a qualified offer can be.

Crystal Greenwald claimed a $5,920 earned income tax credit and a $2,050 additional child tax credit on her tax return. When the IRS denied the credits because she couldn’t prove the children involved lived with her for more than six months during the year, she appealed to the IRS Office of Appeals. Her attorney made a qualified offer to the office for the full amount of the credits.

Appeals disregarded the offer—apparently because it was misplaced—but ultimately chose to pay Crystal the credits rather than continue the dispute in district court.

Because her attorney had made a valid qualified offer and Crystal ultimately prevailed, the district court awarded her $34,081 in attorney fees. She was not required to prove that the IRS’s position lacked substantial justification—something she likely could not have established, since she never provided evidence that her children lived with her for more than six months.

Most IRS cases settle, so even with a qualified offer, you can’t get attorney fees following a settlement unless you show that the IRS’s position was not substantially justified (which is very difficult to show). Even so, making a qualified offer is worthwhile because it encourages the IRS to settle, knowing it could be on the hook for attorney fees if it doesn’t settle and loses the case.

Despite these benefits, taxpayers underuse qualified offers.

How One-Owner Businesses Win with the New 50% Childcare Credit

Beginning in 2026, the One Big Beautiful Bill Act increases the employer childcare credit for small businesses to 50 percent of qualified expenses, up to $600,000 per year. Even one-owner businesses can benefit—and the savings are substantial.

If you operate as a sole proprietor, you cannot claim the credit for your own childcare because you are not an employee. But if you hire your spouse as a legitimate W-2 employee, your business qualifies.

For example, on $20,000 in childcare expenses, the 50 percent credit results in a $10,000 dollar-for-dollar tax reduction. The remaining $10,000 is deductible, producing additional tax savings. After your spouse pays tax on the wages, the household comes out thousands of dollars ahead.

Solo S corporation owner-employees also win. Although a more-than-5-percent owner must include the childcare benefit in W-2 wages, the combination of the 50 percent credit plus the deduction outweighs taxes paid on wage inclusion, resulting in thousands in savings.

The key driver is the 50 percent credit. When paired with a deduction for the remaining expense, the math is strongly favorable, despite the benefit being taxable.

Late Filing Costs Estate $1.5M—Will Yours Be Next?

With today’s $15 million federal estate and gift tax exemption ($30 million for married couples), it’s easy to believe estate tax planning is no longer a concern. But a recent Tax Court case proves otherwise—an estate lost $1.5 million simply because a portability election was not properly and timely filed.

Here’s the key issue: When the first spouse dies, any unused estate tax exemption can be transferred to the surviving spouse—but only if the executor files a timely and properly completed Form 706 and elects portability. This is true even when no estate tax is owed.

Why does this matter? Because circumstances change. A surviving spouse’s assets may grow significantly due to business success, investments, inheritance, or even future changes in the law that reduce the exemption amount.

  • Without the portability election, the unused exemption is permanently lost.
  • With it, the surviving spouse may preserve millions of dollars in additional tax-free protection.

The filing deadline is generally nine months after death (with a six-month extension available). Even estates below the filing threshold can use a simplified Form 706 if the sole purpose is to elect portability. But if the return is not properly filed within the allowable window, the opportunity disappears forever.

The lesson is simple: if you are married, make sure your executor understands the importance of filing Form 706 and electing portability—no matter how modest the estate may seem today.

$12,000 Door Replacement: Repair or 39-Year Asset?

When a five-figure commercial building expense hits your desk, the first question is simple: Can you deduct it, or must you depreciate it over 39 years?

Consider a recent example. An office building owner replaced a failed sliding glass door and frame at a total cost of $12,000, including removal and installation. The new unit was the same brand, size, and quality as the old one. No upgrades. No redesign. No expansion.

Under the tax rules, expenses must be capitalized if they result in a betterment, an adaptation to a new or different use, or a restoration—the so-called BAR tests. Replacing a door with one of the same type and quality, without improving the building overall, does not clearly meet the capitalization tests. In situations like this, the strongest technical position is often to deduct the full amount as a repair under Section 162 of the tax code.

That said, conservative taxpayers may prefer to capitalize the cost. If you take that route, you must capitalize the entire $12,000—including installation—and depreciate it over 39 years. The good news: you may also elect a partial disposition and deduct the remaining basis of the old door, which can produce a meaningful current write-off.

The key takeaway? Not every expensive building cost is a capital improvement. The tax result depends on the nature and scope of the work—not on the price tag.

If you have questions, don’t hesitate to contact me.

Form 1099-DA Is Here—How It Will Impact Your Crypto Taxes

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Crypto Taxes

After four years of work, the IRS has finalized its cryptocurrency regulations, and crypto tax reporting now begins. Starting with the 2025 tax year, custodial crypto platforms must report taxable crypto transactions directly to the IRS.

“Digital asset brokers” must handle this reporting when they take custody of the digital assets their customers sell or exchange. These brokers include

  • operators of centralized trading platforms such as Coinbase, Kraken, and Binance; and
  • hosted wallet providers (also called “custodial wallets”).

Most crypto transactions run through these brokers.

Brokers must file the new IRS Form 1099-DA, Digital Asset Proceeds From Broker Transactions. This form reports the following:

  • Customer’s name, address, and taxpayer identification number
  • Name and quantity of the digital asset sold
  • Sale date
  • Gross proceeds amount

Brokers must file the first Forms 1099-DA for the 2025 tax year by March 31, 2026.

For 2025 only, brokers must report gross proceeds from sales or other transfers. Gross proceeds represent the total amount you receive when you sell or exchange crypto, before any fees or other costs. Beginning in 2026, brokers must also report the customer’s cost basis—the original value of the crypto at acquisition plus any associated costs.

With Form 1099-DA in place, you will find it easier to calculate your crypto gains and losses when you file your return.

The regulations also establish rules for how crypto owners determine the basis of their crypto units. FIFO (first in, first out) serves as the default method. During periods of rising prices, the FIFO method typically produces the largest taxable gains because it uses your earliest—and often lowest-basis—units first.

If you want to reduce tax on crypto transfers, you can use the specific identification method instead. This method allows you to identify the exact units you transfer. Transitional rules for 2025 allow you to use specific identification in your own records without notifying your broker.

The final regulations also require crypto owners to track their cost basis separately for each wallet when they hold crypto across multiple wallets or exchanges. You may no longer treat all your crypto as if it sits in a single wallet or account. If you had crypto in multiple wallets or exchanges on January 1, 2025, you must allocate your unused basis to the specific accounts where you hold each asset.

Only Seven Months Left to Secure Your EV Charger Credit

We want to alert you to a tax credit that is set to expire soon. You can claim a federal income tax credit for installing electric vehicle chargers or other alternative-fuel refueling equipment, but the credit disappears for anything you place in service after June 30, 2026. 

You still have time to benefit, but you must act quickly.

The credit generally equals 30 percent of the cost of qualifying equipment. If you install equipment at your principal residence for personal use, you can claim a credit up to $1,000, provided your home sits in an eligible census tract. 

If you install equipment for business use, you can claim much larger credits—up to $100,000 per item—and you can increase the credit rate from 6 percent to 30 percent when you meet specific wage and apprenticeship rules.

Strict location rules now block many taxpayers from qualifying, so we encourage you to check your proposed installation site before you move forward. To claim the credit, you must place the equipment in a low-income or non-urban census tract—an area that covers roughly 97 percent of the U.S. land mass.

You also must start as the original user of the equipment and install components that function together as an integrated refueling or charging system.

When equipment is used for both personal and business purposes, you must split the credit based on your actual use percentages. Businesses with fleets or multiple charging ports can secure substantial credits by properly allocating all associated costs, including chargers, pedestals, electrical panels, wiring, and smart-charge management systems.

You claim the credit on IRS Form 8911. Business credits flow to Form 3800, and personal credits flow to Schedule 3 of Form 1040. You must also reduce the equipment’s basis by the amount of the credit and follow recapture rules if the equipment stops qualifying.

If you plan to install charging equipment at your home or business, we recommend evaluating your project now so you don’t miss this valuable tax benefit. We can help you confirm eligibility, estimate your credit, and structure your installation to maximize savings.

Do Pass-Through Entity Taxes Still Pay Off after OBBBA?

Do you own a business organized as a pass-through entity (PTE)—such as a partnership, a limited partnership, an S corporation, or a multimember LLC taxed as a partnership or an S corporation? If so, you face an important tax decision.

For the past several years, many PTE owners have elected to have their businesses pay the state income tax on their business income rather than paying it personally. This approach allows the PTE to deduct those state income tax payments as a federal business expense.

Why Choose This Option?

The Tax Cuts and Jobs Act of 2018 capped the personal itemized deduction for state and local taxes (SALT) at $10,000. This cap does not apply to income taxes paid by business entities. 

As a result, almost all states with income taxes allow PTE owners to elect pass-through entity taxes (PTETs) instead of paying state income tax individually. The IRS has approved this practice, and many PTE owners use it to fully deduct state taxes for federal purposes despite the SALT limitation.

Recent legislation—the One Big Beautiful Bill Act (OBBBA)—did not eliminate or restrict PTETs, which remain optional. However, it did raise the SALT deduction limit to $40,000 for tax years 2025 through 2029. This raises an important question: Should PTE owners skip the PTET election and simply deduct their state income taxes on their personal returns?

Not necessarily. PTETs can still offer meaningful benefits, including:

  • Overcoming the reduced benefit for high-income taxpayers. The new $40,000 SALT cap phases down once modified adjusted gross income (MAGI) exceeds $500,000. Taxpayers with income above $600,000 receive only a $10,000 deduction.
  • Lower federal and self-employment taxes. When your PTE pays state taxes and deducts them as a business expense, it reduces the income passed through to you. This lowers both your federal income tax and your self-employment taxes—12.4 percent Social Security (up to the annual wage base, $176,100 for 2025) and 2.9 percent to 3.8 percent Medicare tax on net self-employment earnings.
  • Lower adjusted gross income (AGI) and related advantages. A PTET election lowers your AGI, which may help you (1) avoid the net investment income tax and Medicare surcharge thresholds, (2) qualify for deductions with AGI floors (such as medical expenses and charitable contributions), and (3) preserve deductions and credits that phase out at higher AGIs, including IRA contributions and real-estate loss deductions.

Potential Savings When Using the Enhanced Standard Deduction

Some taxpayers will owe less tax by electing PTET and taking the permanently enhanced standard deduction under the OBBBA instead of itemizing.

Potential Downside

Electing PTET can reduce your 20 percent qualified business income (QBI) deduction because it lowers the taxable income you receive from the PTE.

Bottom Line

Every PTE owner’s situation is unique. You should run the numbers to determine whether a PTET election benefits you.

The Hidden Benefits of Filing a Gift Tax Return

The givers of gifts (donors), not the recipients (donees), file gift tax returns. 

If you give money or property, you may be legally required to file a gift tax return with the IRS—even if you owe no gift tax. 

In fact, most people who file gift tax returns do not pay any gift tax because each individual has a generous lifetime gift tax exemption of $13.99 million (for 2025). Married couples can effectively double this amount by combining their exemptions.

Even when no tax is due, you must file a gift tax return whenever you make a “reportable gift.” This allows the IRS to track both the total amount you have gifted during your lifetime and the remaining balance of your lifetime estate and gift tax exemption.

You are required to file a gift tax return if you do any of the following:

  • Give any one person more than the annual exclusion amount ($19,000 in 2025).
  • Elect to split gifts with your spouse.
  • Make a gift of a future interest, such as certain transfers to a trust.
  • Front-load multiple years of contributions into a Section 529 plan.
  • Give certain types of gifts to your spouse.

If you must file a gift tax return, you also need to report any charitable gifts made during the year. These charitable gifts are not subject to gift tax and do not reduce your lifetime exemption, but you must disclose them on the gift tax return.

Gift tax returns are due at the same time as your income tax return. However, they must be filed separately on paper, as joint gift tax returns do not exist—each spouse must file individually.

Your return must include detailed information for each reportable gift, including its fair market value. Gifts that are difficult to value, such as business interests, require either a professional appraisal or a thorough explanation of how you determined the value.

The IRS may impose a failure-to-file penalty of 5 percent per month if you do not file a required gift tax return. But this penalty applies only when you owe gift tax, which is uncommon.

When no penalty applies, it is still wise to file a gift tax return when required. Filing starts the three-year statute of limitations during which the IRS may question your valuations. 

Without a filed return, the IRS has no time limit to challenge the value of your gifts. Filing also provides a clear record of your gifting history and helps you track your remaining lifetime exemption.

IRS Moves Toward All-Electronic Refunds: What You Need to Know

Your tax refund will no longer arrive by paper check. The IRS recently announced that it will stop issuing refund checks, with limited exceptions, and will require taxpayers to receive refunds electronically.

Why the Change?

Paper checks cost more, create security risks, and take much longer to process. In addition, the Trump administration directed all federal agencies to eliminate paper check payments.

What Stays the Same?

The IRS has not changed the process for filing your tax return. You will continue to file exactly as you do now.

How to Receive Your Refund

The fastest and most reliable way to receive your refund is through direct deposit into your bank account. Ninety-three percent of taxpayers already use direct deposit, and this change will not affect them.

If you currently receive refund checks, switch to direct deposit when you file your 2025 return. Simply enter your bank’s routing and account numbers on your tax form.

If you prefer not to use direct deposit, you can choose certain mobile apps or prepaid debit cards that provide a routing and account number.

The IRS will still issue a paper check if you request a waiver because you lack access to banking services or electronic payment systems. Keep in mind that paper checks take at least six weeks to process, while electronic refunds typically take about 21 days.

If You Need a Bank Account

You can open an account online through several resources:

Paying Taxes

For now, the IRS will still accept tax payments by check. However, electronic payments remain the faster and more reliable option. To review all electronic payment methods, visit the IRS Make a payment web page.

If you have questions, don’t hesitate to contact me.

Your 2025 Year-End Tax Planning Guide

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Your 2025 Year-End Tax Planning Guide

As we approach the end of 2025, there’s still time to take action and make a real difference in your tax outcome for the year. 

With thoughtful planning and a few strategic steps, you can reduce your tax bill, strengthen your retirement savings, and position your finances for a better 2026.

Below are some year-end moves to consider before December 31. Each one is practical, IRS-approved, and designed to help you keep more of what you’ve earned.

  1. Strengthen Your Business Deductions before December 31

Prepay Expenses Under the IRS Safe Harbor

If you’re on the cash basis, you can prepay qualifying expenses up to 12 months in advance and deduct them this year. That includes office rent, equipment leases, and insurance premiums.

For example, if your monthly office rent is $3,000, prepaying $36,000 on December 31 to cover your 2026 rent gives you a $36,000 deduction in 2025—and it provides the landlord with the income when he wants it, in 2026. Be sure to mail the funds on December 31 so they arrive in January 2026, and keep documentation, such as the USPS tracking number.

Hold Off on Year-End Billing

A simple yet effective move for cash-basis businesses: delay billing clients until January. Since you don’t recognize income until payment is received, postponing invoices can shift taxable income into 2026.

Purchase Needed Equipment

If you’ve been planning to buy office furniture, computers, or machinery, doing it now can provide a full deduction through 100 percent bonus depreciation or Section 179 expensing—as long as you place the equipment in service before December 31.

Use Business Credit Cards Wisely

For Schedule C filers, the deduction occurs on the date of the charge, not when you pay the bill. That means charges made in December are deductible this year. Corporations can do the same when employees are using a corporate card.

Document and Claim Every Legitimate Deduction

Don’t avoid deductions because you think they might raise red flags. If they’re legitimate and supported by records, you’re entitled to them. If deductions exceed your income, that loss may create a net operating loss (NOL) that carries forward to offset future profits.

Review Qualified Improvement Property

If you improved the interior of your business or one of your commercial rental properties this year, those costs may qualify for immediate expensing rather than 39-year depreciation. To take the deduction for 2025, you must place the improvement in service by December 31.

  1. Take Full Advantage of Retirement Savings Opportunities

Retirement plans remain one of the most powerful tax-saving tools available to small-business owners and self-employed professionals.

Establish or Fund a Retirement Plan Before Year-End

If you don’t yet have a retirement plan, setting one up before December 31 allows you to make both employee and employer contributions for 2025.

For a solo business, a 401(k) plan (often referred to as an “individual 401(k)” or a “solo 401(k)”) is an ideal option. Your owner-employee contribution limits for 2025 are:

  • $23,500 if under age 50
  • $31,000 if age 50–59 or over 64
  • $34,750 if age 60–63

Your employer contributions to your retirement account (remember, you are both employer and employee) can tally up to 25 percent of compensation, with a combined maximum of $70,000–$81,250 depending on age.

Use Available Tax Credits

If you started a new plan this year or plan to, you may qualify for valuable credits:

  1. A start-up credit of up to $15,000 for new plans
  2. A contribution credit of up to $3,500 per employee for employer contributions
  3. An automatic-enrollment credit of $500 per year for three years

These credits directly reduce taxes owed, not just taxable income.

Consider a Roth Conversion

If your income is lower this year or your investments have declined, converting a traditional IRA or 401(k) to a Roth can be an attractive option. You’ll pay tax on the converted amount now, but future qualified withdrawals are tax-free, and Roth IRAs have no required minimum distributions during your lifetime.

  1. Use Vehicle Deductions to Your Advantage

The One Big Beautiful Bill Act (OBBBA) expanded the deductions available for business vehicles in 2025. Timing and vehicle type are critical.

Heavy SUVs, Pickups, and Vans 

These vehicles with a gross vehicle weight rating (GVWR) over 6,000 pounds may qualify for:

  • 100 percent bonus depreciation
  • Section 179 expensing up to $31,300 for SUVs and $2.5 million for trucks and vans
  • No luxury limits

Example. A $50,000 SUV used 90 percent for business produces a $45,000 deduction this year.

Standard-Weight Vehicles

Cars (and lighter SUVs with GVWRs of 6,000 pounds or less) face luxury depreciation caps—allowing only up to $20,200 in first-year deductions.

Act Before Year-End

To qualify, you must own the vehicle and place it in service by December 31—meaning it’s ready and being used for business. Driving it even one business mile before midnight proves eligibility.

Note. Electric-vehicle tax credits ended September 30, 2025.

  1. Plan for Crypto Profits and Losses

Crypto investors had a strong 2025, and now is the time to manage taxes efficiently.

Harvest Gains or Losses

  • Tax-gain harvesting. Sell appreciated crypto now if you expect higher income next year. Pay tax at today’s rate, and immediately repurchase to reset your basis.
  • Tax-loss harvesting. Sell underperforming assets to offset other capital gains. Excess losses can offset up to $3,000 of ordinary income, with the balance carried forward.

No Wash-Sale Restrictions

Because the IRS treats crypto as property—not securities—you can sell to create deductible losses and rebuy immediately without waiting 30 days.

Donate Appreciated Crypto

Donating directly to a qualified 501(c)(3) charity avoids capital gains and earns a deduction for the fair market value. If the gift exceeds $5,000, obtain a qualified appraisal and include Form 8283 with your return.

Gift Crypto to Family Members

You can give up to $19,000 per person in 2025 without any reporting requirement. The recipient inherits your original cost basis and holding period.

Invest through Self-Directed Accounts

Consider a self-directed IRA or solo 401(k) that allows cryptocurrency investments. You’ll enjoy the same tax-deferred or tax-free growth benefits available with traditional investments.

  1. Don’t Overlook Deductions Hidden in Your Current Vehicles

Your existing vehicles can still produce valuable deductions before year-end.

  • Sell older business vehicles. You’ll capture deductible losses—especially for those vehicles with declining business use.
  • Check vehicles purchased before 2018. If you traded cars under the old like-kind exchange rules, you may have unclaimed losses built up over multiple trades. Selling now could unlock a sizable deduction.
  • Convert a personal vehicle to business use. OBBBA allows up to 100 percent bonus depreciation when you start using a personal vehicle for business. If you operate as a corporation, the company must reimburse you for the deduction before year-end.
  1. Review Your Stock Portfolio for Tax Efficiency

Year-end is an ideal time to review and adjust your investments.

Offset Gains with Losses

Match short-term gains (taxed as high as 40.8%) with long-term losses.

Avoid Wash-Sale Traps

Selling and repurchasing the same stock within 30 days cancels your loss. Wait until January to rebuy if you plan to claim the loss in 2025.

Share Wealth within the Family

Gifting appreciated stock to children or parents in lower tax brackets lets them sell at 0%–15% capital gains rates, freeing up after-tax cash for the family as a whole.

Donate Appreciated Stock to Charity

Instead of cash, donate appreciated shares. If you itemize your deductions, you’ll receive a deduction for the fair market value and avoid paying capital gains on the appreciation.

Sell Losers, Then Give Cash

If a stock has lost value, sell it to recognize the loss, then donate the cash proceeds. This way, you claim both the loss and the charitable deduction.

  1. Review Your Health Care Reimbursement Options

For small-business owners, properly structured medical plans can be powerful deduction tools.

Reimburse Section 105 Expenses before December 31

If you have a Section 105 Health Reimbursement Arrangement (HRA) for your spouse-employee, ensure that all reimbursements are completed before year-end so your family’s medical expenses qualify for a 2025 deduction.

Consider a QSEHRA or an ICHRA

  • QSEHRA (Qualified Small Employer HRA): For businesses with fewer than 50 employees, reimburse up to $6,350 (individual) or $12,800 (family) tax-free.
  • ICHRA (Individual Coverage HRA): Works for employers of any size, and reimburses employees for individual health insurance coverage.

S Corporation Owners

For you to qualify for the above-the-line deduction on your Form 1040, your S corporation must pay or reimburse your health insurance premiums and include them on your W-2.

Small-Employer Health Insurance Credit

If you cover at least half the cost of employee health insurance, you may qualify for a 50 percent tax credit for up to two consecutive years—another reason to review your benefits before December 31.

  1. Make Smart, Family-Focused Tax Moves

Put Your Children on Payroll

Paying your under-18 child reasonable wages for legitimate work can save thousands:

  • The wages are deductible for you.
  • Neither you nor your child owes payroll taxes.
  • The first $15,750 paid to the child is tax-free to the child due to the standard deduction.
  • Your child can contribute up to $7,000 to a Roth IRA, building tax-free savings for life.

Be sure to issue a W-2 (not a 1099) and keep clear records of work performed and payment dates.

Consider Marriage or Divorce Timing

Your marital status on December 31 determines your filing status for the entire year. Run both scenarios—married and single—to see which is most beneficial. Joint filing usually lowers overall tax, but not always.

For divorces finalized after 2018, alimony is no longer deductible by the payer or taxable to the recipient.

Mortgage and Relationship Planning

Two unmarried co-owners can each deduct interest on up to $1 million of mortgage debt for older loans (or $750,000 for newer loans). Married couples are limited to a total of $1 million (or $750,000).

Use the 0 Percent Capital-Gains Bracket for Family Gifts

If you assist parents or relatives in lower tax brackets (say, with a joint income of under $96,700), consider giving them appreciated stock instead of cash. They can sell the stock tax-free, preserving more family wealth.

  1. Make the Most of the Section 199A Deduction

The 20 percent deduction on qualified business income remains one of the most valuable breaks for owners of pass-through entities such as sole proprietorships, partnerships, and S corporations.

Eligibility Thresholds for 2025

  • $197,300 for single filers
  • $394,600 for joint filers

If your taxable income exceeds these levels, the deduction may phase out—especially for specified service businesses such as law, health, or consulting.

Three Ways to Boost the Deduction before Year-End

  1. Harvest capital losses. Lower taxable income by offsetting gains in your investment portfolio.
  2. Make charitable contributions. Prepay 2026 charitable gifts or donate appreciated stock to increase itemized deductions and lower your taxable income.
  3. Buy business assets and place them in service. New equipment or property expensed under Section 179 or bonus depreciation can bring taxable income below the threshold and increase your deduction.
  1. Review Your Year-End Tax Checklist

Here’s a quick review of some steps to take before December 31:

  • Prepay next year’s qualifying business expenses
  • Delay billing until January
  • Purchase and place in service needed equipment and vehicles
  • Establish or fund your retirement plan
  • Review current and older vehicles for possible loss deductions
  • Manage crypto and stock portfolios for gains and losses
  • Complete any health-insurance reimbursements or S corporation W-2 adjustments
  • Pay children for work performed in the family business
  • Confirm eligibility for the Section 199A deduction

Each of these moves can help reduce your 2025 tax liability and improve your long-term financial position.

If you have questions, don’t hesitate to contact me.