What higher 2026 AMT risk may mean for your year-end tax planning
Tax law changes taking effect this year will increase alternative minimum tax (AMT) risk for some higher-income taxpayers. For 2026, the AMT exemption phaseout thresholds are reduced and the exemption phases out twice as fast as for 2025. If you may be affected, consider the AMT before implementing income and deduction timing strategies. A move that would reduce your 2026 regular tax might provide little or no benefit under the AMT — or could trigger it. Before acting, determine whether you may owe the AMT for 2026 or 2027 and how the move would affect both calculations. We can help project your regular tax and AMT liability for both years and the potential impact of timing strategies.
What are the tax implications of cryptocurrency transactions?
If your small business accepts, uses or invests in Bitcoin, Ethereum or other forms of cryptocurrency, accurate reporting and detailed records are critical for federal tax purposes. The IRS continues to scrutinize digital-asset transactions. Today, business tax returns include a question about digital assets, and brokers are now required to report certain transactions to taxpayers […]
A small business primer on expense deductions
Which of your small business’s expenses are deductible? Even with a tax advisor, it’s worth knowing because daily decisions can significantly reduce taxable income before year end. Deductible business expenses must be ordinary and necessary, but they don’t need to be indispensable. Business travel costs are typically deductible in the current year, but buildings, equipment and other capital assets generally must be deducted over time. Personal expenses aren’t deductible, but mixed-use ones could be if you can support your cost allocation. Rules vary on meal, entertainment, gift and vehicle expenses. Contact us for help claiming every available tax deduction.
Consider an installment sale to optimize taxes when selling your business
If you want to sell your business, receiving the purchase price over time in an installment sale may allow you to spread your gain — and the related tax — over several years.
The buyer typically makes a down payment and issues a note for the balance. Each principal payment generally includes a tax-free return of basis and taxable gain; interest on the note is taxed separately as ordinary income. This arrangement may also expand the pool of buyers or help you obtain a higher price. But depreciation recapture may be taxable upfront, and you assume the risk that the buyer won’t pay.
Watch out for the growing reach of the additional 3.8% tax on investment income
Watch out for the growing reach of the 3.8% net investment income tax (NIIT). The income thresholds haven’t changed since the tax took effect in 2013, so it’s hitting more taxpayers. If you have net investment income (NII) and your 2026 modified adjusted gross income (MAGI) exceeds $200,000 ($250,000 if you’re married and file jointly, half that if you file separately), you’ll be subject to the NIIT on the lesser of your NII or the amount by which your MAGI exceeds the applicable threshold. Some NII examples are taxable interest, dividends, and gains from stocks, bonds and mutual funds. Year-end planning may help reduce your MAGI or NII — and the NIIT’s impact. Contact us to learn more.
How your business can use AI to strengthen customer service
AI can help your business meet high customer service expectations without overburdening employees. It’s particularly effective for routine tasks. These include answering customers’ basic questions anytime on your website or social media accounts. AI can also help analyze and route customer requests to the right employees, and work behind the scenes to give staffers context and suggest next steps. Of course, AI is only as effective as how it’s trained and used. Your business should regularly test its systems, restrict access to confidential data and establish escalation rules. We can help calculate possible savings and recommend affordable solutions.
Business owner FAQs about IRS audits
Business owners often have more complex tax situations that can trigger an IRS audit. The good news is that with proper preparation, detailed records and professional guidance, you can make the process far less stressful.
Some returns may be selected randomly, but the IRS also has some audit hot buttons. Examples include significant differences between current and prior-year returns, repeated business losses, profit margins and expenses that differ substantially from similar businesses, and mathematical errors.
If you receive an IRS notice, don’t panic; contact us immediately. We can help you understand the issues, gather the needed documents and respond to the inquiries effectively.
Working teens can maximize the power of tax deferred — or tax-free — compounding with an IRA
Retirement is far from most teenagers’ minds when they get their first jobs. But those early earnings create a significant tax-advantaged savings opportunity. Even modest IRA contributions now can substantially multiply over time. For example, just $2,000 contributed to an IRA earning 5% annually will grow to nearly $23,000 50 years later. A Roth IRA can be especially powerful because qualified distributions will be tax-free. For 2026, the annual contribution limit for IRAs is the lesser of taxable compensation or $7,500. 2026 contributions can be made until April 15, 2027, but the income to support them must be earned by Dec. 31, 2026. Contact us to discuss tax-smart planning for your teen.
Worker misclassification can carry serious consequences
Calling one of your business’s employees an independent contractor doesn’t necessarily make that person one. Worker status depends on the actual relationship. And getting it wrong can expose you to tax liabilities, penalties and other costs. Familiarize yourself with the three primary factors the IRS uses to classify workers for federal employment tax purposes: behavioral control, financial control and type of relationship. Also know that the Department of Labor has proposed new independent-contractor regulations that, if finalized, could differ from IRS definitions. We can review your worker classifications and help determine whether you should change them.
Make more timely business decisions with interim financial reports
Interim financial reports produced monthly or quarterly can provide your business with more timely information than year-end financial statements. You can use this data to spot emerging problems and opportunities. Compare each interim report with your budget and financial reporting from the same period of the previous year. Account for seasonality, but don’t focus solely on revenue. Higher labor costs or excessive discounting may increase sales while profit margins shrink. Unexpected results in interim reports don’t necessarily signal a crisis, but you should investigate them. Contact us for help setting up interim reports and interpreting them.
You must be logged in to post a comment.