Do You Own an Interest in a Foreign Business?The IRS Wants to Know
Forms 5471 and 8865 can carry substantial penalties when overlooked.
Most people know they must report income earned outside the United States. What many do not realize is that simply owning an interest in a foreign business can create an IRS filing requirement, even if the business made little or no money.
Two of the most commonly overlooked international information returns are Form 5471 and Form 8865. These forms do not usually create additional tax by themselves, but failing to file them can result in substantial penalties.
Form 5471: Foreign Corporations
- Started a corporation outside the United States
- Own a significant percentage of a foreign corporation
- Became an officer or director under certain circumstances
- Have ownership in a controlled foreign corporation (CFC)
The form can require detailed ownership and financial information.
Form 8865: Foreign Partnerships
- Own an interest in a foreign partnership
- Control a foreign partnership
- Contribute significant property
- Meet ownership thresholds
Like Form 5471, Form 8865 requires detailed financial and ownership information.
The Penalties Can Be Severe
Failure to file can generally result in an initial $10,000 penalty per required form, with additional penalties possible if the failure continues.
International Reporting Is More Than Just FBARs
Foreign business ownership is a separate reporting requirement from FBAR and Form 8938.
Do Not Assume Someone Else Is Filing
These are U.S. information returns that are generally the responsibility of the U.S. taxpayer.
The Bottom Line
If you own, inherit, or invest in a foreign corporation or partnership, determine whether Forms 5471 or 8865 apply before filing your return.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
The Hidden Home Insurance Rule?
It Could Cost You Thousands!
Many homeowners assume that as long as they have homeowners insurance, they are fully protected. Unfortunately, one little-known provision found in many homeowners policies can significantly reduce an insurance payout after a loss. It is commonly known as the 80% rule, and understanding it before you need it can save you thousands of dollars.
What Is the 80% Rule?
The 80% rule generally requires you to insure your home for at least 80% of its current replacement cost. Replacement cost is the amount it would take to rebuild your home using today's labor and material costs. It is not the same as your home's market value or your purchase price.
If your dwelling coverage falls below that threshold, your insurance company may reduce the amount it pays on a partial loss, even if the loss itself is well below your policy limit.
A Simple Example
Suppose your home's replacement cost is $600,000. Under the 80% rule, your policy should generally provide at least $480,000 of dwelling coverage.
If you carry only $400,000 of coverage and later suffer a $120,000 fire loss, your insurer may apply a coinsurance formula that reduces your reimbursement. Instead of paying the full covered loss (less any deductible), the insurance company may pay only a portion of it because the home was underinsured.
Why This Happens More Often Today
Over the past several years, construction costs have risen dramatically due to higher prices for lumber, concrete, roofing materials, electrical components, and skilled labor. A policy that provided adequate protection just a few years ago may no longer reflect today's rebuilding costs.
Many homeowners focus on the market value of their home, but insurers are concerned with reconstruction cost. In some areas, rebuilding can actually cost more than the home's current market value.
How to Protect Yourself
- Review your homeowners policy every year.
- Ask your insurance agent for an updated replacement-cost estimate.
- Notify your agent about major remodeling projects or additions.
- Consider whether an extended or guaranteed replacement-cost endorsement makes sense for your situation.
Don't Wait Until After a Loss
The worst time to discover you are underinsured is after your home has been damaged. A brief annual review can help ensure your coverage keeps pace with inflation and rising construction costs, reducing the chance of an unpleasant surprise during the claims process
The Bottom Line
The 80% rule is one of those insurance provisions that many homeowners have never heard of until it affects them. Spending a few minutes reviewing your policy today could help protect one of your largest financial investments tomorrow.
How Gurel CPA Can Help?
Although your insurance professional determines the appropriate level of coverage, understanding the financial consequences of being underinsured is an important part of protecting your overall financial plan. If you have questions about casualty losses, disaster-related tax issues, or other financial planning matters, Gurel CPA is here to help.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
New Limits on Charitable Deductions
Starting with 2026 tax returns, many taxpayers who itemize deductions may receive a smaller charitable deduction than they expect.
A new tax law requires individuals who itemize to subtract 0.5% of Adjusted Gross Income (AGI) before claiming a charitable contribution deduction.
How the New Law Works
Beginning in 2026, only the portion of charitable contributions that exceeds 0.5% of your AGI is deductible. This creates a new threshold that reduces the deductible amount of many charitable gifts.
Example:
AGI: $200,000
• 0.5% of AGI = $1,000
• Charitable gifts = $5,000
• Deductible amount = $4,000
The first $1,000 of contributions is not deductible.
This Law Is Separate from Existing AGI Limits
Taxpayers may confuse the new 0.5% AGI floor with the long-standing limits on charitable deductions. They are different rules and both may apply.
• The new 0.5% AGI floor reduces the amount of contributions that can be deducted.
• The existing AGI percentage limits (such as the 60% of AGI limit for many cash gifts to public charities) continue to limit the maximum deduction that can be claimed.
In other words, itemizing taxpayers must first reduce their deduction by the new 0.5% floor, and then the remaining deduction is still subject to the applicable AGI limits.
Who Is Affected?
This change affects taxpayers who itemize deductions on Schedule A and make gifts to qualified charitable organizations. Taxpayers claiming the standard deduction are not subject to the 0.5% floor.
Why This Matters
Many generous donors will receive a smaller tax benefit than in prior years. Thoughtful year-end planning can help maximize the value of charitable giving.
Planning Opportunities
- Bunch several years of charitable gifts into one year.
- Donate appreciated securities instead of cash when appropriate.
- Use Qualified Charitable Distributions (QCDs) if you qualify.
- Coordinate charitable giving with your overall tax strategy.
Don't Let the New Law Surprise You
Charitable giving should always begin with supporting causes you care about, but understanding the new rules can help you receive every deduction available. If you expect to itemize deductions, review your charitable giving strategy before year-end.
Questions? Let’s Talk!
Contact GurelCPA. We can help you build a charitable giving strategy that supports both your favorite charities and your tax planning goals.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique.
You Can Owe Tax on Money You Never Received
Most people assume they only pay income tax on money that actually lands in their bank account. Unfortunately, the tax law doesn't always work that way. You may owe federal income tax on income you never physically receive. These rules often surprise taxpayers and can create unexpected tax bills if they are not anticipated.
A Recent Tax Court Reminder
On July 14, 2026, the U.S. Tax Court issued its decision in Eiler v. Commissioner (167 T.C. No. 3). The taxpayers received a lawsuit settlement, but most of the settlement proceeds were paid directly to their attorneys under a contingent fee agreement.
The taxpayers argued that they should only be taxed on the amount they actually kept. The Tax Court disagreed. Relying on Commissioner v. Banks, the court held that when a lawsuit recovery is taxable, the taxpayer generally must include the entire recovery in income, including the portion paid directly to the attorney. Because the claims in this case did not qualify for a special deduction available for certain civil rights and employment cases, the attorney fees did not reduce taxable income.
The result was that the taxpayers owed tax on money they never personally received.
Other Situations Where This Can Happen
- Cancellation of Debt: When a lender forgives debt, the forgiven amount is generally taxable.
- Debt Settlements: Settling a loan or credit card for less than the balance may produce taxable cancellation-of-debt income and a Form 1099-C.
- Partnership and LLC Income: Owners are taxed on their share of business profits even if the business keeps the cash instead of distributing it.
- S Corporation Income: Shareholders generally pay tax on their share of corporate income whether or not cash distributions are made.
- Imputed Interest: The tax law sometimes treats interest as having been paid on below-market loans even when no interest actually changes hands.
- Foreclosures and Repossessions: Losing property can result in taxable gain, cancellation-of-debt income, or both depending on the facts.
Why These Rules Exist
The tax law often focuses on economic benefit rather than cash actually received. If your financial position improves because a debt disappears, a business earns income on your behalf, or another party satisfies an obligation you owe, the IRS may treat that benefit as taxable income.
Planning Can Prevent Costly Surprises
Many of these situations involve exceptions and planning opportunities. Understanding the tax consequences before signing a settlement, restructuring debt, or completing a transaction can help avoid unexpected tax bills.
How Can We Help?
Unexpected taxable income often catches taxpayers off guard because the transaction does not feel like income. If you are settling a lawsuit, negotiating debt, selling a business, or facing another complex financial transaction, Gurel CPA can help you understand the tax consequences before you make a costly decision.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Gifting to a Non-U.S. Citizen Spouse?
Many married couples assume they can transfer unlimited amounts of money or property to each other without worrying about gift taxes.
While that's generally true when both spouses are U.S. citizens, the rules are different when one spouse is not a U.S. citizen.
Why Is There a Different Rule?
Normally, gifts between spouses qualify for the unlimited marital deduction. However, that unlimited deduction does not apply if the recipient spouse is not a U.S. citizen because assets could leave the U.S. transfer tax system. For 2026, the IRS has increased the annual tax-free gift limit for gifts to a non-U.S. citizen spouse to $194,000, up from $190,000 in 2025.
What Does the $194,000 Limit Mean?
You may give up to $194,000 to a non-U.S. citizen spouse during 2026 without creating a taxable gift. Larger gifts generally require Form 709 and reduce your lifetime exemption rather than immediately creating gift tax.
Examples:
Example 1: A $150,000 gift is fully covered by the annual exclusion.
Example 2: A $250,000 gift leaves $56,000 that generally uses part of the lifetime exemption and requires Form 709.
Estate Planning Opportunities
Making annual gifts within the exclusion can gradually transfer wealth while reducing future estate tax exposure. International families should coordinate gift, estate, and immigration planning.
Don't Confuse This With the Regular Gift Exclusion
For 2026:
- Annual gift exclusion to most individuals: $19,000
- Annual gift exclusion to a non-U.S. citizen spouse: $194,000
Bottom Line
If your spouse is not a U.S. citizen, don't assume the unlimited marital deduction applies. The higher 2026 exclusion provides additional planning opportunities, but larger gifts should be reviewed with a qualified tax advisor.
Questions about international tax planning or gift tax reporting? Contact GurelCPA to discuss your situation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Hurricane and Wildfire Season Is Here: Are Your Tax Records Protected?
June marked the beginning of hurricane season in many parts of the United States and wildfire season in others.
While most people think about protecting their homes and families, it's equally important to protect the financial and tax records you may need after a disaster.
The IRS reminds taxpayers that a little preparation today can save significant stress and frustration later.
Start With Important Documents
- Tax returns
- Supporting tax documents
- Property records
- Insurance policies
- Estate planning documents
- Vehicle titles
- Business records
- Nonprofit financial records
Store digital copies securely in cloud storage or on an encrypted external drive kept in a separate location.
Take Photos of Valuable Property
- Furniture
- Electronics
- Appliances
- Artwork
- Jewelry
- Tools and equipment
- Business assets
These records may make it easier to support insurance claims and document losses if a disaster occurs.
Create and Maintain an IRS Online Account
- Tax transcripts
- Account balances
- IRS notices
- Payment history
- Filing information
If your paper records are lost, online access may help you obtain information needed to reconstruct your tax files.
Businesses and Nonprofits Should Take Extra Precautions
Business owners and nonprofit organizations should also protect accounting files, payroll records, vendor contracts, donor records, grant documentation, board minutes, and organizational documents. Cloud-based systems provide additional protection.
Tax Relief May Be Available After a Disaster
When a major disaster receives a federal disaster declaration, the IRS often provides extended filing deadlines, payment relief, and penalty relief. Taxpayers in designated disaster areas frequently receive this relief automatically.
Don't Wait Until Disaster Strikes
Taking a few hours now to organize records, back up documents, and document valuable property could save days or weeks of work later.
Need Help?
If you're unsure which tax and financial records should be retained or how long to keep them, contact me directly.
I offer a free consultation and can help you develop a recordkeeping system that protects your information and makes tax season easier.
This article is for informational purposes only and does not constitute tax advice. Every situation is different, especially when multiple years of unfiled returns are involved.
Don’t Give Them the House. Let Them Inherit It.
Many parents assume that giving a house to their children during their lifetime is a smart way to avoid probate or simplify their estate.
In reality, making a lifetime gift of appreciated real estate can create a significant tax problem for your children. In most cases, allowing your heirs to inherit the property instead of receiving it as a gift can save them tens or even hundreds of thousands of dollars in capital gains tax.
The Difference Is the Tax Basis
When you give someone a house during your lifetime, they generally receive your original tax basis in the property. This is called a carryover basis.
Example:
- You bought your home years ago for $150,000.
- Today it is worth $700,000.
- You give the house to your daughter.
Your daughter's tax basis is still $150,000. If she later sells the home for $700,000, she could owe capital gains tax on approximately $550,000 of gain, subject to any available exclusions.
What Happens If They Inherit the House?
When property is inherited, most assets receive a step-up in basis. The property's tax basis generally becomes its fair market value on the date of death (or an alternate valuation date if elected by the estate).
- Original purchase price: $150,000
- Value at death: $700,000
- Heir's new tax basis: approximately $700,000
If the property is sold shortly after inheritance for about that amount, there may be little or no taxable capital gain.
What About Probate?
Avoiding probate does not necessarily require giving away the property during your lifetime. Depending on your situation, alternatives may include:
- Revocable living trust
- Transfer-on-death deed (where available)
- Appropriate joint ownership arrangements
- Other estate planning techniques recommended by your attorney
Are There Exceptions?
Yes. There are situations where lifetime transfers make sense, including:
- Medicaid planning
- Asset protection planning
- Certain irrevocable trust strategies
- Other specialized estate planning situations
These decisions should always be made after considering both the legal and tax consequences.
The Bottom Line
One of the most expensive estate planning mistakes families make is giving appreciated real estate to children too soon. In many cases, allowing loved ones to inherit the property instead can provide a valuable step-up in basis and dramatically reduce future capital gains taxes.
Before transferring a home, vacation property, rental house, or other appreciated real estate, speak with both your CPA and your estate planning attorney. A simple planning decision today could save your family a substantial amount in taxes tomorrow.
Questions about gifting property or estate tax planning?
GurelCPA helps individuals and families understand the tax consequences of gifting, inheriting, and selling real estate so they can make informed financial decisions before transferring valuable assets.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
IRS Raises Standard Mileage Rates Mid-Year for 2026
Business Drivers Get a Bigger Deduction Beginning July 1
In an unusual mid-year move, the IRS has increased the optional standard mileage rates for the remainder of 2026 due to rising fuel costs. If you use your personal vehicle for business, medical, or certain moving purposes, this change could increase your tax deduction.
The new rates apply to miles driven on or after July 1, 2026.
New Standard Mileage Rates
For miles driven from January 1 through June 30, 2026, the standard mileage rates are:
- Business: 72.5 cents per mile
- Medical: 20.5 cents per mile
- Qualifying military moving: 20.5 cents per mile
- Charitable: 14 cents per mile
For miles driven on or after July 1, 2026, the rates are:
- Business: 76 cents per mile
- Medical: 23.5 cents per mile
- Qualifying military moving: 23.5 cents per mile
- Charitable: 14 cents per mile (unchanged)
Moving expenses are deductible only for qualifying active-duty members of the U.S. Armed Forces and certain members of the intelligence community.
Who Benefits?
- Self-employed individuals
- Independent contractors
- Gig workers (Uber, Lyft, DoorDash, Instacart, etc.)
- Sole proprietors
- Farmers
- Small business owners who use their personal vehicles for business
Keep Good Mileage Records
Because the rate changed in the middle of the year, you'll need to separate your mileage into two periods:
- Miles driven January 1 through June 30
- Miles driven July 1 through December 31
Standard Mileage vs. Actual Expenses
The standard mileage rate is optional. Some taxpayers may receive a larger deduction by deducting their actual vehicle expenses instead. Actual expenses can include:
- Gas and oil
- Repairs and maintenance
- Tires
- Insurance
- Registration fees
- Depreciation (subject to IRS rules)
A Rare Mid-Year Change
The IRS normally announces one mileage rate each fall for the following calendar year. Mid-year adjustments are uncommon and generally occur only when fuel prices change dramatically. The last mid-year increase occurred in 2022.
Bottom Line
If you drive for business, be sure your mileage records reflect the new rates beginning July 1st. Even a few thousand business miles can produce a meaningful additional deduction.
If you have questions about deducting vehicle expenses or would like help determining whether the standard mileage method or actual expenses will save you more tax, contact GurelCPA. We're here to help you keep more of what you earn.
This article is for informational purposes only and should not be relied upon as tax advice. Please contact me directly to discuss how this applies to your individual tax situation.
The IRS May Text You... But Here's How to Know if It's Real
For years, taxpayers have been told one simple rule:
"The IRS will never text you."
That advice was accurate for many years. Today, however, it's no longer true.
The IRS has expanded its digital services and now sends certain text messages to taxpayers who have opted in to receive them. The change is intended to improve customer service, but it also gives scammers another opportunity to confuse taxpayers.
Here's what you need to know.
When the IRS May Send a Text
The IRS now uses text messaging for a limited number of situations, including:
IRS News and Updates
If you've signed up to receive IRS news and announcements, you may receive text notifications about:
• Tax law changes
• IRS Newswire updates
• Account notifications
• Security verification codes
These messages are optional and require you to subscribe first.
IRS Appointment Reminders
If you've scheduled an appointment at an IRS Taxpayer Assistance Center and choose to receive text updates, the IRS may send reminders or let you know when it's your turn to be seen.
IRS Callback Notifications
Instead of waiting on hold, some IRS phone services now offer a callback option. If you request one, the IRS may text you when an agent is preparing to return your call.
The IRS Still Will NOT Text You About These Things
The IRS will never send an unexpected text asking you to:
• Pay taxes immediately
• Click a link to claim a refund
• Provide your Social Security number
• Verify your banking information
• Send passwords or security codes
• Scan a QR code to avoid penalties
If a message does any of these things, it's almost certainly a scam.
Watch for IRS Short Codes
Legitimate IRS text messages come from official short code numbers rather than ordinary 10-digit phone numbers.
Current IRS short codes include:
• 91040 – IRS news, appointment reminders, account notifications, and security codes
• 34381 – IRS callback notifications
Even so, scammers continue to get more sophisticated. Never assume a message is legitimate simply because it appears professional.
One Important Security Tip
If you receive a text containing a security code that you didn't request, don't ignore it. It may mean someone is attempting to access your IRS Online Account.
Never give that code to anyone. Instead, log directly into your IRS Online Account yourself and review your account activity.
What To Do if You Receive a Suspicious IRS Text
• Don't click any links.
• Don't reply.
• Don't provide personal information.
• Take a screenshot if possible.
• Forward the message to phishing@irs.gov.
• Forward the text to 7726 (SPAM).
• Delete the message afterward.
Bottom Line
IRS communication is gradually becoming more digital, but scammers are evolving just as quickly.
A legitimate IRS text will only be sent in limited situations that you initiated or specifically agreed to receive. If a text unexpectedly demands money, personal information, or immediate action, treat it as a scam until proven otherwise.
If you're ever unsure whether an IRS message is legitimate, contact GurelCPA before responding. A few minutes of caution can prevent identity theft and costly fraud.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
IRS Makes Penalty Relief Automatic for Many Taxpayers
The IRS has announced a significant taxpayer-friendly change that will make it easier for eligible individuals and businesses to avoid certain IRS penalties. Instead of requiring taxpayers to request relief, the IRS will begin granting qualifying penalty relief automatically to taxpayers with a strong history of compliance.
What's Changing?
For many years, taxpayers who qualified for First Time Abate (FTA) penalty relief had to know the program existed and contact the IRS to request it. Many eligible taxpayers never received this relief simply because they didn't know to ask.
The IRS is replacing that process with a new system called Automatic Exemption from Penalty (AEP).
Under AEP, the IRS will determine eligibility during return processing and automatically remove qualifying penalties without requiring taxpayers to file a request or make a phone call.
Who May Qualify?
- Filing required tax returns on time for the previous three years.
- Paying tax due on time (or making appropriate payment arrangements).
- Not having received similar administrative penalty relief during the look-back period.
Which Penalties Are Covered?
- Failure-to-File penalties
- Failure-to-Pay penalties
- Failure-to-Deposit penalties (primarily for businesses)
Interest on unpaid taxes still applies, and taxpayers remain responsible for paying any tax owed.
When Does It Begin?
The IRS is beginning the transition during the summer of 2026.
• 2025 tax year returns and 2026 quarterly business returns are part of the transition period. Some eligible taxpayers may still receive penalty notices during this phase. If that happens, qualifying taxpayers can still request First Time Abate under the existing rules.
• For returns with original due dates on or after January 1, 2027, AEP is expected to replace First Time Abate for eligible taxpayers, making the relief automatic.
If You Don't Qualify
Taxpayers who don't meet the requirements for AEP may still request penalty relief based on reasonable cause, such as serious illness, natural disasters, or other circumstances beyond their control. The IRS will continue reviewing those requests individually.
Why This Matters
This change removes one of the biggest frustrations in the penalty relief process. Previously, taxpayers often needed to know about the First Time Abate program or hire a tax professional to request it. Under the new system, many eligible taxpayers will receive the relief automatically, reducing paperwork, phone calls, and unnecessary penalties.
Need Help?
If you've received an IRS penalty notice, don't assume you must pay it. You may qualify for automatic relief or another form of penalty abatement. Before paying an IRS penalty, it's worth having the notice reviewed to determine whether relief is available.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
No Tax on Tips and Overtime: What Workers Need to Know
Millions of American workers may qualify for new federal tax deductions for tips and overtime beginning with the 2025 tax year.
Although these provisions are often called “No Tax on Tips” and “No Tax on Overtime,” the name is a little misleading. The income is still taxable, but eligible workers may be able to claim a deduction that reduces their federal taxable income when they file their tax return. These deductions are currently scheduled to apply for tax years 2025 through 2028.
Who May Qualify?
You may benefit if you receive:
- Qualified tips in an occupation that customarily and regularly receives tips.
- Qualified overtime compensation required under federal overtime rules.
- Income below the phase-out thresholds.
The deductions begin to phase out when modified adjusted gross income exceeds $150,000 for most individual filers and $300,000 for married couples filing jointly.
This Isn't a Tax-Free Paycheck
Many people expected these rules to eliminate taxes from each paycheck. That isn't how they work.
- Federal income tax may still be withheld.
- Social Security and Medicare (FICA) taxes still apply.
- State income taxes may still apply, depending on your state.
Instead, you'll generally claim the deduction when you file your federal tax return, which could reduce the tax you owe or increase your refund.
How Will It Show Up at Year-End?
For the 2025 tax year, employers were given transition relief. That means not every employer will report qualified tips or qualified overtime the same way. You may receive the information:
- On your Form W-2.
- In Box 14 of your W-2.
- On a separate employer statement.
- Through your employer's payroll portal.
Don't assume that if you don't see a special code on your W-2 you aren't eligible. Keep your year-end payroll information with your tax records.
What Should You Do Now?
- Save your year-end payroll documents.
- Review your W-2 carefully when it arrives.
- Make sure your tax preparer knows you received qualifying tips or overtime.
- Ask questions if your employer's reporting isn't clear.
The IRS continues to issue guidance, and reporting should become more standardized in future years.
The Bottom Line
These new deductions could reduce your federal income tax if you qualify, but they are not automatic paycheck exemptions and they don't eliminate payroll taxes.
The most important thing is making sure your year-end tax documents accurately reflect your qualifying tips or overtime so you receive every deduction you're entitled to.
Questions? Let’s Talk!
If you have questions about whether you qualify or how these new deductions apply to your situation, I'd be happy to help.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique.
You Don't Need to Keep Paper Receipts
Many taxpayers think the IRS requires a receipt for every deduction. That is not exactly the rule.
The real rule is this: if you claim a deduction, credit, or business expense, you must be able to substantiate it. In plain English, you need records that show what you spent, when you spent it, and why it was deductible.
What does “substantiate” mean?
To substantiate an expense means you can support it with records. Depending on the item, that may include a receipt, invoice, canceled check, bank or credit card statement, mileage log, charitable acknowledgment, or other documentation.
But a bank or credit card statement alone is often not enough. It may show that money was spent, but not exactly what was purchased or whether it was deductible.
Do you always need a receipt?
Not always in the narrowest technical sense, but in practice, keeping the receipt is usually the safest approach.
If you want to deduct an expense, keep the receipt and any related backup that helps explain it. A store receipt may show what was purchased, while a credit card statement may only show the total charge.
Why receipts matter
Receipts and supporting records help in three ways.
- They help you prepare an accurate return.
- They help your tax preparer determine what is and is not deductible.
- They protect you if the IRS questions the return later.
If the IRS examines your return and you cannot support a deduction, the deduction may be denied even if you really did spend the money.
Some categories need especially strong documentation:
Business meals and travel
Business meals and travel are areas where taxpayers often run into trouble. You should keep records showing the amount, date, place, and business purpose of the expense. For meals, it is also helpful to note who was involved.
Vehicle expenses and mileage
If you claim business mileage, you should keep a contemporaneous mileage log showing the date, destination, business purpose, and miles driven. Reconstructing mileage later is much weaker.
Charitable contributions
For charitable deductions, the rules are stricter than many people realize.
For any single contribution of $250 or more, you generally need a contemporaneous written acknowledgment from the charity.
For smaller donations, a bank record, receipt, or written communication from the organization may be enough, depending on the facts.
What about the “under $75” rule?
Many taxpayers have heard that receipts are not required for amounts under $75. That idea is often misunderstood.
There are limited exceptions in certain situations, but taxpayers should not treat “under $75” as a general rule for undocumented deductions. As a practical matter, if you are claiming it, keep the record.
Are digital receipts acceptable?
Yes. Digital records are acceptable.
Scanned receipts, PDF invoices, emailed confirmations, bookkeeping software records, and organized electronic files are all fine as long as they are legible, accurate, and accessible.
You do not have to keep boxes of paper if you have a reliable digital system.
How long should taxpayers keep receipt records?
A common rule of thumb is at least three years after the return is filed. Some records should be kept longer.
If the records relate to property basis, depreciation, investments, or other items that affect future returns, keep them as long as they remain relevant, plus the applicable retention period after the item is sold or disposed of.
What happens if you do not have receipts?
If you cannot substantiate a deduction, the IRS may disallow it. That can lead to additional tax, penalties, interest, and stress.
Good recordkeeping is not just paperwork. It is part of protecting the deduction itself.
Practical advice for taxpayers
The easiest approach is to use a simple system and stay consistent.
- Save receipts when the purchase happens.
- Use a separate business bank account or credit card for business activity.
- Scan or photograph paper receipts.
- Keep digital folders by year and category.
- Make notes about business purpose while the details are still fresh.
- Maintain mileage logs in real time.
Final thoughts
IRS receipt requirements are really about proof.
The question is not just whether you spent the money. The question is whether you can show that the expense was legitimate, deductible, and properly reported.
Good records make tax preparation easier, reduce audit risk, and put you in a stronger position if the IRS ever asks questions.
Questions? Let’s Talk
At GurelCPA.com, I help taxpayers and business owners not only file accurate returns, but also build practical recordkeeping habits that support those returns.
This article is for informational purposes only and does not constitute legal, tax, or accounting advice for your specific situation. Tax rules can vary based on the facts and circumstances involved. Please contact me directly to discuss your situation and schedule a free consultation.
Are You Happy With Your CPA?
That is the Question I Ask Prospective Clients
If the Answer is Yes:
That’s something to value. A strong CPA relationship is built on trust, communication, and long-term understanding — and if you’ve found that, you’re fortunate to have a true trusted advisor.
If the Answer is No:
Then it’s probably worth a conversation. Feeling unheard, rushed, or misunderstood financially is often a sign that a better professional fit may exist.
And for some people, the honest answer is:
“I don’t have a CPA.”
Where CPA Services Truly Add Value
There are specific situations where professional guidance can create real financial value and prevent costly mistakes — especially when complexity increases.
This commonly includes small business ownership (entity structure, expense classification, tax strategy, cash flow planning, estimated taxes, and compliance obligations) and rental properties or real estate (depreciation strategy, passive activity rules, loss limitations, capital gains planning, and long-term tax structuring)
When You May Not Need a CPA
Not everyone needs a CPA.
If your financial life is simple — for example, if all of your income comes from W-2 wages, investment accounts, and basic sources of income — there are reliable, user-friendly tax software platforms that many people can use successfully on their own.
A Different Kind of CPA Relationship
My approach to accounting isn’t transactional — it’s relational. It’s about understanding your life, your business, and your goals — not just preparing returns.
If you’re happy with your CPA, that’s something to value.
If you’re not, we should talk.
If you don’t have one — and your financial life is becoming more complex — it may be time to explore whether having a trusted advisor could make a meaningful difference.
Question? Let’s Talk!
A core principle of my practice has always been empowerment: helping people understand their finances and supporting them in doing for themselves what they feel comfortable doing.
Contact GurelCPA for a free consultation today!
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
1099 Reporting Threshold Increases to $2,000 Beginning in 2026
For years, taxpayers and businesses have been familiar with the $600 rule for issuing Forms 1099 to independent contractors and certain other payees. Beginning with payments made in 2026, that long-standing threshold has increased to $2,000 for Form 1099-NEC and some of the payments reported on Form 1099-MISC.
What Changed?
• 2025 and earlier: Form 1099 was issued if total qualifying payments were $600 or more.
• Beginning 2026, Form 1099 is required only if total qualifying payments are $2,000 or more.
•Beginning in 2027, the $2,000 threshold will be adjusted annually for inflation.
Businesses: Don't Stop Collecting Forms W-9
Although fewer businesses may need to issue 1099s, this is not a reason to stop collecting Forms W-9 from vendors. A contractor who receives only a few hundred dollars today may receive additional work later in the year that pushes total payments over the reporting threshold. Having a completed W-9 on file before making payments saves time and frustration later.
Individuals: Remember! Income Is Still Taxable
The higher reporting threshold does not change whether income is taxable. Contractors and self-employed individuals must still report all taxable income they receive, even if they never receive a Form 1099.
Watch for State Differences
The new $2,000 federal reporting threshold applies to payments beginning January 1, 2026. However, some states have their own information reporting rules and may continue using different thresholds until they update their laws or guidance. If you make payments to vendors in multiple states, be sure to verify each state's reporting requirements before year-end.
Need Help? Let’s Talk!
The new reporting rules may reduce paperwork for many businesses, but they also create new questions about who must receive a Form 1099 and when.
If you're unsure how these changes affect your business, we're happy to help you stay compliant while avoiding unnecessary filings. Contact GurelCPA for a free consultation.
This article is for informational purposes only and should not be relied upon as tax advice. Please contact me directly to discuss how this applies to your organization’s specific situation.
Leave a Legacy That Matters
Creating a will is one of the most important financial and personal decisions you'll make. It allows you to decide how your property will be distributed, who will carry out your wishes, and how you want to be remembered.
Most people naturally think first about providing for a spouse, children, or other loved ones. That's exactly what a will should do. But while you're meeting with your attorney, there is another important conversation to have.
What are the charitable organizations that have made a difference in your life?
Including a charitable gift in your will allows you to continue supporting the causes that have been meaningful to you throughout your life. Your gift does not have to be large. Even a modest bequest can make a lasting difference.
You may have several organizations that reflect your values and have earned your support over the years, such as:
- Your church or other religious organization
- A college or university
- A hospital or healthcare charity
- An animal rescue or humane society
- A food bank or other community service organization
Think about the organizations that have helped shape your life. Perhaps your church has been an important part of your family's story. Maybe a college or university opened doors to your career. A hospital may have provided exceptional care to someone you love, or a local nonprofit may have strengthened your community. These organizations often leave a lasting impression, and your will can allow you to continue supporting their mission.
A Few Practical Suggestions
- Make a list of the organizations that are important to you.
- Use each charity's correct legal name so there is no confusion.
- Review your will every few years, especially after major life events.
- Let your family know why these organizations are meaningful to you.
A charitable bequest does not have to be a large percentage of your estate. Some people leave a specific dollar amount, while others leave a percentage of what remains after family members have been provided for. Your attorney can help determine the approach that best fits your goals.
If you are creating or updating your will, take a few minutes to make a list of the charities that have been important to you. Share that list with your attorney and discuss whether including one or more charitable gifts makes sense as part of your estate plan. Your attorney can prepare the legal documents.
As Your CPA:
I can help you understand the tax considerations of charitable giving as part of your overall estate and financial plan. In some situations, charitable giving may have income tax or estate planning implications, particularly when retirement accounts or appreciated assets are involved. Working together, your attorney and CPA can help ensure your wishes are carried out efficiently.
Bequests do not have to be large to make an impact
Your will is more than a legal document. It is an opportunity to leave a legacy that reflects both the people and the causes that mattered most to you.
Question? Let’s Talk!
If you have questions about the tax aspects of charitable giving or would like to discuss how it fits into your overall financial plan, contact GurelCPA for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
IRS Interactive Tax Assistant: Get Answers to Common Tax Questions
Did you know the IRS offers a free online tool that can answer many common tax questions?
The IRS Interactive Tax Assistant (ITA) asks you a series of simple questions and provides answers based on your situation and current tax law.
The ITA can help you determine things like:
- Whether you need to file a tax return
- Your filing status
- Whether someone can claim you as a dependent
- If you qualify for certain tax credits
- Whether an expense is deductible
- If income is taxable
The tool is easy to use and available anytime, making it a great first stop for basic tax questions.
Keep in mind that the ITA is designed for general tax situations. If your circumstances involve a business, rental property, foreign income, retirement planning, or other complex issues, personalized tax advice is still the best option.
Questions? Let’s Talk!
Need help with a tax question the IRS tool can't answer?
We're happy to help. Contact us for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Home Sale Tax Break: Many Homeowners Can Sell Tax-Free
Selling your home can result in a substantial profit, but many homeowners are surprised to learn that they may owe no federal capital gains tax at all.
The IRS allows eligible homeowners to exclude up to:
• $250,000 of gain if filing Single
• $500,000 of gain if Married Filing Jointly
This is one of the most valuable tax breaks available, but there are several rules that must be met.
Do You Qualify?
Most homeowners qualify if they meet these requirements:
• Own the home for at least 2 years during the 5-year period before the sale.
• Live in the home as their primary residence for at least 2 years during that same 5-year period.
• Have not claimed the home sale exclusion on another home within the previous two years.
Your Gain May Be Smaller Than You Think
Your taxable gain is not simply the selling price minus the purchase price. Qualifying home improvements and certain selling expenses can reduce your taxable gain. Keep receipts for major improvements such as a new roof, kitchen remodel, room addition, or HVAC replacement.
Not Every Home Expense Counts
Routine maintenance such as painting, lawn care, cleaning, and minor repairs generally does not increase your basis or reduce taxable gain.
What If You Rented the Home?
You may still qualify for the exclusion, but depreciation claimed after May 6, 1997 generally must be recaptured, and rental or business use can complicate the calculation.
What If Your Gain Exceeds the Exclusion?
Only the amount above the $250,000/$500,000 exclusion is generally subject to capital gains tax.
Don't Forget State Taxes
Be sure to consider both federal and state tax consequences before selling your home.
Planning Before You Sell Can Pay Off
• Gather receipts for major improvements.
• Confirm you meet the ownership and residency rules.
• Review any rental or business use.
• Estimate your potential gain before closing.
How GurelCPA Can Help
At GurelCPA, we help homeowners determine whether they qualify for the home sale exclusion, calculate their adjusted basis, and estimate any tax before the sale closes. Planning ahead can make a significant difference.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
What Are Capital Gains?
When you sell something for more than you paid for it, you've earn a capital gain. Capital gains occur when you sell certain types of property, and understanding how they are taxed can help you make better financial decisions.
What Is a Capital Gain?
A capital gain is the gain you make when you sell a capital asset for more than its tax basis (usually what you paid for it, plus certain expenditures).
Short-Term vs. Long-Term Capital Gains
Short-term capital gains apply when you own an asset for one year or less before selling it and are taxed at ordinary income tax rates. Long-term capital gains apply when you own an asset for more than one year and qualify for lower tax rates. Holding an investment long enough to qualify as long-term treatment can significantly reduce the taxes owed.
Long-Term Capital Gains Have Favorable Tax Rates
For 2026, long-term capital gains are taxed at 0%, 15%, or 20%, depending on taxable income.
0% rate:
• Single: Up to $49,450
• Married Filing Jointly: Up to $98,900
15% rate:
• Single: $49,451 to $545,500
• Married Filing Jointly: $98,901 to $613,700
With a little planning, it is possible to spread gains over multiple tax years to keep more gains in the 0% bracket or avoid moving into the 20% bracket.
Tax Planning Can Reduce Capital Gains Tax
Before selling appreciated investments, real estate, or other assets, consider whether the asset has been held long enough for long-term treatment, whether the sale should occur in a lower-income year, whether multiple sales can be spread over multiple years, and whether capital losses are available to offset gains.
We're Here to Help
If you're planning to sell investments, real estate, or other appreciated assets, contact us before completing the transaction. We can help identify opportunities to minimize your capital gains tax through careful planning.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Hiring Seasonal or Part-Time Employees? Don't Overlook These IRS Rules
Summer often means hiring extra help. Whether you're bringing on students, temporary workers, or part-time employees, it's important to understand that these workers generally have the same federal tax requirements as full-time employees.
The IRS recently reminded employers that seasonal and part-time workers are employees for tax purposes, and employers must follow the same payroll tax rules that apply to any other employee.
Four Things Every Employer Should Know
1. Have Every Employee Complete Form W-4
All new employees should complete Form W-4 so you can withhold the correct amount of federal income tax from their wages.
2. Withhold and Pay Payroll Taxes
Seasonal and part-time employees are generally subject to the same federal income tax withholding, Social Security tax, and Medicare tax. Don't assume that working only a few months changes these requirements.
3. Classify Workers Correctly
A temporary employee is not automatically an independent contractor. If you control how, when, and where the work is performed, the worker is generally an employee. Misclassifying workers can result in significant IRS penalties.
4. Seasonal Employers May Have Different Form 941 Filing Requirements
Businesses that only operate during certain times of the year may not need to file quarterly payroll tax returns during quarters when no wages are paid. Employers should indicate that they are seasonal employers when filing Form 941 so the IRS knows returns may not be required every quarter.
Don't Let Temporary Employees Create Permanent Tax Problems
Hiring extra help can be great for your business, but payroll mistakes can become expensive. Setting up payroll correctly from the beginning helps avoid notices, penalties, and unnecessary headaches later.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Now You Can Download Proof of Your EIN
For years, if a business lost its original IRS EIN confirmation letter, replacing it could be a frustrating process. Many business owners had to call the IRS, wait on hold, and request a replacement Letter 147C by mail or fax.
Fortunately, the IRS has made this much easier.
Businesses that have access to an IRS Business Tax Account can now download an official digital CP575 notice confirming their Employer Identification Number (EIN). Even better, the IRS states that this digital notice may be used in place of both the original CP575 notice and Letter 147C.
Why This Matters
- Opening a business bank account
- Applying for financing
- Setting up payroll
- Working with vendors
- Completing government paperwork
- Verifying your business with financial institutions
Instead of searching through old files or contacting the IRS for a replacement, many businesses can now simply sign into their Business Tax Account and download the document immediately.
Who Can Use This Feature?
The IRS continues expanding Business Tax Account access to more types of businesses and tax-exempt organizations. Eligibility depends on your entity type and your role within the organization, but many corporations, partnerships, nonprofits, and other entities can now use these online services.
Our Recommendation
If your business doesn't already have an IRS Business Tax Account, now is a great time to create one. In addition to downloading your EIN confirmation, the account provides access to tax records, notices, payments, balances, and other useful IRS services—all without waiting on hold.
Need help setting up your IRS Business Tax Account or determining who should be registered as your Designated Official? GurelCPA can help. Contact us today to get started.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Having a Current Will Matters More Than You Think
Most people know they should have a will. Unfortunately, many people postpone creating one because they assume they are too young, do not have enough assets, or believe their family will simply work things out if something happens.
The reality is that a will is one of the most important legal and financial documents you can have. Whether you are raising a family, living overseas, running a business, supporting charitable causes, or simply trying to make life easier for your loved ones, a properly prepared will can provide clarity, reduce costs, and help prevent unnecessary disputes.
What Happens If You Die Without a Will?
When someone dies without a valid will, they are considered to have died 'intestate.' In that situation, state law determines who receives their assets and who is responsible for administering the estate.
Many people are surprised to learn that the state's distribution rules may not match their wishes.
For example:
• Unmarried partners may receive nothing.
• Stepchildren may receive nothing.
• Specific charitable gifts cannot be honored.
• Family members may disagree about who should manage the estate.
• The court may appoint someone to handle matters who would not have been your first choice.
Having a will allows you to make these decisions yourself rather than leaving them to state law.
A Will Is About More Than Money
A will can name beneficiaries, designate an executor, specify guardians for minor children, direct gifts to charities and nonprofit organizations, provide instructions regarding personal property and family heirlooms, and help reduce confusion and conflict among surviving family members.
Special Considerations for Americans Living Abroad
Expats often own assets in multiple countries, including U.S. bank and investment accounts, foreign bank accounts, foreign real estate, retirement accounts, and business interests.
Different countries may have different inheritance laws, probate procedures, and rules regarding the recognition of foreign wills. Americans living abroad should work with qualified legal professionals familiar with both U.S. and local laws to ensure their estate plan functions as intended.
Supporting Causes That Matter
Many nonprofit supporters spend years donating their time, talent, and financial resources to organizations they care about. A will allows individuals to continue supporting those causes after their lifetime through charitable bequests and other planned gifts.
The Importance of Updating Your Will
Major life events such as marriage, divorce, birth or adoption of children, death of a beneficiary or executor, significant changes in assets, or moving to another state or country should trigger a review of your estate plan.
Estate Planning Is an Act of Care
A properly prepared will can help reduce uncertainty, minimize family conflict, support charitable goals, and provide clear instructions when your loved ones need them most.
Final Thoughts
A will is one of the simplest and most effective tools available to protect your family, support your charitable interests, and ensure your wishes are carried out. Whether you live in the United States or abroad, taking the time to establish or update a will can provide valuable peace of mind.
Have questions about how estate planning decisions may affect your taxes, charitable giving, or overall financial situation? Contact Lance W. Gurel, CPA, for a free consultation.
This article is intended for informational purposes only and does not constitute legal or tax advice. Estate planning documents should be prepared with the assistance of a qualified attorney familiar with your individual circumstances.
Nonprofits: You Can Use the IRS Business Tax Account Too
Many nonprofits assume IRS online tools are only for for-profit businesses. That’s no longer the case. The Internal Revenue Service now offers a Business Tax Account (BTA) and nonprofits are included.
If your organization has an EIN and files with the IRS (Form 990, 990-EZ, or payroll returns), this is a tool you should know about.
What Is the IRS Business Tax Account?
The IRS Business Tax Account is a secure online portal that lets your organization view and manage its federal tax information in one place.
Think of it as your nonprofit’s IRS dashboard, payment center, and compliance tool.
Yes — This Applies to Nonprofits
If your organization has an EIN, files Form 990 (or 990-EZ / 990-N), or handles payroll or other federal filings, you may be able to use this system.
This is not just for businesses—it applies to nonprofits too.
What Can Your Nonprofit Do With It?
View balances and payments: See what you owe and confirm payments were applied correctly.
Make and schedule payments: Pay payroll taxes or other liabilities without mailing checks.
Access IRS records: Download transcripts and account history for lenders or grantors.
View IRS notices online: Avoid missed or delayed mail.
Manage access: Add or remove users and improve internal controls.
Why This Matters
Fewer surprises from missed notices or unknown balances.
Stronger internal controls with managed access.
Better grant readiness with organized IRS records.
Bottom Line
The IRS Business Tax Account is becoming an important tool for nonprofits. It provides better visibility, more control, and fewer surprises.
Questions? Let’s Talk!
If you’d like help setting this up or understanding how it applies to your nonprofit, please contact me directly. I offer a free consultation to help you evaluate your situation.
This article is for informational purposes only and should not be relied upon as tax advice. Please contact me directly to discuss how this applies to your organization’s specific situation.
A Penalty-Free Path for U.S. Expats to Make-up Missed Tax Filings
Many U.S. citizens living abroad are surprised when they learn that they are still required to file U.S. tax returns and report certain foreign accounts — even if they owe little or no U.S. tax. They don’t realize the rule is that US citizens must report on their worldwide income and bank accounts.
If you are behind on U.S. filings, the IRS Streamlined Foreign Offshore Procedures (SFOP) may allow you to catch up without penalties, as long as your noncompliance was non-willful.
What Are the Streamlined Foreign Offshore Procedures?
The SFOP is an IRS program that allows eligible U.S. taxpayers living outside the United States to become compliant by filing overdue tax returns and submitting Foreign Bank Account Reports when required.
When done correctly, no IRS penalties are assessed, and, most filers are able to use provisions such as the Foreign Earned Income Exclusion or Foreign Tax Credit to reduce or eliminate U.S. tax owed.
Who Qualifies?
SFOP is designed for U.S. taxpayers who:
• Lived outside the U.S. during the required filing years
• Failed to file U.S. returns or international forms
• Did not willfully avoid U.S. tax obligations
This applies to both temporary and long-term residents abroad.
What Must Be Filed?
To complete SFOP, taxpayers generally submit:
• Three years of U.S. income tax returns
• Six years of foreign account reports (FBARs)
Are There Penalties?
For taxpayers qualifying under the foreign streamlined procedures:
• No late-filing penalties
• No FBAR penalties
• No accuracy-related penalties
Only actual tax due (if any) and interest must be paid.
Why Professional Review Matters
If you are a U.S. taxpayer living abroad and want to understand your options, I invite you to contact me directly. I offer a free initial consultation to review your situation and discuss next steps.
This article is for general informational purposes only and does not constitute tax advice. Every tax situation is different, and eligibility for the Streamlined Foreign Offshore Procedures depends on specific facts and circumstances.
IRS Business Tax Account: What It Is and Why Every Business Should Use It
If you own a business, the IRS has quietly rolled out one of the most important tools in years: the IRS Business Tax Account.
This isn’t just another IRS webpage; it’s a secure online portal that gives you direct access to your business tax information. For many business owners, it can replace hours of phone calls, paperwork, and guesswork.
Let’s break down what it is, what it does, and why you should care.
What Is the IRS Business Tax Account?
The IRS Business Tax Account (BTA) is a self-service online platform that allows business owners and authorized users to view and manage their federal tax information in one place.
Think of it as your business’s IRS dashboard: similar to online banking, but for taxes.
What Can You Do With a Business Tax Account?
1. View Your Balance and Payment History – See what you owe, track payments, and monitor outstanding liabilities in real time.
2. Make and Manage Payments – Make federal tax deposits, pay balances, schedule future payments, and cancel payments all in one place.
3. Access Tax Records and Transcripts – Download tax return transcripts, account transcripts, and compliance reports.
4. Read IRS Notices Online – View IRS notices digitally and track correspondence without waiting for mail.
5. Manage Who Has Access – Add or remove authorized users and control access levels to your business tax data.
6. Approve Third-Party Requests – Approve or reject lender requests for tax information directly inside your account.
Why This Matters
Faster answers, better financial control, fewer surprises, and alignment with the IRS’s ongoing shift toward digital systems.
Important Limitations
The system is still evolving, and access varies depending on your business structure and role.
Bottom Line
The IRS Business Tax Account is becoming an essential tool for business owners, offering real-time visibility and improved control.
Questions? Let’s Talk!
If you’d like help setting up your IRS Business Tax Account or understanding how to use it effectively, please contact me directly. I offer a free consultation to get you started.
This article is for informational purposes only and should not be relied upon as tax advice. Please contact me directly to discuss how this applies to your individual tax situation.
You Filed Your Tax Return But Didn’t Pay: What Happens Next?
If you filed your tax return but couldn't afford to pay the balance due, you did the right thing by filing on time.
Now comes the next step.
About two months after tax season, many taxpayers begin receiving IRS balance-due notices in the mail. The most common is Notice CP14, which tells you how much you owe, including penalties and interest. For many people, opening that letter can be stressful. But receiving a balance-due notice is often the best time to take action.
First, don't ignore the notice. The IRS sends these notices because a tax return was filed showing a balance due that was not paid in full. If no action is taken, penalties and interest continue to accumulate, and the IRS collection process can become more serious.
Installment Agreements: The Most Common Solution
For many taxpayers, an IRS installment agreement is the simplest answer. An installment agreement allows you to make monthly payments over time rather than paying the entire balance immediately. Even if you cannot pay the full amount today, paying something and establishing a payment plan is often far better than doing nothing.
What If You Truly Can't Afford Payments?
If your financial situation is severe, the IRS has other programs that may help.
Currently Not Collectible Status
Taxpayers experiencing genuine financial hardship may qualify for a temporary suspension of collection activity. This doesn't erase the debt, but it can provide breathing room while you get back on your feet.
Offer in Compromise
In some situations, taxpayers may be able to settle their tax debt for less than the full amount owed. While not everyone qualifies, it can be a valuable option for taxpayers facing long-term financial hardship.
Make Sure the Notice Is Correct
Before paying, review the notice carefully. Occasionally taxpayers receive a balance-due notice after they have already paid, particularly when payments are still being processed or posted to the IRS account.
The Bottom Line
Filing your return was the first step. Now it's time to deal with the balance due.
The good news is that the IRS would much rather work with taxpayers who communicate and make arrangements than with those who ignore the problem.
If you've received an IRS balance-due notice and aren't sure whether an installment agreement, Offer in Compromise, or another relief option is right for you, contact me for a free consultation. Together we can review your situation and determine the best path forward.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Inherited an IRA? The IRS Is Enforcing These Required Minimum Distribution Rules
If you've been seeing articles about Required Minimum Distributions (RMDs) lately, you may be wondering whether the rules changed again.
For most retirees, the answer is no.
The age for starting RMDs remains 73 for individuals born between 1951 and 1959, and 75 for those born in 1960 or later. If you're already taking RMDs from your retirement accounts, there is probably nothing new to worry about.
The real story involves inherited IRAs.
The Surprise for Many IRA Beneficiaries
Under the SECURE Act, most non-spouse beneficiaries who inherit an IRA must withdraw the entire account within 10 years. For several years, however, the IRS delayed enforcement while it finalized the regulations.
Now those regulations are in place, and many beneficiaries are discovering that the 10-year rule may not work the way they expected.
If the original IRA owner had already begun taking RMDs before passing away, many beneficiaries must:
• Take annual distributions during years 1 through 9, and
• Completely empty the account by the end of year 10.
Many taxpayers believed they could simply wait until year ten and withdraw the entire balance. In many cases, that is no longer allowed.
Penalties Are Smaller, but Still Expensive
The SECURE 2.0 Act reduced the penalty for missed RMDs.
The old penalty was 50% of the amount that should have been withdrawn. Today, the penalty is generally 25%, and it may be reduced further if corrected quickly.
That's certainly better than before, but it can still be a costly mistake.
Why This Matters
Many inherited IRA beneficiaries have never taken a required distribution because the IRS repeatedly postponed enforcement of these rules.
Now that enforcement has begun, beneficiaries who miss required withdrawals could face penalties and unexpected tax issues.
There is also a planning opportunity. Taking distributions strategically over several years may help reduce the tax impact compared to waiting and taking large withdrawals later.
The Bottom Line
Most retirees don't need to worry about new RMD rules this year.
However, if you inherited an IRA after 2019, it may be time to take a closer look. The IRS is now enforcing inherited IRA distribution requirements that many beneficiaries have never had to follow before.
If you're unsure whether an inherited IRA requires an RMD this year, don't guess. A quick review now could prevent penalties and help you avoid unnecessary taxes later.
Questions about inherited IRAs, retirement distributions, or tax planning? Contact GurelCPA for a free consultation. We're happy to help you understand your options and stay compliant with the IRS.
This article is meant for informational purposes only and should not be relied upon as tax or legal advice. Please contact Lance W. Gurel, CPA directly to discuss your individual tax situation and inherited retirement account planning opportunities. Free consultations are available.
Just Married? It's a Good Time to Check Your Tax Withholding
Wedding planning usually focuses on venues, flowers, travel, and thank-you notes. Taxes rarely make the list.
But if you recently got married, one of the smartest financial moves you can make is reviewing your tax withholding.
A change in marital status can affect how much tax should be withheld from your paycheck, and failing to update your withholding could lead to an unexpected tax bill, or a larger refund than necessary, when you file your return.
Why Marriage Can Change Your Tax Situation
For federal tax purposes, if you are married on December 31, the IRS generally considers you married for the entire year. That means you'll typically file either Married Filing Jointly or Married Filing Separately.
Many couples benefit from filing jointly, but the amount of tax withheld from their paychecks may need adjustment, especially when both spouses work.
Update Your Form W-4
The IRS recommends that newly married couples review and update their Form W-4 with their employers.
Use the IRS Tax Withholding Estimator
The IRS Tax Withholding Estimator can help determine whether your withholding is on track by considering filing status, income, credits, deductions, and other factors.
Don't Forget to Update Social Security Records
If either spouse changes their name after marriage, updating records with the Social Security Administration should be a top priority.
The IRS matches the name and Social Security number shown on a tax return against SSA records.
If the name on the tax return does not match the name on file with Social Security, the return may be rejected when electronically filed or processing may be delayed.
Other Important Tax Updates for Newlyweds
Marriage often brings other changes that can affect your tax return, including updating addresses, reviewing beneficiary designations, evaluating filing status options, and adjusting estimated tax payments if needed.
The Bottom Line
Taking a few minutes now to update your W-4, verify your withholding, and ensure your Social Security records are current can help prevent surprises and filing problems next tax season.
If you've recently married and would like help reviewing your withholding, filing status options, or overall tax situation, contact GurelCPA. We offer a free initial consultation and would be happy to help.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Living Abroad? Do you need to file an FBAR?
Many U.S. citizens living outside the United States are surprised to learn that filing a tax return may not be their only reporting obligation. In addition to your federal income tax return, you may also need to file something called an FBAR.
You must file an FBAR if the combined total of your foreign financial accounts exceeded $10,000 at any time during the year.
What Is an FBAR?
FBAR stands for Foreign Bank Account Report. The official name is FinCEN Form 114, and it is filed electronically with the U.S. Treasury, not with your tax return.
It does not matter if:
• The balance only exceeded $10,000 for one day
• The funds were already taxed in another country
• You owe no U.S. income tax
If the threshold is met, the reporting requirement applies.
What Accounts Count?
Foreign financial accounts may include:
• Foreign checking and savings accounts
• Foreign investment or brokerage accounts
• Some foreign retirement accounts
• Joint accounts
• Accounts where you have signature authority
If the account is located outside the United States, it may be reportable.
Important: It’s $10,000 Combined
The $10,000 threshold applies to the total of all foreign accounts combined, not per account. If your combined balance exceeds $10,000 at any point during the year, an FBAR is generally required.
Is an FBAR a Tax?
No. The FBAR does not calculate tax and does not create tax by itself. It is strictly an informational reporting requirement.
Many expats owe little or no U.S. income tax because of the Foreign Earned Income Exclusion or Foreign Tax Credit, but the reporting obligation may still exist.
What If You Didn’t Know?
Many expats miss FBAR filings simply because they were unaware of the rule. If the failure to file was non-willful, there are compliance options available to correct past years without penalties
The Bottom Line
If you are a U.S. citizen or green card holder living abroad, it is important to determine whether FBAR reporting applies to you. If you are a U.S. taxpayer living abroad and are unsure whether you should be filing FBARs, or whether you may need to correct past filings, I invite you to contact me directly for a free initial consultation to review your situation and discuss your options.
This article is for general informational purposes only and does not constitute tax advice. FBAR requirements depend on individual facts and circumstances
IRS Identity Protection PIN: A Simple Tool to Help Prevent Tax Fraud
Identity theft continues to be one of the most common tax-related problems facing taxpayers. Criminals often use stolen personal information to file fraudulent tax returns and claim refunds before the legitimate taxpayer has a chance to file.
One of the simplest ways to help protect yourself is by obtaining an IRS Identity Protection Personal Identification Number, commonly called an IP PIN.
What Is an IP PIN?
An IP PIN is a six-digit number issued by the IRS that helps verify your identity when you file your federal tax return. Once an IP PIN is assigned to your Social Security Number, the IRS generally will not process an electronically filed tax return without the correct PIN.
Why Does It Matter?
If someone obtains your Social Security Number, they may attempt to file a fraudulent tax return and claim a refund in your name. An IP PIN helps prevent this because the fraudster would also need your current year's PIN in order to successfully file.
Who Should Consider Getting One?
An IP PIN may be especially worth considering if you:
• Have been a victim of identity theft in the past
• Have had personal information exposed in a data breach
• Want an additional layer of protection for your tax return
• Are concerned about increasing online fraud and scams
Things to Know Before You Enroll
• A new IP PIN is issued each year.
• You must use the current year's PIN when filing.
• Keep it in a safe place.
• Losing your IP PIN can delay the filing process.
• The IP PIN applies to federal tax returns.
Is an IP PIN Right for You?
For many taxpayers, obtaining an IP PIN is a simple and effective way to add another layer of security to their tax filing process. While no system can eliminate fraud entirely, an IP PIN can make it significantly more difficult for criminals to file a fraudulent tax return using your information.
Need Help?
Questions about IRS identity theft protection, tax account security, or other IRS tools? Contact me directly for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
An Audit Isn’t a Character Test: It’s a Documentation Test
Many taxpayers hear the word “audit” and immediately feel anxious. They worry that an IRS audit means they have done something wrong or that their integrity is being questioned.
In reality, most audits are much less personal than people imagine.
An audit is usually not a test of your character. It is a test of your documentation.
The IRS Wants Evidence
When the IRS reviews a tax return, its primary question is simple:
Can you support the numbers reported on your return?
If you claimed business expenses, charitable contributions, mileage, home office deductions, or other tax benefits, the IRS may ask for documentation that supports those claims.
The IRS is generally looking for:
• Receipts and invoices
• Bank and credit card statements
• Mileage logs
• Payroll records
• Donation acknowledgments
• Accounting records
• Supporting schedules and workpapers
The stronger your records, the smoother the process tends to be.
Three Keys to Audit Readiness
1. Maintain Strong Records
Keep supporting documents throughout the year instead of trying to reconstruct them later.
2. Organize Documentation
Having documents is only part of the equation. The ability to quickly locate the correct records often determines how efficiently an audit proceeds.
3. Respond Promptly
IRS notices usually contain deadlines. Timely responses help prevent additional correspondence, delays, and unnecessary complications.
Good Records Reduce Stress
Many taxpayers assume that surviving an audit depends on arguing their case effectively.
More often, success comes down to being organized.
When records are readily available questions can be answered quickly, explanations become easier, and professional representation is more effective.
Good documentation turns uncertainty into confidence.
The Bottom Line
The best audit defense begins long before an IRS letter arrives.
Strong records, organized documentation, and timely responses can make the difference between a stressful experience and a manageable one.
Remember:
An audit isn't a character test. It's a paperwork test. And taxpayers who maintain good records are usually in the strongest position to succeed.
Need help responding to an IRS notice or preparing for an audit?
I help individuals, self-employed taxpayers, and small nonprofits organize records, respond to IRS inquiries, and navigate tax compliance issues with confidence.
This article is for informational purposes only and should not be considered tax or legal advice. Individual circumstances vary.
Understanding 529 Plans: A Smart Way to Save for Education
What Is a 529 Plan?
A 529 plan is a state-sponsored savings plan designed to encourage saving for education expenses. Contributions are made with after-tax dollars, but the earnings grow tax-free, and qualified withdrawals are also tax-free.
The beneficiary can be a child, grandchild, spouse, or even yourself.
Tax Benefits of a 529 Plan
The primary tax advantages include:
• Tax-free growth on investments within the account.
• Tax-free withdrawals when used for qualified education expenses.
• Potential state tax deductions or credits, depending on the state sponsoring the plan.
• No federal income tax deduction for contributions.
For many families, years of tax-free growth can result in significant savings compared to investing in a taxable account.
What Expenses Qualify?
College and University Expenses
• Tuition and fees
• Books and supplies
• Computers and related equipment
• Room and board (for eligible students)
K–12 Education
• Up to $10,000 per year may be used for tuition at public, private, or religious elementary and secondary schools.
Apprenticeship Programs
• Qualified apprenticeship expenses may qualify if the program is registered with the U.S. Department of Labor.
Student Loan Repayment
• Up to $10,000 may be used toward the beneficiary's student loans, with certain limitations.
What Happens If the Child Doesn't Go to College?
Fortunately, the account owner has options:
• Change the beneficiary to another qualifying family member.
• Keep the funds invested for future educational needs.
• Use the funds for another child's education.
• Withdraw the funds (earnings may be subject to income tax and penalties if not used for qualified expenses).
Recent law changes have also created opportunities to roll certain unused 529 funds into a Roth IRA for the beneficiary, subject to several requirements and annual contribution limits.
Who Controls the Money?
The person who establishes the account remains in control of the funds. The beneficiary does not automatically gain ownership when reaching adulthood.
This allows parents and grandparents to maintain flexibility and ensure the funds are used as intended.
Contribution Limits
529 plans generally have very high lifetime contribution limits, often exceeding $300,000 per beneficiary depending on the state plan.
Contributions may also qualify for special gift-tax averaging rules, allowing larger amounts to be contributed without triggering federal gift tax concerns.
Choosing a 529 Plan
You are not required to use your own state's plan. Many investors compare plans based on:
• Investment options
• Fees and expenses
• State tax benefits
• Historical performance
• Ease of use
The best choice depends on your family's goals and circumstances.
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The Bottom Line
A 529 plan can be one of the most effective tools available for education savings. Tax-free growth, tax-free qualified withdrawals, and flexible beneficiary rules make these plans attractive for many families.
Starting early allows investments more time to grow and may significantly reduce the financial burden of future education costs.
If you have questions about 529 plans, education tax credits, gift tax implications, or education funding strategies, please contact GurelCPA for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Why You Should Create an IRS Online Account and How to Do It
The IRS offers taxpayers a secure online tax account that provides direct access to important tax information.
Creating an IRS online account can save time, reduce confusion, and help taxpayers stay ahead of notices, balances, and filing requirements.
For many taxpayers, this tool has become one of the most useful ways to monitor their tax situation year-round — not just during filing season.
WHAT IS AN IRS ONLINE ACCOUNT?
An IRS online account is a secure portal that allows individuals to view and manage certain federal tax information. Once established, the account gives you real-time access to data the IRS has on file for you.
This is not a filing system. Instead, it’s an information and account-management tool designed to help taxpayers understand their current standing with the IRS.
KEY BENEFITS OF AN IRS ONLINE ACCOUNT
View Your Tax Records
Taxpayers can access prior-year tax return transcripts, wage and income transcripts (W-2s, 1099s, etc.), and adjusted gross income (AGI) for prior years.
Check Balances and Payments
An IRS online account allows you to view your current balance due, see recent payments and applied credits, and monitor installment agreements.
Review IRS Notices
Many IRS notices now appear in the online account, allowing taxpayers to confirm which tax year is involved and share accurate information with their tax professional.
Make Payments or Set Up Payment Plans
Taxpayers can make secure payments, request or manage installment agreements, and view payment history directly through the account.
HOW TO CREATE AN IRS ONLINE ACCOUNT
Step 1: Visit the IRS Website
Go to IRS.gov and select the option to sign in or create an online account.
Step 2: Verify Your Identity
You will need a valid email address, a photo ID, and a smartphone or computer with a camera for identity verification.
Step 3: Create Login Credentials
Set up a username, password, and multi-factor authentication.
WHEN AN IRS ONLINE ACCOUNT IS ESPECIALLY HELPFUL
This tool is particularly helpful if you owe taxes, receive IRS notices, need prior-year transcripts quickly, want to confirm payments, or work with a tax professional.
FINAL THOUGHTS
Creating an IRS online account is one of the simplest steps taxpayers can take to stay informed and organized. If you need help reviewing information from your IRS account or responding to IRS correspondence, a tax professional can help determine next steps.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Hiring Your Children in Your Business: A Legitimate Tax Strategy
You may have heard people refer to hiring your children in your business as the "family payroll loophole." While the name sounds questionable, this is actually a legitimate tax strategy recognized by the IRS when done correctly.
To qualify, your child must perform real work and be paid a reasonable wage, and the business should maintain proper records.
Why Do Business Owners Do It?
• The wages are generally deductible to the business.
• The child may pay little or no federal income tax if their earnings fall within the standard deduction.
• The family may shift income from a higher tax bracket to a lower one.
Additional Payroll Tax Savings
For sole proprietorships and husband-and-wife partnerships, wages paid to children under age 18 are generally exempt from Social Security and Medicare taxes. Wages paid to children under age 21 are also generally exempt from federal unemployment tax (FUTA).
These exemptions do not generally apply to S corporations.
What Kind of Work Can Children Do?
• Filing and organizing records
• Cleaning the office
• Data entry
• Social media assistance
• Photography or website updates
• Inventory and administrative tasks
The work must be appropriate for the child's age and abilities.
Don't Forget the Roth IRA Opportunity
Because wages are earned income, a child may be eligible to contribute to a Roth IRA, giving them a head start on tax-free retirement savings.
The Bottom Line
Hiring your children can provide legitimate tax savings while teaching valuable work skills and responsibility. The key is making sure the work is real, the pay is reasonable, and the records are properly maintained.
Thinking about hiring your child in your business? Please contact me directly for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Protecting Your Personal and Financial Information Online
Simple Steps to Reduce Your Risk of Identity Theft
Every year, millions of Americans have personal information exposed through data breaches, phishing scams, stolen devices, and fraudulent websites. Once criminals obtain enough information about you, they may attempt to open credit accounts, access financial records, file fraudulent tax returns, or steal money from existing accounts.
The good news is that a few simple habits can dramatically reduce your risk.
Use Strong Passwords and Multi-Factor Authentication
Your email account is often the key to everything else. If a criminal gains access to your email, they can reset passwords for banks, credit cards, and investment accounts.
Use unique passwords for important accounts and enable multi-factor authentication (MFA) whenever available.
Monitor Your Credit Reports
Federal law allows consumers to obtain free credit reports from each major credit bureau. Review them regularly for unfamiliar accounts, addresses, or inquiries.
Consider Freezing Your Credit
A credit freeze prevents new lenders from accessing your credit report without your authorization and is one of the strongest defenses against identity theft.
Be Suspicious of Unexpected Emails and Text Messages
Never click links in unexpected messages requesting personal information, passwords, or financial details. The IRS generally initiates contact by mail, not email or text.
Keep Your Devices Updated
Enable automatic updates on computers, phones, tablets, web browsers, and antivirus software whenever possible.
Secure Your Home Wi‑Fi Network
Change default router passwords and make sure your wireless network uses WPA2 or WPA3 security.
Limit What You Share Online
Birthdates, family relationships, schools attended, pets' names, and travel plans can all be useful to identity thieves.
Back Up Important Records
Maintain secure backups of important tax records, financial documents, photographs, and business files.
Protect Tax Documents
Store tax documents securely, avoid sending sensitive information through unsecured email, and use encrypted portals whenever possible.
Properly Dispose of Old Devices
Before selling, donating, or recycling computers, phones, or tablets, perform a factory reset and remove all personal data.
The Bottom Line
Most identity theft can be prevented through a few basic habits: use strong passwords, enable MFA, monitor your credit, stay alert for scams, and protect sensitive tax information.
Need Help Protecting Your Tax Information?
If you have concerns about IRS identity theft, suspicious tax notices, or protecting sensitive tax records, contact GurelCPA for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Should Your LLC Elect S Corporation Status? Benefits & Drawbacks
Why Consider an S Corporation Election?
Many business owners start with an LLC because it is simple and flexible. As profits grow, however, electing S corporation tax treatment may reduce self-employment taxes and create meaningful tax savings.
Key Benefits
• Potential reduction in self-employment taxes
• Pass-through taxation with no federal tax at the entity level
• More formal business structure for lenders and vendors
Potential Drawbacks
• Payroll is generally required for owner-employees
• Additional payroll and tax filing responsibilities
• Increased accounting and compliance costs
• IRS scrutiny if owner compensation is unreasonably low
What About the June 30 Deadline?
The normal deadline for a calendar-year business to elect S corporation status effective January 1 is March 15. However, many businesses that miss that deadline can still qualify for late-election relief. June 30 is often viewed as an important checkpoint because delaying longer can make the process more complicated.
Is an S Corporation Right for You?
An S corporation election can be valuable when business profits significantly exceed a reasonable salary for the owner. The potential tax savings should always be weighed against the added administrative requirements.
Need Help Deciding?
Please contact me directly for a free consultation to discuss whether an S corporation election makes sense for your business.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Haven’t Filed Taxes in Years & Now You Need Your Tax Returns?
Many people who haven’t filed tax returns for years weren’t trying to avoid anything. They simply didn’t need to file… or didn’t think they did.
Then, suddenly, you’re asked: “Can you provide your last few years of tax returns?”
Why Unfiled Tax Returns Matter Now
Tax returns have become a standard financial requirement, not just an IRS obligation.
You may need them to:
• Qualify for a home loan or refinance
• Complete immigration or visa applications
• Verify income for loans, grants, or benefits
No returns = delays or denials.
Good News: You Usually Don’t Need to Go Back Forever
One of the biggest misconceptions is that you must file every missing year.
In reality:
• The IRS focus is on getting you back into compliance
• Many taxpayers can move forward by filing a limited number of recent years
• Refunds are only available for the last 3 years
The goal is to establish a recent filing history, not rebuild your entire past.
It’s usually more manageable than people expect.
What Getting Caught Up Actually Looks Like
A practical approach typically includes:
- Identifying which years need to be filed
- Reconstructing income using IRS transcripts and records
- Filing a targeted set of returns (not necessarily every year)
- Addressing any balances or confirming refunds
In many cases, taxpayers are surprised to find they don’t owe as much as expected or they were actually due refunds
Bottom Line
Unfiled tax returns may not have mattered before—but they often matter now.
Getting current isn’t just about the IRS.
It’s about removing barriers to homeownership, immigration, and financial progress.
If you need help getting caught up—or want to understand how many years you actually need to file—contact GurelCPA for a free consultation.
This article is for informational purposes only and does not constitute tax advice. Every situation is different, especially when multiple years of unfiled returns are involved.
Filed Your Tax Return, But Didn't Pay? The IRS Is Starting to Send Notices
Did you file your tax return on time but couldn't afford to pay the balance due? You're not alone.
Every year, many taxpayers file their returns by the deadline but don't have enough cash available to pay the tax they owe. Filing on time is important because it avoids the much larger failure-to-file penalty, but it does not stop the IRS from beginning its collection process.
Now that tax season has passed, the IRS is starting to send notices to taxpayers with unpaid balances.
What Happens If You Filed but Didn't Pay?
After processing your return, the IRS will send a notice showing:
• The amount of tax due
• Penalties that have been assessed
• Interest that has accrued
• The total amount currently owed
Even if you cannot pay the full balance, it's important not to ignore these notices. Interest and penalties continue to accumulate until the debt is paid in full.
The Good News: You Have Options
Installment Agreements
Many taxpayers can make monthly payments over time. The IRS will usually accept a plan that will pay off the tax debt in no more than 60 months. Setting up a payment plan can help avoid more serious collection activity. Most of the time, taxpayers can set up an installment agreement online.
Temporary Collection Relief
If paying the IRS would create a significant financial hardship, the IRS may temporarily delay collection efforts. Read our article about Offers in Compromise.
Penalty Relief
In some situations, penalties may be reduced or removed through programs such as First-Time Penalty Abatement or reasonable cause relief. Do not pay any penalties without checking first to see if they can be removed.
Don't Wait Until the Problem Gets Bigger
Many people make the mistake of setting IRS notices aside because they are uncomfortable dealing with the situation. Unfortunately, penalties and interest continue to grow, and additional notices become more serious over time.
The earlier you address an unpaid tax balance, the more options are usually available.
Need Help?
If you filed your tax return but still owe money to the IRS, don't panic—but don't ignore the notices either.
GurelCPA can help you understand your options, evaluate payment arrangements, and communicate with the IRS when necessary. Please contact me directly for a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Ways to Support Nonprofits That Go Beyond the Schedule A Charitable Deduction
Many taxpayers assume the only tax benefit available for charitable giving is claiming an itemized deduction on Schedule A.
However, with today's larger standard deduction, many donors no longer itemize and may wonder whether charitable giving still provides any tax advantages.
The good news is that several charitable giving strategies can provide significant tax benefits that go beyond a traditional Schedule A deduction.
Here are three of the most powerful options to consider:
1. Qualified Charitable Distributions (QCDs)
For taxpayers age 70½ or older, a Qualified Charitable Distribution allows funds to be transferred directly from an IRA to a qualified charity.
Benefits include: exclusion from taxable income, satisfaction of Required Minimum Distributions, no need to itemize deductions, potential reduction in Social Security taxation, and possible reduction in Medicare premium surcharges.
2. Donating Appreciated Stock
Donating appreciated investments held longer than one year can allow the donor to avoid capital gains tax while helping the charity receive the full value of the asset.
3. Naming a Charity as an IRA Beneficiary
Traditional IRA assets can be heavily taxed when inherited by individuals. Naming a charity as beneficiary allows the charity to receive the funds income-tax free while potentially leaving more tax-efficient assets to family members.
Other strategies worth exploring include Donor-Advised Funds, Charitable Remainder Trusts, Charitable Gift Annuities, bunching charitable contributions, employer matching programs, certain state tax-credit programs, and deductible volunteer expenses.
Final Thoughts
Qualified Charitable Distributions, donating appreciated investments, and charitable IRA beneficiary designations are three of the most effective ways to support nonprofits while potentially improving your overall tax situation.
Please contact me directly for a free consultation if you'd like to explore tax-efficient ways to support the charitable organizations you care about.
This article is for general informational purposes only and should not be considered tax advice. Please reach out for a free consultation to discuss your individual tax situation.
Living Overseas? You May Have Until June 15, But Don’t Misunderstand This Tax Extension
If you’re a U.S. taxpayer living abroad, you automatically get extra time to file your tax return. That’s true; but it’s also one of the most misunderstood rules in U.S. tax law. And misunderstanding it can cost you money. Let’s break it down clearly.
Yes, There Is an Automatic 2-Month Extension
If you are living outside the United States on April 15, you automatically receive a 2-month extension to file your tax return, moving your filing deadline to June 15.
You qualify if:
- Your main place of business is outside the U.S. and Puerto Rico, or
- You are serving in the military outside the U.S.
No form is required to get this extension. However, when you file your return, you should include a brief statement explaining that you qualified for the automatic extension.
But Here’s the Critical Catch: This Is NOT an Extension to Pay
This is where many taxpayers get into trouble. Even if you qualify for the June 15 filing deadline: your taxes were still due April 15
If you owe money interest began accruing on April 15 and late payment penalties may also apply. In other words, the IRS gives you more time to file — but not more time to pay.
Common Mistakes Expats Make
Such as:
- Assuming “I don’t need to think about taxes until June”
- Filing late and being surprised by interest charges
- Not making an estimated payment by April 15
- Confusion between the automatic June 15 extension and the October 15 extension
Need More Time Beyond June 15?
If you’re not ready by June 15, you can still request additional time:
- File an extension (Form 4868) to move the deadline to October 15
- In limited cases, an additional extension to December 15 may be available
But again: none of these extensions give you more time to pay.
Smart Strategy for U.S. Taxpayers Abroad
If you expect to owe taxes:
- Estimate your liability before April 15
- Make a payment to reduce interest and penalties
- Use the additional time to properly apply:
- Foreign Earned Income Exclusion (FEIE)
- Foreign Tax Credit (FTC)
- Housing exclusions or deductions
Final Thought
The automatic June 15 extension is helpful — but only if you understand how it works.
Used correctly, it gives you time to prepare an accurate return.
Used incorrectly, it can quietly increase your tax bill through interest and penalties.
Questions? Let’s Talk
If you’re living abroad and unsure how this applies to your situation, I can help you navigate the rules and minimize surprises. Contact GurelCPA for a consultation and let’s make sure you’re handling your U.S. tax obligations the right way.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique. Please contact us directly to discuss your specific circumstances and receive personalized guidance.
New 2026 Charitable Contribution Deduction Is Important News for Nonprofit Donors
For the past few years, many taxpayers stopped receiving a direct federal tax benefit for charitable giving because they no longer itemized deductions.
After the standard deduction increased significantly, millions of taxpayers began taking the standard deduction instead of filing Schedule A. As a result, many donors effectively lost the ability to deduct charitable contributions on their federal tax returns.
That is changing beginning in 2026.
What Is Changing in 2026?
Beginning with tax year 2026:
• Single taxpayers who do not itemize may deduct up to $1,000 of qualifying charitable contributions.
• Married taxpayers filing jointly who do not itemize may deduct up to $2,000 of qualifying charitable contributions.
Why This Matters to Nonprofits
Many nonprofit donors have become accustomed to hearing:
“You probably will not receive a tax deduction unless you itemize.”
For a large percentage of taxpayers, that has been true in recent years. But beginning in 2026, many standard deduction taxpayers may once again receive at least some tax benefit from charitable giving.
This creates a strong communication opportunity for nonprofits.
Organizations may want to begin educating donors that:
• Smaller annual gifts may once again provide a federal tax deduction.
• Donors who previously stopped tracking contributions may want to keep records again.
• Year-end giving campaigns may become more effective when donors understand the deduction is available even without itemizing.
For many charities, especially smaller nonprofits, churches, and community organizations, this could become an important fundraising talking point.
Important Limitations
There are several important rules nonprofits and donors should understand.
The deduction generally applies only to:
• Cash contributions
• Made directly to qualifying charitable organizations
• By taxpayers using the standard deduction
Certain contributions do not qualify, including many gifts made to donor-advised funds or certain private foundations.
As always, donors should maintain proper documentation of their contributions.
A Potential Shift in Donor Psychology
Beginning in 2026, nonprofits may be able to reintroduce the idea that charitable giving can both support a mission and potentially reduce taxable income, even for taxpayers who do not itemize.
For organizations that rely heavily on moderate-dollar donors, this change may be worth discussing in donor newsletters, email campaigns, and fundraising conversations.
Nonprofits Should Consider Proactive Communication
This is not a massive deduction, but it is meaningful for many households. A married couple filing jointly could potentially deduct up to $2,000 of charitable contributions while still taking the standard deduction.
That may be enough to encourage:
• recurring monthly giving,
• additional year-end gifts,
• or renewed donor engagement.
Nonprofits that communicate these changes clearly and early may benefit from increased donor awareness going into 2026 and beyond. Free consultations are available if you have questions about the new charitable contribution deduction.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
IRS Withholding Estimator: Avoid A Surprise Next Year
If you are an employee who receives a W-2, now is a good time to check your payroll withholding.
Changes like a new job, side income, or outdated withholding elections can easily throw things off. Before too much of the year has passed, use the Online IRS Withholding Estimator to keep your withholding in line with your income.
IRS Withholding Estimator
The IRS offers an online tool to help you:
- Check if you’re withholding enough
- Estimate your refund or balance due
- Adjust your Form W-4
It’s been improved over the years and is much easier to use than the old worksheets.
What Is a W-4?
The Form W-4 (Employee’s Withholding Certificate) tells your employer how much federal income tax to withhold from your paycheck.
You typically fill one out when you start a job—but many people never update it, even when their situation changes.
Updating your W-4 is how you actually fix your withholding after using the estimator.
Why Now Is the Right Time
Mid-year is a great best time to use the withholding calculator.
You now have a clear picture of your income and taxes, which makes your estimate more accurate.
What You’ll Need
- Recent pay stub
- Latest tax return
- Info on any side or other income
What to Do Next
After using the estimator, update your Form W-4 with your employer.
You can do this anytime—no need to wait.
Bottom Line
If your tax result surprised you last year, don’t ignore it.
Adjust now so next year goes more smoothly.
Questions? Let’s talk!
Please contact me to discuss how this applies to your individual tax situation. I’m always happy to help—and I offer a free consultation to get you pointed in the right direction.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
2nd Quarterly Estimated Tax Payment for 2026 Deadline is June 15
For self-employed taxpayers, June 15 is the deadline for paying the 2nd Quarterly Estimated Tax Payment.
That is when you must pay the tax you estimate is due on the NET income you made from April through May 2026.
The IRS expects taxes to be paid throughout the year as income is earned When too little tax is paid during the year, an underpayment penalty can apply — even if the full balance is paid at filing time.
Here’s an easy formula: multiply your estimated NET income for the period by your marginal tax rate from last year’s tax return. This will give a good approximation.
And remember: if you are in a state with income tax, you need to pay Estimated Quarterly Taxes to your state, as well.
Who Commonly Needs Estimated Payments?
Estimated payments are often required for people with income such as:
• Self-employment or freelance work
• Business or rental income
• Investment or capital gains income
• Retirement withdrawals without enough withholding
• Side income in addition to regular employment
Understanding Safe Harbor Rules
The IRS provides safe harbor rules that allow taxpayers to avoid penalties if enough tax is paid during the year through withholding or estimated payments. Even if additional tax is owed at filing, meeting one of these thresholds usually prevents penalties
In general, penalties are avoided if payments equal at least:
• 90% of the current year’s total tax, or
• 100% of last year’s total tax
2026 Estimated Tax Payment Periods and Due Dates
Estimated taxes are paid in four installments during the year as income is earned. The payment periods do not follow equal calendar quarters, so it is important to understand how the IRS divides the year.
For the 2026 tax year, estimated payments are due on:
• April 15, 2026 — covering income earned January 1 through March 31, 2026
• June 15, 2026 — covering income earned April 1 through May 31, 2026
• September 15, 2026 — covering income earned June 1 through August 31, 2026
• January 15, 2027 — covering income earned September 1 through December 31, 2026
Withholding Can Help Too
Estimated payments aren’t the only solution. Increasing paycheck withholding can often fix the issue and is sometimes easier than making quarterly payments. Withholding is treated as if paid evenly throughout the year, even when adjustments happen later in the year.
Missing or underpaying any installment can result in penalties, even if the total tax is paid when filing the return. Reviewing income periodically during the year helps ensure payments stay on track.
This article is for general informational purposes only and should not be considered tax advice. Please reach out for a free consultation to discuss your individual tax situation.
Summer Camp, Daycare, and the Child Care Credit: What Parents Need to Know
As school lets out for the summer, many parents begin arranging childcare, summer day camps, and activity programs so they can continue working. What many taxpayers do not realize is that some of these costs may qualify for the Child and Dependent Care Credit on their tax return.
However, not every summer expense counts.
Understanding what qualifies and what does not can help families avoid mistakes and potentially reduce their tax bill.
The Child and Dependent Care Credit
The Child and Dependent Care Credit is designed to help working taxpayers offset the cost of caring for children under age 13 while the parents work or look for work. In some cases, care for a disabled spouse or dependent may also qualify.
For most taxpayers, the credit is based on a percentage of qualifying childcare expenses:
• Up to $3,000 of expenses for one qualifying child
• Up to $6,000 of expenses for two or more qualifying children
The actual credit percentage depends on income.
Summer Day Camps Generally Qualify
One of the most common misconceptions is that summer camps are never eligible for the childcare credit.
In fact, many summer day camps do qualify if the primary purpose is to provide care while the parent works. This can include:
• Traditional summer day camps
• Sports camps
• Art camps
• Science or STEM camps
• Recreation programs
• Municipal summer day programs
• Before- and after-camp care programs
The IRS specifically allows day camp expenses to count toward the Child and Dependent Care Credit.
Overnight Camps Do NOT Qualify
This is where many taxpayers get tripped up.
Even though overnight camps provide supervision and care, the IRS does not consider overnight or sleepaway camp expenses to be qualifying childcare expenses for the credit.
That means:
• Overnight sports camps do not qualify
• Sleepaway church camps do not qualify
• Multi-day overnight activity camps do not qualify
Only day camp expenses are potentially eligible.
Daycare and Babysitting Expenses
Other summer childcare arrangements may also qualify, including:
• Licensed daycare centers
• Babysitters
• Nannies
• Before- and after-school care
• Summer daycare programs
However, the care must generally be work-related. In other words, the expense must allow the taxpayer (and spouse, if married) to work or look for work.
Expenses That Usually Do NOT Qualify
Some expenses associated with children during the summer are educational or personal in nature rather than childcare expenses.
Examples that generally do not qualify include:
• Private school tuition
• Overnight camp fees
• Tutoring
• Music lessons
• Sports league fees
• Dance classes
• Food, clothing, and entertainment expenses unrelated to care
Parents should also remember that extracurricular activities do not automatically become deductible simply because they occur during work hours.
Important Requirements Taxpayers Often Miss
To claim the credit, taxpayers typically must:
• Have earned income
• Provide the care provider’s name, address, and taxpayer ID number
• File Form 2441 with their tax return
• Use the expenses so they can work or look for work
Additionally, payments to certain relatives may not qualify, including:
• Your dependent
• Your child under age 19
• The child’s other parent in many situations
Keep Good Records
Taxpayers should keep:
• Receipts
• Camp invoices
• Provider information
• Payment records
• EIN or Social Security numbers for care providers
These records can become very important if the IRS requests documentation later.
Final Thoughts
Summer childcare costs can add up quickly, and many parents are surprised to learn that some summer day camp and daycare expenses may help reduce their taxes through the Child and Dependent Care Credit.
However, the rules can be more restrictive than taxpayers expect — especially when it comes to overnight camps and educational activities.
The article is meant for informational purposes only. Contact me to discuss how this applies to your individual tax situation.
Why Having a Will Matters More Than You Think
Most people know they should have a will. Unfortunately, many people postpone creating one because they assume they are too young, do not have enough assets, or believe their family will simply work things out if something happens.
The reality is that a will is one of the most important legal and financial documents you can have. Whether you are raising a family, living overseas, running a business, supporting charitable causes, or simply trying to make life easier for your loved ones, a properly prepared will can provide clarity, reduce costs, and help prevent unnecessary disputes.
What Happens If You Die Without a Will?
When someone dies without a valid will, they are considered to have died 'intestate.' In that situation, state law determines who receives their assets and who is responsible for administering the estate.
Many people are surprised to learn that the state's distribution rules may not match their wishes.
For example:
• Unmarried partners may receive nothing.
• Stepchildren may receive nothing.
• Specific charitable gifts cannot be honored.
• Family members may disagree about who should manage the estate.
• The court may appoint someone to handle matters who would not have been your first choice.
Having a will allows you to make these decisions yourself rather than leaving them to state law.
A Will Is About More Than Money
A will can name beneficiaries, designate an executor, specify guardians for minor children, direct gifts to charities and nonprofit organizations, provide instructions regarding personal property and family heirlooms, and help reduce confusion and conflict among surviving family members.
Special Considerations for Americans Living Abroad
Expats often own assets in multiple countries, including U.S. bank and investment accounts, foreign bank accounts, foreign real estate, retirement accounts, and business interests.
Different countries may have different inheritance laws, probate procedures, and rules regarding the recognition of foreign wills. Americans living abroad should work with qualified legal professionals familiar with both U.S. and local laws to ensure their estate plan functions as intended.
Supporting Causes That Matter
Many nonprofit supporters spend years donating their time, talent, and financial resources to organizations they care about. A will allows individuals to continue supporting those causes after their lifetime through charitable bequests and other planned gifts.
The Importance of Updating Your Will
Major life events such as marriage, divorce, birth or adoption of children, death of a beneficiary or executor, significant changes in assets, or moving to another state or country should trigger a review of your estate plan.
Estate Planning Is an Act of Care
A properly prepared will can help reduce uncertainty, minimize family conflict, support charitable goals, and provide clear instructions when your loved ones need them most.
Final Thoughts
A will is one of the simplest and most effective tools available to protect your family, support your charitable interests, and ensure your wishes are carried out. Whether you live in the United States or abroad, taking the time to establish or update a will can provide valuable peace of mind.
Have questions about how estate planning decisions may affect your taxes, charitable giving, or overall financial situation? Contact Lance W. Gurel, CPA, for a free consultation.
This article is intended for informational purposes only and does not constitute legal or tax advice. Estate planning documents should be prepared with the assistance of a qualified attorney familiar with your individual circumstances.
A Costly Estate Planning Surprise for Americans Married to Non-Citizens
Most married couples benefit from one of the most valuable provisions in the federal estate tax system: the unlimited marital deduction.
This rule generally allows assets to pass from one spouse to the other without federal estate tax when the first spouse dies.
However, there is an important exception that many Americans, especially those living overseas, have never heard about.
The Unlimited Marital Deduction Does Not Automatically Apply
If the surviving spouse is not a U.S. citizen, the unlimited marital deduction is generally not available unless specific planning requirements are met.
This often surprises taxpayers because the rule applies even if the non-citizen spouse:
• Has lived in the United States for many years
• Holds a green card
• Has been married to a U.S. citizen for decades
For estate tax purposes, citizenship matters.
Why Does the Rule Exist?
Congress created this exception because assets passing to a non-citizen spouse could potentially leave the U.S. tax system before estate tax is ultimately collected.
As a result, special rules were established for estates involving non-citizen spouses.
A Potential Solution: The Qualified Domestic Trust (QDOT)
One common planning tool is a Qualified Domestic Trust (QDOT).
A properly structured QDOT can allow a deceased spouse's assets to qualify for the marital deduction while preserving the government's ability to collect estate tax later.
In general, assets pass into the trust for the benefit of the surviving spouse. The spouse may receive income from the trust, while estate tax is deferred until later events occur, such as the surviving spouse's death or certain distributions of trust principal.
Because QDOTs must satisfy specific legal and tax requirements, they should be established with the assistance of a qualified estate planning attorney.
Why This Matters to Expats
Many Americans living abroad are married to foreign nationals. While most expats are familiar with tax issues such as FBAR reporting, FATCA compliance, and the Foreign Earned Income Exclusion, far fewer are aware of the estate tax rules that apply to non-citizen spouses.
As a result, families may assume that the same estate tax protections available to other married couples automatically apply to them.
They do not.
For families with significant assets, failing to address this issue could lead to unintended estate tax consequences.
Does This Affect Everyone?
Not necessarily.
Current federal estate tax exemptions remain historically high, meaning many families will never owe federal estate tax. However, this issue becomes increasingly important for taxpayers with:
• Significant investment portfolios
• Real estate holdings
• Closely held businesses
• Large retirement accounts
• Anticipated inheritances
• Estates that may exceed future exemption amounts
The Bottom Line
If you are a U.S. citizen married to a non-U.S. citizen, do not assume the unlimited marital deduction automatically applies to your estate.
The rules are different, and proper planning may be necessary to preserve valuable estate tax benefits for your family.
A review today can help identify potential issues long before they become costly problems.
If you would like to discuss how these rules may affect your overall tax and financial planning, please contact Lance W. Gurel, CPA, for a free consultation.
This article is intended for informational purposes only and should not be considered legal or tax advice. Estate planning involving non-citizen spouses can be complex and often requires coordination with a qualified estate planning attorney.
Gifting vs. Inheriting: Understanding the Tax Differences Before You Transfer Wealth
Many families assume that giving assets to children or loved ones during life is always the best strategy. In reality, gifting and inheriting assets can create very different tax consequences.
In some situations, gifting makes sense. In others, inheriting property may produce a far better tax result because of something called a “step-up in basis.”
Understanding the difference can potentially save thousands — or even hundreds of thousands — of dollars in taxes.
What Is “Basis”?
For tax purposes, “basis” generally means what someone originally paid for an asset, adjusted for certain improvements or changes over time.
Basis matters because when an asset is sold, capital gains tax is usually based on:
Selling Price – Basis = Taxable Gain
The lower the basis, the larger the taxable gain.
What Happens When You Gift an Asset?
When you gift property during your lifetime, the recipient usually receives your original basis. This is called a “carryover basis.”
Example:
Suppose you purchased stock years ago for $10,000.
Today, the stock is worth $100,000.
If you gift the stock to your child during your lifetime:
- Your child generally inherits your $10,000 basis
- If they later sell the stock for $100,000
- They may have a taxable capital gain of $90,000
Even though no tax may have been due when the gift was made, a significant capital gains tax bill could eventually result.
What Happens When Someone Inherits an Asset?
Inherited assets are often treated very differently.
In most cases, the recipient receives a “step-up in basis” to the fair market value as of the date of death.
Example:
- Original purchase price: $10,000
- Value at death: $100,000
If the child inherits the stock instead of receiving it as a lifetime gift, the child’s new basis becomes $100,000. If the stock is immediately sold for $100,000, there is no taxable capital gain.
This step-up in basis can eliminate decades of unrealized capital gains.
Common Assets Where Basis Matters
The gifting versus inheritance decision is especially important for:
- Real estate
- Stocks and mutual funds
- Rental properties
- Family cabins or vacation homes
- Businesses and partnership interests
- Collectibles and valuable property
Some families unintentionally create unnecessary taxes by gifting highly appreciated assets too early.
When Gifting Still Makes Sense
Despite the potential loss of a step-up in basis, gifting can still be beneficial in some situations.
Examples may include:
- Reducing a taxable estate for very high-net-worth families
- Helping children financially during life
- Asset protection or Medicaid planning considerations
- Transferring future appreciation out of an estate
- Annual exclusion gifting strategies
The right answer depends on the family’s financial picture, income levels, estate size, and long-term goals.
Don’t Forget About the Annual Gift Tax Exclusion
For 2026, individuals can generally give up to the annual exclusion amount of $19,000 per recipient without filing a gift tax return.
However, even gifts above the exclusion amount do not necessarily create immediate gift tax. Many gifts simply reduce a person’s lifetime estate and gift tax exemption.
Final Thoughts
Before transferring real estate, investments, or other appreciated assets to family members, it is important to understand the tax consequences of gifting versus inheriting.
In many cases, proper planning can significantly reduce future taxes and preserve more wealth for the next generation.
Please contact us directly to discuss your individual situation and whether gifting or inheritance planning strategies may be appropriate for you. Free consultations are available.
This article is intended for informational purposes only and should not be considered legal or tax advice.
How Does a Self-Employed Person Pay Themselves?
Many people start a side business and assume they can simply put themselves on payroll and receive a regular paycheck.
But for most self-employed individuals, that is not how it works.
Sole Proprietors and Single-Member LLCs
If your business operates as a sole proprietorship or a single-member LLC taxed as a sole proprietorship, the owner does not receive a W-2 paycheck from the business.
Instead, owners typically take owner draws: transfers from the business account to a personal account
These transfers are not the same as wages.
What Is the Owner Taxed On?
As a self-employed taxpayer, you are taxed on the business’s net profit, not on how much money you withdraw.
In other words, your business income minus allowable business expenses.
Example:
Suppose a business has:
• $80,000 of income
• $30,000 of deductible expenses
The business would have:
• $50,000 of net profit
The owner is taxed on the $50,000 of net income even if they only transferred part of that money to themselves personally.
What About an S Corporation Election?
If a business elects to be treated as an S corporation for tax purposes, that can change how the owner is compensated and may allow the owner to receive a W-2 paycheck.
However, that structure also creates additional tax filings, payroll requirements, and compliance responsibilities.
Don’t Confuse Cash Flow With Taxable Income
One important concept for self-employed individuals is this:
Taking money out of the business is not what determines the taxable income.
For sole proprietors and single-member LLC owners, taxable income is generally based on the business’s net earnings.
Final Thoughts
Starting a side business creates opportunities, but it also creates tax responsibilities many people do not expect.
Understanding the difference between:
• Owner draws
• Payroll
• Net profit
• Business structure
…can help self-employed individuals avoid confusion and costly mistakes later.
Are you happy with your CPA?
I help self-employed individuals, small businesses, nonprofits, and expats navigate tax compliance and planning issues, including business structure and self-employment taxation. Free consultations are available.
The article is meant for informational purposes only. Contact me to discuss how this applies to your individual tax situation.
Why Separate Business and Personal Bank Accounts Matter
Many small business owners start out informally. A side gig grows into something bigger, money starts coming in, expenses start going out, and before long personal and business transactions are mixed together in the same checking account.
That may seem easier at first, but combining business and personal finances often creates major problems later.
One of the simplest and most important steps a business owner can take is opening and consistently using a separate business checking account.
A Separate Account Helps Establish That the Business Is Real
When the IRS, a lender, or even a potential business partner reviews a business activity, one important question often exists in the background:
Is this a legitimate business activity or simply a personal hobby?
Using a dedicated business bank account helps demonstrate that the owner is operating in a businesslike manner.
Mixing Funds Creates Problems
When business and personal transactions are combined in one account, bookkeeping becomes far more difficult.
Common problems include:
- Missed deductions
- Poor financial records
- Difficulty preparing tax returns
- Increased accounting costs
- Problems proving expenses during an IRS examination
- Confusion over business profitability
- Difficulty obtaining financing
In many cases, business owners do not realize how much time and money they lose later trying to reconstruct records that could have been organized properly from the beginning.
Clean Records Help Support Tax Deductions
Good documentation matters.
A separate business checking account creates a cleaner paper trail for:
- Business income
- Vendor payments
- Advertising expenses
- Mileage reimbursements
- Equipment purchases
- Software subscriptions
- Home office related reimbursements through accountable plans
- Independent contractor payments
While a separate bank account alone does not automatically make an expense deductible, it often helps support the legitimacy and documentation of business activity.
LLC Protection and Corporate Formalities
For LLCs and corporations, separate banking is even more important.
Mixing personal and business funds may weaken the argument that the business is operating as a separate legal entity. Maintaining separate accounts helps support proper business formalities and demonstrates respect for the separate structure of the entity.
It Is Easier Than Many People Think
Opening a separate business checking account is often straightforward. Many banks offer low-cost or basic business checking options designed for small businesses and sole proprietors.
In many cases, the only things needed are:
- EIN or Social Security Number (depending on structure)
- Business formation documents if applicable
- Business license if required
- Personal identification
Even sole proprietors without an LLC can often open a separate business account using a DBA or their own legal name.
Final Thought
A separate business checking account is not just about organization. It helps establish credibility, improves bookkeeping, supports deductions, simplifies tax preparation, and helps demonstrate that a business is operating legitimately.
For many small businesses, it is one of the smartest foundational steps they can take early on.
This article is for general informational purposes only and should not be considered legal, tax, or accounting advice. Every business situation is different. If you would like assistance evaluating your business structure, recordkeeping, or tax compliance procedures, please contact GurelCPA for a free consultation.
A Penalty-Free Path for U.S. Expats to Make-up Missed Tax Filings
Many U.S. citizens living abroad are surprised when they learn that they are still required to file U.S. tax returns and report certain foreign accounts — even if they owe little or no U.S. tax. They don’t realize the rule is that US citizens must report on their worldwide income and bank accounts.
If you are behind on U.S. filings, the IRS Streamlined Foreign Offshore Procedures (SFOP) may allow you to catch up without penalties, as long as your noncompliance was non-willful.
What Are the Streamlined Foreign Offshore Procedures?
The SFOP is an IRS program that allows eligible U.S. taxpayers living outside the United States to become compliant by filing overdue tax returns and submitting Foreign Bank Account Reports when required.
When done correctly, no IRS penalties are assessed, and, most filers are able to use provisions such as the Foreign Earned Income Exclusion or Foreign Tax Credit to reduce or eliminate U.S. tax owed.
Who Qualifies?
SFOP is designed for U.S. taxpayers who:
• Lived outside the U.S. during the required filing years
• Failed to file U.S. returns or international forms
• Did not willfully avoid U.S. tax obligations
This applies to both temporary and long-term residents abroad.
What Must Be Filed?
To complete SFOP, taxpayers generally submit:
• Three years of U.S. income tax returns
• Six years of foreign account reports (FBARs)
Are There Penalties?
For taxpayers qualifying under the foreign streamlined procedures:
• No late-filing penalties
• No FBAR penalties
• No accuracy-related penalties
Only actual tax due (if any) and interest must be paid.
Why Professional Review Matters
If you are a U.S. taxpayer living abroad and want to understand your options, I invite you to contact me directly. I offer a free initial consultation to review your situation and discuss next steps.
This article is for general informational purposes only and does not constitute tax advice. Every tax situation is different, and eligibility for the Streamlined Foreign Offshore Procedures depends on specific facts and circumstances.
IRS Penalty Abatement: Yes, It’s Often Possible, But You Have to Ask
Receiving a notice from the IRS that includes penalties can be unsettling. Many taxpayers assume penalties are automatic, non-negotiable, and must simply be paid. In practice, that’s often not the case.
In my experience as a CPA, the IRS is frequently more forgiving than people expect, particularly when a taxpayer has a reasonable explanation and a history of compliance.
The most important thing to understand is this: penalty relief is rarely automatic — you must ask for it, and you must ask the right way.
WHAT IS AN IRS PENALTY ABATEMENT?
A penalty abatement is a formal request asking the IRS to reduce or remove penalties assessed on a tax return or tax account. Penalty relief may be available for many common situations, including:
• Failure to file a return on time
• Failure to pay tax by the due date
• Underpayment of estimated taxes
• Accuracy-related penalties
• Late payroll tax deposits
Interest is generally not removed unless the related penalty is abated, but eliminating penalties alone can significantly reduce the total amount owed.
WHY THE IRS IS OFTEN WILLING TO GRANT PENALTY RELIEF
The IRS’s primary objective is voluntary compliance, not punishment. Penalties are intended to encourage timely and accurate filing—not to penalize taxpayers who made an honest mistake and corrected it.
In practice, the IRS often grants abatements when:
• The taxpayer has a history of filing and paying on time
• The issue resulted from circumstances beyond the taxpayer’s control
• The taxpayer acted in good faith
• The problem was corrected once it was identified
COMMON GROUNDS FOR PENALTY ABATEMENT
Reasonable Cause
This is the most common basis for relief. The IRS looks at whether the taxpayer exercised “ordinary business care and prudence.” Examples may include:
• Serious illness or death in the family
• Natural disasters or fires
• Records destroyed or unavailable
• Reliance on incorrect professional advice
• Mail, banking, or payment processing disruptions
PENALTY ABATEMENT IS A STRUCTURED IRS PROCESS
Penalty abatement requests are governed by specific IRS standards and administrative guidelines. Knowing which standard applies—and how to clearly present the facts—often makes the difference between approval and denial.
This is not a negotiation or an appeal to sympathy. It is a formal request that must be framed correctly, supported by facts, and submitted through the appropriate channels.
HOW A CPA CAN HELP
As aCPA, I assist clients by:
• Reviewing IRS notices for accuracy and scope
• Identifying which penalties are eligible for abatement
• Determining the strongest basis for relief
• Preparing and submitting formal abatement requests
• Communicating directly with the IRS on the client’s behalf
• Monitoring responses and following up when needed
In many cases, penalties can be reduced or eliminated entirely—even when taxpayers initially believed they had no options.
A FINAL WORD OF ENCOURAGEMENT
IRS penalties can feel intimidating, but they are often not the end of the story. The IRS does not automatically offer penalty relief, and many taxpayers overpay simply because they never ask.
If you’ve received an IRS notice that includes penalties, it’s worth reviewing your situation before paying more than necessary. With proper guidance and a well-supported request, penalty abatement is often achievable.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Gifts That Don’t Count Toward the Annual Gift Tax Exclusion
Gift Tax Fact One: Gifts do not create a tax liability for the person who receives the gift.
Gift Tax Fact Two: The gift donor MAY be liable for taxes on some gifts, but gifts below the Annual Gift Exclusion Rate (currently $19,000 for 2025 and 2026) do not incur gift tax. And the Annual Gift Tax Exclusion is per person per year.
Gift Tax Fact Three: Certain transfers aren’t treated as taxable gifts at all and don’t reduce your lifetime exemption if structured correctly, even if the gifts are more than the Annual Gift Exclusion Rate per person, such as:
Tuition Paid Directly to Schools
Unlimited amounts allowed if paid directly to a qualified school for tuition only. Does not cover books, room, board, fees, or reimbursements. Can be combined with annual exclusion and gift splitting.
Medical Expenses Paid Directly
Unlimited qualifying medical expenses paid directly to providers or insurers are excluded. Must meet IRS medical deduction rules. Reimbursements do not qualify.
Gifts to a Spouse
Unlimited gifts to a U.S. citizen spouse are tax-free under the unlimited marital deduction. Non‑citizen spouses have a special higher annual limit.
Donations to Qualified Charities
Gifts to IRS-recognized 501(c)(3) organizations are excluded from gift tax and may be income tax deductible if itemized. Gifts to individuals or non-qualified nonprofits do not qualify.
Political Contributions
Political contributions to qualified political organizations are exempt from gift tax, though they are not income‑tax deductible.
Key Takeaways:
• Structure matters — who you pay and how you pay determines tax treatment
• These categories allow powerful planning opportunities
• When structured correctly, they do not count toward the annual gift tax exclusion
Please contact me for a free consultation to see how this information applies to your individual tax situation.
Gift Tax: What Happens If the Donor Exceeds the Annual Gift Exclusion?
Gifts are not taxable to the recipient, but sometimes gifts are taxable to the donor.
A donor can give gifts up to the annual exclusion amount (currently $19,000 per recipient for 2026) to as many people as they wish EACH YEAR. But what happens if you give more?
Exceeding the Annual Exclusion Doesn’t Mean You Owe Tax
If you give more than the exclusion to any person in a year, you may need to file IRS Form 709. That does not automatically mean tax is due. Most taxpayers never pay federal gift tax.
How It Works
1. File Form 709 if you gave gifts to any one person over the annual exclusion amount
2. The excess applies against your lifetime exemption
3. No tax is due unless you exceed the lifetime exemption, currently $13.99 million.
Example:
You give $50,000 to your daughter.
$32,000 exceeds the annual exclusion.
You file Form 709 to report the $32,000.
No tax is owed unless you someday exceed your lifetime exemption.
Future Income from Gifts
While gifts are not taxable to the recipient, future income from those gifts (interest, dividends, rent, etc.) is taxable to the recipient.
Key Takeaways:
• Filing Form 709 Gift Tax Return does not necessarily mean tax is owed
• Excess gifts reduce lifetime exemption
• Most people never pay gift tax
Please contact me for a free consultation to see how this information applies to your individual tax situation.
Gifts and Gift Taxes: Do You Owe Tax on Gifts You Receive?
Giving money or property to someone can be a generous way to support family, friends, or charitable causes — but many people worry about taxes.
The good news? In the United States, the person who receives a true gift does not owe federal income tax on it, and the federal gift tax rules provide generous exclusions that make gifting easier than many people realize.
The Core Rule: Recipients Don’t Pay Tax on True Gifts
Under federal tax law, a true gift is not taxable income to the recipient. That means if someone gives you cash, property, or another valuable item purely out of generosity, you won’t owe federal income tax on it.
To be considered a true gift, the transfer must be:
• Given out of generosity, affection, or similar motives
• Not compensation for services or work performed
Example:
Your niece gives you $5,000 to help with moving expenses. You don’t owe tax on that money because it was a gift — not payment for a job or service.
Who Handles Gift Taxes?
The person who makes the gift — the donor — could potentially be responsible for paying gift tax, but never the recipient. However, most donors never actually pay gift tax because of:
• The annual gift tax exclusion
• The lifetime gift and estate tax exemption
Annual Gift Tax Exclusion
For 2026, the annual exclusion is $19,000 per recipient. Married couples can split gifts, allowing up to $38,000 per recipient per year.
You can give up to the annual exclusion amount to as many people as you wish each year without triggering gift tax liability.
Key Takeaways:
• True gifts are not taxable to the recipient
• Donors may have reporting responsibilities
• The annual exclusion is $18,000 per recipient per donor per year
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
So, You’ve Inherited a Retirement Account. What Are the Tax Rules?
Inheriting a retirement account can create both financial opportunity and unexpected tax complications. Many beneficiaries assume inherited retirement accounts work the same way as accounts they personally own. In many cases, they do not.
The tax treatment depends on:
• The type of retirement account
• Whether the original owner had started required minimum distributions (RMDs)
• The beneficiary’s relationship to the deceased
• Whether the account is traditional or Roth
Because of major law changes under the SECURE Act, inherited retirement accounts now require much more careful planning.
Traditional IRA Rules
Traditional IRAs are generally funded with pre-tax dollars, so distributions are usually taxable as ordinary income.
For many non-spouse beneficiaries:
• The old “stretch IRA” rules no longer apply
• The account often must be emptied within 10 years
• Annual RMDs may still apply in some situations
• Large withdrawals can push beneficiaries into higher tax brackets
Spousal Beneficiaries
Spouses usually receive the most favorable treatment. A surviving spouse may often:
• Roll the account into their own IRA
• Delay RMDs longer
• Continue tax deferral
• Potentially reduce immediate tax pressure
Inherited Roth IRAs
Inherited Roth IRAs are often more favorable because qualified withdrawals are generally tax-free.
However:
• The 10-year rule may still apply
• Beneficiaries may still need to fully distribute the account within 10 years
• Proper timing and reporting still matter
Inherited 401(k) Plans
Employer retirement plans may have additional restrictions or fewer payout options. In some cases, beneficiaries may move funds into an inherited IRA when permitted for greater flexibility.
Special Exceptions
Certain beneficiaries may qualify for exceptions to the standard 10-year rule, including:
• Surviving spouses
• Minor children of the account owner
• Certain disabled or chronically ill individuals
• Beneficiaries close in age to the deceased
Why Tax Planning Matters
Inherited retirement distributions are usually taxed as ordinary income and can:
• Increase Medicare premiums
• Affect Social Security taxation
• Trigger deduction or credit phaseouts
• Create larger-than-expected tax bills
Strategic timing of withdrawals may help reduce overall taxes.
Final Thoughts
Inherited retirement account rules have become much more complicated in recent years. Beneficiaries are often surprised to learn how important timing, distribution rules, and tax planning can be.
This article is meant for informational purposes only and should not be relied upon as tax or legal advice. Please contact Lance W. Gurel, CPA directly to discuss your individual tax situation and inherited retirement account planning opportunities. Free consultations are available.
Should Your LLC Elect S Corporation Tax Treatment?
Many LLC owners eventually hear the same question:
“Should I make an S corporation election?”
For the right business, the answer may be yes.
An S corporation election does not change your LLC’s legal structure. It changes how the business is taxed by the IRS.
The primary reason many business owners consider the election is simple: Potential Self-Employment Tax Savings
A standard single-member LLC is usually taxed as a sole proprietorship. In that structure, most business profit is generally subject to:
• Federal income tax
• Self-employment tax
• State taxes where applicable
With an S corporation election, an owner who works in the business must generally take a reasonable salary through payroll.
That salary is subject to payroll taxes.
However, additional profits distributed beyond reasonable compensation may not be subject to self-employment tax.
Example:
• Business profit: $140,000
• Reasonable salary: $70,000
• Remaining distribution: $70,000
In many cases, only the salary portion is exposed to payroll taxes.
For profitable businesses, this can create meaningful tax savings.
But There’s a Catch
S corporations come with additional responsibilities, including:
• Payroll processing
• Payroll tax filings
• W-2 preparation
• Separate business tax returns
• More bookkeeping and compliance work
The IRS also closely watches “reasonable compensation.”
Business owners generally cannot pay themselves artificially low wages simply to reduce payroll taxes.
When an S Corporation Election May Make Sense
An S corporation election is often considered when:
• Business profits are growing
• Income is becoming more consistent
• The tax savings may outweigh the added compliance costs
It is commonly discussed for:
• Consultants
• Contractors
• Service businesses
• Self-employed professionals
Timing Matters
The election must generally be filed timely with the IRS to apply for a specific tax year.
Late election relief may sometimes be available, but taxpayers should not assume it will automatically be granted.
Final Thought
An S corporation election can be a valuable tax planning tool for the right business, but it is not automatically the best choice for everyone.
The potential tax savings should always be weighed against the additional compliance requirements and administrative costs.
This article is for general informational purposes only and should not be considered tax or legal advice. Every business situation is different. If you would like to discuss whether an S corporation election may make sense for your business, please contact GurelCPA for a free consultation.
Offer in Compromise: Can You Settle IRS Tax Debt for Less?
Owing the IRS can feel overwhelming. When taxpayers search for help, they often see advertisements promising to settle IRS debt for “pennies on the dollar.”
Sometimes that is possible. But not everyone qualifies.
The IRS does offer a legitimate program called an Offer in Compromise (OIC). In certain situations, it may allow taxpayers to settle tax debt for less than the full amount owed.
The key question is whether the IRS believes the taxpayer can realistically pay the balance in full.
What Is an Offer in Compromise?
An Offer in Compromise is an agreement between a taxpayer and the IRS to settle a tax debt for less than the total amount due.
The IRS reviews the taxpayer’s overall financial condition, including income, assets, monthly living expenses, equity in property, and future earning potential.
The IRS generally accepts an Offer in Compromise only when it believes the full debt is unlikely to be collected within the legal collection period.
The IRS Looks at More Than Monthly Income
Many taxpayers assume they qualify simply because they cannot currently afford to pay the IRS. But the IRS looks far beyond monthly cash flow.
The IRS may review bank accounts, retirement accounts, vehicles, investments, real estate equity, business assets, and future income potential. A taxpayer with low income but substantial assets may still not qualify.
Many Offers Are Rejected
An Offer in Compromise is not automatically available simply because taxes are owed.
Applications are commonly denied when taxpayers have unfiled tax returns, fail to stay current on estimated payments, have the ability to pay through an installment agreement, fail to fully disclose financial information, or possess significant asset equity.
Before applying, taxpayers should understand that the IRS carefully reviews financial records and supporting documentation.
Compliance Still Matters
To qualify for an Offer in Compromise, taxpayers generally must be current with required tax filings and ongoing tax obligations.
Even after acceptance, future compliance remains critical. Creating new tax debt can default the agreement and place the taxpayer back into collections.
Beware of Aggressive Advertising
Many national tax resolution companies aggressively market Offer in Compromise services using unrealistic promises.
Unfortunately, some taxpayers pay large upfront fees only to discover they never qualified in the first place.
A realistic evaluation of the taxpayer’s financial condition is essential before pursuing an Offer in Compromise.
Other IRS Resolution Options May Exist
An Offer in Compromise is only one possible IRS resolution strategy.
Depending on the situation, alternatives may include installment agreements, Currently Not Collectible status, penalty relief requests, partial payment installment agreements, or broader tax compliance planning.
In many situations, another resolution option may be more practical and cost-effective.
Final Thoughts
Ignoring IRS tax debt rarely improves the situation. But not every taxpayer needs an Offer in Compromise.
The best solution depends on the taxpayer’s income, assets, compliance history, and long-term financial condition.
Understanding your actual options before taking action can help avoid costly mistakes and unrealistic expectations.
Need Help With IRS Tax Debt?
If you are dealing with IRS collection notices, installment agreements, or possible Offer in Compromise issues, professional guidance may help you understand your options before making important financial decisions. Contact GurelCPA for a free initial consultation.
This article is for general informational purposes only and should not be considered legal or tax advice. Every tax situation is different. Consult directly with a qualified tax professional regarding your specific circumstances.
How to Pay an IRS Balance Due Using IRS Direct Pay
A Step-by-Step Guide for Paying 2025 Form 1040 Taxes Online
If you owe additional federal tax for your 2025 Form 1040 return, IRS Direct Pay is one of the easiest and safest ways to pay online.
The system allows taxpayers to pay directly from a checking or savings account without creating an IRS account or paying processing fees.
Step 1: Go to IRS Direct Pay
Visit IRS.gov Direct Pay and click “Make a Payment.” The IRS will display an authorization screen. Click “Continue.”
Step 2: Select the Reason for Payment
For most taxpayers paying tax owed on a filed return, select:
• Balance Due
Step 3: Select the Return Type
On the next screen, choose:
• Income Tax – Form 1040
Step 4: Select the Tax Year
For taxes owed on a 2025 individual return filed in 2026, select:
• 2025
Choosing the wrong year is one of the most common payment mistakes.
Step 5: Verify Your Identity
The IRS will ask for information from a previously filed tax return, including:
• Name
• Social Security number
• Date of birth
• Filing status
• Address from a prior return
Use the address exactly as it appeared on your previously filed return.
Step 6: Enter Bank Information
Enter:
• Routing number
• Bank account number
• Checking or savings account type
• Payment amount
• Payment date
Step 7: Review Everything Carefully
Before submitting, review:
• Payment type
• Tax year
• Payment amount
• Bank information
Even small errors can create posting delays or IRS notices.
Step 8: Submit the Payment
Click “Submit” to authorize the payment. After submission, the IRS provides a confirmation number and payment summary. Save or print this page for your records.
Common Mistakes to Avoid
- Selecting the wrong tax year
- Choosing the wrong payment type
- Entering incorrect bank information
- Failing to save the confirmation number
Final Thoughts
IRS Direct Pay is often the fastest and lowest-cost way to pay a federal tax balance online. Carefully selecting the correct payment type, tax year, and bank information can help avoid unnecessary delays and IRS correspondence.
Questions? Let’s Talk!
If you owe the IRS, received a notice, or need help understanding payment options or installment agreements, please contact GurelCPA.com for a free consultation.
This article is provided for informational purposes only and should not be considered tax or legal advice. Please contact me directly to discuss your specific situation.
10 Types of Income the IRS May Not Tax
Smart Tax Planning Opportunities Many People Overlook
Most people assume the IRS taxes every dollar that comes in.
Not true.
The tax code includes several types of income that may be partially or completely free from federal income tax when the rules are followed correctly. Some are designed to encourage retirement savings. Others reward long-term investing, homeownership, or healthcare planning.
Here are 10 examples of income the IRS may not touch and why they matter.
1. Qualified Roth IRA Withdrawals
Qualified withdrawals from a Roth IRA are generally tax free because contributions were made with after-tax dollars.
If IRS holding period and age requirements are met, both the original contributions and the investment growth may come out tax free.
For many retirees, Roth accounts create valuable tax-free retirement income and flexibility.
2. 0% Long-Term Capital Gains
Not all investment gains are taxed at 15% or 20%.
Some taxpayers qualify for a 0% federal tax rate on long-term capital gains if their taxable income stays below certain thresholds.
This can create major planning opportunities for retirees and lower-income investors.
3. Gain From the Sale of Your Home
Many homeowners can exclude substantial profit from taxation when selling a primary residence.
Current rules generally allow exclusion of:
• Up to $250,000 for single filers
• Up to $500,000 for many married couples filing jointly
To qualify, taxpayers generally must have owned and lived in the home for at least two of the previous five years.
4. Municipal Bond Interest
Interest earned from many municipal bonds is exempt from federal income tax.
In some cases, it may also be exempt from state income tax.
Because of this favorable treatment, municipal bonds are often attractive to higher-income taxpayers seeking tax-efficient income.
5. Health Savings Account (HSA) Withdrawals
Qualified HSA withdrawals used for eligible medical expenses are generally tax free.
HSAs are especially powerful because they may offer:
• Tax-deductible contributions
• Tax-free growth
• Tax-free qualified withdrawals
Very few accounts receive this kind of triple tax advantage.
6. Life Insurance Death Benefits
Life insurance proceeds paid to beneficiaries are generally income-tax free.
While large estates can involve estate tax considerations, most beneficiaries do not owe federal income tax on life insurance death benefits they receive.
7. Gifts and Inheritances
Receiving a gift or inheritance usually does not create taxable income for the recipient.
There can be reporting requirements or future tax consequences depending on the asset involved, but inherited cash or property itself is often not taxable income.
8. Qualified Scholarships
Some scholarships are tax free when used for qualified education expenses such as:
• Tuition
• Required fees
• Required books and supplies
Amounts used for room and board generally do not qualify.
9. Some Social Security Benefits
Not all Social Security income is taxable.
Depending on total income levels, some retirees may pay tax on none, part, or up to 85% of their benefits.
For taxpayers with modest retirement income, a significant portion of Social Security may effectively be tax free.
10. Employer-Provided Health Insurance
Most employer-paid health insurance benefits are not treated as taxable income to employees.
This is one of the largest tax-free financial benefits many workers receive every year.
“Tax Free” Does Not Always Mean “No Tax Impact”
One important warning: tax-free income can still affect other parts of a tax return.
Some tax-advantaged income may:
• Increase Medicare premiums
• Affect taxation of Social Security
• Impact deductions or credits
• Change overall tax planning strategies
That is why good tax planning involves looking at the entire picture, not just one transaction.
Final Thoughts
The tax code is complicated, but it also creates opportunities.
Understanding how Roth withdrawals, 0% capital gains, home sale exclusions, HSAs, and other tax-favored income work may help taxpayers legally reduce taxes and improve long-term financial flexibility.
Strategic tax planning is often less about how much you make and more about how your income is structured.
This article is for general informational purposes only and should not be considered tax, legal, or financial advice. Tax laws are complex and frequently change. Every taxpayer’s situation is different. If you would like help evaluating tax-efficient income strategies or retirement planning opportunities, please contact GurelCPA for a free consultation.
Nonprofit Form 990 Extension: Don’t Miss This Important IRS Deadline Relief Option
Many nonprofit organizations know they must file Form 990, Form 990-EZ, or Form 990-PF each year. What many organizations do not realize is that the IRS allows an automatic extension of time to file.
For calendar-year nonprofits, Form 990 filings are generally due May 15. However, organizations that need additional time can usually obtain an automatic 6-month extension by filing IRS Form 8868 before the original due date.
This extension can be extremely valuable for nonprofits that are still finalizing bookkeeping, gathering donor and grant information, reconciling accounts, or waiting for year-end financial statements.
Use the extra time to sharpen up your statements on Program Accomplishments
Most 990 and 990-EZ submissions that I review are lacking in one key area: they have failed to put the time into making full and complete explanations of their Program Accomplishments. This is the place to show how your actions match your mission statement, so donors and grantors can see that your mission AND actions match their values.
A rushed Form 990 often leads to mistakes, weak program descriptions, missing disclosures, or incomplete reporting. Since Form 990 filings are public documents reviewed by donors, grantors, foundations, journalists, and charity rating organizations, accuracy and presentation matter.
The extension applies to the filing deadline itself. It does not extend payment deadlines for any unrelated business income tax that may be due.
Form 990-N Postcard Return
One important exception is Form 990-N, also known as the e-Postcard.
The IRS does not allow extensions for Form 990-N filings.
Take Away
Nonprofits should remember that failing to file required Form 990-series returns for three consecutive years can result in automatic revocation of tax-exempt status.
Filing an extension is not a sign of failure. It can be a smart compliance decision that provides time to prepare a more accurate and more effective public-facing return.
If your nonprofit needs assistance with Form 990 compliance, Form 990-EZ preparation, or improving how your organization presents its mission and accomplishments on its public filings, consult a qualified CPA before the deadline.
This article is for general informational purposes only and should not be considered tax or legal advice. Every nonprofit organization’s situation is different. Contact GurelCPA for a free consultation regarding your nonprofit tax compliance and Form 990 filing needs.
IRS Scam Notices Are Rising: How to Tell What’s Real and Protect Yourself
Recent warnings from the IRS highlight a growing surge in scam notices designed to look official.
These fake letters are becoming more convincing, using IRS-style formatting, urgent language, and threats to pressure taxpayers into acting quickly.
The real risk is not just falling for a scam.
It is also ignoring a legitimate IRS notice because it looks suspicious. That mistake can cost you time, money, and critical response options.
Why IRS Notices Matter
IRS notices operate on strict deadlines. If a notice is legitimate and you do not respond in time, you may:
- Lose appeal rights
- Face increased penalties and interest
- Trigger collection actions
- Limit your resolution options
How to Tell If an IRS Notice Is Real
1. Delivery Method
The IRS generally communicates through U.S. mail. Emails, texts, and social media messages claiming to be from the IRS are almost always scams.
2. Notice Number
Legitimate IRS letters include a notice or letter number (such as CP2000 or LT11). Missing or inconsistent numbers are a red flag.
3. Specific Details
Real notices reference a specific tax year, explain the issue clearly, and provide structured instructions.
4. Payment Methods
The IRS will never demand payment through gift cards, cryptocurrency, or payment apps. Requests like these are scams.
5. Match Your Records
If the notice does not align with your filings or expectations, verify before acting.
How to Verify an IRS Notice
- Check your IRS Online Account
- Call the IRS using official contact information
- Consult us for professional review
The Biggest Mistake: Waiting Too Long
Delaying action on a real IRS notice can eliminate your options. The IRS system is automated and continues moving forward whether you respond or not.
This article is for general informational purposes only and does not constitute tax advice. Every situation is different. If you have received an IRS notice, consult with me directly. I offer a free consultation to review your situation and determine the best course of action.
Optimizing Your Form 990/990-EZ
Help Donors See Your Mission Clearly!
Many nonprofit organizations file Form 990-EZ or Form 990 every year and assume the job is finished once the return is accepted by the IRS. From a compliance standpoint, that’s true.
But has your organization optimized this chance to tell the world about your accomplishments? Review last year’s filing and see what you think.
A review of public Form 990 filings on platforms like GuideStar and the IRS website shows a common issue: the program accomplishments section is missing, minimal, or dramatically underdeveloped, even for organizations doing meaningful work.
Filing the Form Isn’t the Same as Using It Well
Form 990 filings are public documents. For donors, grantors, journalists, and prospective board members, they are often the first source of information about an organization.
Yet many filings include:
• Blank or one-sentence program descriptions
• Generic language that could apply to any nonprofit
• No clear explanation of impact or scale
• Little connection between spending and mission
When this happens, the organization loses one of its most credible opportunities to explain its work.
The Cost of Under-Describing Program Accomplishments
The program accomplishments section is one of the few places where a nonprofit can clearly describe, at length, in its own words:
• What it actually did during the year
• Who benefited from that work
• How resources were used
• Why the work mattered
When that section is underdeveloped, the organization loses:
• Visibility on public nonprofit platforms
• Credibility with donors and grantors
• Control over its public narrative
The work still happened — but the public record doesn’t reflect it.
A Small Change Can Create Outsized Impact
Improving program accomplishment descriptions isn’t about marketing language or exaggeration. It’s about accurately and clearly describing real work in the most trusted document a nonprofit files.
For many organizations, modest improvements to this section can significantly improve how the organization is understood by the public.
This Lost Value Is Already Public Information
Past Form 990 filings are part of the public record. Anyone researching the organization can see how programs were described and whether accomplishments appear thoughtful, intentional, and complete.
A Quick Review Can Be Eye-Opening
If you’d like a second set of eyes on your organization’s past filing before preparing the next one, I offer a free consultation to discuss whether your Form 990 is fully reflecting the value your organization delivers.
This article is provided for general informational purposes only and should not be considered tax advice. Each organization’s circumstances are unique.
Check Before You Give: Look Beyond the Numbers
Does the mission of this charitable organization match your personal values?
If you make charitable donations, the IRS has a simple but powerful message: “Check Before You Give.”
Most people hear that and think it means confirming whether an organization is legitimate, and that’s certainly part of it.
But if you stop there, you’re missing the bigger opportunity. The real value is in understanding what the organization does with its resources.
Start with the IRS Tool
The IRS provides a public database called Tax Exempt Organization Search (TEOS). This tool allows you to:
- Confirm that an organization is recognized as tax-exempt
- Verify that contributions are deductible
- Access filed Forms 990 or 990-EZ
Don’t Just Verify—Read the Story
When you pull up a nonprofit’s Form 990 or 990-EZ, you’re not just looking at compliance paperwork. You’re looking at a public-facing narrative of the organization.
Focus on:
- Mission Statement – What is the organization trying to accomplish?
- Program Accomplishments (Part III) – What did they actually do this year?
- Schedule O – Additional explanations and details
This is where you can see whether the organization aligns with your values.
Be Careful with “Overhead” Judgments
There’s a common misconception that a “good” charity must spend a certain percentage of its funds on programs versus administration.
That approach can be misleading.
Different types of organizations operate in different ways:
- Startup nonprofits may have higher administrative costs early on
- Advocacy organizations may not fit neatly into “program expense” categories
- Grantmaking organizations distribute funds rather than operate programs directly
There is no universal percentage that defines a “good” charity.
Instead, focus on clarity, consistency, and impact in their reporting.
Use Independent Sources for Additional Perspective
In addition to IRS data, several private organizations provide insights and summaries, including GuideStar (Candid), Charity Navigator, and ProPublica Nonprofit Explorer.
These platforms can help you:
- View multiple years of filings
- Compare organizations
- See how information is presented to the public
A Better Way to Give
Before you donate, take a few minutes to ask:
- Does this organization clearly explain what it does?
- Do its accomplishments match its mission?
- Does its reporting feel thoughtful and transparent?
Those answers will tell you far more than any single percentage can.
Final Thought
The IRS says “Check Before You Give.” That’s good advice—but don’t just check for legitimacy. Take the extra step and understand the story behind the organization. That’s how you give with confidence.
This article is for informational purposes only and should not be considered tax advice. Every situation is different. If you have questions about charitable giving or nonprofit reporting, contact GurelCPA directly for a free consultation.
Is Someone Using Your Social Security Number? What to Do If Your Tax Return Was Rejected by the IRS.
Each tax season, some taxpayers hit a frustrating problem.
You file your return, and it gets rejected.
The IRS says a return has already been filed using your Social Security number.
This situation usually comes down to one of two causes, and knowing which one applies is critical.
Why the IRS Rejects Returns for Duplicate Social Security Numbers
You Were Claimed as a Dependent
This is the most common reason.
If someone else claimed you as a dependent, the IRS system will reject your return if you try to file independently.
What to know:
- This is often a misunderstanding of dependency rules
- You can still file by mailing your return
- The IRS may follow up with both parties for clarification
- The person who claimed you can file an amended return to remove you, after which you can file your return electronically
Tax-Related Identity Theft
If you should not be claimed as a dependent, this is the more serious issue.
It may mean someone used your Social Security number to file a fraudulent tax return.
This type of identity theft is often discovered only after your return is rejected.
What to Do If Your Tax Return Is Rejected
If you are not a dependent and your return was rejected:
- File your tax return by mail so the IRS can review it
- Complete Form 14039, Identity Theft Affidavit
- Watch for IRS notices and respond promptly
How to Prevent Tax Identity Theft: Get an IP PIN
The best long-term protection is an Identity Protection PIN, or IP PIN, issued by the Internal Revenue Service.
What Is an IP PIN?
An IP PIN is a six-digit number required to file your federal tax return.
Without it, a return cannot be filed using your Social Security number.
Why an IP PIN Matters
- Stops fraudulent tax returns before they are accepted
- Protects your IRS account year after year
- Reduces the risk of rejected returns
Who Should Get an IP PIN
- Anyone whose return was rejected due to duplicate SSN use
- Anyone concerned about identity theft
- Anyone who wants stronger protection going forward
Final Thoughts
A rejected return is not something to ignore.
It may be a simple dependency issue, or it may be identity theft.
Either way, taking action now and securing an IP PIN can prevent bigger problems later.
Need Help?
If your return was rejected and you are not sure why, or you want help protecting your IRS account, I can help.
Questions? Let’s Talk!
I offer a free consultation to review your situation and help you move forward with confidence.
Please contact GurelCPA, Tax and Nonprofit Accounting directly to discuss your specific circumstances and schedule your free consultation.
This article is for informational purposes only and should not be considered tax advice. Every situation is different.
What to Do If You Don’t Receive Your W-2
Each January, employers are required to send employees a Form W-2, which reports wages earned and taxes withheld during the prior year. Employers must furnish W-2s by January 31 of the year following the tax year. Most taxpayers receive their W-2s without issue, but delays and missing forms do happen, especially if you changed jobs, moved, or worked for multiple employers.
If you haven’t received your W-2 by early February, here’s what to do.
Step 1: Contact Your Employer
Your first step should always be to contact your employer or former employer directly.
Ask whether the W-2 was issued, whether it was mailed or made available electronically, and whether the employer has your correct mailing address or email.
In many cases, the issue is simply an outdated address or a payroll processing delay.
Step 2: Check Your Payroll or HR Portal
Many employers deliver W-2s electronically through payroll platforms such as ADP, Paychex, or Workday.
If you had online access during employment, log in to your payroll or HR portal and look for a section labeled Tax Documents or Year-End Forms.
Download and save a copy for your records.
Step 3: Contact the IRS (If Necessary)
If you are unable to obtain your W-2 after contacting your employer, the IRS can assist. You may contact the IRS after February 15. Be prepared to provide your identifying information, your employer’s contact details, dates of employment, and an estimate of wages and withholding based on your records. The IRS may contact your employer on your behalf and advise you on next steps.
What If the W-2 Is Wrong When You Receive It?
If you receive a W-2 that contains errors, such as incorrect wages, withholding amounts, or Social Security number, request a corrected W-2 (Form W-2c) from your employer. Do not file your tax return until the corrected form is issued.
Filing Without a W-2 (Form 4852) — and Why You Should Be Careful
If all reasonable efforts fail, you may be able to file your tax return using Form 4852, Substitute for Form W-2. This form allows you to report wages and withholding based on your own records, such as final pay stubs or bank deposit information.
This option should be used only as a last resort. Filing with estimated or reconstructed numbers increases the likelihood of IRS notices, refund delays, and the need to file an amended return later.
Important Disclaimer
This article is intended for general informational purposes only and should not be considered tax, legal, or accounting advice. Tax situations vary widely based on individual facts and circumstances. Please schedule a free consultation regarding your specific situation before taking action.
Late W-2 After You Filed? Best Practice: Wait for an IRS Notice
It’s April 30. You’ve already filed your tax return. Then it happens—your employer sends a late Form W-2.
Sometimes it’s a real number. Other times, it’s something surprisingly small—like $11 of wages that were missed due to a payroll error.
So what is the IRS expecting you to do?
The Technical Rule: Amend Your Return
From a strict compliance standpoint, the IRS expects taxpayers to report all income.
If you receive a missing W-2 after filing, the official step is to file an amended return using Form 1040-X.
There is no formal “small amount” exception in the rules.
The Reality: Materiality Matters
In practice, not all errors are treated equally.
For example:
- $11 of additional wages might result in $1–$3 of additional tax
- The IRS matching system may do nothing or send a small notice later
The IRS uses automated matching, but very small discrepancies are not always pursued.
What Most Taxpayers Actually Do
For very small amounts like this, most taxpayers—and many tax professionals—take a practical approach:
- Do not amend the return
- Wait to see if the IRS sends a notice
- Pay any small balance if and when it arises
This avoids unnecessary paperwork for a negligible tax difference
When You Should Consider Amending
There are situations where filing an amended return still makes sense:
- The late W-2 includes federal or state withholding
- The additional income is more than minimal
- You are already filing an amendment for another reason
- You prefer complete technical accuracy and a clean record
One Important Detail: Withholding
If the late W-2 shows withholding, that’s worth a closer look.
The IRS will see the income either way, but you don’t get credit for withholding unless it’s reported on your return.
Bottom Line
IRS expectation: File an amended return
Real-world approach: For very small amounts, many taxpayers wait
For something like $11 of income, the cost of amending often outweighs the benefit.
Questions? Let’s Talk!
Every situation is different. If you’ve received a late W-2 or have questions about whether to amend your return, contact GurelCPA directly. We’re happy to review your situation and offer a free consultation to help you make the right call.
This article is for general informational purposes only and does not constitute tax advice.
Why You Should Create an IRS Online Account (and How to Do It)
The IRS offers taxpayers a secure online tax account that provides direct access to important tax information. Creating an IRS online account can save time, reduce confusion, and help taxpayers stay ahead of notices, balances, and filing requirements.
For many taxpayers, this tool has become one of the most useful ways to monitor their tax situation year-round — not just during filing season.
WHAT IS AN IRS ONLINE ACCOUNT?
An IRS online account is a secure portal that allows individuals to view and manage certain federal tax information. Once established, the account gives you real-time access to data the IRS has on file for you. This is not a filing system. Instead, it’s an information and account-management tool designed to help taxpayers understand their current standing with the IRS.
KEY BENEFITS OF AN IRS ONLINE ACCOUNT
View Your Tax Records
Taxpayers can access prior-year tax return transcripts, wage and income transcripts (W-2s, 1099s, etc.), and adjusted gross income (AGI) for prior years.
Check Balances and Payments
An IRS online account allows you to view your current balance due, see recent payments and applied credits, and monitor installment agreements.
Review IRS Notices
Many IRS notices now appear in the online account, allowing taxpayers to confirm which tax year is involved and share accurate information with their tax professional.
Make Payments or Set Up Payment Plans
Taxpayers can make secure payments, request or manage installment agreements, and view payment history directly through the account.
HOW TO CREATE AN IRS ONLINE ACCOUNT
Step 1: Visit the IRS Website
Go to IRS.gov and select the option to sign in or create an online account.
Step 2: Verify Your Identity
You will need a valid email address, a photo ID, and a smartphone or computer with a camera for identity verification.
Step 3: Create Login Credentials
Set up a username, password, and multi-factor authentication.
WHEN AN IRS ONLINE ACCOUNT IS ESPECIALLY HELPFUL
This tool is particularly helpful if you owe taxes, receive IRS notices, need prior-year transcripts quickly, want to confirm payments, or work with a tax professional.
FINAL THOUGHTS
Creating an IRS online account is one of the simplest steps taxpayers can take to stay informed and organized. If you need help reviewing information from your IRS account or responding to IRS correspondence, a tax professional can help determine next steps.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Haven’t Filed Taxes in Years & Now You Need Your Tax Returns?
Many people who haven’t filed tax returns for years weren’t trying to avoid anything. They simply didn’t need to file… or didn’t think they did.
Then, suddenly, you’re asked: “Can you provide your last few years of tax returns?”
Why Unfiled Tax Returns Matter Now
Tax returns have become a standard financial requirement, not just an IRS obligation.
You may need them to:
• Qualify for a home loan or refinance
• Complete immigration or visa applications
• Verify income for loans, grants, or benefits
No returns = delays or denials.
Good News: You Usually Don’t Need to Go Back Forever
One of the biggest misconceptions is that you must file every missing year.
In reality:
• The IRS focus is on getting you back into compliance
• Many taxpayers can move forward by filing a limited number of recent years
• Refunds are only available for the last 3 years
The goal is to establish a recent filing history, not rebuild your entire past.
It’s usually more manageable than people expect.
What Getting Caught Up Actually Looks Like
A practical approach typically includes:
- Identifying which years need to be filed
- Reconstructing income using IRS transcripts and records
- Filing a targeted set of returns (not necessarily every year)
- Addressing any balances or confirming refunds
In many cases, taxpayers are surprised to find they don’t owe as much as expected or they were actually due refunds
Bottom Line
Unfiled tax returns may not have mattered before—but they often matter now.
Getting current isn’t just about the IRS.
It’s about removing barriers to homeownership, immigration, and financial progress.
If you need help getting caught up—or want to understand how many years you actually need to file—contact GurelCPA for a free consultation.
This article is for informational purposes only and does not constitute tax advice. Every situation is different, especially when multiple years of unfiled returns are involved.
ITIN Renewal Rules: Avoid This Common Filing Problem
Many taxpayers don’t realize that ITINs expire—until the IRS delays their return or denies a credit.
If you file with an expired ITIN, it can lead to processing delays, lost credits, and IRS notices.
Here’s what you need to know to avoid problems.
Do ITINs Expire?
Yes it does.
An Individual Taxpayer Identification Number (ITIN) expires if it is not used on a federal tax return for three consecutive years.
Example:
If your ITIN was last used on a 2021 return and not used again, it may now be expired.
What Happens If You File With an Expired ITIN?
The IRS will still process your return—but with limitations.
You may experience:
- Delays in processing your tax return
- Denial of certain tax credits
- An IRS notice requesting renewal
What About Dependents’ ITINs?
If you claim dependents, their ITINs must also be valid.
If a dependent’s ITIN is expired:
- Credits like the Child Tax Credit may be denied
- You may receive an IRS notice
How Do You Renew an ITIN?
To renew an ITIN, file Form W-7 (Application for IRS Individual Taxpayer Identification Number).
You will also need:
- Supporting identification documents (such as a passport), or
- Certified copies from the issuing agency
When Should You Renew Your ITIN?
Best practice:
Renew before filing your tax return if you think your ITIN may be expired.
Why this matters:
- Prevents delays
- Preserves eligibility for credits
- Avoids IRS notices
Can You Renew an ITIN With Your Tax Return?
Yes—but it’s not ideal.
If you submit a renewal with your return:
- The IRS will process both together
- Your return will likely be delayed
Common ITIN Renewal Mistakes
- Waiting until after filing to renew
- Forgetting to renew dependents’ ITINs
- Submitting incomplete documentation
- Assuming the ITIN is still active
Key Takeaways
- ITINs expire after 3 years of non-use
- Filing with an expired ITIN can delay your return and reduce benefits
- Dependents’ ITINs must also be valid
- Renew early to avoid problems
If you’re unsure whether your ITIN is still valid, or want help renewing it correctly.
I offer a free consultation to review your situation and help you avoid delays and lost credits.
This article is for general informational purposes only and does not constitute tax advice. ITIN renewal and eligibility rules can vary depending on your situation.
What Is an ITIN? Tax Rules, Refunds, and Credits for ITIN Holders
If you don’t have a Social Security Number but still need to file U.S. taxes, you may need an ITIN.
Here’s what ITIN holders need to know about filing requirements, tax refunds, and which credits are available (and not available).
What Is an ITIN?
An Individual Taxpayer Identification Number (ITIN) is a tax processing number issued by the Internal Revenue Service.
It is used by individuals who:
- Are not eligible for a Social Security Number, and
- Still have a U.S. tax filing requirement
An ITIN is for tax purposes only. It does not authorize work and does not provide immigration status.
Who Needs an ITIN?
Common ITIN filers include:
- Nonresident aliens with U.S. income
- Resident aliens (for tax purposes) without work authorization
- Spouses or dependents of U.S. taxpayers
Do ITIN Holders Have to File Taxes?
Yes—if they meet IRS filing requirements.
ITIN holders may need to file:
- Form 1040 (resident taxpayers)
- Form 1040-NR (nonresidents)
If classified as a U.S. tax resident, they are taxed on worldwide income.
Can ITIN Holders Get a Tax Refund?
Yes.
ITIN holders can:
- File a tax return
- Reconcile taxes owed
- Receive a refund if too much tax was withheld
What Tax Credits Can ITIN Holders Claim?
Some credits are available—but many require a Social Security Number.
Credits ITIN Holders May Qualify For:
- Child Tax Credit (limited eligibility)
- Credit for Other Dependents
- American Opportunity Credit
What Credits Require a Social Security Number?
These major tax benefits are not available to ITIN-only taxpayers:
- Earned Income Tax Credit
- Refundable Child Tax Credit (in most cases)
- Recovery Rebate Credit (stimulus payments)
For the Child Tax Credit:
- The child must have a valid SSN
- The taxpayer may use an ITIN, but rules are limited
ITIN vs. Social Security Number
A Social Security Number (SSN) generally indicates:
- U.S. citizenship, or
- Authorization to work in the U.S.
An ITIN:
- Is only for tax reporting
- Does not authorize employment
- Does not change immigration status
Why Does the IRS Issue ITINs?
To ensure individuals with U.S. tax obligations can file returns and pay taxes, even without a Social Security Number.
Key Takeaways for ITIN Filers
- You can file a tax return with an ITIN
- You may be eligible for a refund
- Some tax credits are limited or unavailable
- Residency rules determine how you are taxed
If you have questions about ITIN filing, refunds, or credit eligibility, I offer a free consultation to review your situation and help you move forward with confidence.
This article is for general informational purposes only and does not constitute tax advice. ITIN filings often involve complex residency and eligibility rules.
Does your Form 990 Tell Your Story?
For calendar-year filers, May 15 is the filing deadline for Form 990 and Form 990-EZ. And for many nonprofit organizations, filing the annual information return is treated as a compliance exercise. The form gets completed, submitted to the IRS, and filed away until next year.
But here is something many nonprofit leaders overlook: once filed, your organization’s Form 990 or Form 990-EZ becomes a public document available to donors, grantors, journalists, and the general public.
These filings are searchable directly through the IRS website and are also widely available through third-party nonprofit databases. That means your filing is not just a regulatory requirement. It is also one of the most visible public representations of your organization.
And for many nonprofits, that opportunity is not being fully used.
Many Filings Leave Important Information Undeveloped
As a CPA who works with nonprofit organizations, I regularly review publicly available Form 990 filings.
Many organizations are doing outstanding work in their communities. However, their filings often do not fully reflect the scope or impact of their programs.
Some common issues include:
• Mission statements that are very brief or generic
• Minimal descriptions of program accomplishments
• Important activities summarized in only a sentence or two
• Checklist questions answered incorrectly or inconsistently
• Financial information that does not clearly align with the organization’s financial statements
None of these issues usually indicate wrongdoing. In most cases, they simply reflect the fact that the Form 990 is treated as a compliance task rather than a strategic communication tool.
The Program Accomplishments Section Matters
One of the most important parts of the filing is Part III — Program Service Accomplishments.
This section gives an organization the opportunity to explain:
• What programs it operates
• Who benefits from those programs
• What outcomes or impact those programs produce
• How resources are being used to fulfill the mission
When this section is underdeveloped, readers are left with little understanding of the organization’s real work.
A thoughtful description, on the other hand, can clearly demonstrate impact and strengthen credibility with donors and grantors.
Your Form 990 Is Part of Your Public Profile
Today, nonprofit filings are widely available online and frequently reviewed by people researching organizations.
In addition to being searchable through the IRS website, Form 990 filings are also available through nonprofit databases such as Candid (formerly GuideStar), ProPublica’s Nonprofit Explorer, and Charity Navigator.
For many people researching a nonprofit, the Form 990 is one of the first documents they review.
A clear and informative filing can strengthen confidence in the organization.
A sparse or incomplete filing can leave important questions unanswered for donors, grantors, and the public.
A Good Time to Review Your Filing
As many organizations begin preparing their next Form 990 filing, this can be a useful time to take a fresh look at last year’s return.
Consider asking:
• Does our mission statement clearly describe what we do?
• Do our program descriptions accurately reflect the scope of our work?
• Are we communicating outcomes and impact effectively?
• Were the checklist questions answered carefully and completely?
• Does the financial information presented align with the organization’s financial statements?
A careful review before the next filing can help ensure the organization’s public record reflects the work it is truly doing.
From Compliance to Communication
For nonprofit organizations, transparency builds trust.
Your Form 990 is not just a required filing — it is also a chance to explain your mission, your programs, and your impact.
When prepared thoughtfully, it can serve as a valuable part of your organization’s public narrative.
Final Thoughts
If your organization files Form 990 or Form 990-EZ each year, it may be worth reviewing whether your filings fully communicate the scope and impact of your work. Also, don't forget the May 15, 2026 filing deadline.
Sometimes a few improvements in how information is presented can make a meaningful difference in how the organization is understood by donors, grantors, and the public.
If you would like assistance reviewing your organization’s Form 990 or Form 990-EZ filing, you are welcome to contact us for a free consultation.
This article is for informational purposes only and does not constitute tax or legal advice. Nonprofit reporting requirements vary depending on an organization’s structure and activities.
Why Tax Refunds Are Bigger in 2026 (And Why They May Not Be Next Year)
Tax refunds are trending higher in 2026—and people are noticing.
Searches for “large refunds 2026” are spiking, and many taxpayers are even asking if this is some kind of stimulus.
It’s not—but there are clear reasons refunds are larger this year, and those reasons may not stick around.
Why Refunds Are Higher This Year
• Temporary tax law changes increasing credits and eligibility
• Higher withholding during 2025 (many taxpayers overpaid without realizing it)
• Inflation adjustments lowering overall tax liability
• Increased awareness driven by media coverage and social sharing
Is This a Stimulus?
No. A tax refund is simply money you already paid in.
If your refund is larger, it usually means you overpaid during the year or qualified for additional credits.
Why This May Not Repeat in 2027
• Withholding gets corrected (less overpayment)
• One-time or temporary tax benefits may not continue
• Income patterns normalize (bonuses, job changes, etc.)
A large refund this year does not mean you should expect the same result next year.
Is a Big Refund Actually a Good Thing?
Not always. A large refund often means you gave the IRS an interest-free loan.
Many taxpayers are better off with:
• More take-home pay during the year
• A smaller refund (or breaking even)
• Better control over cash flow
Action Steps: What to Do Now
1. Compare your 2025 and 2024 tax returns
2. Identify whether your refund increase came from withholding, credits, or both
3. Review and update your W-4 if needed
4. Plan ahead so you’re not surprised next year
Understanding why your refund changed is the key to better tax planning going forward.
This article is for informational purposes only and should not be considered tax advice. Please contact GurelCPA directly for personalized guidance.
Where’s My Refund? What Taxpayers Need to Know Right Now (2026 Update)
If you’re still waiting on your tax refund, you’re not alone. “Where’s my refund?” remains one of the most searched tax questions after filing season—and for good reason.
The IRS continues to process millions of returns, and while most refunds are issued on time, delays are more common than many taxpayers expect.
Here’s what to know right now.
How the IRS “Where’s My Refund?” Tool Really Works
The IRS refund tracker updates once per day (usually overnight) and shows one of three statuses:
- Return Received — Your return is in the system and being processed
- Refund Approved — Your refund has been finalized and scheduled
- Refund Sent — The IRS has issued your refund
If you chose direct deposit, funds typically arrive within a few business days after the “sent” status.
How Long Should a Refund Take in 2026?
- 21 days is still the standard timeline for most electronically filed returns
- Many refunds arrive faster—but not all
- Paper-filed returns take significantly longer
If you’re within 21 days of e-filing, the IRS will not take action on your inquiry.
Why Refund Delays Are More Common Than You Think
- Errors or missing information
- Identity verification reviews
- EIC or Additional Child Tax Credit claims
- Income mismatches with IRS records
- Bank account or direct deposit issues
Watch for IRS Letters
If the IRS needs additional information, they will contact you by mail.
- Identity verification requests
- Requests to confirm income or credits
- Notices about refund adjustments
What If Your Refund Amount Changes?
- Credit recalculations
- Math corrections
- Marketplace Premium Tax Credit reconciliation
- Offsets for past-due debts
A Common Misunderstanding in 2026
Refund amounts may change due to income, withholding, credits, or reconciliation items. A refund is not a bonus—it is your own money being returned.
When Should You Be Concerned?
- Less than 21 days since e-file → Wait
- Status says 'still processing' → Wait
- You receive an IRS letter → Act promptly
- Refund amount changes → Review carefully
The Bottom Line
Refund delays are frustrating—but often normal. If something doesn’t look right, it’s worth taking a closer look.
This article is for informational purposes only and does not constitute tax advice. Every situation is different. Please contact us directly to discuss your specific facts and circumstances. We offer a free consultation to help you move forward with confidence.
You Filed Your Taxes, Now What? 5 Next Steps
Filing your tax return is a big milestone—but it’s not the finish line.
In fact, what you do after you file can affect your refund, your risk of IRS issues, and even your taxes next year.
Here are five smart next steps most people miss after filing their taxes:
1. Track Your Refund (and Know What’s Normal)
If you’re expecting a refund, don’t just wait—track it. The IRS “Where’s My Refund?” tool is updated daily and can show if your return is received, approved, or sent.
Most refunds take up to 21 days, but delays are common due to identity verification, errors, or manual review. If it’s been more than 3–4 weeks, it may be time to look deeper.
2. Confirm Your Payment Went Through
If you owed taxes, verify that your payment actually processed. Check your bank account and IRS online account. Errors or duplicate payments can happen—especially with auto-withdrawals.
3. Watch Your Mail (and Email) for IRS Notices
The IRS may send identity verification letters, notices, or requests for additional information. Do not ignore IRS mail—even small issues are easier to fix early.
4. Save the Right Documents (Not Everything)
Keep your filed tax return (PDF), W-2s, 1099s, and key deduction records. The IRS accepts digital copies, so scanned PDFs are fine. Most records should be kept for at least 3 years.
5. Adjust for Next Year (This Is the Big One)
If your refund was too big—or you owed more than expected—it may be time to adjust withholding or plan for estimated payments. Planning now helps avoid surprises next year.
Final Thought
Filing your taxes is important—but what you do next can matter just as much. A few steps now can prevent issues, reduce stress, and put you in a better position for next year.
Need Help Reviewing Your Situation?
If you’re not sure whether everything was handled correctly—or want to plan ahead for next year—I’m happy to help.
Contact GurelCPA for a free consultation and let’s make sure you’re on the right track.
This article is for informational purposes only and should not be considered tax advice. Every situation is different. Please contact us directly for guidance specific to your circumstances
Nonprofits: You Can Use the IRS Business Tax Account Too
Many nonprofits assume IRS online tools are only for for-profit businesses. That’s no longer the case. The Internal Revenue Service now offers a Business Tax Account (BTA) and nonprofits are included.
If your organization has an EIN and files with the IRS (Form 990, 990-EZ, or payroll returns), this is a tool you should know about.
What Is the IRS Business Tax Account?
The IRS Business Tax Account is a secure online portal that lets your organization view and manage its federal tax information in one place.
Think of it as your nonprofit’s IRS dashboard, payment center, and compliance tool.
Yes — This Applies to Nonprofits
If your organization has an EIN, files Form 990 (or 990-EZ / 990-N), or handles payroll or other federal filings, you may be able to use this system.
This is not just for businesses—it applies to nonprofits too.
What Can Your Nonprofit Do With It?
View balances and payments: See what you owe and confirm payments were applied correctly.
Make and schedule payments: Pay payroll taxes or other liabilities without mailing checks.
Access IRS records: Download transcripts and account history for lenders or grantors.
View IRS notices online: Avoid missed or delayed mail.
Manage access: Add or remove users and improve internal controls.
Why This Matters
Fewer surprises from missed notices or unknown balances.
Stronger internal controls with managed access.
Better grant readiness with organized IRS records.
Bottom Line
The IRS Business Tax Account is becoming an important tool for nonprofits. It provides better visibility, more control, and fewer surprises.
Questions? Let’s Talk!
If you’d like help setting this up or understanding how it applies to your nonprofit, please contact me directly. I offer a free consultation to help you evaluate your situation.
This article is for informational purposes only and should not be relied upon as tax advice. Please contact me directly to discuss how this applies to your organization’s specific situation.
IRS Launches “Tax Debt Help” Tool — What to Do If You Owe
If you owe the IRS and aren’t sure what to do next, a new tool can help you evaluate your options — before taking action.
The IRS recently released its Tax Debt Help tool, which walks taxpayers through possible solutions based on their situation — without requiring personal information.
Why Acting Early Matters
Delaying can get expensive:
• Failure-to-pay penalty: 0.5% per month (up to 25%)
• Failure-to-file penalty: 5% per month
• Interest: compounds daily
File your return even if you can’t pay.
What the Tool Does
• Helps you understand IRS payment options
• Guides you based on your financial situation
• Lets you explore privately (no SSN required)
It’s a starting point, not a solution.
Your Main Options
Short-Term Plan (≤180 days)
• No setup fee
• Balance under $100,000
Installment Agreement
• Monthly payments over time
• Typically under $50,000
Offer in Compromise
• Settle for less (if qualified)
Hardship Status
• Temporary pause on collections
Key Requirement
All tax returns must be filed first.
Bottom Line
The new IRS tool makes it easier to understand your options — but choosing the right strategy still matters.
The wrong approach can cost more in interest and delay resolution.
Tax Debt Tool Link: https://www.irs.gov/payments/get-help-with-tax-debt
Need Help?
If you owe the IRS and want to handle it the right way the first time, let’s talk.
Free consultation available.
This article is for informational purposes only and does not constitute tax advice.
Every situation is different. Please contact us directly to discuss your specific facts and circumstances.
Is the IRS Holding Your Refund?
If you’ve already filed your tax return and are waiting for your refund, you’re not alone in asking: “Why is it taking so long?” or “Did I do something wrong?”
The truth is, not all delays are the same—and in 2026, more refunds are being reviewed, adjusted, or even reduced than many taxpayers expect.
Here are the most common reasons the IRS may be holding your refund—and what you should do about it.
1. Refund Offsets (Your Refund Was Applied to a Debt)
This is one of the most surprising and frustrating situations. Even if your return is processed quickly, your refund may be reduced or completely taken through a process called an offset.
What Is a Refund Offset?
A refund offset happens when the government uses your tax refund to pay certain outstanding debts.
Common reasons include:
- Past-due federal or state taxes
- Student loan debt (in default)
- Child support arrears
- Other federal debts
Instead of receiving your refund, it is applied to the balance you owe.
How You’ll Know
If your refund is offset, you will typically receive a notice explaining:
- The amount of the original refund
- The amount applied to the debt
- The agency that received the payment
Important Tip: the IRS does not control all offsets. If you disagree, you must contact the agency that received the funds.
2. Bank or Direct Deposit Issues
Sometimes the delay isn’t the IRS: it’s the delivery.
Common issues:
- Incorrect bank account or routing number
- Closed or inactive account
- Name mismatch on the account
If direct deposit fails, the IRS may eventually issue a paper check, but this will add weeks.
Is the IRS Holding Your Refund? Continued
3. Amended or Complex Returns
If you filed an amended return (Form 1040-X) or a complex return, processing times increase significantly.
Amended returns can take 12–16 weeks or longer.
4. Errors or Missing Information
Simple issues can slow things down:
- Math errors
- Missing forms
- Incorrect Social Security numbers
- Filing status inconsistencies
The IRS may correct the return or request clarification.
5. Identity Verification Is Required
The IRS may require identity verification before releasing your refund.
Common letters:
- 5071C
- 4883C
Until completed, your refund will not be issued.
6. Your Return Is Under IRS Review
The IRS may pause refunds for additional review due to mismatches, credits, or unusual changes.
What Should You Do Right Now?
- Check Where’s My Refund
- Watch your mail
- Respond promptly
- Don’t file a second return
Need Help Figuring It Out?
If your refund is delayed, reduced, or offset, I can help you understand what’s happening.
Questions? Let’s Talk. Free consultation available.
This article is for informational purposes only and should not be considered tax advice. Please contact GurelCPA directly for personalized guidance.
IRS Business Tax Account: What It Is and Why Every Business Should Use It
If you own a business, the IRS has quietly rolled out one of the most important tools in years: the IRS Business Tax Account.
This isn’t just another IRS webpage; it’s a secure online portal that gives you direct access to your business tax information. For many business owners, it can replace hours of phone calls, paperwork, and guesswork.
Let’s break down what it is, what it does, and why you should care.
What Is the IRS Business Tax Account?
The IRS Business Tax Account (BTA) is a self-service online platform that allows business owners and authorized users to view and manage their federal tax information in one place.
Think of it as your business’s IRS dashboard: similar to online banking, but for taxes.
What Can You Do With a Business Tax Account?
1. View Your Balance and Payment History – See what you owe, track payments, and monitor outstanding liabilities in real time.
2. Make and Manage Payments – Make federal tax deposits, pay balances, schedule future payments, and cancel payments all in one place.
3. Access Tax Records and Transcripts – Download tax return transcripts, account transcripts, and compliance reports.
4. Read IRS Notices Online – View IRS notices digitally and track correspondence without waiting for mail.
5. Manage Who Has Access – Add or remove authorized users and control access levels to your business tax data.
6. Approve Third-Party Requests – Approve or reject lender requests for tax information directly inside your account.
Why This Matters
Faster answers, better financial control, fewer surprises, and alignment with the IRS’s ongoing shift toward digital systems.
Important Limitations
The system is still evolving, and access varies depending on your business structure and role.
Bottom Line
The IRS Business Tax Account is becoming an essential tool for business owners, offering real-time visibility and improved control.
Questions? Let’s Talk!
If you’d like help setting up your IRS Business Tax Account or understanding how to use it effectively, please contact me directly. I offer a free consultation to get you started.
This article is for informational purposes only and should not be relied upon as tax advice. Please contact me directly to discuss how this applies to your individual tax situation.
Filing and Paying Are Two Separate Obligations
The IRS treats these as two different responsibilities, and the penalties are very different.
Failure-to-File Penalty
If you do not file your tax return on time, the IRS can assess a penalty of 5% of the unpaid tax per month, up to a maximum of 25%.
Failure-to-Pay Penalty
If you file on time but cannot pay the tax immediately, the penalty is much smaller — generally 0.5% per month of the unpaid balance. Interest also accrues on the unpaid tax.
Because the failure-to-file penalty is ten times larger, the first priority should always be: File the return on time.
An Extension Gives You More Time to File , Not More Time to Pay
Some taxpayers think filing an extension solves the problem.
It doesn’t.
A standard extension moves the filing deadline to October, but the tax is still due April 15.
There are limited exceptions for certain taxpayers overseas or members of the military in specific circumstances, but for most people the payment deadline does not change.
This article is for general informational purposes only and should not be considered tax advice. Every taxpayer’s situation is different. If you need help filing your return or setting up an IRS payment plan, contact GurelCPA to discuss your situation and schedule a free consultation.
Can’t Pay Your Taxes by April 15? File Anyway, Then Set Up a Payment Plan
Every tax season, many taxpayers find themselves in the same stressful situation:
You’ve finished preparing your tax return… and the numbers show that you owe more tax than you can afford to pay right now.
If that happens, the most important thing to understand is this:
You should still file your tax return on time — even if you cannot pay the amount due.
Failing to file your return creates a much larger problem than failing to pay the tax.
The Best Solution: Set Up an IRS Payment Plan
If you cannot pay the full amount when you file, the IRS offers a practical solution: an installment agreement.
In most cases, taxpayers can apply online in just a few minutes. The IRS generally allows payment plans of up to 60 months (five years).
That means the balance due can be spread across monthly payments that fit your budget.
How the IRS Payment Plan Works
1. File your tax return on time.
2. Apply for an IRS Online Payment Agreement.
3. Choose a monthly payment amount that will pay the balance within 60 months.
4. Set up automatic monthly payments from your bank account.
The Bottom Line
If you cannot pay your taxes by April 15:
• File your tax return on time
• Pay as much as you can
• Set up an IRS payment plan for the remaining balance
In most cases, the process is straightforward and can make a difficult tax bill much easier to manage.
Key Benefits of an IRS Online Account
Once inside your account, you can:
- View tax transcripts
- Check balances and payments
- Review IRS notices
- Set up or manage payment plans
It’s essentially a window into what the IRS sees about your tax situation.
.
How to Set It Up (Takes Just Minutes)
1. Go to IRS.gov
2. Sign in or create your account
3. Verify your identity
4. Access your records immediately
Bottom Line for April 14
If you’re missing documents today:
Don’t wait
Don’t guess
Don’t skip filing
Check your IRS Online Account, pull your transcripts, and move forward.
Questions? Let’s Talk!
If you need help reviewing your transcript, filling in missing information, or deciding how to proceed before the deadline, I’m happy to help.
Feel free to contact me to schedule a free consultation.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
April 14 Reminder: Missing Tax Documents?
Check Your IRS Online Account
With the filing deadline just one day away, many taxpayers are realizing they are still missing key tax documents like W-2s or 1099s.
If that’s you, don’t panic — and don’t delay filing.
Instead, one of the fastest ways to move forward is to access your IRS Online Account and review your IRS transcripts.
Why This Matters Right Now
As we approach April 15, waiting on mailed documents can put you at risk of:
- Filing late
- Filing inaccurately
- Or not filing at all
The IRS already has copies of most of your income documents and you can often see them immediately through your account.
What You Can Do Today
By creating (or logging into) your account, you can access your:
Wage & Income Transcript
This is the key report if you’re missing documents.
It may include:
- W-2s from employers
- 1099s (NEC, INT, DIV, etc.)
- Other reported income
If you’re missing a form, this transcript can often provide the numbers needed to file.
Important Limitation to Know
Wage & income transcripts are typically not fully complete until later in the year.
However:
- Many forms are already available by April
- Partial data is often better than waiting and missing the deadline
If something is missing, you can still file using available information and correct later if needed.
Why Filing Still Matters (Even If It’s Not Perfect)
Filing on time helps you:
- Avoid the failure-to-file penalty
- Stay compliant with IRS requirements
- Keep options open (like payment plans)
If you owe but can’t pay, you can still file and set up an installment agreement later.
U.S. Tax Filing When You’re Affected by Armed Conflict
What Americans Overseas Need to Know
The United States taxes its citizens on their worldwide income, regardless of where they live.
Even during times of political instability or armed conflict, most Americans overseas must still file a U.S. tax return. However, the IRS does recognize that conflicts and emergencies can disrupt normal life, and there are special rules and relief provisions that may apply.
Americans Overseas Still Have Filing Requirements
If you are a U.S. citizen or resident alien living abroad, you generally must file a federal income tax return if your income exceeds the normal filing thresholds.
This applies even if:
• You live in a country experiencing armed conflict
• Your income is earned entirely outside the United States
• You plan to exclude income using the Foreign Earned Income Exclusion (FEIE) or claim a Foreign Tax Credit
In most cases, the IRS still requires a return to be filed in order to claim those benefits.
Automatic Filing Extensions for Americans Abroad
Americans living outside the United States automatically receive a two‑month extension to file their tax return.
Instead of the usual April 15 deadline, taxpayers abroad typically have until June 15 to file. Interest still accrues on unpaid tax after April 15, but the filing deadline itself is extended.
Additional extensions can be requested if needed.
Questions? Let’s Talk.
If you have questions about U.S. tax filing requirements while living abroad or during periods of political instability or armed conflict, please contact us for a free consultation to discuss your specific situation.
This article is for informational purposes only and should not be considered tax advice. Every taxpayer’s situation is unique, especially for Americans living overseas.
Special IRS Relief for Conflict Zones
When armed conflicts significantly disrupt a region, the IRS sometimes announces special tax relief for affected taxpayers.
This relief may include:
• Extended filing deadlines
• Extended payment deadlines
• Waiver of certain penalties
• Additional time for compliance with reporting requirements
Each situation is different, and relief is usually announced on a case‑by‑case basis.
Combat Zone Rules for Military Personnel
Separate rules apply to members of the U.S. Armed Forces serving in designated combat zones.
Military personnel may receive:
• Extended tax filing deadlines
• Exclusion of certain combat pay from taxable income
• Suspension of certain IRS deadlines during deployment
These provisions are designed specifically for active military service members and typically do not apply to civilians living in the same region.
If Conflict Has Disrupted Your Records
In many conflict situations, taxpayers may lose access to financial records, bank statements, or employment documents.
If this happens, the IRS generally allows taxpayers to:
• Reconstruct income records
• Request copies from financial institutions
• File amended returns later if necessary
The most important step is to stay compliant with filing requirements whenever possible.
Don’t Wait too Long to File for
a Tax Refund
When it comes to claiming a refund from the IRS, there’s an important deadline every taxpayer should know: you can lose your refund forever if you wait too long.
There is a Legal Deadline
The IRS sets a legal deadline for how long a taxpayer can claim a refund or credit. In most cases, the deadline is the latter of:
• Three years from the date you filed your original tax return, or
• Two years from the date you paid the tax.
Since the original due date for a 2022 tax return was April 15, 2023, a taxpayer has until April 15, 2026 to claim a refund.
If you miss this deadline, the IRS generally will not issue a refund, even if you overpaid.
Many taxpayers lose refunds simply because they wait too long to file a return or amend a prior one. Once the statute expires, the refund is permanently forfeited to the U.S. Treasury.
Important Notes:
• Filing an original return counts as a refund claim.
• Amended returns must also be filed within the same deadline.
• Certain disaster relief or special circumstances may extend deadlines.
This article is for informational purposes only and does not constitute tax advice. Record-retention needs vary based on individual circumstances. Please contact me for a free consultation if you have questions about your individual tax situation.
New $6,000 Senior Deduction Offers Major Tax Relief for Older Americans
A significant change in federal tax law is set to benefit many Americans age 65 and older beginning with the 2025 tax year (filed in 2026). A new federal deduction of up to $6,000 is now available to qualifying seniors, potentially reducing taxable income and overall tax liability.
What is the $6000 Senior Deduction?
Eligible taxpayers age 65 or older may claim an additional federal deduction of up to $6,000 on their income tax return. This deduction is available in addition to the standard deduction or itemized deductions.
Who Qualifies?
• Taxpayers who are age 65 or older by the end of the tax year
• Married couples may qualify for up to $12,000 if both spouses are age 65 or older
• Must have a valid Social Security number
• Subject to income phase‑out limits
Income Phase-Outs
The deduction begins to phase-out based on modified adjusted gross income (MAGI):
• Single filers: phase‑out begins at $75,000
• Married filing jointly: phase‑out begins at $150,000
Higher‑income taxpayers may see a reduced or eliminated benefit.
Why This Matters
This deduction may significantly lower taxable income for seniors and, in some cases, reduce the amount of Social Security benefits subject to tax. It may also help retirees stay in a lower tax bracket.
Questions? Let's Talk!
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
More Languages, Better Access: Tax Help with the IRS Alternative Media Center
Most taxpayers think of the IRS as forms, deadlines, and notices—but not accessibility.
What many people don’t realize is that the IRS has an entire division dedicated to making tax information easier to understand and more widely available: the Alternative Media Center (AMC).
For taxpayers who need or prefer information in different formats or languages, this resource can be incredibly valuable.
WHAT IS THE IRS ALTERNATIVE MEDIA CENTER?
The IRS Alternative Media Center is designed to make tax information accessible to a broader audience.
It provides tax forms, publications, and educational materials in multiple formats and languages, helping taxpayers who may have visual impairments, language barriers, or different learning preferences.
The goal is simple: make sure everyone has access to the information they need to meet their tax obligations.
WHAT TYPES OF MATERIALS ARE AVAILABLE?
The AMC offers IRS forms and publications in alternative formats, including:
- Text-only versions
- Braille-ready files
- Large print documents
- Accessible PDFs
- Browser-friendly HTML formats
These formats are designed to work with assistive technologies such as screen readers and voice recognition software.
Taxpayers can also request IRS notices in formats such as Braille, large print, audio, or electronic delivery by submitting Form 9000 (Alternative Media Preference).
WHAT ABOUT DIFFERENT LANGUAGES?
The IRS continues to expand access for multilingual taxpayers.
Many materials are available in:
- Spanish
- Chinese (Simplified and Traditional)
- Korean
- Vietnamese
- Russian
- Haitian Creole
And more languages continue to be added over time.
IRS VIDEOS AND VISUAL CONTENT
The IRS also produces educational videos, including a library of American Sign Language (ASL) content covering topics like tax credits, refunds, identity protection, and filing requirements.
WHO SHOULD BE PAYING ATTENTION TO THIS?
This resource can be useful for:
- Taxpayers who prefer information in their native language
- Seniors who benefit from large print materials
- Individuals who learn better through video or audio
- Nonprofits serving diverse communities
- Tax professionals working with multilingual clients
WHY THIS MATTERS
Clear and understandable information leads to better decisions—and fewer mistakes.
For nonprofits, international taxpayers, and underserved communities, this can make a meaningful difference.
HOW TO ACCESS THESE RESOURCES
Taxpayers can download materials from IRS.gov, request alternative formats, set preferences for future notices, or contact the IRS Accessibility Helpline.
This article is for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation and would be happy to help.
What Does "Automatic" Really Mean?
You do not need to file a specific form or call the IRS to "prove" you deserve the extra time. That isn't the case here.
- No Paperwork Required: The IRS computer systems automatically identify taxpayers located in the covered disaster area and apply filing and payment relief.
- Payment is Included: Unlike a standard extension (which only gives you more time to file), a disaster extension typically applies to both filing and payment. This means you have until May 1 to pay any balance due without facing late fees.
- Applies to Estimates & IRAs: This relief also extends to your 2026 first-quarter estimated tax payments and your 2025 contributions to IRAs and Health Savings Accounts (HSAs).
Why You Shouldn't Rush
If you live in one of these counties, rushing to meet the April 15th date can lead to overlooked deductions or simple data-entry errors.
With the new tax provisions affecting tips and overtime this year, taking that extra time can ensure your return is accurate and your refund is maximized.
The Bottom Line
Don't let the April 15th calendar date cause unnecessary stress if you reside in a disaster-declared zone. You have the legal right to that extra time—use it to ensure your filing is handled correctly.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
You Already Have an Automatic IRS Extension if you live in an IRS Disaster Zone
As the April 15th deadline approaches, the annual "tax panic" is in full swing. However, for many taxpayers in Washington, Montana, and Alaska, there is a good chance you are rushing unnecessarily.
Due to recent federal disaster declarations, the IRS has granted automatic extensions to millions of taxpayers. If you live or own a business in a designated county, your deadline has already been pushed back to May 1, 2026.
The most important thing to understand? You do not have to be "personally" impacted by the disaster to qualify. If your address of record is in a covered county, the extension is yours automatically.
Is Your County on the List?
The IRS provides this relief to entire regions to ensure that the community has time to recover without the added stress of a tax deadline. Below are the areas currently granted an automatic extension to May 1, 2026:
State Covered Counties & Regions
Washington:
17 Counties, including King, Pierce, Snohomish, Skagit, and Whatcom
Montana:
Carbon and Stillwater Counties, plus the Blackfeet Indian Reservation
Alaska:
Specific regions designated following the remnants of Typhoon Halong
Not sure if your specific location is covered?
We stay on top of every IRS notice so you don't have to. At Gurelcpa.com, we can verify your status and help you navigate the nuances of disaster-related tax relief.
Stop the rush and reach out to us today for a clear, professional guidance.
No Tax on Tips and Overtime: Check Your W-2
You’ve probably heard the headlines: “No tax on tips” and “No tax on overtime.”
For 2025, this is real—and the most important thing to know is this:
👉 The information is already on your W-2.
What “No Tax” Actually Means
These are not full tax exemptions.
Instead, they are above-the-line deductions that reduce your federal taxable income:
- Tips: Up to $25,000 may be deductible
- Overtime: The premium portion (the “half” in time-and-a-half) may be deductible
- Up to $12,500 (single)
- Up to $25,000 (married filing jointly)
⚠️ You still pay Social Security and Medicare (FICA) taxes on this income.
It’s Already on Your W-2
You don’t need to dig through paystubs—this is the big change.
Look at your W-2:
- Box 7 → Reported tips
- Box 14 → Often shows “Qualified Overtime” or “OT Premium”
- Box 12 → Some employers are starting to use new reporting codes
👉 Your employer has already done much of the tracking for you.
Why This Matters
Just because it’s on your W-2 doesn’t mean it’s handled correctly on your tax return.
We’re already seeing:
- unclear Box 14 descriptions
- missed overtime premium calculations
- deductions not fully applied
The Bottom Line
If you earned tips or overtime, your W-2 may unlock real tax savings—but only if it’s used correctly.
Questions? Let’s Talk
Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation and would be happy to help you make sure you’re not leaving money on the table.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique.
The IRS Is Targeting FBAR Non-Filers and Technology is Helping Them
Many taxpayers assume that if no tax is due, there is nothing to worry about. That assumption can be costly when it comes to the FBAR.
The Foreign Bank Account Report (FinCEN Form 114) is not a tax return. There is no tax calculated and no payment submitted. It is simply an information report. But the penalties for failing to file can be significant, and the IRS has made FBAR non-filers an explicit enforcement priority.
Why the FBAR Exists
The FBAR requirement comes from the Bank Secrecy Act and is designed to combat money laundering, terrorist financing, tax evasion, and other illicit financial activity.
It gives the U.S. government visibility into foreign financial accounts held by U.S. persons.
If your foreign accounts exceed $10,000 in total at any point during the year even for one day, an FBAR is required.
The IRS Has Publicly Elevated FBAR Enforcement
In recent compliance strategy announcements, the IRS has specifically identified offshore reporting and FBAR non-filers as focus areas.
With increased funding and renewed attention to high-balance foreign accounts, offshore compliance is now part of the IRS’s active enforcement agenda.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique. Contact me directly to discuss your specific circumstances.
Technology Has Changed the Risk
Foreign financial institutions report account data under FATCA. International information-sharing agreements are widespread. The IRS uses advanced data analytics to identify mismatches and potential non-filers.
In many cases, the government already has access to the underlying account information.
The Penalties and the Six-Year Lookback
There is a six-year statute of limitations for assessing FBAR penalties. That means the government can review up to six years of potential non-compliance.
Penalties can apply even when the failure was non-willful. Willful violations carry much more severe consequences.
The filing itself is generally straightforward. The penalties are not.
There Is a Way to Correct Past Non-Filing
Questions? Let’s Talk.
If you have foreign accounts and want to ensure you are fully compliant — or need to file back FBARs — contact me for a confidential strategy call to determine the best path forward.
What About Self-Employed Retirement Plans?
If you are self-employed, certain plans allow contributions after year-end:
- SEP-IRA: Contributions can typically be made up to the tax filing deadline, including extensions.
- Solo 401(k): Employee deferrals must be elected by year-end, but employer contributions can be made up to the filing deadline.
Contribution Limits Still Apply
Even though you have extra time, the annual contribution limits do not change.
Important: Designate the Correct Tax Year
When making a contribution between January 1 and April 15, you must tell the custodian which year the contribution is for.
Why This Matters
This strategy can be especially valuable if:
- Your income was higher than expected last year
- You owe more tax than anticipated
- You want to boost retirement savings while reducing taxes
Final Thought
Too often, taxpayers assume tax planning ends on December 31. In reality, there’s still a window of opportunity—and IRA contributions are one of the easiest ways to take advantage of it.
Questions? Let’s Talk.
Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation to review your options and help you make the most of available tax strategies.
Still Time to Lower Your Taxes: IRA Contributions Before April 15
Many taxpayers think the opportunity to reduce last year’s tax bill ended on December 31. That’s not always true.
If you haven’t fully funded your retirement account, you may still have time to make a contribution up to April 15 and have it count for the prior tax year.
That’s one of the most overlooked tax planning opportunities available.
How It Works
The IRS allows certain retirement contributions made between January 1 and April 15 to be designated for the previous tax year.
For example: A contribution made on March 20 can still count as a prior-year IRA contribution—as long as you clearly designate it that way with your financial institution.
This can:
- Reduce your taxable income (Traditional IRA)
- Increase tax-free retirement savings (Roth IRA)
- Potentially improve eligibility for other tax benefits
Which Retirement Accounts Qualify?
This rule primarily applies to Individual Retirement Accounts (IRAs):
Eligible:
- Traditional IRA
- Roth IRA
Not Eligible:
- Employer plans like 401(k), 403(b), 457 plans
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Do You Need to File an FBAR?
Many U.S. citizens living outside the United States are surprised to learn that filing a tax return may not be their only reporting obligation. In addition to your federal income tax return, you may also need to file something called an FBAR.
You must file an FBAR if the combined total of your foreign financial accounts exceeded $10,000 at any time during the year.
What Is an FBAR?
FBAR stands for Foreign Bank Account Report. The official name is FinCEN Form 114, and it is filed electronically with the U.S. Treasury — not with your tax return.
It does not matter if:
• The balance only exceeded $10,000 for one day
• The funds were already taxed in another country
• You owe no U.S. income tax
If the threshold is met, the reporting requirement applies.
What Accounts Count?
Foreign financial accounts may include:
• Foreign checking and savings accounts
• Foreign investment or brokerage accounts
• Some foreign retirement accounts
• Joint accounts
• Accounts where you have signature authority
If the account is located outside the United States, it may be reportable.
Important: It’s $10,000 Combined
The $10,000 threshold applies to the total of all foreign accounts combined, not per account. If your combined balance exceeds $10,000 at any point during the year, an FBAR is generally required.
Is an FBAR a Tax?
No. The FBAR does not calculate tax and does not create tax by itself. It is strictly an informational reporting requirement. Many expats owe little or no U.S. income tax because of the Foreign Earned Income Exclusion or Foreign Tax Credit — but the reporting obligation may still exist.
What If You Didn’t Know?
Many expats miss FBAR filings simply because they were unaware of the rule. If the failure to file was non-willful, there are compliance options available to correct past years without penalties.
The Bottom Line
If you are a U.S. citizen or green card holder living abroad, it is important to determine whether FBAR reporting applies to you. If you are a U.S. taxpayer living abroad and are unsure whether you should be filing FBARs — or whether you may need to correct past filings — I invite you to contact me directly for a free initial consultation to review your situation and discuss your options.
This article is for general informational purposes only and does not constitute tax advice. FBAR requirements depend on individual facts and circumstances
What You Need to Do (Now)
If you’ve been relying on paper checks, this is your next step:
• Set up direct deposit (routing number, account number, account type)
• Provide accurate information when filing
• Double-check everything before submitting your return
No Bank Account?
You still need an electronic option. Consider a basic checking account or a prepaid debit card that accepts direct deposit.
The Bottom Line
Paper refund checks are no longer something you can rely on.
If you want your refund faster, more securely, and without delays—you must use direct deposit.
Questions? Let’s Talk
If you’re unsure how to set up direct deposit, I can help.
Please contact me directly to discuss your specific tax situation. I offer a free consultation.
IRS Has Ended Most Paper Refund Checks, Your Action is Required
If you’ve been receiving your tax refund by paper check, this is important:
The Internal Revenue Service has effectively moved away from issuing paper refund checks in most situations.
Today, direct deposit is the standard—and in most cases, expected—method for receiving your refund.
If you have not already made this change, you need to take action now to avoid delays or complications.
What This Means for You
If you file your tax return without direct deposit information, you may run into real problems:
1. Your Refund May Be Delayed
Electronic refunds are processed quickly. Returns without direct deposit can face additional handling—and slower processing.
2. Paper Checks Are Now Limited
Paper checks are no longer the default option. They are generally issued only in limited exception situations, not by choice.
3. Higher Risk of Issues
If a check is issued, it can be lost, stolen, sent to an outdated address, and take weeks—or longer—to resolve.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Self-employed & Gig Workers? Rule One: Keep Good Records
If you’re self-employed, one of the most important habits you can build is keeping good records.
But here’s the problem: some people think they need complicated software or a perfect system to get started. You don’t.
What matters most is this: you keep track of your income and expenses consistently.
Why Recordkeeping Matters
Good records help you:
- Know how much you’re actually earning
- Track your business expenses
- Prepare an accurate tax return
- Support your deductions if the IRS ever asks
If you don’t track it, you generally can’t deduct it.
It Doesn’t Have to Be Complicated
There’s no single right way to keep records.
The best system is the one you’ll actually use.
That could be a simple spreadsheet, a notebook or ledger, or accounting software like QuickBooks. All of these can work.
But doing something consistently is far more important than choosing the perfect system.
Start with the Basics
At a minimum, you should be tracking:
- Your income (what you’re paid)
- Your expenses (what you spend for your business)
Ideally, you’re updating this regularly—not trying to recreate everything at tax time.
One of the Best Habits: Separate Your Money
One of the most important steps any self-employed/small business person can do is open a dedicated business checking account.
Even for a small gig business, this can make a big difference.
Why?
- Keeps business and personal transactions separate
- Makes tracking income and expenses much easier
- Reduces errors and missed deductions
- Creates a cleaner record if you’re ever asked to support your numbers
And because it is one of the key indicators to the IRS that you have a serious business.
Keep It Simple—and Keep It Going
You don’t need a perfect system.
You don’t need expensive software.
You just need a method that fits your lifestyle—and the discipline to keep it up.
Consistency beats complexity every time.
Questions? Let’s Talk
If you’re not sure how to set up a simple system—or want help making sure you’re tracking the right things—I’m happy to help. Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation to help you get organized and stay on track.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
What Happens If You Don’t Pay?
If you wait until you file your tax return in April of the following year, you may owe an underpayment penalty.
This is essentially interest charged by the IRS for paying too late—even if you file and pay in full.
How to Avoid the Penalty
You can generally avoid penalties if you pay:
- At least 90% of your current year tax, or
- 100% of your prior year tax (110% for higher-income taxpayers)
A Simple Rule of Thumb
Looking for a suggestion of where to start. For most self-employed/gig workers, a good guide is 25% to 30% of their net income for taxes.
This isn’t exact, but it’s a good starting point.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique.
Gig Workers: Do You Need to Make Quarterly Tax Payments?
If you’re new to self-employment, there’s one issue that catches almost everyone off guard: no taxes are being withheld from your income.
But the IRS wants to start collecting the tax bill that you are accumulating throughout the year as you owe it. It’s like they think, “Once you owe it, it’s ours.”
That means it’s up to you to pay your taxes throughout the year.
Why Quarterly Payments Matter
When you work for an employer, taxes are withheld automatically. As a self-employed person: no automatic withholding.
You are responsible for paying your own taxes as you earn income.
What Are Quarterly Estimated Payments?
The IRS expects you to pay taxes throughout the year, not just in April. These payments are typically due the last day of April. June, September, and January (following year)
They cover what you owe for Income tax and Self-employment tax (Social Secuity & Medicare - 15.3%)
Bottom Line
If you’re earning income without withholding, you likely need to make quarterly payments.
Questions? Let’s Talk.
Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation to help you get started the right way.
The Part That Surprises Most Gig Workers: Self-Employment Tax
In addition to income tax, you also pay self-employment tax. This covers Social Security and Medicare. The rate is 15.3% on your net business income.
This is separate from your regular income tax. When you work for an employer, they pay half of these taxes for you. When you’re self-employed, you pay both halves.
How Profit Is Calculated
Here’s a simple example:
- You earn: $50,000
- You have expenses: $20,000
- Your net income: $30,000
You are taxed on $30,000, not $50,000.
Where That Profit Shows Up
Your net income from Schedule C flows directly into your Form 1040. It becomes part of your total taxable income, just like wages from a job.
Why Expenses Matter
Your business expenses directly reduce the amount of income you are taxed on. So, the more accurately you track and report your expenses, the lower your taxable income may be.
We’ll go into detail on what counts as a business expense in a follow-up article—but for now, just know: expenses reduce your profit, and your profit is what gets taxed.
Gig Workers: You’re Taxed on Net Profit, Not Gross Income
If you’re new to self-employment—whether driving, freelancing, consulting, or selling online—your taxes work very differently from a traditional job.
One of the most important things to understand is you are not taxed on your total income. You are taxed on your profit.
Schedule C: Where Your Business Income Is Reported
Most gig workers report their business activity on Schedule C, which is filed with your individual tax return (Form 1040).
On Schedule C, you report your total income (what you were paid) and your business expenses. The difference between those two is your net income, also called your profit.
The Bottom Line
You’re taxed on what you keep—not what you earn.
But you are responsible for Income tax and Self-employment tax (15.3%). And both are based on your net income.
Questions? Let’s Talk
Starting out as a gig worker can feel overwhelming, but getting the basics right makes a big difference.
Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation to help you get started the right way.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Gig Workers & Self-employed:
Two of the Biggest Tax Deductions, Mileage and the Home Office
For many gig workers, two of the largest tax deductions are also two of the most misunderstood: vehicle expenses and the home office deduction.
Understanding these rules and keeping good records can make a significant difference in your tax bill.
Standard Mileage Rate vs. Actual Vehicle Expenses
If you use your vehicle for business, you may be able to deduct those costs. In most cases, you generally have two methods available.
Option 1: Standard Mileage Method
With this method, you track your business miles driven and multiply them by the IRS standard mileage rate for the year.
Benefits:
• Simpler and easier to manage
• Requires consistent mileage tracking
• Often works well for high-mileage drivers with lower operating costs
The key is maintaining a reliable mileage log showing:
• Date
• Business purpose
• Destination
• Miles driven
Option 2: Actual Expense Method
With this method, you track the actual cost of operating your vehicle, including:
• Gas
• Insurance
• Repairs and maintenance
• Registration and licensing
• Tires
• Depreciation or lease costs
You then deduct the business-use percentage of those expenses.
Benefits:
• May produce a larger deduction for expensive vehicles or vehicles with high operating costs
• Can be beneficial for lower-mileage drivers with substantial vehicle expenses
Drawbacks:
• Requires significantly more recordkeeping
• Requires separating personal and business use carefully
Which Vehicle Method Is Better?
It depends on your individual situation.
In general:
• High mileage + lower-cost vehicle → the mileage method often produces a strong deduction
• Higher-cost vehicle or high operating expenses → actual expenses may provide greater tax savings
One important issue many taxpayers do not realize:
Your choice during the first year a vehicle is used for business can affect which methods are available in future years. That makes it important to evaluate the options carefully from the beginning.
The Home Office Deduction
Many gig and self-employed workers also qualify for a home office deduction, but this area is frequently misunderstood.
The Key Rule: Regular and Exclusive Use
To qualify, part of your home must be used:
• Regularly for business
• Exclusively for business
That generally means a dedicated workspace used only for your business activities.
A spare bedroom converted into an office may qualify.
A kitchen table used for both personal and business activities generally does not.
What Expenses May Be Deductible?
If you qualify, you may be able to deduct a portion of:
• Rent or mortgage interest
• Utilities
• Internet
• Homeowners insurance
• Home maintenance and repairs
The deduction is generally based on the percentage of your home used for business.
Why These Deductions Matter
For many gig and self-employed workers, these are among the largest opportunities to reduce taxable income.
They are also areas where mistakes commonly occur:
• Not tracking mileage consistently
• Choosing the wrong vehicle deduction method
• Claiming a home office that does not meet IRS requirements
• Mixing personal and business expenses
Handled correctly, these deductions can substantially reduce taxes.
Handled poorly, they can create problems during an IRS review.
Good Records Matter
The IRS expects taxpayers to maintain documentation supporting deductions claimed on a tax return.
That typically includes:
• A mileage log
• Receipts and expense records
• Documentation supporting business use
• Clear separation between personal and business activities
Good recordkeeping is often what determines whether a deduction survives scrutiny.
Questions? Let’s Talk!
If you are unsure which vehicle deduction method makes the most sense — or whether your home office qualifies — it is worth getting guidance before filing.
Please contact me directly to discuss your individual situation. I offer a free consultation to help gig workers and self-employed taxpayers understand their options and avoid costly mistakes.
This article is for general informational purposes only and should not be considered tax or legal advice. Every tax situation is different. Contact GurelCPA for a free consultation.
Retirement Income Is Fully Taxable Under Standard Rules
Distributions from retirement accounts are treated the same way they would be in the U.S.:
- Traditional IRA and 401(k) withdrawals are generally taxable
- Pension income is typically taxable
- Required Minimum Distributions (RMDs) still apply
There is no special exclusion simply because you live overseas.
Important: This Income Does NOT Qualify for the Foreign Earned Income Exclusion
The Foreign Earned Income Exclusion (FEIE) applies only to earned income, such as wages and self-employment income.
It does not apply to Social Security, pensions, IRA or 401(k) distributions, or investment income. If you are retired, FEIE generally does nothing to reduce your U.S. tax liability
Common Misconception
“I live overseas now, so my retirement income isn’t taxable in the U.S.”
This is incorrect. Your U.S. tax obligations on retirement income remain largely unchanged.
Questions? Let’s Talk.
If you’re living abroad — or planning to — and want clarity on how your retirement income will be taxed, I can help you understand your obligations and avoid surprises.
Contact GurelCPA for a tax strategy session; let’s make sure your retirement tax strategy is handled correctly.
Living Abroad in Retirement? Your U.S. Taxes Don't Change
Many U.S. taxpayers assume that once they move overseas — especially in retirement — their U.S. tax obligations will decrease or even disappear.
Unfortunately, that’s not how it works.
If you’re a U.S. citizen living abroad, your retirement income and Social Security are generally taxed the same as if you were living in the United States.
U.S. Taxes Follow You — Even in Retirement
That means the following are still subject to U.S. tax rules:
- Social Security benefits
- Pension income
- IRA distributions
- 401(k) withdrawals
Living overseas does not change how these types of income are taxed by the U.S.
Social Security Is Still Taxable
Many retirees are surprised to learn that Social Security benefits can still be taxable — even while living abroad.
The same rules apply as if you were living in the U.S. Depending on your total income, up to 85% of your Social Security benefits may be taxable
Your location does not change this calculation.
Bottom Line
- U.S. citizens abroad are taxed on retirement income just like U.S. residents
- Social Security may still be taxable (up to 85%)
- Retirement distributions remain taxable under standard rules
- The Foreign Earned Income Exclusion does not apply
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique. Please contact GurelCPA directly to discuss your specific circumstances and receive personalized guidance.
IRS Fresh Start Program: What It Is and How It Can Help You
If you owe money to the IRS, it can feel overwhelming, but you do have options.
The IRS offers a group of relief programs commonly referred to as the Fresh Start Program, designed to help taxpayers resolve their tax debt in a structured and manageable way. The key is choosing the right one for your individual tax situation.
What Is the IRS Fresh Start Program?
The Fresh Start Initiative is not a single program. It’s a collection of IRS tools that make it easier to:
- Set up monthly payment plans
- Reduce or eliminate certain penalties
- Settle tax debt in cases
- Avoid aggressive IRS collection actions
The IRS is willing to work with you—but only if you act.
Your Main Options
1. Installment Agreements (Payment Plans)
- Pay your balance over time, usually up to 72 months
- Predictable monthly payments
- Can usually be set up online
Best for taxpayers who can pay over time but not all at once.
2. Offer in Compromise (Settle for Less)
- Allows you to settle your tax debt for less than the full amount owed
- Based on income, expenses, assets, and ability to pay
Best for taxpayers who cannot realistically pay the full balance.
3. Penalty Relief
- First-time penalty abatement
- Relief for reasonable cause
Available for taxpayers with strong compliance history or a valid hardship.
4. Currently Not Collectible (CNC)
- Temporarily pauses IRS collections
- Provides short-term relief
Best for taxpayers facing financial hardship.
Even if you can’t pay, you should file.
There are penalties for not filing a tax return IN ADDITION TO the penalties for not paying you tax on time. Don’t make things worse by not filing a tax return. Ignoring the IRS will not make them go away.
Questions? Let's Talk
If you’re dealing with IRS tax debt, I can help you:
- Evaluate which option is best for your situation
- Set up a payment plan or resolution strategy
- Communicate with the IRS on your behalf
A short conversation can often make things much clearer. Contact me today for a free consultation and let’s put a plan in place.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique. Please contact GurelCPA directly for personalized guidance and to discuss your specific circumstances.
Tax-Time Scammers in Your Neighborhood
How a Little Community Awareness Can Prevent Tax-Time Scams and Bad Advice
Tax season can be stressful for many people. For some members of our community, it can also be confusing, intimidating, or even risky.
Every year, taxpayers lose money to scams, misleading tax advice, and unqualified tax preparers. While the IRS and tax professionals work to prevent fraud, one of the most effective protections is something much simpler: neighbors looking out for neighbors.
If you know someone in your community who may need a little extra support during tax season, a small act of awareness could help them avoid serious problems.
Who May Be More Vulnerable During Tax Season
Some taxpayers face additional challenges when it comes to taxes. These can include:
- Older adults who may not use online tools or understand newer tax rules
- Recent immigrants who are still learning how the U.S. tax system works
- Neighbors who do not speak English as their first language
- Individuals with limited internet access
- People experiencing financial stress or sudden life changes
Unfortunately, these taxpayers are often targeted by scammers or may rely on questionable tax preparers who promise large refunds.
Signs Someone May Be Getting Bad Tax Advice
Sometimes the warning signs are subtle. A few things that may indicate someone is receiving risky or misleading tax advice include:
- Being promised “guaranteed large refunds”
- Being told to claim credits they don’t understand
- A preparer who refuses to sign the tax return
- A preparer who charges fees based on the size of the refund
- A preparer who wants the refund sent to their own bank account first
If something sounds too good to be true, it often is.
This article is for informational purposes only and should not be considered tax advice. Every taxpayer’s situation is different. For advice regarding your specific situation, please contact GurelCPA for a free consultation.
Simple Ways Neighbors Can Help
You don’t need to be a tax expert to help someone avoid trouble. Sometimes the most helpful thing you can do is simply point someone toward reliable information.
Here are a few ways neighbors can support each other during tax season:
- Encourage people to use qualified tax professionals such as CPAs or Enrolled Agents
- Share reliable information sources like IRS resources
- Offer help translating or explaining basic tax correspondence
- Encourage people to ask questions before signing a tax return
Tax Fraud Often Starts With Isolation
Many tax scams succeed because the victim feels embarrassed or unsure who to ask for help. Community awareness can make a real difference.
A simple comment such as, “If you have tax questions, make sure you talk to a qualified preparer,” can help someone avoid losing hundreds or even thousands of dollars.
Taxes Are Complicated — And That’s Okay
The U.S. tax system is complicated even for professionals who work with it every day. No one should feel embarrassed about asking questions or seeking help.
When neighbors look out for each other, communities become a little safer — even during tax season.
Questions? Let's Talk
Charity Bunching: A Smart Tax Strategy for Charitable Donors
Many taxpayers give to nonprofits every year because they believe in supporting organizations whose missions match their values. What many people don’t realize is that the timing of those donations can affect whether they receive a tax benefit for their generosity.
A strategy called “charity bunching” can help taxpayers maximize their charitable deductions while still supporting the organizations they care about.
What Is Charity Bunching?
Charity bunching means concentrating multiple years of charitable donations into a single tax year so that you can itemize deductions in that year.
Instead of donating the same amount every year, a taxpayer might combine two or three years of donations into one year, itemize deductions that year, and take the standard deduction in the following years.
This allows taxpayers to increase their total deductions over time while continuing to support the organizations they care about.
Why Some Charitable Donations Don’t Produce a Tax Deduction
Since the standard deduction increased in recent years, fewer taxpayers itemize deductions on their tax returns.
For many households, the standard deduction is roughly:
Single: about $15,000
Married Filing Jointly: about $30,000
Taxpayers who are age 65 or older may also qualify for an additional $6,000 senior deduction, which raises the threshold even further. This means a married couple where both spouses qualify for the senior deduction could potentially have a standard deduction approaching $42,000.
To benefit from charitable contributions on a tax return, total itemized deductions must exceed the standard deduction.
Itemized deductions typically include:
Mortgage interest
State and local taxes (subject to a $40,000 SALT cap)
Charitable contributions
Certain medical expenses
Because the standard deduction can now be quite high, especially for seniors, many taxpayers find that their charitable donations do not actually change their tax result because they do not itemize.
Example for a Typical Household
Suppose a married couple has the following deductions:
State and local taxes: $20,000
Mortgage interest: $7,000
Charitable donations: $5,000 per year
Their itemized deductions would be:
$20,000 + $7,000 + $5,000 = $32,000
Because the standard deduction for married couples is around $30,000, the tax benefit from itemizing is relatively small.
But if they bunch two years of donations into one year, their deductions would be:
SALT: $20,000
Mortgage interest: $7,000
Charitable donations: $10,000
Total itemized deductions: $37,000
Now the difference between itemizing and taking the standard deduction becomes more meaningful.
In the following year, they could simply take the standard deduction.
Example for Seniors
Now consider a married couple both over age 65.
Their standard deduction could approach $42,000 once the additional senior deduction is included.
Suppose their annual deductions are:
State and local taxes: $20,000
Mortgage interest: $5,000
Charitable donations: $6,000
Total itemized deductions:
$20,000 + $5,000 + $6,000 = $31,000
Because their standard deduction is about $42,000, they would not itemize and their charitable donations would not produce any additional tax benefit.
However, if they bunch three years of charitable donations into one year, their deductions would become:
SALT: $20,000
Mortgage interest: $5,000
Charitable donations: $18,000
Total itemized deductions: $43,000
Now they exceed the standard deduction and can receive a tax benefit from their charitable giving.
Using a Donor-Advised Fund
One concern people have about bunching donations is that charities often rely on steady annual contributions. A helpful solution is a Donor-Advised Fund (DAF).
With a donor-advised fund, a taxpayer can:
Make a larger charitable contribution in one year and claim the tax deduction.
Place the funds in the donor-advised account.
Recommend grants to charities over several future years.
This allows donors to maintain steady support for nonprofits while still using the tax advantages of bunching.
Final Thoughts
Tax law often creates opportunities for taxpayers who plan ahead. Charity bunching is one example of how thoughtful timing of charitable donations can increase the tax benefit of giving without reducing support for the organizations doing important work.
If you regularly donate to charitable organizations, it may be worth reviewing whether a bunching strategy could make your giving more tax-efficient.
This article is provided for informational purposes only and should not be considered tax advice. Every taxpayer’s situation is different. If you would like to discuss how strategies such as charity bunching may apply to your circumstances, please contact GurelCPA directly to schedule a consultation. I offer a free initial tax strategy meetings to help determine the best approach for your situation.
New to the United States? Understanding the Basics of the U.S. Tax System
Moving to U.S.?
Moving to the United States can involve many adjustments, including learning how the U.S. tax system works. Many new residents are surprised to learn that the U.S. tax system operates differently than the systems used in many other countries.
The goal of this article is to explain some of the basic ideas behind U.S. taxes so that new residents can avoid confusion and stay compliant with the law.
The U.S. Tax System Relies on Self-Reporting
One of the biggest differences in the United States is that the tax system largely relies on self-reporting.
This means taxpayers are responsible for reporting their income and calculating their taxes each year by filing a tax return. In many other countries, taxes are handled primarily through withholding by employers or by government calculation.
In the United States, most individuals must file a tax return every year if their income exceeds certain thresholds.
Filing a Tax Return
Most taxpayers file an annual federal income tax return using Form 1040.
For most individuals, the filing deadline is April 15 each year. If the deadline falls on a weekend or holiday, the due date may move to the next business day.
Even if taxes are withheld from wages during the year, filing a tax return is still usually required.
U.S. Taxes Apply to Worldwide Income
Another important concept is that the United States taxes worldwide income.
This means that taxpayers must report income earned both inside and outside the United States. For example, income may need to be reported from:
- foreign employment
- rental property located abroad
- foreign bank accounts
- investments held in other countries
There are rules and credits designed to prevent double taxation, but the reporting requirements still apply.
Identification Numbers for Tax Filing
To file a tax return in the United States, a taxpayer must have a valid identification number.
The two most common types are:
Social Security Number (SSN)
This number is issued by the Social Security Administration and is typically provided to U.S. citizens and individuals authorized to work in the United States.
Individual Taxpayer Identification Number (ITIN)
An ITIN is issued by the IRS for individuals who need to file a tax return but are not eligible for a Social Security Number.
An ITIN allows a taxpayer to comply with tax filing requirements, but it does not authorize employment or change immigration status.
This article is for informational purposes only and should not be considered tax advice. Every taxpayer’s situation is different. If you have questions about your specific tax situation, please contact GurelCPA for a consultation.
Keep Good Records
Keeping accurate records can make filing taxes much easier. Important records may include:
- wage statements (Form W‑2)
- forms reporting other income (such as 1099 forms)
- records of deductible expenses
- documentation of foreign income or assets if applicable
Good recordkeeping can also make it easier to respond if the IRS ever asks questions about a tax return.
Please Share This Information
Most of the people who read this article already understand the basics of the U.S. tax system. However, many people in our communities may still be learning how it works.
If you know someone who recently moved to the United States, or someone who may not be familiar with the U.S. tax system, please consider sharing this article with them. A little information at the right time can help someone avoid confusion, mistakes, or bad advice during tax season.
The IRS Will NOT Contact You This Way
One of the easiest ways to identify a tax scam is knowing how the IRS actually communicates with taxpayers.
The IRS generally initiates contact by mail through the U.S. Postal Service. The agency does not begin communication through:
• Email
• Text messages
• Social media messages
• Threatening phone calls demanding immediate payment
If someone contacts you claiming to be from the IRS and demands payment or sensitive information, it is almost certainly a scam.
Social Media Tax Advice Schemes
In recent years, misleading tax advice has spread rapidly through social media platforms. Some posts encourage taxpayers to claim credits or deductions they are not eligible for, often promising large refunds.
Following such advice can lead to audits, penalties, and repayment of refunds.
How to Protect Yourself
To avoid becoming a victim of tax scams:
• Do not click links in unsolicited tax-related emails or texts
• Never share personal tax information with unknown callers
• Verify the identity of anyone claiming to represent the IRS
• Work with a trusted tax professional
• Report suspected scams to the IRS
If you receive suspicious messages claiming to be from the IRS, you can forward phishing emails to phishing@irs.gov.
Questions about tax filing, IRS notices, or suspicious tax-related communications? If you're unsure whether something is legitimate, it's always better to ask before responding. The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Watch Out for Tax-Time Scams
As tax season gets underway, millions of taxpayers are gathering documents and preparing to file their returns. Unfortunately, this is also the time when scammers become most active, targeting taxpayers with emails, phone calls, and text messages designed to steal personal and financial information.
Each year the IRS publishes alerts about common scams through its “Dirty Dozen” tax scam campaign, reminding taxpayers to stay vigilant during filing season. Understanding the most common tax scams can help you avoid becoming a victim.
Common Tax Scams to Watch For
During tax season, scammers often use similar tactics to trick taxpayers into providing Social Security numbers, bank information, or payments.
Phishing Emails and Text Messages
Scammers send emails or text messages that appear to come from the IRS or tax software companies. These messages may claim:
• There is a problem with your tax return
• You are owed a refund
• Your account has been locked or suspended
These messages typically contain links to fake websites designed to steal login credentials or personal information.
Fake IRS Phone Calls
Some scammers call taxpayers pretending to be IRS agents. They may threaten arrest, lawsuits, or license suspension unless payment is made immediately.
The IRS does not demand immediate payment over the phone and will never ask for payment through gift cards, prepaid debit cards, or cryptocurrency.
Fraudulent Tax Preparers
Another risk during filing season involves unscrupulous tax preparers who promise unusually large refunds or ask taxpayers to sign blank tax returns.
Warning signs include:
• Charging fees based on the size of the refund
• Refusing to sign the tax return as the preparer
• Directing refunds into accounts they control
Taxpayers should always review their return carefully and work with a qualified, ethical tax professional.
If You're Married, Can You File as Single on Your Tax Return?
Each tax season I hear a variation of the same question:
"I'm married, but it would save me money if I filed as single. Can I just do that?"
The answer is simple under IRS rules:
If you are legally married on December 31 of the tax year, you cannot file as Single.
The IRS determines your filing status based on your marital status on the last day of the year. If you were married on December 31, the IRS considers you married for the entire year for tax filing purposes.
This rule applies even if you:
- Got married late in the year
- Lived apart from your spouse
- Managed your finances separately
- Believe you would pay less tax by filing as Single
In all of these situations, the Single filing status is not available.
The Filing Options for Married Taxpayers
If you are married at year-end, you generally have three possible filing statuses:
Married Filing Jointly (MFJ)
This is the most common choice for married couples.
When filing jointly:
- Both spouses combine income on one tax return
- Both spouses sign the return
- Both spouses are jointly responsible for the tax
This filing status often results in the lowest total tax, but not always.
Married Filing Separately (MFS)
Married taxpayers also have the option to file separate tax returns.
Under this approach:
- Each spouse reports their own income and deductions
- Each spouse is responsible only for their own return
However, the IRS places several restrictions on taxpayers who choose this option. For example, many tax credits and deductions are limited or unavailable when filing separately.
Head of Household (Sometimes Available)
A married person may qualify for Head of Household status in certain situations, but the rules are strict.
Generally, a married taxpayer must:
- Live separately from their spouse for the last six months of the year, and
- Maintain a home for a qualifying child or dependent
If those requirements are met, the IRS may allow the taxpayer to file as Head of Household, which usually provides a larger standard deduction and better tax brackets than filing separately.
Why Some People Ask About Filing Single
Many people ask about filing as Single because they believe it will reduce their taxes.
But in practice, the choice isn't between Single vs. Married. The real comparison is usually between:
- Married Filing Jointly
- Married Filing Separately
- Head of Household (if eligible)
Each option has different tax consequences, and determining the best choice often requires reviewing both spouses' income and deductions.
The Bottom Line
If you are married on December 31, the IRS does not allow you to file as Single for that tax year.
Your options will be limited to:
- Married Filing Jointly
- Married Filing Separately
- Head of Household (if you qualify)
Understanding which option is best can make a meaningful difference in the amount of tax you pay.
Questions? Let's Talk
Tax filing status decisions can affect credits, deductions, and your total tax liability. If you're unsure which filing status is right for your situation, professional guidance can help you avoid costly mistakes.
If you would like help reviewing your filing options, feel free to contact me. I offer complimentary initial consultations to discuss your situation and determine the best path forward.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
State and Local Tax (SALT) Deduction Increased to $40,000
What the New SALT deduction Limit Means for Taxpayers
One of the most significant recent changes to federal tax law is the increase in the State and Local Tax (SALT) deduction limit. Beginning with tax year 2025, the maximum SALT deduction increased to $40,000 per tax return for taxpayers who itemize deductions. Married taxpayers filing separately are limited to $20,000.
Income Limits Still Apply
For higher‑income taxpayers, the SALT deduction begins to phase down once income exceeds approximately $500,000.
As income rises further, the deduction gradually declines, potentially returning to the prior $10,000 limit.
Because of this phase‑out, the largest benefits will generally go to taxpayers below the highest income brackets.
This article is for informational purposes only and should not be considered tax advice.
What the Limit Used to Be Under the Tax Cuts and Jobs Act of 2017
The SALT deduction was capped at $10,000 per return ($5,000 for married filing separately).
This cap applied to the combined total of: state income taxes, local income taxes, and property taxes on real estate.
For taxpayers in states with higher income taxes or high property values, the $10,000 cap significantly reduced the benefit of itemizing deductions. The new legislation raises the cap to $40,000, effectively quadrupling the previous limit
Planning Opportunities
The increased SALT deduction may affect several tax planning decisions, including:
• Whether to itemize deductions
• Timing of state tax payments
• Planning for property tax payments
• Evaluating pass‑through entity tax elections for business owners
Because the new SALT rules interact with other federal tax provisions, taxpayers may benefit from reviewing their situation with a tax professional.
Who Benefits the Most?
The taxpayers most likely to benefit from the higher SALT deduction include:
• Homeowners with significant property taxes
• Taxpayers living in states with higher state income taxes
• Households whose itemized deductions exceed the standard deduction
Many taxpayers will still claim the standard deduction, which means the SALT deduction will not affect their return.
However, taxpayers who already itemize—particularly homeowners in higher‑tax areas—may see a meaningful reduction in their federal taxable income.
If you have questions about how the SALT deduction affects your tax return or your long‑term tax planning, please contact us at GurelCPA to schedule a free consultation to discuss your specific situation.
From Compliance to Optimization: Turning a Required Filing into a Strategic Asset
Compliance Is the Minimum Standard
Form 990-N is intentionally simple. It confirms that an organization remains eligible for tax-exempt status. Beyond that, it provides almost no information to the public.
There is no mission statement, no description of programs, no financial context, and no explanation of how donations are used.
For prospective donors, grantors, partners, and even potential board members, the 990-N provides little insight into the organization behind the filing.
Moving From Compliance to Optimization
Nonprofit leaders will benefit from thinking beyond minimum requirements and asking how required processes can be used more intentionally. This is the shift from compliance to optimization: a proactive approach to transparency.
Even small nonprofits have the option to file Form 990-EZ voluntarily, rather than filing the minimal 990-N postcard. By doing so, the organization can place meaningful, standardized information into the public record, including:
- The organization’s mission and purpose
- Summary financial information
- How funds are used to support programs
- Governance and operational structure
- Ongoing compliance with 501(c)(3) requirements
Instead of simply checking a compliance box for the IRS, the organization creates a transparent snapshot of who they are and how they operate — in a format donors and grantmakers already recognize and trust.
Your Three Most Important Stories
One of the most important sections of Form 990 is Part III: Program Service Accomplishments.
The form requires organizations to list their three largest programs, based on dollars spent during the year, and provide narrative descriptions explaining:
- The nature of the program or services provided
- Who is served
- The scope or scale of the activity
- How the program advances the organization’s mission
This section provides meaningful space for explanation. While organizations do not choose which programs appear based purely on preference, they do have discretion in how programs are described and how related activities are grouped, when appropriate.
A Place to Let Your Organization’s Light Shine
The program accomplishments section of Form 990 is not marketing copy, but it is one of the clearest places a nonprofit can explain its work in its own words.
Because the return is filed with the IRS under penalty of perjury, these descriptions carry a level of credibility that traditional marketing materials do not.
For donors and grantmakers reviewing information on platforms like GuideStar or Charity Navigator, this section often becomes the most trusted explanation of what an organization actually does.
Strong program descriptions demonstrate that the organization:
- Understands its mission and programs
- Can clearly articulate how resources are used
- Tracks program activity and spending
- Takes transparency and governance seriously
For many small nonprofits, this may become the most complete and authoritative public description of their work available anywhere.
Beyond the 990-N Postcard: How Form 990 Can Help Small Nonprofits Build Transparency and Credibility
This article is written for people who care about small nonprofit organizations: executive directors, board members, volunteers, donors, and other stakeholders who want to see nonprofits thrive, not merely survive.
Many small nonprofits operate with limited resources and annual gross receipts under $50,000. Under IRS rules, those organizations may satisfy their federal filing requirement by submitting Form 990-N, commonly known as the IRS e-Postcard.
From a compliance standpoint, that filing is enough.
From a strategic standpoint, it may be a missed opportunity.
Where Donors and Grantmakers Actually Look
Many donors, grantmakers, and nonprofit evaluators begin their research on public nonprofit information platforms such as GuideStar (Candid), Charity Navigator, and ProPublica’s Nonprofit Explorer
These platforms pull their information directly from IRS Form 990 filings.
When an organization files only Form 990-N, there is very little information for these platforms to display. When an organization files Form 990-EZ or the full Form 990, however, those platforms display mission statements, program descriptions, and summary financial information sourced directly from the return.
For many stakeholders, this may be the first place they encounter a nonprofit.
Why This Matters for Small Nonprofits
Large nonprofit organizations typically have development staff, communications teams, and marketing budgets.
Smaller nonprofits often do not.
For organizations with annual revenue under $50,000, Form 990-EZ may be one of the only places where a complete, standardized description of their programs appears publicly.
When approached thoughtfully, this transforms a required filing into an opportunity for clarity, credibility, and trust-building.
Let’s Talk Before You File
If you’re involved with a nonprofit and would like to explore whether moving from compliance to optimization makes sense for your organization, I invite you to reach out.
If you would like to discuss whether voluntary Form 990-EZ filing could strengthen your organization’s transparency and credibility, I offer a free consultation to review your organization’s situation and help you think through the strategic use of Form 990-EZ.
This article is provided for general informational purposes and should not be considered tax or legal advice. Every nonprofit’s situation is different.
Bona Fide Residence vs. Physical Presence
How Do You Qualify for the Foreign Earned Income Exclusion?
Qualifying for the Foreign Earned Income Exclusion (FEIE) is not automatic simply because you live overseas.
To exclude foreign earned income, you must meet either the Bona Fide Residence Test or the Physical Presence Test
Bona Fide Residence Test
This test focuses on whether you have established a genuine, ongoing residence in a foreign country for an entire tax year.
The IRS looks at factors such as length of stay, type of visa, permanent housing, and family and community ties. This test is typically used by long-term expats who relocate abroad on a more permanent basis.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique. Please consult directly for a personalized review of your international tax position. We offer a complimentary initial consultation to discuss your specific facts and planning opportunities.
Physical Presence Test
This test is strictly mathematical. You must be physically present in one or more foreign countries for 330 full days during any 12-month period.
The 12-month period does not have to match the calendar year. Intent does not matter — day count does. This test is often used by contractors, digital nomads, and individuals on temporary overseas assignments.
Foreign Housing Exclusion
In addition to excluding earned income, qualifying taxpayers may also claim the Foreign Housing Exclusion (or deduction for self-employed individuals).
Eligible expenses may include:
• Rent
• Utilities (excluding telephone)
• Property insurance
• Residential parking
• Certain occupancy taxes
There is a base housing amount and a location-based cap. In high-cost cities, the housing exclusion can significantly increase the total amount excluded from U.S. taxation.
Why This Matters
Taxpayers can apply the wrong test, fail to track days properly, or overlook housing exclusion opportunities. International tax compliance and qualification should be documented carefully.
If you’re living overseas — whether permanently or temporarily — we can review your situation to determine which test applies and whether the Foreign Housing Exclusion can further reduce your U.S. tax.
Questions? Let’s Talk.
Foreign Earned Income Exclusion vs. Foreign Tax Credit
For U.S. taxpayers living or working outside the United States, foreign income does not mean freedom from U.S. taxes. The U.S. tax system taxes citizens and resident aliens on worldwide income, regardless of where they live. Fortunately, the Internal Revenue Code provides two powerful tools to reduce or eliminate double taxation:
• The Foreign Earned Income Exclusion (FEIE)
• The Foreign Tax Credit (FTC)
While both are designed to prevent double taxation, they operate in fundamentally different ways — and choosing the wrong one can cost taxpayers thousands of dollars in unnecessary tax over time. Understanding the distinction between these two strategies is essential for proper international tax planning.
What Is the Foreign Earned Income Exclusion (FEIE)?
The Foreign Earned Income Exclusion allows qualifying taxpayers to exclude a portion of their foreign earned income from U.S. taxation entirely.
Key features of the FEIE include:
• Applies only to earned income (wages, salary, self-employment income)
• Does not apply to passive income (interest, dividends, rental income, capital gains)
• Requires meeting either a Bona fide residence test, or a Physical presence test
• Must be affirmatively elected by filing Form 2555
• The exclusion amount is indexed annually for inflation
If a taxpayer qualifies, they may exclude foreign earned income from U.S. taxable income, reducing federal income tax and potentially self-employment tax exposure (subject to totalization agreements and treaty rules where applicable).
When the FEIE Is Often More Advantageous
The FEIE is typically beneficial when:
• The taxpayer lives in a low-tax or no-tax country
• Foreign taxes paid are minimal or zero
• Income is primarily earned income
• The taxpayer wants to reduce adjusted gross income (AGI) for purposes such as: student loan repayment calculations, ACA subsidy calculations, Child Tax Credit thresholds, or phase-outs of deductions and credits
What Is the Foreign Tax Credit (FTC)?
The Foreign Tax Credit provides a dollar-for-dollar credit against U.S. tax for income taxes paid to a foreign country.
Key features of the FTC include:
• Applies to both earned income and passive income
• Claimed using Form 1116
• Credit is limited to the portion of U.S. tax attributable to foreign income
• Excess credits can often be carried forward for up to 10 years
• Works best when foreign tax rates are equal to or higher than U.S. tax rates
Rather than excluding income, the FTC allows the income to remain taxable in the U.S. but offsets U.S. tax liability with foreign taxes already paid.
When the Foreign Tax Credit Is Often More Advantageous
The FTC is typically beneficial when:
• The taxpayer lives in a high-tax country
• Foreign tax rates exceed U.S. tax rates
• The taxpayer has passive income (investments, dividends, rental income)
• Long-term tax efficiency is a priority
• Retirement planning is a consideration
• Medicare tax and Social Security tax planning matter
In many high-tax jurisdictions, the FTC produces superior long-term outcomes compared to the FEIE.
Final Thoughts
The Foreign Earned Income Exclusion and the Foreign Tax Credit are both powerful tools, but they serve different strategic purposes. The correct choice depends on long-term planning goals, not just short-term tax savings.
The article is intended for informational purposes only. Professional guidance is essential when making international tax planning decisions.
What Counts as “Earned Income” for the Foreign Earned Income Exclusion?
Many U.S. taxpayers living abroad assume that if they qualify for the Foreign Earned Income Exclusion (FEIE), all their income is excluded.
That is not correct.
The FEIE applies only to earned income — not to investment income, retirement income, or capital gains. Understanding this distinction can prevent costly mistakes.
In summary, the services must be performed in a foreign country. And the exclusion applies to compensation for services performed. It does NOT apply to passive or retirement income.
Questions? Let’s Talk.
This article is for informational purposes only and does not constitute tax advice. Every taxpayer’s situation is unique. Please message me for a complimentary initial consultation to discuss your specific facts and planning opportunities.
What Is Earned Income?
For FEIE purposes, earned income includes compensation you receive for performing services, such as:
• Wages and salaries
• Bonuses and commissions
• Self-employment income
• Professional fees
If you worked for it, it is likely earned income.
What Is Not Earned Income?
The following types of income do not qualify for the Foreign Earned Income Exclusion:
• Interest (bank accounts, CDs)
• Dividends (stocks, mutual funds)
• Capital gains (stock sales, crypto, real estate gains)
• Rental income (in most cases)
• Social Security benefits
• IRA or 401(k) distributions
• Pension or annuity income
If you are receiving investment or retirement income from the United States while living abroad, that income is still taxable under normal U.S. tax rules. Living overseas does not convert passive income into earned income.
A Simple Example
If a taxpayer living abroad earns:
• $110,000 in foreign wages
• $20,000 in dividends
• $15,000 in capital gains
Only the wages may qualify for the exclusion. The dividends and capital gains remain taxable.
Injured Spouse Relief: Protecting
Your Refund
Injured Spouse Relief applies when a couple files a joint return and the IRS takes the entire refund to pay one spouse’s debt.
This commonly happens when one spouse owes back taxes, defaulted student loans, child or spousal support, or certain state debts. If the debt belongs only to one spouse, the other spouse can request their portion of the refund instead of losing it to the debt.
In short, injured spouse relief protects your share of a refund, not the tax liability itself.
Why This Matters During Separation or Divorce
Tax problems often surface during separation or divorce. Refunds may suddenly disappear, or the IRS may pursue payment for issues tied to a former spouse. Decisions about filing jointly versus separately can also affect outcomes. In some cases, filing jointly still produces better tax results, but additional protections may be needed.
This article is for informational purposes only and does not constitute tax advice. Every situation is unique. If you are dealing with separation, divorce, or concerns about a spouse’s tax debt, contact me at GurelCPA for personalized guidance. We’re happy to offer a free consultation to help you protect your financial future.
Injured Spouse Relief vs. Innocent Spouse Relief: What’s the Difference?
When tax problems arise in a marriage, many people assume both spouses are automatically responsible. But the IRS actually provides two different forms of relief designed to protect one spouse from the other’s tax issues.
These rules are often confused, yet they apply in very different situations. Understanding the difference is especially important for people who are separated, newly divorced, or concerned about a spouse’s past tax problems.
Innocent Spouse Relief: Protecting You From Tax Owed
Innocent Spouse Relief is different. It applies when there is additional tax owed because of errors or omissions on a joint return caused by one spouse.
This can occur when the other spouse failed to report income, improper deductions or credits were claimed, or understated tax due to only one spouse’s actions.
In these cases, the IRS may normally hold both spouses liable. Innocent spouse relief allows one spouse to avoid responsibility if they did not know — and had no reason to know — about the issue.
Final Thought
Marriage doesn’t always mean sharing tax consequences forever. If you are separating, divorcing, or concerned about a spouse’s past tax problems, it’s important to understand what protections are available before filing.
OMG! What happened to my Tax Refund?
Repayment Caps Have Ended for Marketplace Premium Tax Credits
Not only are taxpayers finding much higher 2026 Marketplace costs, but now they are finding that their 2025 Marketplace cost was actually higher.
Repayment caps for 2025 have been eliminated for most taxpayers.
That means if your household income was higher than the income you estimated when enrolling in Marketplace coverage, you may be required to repay the full amount of excess subsidy you received.
Why the Shock Is Happening
When you enroll in Marketplace insurance, you estimate your annual household income. Based on that estimate, the government sends a subsidy directly to your insurance company each month.
At tax time, Form 8962 reconciles what you received in advance with what you were entitled to based on your final income. If your income ended up higher than projected, the subsidy may have been too large.
In prior years, repayment caps limited how much taxpayers had to pay back. For tax year 2025, those caps have ended. There is no longer a maximum repayment limit.
What That Means
Even moderate income increases can create a significant tax bill. If you received $1,000 per month in advance credits, that’s $12,000 for the year. If your final income reduces your eligibility, the excess may now have to be repaid in full.
The Premium Tax Credit can be valuable support. But without repayment caps, the reconciliation process can produce a result that feels sudden and severe.
This article is for informational purposes only and does not constitute tax advice. Each taxpayer’s situation is different. If you would like a personalized review of how your Marketplace coverage may affect your tax return, contact me for a free consultation.
Who Is Affected?
A person may be subject to exit tax if they become a covered expatriate, generally by meeting one of these conditions:
• Net worth of $2 million or more
• Average U.S. income tax liability above an indexed threshold over the past five years
• Failure to certify five years of full U.S. tax compliance
That last point surprises many people: simply being behind on filings can create problems when expatriating.
It’s important to understand that the risk isn’t limited only to people formally renouncing citizenship.
Americans living abroad who fall behind on their U.S. tax filings can also run into serious problems, since failure to stay compliant can cause someone to be treated as a “covered expatriate” if they later decide to expatriate.
U.S. Exit Tax: Key Considerations Before Giving Up U.S. Status
Some Americans living overseas eventually consider giving up U.S. citizenship or long-term green card status permanently. What many people don’t realize is that doing so can trigger the U.S. exit tax, one of the most complex areas of international tax law.
What Is the Exit Tax?
Under Internal Revenue Code Section 877A, certain individuals who expatriate are treated as if they sold all their worldwide assets the day before expatriation, even though no sale actually occurs. Any gain above an annual exclusion amount becomes taxable, often resulting in a significant one-time tax bill.
Final Thought
Expatriation is not just an immigration decision — it can be a major tax event. Planning ahead and maintaining tax compliance can make a significant difference in outcomes.
If you are living abroad or considering giving up U.S. citizenship or long-term residency, understanding the exit tax rules before making a move is essential.
This article is for informational purposes only and does not constitute tax advice. Every situation is unique. If you are considering expatriation or want to understand how exit tax rules could affect you, contact us at GurelCPA for personalized guidance. We offer a free consultation to help you plan your next steps with confidence.
Do Americans Living Abroad Still Pay U.S. Self-Employment Tax?
Many Americans working overseas assume that moving abroad eliminates all U.S. tax obligations.
For self-employed individuals, however, one major tax often remains: U.S. self-employment tax.
What Is Self-Employment Tax?
Self-employment tax funds Social Security and Medicare. For U.S. self-employed workers, this tax is typically 15.3% of net earnings, regardless of where you live. (W-2 employees typically pay half and employers pay half: 7.65% each.)
The Common Misunderstanding
Many expats use the Foreign Earned Income Exclusion (FEIE) to reduce or eliminate income tax.
But: FEIE reduces income tax. FEIE does NOT eliminate self-employment tax. So even when income tax is zero, self-employment tax may still apply.
How Social Security Taxes Work Across Borders
If you are self-employed in another country, you may also be required to pay into that country’s social security or national insurance system.
To prevent workers from being taxed twice for social security, the United States has Totalization Agreements with many countries. These agreements generally ensure that a worker pays into only one country’s system rather than both.
Which country applies depends on where the work is performed and local registration requirements, and proper documentation is often required to claim exemption from U.S. self-employment tax.
Who Is Affected Most?
Common situations include:
- Independent contractors abroad
- Consultants working remotely
- Digital nomads
- Freelancers
- Expats running businesses overseas
- Single-member LLC owners abroad
Final Thought
Living abroad does not automatically remove U.S. Social Security and Medicare obligations for self-employed Americans. Understanding this early helps avoid unexpected tax bills.
This article is for informational purposes only and does not constitute tax advice. Cross-border self-employment tax issues vary widely based on country and individual circumstances. If you operate a business or work independently while living abroad, contact us at GurelCPA.com for personalized guidance.
No Tax on Social Security: Really? What’s Real and What’s Hype?
You may have seen headlines claiming there is now “No Tax on Social Security.” Sorry, but the IRS formula for taxing Social Security benefits has not changed. However, other recent tax changes may reduce overall taxes for some retirees, which can make it feel like Social Security is no longer being taxed.
The Key Point: Social Security Tax Rules Did Not Change
Social Security benefits are taxed under a formula that has existed for decades. Benefits become taxable depending on a taxpayer’s combined income, which includes Adjusted Gross Income, Nontaxable interest, and One-half of Social Security benefits.
If combined income exceeds certain thresholds, up to 85% of benefits can become taxable income. Those thresholds have not changed, and the formula itself remains in place today.
So Why Are People Hearing “No Tax on Social Security”?
Recent tax legislation included provisions that provide additional tax relief in the form of the new $6,000 extra senior deductionthat will often reduce overall taxable income.
When total taxable income goes down, the amount of Social Security benefits taxed by the formula goes down, meaning that less of a taxpayer’s Social Security will be taxed.
So, no: there is still tax on Social Security benefits. But, yes, less of your social security benefits may be taxed.
Who Will Actually See a Difference?
Many retirees already pay little or no federal income tax on their Social Security benefits. Those who rely primarily on Social Security and have only modest additional income often fall below the taxation thresholds already. For these households, recent tax changes may not significantly alter their situation because they already owed little or no tax.
The biggest impact is often felt by retirees whose income is just high enough to make part of their benefits taxable. For this middle-income group, tax relief provisions may lower overall taxable income enough to reduce their total tax bill, sometimes significantly.
Higher-income retirees, whose overall income remains well above taxation thresholds, will generally continue to see much of their Social Security benefits treated as taxable income, with limited impact from recent changes.
The Reality Behind the Headlines
The phrase “No Tax on Social Security” oversimplifies what actually happened.
In practice: Social Security taxation rules remain unchanged.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique. Not all states automatically follow federal tax law changes, so state taxation may still apply. Contact me for a free consultation regarding your specific circumstances.
No Tax on Tips and Overtime: Check Your W-2
You’ve probably heard the headlines: “No tax on tips” and “No tax on overtime.”
For 2025, this is real—and the most important thing to know is this:
👉 The information is already on your W-2.
What “No Tax” Actually Means
These are not full tax exemptions.
Instead, they are above-the-line deductions that reduce your federal taxable income:
- Tips: Up to $25,000 may be deductible
- Overtime: The premium portion (the “half” in time-and-a-half) may be deductible
- Up to $12,500 (single)
- Up to $25,000 (married filing jointly)
⚠️ You still pay Social Security and Medicare (FICA) taxes on this income.
It’s Already on Your W-2
You don’t need to dig through paystubs—this is the big change.
Look at your W-2:
- Box 7 → Reported tips
- Box 14 → Often shows “Qualified Overtime” or “OT Premium”
- Box 12 → Some employers are starting to use new reporting codes
👉 Your employer has already done much of the tracking for you.
Why This Matters
Just because it’s on your W-2 doesn’t mean it’s handled correctly on your tax return.
We’re already seeing:
- unclear Box 14 descriptions
- missed overtime premium calculations
- deductions not fully applied
The Bottom Line
If you earned tips or overtime, your W-2 may unlock real tax savings—but only if it’s used correctly.
Questions? Let’s Talk
Please contact me directly to discuss how this applies to your individual tax situation. I offer a free consultation and would be happy to help you make sure you’re not leaving money on the table.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique.
What to Do If You Don’t Receive Your W-2
Each January, employers are required to send employees a Form W-2, which reports wages earned and taxes withheld during the prior year. Employers must furnish W-2s by January 31 of the year following the tax year. Most taxpayers receive their W-2s without issue, but delays and missing forms do happen, especially if you changed jobs, moved, or worked for multiple employers.
If you haven’t received your W-2 by early February, here’s what to do.
Step 1: Contact Your Employer
Your first step should always be to contact your employer or former employer directly.
Ask whether the W-2 was issued, whether it was mailed or made available electronically, and whether the employer has your correct mailing address or email.
In many cases, the issue is simply an outdated address or a payroll processing delay.
Step 2: Check Your Payroll or HR Portal
Many employers deliver W-2s electronically through payroll platforms such as ADP, Paychex, or Workday.
If you had online access during employment, log in to your payroll or HR portal and look for a section labeled Tax Documents or Year-End Forms.
Download and save a copy for your records.
Step 3: Contact the IRS (If Necessary)
If you are unable to obtain your W-2 after contacting your employer, the IRS can assist. You may contact the IRS after February 15. Be prepared to provide your identifying information, your employer’s contact details, dates of employment, and an estimate of wages and withholding based on your records. The IRS may contact your employer on your behalf and advise you on next steps.
What If the W-2 Is Wrong When You Receive It?
If you receive a W-2 that contains errors, such as incorrect wages, withholding amounts, or Social Security number, request a corrected W-2 (Form W-2c) from your employer. Do not file your tax return until the corrected form is issued.
Filing Without a W-2 (Form 4852) — and Why You Should Be Careful
If all reasonable efforts fail, you may be able to file your tax return using Form 4852, Substitute for Form W-2. This form allows you to report wages and withholding based on your own records, such as final pay stubs or bank deposit information.
This option should be used only as a last resort. Filing with estimated or reconstructed numbers increases the likelihood of IRS notices, refund delays, and the need to file an amended return later.
Important Disclaimer
This article is intended for general informational purposes only and should not be considered tax, legal, or accounting advice. Tax situations vary widely based on individual facts and circumstances. Please schedule a free consultation regarding your specific situation before taking action.
Foreign Earned Income Exclusion vs. Foreign Tax Credit
For U.S. taxpayers living or working outside the United States, foreign income does not mean freedom from U.S. taxes. The U.S. tax system taxes citizens and resident aliens on worldwide income, regardless of where they live. Fortunately, the Internal Revenue Code provides two powerful tools to reduce or eliminate double taxation:
• The Foreign Earned Income Exclusion (FEIE)
• The Foreign Tax Credit (FTC)
While both are designed to prevent double taxation, they operate in fundamentally different ways — and choosing the wrong one can cost taxpayers thousands of dollars in unnecessary tax over time. Understanding the distinction between these two strategies is essential for proper international tax planning.
What Is the Foreign Earned Income Exclusion (FEIE)?
The Foreign Earned Income Exclusion allows qualifying taxpayers to exclude a portion of their foreign earned income from U.S. taxation entirely.
Key features of the FEIE include:
• Applies only to earned income (wages, salary, self-employment income)
• Does not apply to passive income (interest, dividends, rental income, capital gains)
• Requires meeting either a Bona fide residence test, or a Physical presence test
• Must be affirmatively elected by filing Form 2555
• The exclusion amount is indexed annually for inflation
If a taxpayer qualifies, they may exclude foreign earned income from U.S. taxable income, reducing federal income tax and potentially self-employment tax exposure (subject to totalization agreements and treaty rules where applicable).
When the FEIE Is Often More Advantageous
The FEIE is typically beneficial when:
• The taxpayer lives in a low-tax or no-tax country
• Foreign taxes paid are minimal or zero
• Income is primarily earned income
• The taxpayer wants to reduce adjusted gross income (AGI) for purposes such as: student loan repayment calculations, ACA subsidy calculations, Child Tax Credit thresholds, or phase-outs of deductions and credits
What Is the Foreign Tax Credit (FTC)?
The Foreign Tax Credit provides a dollar-for-dollar credit against U.S. tax for income taxes paid to a foreign country.
Key features of the FTC include:
• Applies to both earned income and passive income
• Claimed using Form 1116
• Credit is limited to the portion of U.S. tax attributable to foreign income
• Excess credits can often be carried forward for up to 10 years
• Works best when foreign tax rates are equal to or higher than U.S. tax rates
Rather than excluding income, the FTC allows the income to remain taxable in the U.S. but offsets U.S. tax liability with foreign taxes already paid.
When the Foreign Tax Credit Is Often More Advantageous
The FTC is typically beneficial when:
• The taxpayer lives in a high-tax country
• Foreign tax rates exceed U.S. tax rates
• The taxpayer has passive income (investments, dividends, rental income)
• Long-term tax efficiency is a priority
• Retirement planning is a consideration
• Medicare tax and Social Security tax planning matter
In many high-tax jurisdictions, the FTC produces superior long-term outcomes compared to the FEIE.
Final Thoughts
The Foreign Earned Income Exclusion and the Foreign Tax Credit are both powerful tools, but they serve different strategic purposes. The correct choice depends on long-term planning goals, not just short-term tax savings.
The article is intended for informational purposes only. Professional guidance is essential when making international tax planning decisions.
Are You Happy With Your CPA?
That is the Question I Ask Prospective Clients
If the Answer is Yes:
That’s something to value. A strong CPA relationship is built on trust, communication, and long-term understanding — and if you’ve found that, you’re fortunate to have a true trusted advisor.
If the Answer is No:
Then it’s probably worth a conversation. Feeling unheard, rushed, or misunderstood financially is often a sign that a better professional fit may exist.
And for some people, the honest answer is:
“I don’t have a CPA.”
Where CPA Services Truly Add Value
There are specific situations where professional guidance can create real financial value and prevent costly mistakes — especially when complexity increases.
This commonly includes small business ownership (entity structure, expense classification, tax strategy, cash flow planning, estimated taxes, and compliance obligations) and rental properties or real estate (depreciation strategy, passive activity rules, loss limitations, capital gains planning, and long-term tax structuring)
When You May Not Need a CPA
Not everyone needs a CPA.
If your financial life is simple — for example, if all of your income comes from W-2 wages, investment accounts, and basic sources of income — there are reliable, user-friendly tax software platforms that many people can use successfully on their own.
A core principle of my practice has always been empowerment: helping people understand their finances and supporting them in doing for themselves what they feel comfortable doing.
A Different Kind of CPA Relationship
My approach to accounting isn’t transactional — it’s relational. It’s about understanding your life, your business, and your goals — not just preparing returns.
If you’re happy with your CPA, that’s something to value.
If you’re not, we should talk.
If you don’t have one — and your financial life is becoming more complex — it may be time to explore whether having a trusted advisor could make a meaningful difference.
Minimum Wage Increases Take Effect in Several States
As the new year begins, workers in many states are seeing higher paychecks as minimum wage increases take effect across the country. With the federal minimum wage remaining at $7.25 per hour, unchanged since 2009, states and local governments continue to take the lead in raising wages to better reflect rising costs of living.
WHAT’S CHANGING IN 2026
As of January 1, 2026, nearly twenty states have implemented higher minimum wage rates. Many of these increases were approved through voter initiatives or legislation passed in prior years and are adjusted annually for inflation.
Several states now have minimum wages at or above $15 per hour, while others are steadily moving toward that level through scheduled increases.
NOTABLE STATE INCREASES
While rates vary by state and sometimes by city, examples of 2026 changes include:
• States with minimum wages exceeding $15 per hour, including Washington, California, and New York (with higher rates in certain metro areas)
• States such as Arizona, Colorado, Maine, Missouri, and Nebraska continuing phased increases toward higher wage thresholds
• Additional increases in states including Michigan, Minnesota, Vermont, Rhode Island, Connecticut, Ohio, Virginia, and South Dakota
Some states and cities also maintain local minimum wages that exceed state-level requirements, meaning employers must apply the highest applicable rate.
MORE INCREASES LATER IN THE YEAR
A few states have minimum wage increases scheduled later in 2026 rather than January 1. Florida, for example, continues its voter-approved plan to gradually raise the minimum wage to $15 per hour.
WHY THIS MATTERS FOR WORKERS AND EMPLOYERS
For workers, higher minimum wages can help offset inflation and rising living expenses. For employers, especially small businesses, these changes require careful payroll planning, updated systems, and ongoing compliance with both state and local laws.
Employers should:
• Review current wage rates and upcoming scheduled increases
• Confirm whether local minimum wage ordinances apply
• Update payroll systems and labor budgets accordingly
STILL AN UNEVEN LANDSCAPE
Despite these changes, several states continue to follow the federal minimum wage. This creates wide disparities in pay across the country and highlights the importance of understanding the specific rules that apply where employees live and work. Both workers and employers should stay informed about changes that may affect pay, payroll compliance, and budgeting throughout the year.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
When a 1099 Is Not Required:
- Personal, household, or family payments
- Payments to corporations (with exceptions)
- Payments for goods (not services)
- Credit card/third-party processor payments
- Payments under $600
Who Is Required to Issue Form 1099?
Form 1099 is one of the most misunderstood tax forms in the U.S. tax system. Many people know that businesses must issue 1099s to independent contractors and service providers; but fewer people understand when individuals are required to issue them, and when they are not.
The General Rule: Form 1099 is required when payments are made for services in the course of a trade or business.
This means the obligation to issue a 1099 is based on business activity, not just whether a person owns a business entity. If you are paying someone as part of a business or income-producing activity, a 1099 requirement may apply — regardless of whether you are a corporation, LLC, partnership, sole proprietor, or individual taxpayer.
Who Is Required to Issue Form 1099?
Businesses must generally issue a Form 1099 when they:
- Pay $600 or more in a calendar year
- To a non-employee
- Using cash, check, ACH, Zelle, Venmo, Cash App, or similar methods
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
When Does an Individual Have to Issue a 1099?
Individuals must issue 1099s when acting in a business or income-producing capacity, such as rental property owners and individuals operating side businesses or self-employment activities.
Understanding Common IRS 1099 Forms
Many taxpayers are familiar with Form 1099-NEC, but the IRS 1099 series includes many other forms that report different types of income. If you receive one, the IRS received a copy too, so it’s important to know what it represents.
1099-B – Proceeds from Investments
You’ll receive a 1099-B if you sold stocks, mutual funds, ETFs, cryptocurrency, or other investments. It reports what you sold, when you sold it, how much you received, your cost basis in most cases, and whether the gain or loss is short-term or long-term.
1099-DIV – Dividends
If you earned dividends from stocks or mutual funds, you may receive a 1099-DIV. It reports ordinary dividends, qualified dividends, and sometimes capital gain distributions or foreign taxes paid. Even reinvested dividends are taxable.
1099-INT – Interest Income
Banks and financial institutions issue 1099-INT when you earn interest, such as from savings accounts, CDs, bonds, or brokerage accounts. Most interest is taxable, though some government bond interest may have special rules.
1099-G – Government Payments
This form is commonly issued for unemployment benefits and state tax refunds, along with some other government payments. Whether a state tax refund is taxable depends on whether you itemized deductions the prior year.
1099-R – Retirement Distributions
You’ll receive a 1099-R if you took money from pensions, IRAs, 401(k)s, annuities, or other retirement plans. It shows how much was distributed, how much may be taxable, whether withholding was taken, and whether penalties might apply for early withdrawals.
1099-S – Real Estate Transactions
Form 1099-S is issued when you sell real estate such as a primary home, rental property, land, or other property. Even if some or all of the gain is excluded, the sale still needs to be reported correctly.
1099-MISC – Still in Use
Although nonemployee compensation now appears on 1099-NEC, the 1099-MISC is still used for items such as rent, royalties, prizes, certain legal payments, and other miscellaneous income.
What To Do If You Receive a 1099
Don’t ignore it, because the IRS already has a copy. If you have questions about how any 1099 form affects your taxes, I’d be happy to help.
This article is intended for general informational purposes and does not constitute tax advice. Please contact us to schedule a complimentary consultation and learn how these updates may affect your specific situation.
Understanding Form 1099-NEC: What It Means for You
If you work as an independent contractor, freelancer, gig worker, or provide services as a non-employee, you may receive Form 1099-NEC (Non-Employee Compensation). This form reports the income a business paid you for your services.
Who Receives a 1099-NEC?
Businesses are generally required to issue a 1099-NEC if they paid you $600 or more in a year for services in the course of their business. However, your tax obligation does not depend on whether you receive the form.
Common Misconceptions
“If I don’t get a 1099, I don’t have to report the income.”
Not true. If you earned the income, you are required to report it — even if the payer doesn’t send a form. All of your business income is taxable, whether or not a 1099 was issued for every payment.
Deductions Matter
Most people who receive a 1099-NEC are considered self-employed for tax purposes, which means they are often able to deduct ordinary and necessary business expenses related to earning that income. These may include:
• Supplies and materials
• Mileage and vehicle expenses
• Home office costs
• Professional services and fees
• Other legitimate business expenses
The key takeaway: while the 1099-NEC shows your gross income, many taxpayers are taxed on their net income after allowable deductions.
Bottom Line
A 1099-NEC tells the IRS (and you) how much non-employee income you were paid — but even without a form, you are still responsible for reporting the income you earned. The good news is that legitimate business expenses may help reduce the amount you ultimately pay tax on.
If you have questions about 1099 income, required reporting, or what qualifies as a deductible expense, we’re happy to help.
This article is intended for general informational purposes and does not constitute tax advice. Please contact us to schedule a complimentary consultation and learn how these updates may affect your specific situation.
Venmo, PayPal & 1099‑K: What Taxpayers Need to Know
You may have heard buzz about “Venmo being taxed” or “1099‑K changes,” especially if you’ve sold something online or earned money through gig work. Let’s clear it up in straight, practical terms.
What Is a 1099‑K?
Form 1099‑K is an information tax form used to report payments you receive through payment apps (like Venmo, PayPal, Cash App) or online marketplaces when those payments are for goods or services — not personal transfers between friends and family.
It doesn’t create a new tax, but it alerts the IRS to income you’ve received so you report it correctly.
Current Reporting Threshold
For payments you receive during 2025 (filed in early 2026), a payment app generally must issue a 1099‑K only if:
• You received more than $20,000 in gross payments, AND
• You had more than 200 transactions during the year.
Some platforms or states may still issue a form at lower amounts. But the key takeaway is that the older, higher federal threshold applies again.
You Still Must Report the Income
Even if you don’t receive a 1099‑K, you are still required to report all income you received for goods or services on your tax return. Getting no form does not mean the income isn’t taxable.
This applies to:
• Side gigs
• Online sales
• Freelance work
• Services you are paid for through an app
Personal vs Business Payments
Payments that are purely personal — like splitting meals, or friends paying you back — are not taxable business income. If you ever receive a form that includes personal payments, work with the issuer or your tax professional to correct it.
Quick Tips
• Keep good records of your income and expenses
• Try to separate personal and business transactions in payment apps
• Don’t base your tax decisions only on whether you received a form
• Reach out for help if you are unsure
If you’re unsure how income from payment apps affects your tax return — or you received a 1099‑K and aren’t sure what to do with it — let us help you sort it out before filing season.
This article is intended for general informational purposes and does not constitute tax advice. Please contact us to schedule a complimentary consultation and learn how these updates may affect your specific situation.
WHAT ARE DIGITAL ASSETS?
For tax purposes, the IRS uses the term digital assets to describe property that exists in digital form and uses cryptographic technology. Common examples include cryptocurrency such as Bitcoin or Ethereum, stablecoins, certain non-fungible tokens (NFTs), and other similar digital representations of value. Digital assets are generally treated as property, not currency, for federal tax purposes.
WHEN DIGITAL ASSET ACTIVITY IS TAXABLE
Some actions do not create a taxable event by themselves, including buying digital assets with cash and holding them, transferring digital assets between wallets you own, and holding digital assets without selling or exchanging them.
Digital Assets and Your Tax Return
What the IRS Is Asking and Why It Matters
Digital assets, including cryptocurrency and similar technologies, are now firmly part of the federal tax landscape. Over the past several years, the IRS has expanded its reporting requirements related to digital assets, and taxpayers are now required to directly answer questions about their involvement with them when filing a federal tax return.
THE IRS DIGITAL ASSET QUESTION ON THE TAX RETURN
Every individual federal income tax return now includes a prominently worded question asking whether, at any time during the year, the taxpayer received, sold, exchanged, or otherwise disposed of any digital asset.
This question must be answered yes or no, and it applies even if the taxpayer had only limited activity.
FINAL THOUGHTS
Digital assets are no longer a niche issue in tax compliance. Even casual investors or individuals who received small amounts of cryptocurrency may have reporting obligations. If you receive and 1099-DA from your broker of digital asset exchange, so does the IRS.
This article is for informational purposes only. Please contact me directly to discuss how digital asset activity applies to your individual tax situation.
Digital Assets and Your Tax Return: What the IRS Is Asking and Why It Matters
Digital assets, including cryptocurrency and similar technologies, are now firmly part of the federal tax landscape. Over the past several years, the IRS has expanded its reporting requirements related to digital assets, and taxpayers are now required to directly answer questions about their involvement with them when filing a federal tax return.
WHAT ARE DIGITAL ASSETS?
For tax purposes, the IRS uses the term digital assets to describe property that exists in digital form and uses cryptographic technology. Common examples include cryptocurrency such as Bitcoin or Ethereum, stablecoins, certain non-fungible tokens (NFTs), and other similar digital representations of value.
Digital assets are generally treated as property, not currency, for federal tax purposes.
THE IRS DIGITAL ASSET QUESTION ON THE TAX RETURN
Every individual federal income tax return now includes a prominently worded question asking whether, at any time during the year, the taxpayer received, sold, exchanged, or otherwise disposed of any digital asset.
This question must be answered yes or no, and it applies even if the taxpayer had only limited activity.
WHEN DIGITAL ASSET ACTIVITY IS TAXABLE
Taxable events generally include selling digital assets for cash, exchanging one digital asset for another, using digital assets to purchase goods or services, and receiving digital assets as payment, compensation, or rewards
WHEN DIGITAL ASSET ACTIVITY IS NOT TAXABLE
Some actions do not create a taxable event by themselves, including buying digital assets with cash and holding them, transferring digital assets between wallets you own, and holding digital assets without selling or exchanging them.
HOW DIGITAL ASSETS ARE TAXED
When a taxable transaction occurs, the tax treatment depends on how the digital asset was acquired and how long it was held. Capital gains or losses may apply when assets are sold or exchanged, while ordinary income may apply when assets are received as payment, mining rewards, or staking income.
FINAL THOUGHTS
Digital assets are no longer a niche issue in tax compliance. Even casual investors or individuals who received small amounts of cryptocurrency may have reporting obligations. If you receive and 1099-DA from your broker of digital asset exchange, so does the IRS.
This article is for informational purposes only. Please contact me directly to discuss how digital asset activity applies to your individual tax situation.
Don’t Wait to Claim Your 2022 a Tax Refund
When it comes to claiming a refund from the IRS, there’s an important deadline every taxpayer should know: you can lose your refund forever if you wait too long.
There is a Legal Deadline
The IRS sets a legal deadline for how long a taxpayer can claim a refund or credit. In most cases, the deadline is the latter of:
• Three years from the date you filed your original tax return, or
• Two years from the date you paid the tax.
Since the original due date for a 2022 tax return was April 15, 2023, a taxpayer has until April 15, 2026 to claim a refund.
If you miss this deadline, the IRS generally will not issue a refund, even if you overpaid.
Many taxpayers lose refunds simply because they wait too long to file a return or amend a prior one. Once the statute expires, the refund is permanently forfeited to the U.S. Treasury.
Important Notes:
• Filing an original return counts as a refund claim.
• Amended returns must also be filed within the same deadline.
• Certain disaster relief or special circumstances may extend deadlines.
This article is for informational purposes only and does not constitute tax advice. Record-retention needs vary based on individual circumstances. Please contact me for a free consultation if you have questions about your individual tax situation.
Income the IRS Doesn’t Tax: What Truly Counts as Nontaxable Income
When people talk about income and taxes, it’s important to distinguish between nontaxable income and tax deductions. These concepts are often confused, and misunderstanding the difference can lead to unrealistic expectations at tax time.
Nontaxable income is income that the IRS does not consider taxable under federal law. It is excluded from gross income and generally does not need to be reported on your federal tax return. Tax deductions, on the other hand, reduce taxable income but do not change the nature of the income itself.
FINANCIAL GIFTS
For 2025, the annual federal gift tax exclusion is $19,000 per recipient. Gifts within this limit are not taxable to the recipient and do not require gift tax reporting by the giver.
INHERITANCES
Inheritances are not taxable income at the federal level. However, income generated after the inheritance, such as interest or dividends, may be taxable.
LIFE INSURANCE PROCEEDS
Life insurance death benefits paid to beneficiaries are generally income-tax free, though interest earned on retained proceeds may be taxable.
ROTH ACCOUNTS
Qualified distributions from Roth accounts are tax-free when age and holding-period rules are met. Roth conversions, however, are taxable.
EMPLOYER-PROVIDED BENEFITS
Employer-paid health insurance, certain life insurance coverage, and employer HSA contributions are generally excluded from taxable income.
FINAL THOUGHTS
Many types of income are excluded from federal taxation, but most come with specific rules and conditions. Reviewing the details with a tax professional before assuming income is tax-free can help avoid surprises.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
No Tax on Tips: Really? What’s Real and What’s Hype?
The tax situation for tipped workers just changed. As part of tax legislation signed into law in 2025, a new provision commonly described as “No Tax on Tips” takes effect beginning with the 2025 tax year returns filed in early 2026. This article explains what the rule means, who qualifies, and how it affects both employees and employers.
What Is “No Tax on Tips”?
Despite the name, tips are not completely tax-free. Instead, the rule creates a new federal income tax deduction for qualifying tip income. Under the new provision, workers may deduct up to $25,000 of qualified tip income from federal taxable income each year. Tips must still be reported and remain subject to Social Security and Medicare payroll taxes.
Who Can Claim the Tip Deduction?
Occupation
The deduction applies to workers in occupations that customarily and regularly receive tips, including restaurant staff, bartenders, delivery drivers, personal service workers, and similar service occupations as defined in future IRS guidance.
Reported Tip Income
The deduction applies only to tips that are properly reported for tax purposes. This includes tips reported through Forms W-2, 1099-NEC, 1099-MISC, or 1099-K, as well as tips reported directly by employees on Form 4137. Both cash tips and electronic or credit-card tips qualify so long as they are voluntary payments from customers and properly reported. Non-cash tips, such as tickets or gift items, remain taxable but do not qualify for the deduction.
Income Limits
The deduction begins to phase out for taxpayers whose Modified Adjusted Gross Income exceeds $150,000 for single filers or $300,000 for married couples filing jointly, with the allowable deduction gradually reduced above those levels.
How the Deduction Works
The deduction is an above-the-line deduction, meaning it can be claimed whether or not the taxpayer itemizes deductions.
For example, if a worker earns $20,000 in wages and $30,000 in tips, they may deduct up to $25,000 of tip income, reducing taxable income significantly.
Self-employed workers receiving tips may also qualify, although the deduction cannot exceed net income from the trade or business.
Payroll Taxes Still Apply
The deduction reduces federal income tax but does not eliminate Social Security or Medicare taxes on tips.
What This Means for Service Workers and Employers
For tipped workers, the rule can reduce federal income tax liability and increase take-home pay. For employers, accurate payroll reporting and tip tracking become even more important to help employees benefit from the change.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique. Not all states automatically follow federal tax law changes, so state taxation may still apply. Contact me for a free consultation regarding your specific circumstances.
No Tax on Social Security: Really? What’s Real and What’s Hype?
You may have seen headlines claiming there is now “No Tax on Social Security.” Sorry, but the IRS formula for taxing Social Security benefits has not changed. However, other recent tax changes may reduce overall taxes for some retirees, which can make it feel like Social Security is no longer being taxed.
The Key Point: Social Security Tax Rules Did Not Change
Social Security benefits are taxed under a formula that has existed for decades. Benefits become taxable depending on a taxpayer’s combined income, which includes Adjusted Gross Income, Nontaxable interest, and One-half of Social Security benefits.
If combined income exceeds certain thresholds, up to 85% of benefits can become taxable income. Those thresholds have not changed, and the formula itself remains in place today.
So Why Are People Hearing “No Tax on Social Security”?
Recent tax legislation included provisions that provide additional tax relief in the form of the new $6,000 extra senior deductionthat will often reduce overall taxable income.
When total taxable income goes down, the amount of Social Security benefits taxed by the formula goes down, meaning that less of a taxpayer’s Social Security will be taxed.
So, no: there is still tax on Social Security benefits. But, yes, less of your social security benefits may be taxed.
Who Will Actually See a Difference?
Many retirees already pay little or no federal income tax on their Social Security benefits. Those who rely primarily on Social Security and have only modest additional income often fall below the taxation thresholds already. For these households, recent tax changes may not significantly alter their situation because they already owed little or no tax.
The biggest impact is often felt by retirees whose income is just high enough to make part of their benefits taxable. For this middle-income group, tax relief provisions may lower overall taxable income enough to reduce their total tax bill, sometimes significantly.
Higher-income retirees, whose overall income remains well above taxation thresholds, will generally continue to see much of their Social Security benefits treated as taxable income, with limited impact from recent changes.
The Reality Behind the Headlines
The phrase “No Tax on Social Security” oversimplifies what actually happened.
In practice: Social Security taxation rules remain unchanged.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique. Not all states automatically follow federal tax law changes, so state taxation may still apply. Contact me for a free consultation regarding your specific circumstances.
No Tax on Overtime: Really? What’s Real and What’s Hype?
A change affecting hourly workers and employers is arriving with the same recent federal tax legislation that introduced the tip deduction.
Often described in headlines as “No Tax on Overtime,” the rule begins with the 2025 tax year returns filed in early 2026 and provides a new federal income tax benefit for qualifying overtime pay.
Here’s what the rule actually means and how it works.
What is the “No Tax on Overtime" Rule?
Despite the headline wording, overtime pay is not completely tax-free. Instead, the law creates a new federal income tax deduction for qualifying overtime wages.
Under the new rule, eligible workers may deduct a portion of qualifying overtime pay from federal taxable income, subject to limits set in future IRS guidance. Overtime wages must still be reported and remain subject to Social Security and Medicare payroll taxes.
But note. It’s only the additional ‘half’ of the ‘time and a half’ that is not taxed for income tax: the base overtime hours are still taxed as before.
Who Qualifies?
The deduction applies to employees who receive overtime compensation under federal or state overtime laws, typically meaning pay at time-and-a-half or higher rates for hours worked beyond standard thresholds.
Employees most likely to benefit include workers in manufacturing and production, healthcare and emergency services, construction and skilled trades, retail, logistics, hospitality, and service industries.
Workers who are salaried and exempt from overtime rules generally do not receive overtime pay and therefore would not benefit from the deduction.
Reporting Requirements Still Matter
Overtime wages must still be properly reported on Form W-2, and payroll withholding will continue during the year as usual.
The benefit is realized when filing the tax return, not automatically in each paycheck. Employees should expect withholding to continue normally unless future IRS guidance changes employer payroll handling.
Like many tax benefits, eligibility is reduced or phased out at higher income levels. The deduction begins to phase out once Modified Adjusted Gross Income exceeds thresholds similar to those applied to the tip deduction, with final implementation details expected in IRS regulations.
Workers with moderate incomes are most likely to benefit fully from the change.
What This Means for Workers
For employees who regularly work overtime, the rule could lower federal income tax liability and increase effective take-home pay over the course of the year. However, payroll taxes still apply, and benefits will vary depending on income level and total earnings.
What Employers Should Know
Employers are not exempt from payroll tax obligations and must continue to properly calculate and report overtime wages. Accurate payroll reporting will remain essential to ensure employees can claim the deduction correctly on their tax returns.
Payroll systems may require updates once final IRS implementation rules are released.
Planning Ahead
Employees who regularly earn overtime may want to review withholding levels and overall tax planning beginning in 2025 to avoid over- or under-withholding.
This article is provided for general informational purposes only and should not be considered tax advice. Each taxpayer’s situation is unique. Not all states automatically follow federal tax law changes, so state taxation may still apply. Contact me for a free consultation regarding your specific circumstances.
Clean Energy and Electric Vehicle Tax Credits in 2026
Federal tax credits for clean energy improvements and electric vehicles continue to generate interest, but the rules can be complex and subject to change. As 2026 begins, taxpayers considering energy-efficient upgrades or vehicle purchases should understand which credits may still apply and what documentation is required.
Residential Clean Energy Credits
Tax credits may be available for certain qualifying home improvements, such as energy-efficient heating and cooling systems, insulation, and renewable energy installations. Eligibility often depends on the type of improvement, when the property is placed in service, and whether specific efficiency standards are met.
Electric Vehicle Credits
Electric vehicle tax credits can vary significantly based on vehicle eligibility requirements, income limitations, and dealer reporting rules. Not all vehicles qualify, and eligibility can change over time, making advance planning especially important.
Documentation Matters
Clean energy and electric vehicle credits often require detailed records, including receipts, manufacturer certifications, and vehicle documentation. Without proper substantiation, credits may be delayed or disallowed during return processing.
A Cautious Planning Reminder
While tax credits can provide meaningful savings, they should not be the sole factor driving major financial decisions. Reviewing eligibility and timing before making a purchase can help ensure credits are claimed correctly and reduce surprises at filing time.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Reporting Life Changes to the IRS and Social Security Administration: What to Update and When
Major life changes don’t just affect your personal life — they can also affect your tax records. Changes such as a new name, a new address, or a change in filing status should be reported properly to avoid delays, notices, or processing problems later.
Fortunately, most updates are straightforward once you know which agency to notify and when.
WHY REPORTING CHANGES MATTERS
The IRS and the Social Security Administration (SSA) rely on accurate information to:
• Match tax returns to Social Security records
• Process refunds correctly
• Send notices to the correct address
• Apply credits and benefits properly
Mismatched or outdated information can lead to delayed refunds, rejected returns, or unnecessary IRS correspondence.
NAME CHANGES: MARRIAGE, DIVORCE, OR LEGAL NAME CHANGE
If your name has changed due to marriage, divorce, or a legal name change, the first and most important step is updating your record with the SSA — not the IRS.
Social Security Administration Comes First
The IRS matches the name and Social Security number on your tax return against SSA records. If they don’t match, your return may be delayed or rejected.
You should report a name change to the SSA by submitting:
• Form SS-5, Application for a Social Security Card
• Supporting documentation such as a marriage certificate, divorce decree, or court order
Once the SSA updates your record, the IRS will automatically receive the updated information.
ADDRESS CHANGES: WHEN TO FILE IRS FORM 8822
If you move and want the IRS to update your address before your next tax return is filed, you should submit IRS Form 8822, Change of Address.
This is especially important if:
• You expect IRS correspondence
• You are in an installment agreement or under review
• You recently filed a return and may receive notices or a refund
OTHER COMMON CHANGES TO REPORT
Change in Marital Status
Marriage or divorce can affect filing status, eligibility for credits, and withholding. Filing status is updated when you file your next return, but withholding or estimated taxes may need earlier review.
Dependents
Births, adoptions, or changes in dependent status are generally reported on the next tax return. No separate IRS notification is usually required.
Business Address or Responsible Party Changes
Businesses should notify the IRS promptly if there is a change in business address or responsible party to avoid missed notices or compliance issues.
Bank Account Changes
Direct deposit information is updated on each tax return and does not carry forward automatically.
FORM 8822 VS. UPDATING YOUR NEXT RETURN
A simple rule of thumb:
• Use Form 8822 when the IRS needs your new address before your next return is filed
• Update your next tax return when the change can wait until filing
FINAL THOUGHTS
Life changes happen — marriage, divorce, moves, new children, and new businesses are all part of that. Keeping your IRS and Social Security records current helps ensure smooth tax processing and fewer surprises. If you’ve experienced a recent change and aren’t sure what needs to be updated, it’s worth reviewing your situation before your next tax filing.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
IRS Announces 2026 Standard Mileage Rates
The IRS has released the new standard mileage rates that will apply beginning January 1, 2026. These rates determine how much taxpayers can deduct for business, medical, moving (where applicable), and charitable mileage. Below is the IRS announcement in full for your reference:
IRS Notice – IR-2025-128 (Dec. 29, 2025)
IRS sets 2026 business standard mileage rate at 72.5 cents per mile, up 2.5 cents
WASHINGTON — The Internal Revenue Service today announced that the optional standard mileage rate for business use of automobiles will increase by 2.5 cents in 2026, while the mileage rate for vehicles used for medical purposes will decrease by half a cent, reflecting updated cost data and annual inflation adjustments.
Beginning Jan. 1, 2026, the standard mileage rates for the use of a car, van, pickup or panel truck will be:
• 72.5 cents per mile driven for business use, up 2.5 cents from 2025.
• 20.5 cents per mile driven for medical purposes, down a half cent from 2025.
• 20.5 cents per mile driven for moving purposes for certain active-duty members of the Armed Forces (and now certain members of the intelligence community), reduced by a half cent from last year.
• 14 cents per mile driven in service of charitable organizations, equal to the rate in 2025.
The rates apply to fully-electric and hybrid automobiles, as well as gasoline and diesel-powered vehicles.
While the mileage rate for charitable use is set by statute, the mileage rate for business use is based on an annual study of the fixed and variable costs of operating an automobile. The rate for medical and moving purposes, meanwhile, is based on only the variable costs from the annual study.
Use of the standard mileage rates is optional. Taxpayers may instead choose to calculate the actual costs of using their vehicle. Taxpayers using the standard mileage rate for a vehicle they own and use for business must choose to use the rate in the first year the automobile is available for business use. Then, in later years, they can choose to use the standard mileage rate or actual expenses.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Payroll Changes Employees May Notice at the Start of 2026
As a new year begins, many employees notice that their first paycheck of the year looks slightly different. Even without a raise or change in hours, January payroll amounts often shift due to annual updates across the tax system.
These changes are routine and are largely driven by inflation adjustments and statutory limits set by the Internal Revenue Service (IRS) and other agencies.
Why January Paychecks Often Change
Several payroll-related factors reset on January 1 each year, including federal income tax withholding tables, Social Security wage base limits, and contribution limits for retirement and benefit plans. As a result, take-home pay may increase or decrease slightly compared to late-year paychecks.
Social Security Wage Base Updates
Each year, the maximum amount of wages subject to Social Security tax is adjusted for inflation. Employees who earn above this threshold may notice that Social Security withholding restarts in January after having stopped late in the prior year.
For higher-income earners, this reset commonly results in a lower net paycheck early in the year until the annual wage base is reached again.
Retirement and Benefit Contribution Changes
January is also when updated contribution limits take effect for many employer-sponsored plans, including 401(k), 403(b), and 457 retirement plans, Health Savings Accounts (HSAs), and Flexible Spending Accounts (FSAs).
Employees who elected to contribute the maximum amount may see changes in their per-pay-period deductions. In some cases, payroll systems automatically adjust contributions; in others, employees may need to update elections.
Withholding Adjustments and Form W-4
Payroll withholding is based on information provided on Form W-4. While tax brackets and standard deductions may be adjusted for inflation, withholding does not automatically correct for every taxpayer’s situation.
Life changes such as marriage, divorce, additional income, or changes in dependents can all affect whether withholding remains appropriate.
What Employees Should Do Early in the Year
Employees should review their first few pay stubs of the year, confirm retirement and benefit contribution amounts, and revisit withholding elections if circumstances have changed. Small adjustments made early in the year can help prevent under- or over-withholding later.
A Planning Reminder
Payroll changes in January are common and expected, but they can also serve as a useful reminder to review overall tax and financial planning for the year ahead. Addressing questions early allows more flexibility than waiting until filing season.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
“Tax-Free” Doesn’t Always Mean Untaxed
Tax headlines often use phrases like “no tax” or “tax-free,” but the reality is usually more nuanced. Many types of income are still taxable — even if deductions or exclusions reduce the final tax bill.
SOCIAL SECURITY
Up to 85% of Social Security benefits may be taxable depending on income. The rules are based on a formula that considers other sources of income.
CAPITAL GAINS
Home sale exclusions, capital loss offsets, and carryforwards can reduce tax, but capital gains are not automatically tax-free. Note: the 2026 capital gains rate is 0% for amounts up to $49,450 single/$98,800 married filing jointly.
OVERTIME PAY AND TIPS
Recent law changes allow deductions for certain overtime pay and reported tips, but the income is still taxable and subject to payroll taxes.
ANNUITIES
Annuities are tax-deferred, not tax-free. Withdrawals may be partially or fully taxable depending on how the annuity was funded.
FINAL THOUGHTS
When something sounds “tax-free,” it’s worth consulting a tax professional to closely at the rules. Understanding how income is taxed helps avoid confusion and improves planning.
More Year-End Tax Planning Ideas: Investments and Retirement
As we continue looking at meaningful year-end opportunities, there are a few additional areas that may be worth reviewing before the calendar turns: investment gains and losses, required minimum distributions from retirement accounts, and thoughtful family gifting or estate planning. A little attention now can help reduce stress later and may even improve your long-term financial picture.
INVESTMENT GAINS, LOSSES, AND TAX-LOSS HARVESTING
If you have investments in taxable brokerage accounts, year-end is a good time to review how your portfolio has performed during the year. In some situations, selling certain investments at a loss may help offset gains recognized earlier in the year. This is sometimes referred to as tax-loss harvesting.
Key reminders:
• Losses can offset capital gains
• Excess losses may offset some ordinary income
• Remaining losses can carry forward
Always consider overall investment strategy and wash sale rules.
REQUIRED MINIMUM DISTRIBUTIONS AND RETIREMENT REMINDERS
If you’re subject to Required Minimum Distributions (RMDs), most distributions must be taken by December 31 to avoid penalties.
Year-end can also be a good time to:
• Review retirement withdrawals
• Confirm withholding
• Consider Qualified Charitable Distributions when eligible
YEAR-END GIFTING
The final weeks of the year are a natural time for many families to think about financial gifting and long-range planning.
Many people review:
• Annual gifts to family members
• Paying tuition or medical expenses directly where appropriate
• Beneficiary designations
• Whether wills or powers of attorney are current
These aren’t just tax steps — they are about clarity and peace of mind.
Thoughtful year-end planning can lead to reduced surprises and greater financial clarity. If you’d like to discuss investment decisions, retirement withdrawals, or family planning considerations, I’d be glad to help.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
More Year-End Tax Topics to Consider Before the Calendar Turns
Year-end is a natural time to take a closer look at your financial picture and make sure you’re prepared for both tax filing season and the year ahead. In addition to charitable giving, retirement planning, and business expenses, there are a few other important topics worth considering as December 31 approaches — especially relating to healthcare accounts and upcoming changes in tax law that may affect planning over the next couple of years.
HEALTHCARE ACCOUNTS: DON’T LEAVE MONEY ON THE TABLE
If you participate in an employer-sponsored healthcare account, year-end is the perfect time to review your balances and deadlines.
Flexible Spending Accounts (FSAs)
Many FSAs follow a “use it or lose it” structure. That means if you don’t use your remaining balance by your plan’s deadline, you may lose part — or even all — of the unused funds.
However, employers have options, and your plan may allow:
• A grace period into the early part of next year, or
• A limited carryover of unused funds
Since each plan is different, it’s important to confirm your specific rules. If you still have money available, consider scheduling medical or dental appointments, updating prescriptions, or purchasing qualifying medical supplies before your deadline.
Health Savings Accounts (HSAs)
HSAs work differently and are often extremely valuable from a tax standpoint. Contributions are tax-deductible, growth is tax-free, and withdrawals for qualified medical expenses are tax-free.
While HSA contributions don’t necessarily need to be made by December 31, it’s still a good time to:
• Review contributions so far
• Evaluate tax strategy
• Make sure funding aligns with next year’s needs
LOOKING AHEAD: TAX RULES MAY CHANGE AFTER 2025
Under current law, many provisions from the Tax Cuts and Jobs Act are scheduled to expire after 2025. Unless Congress acts, several rules could change beginning in 2026.
Examples include:
• Standard deduction scheduled to decrease
• Income tax brackets may shift
• Various deductions and credits may revert to prior rules
This isn’t a reason to panic, but it’s an excellent reason to stay informed and consider proactive planning. Awareness leads to better long-term financial decision-making.
PLANNING BRINGS CLARITY — AND PEACE OF MIND
Year-end planning isn’t just about minimizing taxes today. It’s about creating clarity, avoiding surprises, and strengthening your financial future.
If you’d like to review your healthcare accounts, consider long-range planning, or understand how future tax changes might affect you, I’d be happy to help.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
Year-End Tax Planning: Smart Strategies to Consider Before December 31
As the year winds down, it’s a great time to pause and take stock of your financial picture. A little bit of planning in these final weeks can sometimes make a meaningful difference on your tax bill — and help you start the new year on solid footing. Here are a few important areas to think about as December 31 approaches.
CHARITABLE CONTRIBUTIONS
The end of the year is traditionally when many people think about giving back — and charitable giving can also offer valuable tax benefits.
If you itemize deductions, qualified charitable contributions made by December 31 may reduce your taxable income. Consider:
• Gifts to qualified charities (cash, check, or online)
• Donating appreciated stock instead of cash
• Using a donor-advised fund if you want to “bunch” several years of giving into one tax year
• Making Qualified Charitable Distributions (QCDs) from IRAs if you’re eligible — this can satisfy part or all of your required minimum distribution and may reduce taxable income
Documentation is essential, so be sure you receive proper acknowledgment letters or receipts.
RETIREMENT PLANNING AND DEADLINES
Retirement accounts are another important part of year-end planning. Some deadlines happen by December 31, while others extend into tax season.
• IRA contributions can typically be made up to the tax filing deadline and still count for the prior year.
• 401(k) and similar workplace retirement plan contributions generally must be made by December 31.
• Required Minimum Distributions (RMDs) usually must be taken by year-end to avoid penalties.
• Self‑employed individuals may have additional retirement plan setup or funding deadlines.
YEAR-END PLANNING FOR BUSINESSES
Business owners also benefit from reviewing finances before the calendar closes.
• Purchasing needed equipment or technology before year-end may allow earlier deductions.
• Review income/expenses to see whether accelerating deductions or deferring income makes sense.
• Confirm bookkeeping, payroll, and compliance tasks are on track.
• Prepare for upcoming 1099 filing requirements.
OTHER ITEMS WORTH REVIEWING
Depending on your situation, you may also want to think about:
• Capital gains and tax‑loss harvesting
• Flexible spending accounts deadlines
• Health Savings Account (HSA) contributions
• Estimated tax payments
A LITTLE PLANNING CAN GO A LONG WAY
Every taxpayer’s situation is different, and good year‑end planning isn’t simply about reducing taxes in the moment — it’s about making smart choices that support your larger financial goals. If you’d like to talk through your year‑end options or review your situation, I’d be happy to help.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.
The Rules Have Changed for Required Minimum Distributions
Required Minimum Distributions (RMDs) are one of the most consequential tax rules for retirees. Here is a recap of the changes that have happened recently impacting when distributions begin, penalties for missing them, how Roth accounts are handled, and ways RMDs interact with charitable giving and survivor planning.
RMD Age Increases
Previously, most retirees began RMDs at age 72. Under SECURE 2.0, the RMD age increased to 73 beginning in 2023 and will rise again to age 75 in 2033. The change gives retirees more flexibility and tax deferral opportunities, but it also means planning is essential to manage future tax brackets and Medicare premium effects.
Lower RMD Penalties
The penalty for not taking a required distribution used to be one of the highest in the tax code at 50%. SECURE 2.0 reduced the penalty to 25%, and if corrected within two years, it may be reduced to 10%. This provides relief, but it is still important to stay compliant.
Roth 401(k) and Roth Employer Plan RMD Eliminated
A major planning change is that Roth accounts in employer plans such as Roth 401(k)s and Roth 403(b)s are no longer subject to RMDs beginning in 2024. This places them in line with Roth IRAs, which have never required RMDs for the original owner. This strengthens Roth accounts as a long‑term tax‑free retirement planning strategy.
Qualified Charitable Distributions (QCDs)
Qualified Charitable Distributions allow IRA owners age 70½ and older to give directly to a qualified charity and have the distribution count toward their RMD. SECURE 2.0 enhanced QCD rules by indexing the limit for inflation and adding new charitable giving opportunities in specific situations. QCDs remain an excellent way to reduce taxable income while supporting charitable causes.
Annuities and Surviving Spouse Provisions
The rules have also been redefined around annuities within retirement accounts and expanded options for surviving spouses, allowing more flexibility in certain beneficiary planning situations.
Planning Matters More Than Ever
These updates create meaningful opportunities—but also new complexity. Deferring RMDs may reduce taxes now but could create higher taxable distributions later. Roth accounts play an even bigger role in long‑term planning. Charitable strategies may benefit both taxpayers and the organizations they care about. More options…more decisions.
Roth Conversions
How and Why to Convert Retirement Accounts to a Roth IRA
Roth conversions have become an increasingly popular tax-planning strategy for individuals who want more control over their future tax burden. While converting retirement funds to a Roth IRA can create a tax bill today, the long-term benefits can be significant when done correctly.
WHAT IS A ROTH CONVERSION?
A Roth conversion occurs when you move funds from a pre-tax retirement account into a Roth IRA. Common accounts that can be converted include:
• Traditional IRAs
• Rollover IRAs
• SEP IRAs
• SIMPLE IRAs (after meeting holding requirements)
• Pre-tax portions of employer plans such as 401(k)s or 403(b)s (often after a rollover)
When you convert, the amount transferred is generally taxable as ordinary income in the year of the conversion. Once the funds are inside the Roth IRA, however, they can grow tax-free, and qualified withdrawals are not subject to federal income tax.
WHY CONSIDER A ROTH CONVERSION?
Tax-Free Growth and Withdrawals
One of the biggest advantages of a Roth IRA is that qualified distributions are tax-free. Unlike traditional retirement accounts, Roth IRAs are funded with after-tax dollars, meaning future earnings and withdrawals (once requirements are met) are not taxed.
No Required Minimum Distributions (RMDs)
Traditional IRAs and most employer retirement plans require required minimum distributions beginning at a specified age. Roth IRAs do not require RMDs during the owner’s lifetime, allowing funds to continue growing tax-free.
Estate and Legacy Planning Benefits
Roth IRAs can be powerful estate-planning tools. Beneficiaries receive distributions tax-free, subject to distribution timing rules, and heirs are not burdened with large taxable distributions in high-earning years.
Taking Advantage of Lower-Income Years
Roth conversions are often most effective during years when taxable income is temporarily lower, such as early retirement, job transitions, or years with unusually high deductions.
FINAL THOUGHTS
Roth conversions offer a valuable opportunity to reposition retirement savings for tax-free growth and greater flexibility. When executed with careful planning, they can reduce lifetime taxes and improve retirement outcomes. But Roth conversions are not right for everyone. Consider current and future tax rates, cash available to pay the tax, Medicare premiums, Social Security taxation, and interaction with other credits or deductions. Once completed, a Roth conversion cannot be reversed.
This article is for informational purposes only and does not constitute tax advice. Please contact me for a free consultation if you have questions about your individual tax situation.
What the 2025–2026 Roth 401(k) Rule Updates Mean for Your Retirement Planning
As retirement planning strategies continue to evolve, changes to Roth 401(k) rules under the SECURE 2.0 Act are driving meaningful tax and planning considerations. If you’re saving for retirement with a Roth 401(k), it’s important to understand what’s changing now and what’s on the horizon.
No More Required Minimum Distributions for Roth 401(k)s
One of the most impactful updates is the removal of required minimum distributions (RMDs) for designated Roth 401(k) accounts. Under prior rules, Roth 401(k)s were treated like traditional 401(k)s when it came to RMDs — meaning account holders had to begin withdrawing funds at age 73 (or later under future age schedules) even though qualified withdrawals are tax-free.
Thanks to the SECURE 2.0 Act, RMDs no longer apply to Roth 401(k)s. This change brings Roth 401(k)s into the same RMD-free treatment previously reserved for Roth IRAs, allowing your money to potentially grow tax-free for longer. For many savers, this means greater flexibility in retirement and the ability to keep assets working for you without being forced to take taxable distributions simply due to age.
Employer Matching Can Now Go Directly Into Your Roth Account
Another important shift affects employer contributions. Traditionally, employer matches tied to Roth 401(k) contributions were deposited into a traditional (pre-tax) 401(k) account. Now, employers generally have the option to deposit matching funds directly into your Roth 401(k).
While this can be beneficial because those contributions grow tax-free and can be withdrawn tax-free in retirement, it does come with a current tax consequence: employer Roth match amounts are treated as taxable income in the year they are made. If your employer adopts this approach in 2025, you can expect that added income to be reflected on your 2025 W-2, which you receive in early 2026.
Some savers may view this as a worthwhile trade-off for future tax-free growth, but it’s important to plan for the potential increase in taxable income today.
Catch-Up Contributions Must Be Roth for High Earners Starting in 2026
The SECURE 2.0 Act also changed the rules for catch-up contributions. For 2025, high-income earners (those with wages above $150,000 in the previous year) can still make catch-up contributions on a pre-tax basis. Beginning January 1, 2026, however, catch-up contributions for these high-wage employees must be made on an after-tax (Roth) basis.
This means that beginning with 2026 contributions, higher earners will pay taxes upfront on catch-up amounts, foregoing the immediate tax deduction they might previously have claimed. However, since contributions are Roth, qualified withdrawals in retirement can be tax-free.
Contribution Limits for 2025
For the 2025 tax year, contribution limits to 401(k) plans (including Roth 401(k)s) remain generous:
Under age 50: You can contribute up to $23,500 to your 401(k).
Ages 50–59 and 64+: You can make an additional catch-up contribution, bringing the total to $31,000.
Ages 60–63: Thanks to the “super catch-up” provision, you may contribute up to $34,750 total, combining the standard limit with the higher catch-up allowance.
Remember, you must make contributions by December 31 of the plan year for them to count toward that year’s limits.
What This Means for You
The recent Roth 401(k) rule changes give you more control and flexibility over your retirement savings. Eliminating RMDs lets you hold on to funds longer, potentially extending tax-free growth well into retirement. The option for employer matching to Roth accounts can enhance your tax-free income picture in the future — but it’s important to factor in the tax impact today.
Planning around these changes can help you take full advantage of available benefits and better align your retirement strategy with your long-term financial goals.
This article is intended for general informational purposes and does not constitute tax advice. Please contact us to schedule a complimentary consultation and learn how these updates may affect your specific situation.
More changes for 2026. Understanding the IRS “Mailbox Rule”
You may have heard recent news about changes to how the U.S. Postal Service applies postmarks. That has raised questions about whether mailing a tax return (or mail-in ballot) by the deadline still protects you if the IRS receives it late. The law itself has not changed, but how mail is processed has, so taxpayers should be more cautious.
The IRS Still Follows the Statutory “Mailbox Rule.”
Under federal tax law (Internal Revenue Code §7502), a paper tax return or payment is considered timely filed if:
• It is properly addressed
• Has sufficient postage
• Is mailed through the U.S. Postal Service
• And the USPS postmark date is on or before the filing deadline
If those conditions are met, it is treated as filed on time even if the IRS receives it later. This applies to many IRS filings, extensions, and certain payments.
Why There Is Confusion Now
The Postal Service has implemented operational changes that can sometimes delay when an official postmark is applied. That means something placed in a mailbox late in the day may not receive the same-day postmark like it often did in the past.
Because the IRS relies on the postmark date—not when you physically dropped it in a mailbox—a delayed postmark could make something appear late even if you mailed it on time.
Best Practices to Protect Yourself
If you are mailing important tax documents, consider:
• Mailing earlier than the last day when possible
• Using Certified Mail with a receipt
• Asking the post office to hand‑stamp a postmark at the counter
• Using IRS‑approved private delivery services such as FedEx or UPS
• Or simply e‑file when available, which is usually faster and safer
Bottom Line
The IRS still recognizes the “timely mailed = timely filed” rule—but the postmark date controls, and postal processing changes may affect when that postmark appears.
If your deadline is important, it’s best not to rely on dropping something in a mailbox at the last minute.
The article is meant for informational purposes only. Please contact me directly to discuss how this applies to your individual tax situation.