2026 Tax Preparation - things to know

 Some key provisions of the One Big Beautiful Bill Act (OBBBA) of 2025 kick in for 2026 or are adjusted for inflation.  Below is a short list of important items for the 2026 tax preparation season:

1.  Educator expenses of $350 to be deducted without itemizing.  Excess of $350 can be deducted on Schedule A and not subject to 2% AGI limitation.

2.  $2500 of Education loan interest is deductible.

3.  Annual gift tax exclusion amount is $19,000.

4.  Standard mileage (use of car for business, charities, or medical) per mile:

      a.  Business - 1/1/26 to 6/30/26:   72 cents; 7/1/26 to 12/31/26:   76 cents

      b.  Charities - 14 cents

      c.  Medical - 1/1/26 to 6/30/26:  20.5 cents:  7/1/26 to 12/31/26:  23.5 cents

5.  Recipients of 1099 Misc or 1099 NEC:  reporting organizations will issue forms if amount paid to qualifying individuals is $2,000 or more (prior to 2026 amount was $600).

6.  Child and Dependent Care credit - up to 50% of expenses (prior years: 35%)

7. Mortgage insurance premiums are included as qualified mortgage interest.

8.  Gambling losses are reduced to 90% of losses against gambling winnings.

9.  SALT (State and local tax) deduction limitation raised to $40,400 for 2026.

10.  Charitable deduction of $1,000 ($2,000 for Married filing jointly) for non-itemizing taxpayers.

11.  529 Education Plans - distribution increase from $10,000 to $20,000 for elementary and secondary school expenses in 2026.

 

These are some of the provisions of the OBBBA for 2026 to be aware of.  LFC can help taxpayers learn more about the 2026 filing season and what other items of the law may impact them.  

Contact LFC for more information or set an appointment.      

Errors on financial statements in Quickbooks

As a Quickbooks Pro Advisor, Liberty Financial has offered assistance to Quickbooks users in assessing and correcting problems with financial statements.

Many errors result from incorrect item set up or lack of understanding of basic accounting.

Here are some examples:

1.  Adding items to the item list:  the item list is used to populated forms such as invoices, sales receipts, sales orders, purchase orders, and bills.  The items direct the transactions to the chart of accounts.  If the item is tagged to the incorrect account on the chart of accounts, the financial statements will be incorrect.  It is important to know when an item is to be coded as income, expense, or an inventory item as it is used on a form.  

2.  Treating all payments as expense - payments for credit cards or loans should not be treated as expenses.  These are liability payments.  The expenses are the actual charges on the credit card statements and the interest component on the loan payment. These are the charges that should be reflected on the income statement, not the payment to reduce the loan or credit card balance.  Those payments impact the balance sheet.

Basic accounting requires an understanding of the accounts on the chart of account list:

Assets - items owned by the company:   cash, accounts receivable, fixed assets, inventory, and intangible assets such as trademarks and patents.

Liabilities - items owed by the company:   accounts payable, payroll taxes, sales taxes, customer deposits, mortgages loans, vehicle loans, and credit cards.

Capital - net equity of the company (assets - liabilities):  capital consists of cash and property put into the company by the owner; distributions taken by the owners, and retained earnings (sum of profits and losses over the life of the business).

Viewing transactions as a journal entry will help reduce errors on a financial statement. Here are some examples:

Sales:      Debit to Accounts Receivable or Cash

                Credit to Income

Expense:  Debit to Expense (utilities, office supplies, etc)

                  Credit Cash or Accounts Payable

Owner Draw/Distribution:      Debit Owner Distributions (capital account)

                                                  Credit Cash

These are some basic concepts to keep in mind about processing financial data for one's financial statements.    Liberty Financial can help organizations ensure they have credible financial statements, which are vitally important to their success.

Contact LFC today for assistance.

Estimated Tax payments 2026 - 3rd and 4th Quarter

For those taxpayers who need to make quarterly tax payments each year, the 3rd and 4th quarter payment due dates will be coming up soon.  Those due dates are as follows:

• 9/15/26
• 1/15/27

The One Big Beautiful Bill, passed in 2025, has made the necessity to review the estimated tax calculations important.  With its multitude of new provisions and tax savings features, it is vital to know that the calculation for these payments is accurately determined and one is taking full advantage of the law's tax savings as it pertains to one's financial situation.  

Liberty Financial Consulting, Inc. can help you with these calculations.  Contact the office to arrange a time before the September deadline for the 3rd quarter payment.

Trump savings accounts - Recent IRS Ruling

In 2025, the Big Beautiful tax bill created a new savings accounts for kids called 'Trump accounts'.  Although these accounts were created in 2025, they were not available until 1 year after the bill was signed into law (7/4/26).  Much of the bill's highlights can be found here.

The Trump accounts are a new account to save for a child's future.  It has important features and one can access information on the accounts in the link above.  For now, we will focus on the recent IRS ruling.  The ruling brings clarity to whether contributions to these accounts are considered a 'present interest' or 'future interest' for the beneficiary.  Since the child does not obtain the funds until he or she reaches 18, this distinction is critical as it relates to gift tax returns.

A present interest is a gift that provides immediate ownership of the gift by the recipient.  This gift qualifies under the annual gift tax exclusion, which in 2026 is $19,000.  A future interest gift, or a gift for which future ownership is derived, does not.   This is important because a future interest gift, or a gift greater than the annual exclusion amount, triggers the necessity to file a gift tax return. The current  ruling by the IRS has deemed contributions to Trump accounts as present interest gifts. The clarity presented by the IRS ruling has now paved the way for these accounts to be considered a significant  vehicle for child savings without having to file another tax return.  

Keep in mind most gift tax returns do not produce a tax liability for taxpayers.  The gift tax produced on the gift tax return is off-set by the unified lifetime credit for gifts and estates.  However, it is required to be filed if one gives recipients a future interest gift or a gift greater than the current year exclusion amount. 

Big Beautiful Bill - July 2025

The Big Beautiful bill was passed and signed into on July 4, 2025.  This is a significant piece of legislation that, most importantly, made permanent the tax provisions of the 2017 Tax Cuts and Jobs Act.  The 2017 law was set to expire on 12/31/25.  Had it not been extended or made permanent, the law would revert back to pre-2017 provisions.  This would have imposed a large tax increase on taxpayers.

This brings certainty to the tax code.  Individuals and businesses can now engage in tax planning with greater confidence in the future.

Below is a summary of the bill:

Big-Beautiful-Bill-Recap-July-2025.pdf