Why work with Liberty Financial in 2026 for your accounting and tax prep needs?

Although it may appear early to begin thinking about the 2026 tax season, it is important to begin making plans regarding your personal tax preparation.  This is especially important if you have a business.  There is still plenty of time to make adjustments now so one is on track with their income tax filing.  

One important decision an individual or business owner needs to make is selecting an accountant to work with for their tax prep and business accounting needs. Below are reasons why one should consider working with LFC:

Individual taxpayers

• Years of experience 
• Affordability
• Knowledge
• Enrolled Agent (IRS designation)

Business Owners

• Worked with wide variety of clients in multiple industries
• Dedication
• Quickbooks Advisor
• Reasonable rates

Contact the LFC office to get started today!

Office:   651 204 6577

Preparing for 2026 Tax Season - tool to use

 Now that the 2025 tax season has officially ended (October 15th, for those that filed extensions), Liberty Financial is moving ahead to the 2026 tax season.

Here you will find documents to help you prepare for 2026 taxes.   This is the Letter of engagement for individuals and businesses.  You can fill it in and transfer the document to LFC via Dropbox or other transfer service. Contact the LFC office before transferring the document.

Things to keep in mind:

• New clients will need to prepay fees before work begins on tax preparation
• Existing client fees are due when work is completed
• Prepaid fees to start work for new clients - Individual taxpayers $375; businesses (S-corps & C Corps; LLC's, and Partnerships) $1000
• Additional fees may be required depending on extent of work involved in preparing tax return.  LFC will notify new client if additional fees are to be charged.

Tax Cut analysis - US Department of Treasury

 In June of 2026, the US Department of Treasury analyzed the impact of the recent tax law changes (as well as the importance of extending the 2017 tax law) on working families.  The complete analysis can be found here.  Below you will find some of the highlights from the analysis:

• Tax relief came primarily to families making less than $200k  per year
• Those making between $100k and $200k experienced an average tax cut of $1250; those making between $50k and $100k averaged $815
• No tax on tips - saw 7.5 million filers claim an average deduction of $7k
• No tax on overtime - saw over 29 million filers claim an average deduction of over $3k
• Enhanced Senior Deduction - over 35 million filers claimed an average deduction of over $7500
• No tax on car loans - average deduction of over $1800 for 1.4 million filers
• Trump Accounts - 5.5 million accounts opened
• Enhanced Child credit - 40 million families claimed the credit
• Total individual tax relief - $82 billion

These numbers are for returns filed by April 15th.  They do not account for taxpayers who filed extensions to October 15th.  Thus, the numbers will show greater impact once the extended returns are added to the analysis.

The good news is that the 2017 law was made permanent along with enhancements from the One Big Beautiful Bill (OBBB) which was passed in July of 2025.  Tax bills since 2001 have carried with them  uncertainty because they have included sunset provisions (expiration dates) in order to get them passed through Congress.  This was true with the 2017 bill.  It was set to expire in Dec of 2025.  Now that the bill is made permanent, individuals and businesses have more certainty in their future tax planning.  

There is always a risk that this current tax bill can be repealed and replaced by a future Congress. But for now, it is the law in place and it is providing significant relief to taxpayers.

LFC will be watching for any update on these statistics once the extended returns are processed and added to the current data.

2026 Year-end tax planning with LFC

As we move into the last quarter of 2026, it is a good idea to consider reviewing one's tax situation before the close of the year.  This review will help with the following:

• Maximizing the benefits provided in the One Big Beautiful Bill (OBBB)
• If necessary, make adjustments to estimated tax payments (final quarter payment due 1/15/27)
• Determining contribution amounts for retirement plans
• Decide if making purchases on business equipment for additional depreciation deduction is warranted

Other important items for business owners include:

• Making sure year-end payroll processing is on track
• All vendor data files are in order for 1099 processing in Jan 2027
• Potential write-off of accounts receivable for non-collectible customer balances (bad debt expense) for accrual-based accounting systems
• Ensure all bank and credit card accounts have each month's reconciliation completed
• If business maintains inventory, perform a physical count of items on hand as of 12/31/26.  For retail businesses, this would include sellable goods inventory; for manufactures, it would include finished goods, works in progress, and parts.
• Review owner capital accounts for distributions, outstanding loans, and capital contributions for the current year
• Review fixed asset purchases and disposals during the current year to update fixed asset list
• Final review of accounting system before file is provided to tax preparer

LFC can help with the year-end review as well as tax preparation for your business.  We also provide tax services to individuals.

Use the Contact Us tab or schedule a meeting from this blog to reach out to us.

Charitable Contributions for 2026

 Starting in 2026, non-itemizing taxpayers will be able to deduct contributions to qualified public charities.  The limits on the deduction are as follows:

• $1,000 for single taxpayers
• $2,000 for married filing taxpayers

These contributions must be in the form of cash or credit card transactions.

Other important information on charitable contributions for itemizing taxpayers for 2026:

• Contribution limit for cash contributions at 60% of AGI has been made permanent by the One Big Beautiful Bill (OBBB)
• Contributions are subject to a .5% Adjusted Gross Income (AGI) floor

The .5% floor means deductible contributions for itemizers must surpass .5% of one's AGI before any contribution is allowed.  The excess contributions of the .5% floor are allowed for the current year; the portion reduced by the .5% floor are carried forward for up to 5 years.  Any carryover charitable deduction not used with the 5-year period will expire.

IRS On-line Services

 The IRS has been actively encouraging individual taxpayers to look into their array of online tools to help them gain information relating to one's tax situation.  This would include:

• Balance information
• Make payments
• View history
• View tax return information
• Access transcripts
• Check status of refunds
• View digital notices from the IRS
• Obtain identity protection

The individual account information can be obtained here.

Businesses can access IRS information through the IRS business account tool.  One will find information on:

• General business information on file with the IRS
• Account history and payment history
• Make payments and deposits
• View IRS notices and letters

Business Account information can be found here.

Other tools are available from the IRS:

• Get a transcript
• Direct Pay with Bank account
• Payment Plan Information
• Tax Withholding Estimator
• Tax Assistant
• Mobile App

Feel free to contact LFC for more information.  Use the contact tab from this blog.

Depreciation & Section 179 Explained

 Depreciation and Section 179 Deductions can be a challenging aspect of one's business accounting and tax return.  The regulations regarding these deductions can be complex.  Despite the complexity, general definitions and rules are provided below:

Depreciation defined

Depreciation - for assets with a useful life of greater than 1 year, an annual depreciation expense is available for each year of an asset's useful life.  Assets would include office furniture, vehicles, buildings, intangible assets, machinery, tools, etc. Each one of these assets has a recovery period (useful life) for which an expense can be taken.  Below are examples of various assets and their recovery periods per the IRS:

Office furniture                     7 years

Automobiles                          5 years

Appliances                             5 years

Residential Rental Prop     27.5 years

Computers                             5 years

Normally, these assets would be depreciated over its recovery period.  For example, an appliance costing $2000 and depreciated over 5 years would experience a $400 deduction each year for 5 years.

Section 179 defined

Section 179 deduction -  refers to expensing an asset on one's tax return in its first year (deducting its entire cost) rather than depreciating it over its useful life.  The IRS provides guidelines on when this is permissible and what the limitations are.  You can find information on Section 179 and other depreciation information  here.  

The use of 179 deduction for an asset in its first year is illustrated below in a simple example to reflect tax savings:

Purchase of asset:

Office computer                 $5000   (Purchased 1/1)

First year depreciation        1000     (5 year property)

179 Deduction                    5000

The 179 Deduction provides tax savings of:     5000

                                                                              .22   (tax bracket)

                                                                          1100    Tax savings

For businesses with frequent turnover of assets, a strategy of when to use Section 179 with asset purchases and when not to use it can provide optimal tax savings over the long term.  However, a point should be made regarding 179 deduction:   if an asset has been expensed using Section 179 and it is disposed (sold, donated to a charity, given away, etc) before its useful life has passed (example:  a computer disposed of before 5 years when it had been expensed by 179), the item is subject to depreciation recapture. This means the item needs to recapture the depreciation taken before it would have been fully depreciated had it not been expensed with 179.  The recaptured depreciation is added back on one's tax return in the year of disposal.

Handling depreciation expense for a business can be challenging.  Let LFC help your business work with you in determining a strategy for your fixed assets.  Use the Contact Us or Set Appointment feature on this blog to schedule a time.

 

Accounts Receivable & Accounts Payable in Quickbooks

 Accounts Receivable and Accounts Payable are processes in an accounting system to handle 2 important functions that aid in the production of financial statements for a business or organization.  Each process is explained below:

1.  Accounts Receivable

Accounts Receivable is part of the income side of a business.  Invoices are produced to record sales of products or services purchased by one's customers.  Invoices keep track of who purchased items as well as what was purchased.  They are vital in maintaining sales of inventory (if a business sells inventoried items) and Cost of Goods Sold for the financial statements (when items invoiced and sold).  

When a business provides terms to its customers (allow customer to pay over time - ex: Net 30 days), the invoice/accounts receivable system helps monitor when customers have paid and how much, which helps in knowing if invoices have been fully paid.  

Accounts Receivable system also helps businesses  monitor which customers are good customers who pay their invoices consistently, or which customers are not paying their invoices promptly (and ones not to extend additional credit).  

2.  Accounts Payable

Accounts Payable is part of the expense or asset purchases system of a business.  Bills from vendors are entered into accounts payable to record purchases of inventory items, various expenses (ex: utilities) or assets like machinery and equipment. Checks are cut or electronic transfers are made as payments for the bills to satisfy one's obligation to the vendors.  Accounts Payable provides the system to monitor bill payments to help with cashflow by determining when bills should be paid.  

Quickbooks software can help manage Accounts Receivable and Accounts Payable for businesses.  It will handle even the more sophisticated systems that involve electronic payments and online processing. It will ensure data is reporting correctly on the financial statements and one's customer and vendor records are maintained properly.

Year-end tax planning - scheduling appointments with accountant

 Now is a good time to begin year-end tax planning.  As we move into the 4th quarter of 2026, it makes sense to review income and expenses along with making the necessary projections of income and expenses to determine the year's tax liability.

A series of appointments before the end of the year with one's accountant is vital to stay on top of one's tax situation.  This is extremely important if one owns and operates a business, particularly one that may have inconsistent revenue. It is also important if one's financial situation has changed dramatically for previous years.  This would include the receipt of retirement distributions, lump sum received from social security, an inheritance, etc.  Perhaps one's personal situation has changed (i.e. newly married, death of spouse, divorce, newborn child or adoption, etc). Thus, these changes warrant an analysis before year-end.

It is also important to keep in mind that as of this writing, there are 2 quarters remaining in 2026 to make estimated tax payments.  These opportunities are available if it is necessary for one to make estimated payments in order to pay the proper amount of tax into the government.   LFC can help with year-end planning and tax payment calculations.  Use the Contact Us and Set Appointments features on this blog to contact the office.

Records Retention

The IRS publishes guidelines on how long to keep accounting records.  These are records such as income, deductions, or credits taken on a tax return.  The IRS defines a period of time ('period of limitations') for holding records as the time for which one can amend a return or the IRS can impose more taxes on the taxpayer.

The time periods for income tax returns include:

• 3 years from the date you filed your original return or 2 years from the date you paid the tax, whichever is later, if you file a claim for a credit or refund after you file your return.
• 7 years if you file a claim for a loss from a worthless securities or bad debt deduction.
• 6 years if you did not report income you should have reported, and it is more than 25% of the gross income shown on a return.
• Keep records indefinitely if you did not file a return.
• Keep records indefinitely if you filed a fraudulent return.

There are other things to consider based on the nature of the records:

• Property records - keep until year property is disposed. 
• Healthcare insurance - if you claimed the premium tax credit, keep records for as long as you received advanced credit payments through the Health Insurance Marketplace and premiums paid. 
• Business records - if you have employees, employment tax records should be kept for 4 years after the tax becomes due or is paid, whichever is later.

You will find IRS information here and here for clarification.

Quickbooks Payroll

Within the Quickbooks Online or Desktop software is a payroll feature that provides quality payroll processing services.  This feature can be a cost-effective alternative to 3rd party processors.

Quickbooks Payroll allows small business owners to:

• Produce payroll checks at any frequency (weekly, bi-weekly, or monthly)
• Submit direct deposit
• Make payroll tax payments
• File quarterly 941 reports
• File state quarterly reports 
• Accommodate any other payroll tax liability (garnishments, retirement contributions, etc)

Quickbooks payroll will also handle the W2s at year-end.

Quickbooks Online software has the feature as part of the online accounting software.  Once it is turned on, one can begin processing payroll after set-up.  Quickbooks Online also has a stand-alone online version of payroll.  If a business needs payroll, but not the full accounting package, Quickbooks online payroll will accommodate these busiensses.

The payroll tool from Quickbooks is a  hands-on feature.  Business owners are in control of their processing. 

LFC can help businesses with their payroll needs.  Contact the LFC office from the Contact Us feature on this blog or set up an appointment. 

Deductions vs. Credits

In order to understand individual income taxes, it is important to have a clear understanding of deductions and credits.  As one works to take advantage of deductions and credits to reduce one's tax liability, it is important to know how each impacts the amount of tax one will owe.  

Explaining deductions & credits:

Deductions

Deductions can be in the form of adjustments or itemized deductions.  Examples of deductions include:

Schedule 1 Deductions

• IRA Contributions
• SEP IRA Contributions - Small Business Retirement Plans
• Educator Expenses
• Health Savings Account Contributions
• Self-Employed Health Insurance Premiums
• Student Loan Interest Deduction

Schedule 1-A Deductions

• Qualified Tips Received
• Qualified Overtime Received
• Enhanced Deduction for Seniors

Form 8895 Deduction

• Qualified Business Deduction for Small Businesses

Itemized Deductions (used when greater than the standard deduction based on filing status)

• Medical Expenses (in excess of 7.5% of Adjusted Gross Income)
• State and Local Taxes (SALT) - up to $40,400 (2026)
• Mortgage Interest
• Charitable Contributions

All of these categories of tax deductions provide significant savings to taxpayers.  Here is an example of the tax savings from a deductible expense:

Assuming a taxpayer is in the 22% tax bracket (based on one's taxable income). The taxpayer makes a deductible IRA contribution for the year.  His savings would be:

                                       $8000    IRA Deduction

                                            .22    Marginal tax rate

                                      ______

                                       $1760   Tax Savings

Total savings from qualifying deductions depends on an individual taxpayer's marginal tax bracket.

Credits

Credits reduce one's tax liability on a dollar-for-dollar basis.  This means the amount of the credit is the total tax savings experienced by the taxpayer.  It is not contingent of marginal tax rates.

Types of Credits

• Non-refundable
• Refundable

Non-refundable credits do not reduce one's tax liability below $0.  Refundable credits can reduce a taxpayer's liability to $0 and any excess credit remaining can be received by the taxpayer as part of a refund.

Examples of credits include:

• Child and dependent care credit
• Child care credit
• Education credits
• Adoption credit
• Earned income credit

Here is an example of how a credit would impact a taxpayer's tax liability:

                                 Taxes owed before credits       $4000

                                  Education credit                       2500

                                                                                   _____

                                 Total taxes owed                       1500

The credit reduced the taxes owed.

Understanding how deductions and credits work are an important part of tax planning.  Contact LFC for additional information or help with your tax planning and preparation needs.

Are we double taxed?

It is interesting to hear from taxpayers when a tax is imposed, particularly when it is the result of a gain on investment or sale of a business, that this represents double taxation. This concept is the result of thinking that since income earned had already been taxed before (i.e. wages or salary earned that had been subject to income tax and social security tax), that income should not be taxed again.  But this is not what is happening.

Explanations:

When income is earned through salaries or wages, it is taxed when a tax return is filed.  It will be subject to  tax withholding (income taxes and social security taxes), so a taxpayer is using after-tax income to pay for personal expenses or investing.

If after-tax income is used for investments, and these investments experience capital appreciation, the growth on this investment is taxable if it is recognized (the investment is sold).  The growth on the investment is new income (a new event) and it is taxed (at capital gain rates), not the original investment. The same is true with the sale of a business:  the growth of the business is taxed, not the original investment.

The receipt of social security benefits also confuses people.  One should look at social security taxes that are withheld from paychecks similarly to 401(k) contributions.  These funds are taken out of paychecks, along with an employer match, and benefits are received at retirement.  There is no double taxation because the social security benefits are a new event/new income that was funded by the social security taxes taken out of a person's paycheck over their working life.

It should be understood that events cause taxation.  Earning salaries and wages produces income taxation and the sale of assets creates capital gain taxes.  These are different events and have their own tax consequences.

For more clarity on taxes for individuals and businesses, contact LFC through the Contact Us feature on this blog.

Using Rules in Quickbooks Online

Within Quickbooks Online, a feature to connect to one's bank account can be utilized to help with data entry and bank reconciliations.

Once Quickbooks is connected to the business accounts (bank accounts and credit cards), data from the bank is available to users in a queue.  These transactions within the queue need to be coded properly (coded to the chart of accounts) and saved to the account registers.  This data entry feature helps save time because much of the work is done for the accountant.  

Rules can be set up in Quickbooks that allow transactions to be automatically entered from the bank queue directly to the chart of account register.  The rules are criteria of a transaction that is set up in Quickbooks and when the data comes down from the bank, it will recognize the transaction and can automatically enter it into Quickbooks.  Here is an example:

Bank transaction

from bank queue:             Office Depot purchase                            $50.00

Rule:     Office Depot purchases will be coded to Office supplies and enter the transaction automatically.

Result:   All future Office Depot transactions from the bank queue will be coded to Office Supplies, with no effort from the accountant to record the transaction.

Note:   Rules can work for expenses, deposits/cash receipts of sales, and liability payments to help streamline data entry.

Although rules can work well for some data entry situations, it can cause some problems.  From our example above, Office Depot purchases coded automatically to office supplies may not be correct in some circumstances.  Suppose a purchase at Office Depot is for a computer or office furniture.  These items are assets, not expenses.  But the rule established for Office Depot records everything to Office Supplies.  This means accountants need to be diligent in recording transactions despite the use of rules used within their accounting software.  This requires auditing of transactions and recoding to the chart of accounts if necessary. 

Rules can be a very helpful tool when entering data within an accounting system. However, it is a good idea to monitor the rules setup and determine that they are capturing and recording data property to ensure the financial statements are correct.

LFC can help with Quickbooks Online and the establishment of rules for one's accounting system.  Contact LFC using the contact feature from this blog.

Effective vs. Marginal tax rates

It is important for taxpayers to understand taxes and tax rates as they impact an individual taxpayer's financial life.  The type of tax rates explained here are:

• Effective Rate
• Marginal Rate

The effective rate can be explained as the total tax (tax liability minus credits and other tax adjustments) divided by gross income:

                                              Total Tax Liability

                                              Less Credits & Adjustments

                                              _______________________

                                               Gross Income

This number will tell you what % of taxes you paid on your total income after all credits and adjustments have been accounted for.  It will include total tax liability (income tax and other taxes such as self-employment taxes) to arrive at the effective rate.   This number is good to know for it tells taxpayers what % of their income is consumed by income taxes.

Margin tax rates are described as the rate of tax you are assessed upon earning an additional dollar of income.  The current code (2025) has the following tax rates:

10%, 12%, 22%, 24%, 32%, 35%, and 37%

These rates are assessed on taxable income.  This is the total income on the tax return after adjustments and itemized deductions (or standard deduction). 

For an example of how the marginal rates work, let's look at a married filing jointly taxpayer (2025 brackets):

Income range                                 Tax Bracket

0  to  23,850                                           10%

23,851  to  96,950                                  12%

96,951  to  206,700                                22%

206,701  to  394,600                              24%

394,601  to  501,050                              32%

501,051  to  751,600                              35%

751,601  and over                                  37%

Each bracket represents an income range which is taxed at the given rate. At the higher income levels, income is taxed at a higher rate.  The result is income taxed at various rates as one goes up the income scale based on one's taxable income on the income tax return.

Keep in mind, knowing one's marginal tax rate is important not only for its impact on income earned (i.e. next dollar earned would be tax at the marginal tax rate), but this applies to deductable expenses as well:  if one is in the 24% rate bracket, you will save $24 in taxes for each additional $100 deduction.

LFC provides tax services to individuals and small businesses.  Contact the LFC office for assistance via Contact Us on this blog.

Independent Contractors vs. Employees

 Many businesses hire independent contractors to fulfill work they need done rather than hire someone as an employee.  Plus, they may need the workers for a short-term basis, depending on the industry. Businesses may also use independent contractors to obtain a specific skills for which they do not currently have from their staff.  

Whatever the purpose for the use of independent contractors, independent contractors provide businesses with the opportunity to obtain flexible labor and expertise when they need it.

Despite the positive aspects of independent contractor labor, the IRS has some specific guidelines businesses must be aware of when hiring such individuals. Misclassifying someone as independent can become costly for an employer.  Information from the IRS can be obtained here.

In general, the key indicator as to whether someone is an employee vs. an independent is the amount of control the employer places over an individual to perform the work.  There are other factors to consider, but control of the end result is extremely important to assess so as not to misclassify the relationship.

The two forms of control the IRS will look at to determine the nature of the business relationship are:

• Financial Control
• Behavioral Control

Financial control can be described in simple terms as does the individual contractor have a financial interest in the endeavor, that is, do they have anything invested in the process besides their time (equipment, etc) and would they recognize a profit or loss from the activity.  

Behavioral control would include a business dictating how something is to be done, when someone needs to come in to work, and  where the work is to be performed.

Proper evaluation of an employee/independent contractor situation before making the decision to bring someone on board is vitally important. Assessing whether someone is an employee or independent contractor can be difficult to determine.  LFC can help with these assessments.  Contact LFC to discuss work classifications for your business.

Sales Taxes

Sales tax complexity

 Sales tax compliance can be challenging for businesses.  One needs to understand not only what items or services are taxable, but also what rate is applied to transactions.  

In Minnesota, sales tax rates are assessed based on where a product is delivered, not where the transaction originated.  Plus, if a business has sales in other states, one needs to determine if those sales are taxable, and assess whether the volume of sales in a particular state (sales threshold) or total number of sales within the state (sales transactions) meets its reporting criteria.  Once the threshold criteria have been met for a particular state, a business will need to register with a state's Department of Revenue in order to file sales tax reports in the future.

The state of Minnesota provides Sales Tax information to guide businesses through this process.  You can find it here.  Streamline Sales tax reporting can help with sales tax issues in other states.  This information can be found here.

The state of Minnesota's complex sales tax system is compounded by the number of entities that assess a sales tax.  Many counties and cities have imposed sales taxes.  Here you will find a guide (thru 9/30/26) of sales tax rates for the many municipalities that impose a sales tax in the state.

Quickbooks software

Quickbooks software can manage sales taxes for businesses.  Whether a business is a stand-alone retail operation, or a business that distributes its products to a wider geographical area, Quickbooks can handle the process.  For more complex sales tax situations, 3rd party apps are available to work with Quickbooks to properly calculate sales taxes. 

If you need assistance with sales tax issues, contact LFC.

Possible expansion of capital gains exemption on home sales

Recently, there has been discussion by the Trump Administration to expand the capital gains tax on home sales.  Due to significant increases in home prices and low inventories of existing homes, the discussion is important.

Let's review the tax provision as it currently sits.  The existing law goes back to 1997 where the following parameters were put in place:

Excluded gain on sale of home                               Filing status

250,000 or less                                                        Single

500,000 or less                                                        MFJ

The 1997 law was significant legislation and provided considerable tax relief to taxpayers for selling their homes.  However, since that time, there has been no indexing gains to inflation.

Right now, this is an idea has been brought up for discussion.  It will take an act of  Congress  to draft the legislation, plus a vote in the affirmative along with a signature from the President for it to become law.  We don't know what form this proposal will eventually take, but LFC will be watching  the development of this idea in the weeks and months ahead.

Consulting Businesses - accounting for retainers

 In the consulting business, retainers are received from clients for future work on projects or on-going consulting services.  How to handle this for accounting purposes is an important concern.  

First of all, if the consulting business accounting system operates on a cash basis, the receipt of a retainer would be recorded as income even through no work has been done yet to be applied against the retainer received.  Therefore, a system outside of the accounting system, perhaps a spreadsheet, would monitor hours worked and applied against the retainer.  

If the accounting system is an accrual system, the initial receipt of the retainer is recorded as Unearned Revenue.  This means that the receipt of the retainer does not generate income.  Work performed and invoiced against the retainer is when the income is earned.  Once work is performed, invoices can be created and applied against the retainer based on how work is charged: per hour, flat rate, etc.  

If charging customers by the hour, one could make use of Quickbooks timesheets to monitor time charged against a project and applied against an already received retainer.  This will help keep track of the work performed as well as know how much of the retainer has been used.

Keep in mind, if a retainer has not been fully exhausted, the remaining balance would be a liability for the company and owed back to the customer.  

If your business accepts retainers and is unclear how to handle them, contact Liberty Financial for more information.

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.