Doing our 2026 budget and realized a couple things actually changed on the credit side that I hadn't seen mentioned much anywhere, so figured I'd lay it out here.

Child Tax Credit is $2,200 per kid now, up from $2,000, and honestly the bigger deal is it's permanent this time instead of set to expire like the old version was. Up to $1,700 of it is refundable too, though you need at least $2,500 of earned income to actually get that refundable part. One thing that'll trip people up, starting this tax year you or your spouse (at least one of you, not both) plus the kid all need a valid SSN to claim it, that's a real change from before and it specifically messes with mixed-status households.

The dependent care credit got a pretty big overhaul that I feel like flew under the radar completely. The percentage jumped from a max of 35% up to 50%, but it actually phases down in two separate steps depending on your AGI, not just one drop like I first thought when I read about it. Full 50% if you're under $15,000, stepping down to 35% by around $43,000, then it actually holds flat at 35% all the way to $75,000 single or $150,000 joint, then it steps down again to a 20% floor by $103,000 single or $206,000 joint. Expenses are capped at $3,000 for one kid or $6,000 for two or more, so at the high end that's up to $1,500 or $3,000 back depending how many dependents you're claiming care for.

The one most people haven't clocked yet, quite honestly, is the FSA limit. If your job offers a dependent care FSA, the contribution limit goes from $5,000 to $7,500 starting January 1 2026. First permanent bump to that limit since 1986 actually, aside from a temporary pandemic-era change. Worth updating your election if you haven't already, since open enrollment locks it in and people miss it every year.

Anyone else been trying to budget around this and getting a bit lost in the phase-out math? The credit vs FSA stacking rules get kind of weird depending on your income band.

Sources: IRS.gov (Child Tax Credit and Child and Dependent Care Credit pages), National Law Review's coverage of the 2026 FSA limit increase, and Mercer's summary of the OBBBA dependent care changes.

Has anyone gone through reasonable compensation being challenged by the IRS? Just wondering what it was like and what was used to support the compensation amount (on both sides). Also what were the results of it being challenged? I understand there are some that neglect paying themselfs a reasonable comp more curious about cases where people felt like they had ground on in the argument. But I'll take horror stories as well. Just interested about hearing about it in practice.

It’s been so long. I completely forgot that they still owe me. I can’t get anyone on the phone email I give up at this point.

Wife and I have four LLC's that each own several rental properties. One of the LLC's also ran the payroll for all of the entities under its EIN (we have three employees). Last year, our attorney recommended that we form another LLC to basically act as the management entity that will also run the payroll, pay bills, etc. He also mentioned that we should be able to file just one partnership tax return for all of the properties. How does this work? We didn't file final returns for the prior year for the four LLC's. Can we just file one return for 2025 under the new LLC, and if so should we reference that this return includes the activity for the other four LLC's? One complication is that we filed payroll taxes under the one old LLC for the first quarter 2025 and under the new LLC for the rest of the year.

Also, for those who are in Ohio and are familiar with Ohio municipal taxes, we have credit carryovers on our municipal returns for each of the four LLC's that we carried forward to 2025. Assuming that we file everything under the new LLC starting in 2025, are we able to note that we are including the activity for the old LLC's on this return, and document the credit carryforward from each entity?

I’m considering taking a $10,000 distribution from a traditional IRA under the first-time homebuyer exception.

I understand that the distribution would still be subject to ordinary federal income tax, but the 10% early-withdrawal penalty may be waived if the funds are used for qualified home-purchase costs within 120 days.

My concern is tax withholding. If I elect 10% withholding, I would receive only $9,000 while $1,000 is sent to the IRS. Could the IRS consider only $9,000 as having been used for qualified home-purchase costs, potentially leaving the withheld $1,000 subject to the early-withdrawal penalty?

Would the cleaner approach be to:

• Elect 0% withholding on the IRA distribution;
• Use the full $10,000 for qualified home-purchase costs; and
• Make a separate estimated tax payment or increase payroll withholding to cover the ordinary income tax?

Has anyone dealt with this, or can a tax professional point to IRS guidance addressing whether taxes withheld directly from the distribution qualify for the first-time homebuyer exception?

I amended my tax return for the year 2024 around mid march. Its been around 4 months and the status is still showing received. Is anyone else on the same boat?

I own a signed race car photo (fair market value ~$2,000) that I'd like to hang in my office. I'm considering having my business buy it from me at that price to use as office decor.

A few things I'm trying to figure out:

• Is this considered a related-party transaction that the IRS scrutinizes, since I'd be on both sides of the sale?
• Since art typically isn't depreciable, does the $2,000 just sit on the books as a non-deductible capital asset, or is there a way to expense it (e.g., de minimis safe harbor for items under $2,500)?
• Would I owe personal capital gains tax on the "sale," and how would basis work if I received it as a gift from a relative.
• Is there a real business-purpose argument here since it'll be in an office lobby I use for work, or is that not enough to avoid it getting recharacterized?

Business is a S Corp. Not looking for a workaround, just want to understand what's actually allowed here before I talk to my CPA. Appreciate any insight from people who've dealt with similar related-party or business asset situations.

My DH will be the only beneficiary of income earned by an estate that earns about $5k a year in O&G royalties in state X. He resides in state Y which has no state income tax. State X has state income tax. The estate will issue a K-1 to my DH every year since the estate passes 100% of these earnings on to DH. I know we need to report and pay federal income tax on this K-1 but what about state X? Do we owe any tax to state X and if not, do we even need to file anything in state X?

Hypothetically, couple in mid 80s, HNW, each has an IRA worth $5 or 6M or more. Other significant assets that have already been placed in two separate revocable trusts within the last year, of which they are the trustees. Have been taking $1M of RMDs a year which they do not need, huge tax burden, no interest in charitable giving.

One spouse is healthy and active, one rapidly declining but competent with a serious condition. Everything will eventually pass to several biological children per stripes. Some of the adult kids are in a 12% bracket currently, one in a much higher one.

Should the spouses still designate each other as the beneficiary of the IRA or would it make more sense to designate their children in equal shares? Wouldn’t designating each other result in the surviving spouse having to take the same RMD (more or less) but now filing as single? Tax is federal only, no state

I have a question regarding the state tax withholding on my relocation payment.

My relocation benefit is part of my employer's relocation package and will be prepaid before I relocate (upfront lump-sum payment, not reimbursement for actual moving costs). I am scheduled to move in two months, and the relocation payment will be treated as taxable income.

Since I will receive the payment while I am still residing and working in my current state, I expected the state income tax withholding to be allocated to my current state. However, I was informed that the state income tax withholding will instead be allocated to the destination (gaining) state.

Is it correct that withholding to the gaining state is correct in this situation?

Hi all,

I have recently accepted a position in the oilfields in West Texas and will be starting in August. The position requires me to drive out there from my home in Louisiana where I currently live. It's rotation work so I'll be making this drive twice a month.

It is my understanding that Texas has no state income tax. I have family in Texas that I could "live" with on paper to potentially avoid state taxes from Louisiana. My question is is this legal? If so, should I do it or is it more trouble than its worth as I assume I would have to get new IDs, change voting status, re-register my car, etc.

Thanks!

I have a dual member llc(husband and wife) and want it converted to single member so it can be filed as a disregarded entity and save money on tax filing with our accountant. This is in Ohio. Whats the best way to do this? Can the effective date be immediately after we originally filed the llc? It was a mistake filing it with 2 members to start with(didn’t know what I was doing).

How do you stay on top of tax law changes across jurisdictions?

Curious how others handle this. We work across several states and keeping track of every DOR bulletin, rate change, and filing update is getting unmanageable. Right now we rely on newsletters / CPE / word of mouth. Anyone found a system that actually works without paying $2k/year for Checkpoint?

Totally hypothetical: If give my fiancé a gift or gifts over the annual limit for that year, but I marry her later that same year, do I still have to file a Gift Tax Return, since if I marry someone by December 31st I am considered married for the entire year by the IRS. Or does that definition apply only to Income Tax and not Gift Tax? Does this make long engagements more expensive in terms of taxes?

This has been ongoing for over a year. They finally shared exactly what the issue is (IL Regulation 100.3020). For the years involved, I was living and working in CO with no intention of returning to IL.

Spoke to a person last week. They are asking for 2021 CO 1040 and 2021 W2s. No problem, except that my browser auto-filled my IL driver's license on the e-file form and I left it thinking it didn't matter.

In addition to sending those, I'm looking at the documents I have from the move out of IL, like the bill from the disposal company for emptying the oversized dumpster twice, the confirmation from the relocation company, and such. Also, I have receipts for the new furniture I bought in CO, some CO medical bills, and of course the apartment leases.

If it matters, I chose not to renew my license. I was within walking distance of work, getting food delivered (worked for a well known grocery conglomerate), and had access to all of Denver's amazing public transit.

My question: how much is too much? Can I get myself into trouble by giving too many documents as proof that I did not intend to return to Illinois?

Hello all, I’m a teenager and I’ve emailed a local wax company to be a receptionist because I want the experience and also I just want a job. Below I’m going to put our emails and I need to know if I’m being taken advantage of or not or if this is even legal. Thank you.

Employer: Hi! Thank you for getting back to me. 😊

A few quick questions:

Do you have reliable transportation to and from work? What is your availability? (Days and hours you’re available to work.) I also wanted to let you know that this is a 1099 independent contractor position, and the pay starts at $10 per hour.

Since you’re under your parents’ guidance, please share these details with them first. If they’re okay with everything, we’d love to meet you.

If that works, can you come in tomorrow around 12:00 PM to speak with _____ at our ______ location?

I look forward to hearing back from you!

Second email:

Hi!

No problem at all about the double email, and I’m sorry for the delayed response—I was tied up today.

_____ told me you stopped by, and I’m so glad to hear you have reliable transportation!

Regarding the 1099, the position is currently 1099 only. Since we’re a small business, we don’t have W-2 positions available at this time. Everyone here works as an independent contractor.

I mentioned the 1099 because if you earn more than $600, I would issue you a 1099 form for tax purposes. I always recommend setting aside a little money for taxes just to be safe. Since you’d only be working for a short period of time, I’m honestly not sure whether you’d end up owing taxes—that depends on your total income and tax situation.

As for the schedule, I can offer preferred hours. Some team members choose to work shorter shifts, while others prefer to work 10:00 AM to 7:00 PM because they want the additional hours. We can discuss what schedule works best for you.

Let me know if you have any other questions. I’d be happy to discuss everything with you!

As the title states my mom passed 4 years ago. I was 22 at the time and was next of kin but didn’t really even think about taxes until now.

She had no assets or money as she was only receiving SS but I believe we notified them of her passing at the time. Since she was not working I don’t believe she was filing taxes for a few years leading up to her passing.

Is there even anything to do at this point? Do you think I can get in trouble if she was supposed to file whatever income she did have?

Should I just let it be? Obviously nothing has been received on my end from them.

It's a long story, but I am 28 years old, and have never files taxes. Due to a toxic situation, I've been conditioned to never worry about my financial independence, but my mother has given me my SSN to start. I have filled out a few W9s for game distribubor websites, however, I don't know the best way to file taxes on the game sales. Can anyone help me?

I’m 35 years old the last 2 years i didn’t work. Started a couple month ago working again but realized I want to get out.
I got everything invested in a high yield etf (12%) return. Is there a way to cash out my dividends and live of them without paying 10% penalties? Also I’m single I was reading I don’t pay capital gains on dividends and ordinary income tax. Would I just pay the penalty fee?