Part 1: Tax Season 2026: IRS Compliance and Updates Series.
Asset Depreciation
Implement 100% bonus depreciation for qualified property. Property must be acquired after January 19, 2025. Restoration is permanent under the One, Big, Beautiful Bill (OBBBA).
- Action Items:
- Identify all MACRS property with recovery periods of 20 years or less.
- Include computer software.
- Include Qualified Improvement Property (QIP).
- Include qualified sound recording productions.
- Verify binding written contracts dated after January 19, 2025.
- Apply depreciation on Form 4562.
- Calculate potential Net Operating Loss (NOL) creation.
Utilize Section 179 expensing. Limits increased for 2026.
- Specifications:
- Maximum deduction: $2,560,000.
- Phase-out threshold: $4,090,000.
- Limit to taxable income.
- Carry forward excess deductions.
Income Deductions
Apply permanent Qualified Business Income (QBI) deduction. Section 199A sunset provision removed.
- Compliance Steps:
- Calculate 20% deduction for pass-through entities.
- Audit W-2 wages and unadjusted basis immediately after acquisition (UBIA).
- Check specialized trade or business (SSTB) status for high-income earners.
- Link to internal resource: Maxing out your deductions.
Process Research & Experimentation (R&E) expenses. Update accounting for domestic and foreign expenditures.
- Requirements:
- Verify immediate expensing restoration for domestic R&E.
- Amortize foreign R&E over 15 years.
- Review Section 174 definitions for technical risk.
Information Reporting
Prepare 1099-NEC and 1099-MISC forms. Threshold updated for 2026.
- New Thresholds:
- Non-employee compensation: $2,000.
- Miscellaneous income: $2,000.
- Collect Form W-9 from all vendors.
- E-file via IRS Information Returns Intake System (IRIS).
Monitor 1099-K reporting. Thresholds reverted for 2026.
- Limits:
- Gross payments: $20,000.
- Transaction count: 200.
- Reconcile third-party network transactions with bank statements.
- Verify business vs. personal transaction categorization.
Employer Credits
Claim expanded Employer Childcare Credit. Review facility and contract eligibility.
- Credit Parameters:
- Increase credit percentage for qualified childcare expenses.
- Include resource and referral services.
- Audit childcare facility certification.
- Document 25% of qualified childcare expenditures.
- Document 10% of qualified childcare resource and referral expenditures.
Manage Tip and Overtime reporting.
- Procedures:
- Report all tips over $20 per month.
- Implement new overtime exemption tracking.
- Apply new reporting requirements for service industry staff.
- Link to internal resource: LLC compliance guide.
Vehicle and Forms
Apply 2026 standard mileage rate.
- Rate:
- Business use: 72.5 cents per mile.
- Charitable use: 14 cents per mile.
- Medical/Moving use: 22 cents per mile.
- Maintain contemporaneous logs.
- Record date, destination, business purpose, and starting/ending odometer readings.
Submit Schedule 1-A.
- Instructions:
- Review "One, Big, Beautiful Bill" supplemental reporting.
- Report aggregated benefit adjustments.
- Attach to Form 1040 or Form 1065 as required.
- Verify accuracy of tax year 2026 data.
Checklist Summary
Download checklist: Ultimate 2026 Tax Checklist.
- Verify 100% Bonus Depreciation.
- Update Section 179 limits to $2.56M.
- Confirm QBI Permanence.
- Adjust 1099-NEC threshold to $2,000.
- Adjust 1099-K threshold to $20k/200 transactions.
- Apply 72.5 cent mileage rate.
- Complete Schedule 1-A.