XQ CPA

If you rent out your primary or secondary residence for no more than 14 days this year, you may be eligible for a tax break known as the “Augusta rule.” The rule allows eligible homeowners to temporarily rent out their homes without reporting the rental income on their personal tax returns. Homeowners typically take advantage of the rule when renting their homes to tourists. Business owners who rent their homes to their businesses for short, event-driven occasions can potentially deduct the rent paid as a business expense while excluding the rental payments from their individual taxable income. But strict compliance with IRS rules is essential. Contact us to learn the details.

Hiring seasonal employees can help businesses meet peak demand, but it also comes with important tax responsibilities. Employers must verify work eligibility, properly classify workers as employees (not independent contractors), withhold payroll taxes and report wages on the appropriate tax forms. Seasonal employees are generally subject to the same federal payroll tax rules as year-round staff, even if they work for only a short time. Proper planning can help you avoid costly payroll mistakes and compliance issues. Contact us if you need guidance before bringing on seasonal workers. For information from the IRS: https://bit.ly/4eXWK3O

Simpler tax rules. Better digital tools. Stronger fraud protection. Those are just some of the priorities highlighted in the newly released Electronic Tax Administration Advisory Committee (ETAAC) 2026 report to the IRS and Congress. (ETAAC members represent taxpayers, tax professionals, tax software developers, payroll service providers, the financial industry, and state and local governments.) The committee’s recommendations focus on technology modernization, AI-powered taxpayer services, digital filing and payments, tax simplification, and sustained IRS funding. The intention is to help create a more efficient, secure and accessible tax experience for individuals and businesses.

Does your child have a paid summer internship? Don’t let him or her forget about taxes. Many interns are surprised to learn that internship stipends or other related payments are generally taxable, even if the program offers training or educational opportunities. Depending on the arrangement, payments may be reported on Form W‑2 or Form 1099. Even if no tax form is issued to your child, the income may still be taxable. If taxes aren’t withheld from internship pay, estimated tax payments might be necessary to avoid surprises when it’s time to file a tax return. If you have questions, we can help.

If your C corporation traditionally makes deductible charitable gifts, make sure you know the rules for 2026 donations. Starting Jan. 1, 2026, corporations can only deduct charitable gifts in excess of 1% of the company’s taxable income, with a 10% of income cap. Amounts exceeding the 10% cap can be carried forward — as can amounts that aren’t currently deductible due to the 1% floor — for up to five years. You may want to execute a multiyear charitable deduction strategy if your company’s income varies from year to year. Contact us. We can help by projecting income and other deductions so you can support your community while maximizing long-term tax benefits.

Can taxpayers deduct alimony payments? It depends on when you signed your divorce or separation agreement. If it was made in 2019 or later, you can’t deduct alimony (and alimony’s not included in the recipient’s taxable income). But these payments are generally deductible (and taxable to the recipient) if they’re subject to an agreement made before 2019 — unless it was modified. As for child support payments, they aren’t deductible if you make them or considered taxable income if you receive them, regardless of when the agreement was signed. If you’re going through a divorce, consult us. We can work with your attorney to manage tax issues and minimize your tax burden.

The Taxpayer Advocate Service is reminding small businesses of an upcoming deadline for filing an amended return to claim a domestic research and experimental (R&E) deduction. Tax legislation signed into law last year allows businesses to deduct domestic R&E expenses in the year they’re incurred, starting with the 2025 tax year. It also allows eligible “small businesses” to file amended returns to claim the deduction retroactively for 2022 through 2024. For many businesses, the deadline to make this retroactive election is July 6, 2026. To learn more, see: https://bit.ly/44dMvDk. For help filing an amended return, contact us.

Treasury Secretary Scott Bessent has announced plans to allow child welfare agencies to elect to open Section 530A accounts (also known as “Trump Accounts”) for children in foster care. The option is available when a state, territorial or tribal government agency is the legal guardian of a child with a Social Security number. A Sec. 530A account can be set up for any U.S. citizen who’ll be under age 18 at the end of the tax year and who has a Social Security number. Generally, annual contributions of up to $5,000 can be made until the year the beneficiary turns 18. Contributions aren’t deductible, but earnings grow tax-deferred as long as they’re in the account. Contact us for details.

Noncorporate business owners: Midyear is a good time to step back and think about taxes. After all, your business income affects your personal federal tax liability. If you’re a sole proprietor or owner of a pass-through entity, start by reviewing your expected 2026 income, tax bracket, deductions and cash flow to determine whether it makes sense to defer income and accelerate deductible expenses — or do the opposite. Also, evaluate your eligibility for the Section 199A qualified business income (QBI) deduction. In particular, look at its income-based limits, W-2 wage and property rules, and special restrictions for certain service businesses. Contact us to discuss tax saving strategies.