Higginbotham-Baldeon Enrolled Agents, Inc.

October is here, and more due dates to review. First, the due date applies to companies and taxpayers with payroll; they must file and pay their tax liability for Form 941 (Federal) and Form RT-6 Unemployment with the Florida DOR by November 2, 2026, because October 31 falls on a Saturday. Moreover, companies that are closing their businesses need to file the final Forms 941, 940, and RT-6. I see some businesses receiving IRS letters with penalties for not filing payroll forms two years ago. Also, you need to keep your tax records for at least 4 years. The next due date is October 15, 2026, which is the due date for the personal tax returns. Taxpayers need to include Form K-1s from their partnerships and/or S-Corporations, with the due date last September 15, 2026. It is important to file your tax return even if you owe money to the IRS.  Some taxpayers delay filing their taxes after the due date to avoid the IRS starting collection on their balance due. It is important to remember that there are two penalties: one for not filing on time, including extension by October 15, 2026, and the second for not paying your tax liability by April 15, 2026. That is why I recommend filing the tax return even if you owe taxes to the IRS, and in this way avoid unnecessary extra penalties of about 5% per month of the amount due. Perhaps for personal tax returns with tax liability under $50,000, the IRS will, in most cases, grant an installment agreement of up to 72 months. It is crucial to set up automatic monthly payments for the installment agreement to prevent missed payments and cancellations. Now, I will provide an update on subcontractor payments for 2026. The federal reporting threshold for Form 1099-NEC (Nonemployee Compensation) increases from $600 to $2,000 per payee for payments made on or after January 1, 2026, under the One Big Beautiful Bill Act (OBBBA). The new Form 1099-NEC for 2026 includes separate individual address entry boxes and new fields to report cash tips, Treasury Tipped Occupation Codes, and overtime compensation. Last, starting January 1, 2026, most food and beverages provided to employees on-site or for the employer's convenience are 0% deductible under a provision taking effect under the Tax Cuts and Jobs Act. This includes meals provided so employees stay on-site during shifts, subsidized employer-operated eating facilities, meals ordered when staff work extra hours, and breakroom coffee, snacks, and drinks. Nevertheless, company events are still 100% deductible. More good business tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.  Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.

This month, in September, we bring due dates. For S-Corporations filing Form 1120-S and Partnerships filing Form 1065, the due date for their extensions is September 15th, 2026. It is important to file on time to avoid high penalties. This year, the penalty is $255 per month, multiplied by the number of shareholders or partners, for up to 12 months. This could impact your S-Corporation, with a maximum penalty of $3,060 for 12 months for one shareholder, and a partnership, with a maximum penalty of $6,120 for a minimum of 2 partners. Another due date, September 15th, 2026, is the third quarterly estimate payment for your personal tax return, especially for sole-proprietorship taxpayers with business reported on their personal tax returns and income received during the year with insufficient withholdings. Next, I have been receiving information that the IRS is not taking the first or second automatic payment on time for taxpayers establishing an installment agreement with the IRS. It is important to check your bank account to ensure the payment was withdrawn from your account. If not, you may need to make the payment manually and contact the IRS to fix future automatic withdrawals and avoid having your installment agreement canceled and receiving a letter from the IRS to pay all balance due. Last, many people are required to complete the new Form W-4 for their employers and the W-4P for their retirement distributions. Moreover, it is again confusing to fill out the Forms and could result in not withholding enough for your tax liability during the year, leading to an unexpected balance due when you file your taxes. The Form includes information to be filled in about receiving qualified tips, qualified overtime compensation, qualified passenger vehicle loan interest, seniors age 65 or older, and any cash gifts to charities. The problem is that quality tips and qualified overtime compensation are not fixed amounts during the year, and it could be a disaster next year. This is a suggestion, and it should be discussed with your tax preparer. If you file your taxes using the standard deduction (32,200 for married filing jointly, 24,150 for head of household, and 16,100 for single or married filing separately), put that amount on page 1 line 4(b), then check your next payment statement and see if your withholdings are lower than your prior month. You can use line 4(c) and get extra withholding to match your prior withholdings, and expect your tax return to be the same as the prior year. More good business tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.  Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.

This month, I will bring some updates. The IRS announced on July 13th, 2026, the optional standard mileage rates for substantiating the costs of operating an automobile for business, medical, or moving purposes. The IRS made the change in 2026 to reflect rising fuel costs. These revised rates are effective beginning July 1st, 2026. For tax year 2026, we will have two mileage rates: the first from January 1st, 2025, through June 30th, 2026, and the second from July 1st, 2026, through December 31st, 2026. This Announcement modifies previous rates. Here are the guidelines: For the period January 1st, 2025, through June 30th, 2026, the standard mileage rate is 72.5 cents per mile for all business miles. For the period July 1st, 2026, through December 31st, 2026, the standard business mileage rate is increased to 76 cents per mile. The mileage rate for moving and medical expenses also increased from 20.5 cents per mile to 23.5 cents per mile. The charitable mileage rate is fixed by statute at 14 cents per mile and has not changed. Nevertheless, these rates apply to fully-electric, hybrid-gasoline, and diesel-powered vehicles. It is important to remember that moving expenses are limited exclusively to active-duty members of the Armed Forces. General civilians cannot deduct moving expenses. Moreover, when a company relocates employees to another city or State, the reimbursement or paid amount for their moving expenses will be treated as taxable income and is subject to tax withholding on their W-2s. Employers should update the proper mileage rate they will pay for the period at issue. Next, the IRS announced a new automatic process to provide penalty relief for taxpayers with a history of filing and paying on time, reducing the need for them to request assistance. The new Automatic Exemption from Penalty (AEP) will be transitioning to replace the First Time Abate during this summer, and will be applied to original tax returns beginning with tax year 2025 and 2026 quarterly returns, as well as future tax periods. Taxpayers qualify if they have a history of timely filing the return and paying any tax due in the three prior years. When taxpayers qualify, penalties are not assessed during processing for failure to file, failure to pay, and failure to deposit. While AEP prevents the assessment of certain penalties, taxpayers must still pay any tax and interest due, as well as any penalties not eligible for relief. Lastly, if you don’t qualify for AEP, you may still request penalty relief based on reasonable cause. More good tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.  Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.

Welcome to July. This July 4th, 2026, we are celebrating the most important milestone in our country’s history, the 250 years of America’s independence. This month brings more guidance for Trump accounts. This program will make a one-time $1,000 contribution to the Trump Account for each eligible child for whom an election is made, who is a U.S. citizen and born on or after January 1st, 2025, through December 31st, 2028. To open the account, you should visit the website trumpaccounts.gov, sign up, and get the $1,000 for your child. They will appreciate it if you do it. Even without any additional contributions, the original $1,000 is projected to grow to $6,000 by age 18. Yearly contributions are allowed from July 4th, 2026. For businesses, the program allows employers to make a deductible contribution of up to $2,500 per year for each employee (or their dependents), and it is tax-free to the employee. This program allows a $5,000 annual limit on contributions from all sources per child. It is important to mention that contributions do not affect the beneficiary’s ability to make traditional or Roth IRA contributions if they’re eligible. Next, information about distributions from Trump accounts: The Account became a traditional IRA in the year the beneficiary turned 18. Distributions from the account will be treated in the same manner as any other withdrawals from a traditional IRA. Withdrawals will be subject to income tax, and early withdrawals taken before age 59½ will also be subject to a 10% penalty. A portion of each distribution will be a nontaxable return of basis, with the remainder of the distribution taxed as ordinary income. Remember, only contributions from family and friends count as a basis. Government (Initial $1,000) and employer contributions do not count as a basis for the calculation. There are penalty exceptions at age 18: the early 10% withdrawal penalty does not apply if the distribution is used for a first-time home purchase (up to a $10,000 lifetime cap), higher education expenses, or the birth or adoption of a child (up to $5,000). There are special situations like death or disability. If the accountholder dies before age 18, the account ceases to be a Trump account, and the fair market value (less investment in the contract) is included in the beneficiary’s estate or the recipient’s income in the year of death. A specific disability allows for a full rollover to an ABLE account at age 17, which may be relevant for disabled beneficiaries. This rollover is tax-free, provided the entire balance is transferred. More good tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.  

Welcome to June, and with this, the celebration of Father’s Day and Memorial Day.  This month, I bring clarifications to address confusion and issues that have arisen in the 2025 individual tax season. I will start with digital assets. Most problems were for clients answering the digital asset question incorrectly, incomplete information required for gain/loss reporting from exchanges done during the year, missing or unreliable cost of basis documentation for gain/loss reporting, taxpayers assuming wallet transfers were taxable events, and greater IRS matching activity tied to third-party reporting. Many taxpayers still don’t recognize the difference between holding, transferring, and disposing of digital assets. Also, sometimes software imports masked incomplete transaction histories, leading to underreporting. For next tax season, let your tax preparer know if you invest in any digital assets, and they will determine your filing requirements. Next, reporting amounts on Form 1099-K for card payments received by your business. Some taxpayers prepared their Form Schedule C for their business income on their personal tax returns, reporting the gross sales without filing Form 1099-K. In those circumstances, the IRS may send you a letter adding the amount from 1099-K to your total gross income and increasing your tax liability. The solution is to file an amended tax return and allocate the correct amounts. Remember, Form 1099-K only reports gross card transactions; you will need your sales summary to deduct fees and expenses. Moreover, as you may have heard many times, buying a vehicle and using it for business expenses may not result as you plan. The amount deducted is only the portion used for business. For example, if you drove a total of 10,000 miles during the year and only 1,000 for business, then only 10% of your vehicle expenses, including depreciation, can be used as a deduction. The IRS required you to keep a mileage log tracking your personal vs. business miles, including the miles driven, date, destination, and business purpose. Next, as the IRS continues to expand its data analytics capabilities, matching programs are becoming more sophisticated. This tax season has seen an increase in IRS CP2000 for matching notices and information return mismatches, especially on Forms 1099’s. I encourage you to wait for consolidated brokerage statements before filing your taxes. Many clients have been receiving corrected 1099s at the end of March after their tax returns were filed. Lastly, taxpayers receiving social security income need to evaluate how the sale of a property, stocks, or an additional retirement distribution may increase the taxability of their social security income. More good tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.  

Welcome to May, and with this, the celebration of Mother’s Day. I wish you a great time with your family.  There is concern that people living abroad may miss filing their tax returns by April 14th, 2026. If you are a U.S. citizen or resident alien residing overseas or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return without requesting an extension. If you use a calendar year, the regular due date for your return is April 15th, and the automatic extended due date is June 15th. If the due date falls on a Saturday, Sunday, or legal holiday, the due date is delayed until the next business day. If you qualify for the 2-month extension but are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15th by filing before the automatic 2-month extension date. Even if you are allowed an extension, you will have to pay interest on any tax not paid by the regular due date of your return. This month, we bring you the May deadlines. We have the due date for non-profit organizations filing different Forms 990, 990-EZ, 990-PF, 990-N, 990-BL, 990-T for tax years ending December 31st 2025. The use of the correct Form depends on your organization’s classification and gross income. If you are not ready with your financial statements to file your non-profit tax return, you can file an extension and get an extra six months to file your tax return by November 15th, 2026. Next, it is important to mention that residential energy credits for solar panels, A/C units, windows, doors, HVAC systems, and home energy audits are no longer eligible and expired after December 31st 2025. Next, the annual gift tax exclusion for 2026 remains at $19,000, which means that you can gift up to $19,000 per recipient ($38,000 for married couples filing jointly) per year without filing the Form 709 to track up to $15 million total in your lifetime per individual under current law. Perhaps Gifts between spouses who are U.S. citizens are fully tax-exempt under the unlimited marital deduction. You can transfer cash, property, or assets to a spouse without triggering gift tax or reducing your lifetime exemption. If the spouse is not a U.S. citizen, the IRS sets a higher annual exclusion of $194,000 for 2026; any gift above this amount must be reported and may reduce your lifetime exemption. More good tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.  

Tax season is almost done, and we have some due dates in April. Taxpayers who did not file past tax returns and potentially received a refund. Taxpayers generally have 3 years from the original due date of the return to file and claim a refund. For the 2022 tax return, they have until April 15th, 2026.  You can consult your tax preparer to help you gather your wages and income from the IRS transcripts to complete your past tax returns.  Next, this April 15th is the due date to file and pay your tax return. If you are ready to file but not ready to pay your taxes, you can file an extension.  That extension will give you an extra 6 months to file your tax return until October 15th, but not 6 months to pay your taxes without approximately 1.2% on penalties and monthly interest for the amount not paid from April 15th until October 15th.  Remember, after filing and paying your tax return, the IRS will send you a letter for the penalties and interest accrued from April 15th until the day of payment. Another due date is the Annual Report with Sunbiz.org, Division of Corporations, by May 1st, so avoid paying $400 in late fees. In recent years, many people have not been able to deduct their charitable donations to the church and other non-profit organizations because the standard deduction has been more beneficial than using the itemized deduction. We have good news: beginning this tax year 2026, if you were not able to itemize, you may deduct up to $1,000 ($2,000 for Married Filing Jointly) of your cash contributions to certain qualified organizations.  Remember, gifts to family members or individuals are not deductible. Only gifts and donations made to qualified organizations are eligible to receive tax-deductible contributions.  For your contributions of cash, check, or other monetary gift (regardless of amount), you must maintain a record of the contribution: a bank record or a written communication from the qualified organization containing the name of the organization, the amount, and the date of the contribution.  Receiving a benefit in exchange for the contribution, such as merchandise, goods, or services, including admission to a charity ball, banquet, theatrical performance, or sporting event, you can only deduct the amount that exceeds the Fair Market Value (FMV) of the benefit received or expected to be received. For example, a $100 banquet ticket: the FMV of the banquet is $40, and the charity portion is only $60. Then your charity donation is only $60, and not $100.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.  

Welcome to March, and I'm ready for another update. The following information is for taxpayers who file Form 1120-S for S-Corporations and Form 1065 for Partnerships. Since this year, the due date is Sunday, March 15; the next business day, March 16, 2026, will be the due date. The penalty for late filing is $255 per month per shareholder or partner, with a maximum penalty of twelve (12) months. For failure to furnish Schedule K-1 to a shareholder when due, a $340 penalty may be imposed for each Schedule K-1 for which a failure occurs. If you want to avoid this and you need more time to gather your receipts and complete all the information necessary for your income and expenses, you'll need to file an extension for your company by March 16, 2026. The extension will allow you to complete your financial information and file your company tax return by September 15, 2026. Next, it is crucial for taxpayers requesting that the IRS treat their Limited Liability Company (LLC) as an S corporation to file Form 2553. You must make this election no later than two months and fifteen days after the company is created or the beginning of the corporation's tax year, and the date to file is March 16, 2026, perhaps, if the company has missed the due date in the first year of operations. You can apply for late election relief; you will need to include a reasonable cause for failing to file Form 2553 on time. Next, it is an update of credits for the 2025 tax return. The Child Tax Credit amount increased up to $2,200 per qualifying child, and the Additional Child Tax credit, the refundable portion of the Child Tax Credit, is $1,700. Moreover, the Earned Income Tax Credit amount will vary based on income, family size, and filing status. The maximum Earn Income Tax Credit (EITC) and number of children, with maximum credits from $649 (no children) up to $8,046 (3+ children), and income thresholds like $61,555 for single filers with 3+ children, or $68,675 if married filing jointly. The threshold income limits are around $19,104 for single filers with no children and $61,555 for single filers with 3+ children, with higher limits for married couples filing jointly. Last, you must file your past tax returns, and do not miss the opportunity to claim the EITC from prior years. The latest tax return you can file to claim the 2022 EITC is due on April 15, 2026.

Here we are in the second month of the year and ready for tax season.  The Internal Revenue Service (IRS) started accepting and processing tax returns electronically on Monday, 26th, 2026.  It is important for taxpayers with health insurance through the marketplace. If you didn’t get your Form 1095-A by mail, you need to log in to their accounts on healthcare.gov; Then you will be able to download and print your Form 1095-A from check messages.  This year is something new: the IRS strongly recommends that taxpayers establish a bank account to receive their tax refunds via direct deposit, because the IRS is phasing out paper tax refund checks due to the executive order, Modernizing Payments To and From America’s Bank Account.  Next, ask your tax preparer about enrollment in a Trump account for your child born in 2025. It is a pilot program contribution of $1,000 for children born between January 1, 2025, and December 31, 2028, who are U.S. citizens with a valid Social Security number. The federal government will deposit into a special IRA account. During the growth period, no distributions will be allowed from a Trump account before January 1 of the calendar year in which the account beneficiary attains age 18. Perhaps, distributions from a Trump account are subject to the rules that apply to distributions from a traditional IRA, including that a distribution may be subject to 10% additional tax on early distributions if an exception does not apply with respect to the account beneficiary, such as for distributions for qualified higher education expenses, first home purchases, or distributions made after age 59½. Parents, guardians, and any other authorized person must elect to create the individual retirement account for their children at the time of filing the tax return for 2025.  It is crucial for taxpayers claiming the Child Tax Credit and Other Dependents to file their tax returns before the middle of February, when the IRS starts processing those returns.  Filing your tax return before the middle of February will prevent someone else from claiming your dependents on their tax returns before you.  Last, for interest paid on new vehicle loans during 2025 through 2028. There are some restrictions on the allowable deduction, which is up to $10,000 annually for personal use. It is subject to an income limit based on Modified Adjusted Gross Income: $100,000 for singles and $200,000 for married filing jointly.  The requirements are as follows: new cars, SUVs, minivans, pickup trucks, or motorcycles weighing less than 14,000 lbs., and must have final assembly in the United States. More good business tax stuff next month.  Remember, this is a very brief overview.  It is your responsibility to discuss any tax and financial changes with your professional advisor for assistance in evaluating your situation.  For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor. Provided by Pedro L. Baldeon, E.A., (321) 632-5726, a member of the National Society of Tax Professionals.  

The New Year has arrived, first I want to thank you for your interest in my monthly articles.  I hope the information provided every month has been useful and engaging, especially with all this changes during the past year. With that, we say goodbye to 2025 and start looking forward to 2026. As we get into 2026, you need to take time and make sure that you will have all your paperwork in order for the upcoming income tax filing season.  This is the time to gather together the pertinent information needed to prepare your tax return.  Make sure your employer has your correct address.  Especially, if you have moved during the year, you may have changed it with your current employer, but failed to inform your former employer(s).  Have you had a change in your life, such as marriage, or birth of a child, or a child starting college? Next, the most important due dates in January are the last quarterly payment for your personal tax return 2025 by January 15, 2026, the fourth quarter payroll Form 941, including payment are due on January 31, 2026. For companies with payments for rent, royalties, others, and subcontractors, the due date to provide Form 1099-NEC and Form 1099-MISC is on January 31, 2026. Moreover, this year the due date to furnish copies of Form W-2’s for your employees is February 2, 2026.

January is the perfect month to sit down and review the previous year changes and get yourself prepared to have your income tax return prepared.  Of course, everyone starts anticipating when they will get their W2’s and when they expect to receive their refund.  Most employers have the W2’s available the last week of the month.  Officially, they have until January 31^st to have them prepared and mailed out.  It just seems natural to take the next couple of weeks and make sure you will have all the documents required to have your return prepared.  Okay, now let’s pick it up a little bit and discuss credits.  There are two types of credits beneficial to the everyday taxpayer, refundable and nonrefundable.  The nonrefundable will reduce the amount of tax owed on taxable income.   The most widely used ones are the Child and Dependent Care, Education, Retirement and Child Tax credits.  Whereas, the refundable credits may provide additional tax refund and the most popular ones are the Earned Income, the American Opportunity Education, and the Child Tax credit.  Now, let’s briefly look at each one.  The Child and Dependent Care Credit provides a credit for the care of your younger child(ren) who are under 14 years old or handicap and your dependent.  The Education credit involves the American Opportunity Education Credit or the the Lifetime Learning Credit and these provide a tax credit for you, your spouse, or dependent to attend an accredited college course or approved trade school curriculum.  The Retirement Savings Contribution Credit provides for a credit when you contribute to any type of retirement arrangement.  The Child Tax Credit provides for a reduction of taxes or additional refund if you have dependent children younger than 17 years of age.  And, finally, the Earned Income Tax Credit provides additional refund if your earned income and/or adjusted gross income falls within credit parameters.  On another note, I want to take a moment and remind everyone the discharging of a weapon in a residential neighborhood is unlawful, unless it involves a stand your ground circumstance, only.  In closing, this is my last monthly tax upadate I will be writing.  Pedro Baldeon, EA is taking over the reins of our tax preparation and representation, accounting, payroll activities, along writing the monthly tax update.  I really appreciate knowing how many of you have read my articles over all these years.  Thank you!!!  We wish everyone a prosperous and healthy 2024!!!  This is a very brief overview. For details and specific assistance in applying the general information in this article, call us at your earliest convenience or contact your tax advisor.   Provided by Tracey C. Higginbotham, E.A., (321) 632-5726, a member of the National Society of Accountants.