Tax Rounds - April 2026 Newsletter
In the night school MBA curriculum, there is only so much time to learn empathetic communication.
What’s New at TaxSmart MD?
Tax season is in full swing! At the time this newsletter was written, I’ve filed between a third and half of my clients’ business and personal tax returns. A handful of personal returns have been finished but not filed, for student loan reasons. That may not sound like a large percentage, but a majority of the remaining returns are mostly complete. There is often a tax form or two that hasn’t yet come in, or we’re still finalizing details, such as retirement contributions for 2025. I can say honestly that the tax return preparation is moving as quickly as the necessary data comes in, which is a refreshing change compared to my first years in this profession.
On my website, I’ve been adding a page for IRS and state/local tax resources. Hopefully this can be your one-stop shop for making payments, accessing your employer accounts, and filing reports with your Secretary of State. I’m slowly adding states where my clients are based. If there is a particular state you don’t see but want me to add, please let me know and I’ll make it a priority!
I’m also preparing to release my schedule for tax planning meetings, which should be available to book on May 1st, if not sooner. Before I do that, I just need to get my calendar figured out. I have several summer vacations and conferences on my schedule, and between that and shifting to tax planning, I’m super excited for the next few months!
April and May availability:
I’ve scheduled a vacation to Big Bend National Park from 4/13 - 4/20. It might sound crazy to do that around the tax filing deadline, but I will make sure all tax extensions not yet in place are filed at least a week beforehand. I will also make sure all clients know how much they need to pay - for their tax return amounts owed, as well as their estimated payments for 2026.
I will also likely be traveling to Chicago at the beginning of June, and this may limit my availability at the very end of May. I will get those dates worked out before I release my planning calendar.
Estimated Payments:
I have been getting some questions about estimated payments for 2026. Rest assured, getting you these numbers is a priority, and a very high one this time of year. Before this newsletter is sent on 4/1/26, I will go through all my clients 2025 tax returns and YTD income and inform you of the plan. Here is my process:
1. Determine if estimated payments need to be made, and to whom (federal, state, local, etc). If you have a lot of W2 income, you may be able to just withhold everything rather than make estimated payments directly.
2. If estimated payments need to be made, look at the safe harbor amounts for each tax authority. For most clients, I will recommend they make estimated payments and withholdings throughout the year to cover 110% of their federal tax liability. This is the easiest preliminary safe harbor we can rely on. For states and business returns, the safe harbor amounts may be different (some of them are only based on current year income (2026)).
3. I’ll schedule emails to be sent out to all monthly subscription clients informing them if they should pay estimated payments, and how much. I will also schedule emails for 6/1/26, 9/1/26, and 1/1/27 and create a chat conversation in Tax Dome you can refer back to during the year. The amounts to pay may change after I have more time to work on your income projection for 2026. If so, I’ll update the messages that are scheduled to go out as more information is processed.
4. I will make sure to talk to all of my California S Corp clients about making a Pass-Through Entity Tax Payment in June, to make sure they get the Pass-Through Entity Tax Credit. If you don’t know much about this, you can read my recent blog posts: Part I and Part II.
What’s New in the Blog?
Gambling after the OBBBA: Most gamblers come out behind, and recent changes to gambling loss deductions tilt the odds against you even more.
Rural Tax Credits for Physicians: If you haven’t figured this by now, I love geeking out on state/local tax peculiarities. I also need to catalog them because they come up so infrequently. If you’re thinking of moving or just working out of town, this is worth a quick glance. And if you’re a psychiatrist, why aren’t you working in Utah?
How Bad is the Pro Rata Rule?: Most physicians can’t make direct Roth IRA contributions because of income limitations, so they need to do the Backdoor Roth IRA. One of the few potential land mines is the pro rata rule, which says that if you have an IRA balance on 12/31/2025 on the year of conversion, the conversion is partially taxable. The take-home message of this post is that a partially taxable conversion isn’t necessarily bad. It may even be better than investing in a taxable brokerage account.
Is That Drive Deductible?: The rules for deducting auto expenses are fairly complicated. If I had to boil it down to one sentence, it hinges on whether the drive is a “commute” or between business locations, or whether you are “traveling away from home.” However, each of those terms has specific definitions outlined in the Internal Revenue Code. Hopefully this post demystifies the rules a bit. I also briefly discuss the difference between deducting mileage and actual expenses.
Other Media Appearances:
Why Physicians Tax Bills are So High (KevinMD): I wrote this for doctors who are early in their career who may not know much about the tax system or be very familiar with its intricacies. It is intended to introduce a conceptual framework (in lieu of technical specifics) for understanding what drives tax liability up and down. If your eyes glaze over when you see my articles about the Pass-Through Entity Tax or QBI deduction, this may be more to your liking!
Outside News and Views:
A Journey Through Crisis, Siberia, and Financial Freedom (WCI): A spectacular read for doctors feeling burned out and stuck in a medical system in which they don’t feel valued.
A Tax Disaster... From a "Safe" Fund (Prudent Plastic Surgeon): Why not to hold target-date funds in a taxable account.
The Hidden Math Behind Physician Hiring Costs and Recruiting (KevinMD): The reality is that if you’re employed, you’re a lot cheaper to keep than replace. I tried to use this leverage to my advantage when my contract came up for renewal. They said no, and then I transitioned to locum tenens. Know what you’re worth, but also make sure you have a Best Alternative to No Agreement (BATNA).
Red and Blue States Growing Further Apart on Income Tax (WSJ gift article): I’ll say upfront that I’m pretty moderate politically and I’m not posting this to take sides between blue and red states. The reason I thought this article is valuable is that it summarizes changes in many states and also helps you zoom out and see trends in current state tax policies. While future taxes are unpredictable, I still think it’s worth appreciating the signals we have available.
Tax Missteps Happen, Even When Two Financial Pros Are Married (NYT Gift): I haven’t committed this exact mistake, but nonetheless I can relate to what happened to the planner couple here. Mistakes are inevitable, but I’ve found the most effective ways to avoid them are to work with similar clients (to limit your blind spots) and use reconciliation tools when preparing returns.
These Simple Steps Can Save You Time and Trouble with the IRS (WSJ Gift): An illuminating article that helps you understand how the IRS automatically tracks your tax data and easily avoidable ways it can get flagged. It is fairly stunning how poorly the IRS aggregates data from married couples.
Wait, can you deduct this??
Olive Vs. Commissioner (and why marijuana trafficking is a crappy potential side hustle): If you sell controlled substances that are prohibited by federal law (even if allowed under state law), you have to report income, but according to IRS 280E, you can’t deduct business expenses that are otherwise ordinary and necessary.
Notably, this doesn’t apply to most other illegal activities (see Commissioner Vs. Sullivan).
So, if your side hustle entails breaking the law, pick something besides weed farming!
That’s it for April! Thanks for reading, and email me at logan@taxsmartmd.com if you think of any questions, or have other topics you want me to cover in the blog or newsletter!