Tax Rounds - February 2026 Newsletter
This Valentine’s Day, I hope you find someone who looks at you the way the IRS looks at your income.
What’s New At TaxSmart MD?
First, I’ve concluded that I’m probably in your email inboxes more than enough right now. Starting this month, I’m going to scale blog posts back to once every two weeks, and newsletters to once a quarter (next will be in April). Quality over quantity! I’m hoping to run my business for many years to come, and while I have a lot to say, I don’t think I need to write 52 blog posts a year (nor do I expect anyone to read that many). Instead, I’ll devote more time to helping other clients and creating other types of educational material.
Now that January is finished, needless to say my top priority is completing clients’ tax returns as quickly and accurately as I can. While sometimes it makes sense to file an extension (for student loan considerations or to postpone the deadline for making retirement contributions), I prefer to draft the return as data comes in. That way, if there was anything that was missed when we did projections earlier in the year, my clients have more time to adjust if necessary. Also, some of my clients are expecting very large refunds, and for them, it makes sense to get the returns filed as soon as they are complete. Speed is important, but accuracy is paramount!
To speed things along, I encourage 2025 clients to complete their organizers in Tax Dome and use the embedded checklist to upload tax documents.
January is still the calm before the storm, and I’m glad to have that time to work on improving processes for tax planning. In particular, I’m adding several different provisions of the OBBBA into the projection tools, including the deduction for overtime pay, the charitable deduction for non-itemizers, and the changes to the QBI deduction.
I’ve also made some changes that I think will make it easier to visualize how your tax rate goes up with your income. Previously, I was using stacked bar charts for both fed and state taxes, but this year, I think I’ll be able to combine them in one chart. Here’s a sneak peek (this is not an actual client):
Old:
New:
The “other” section is for local taxes and federal and state phase outs. I hope you find it useful!
What’s new in the blog
If you haven’t noticed, these posts have trivia questions at the end. Hopefully you can use those at trivia night or your next stint as a Jeopardy contestant!
Should You Eat Ice Cream for Breakfast? Deciding Whether to Claim Accelerated Depreciation: Admittedly, this reflects my own bias a bit. I dislike how some practitioners promise tens of thousands of tax “savings” for something that is really just a timing decision. That being said, accelerated depreciation makes sense in specific situations, but the devil is in the details.
Pass-Through Entity Tax Part 1: Pass-Through Entity Taxes were conceived as a workaround to the $10k SALT deduction limit, which was lifted in 2025. As a result, the PTET deduction doesn’t have the same utility as before, but this post walks through when (and how) you can still take advantage of it to increase your tax savings.
Pass-Through Entity Tax Part 2: Whether the PTET has any downsides, and the magnitude of these, is fairly state-specific. This post explains why you likely need a tax advisor to help you understand the rules of how it works in your state, and whether you’ll still come out ahead. Also, check out the flow chart at the end of the post to help you get an idea of how likely the benefits of the election are to outweigh the extra costs.
The $500,000 Home Sale Tax Break You Can Accidentally Throw Away: If nothing else, I hope you like the image I came up with for this post. But I do think the content is important. Most people who decide to convert their home into a rental don’t think of the capital gains tax exclusion they could be forfeiting after a few years.
If there are any tax topics you want me to visit in a future blog post, you can reply or email me at logan@taxsmartmd.com. The purpose of the blog is to educate on topics that matter to YOU!
Podcast Appearance! - I appeared as a guest for Dr. Andrew Wilner’s “The Art of Medicine Podcast,” talking about how taxes work for locum tenens physicians. If this is relevant for you, I hope you give it a listen (and let me know if you have any feedback). Andrew’s podcast also has great content in general for those in the healing professions (most episodes are not financially based).
Outside News and Views:
Woman Sues IRS to Have Pets Claimed as Dependents: While pet expenses can be “ruff,” something tells me the IRS remains cat-egorically opposed to treating pets as dependents.
Ferguson backs income tax on WA residents earning over $1M: For now, WA is still generally considered an income-tax-free state, despite that they charge a capital gains tax and a payroll for long-term care. That could change in the next few years.
IRS Sets 2026 Mileage Rates: Increased to 72.5 cents per mile.
IRS Will Provide Automatic Penalty Relief Next Filing Season: Always nice to have one fewer reason to call or send a letter to the IRS.
Column: Social Security Still Works, But Its Future is Up to Us: Right now, most of us will have 85% of our Social Security benefits included in taxable income. I wouldn’t be surprised if this gets bumped to 100% in the future. I am personally expecting a 20-30% reduction in my Social Security benefits by the time I claim in the 2040’s.
Tax Fraud Blotter: Requires you to create an account but interesting reading.
Excerpt: Altamirano operated Integrity Investments, d.b.a. "Servicios Latinos." Between 2017 and 2021, Altamirano, what authorities termed a "high-volume" preparer, prepared at least 12,000 returns. Statistical sampling analysis reveals that his false entries on returns cost the U.S. Treasury more than $5 million.
What could possibly go wrong?
Wait, you can deduct this??
According to the IRS, you can’t deduct travel for conventions held outside North America unless the convention meets a “reasonableness” test, which I won’t define here. You can read it on IRS Publication 463.
However, if the convention is held in the North American area, the rules are loosened. Here is a screenshot that defines the North American area:
Not sure where all of those are located? You’re not alone. Eight of those are either completely uninhabited or have no permanent residents.
But the good news is that if your medical society wants to hold its annual meeting at Kingman Reef or Baker Island, you can deduct the travel expenses. Good luck finding a nonstop flight though.
That’s it for February! 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!