Tax Rounds - Newsletter for January 2026
Always remember that tax discussions and social conversations go together like Nitrates and PDE-5 Inhibitors
What’s new at TaxSmart MD?
December has been a pretty busy month here; I was happy to see most clients schedule an end of year planning meeting! I appreciate everyone uploading their paystubs and helping me keep track of their estimated payments.
At this point, I am still accepting clients for the upcoming tax season, though I am generally narrowing it to clients that I consider a good fit. In addition to being engaged and responsive, I prefer to work with folks that are in service industries (such as medicine) and have fairly clean books and records. There is an onboarding fee of two months’ upfront that will be assessed now that it is the beginning of the year; however, this amount will be credited back to new clients after they work with me for 12 months.
Another service that I will begin charging for in January is an S Corp analysis, for professionals who are self-employed, not currently TaxSmart MD clients, and considering this business structure. The cost for this will be $499, but it will be credited back to you if you decide to become a client. This means that, with current pricing, it basically covers the first month of service if you choose the S Corp service, and if you choose to start as a sole proprietor, the fee covers your first month and $150 toward your second month. This fee must be paid before you can download the report. I will upload a sample report to my website.
Another goal for 2026 is to use the communication features in the portal (Tax Dome) to their full extent. I plan to create chats for several different categories; one of these will be related to your 2025 return preparation. Business clients will have ongoing chats for bookkeeping, payroll, and accountable plans, as applicable. These tend to be subjects that we visit frequently throughout the year, and my hope is that this will keep communications clean and organized. I appreciate any feedback, positive or negative, from clients about this change.
I am also in the process of evaluating the quality of bookkeeping and expense tracking. For this reason, I’ve been asking some clients to add me as a view-only user in their bank accounts and credit cards, so I can ensure that the feed captures everything. I will be troubleshooting this process more after I have a chance to compare the transactions in the Xero feeds with the entries on the online banking platform.
Finally, I am putting the finishing touches on the tax questionnaire (organizer) and will be sending that out in January.
While I hope that my clients will find the tax return preparation to be outstanding, I do expect it to offer some learning lessons that inform the even more important process of tax planning. I believe that my processes for estimating income and tax liability has gotten much better over the last six months, but nevertheless, there will likely be some items of income that were not anticipated. It is for this reason that I intend to do as much preparation in January and February as I can, even if the return isn’t completed and filed until months later. If I discover that something is off, I want to make sure that my clients know as soon as possible so they can take action. If you are a client, the best thing you can do is complete the questionnaire and upload tax documents to Tax Dome as you receive them.
Thanks so much for being a part of the firm’s first tax season!
What’s New in the Blog:
Note - I started adding trivia questions to the blog posts, which you can read, answer, and then use to stump your friends and colleagues.
1099s Made Simple: Who Gets One, Who Doesn’t, and How to Avoid IRS Headaches: Filing 1099’s is just part of the deal of being a business owner, and the IRS requires that you attest to filing them when you prepare your tax return. The penalties for not filing them are also fairly steep.
Don’t Jump the Gun: Why You Should Wait Before Making 401(k) Employer Contributions: If you are a supersaver who wants to stuff as much as possible into your Solo 401(k), you may be surprised when your financial planner or tax professional cautions you to pump the brakes (especially when lots of online resources tell you to do your Backdoor Roth IRA on January 2nd). This post explains why.
Should You Hire Your Spouse? (And Will the IRS Thank You or Audit You?): Although your spouse may be the easiest person to hire to help you out, it doesn’t really accomplish the main goal, which is to shift income from you (high tax bracket) to a lower earner (in a lower tax bracket). There are some potential tax benefits, such as enabling the child and dependent care credit, but before you hire your spouse, ask yourself if there are any other friends or family members who would be a good fit.
Your Tax Year Is Bigger Than Your Calendar Year: When I am working with new clients, it isn’t unusual for them to have a full menu of tax savings opportunities, but it can be hard to know which to prioritize. If this is the case, you may not have to choose at all if you take advantage of extended contribution deadlines. If you want to maximize tax efficiency, playing the long game can work to your advantage.
Should Parents Open “Trump Accounts” for Their Kids — or Is This Just Another Account to Forget?: I wasn’t planning to talk much about “Trump accounts,” since the main benefit was the $1,000 pilot contributions. Unfortunately, that’s only being offered to kids who were born after 12/31/24. Now, millions of other kids under age 10 will be eligible for $250 from the Dell Foundation, and these accounts can be established with your tax return filing. Assuming it is rolled out in time (and integrated with my tax software), I want to make sure my interested clients get that free money.
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!
Outside News and Views:
A Win for Taxpayers: Internal Revenue Service Math and Taxpayer Help Act: All I can say is, it’s about time. Hopefully this will make Notices from the IRS more transparent and easier to interpret.
For ‘No Tax on Tips,’ the I.R.S. Gets Intimate (NYT gift article): In all seriousness, tax preparers (but not this preparer) and IRS agents will be watching OnlyFans at work trying to figure out whether to allow or disallow tax deductions for tips.
How to Make the Most of Your Money With Tax‑Loss Harvesting (WSJ): A good basic overview. Tax-loss harvesting is one of those concepts that doesn’t make a ton of sense intuitively (why would you want to sell at a loss?), but this article explains why it can be useful to take a loss now and then just defer a gain for later. Fun fact - the $3,000 limit has been capped without inflation adjustments since 1978 (if it were inflation adjusted it would be almost $15k in 2025).
The State Flat Tax Revolution: Where Things Stand Today (Tax Foundation): I’m a big fan of this just for the simplicity. Needless to say, it is much easier to forecast the impact of income changes on tax liability when the state has a flat tax. It also means that W4 withholding is more likely to track.
State Tax Changes Taking Effect January 1, 2026 (Tax Foundation): I don’t see much here that will impact my clients and the states where they reside, but check to see if there is anything in your state that could make a difference.
Wait, you can deduct this??
Premarital preparation course! Ok, actually this is a tax credit, not a tax deduction, but I can still get behind it. And you have to live in South Carolina. But if you complete one of these, you can get a $50 credit on your South Carolina tax return.
It turns out that there are therapists who have centered their business around this. Here’s one example.
In case you are wondering, South Carolina ranks middle of the pack as far as state divorce rates.
That’s it for January! 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!