Tax Tips

Business Reporting Burden Eased

As a result of a provision in the One Big Beautiful Bill Act, an administrative reporting burden for businesses has been eased. For 2025 and prior years, businesses had to issue a Form 1099-MISC to any payee (and to the IRS) when transactions reached $600 in a calendar year. And businesses that paid $600 or more for services rendered by an independent contractor had to issue a Form 1099-NEC (Nonemployee Compensation).

For 2026, the threshold rises to $2,000, and it will be adjusted for inflation in subsequent years. This change simplifies compliance and reduces the risk of penalties for missed 1099 filings.

However, businesses must continue to maintain accurate records of all payments. In addition, businesses need to be aware that states may have differing reporting thresholds that may be lower than the federal requirements.

Inherited RMD Alert

If you inherited a traditional IRA account from someone other than a spouse, you may need to take annual required minimum distributions (RMDs), even if you’re nowhere near retirement age. Some IRA inheritors, such as minor children and the chronically ill, may have other options. Whether the original owner had reached their own RMD age and the date of death also may be factors.

But most people in this situation are considered “designated beneficiaries” and must withdraw the inherited IRA’s assets annually under an IRS formula. If the IRA was inherited after 2019, the designated beneficiary generally must empty the account by the end of the 10th year after the original owner’s death.

Strategies may be available to minimize taxes and avoid penalties on your inherited IRA. The rules are complex, so it’s important to consult your tax advisor.

Eligibility for ABLE Accounts Expands

Beginning in 2026, more people will be eligible to benefit from Achieving a Better Life Experience (ABLE) accounts. The maximum age of disability onset for eligibility has increased from age 26 to age 46.

Contributions to an ABLE account aren’t tax-deductible, but any growth in the account is tax-deferred. Withdrawals used to pay qualified expenses are tax-free. Qualified expenses include housing, education, transportation and basic living expenses for the beneficiary. An added benefit is that ABLE accounts don’t affect eligibility for government assistance programs.

The annual contribution limit for 2026 has increased to $20,000 (from $18,000 in 2025). ABLE account beneficiaries may be eligible to claim the Saver’s Credit for a percentage of their contributions. This is a nonrefundable credit for people who are 18 or older, aren’t dependents or full-time students, and meet certain income requirements.

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