Attention: This is a machine-generated transcript. As such, there may be spelling, grammar, and accuracy errors throughout. Thank you for your understanding!

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Roger Harris, EA: [00:00:24] Hello again. It's another federal Tax Update podcast and Annie Schwab is back. So welcome back, Annie. Glad to have you.

Annie Schwab, CPA: [00:00:31] Good to see you.

Roger Harris, EA: [00:00:32] Good to see you again. Um, this is actually out before, uh, the October 15th deadline, but I think none of you are probably going to listen to it before October 15th. So our content is, is really, which is kind of sad is, is targeted towards next tax season. Uh.

Annie Schwab, CPA: [00:00:53] One ends, the next one begins.

Roger Harris, EA: [00:00:54] Yeah. The comments that tax season never ends. I guess it's becoming truer and truer. And this is a good example of that, is that the idea here is that we've just wrapped up the one. Hopefully you've taken a little time off and caught your breath, but we're going to go over a few things to kind of think about between now and the next one, and things that might make your life simpler if you aren't doing them. So it's just a kind of a jump around hodgepodge of some things. And, um, congratulations when you listen to this, if you made it through October 15th and sadly, it's time to start planning for January.

Annie Schwab, CPA: [00:01:29] Yeah, year end stuff and getting ready for, you know, getting ready for next tax season is already upon us. So yeah, and some of its housekeeping and some of it's like tips for staying organized. And then there's some reminders about year end payroll and information returns. A couple of new things for 2026 reporting. But, um, but yeah, hopefully you'll find it helpful and, and like, it'll be an easy, easy listen won't be very easy.

Roger Harris, EA: [00:01:56] Listen, while you're trying to get through the end of one. Because yeah, a lot of it's reminders. I mean, you've probably heard us say some of this before, but it's always good to remind them there are some new tweaks, as Annie mentioned this year, you know, in some of the reporting requirements and then just some things that are acknowledging, you know, how the world is changing and there's not a lot new. If we have time, we've got a couple little updates on some stuff, but for the most part, Congress is out campaigning and IRS and practitioners are all worried about finishing to the deadline. So not a lot going on other than you get a lot of junk mail in your mailbox and a lot of political commercials on your TV. So yeah. All right. Any what do you want to start?

Annie Schwab, CPA: [00:02:38] Um, let's start with, I know we've talked about these online accounts. Um, there's a tax pro account for tax practitioners. There's the individual online accounts, there's the business online accounts. I feel like I'm getting notifications that there's new features or updated something here or there. Um, if you haven't kind of embraced what you can do in these online accounts. I strongly suggest that all the tax pros get a tax pro account. Um, you do have to do the whole id me. Um, but you can link a calf number to it. Um, and then you can get individual authorization requests through there so that you can help with the client's accounts. So, um, I don't think that those are going away. In fact, I think it's probably going to be the easiest way to communicate and handle client information. And so go ahead and do it if you haven't, um, it shouldn't take you long.

Roger Harris, EA: [00:03:35] Yeah. No, they're not going away. In fact, and I know we've said this on numerous podcasts, this is going to become more and more where the IRS turns to for, um, opportunities to communicate differently, to access information. Um, you know, the individual accounts, the most advanced, it's the one that they got first.

Annie Schwab, CPA: [00:03:56] First? Yeah.

Roger Harris, EA: [00:03:57] Uh, probably the business accounts are the least. They just have come out recently. The tax pro account somewhere in the middle. And none of them are everything that you want them to be.

Annie Schwab, CPA: [00:04:06] But there is a lot that you can do there.

Roger Harris, EA: [00:04:08] There's a lot there. Yeah. And honestly the individual accounts pretty good. I mean, um.

Annie Schwab, CPA: [00:04:16] It gets updated fairly quickly. Yeah. In my opinion, you know, like notices and tax return processing and where's my refund? And, you know, I feel like it actually is updated pretty, pretty well.

Roger Harris, EA: [00:04:28] And remember, and we'll touch on this again later. This whole issue of no issuing of paper checks is the easiest way. And the suggested way to resolve that was through the own individual online account. So, uh, one of the things you might want to consider if you haven't done it, is a way to assist taxpayers who don't have online accounts, getting them set up because that'll make your life easier and their life easier. I know of, and again, I'm sure we're repeating some of this, but we can't say it enough because a lot of firms are setting up kind of computers in there, assuming they have an office and people come into it, computers in the lobby and staff are assisting taxpayers that don't have online accounts setting them up. Um, obviously that doesn't work if you're virtual or something like that, but figuring out some way to encourage your clients and assist them because really the online accounts are easy. It seems to be ID me, Manny, you tell me if you heard something different where the challenge.

Annie Schwab, CPA: [00:05:24] Oh it is. You know, you got to have a smartphone. Um, you do have to have, like, a camera on your computer, and I get it some, maybe some of our older clients don't have, you know, they're not tech savvy or whatever, but if you can assist them, maybe record a video or, you know, give them step by step instructions or like Roger said, I mean, I think if they're in the office, sit down real quick, a staff will help you do it. You only have to do it one time. It's not something that you go in and have to do every year. Um, so you know, it's just one and done. So I, I, it is the id me thing, but like I did it and I went, it didn't, you know, I was able to do it pretty quickly.

Roger Harris, EA: [00:06:03] So yeah, it's not as hard as some people make it out to be, but there can be challenges. I mean, if you don't have a cell phone in your name, for example, you're not going to be able to get through to it. So there are things. But again, this is this is the future. This is where everything is going. And, and, you know, I think you'll find your tax seasons are going to become better and easier if you have these accounts. I mean, just think about it, looking in an individual's account to pull a transcript to make sure you have everything that the IRS has before you start preparing the return, because we all hate that. Well, I finished the return, but oh, here, I forgot to give you this. Um, you know that it's not going to solve all those situations, but it can certainly help in some. So, uh, I guess our first suggestion of things to think about is come up with a strategy, uh, how to increase both your use of the online accounts, getting your Tax Pro account, but how to get your individuals and businesses to have online accounts so that you'll have access to the newest and best from the IRS whenever it comes out? All right, what's next?

Annie Schwab, CPA: [00:07:06] Next. The wisp. Um, the written security plan that has been around for a while. This is definitely not new. Um, but I will say, when everybody puts their wisps together, sometimes they just put it in a drawer, maybe not revisit it. Hiring new people, bringing on staff, reminding the staff of what's in it. Um, I, I'm 100% sure that the hackers are getting smarter. Um, and during, you know, end of year processing of payroll or preparing tax returns, clearly that's the time of year that they're going to target you and your staff. So revisit it, update it, make sure your employees are aware about it. Please encourage your employees. You know, try not to just click on emails that you get. There's definitely spam and phishing attempts. Um, you know, probably most employers, employers, you know, are used to, you know, hitting spam, spam, spam and, and moving it to the junk box or whatever. But make sure your employees also are aware, um, and, and avoid any of those security breaches during a busy time of year.

Roger Harris, EA: [00:08:13] And there are companies, in fact, we use one here that will help you, uh, monitor and actually get your employees to take some. I call it a test. I don't know if it wasn't a pass fail, but I mean, it was. Yeah, you had to answer some questions after a thing, but you really because any 100% right that you might be the most careful person in the world, but these emails are going to look really, really real. And your employees need to know, but you need to have some monitoring that if you make a mistake, or they'll even send you emails to test your staff and see if they're doing what they should.

Annie Schwab, CPA: [00:08:55] Yeah.

Roger Harris, EA: [00:08:56] It's a good resource to have if somebody because somebody might make a mistake as hard as we try. But but the wisp is getting more and more important. It's a requirement. It's very it.

Annie Schwab, CPA: [00:09:05] Is.

Roger Harris, EA: [00:09:05] Required requirement. But I think sometimes we just we're still taking it as something I just need to have so I can check my PTEN box. And it's much more than that in today's world. I know we get all kinds of stuff here. We had a situation here yesterday where one of our better employees just clicked on an email that was spam, and fortunately, we called the company and we resolved it and it didn't go anywhere. But, um.

Annie Schwab, CPA: [00:09:29] It can easily happen.

Roger Harris, EA: [00:09:30] It can happen. So take take the wisp. Seriously, not just a box you have to check off, you know, check your, uh, your insurances behind it, your cyber insurance, things like that.

Annie Schwab, CPA: [00:09:42] Cyber security coverage, make sure yeah, that's, that's another one on our list. You know, check your policy, make sure you have cybersecurity coverage. Um, you know, update it for, you know, anything that may be new or different. Um, I know, I know those policies are expensive, but it's well worth it.

Roger Harris, EA: [00:09:59] Yeah. And the more employees you have, the more I think a third party company assisting you, monitoring and training your employees is important. If it's you and one other person, I mean, it's still think it's a good idea. But the more employees you have, the more susceptible you are to one of them making a mistake or you not have time. Because once tax season starts, you're not going to have time to train them and think about this sort of stuff.

Annie Schwab, CPA: [00:10:21] Yeah. It's really this time of year to go over all this sort of housekeeping things.

Roger Harris, EA: [00:10:26] Yeah. Clear your mind after October 15th and look at your wisp for next year.

Annie Schwab, CPA: [00:10:32] And you mentioned it, Roger. The PTEN renewal that usually comes out this month. I mean, we should be seeing it released for getting your PTEN or renewing your PTEN. Um, so definitely make sure that you do that, that anybody who's in the hands on with tax preparation, dealing with client documents, um, you know, probably need a ten to you can do it online. It's super fast, but you do check that box that you have a, we're.

Roger Harris, EA: [00:10:57] Going to be checking a box and make sure you're not, you know, you're not checking the box with, you know, wink wink, you know, yeah, I got that. But you really do need to have it. But yeah, and it's inexpensive. Now if you have any doubts, just get them a P ten. I mean it's just was it 17 or something crazy. Yeah.

Annie Schwab, CPA: [00:11:13] It did go down. I don't know what the cost is going to be this year. But it's it's, it's easier to just get and have in case than to not have it.

Roger Harris, EA: [00:11:21] So and watch for that actually make an announcement. We haven't seen it yet. We'll make sure we put it out there when we get it, but it's about time for them to come out and say that the renewal season is open. And that's something you got to do every year.

Annie Schwab, CPA: [00:11:34] Yep, yep. Um, next on our list, we may have talked to this, talked about this before, maybe part of like a succession planning, but we strongly recommend for all of our pageant firms here that you have a second principal person listed on your Ethan. So if something happens to you, someone can stand in and press that button to keep the business moving and returns filing. So it's not a difficult process. You can log into your Ethan system. It could be a key employee. It could be a spouse, it could be a friend colleague. Um, you know, it doesn't have to be an owner of the company, but we strongly recommend having that second principal listed, which will just be a preventative, you know, for stop gap in your, your processing if something were to happen to you. So, um, maybe something you haven't thought about, but a good suggestion here, I think.

Roger Harris, EA: [00:12:31] Yeah. And I know you can sit there and think, well, if it comes into place, I'm dead. Why do I care? But I mean, the rest of your firm will care if they're trying to do it. Now, one thing, because some people confuse this. If. If you are hacked and your effort is compromised, there is a process to get an F in really quickly.

Annie Schwab, CPA: [00:12:49] Uh, yeah, but you have to go through the right channels following your wisp.

Roger Harris, EA: [00:12:53] That's different than you just being the only person on an f N and you pass away. So it's just better to have that second person on there. And he said, it can be anybody, but you want to be able to keep going. If, God forbid, something were to happen to you, or if you're working in a place, you know who is on that. And sometimes you don't even know who you put on it. It's been so.

Annie Schwab, CPA: [00:13:15] Long.

Roger Harris, EA: [00:13:16] Yeah. So go check it and see and put at least some second person or maybe the second person that's on it from when you started. It's not even there anymore.

Annie Schwab, CPA: [00:13:24] Oh that's true. Updating, making sure that that yeah.

Roger Harris, EA: [00:13:26] Make sure you have at least two. And the two that are there are still around where you can find them. So you can continue to e-file if, God forbid, something happens to you.

Annie Schwab, CPA: [00:13:35] Yeah. And kind of speaking of Ethan and, and being hacked, I, I strongly suggest again that you go and check your effin account. Often, especially during tax season, to make sure that it's at least resembles, you know, the amount of returns that you've filed. You know, if you've filed 200 and it says 190, you're probably okay. But if you emailed 200 and it says 2000, then you've been compromised. And so, you know, maybe put on your calendar periodic reminders to go check, you know, what's happening with your effin, make sure that it seems reasonable.

Roger Harris, EA: [00:14:10] Yeah. Particularly now that we're ending the extension season. Go give it a few weeks and then go check it to see how it looks after October 15th to make sure somebody's not there. Getting ready to really nail you come next January.

Annie Schwab, CPA: [00:14:25] Right? Yep. Um, so, you know, there's also those considerations about staffing and pricing and making sure, you know, your office has everything it needs at the start of tax season. I mean, all of those are really good. Just year end kind of checklists so that, you know, once you're really busy, you're not struggling to find extra help or to train someone or, you know, your printer dies, you know, like get all that kind of stuff lined up, um, and squared away before, um, tax season kicks off again.

Roger Harris, EA: [00:14:58] Yeah. This is the perfect time to start thinking about pricing for next year because you're finishing this year. You know, there's plenty of surveys from associations to kind of see where you are. I think, you know, the biggest thing you hear is, well, I've, you know, I've got this in my area or this and that. And so we're basing that on anecdotal information instead of real information. But just about every association puts out some sort of pricing survey. Intuit stuff is pretty much easy to find. It was an interesting article I read in accounting today, and I don't know all the depth of it, but it was a survey of, um, businesses asking how much they expected to pay for accounting and tax services. And what I found interesting is if you were $1 million in less revenue, you expected to pay $5,000 for accounting services.

Annie Schwab, CPA: [00:15:46] Okay.

Roger Harris, EA: [00:15:47] Now, I don't know where that fits in your ballpark. It jumped up significantly when you got over 1 million or 1 million. But this is the time of year to take a good, hard look at pricing. Um, if you've listened to our podcast on rightsizing, you can see how pricing can also help you kind of adjust the makeup of your practice. And we'll talk about good clients, bad clients in a minute. But now is the time. And engage your staff in this. Get their input. You know, how can we make sure that we're competitive but fair and that we're pricing for what we're worth, not necessarily what we do. And just, you know, plan for it now and take the emotion out of it before tax season. And don't try to do it on the spot to the extent that every time you prepare a tax return, you're making a pricing decision 300 times. Go ahead and make some changes. Now, to the extent that you need to make major changes, tell the clients before they come to you and see how they take it. You know, because so this is a great time to do that. And you mentioned hiring, obviously, if you need to hire, you better start now because.

Annie Schwab, CPA: [00:16:55] Right?

Roger Harris, EA: [00:16:56] It's going to take a while.

Annie Schwab, CPA: [00:16:57] Yeah. There's a training, you know, there's time. You need the time for training your, your new staff, getting them acclimated to your processes and, and getting to know some of the clients, etc.. So yeah, don't, don't wait too much longer if you're considering on, on hiring for sure. And Roger mentioned it like this is the, this is the time of year where you're fresh out of tax season. You know, those pain in the butt clients are you're over and done with them. Their returns have been filed. But hey, if there's clients that are either way, way going beyond what you were pricing. I would either fire them or raise their prices, especially ones that are, you know, don't follow the rules or are ugly to your employees or, you know, you have the right to, to let, to disengage with, with these clients that we, you know, the bad ones, whatever. Um, but that I think, like you said, doing it now, giving them time to find somebody else to do their return is the professional way to do it. Um, and then you can see, you know, do you have bandwidth to bring on new clients? Um, so, so take, take a look at that too.

Roger Harris, EA: [00:18:07] Yeah. Replace the bad ones with good ones. Yeah. If you, if you've got a demand and you turn down clients during this season that appear to be good clients, we don't always know until they become clients. But and you go, God, I wish I had time to take that one on. Then why are you letting clients that you don't like take up your time when you think you have people that would be better? Uh, so yeah, you need again, take a little time. Get away from the stresses and the tiredness of October 15th and then take a hard look again. I won't say it again. Bring your staff in here because there may be things that you don't know about that makes them difficult. And take advantage of that. And one last thing when it comes to hiring, if you have seasonal staff that only work during the April time frame and you've made any changes, you've changed any software, you've done anything. Get them in now and get them familiar with the changes. So when they come back after the first of the year, they don't have to figure it out then. This is the time to bring them in and get the learning curve done before December. And um, so they'll be able to jump right in and be as valuable to you as they were last year. Now, if they work through October 15th, they probably know any changes. So if you didn't change anything, you probably don't, you know, still probably wouldn't hurt to engage them in the discussion about, are there any clients that we need to make significant price adjustments to or just as you said, give them time to go find somebody else because we're not doing it. So yeah, don't forget about them when you're thinking about all this stuff. If you plan on bringing them back in.

Annie Schwab, CPA: [00:19:40] Yeah, yeah. Um, there's one other tip. And then we'll kind of get into more nitty gritty stuff. But, um, if you haven't taken advantage of some of these online calendars, like Calendly or, um, some of these other links that you can set up that have your availability where you can instead of, you know, the clients calling or emailing, I need an appointment, I need this, that, and the other, you can place that link out there, um, where they can grab, you can set it to be ten minutes, 20 minutes, an hour or however, you know, you can set different slots, you can block off times of the day. Um, it's great to sort of engage in some of these tools that help you stay focused. Um, less interruptions. Um, you can block time out for marketing or for yourself, you can block time out. You know, I'm not going to take calls after 6 p.m. or whatever. Um, there's, there's a bunch out there. Um, they're all pretty similar. Most of them are free. Uh, so if you haven't taken advantage of sort of these online calendar links, um, I do recommend that.

Roger Harris, EA: [00:20:43] Yeah. And, and that's a great point. And when you were saying that, I think, you know, I just got a flu shot and I went online and picked the location and the place I wanted to go through a calendar, you know, from my pharmacy, the pharmacy.

Annie Schwab, CPA: [00:20:58] Yeah.

Roger Harris, EA: [00:20:58] And so it worked great for me because that gave me I could pick what day, what time that was available for me, you know, that suited my schedule. It didn't take anybody at the pharmacy's time to, to be involved in doing that. So I think, you know, it's, it's becoming commonplace. It's something that we probably if we haven't adopted that yet, we should. There's no need for first of all, if they have to call you. Think about how much time you waste when all you're really trying to do is set an appointment. How are you doing? How's things going? You know.

Annie Schwab, CPA: [00:21:31] Well, it breaks your train of thought and. Yeah, you know, it's interruptions and all. It's all of it.

Roger Harris, EA: [00:21:37] And worst case, you're too busy and you don't answer the phone or respond to the email. So then it all gets discombobulated because by the time you get back to them, that's schedule didn't work. So just put an online calendar out there, make sure you keep it up to date so that you're, you know, you're not, your counter is not always full because that kind of defeats the purpose. But it's a, again, it's just when you said that, I thought, gosh, you know, I even thought about it, but I just did that to get a flu shot. And it was so easy for me because I got to look at the day. It was the best day, the best time, and got to the pharmacy and they knew I was coming and.

Annie Schwab, CPA: [00:22:11] Perfect.

Roger Harris, EA: [00:22:12] Gave me the flu shot. So it's commonplace, so we should take advantage of it as well.

Annie Schwab, CPA: [00:22:16] Yeah for sure.

Roger Harris, EA: [00:22:23] Want a firm you love working in today and one that others will want to own tomorrow. Hi, I'm Roger Harris, host of this show and president of pageant, the company, bringing you this podcast at pageant, we've spent over 60 years helping tax and accounting firms build firms they're proud of and that are built to last. From streamlined systems to exclusive technology discounts to proven marketing strategies and a strong community of peers, we've got your back. Want to see if pageant is the right fit for your firm? Visit pageant franchise.com. That's pageant franchise.com and let the conversation begin.

Annie Schwab, CPA: [00:23:06] All right. How about we do a little bit of reminders on end of year payroll information, returns, those types of things. Um, that's really because.

Roger Harris, EA: [00:23:16] That is different this year.

Annie Schwab, CPA: [00:23:17] This is there are. Yeah, yeah. There's a couple of, um, you know, first, obviously you need to determine, you know, which clients are asking for this service. Are you going to provide. You know. Preparation of W-2 and 1099. Are you going to do it in house? Are you going to use a third party processing. Are you just not going to do it at all? And then what do you charge for it? And, and so there's some obvious there's some, you know, things you need to get organized, um, in your, in your office, but I will tell you if you haven't seen it, the IRS, the fire system that's been around, I don't know how many years. Um, the fire system is going away. It's, it's retiring. Um, and so what's being replaced is what's called Iris. Um, that will be the new electronic filing platform for information returns. Um, so if you're not familiar with it or you weren't aware about the fire system going away, um, we'll, you know, you'll need to kind of learn a new, new process. Um, so, you know, just keep that in mind.

Roger Harris, EA: [00:24:18] Yeah. You don't want to be waking up in January when you're trying to do these things and realize the system that you're used to is no longer an option. Yeah. Because, I mean, think about the time it takes to to do W-2s and 1099. And again, they're different. We'll talk about that. Um, there's nothing really new we haven't said, but we'll go over it again. So, you know, get those systems in place. Think about, you know, how depending on your system, if you gather the information in your accounting software, you know, it's a good time to go make sure you're not missing Social Security numbers or addresses or whatever, you know, do all that stuff now. Because even if something happens in December, at least you've isolated the problem to the one month. You're not going back and trying to recover 10 or 11 months of missing information. So at least have somebody look through those databases and make sure we've got all the information. I think one thing, depending on your system, depending on how it works, and I know every system is different and sometimes you're involved and you're not involved, but if you're involved in it and you're responsible for capturing current information, find a way to give your clients a printout of what's in your system and have them validate and verify that that information is still accurate.

Annie Schwab, CPA: [00:25:35] Accurate.

Roger Harris, EA: [00:25:36] If people move and go to different places or you know, you miss, you got a Social security number inverted somehow, you know. So if you're using any information that you're doing it internally, find a report, give it to your taxpayers probably in November and say, this is what's going to come out on 1099 or W-2s or whatever the case may be. If there's anything wrong, tell me now. Because if you don't tell me now and it causes a problem later, I'm going to have to charge you again for fixing it.

Annie Schwab, CPA: [00:26:04] So yeah.

Roger Harris, EA: [00:26:05] Just another little tip.

Annie Schwab, CPA: [00:26:07] That's a good one too. Okay, so 1099, FTX and miscellaneous those thresholds. I mean, it's been 600 for I don't know how long forever I think. Well, it's not anymore. Um, This year we are at the 2000 threshold that was ob A. Um and so you may not be preparing as many, um, or see your clients getting as many. Uh, miss 1099 doesn't mean the income is not taxable, just means that you're not getting a reporting form for that. Um, so that's another, you know, I think a reasonable jump given that we've been at 600 for a long time. But.

Roger Harris, EA: [00:26:47] Um, I mean, there's going to be some compliance issues, you know, because, um, a lot of people, to your point, Andy, if I don't get a form, I don't have to report it and fewer people are going to get forms. So as the preparer of those forms, it's going to make your life simpler. You don't have sure, you don't have to do as many, but as the tax preparer, you've got to remember that if somebody's got a form last year for $700 and they're not going to bring you a form this year, you got to figure out to make sure how to ask and get the amounts and, you know, address that discrepancy from people who used to bring you forms that aren't going to be bringing them to you anymore. And yet, to your point, that doesn't mean the income became nontaxable.

Annie Schwab, CPA: [00:27:29] Right.

Roger Harris, EA: [00:27:30] Because a lot of them wouldn't have known the amount if it wasn't for the form. So you're going to have some challenges of that person who's used to getting an $800 1099 that doesn't bring you anything you say, well, how much was it? And they go, I don't know, you know.

Annie Schwab, CPA: [00:27:43] Yeah, a little, a little. You're going to have to go back through your records for that one.

Roger Harris, EA: [00:27:47] Yeah. So preparing your taxpayers for, for those group of people that aren't going to get those statements that they used to get, reminding them they're still have reportable income and you need to know what that amount is. And in some cases, that's going to mean they've got to go look through their checkbook or see whatever and come up with it and try to have them be prepared to bring that when they come for their appointment or send you their documentation. You shouldn't have to chase them all down for that because you know, they're going to go, I don't have any idea and I don't know where to find it. Did you put it in whatever.

Annie Schwab, CPA: [00:28:20] It said last year? That's going to be the.

Roger Harris, EA: [00:28:22] Same as last year. Yeah. Yeah.

Annie Schwab, CPA: [00:28:25] Oh, well. And then the 1099 K again. This one's been in phase in, phase out, you know, retroactive, all this stuff back and forth for several years now. But for 2026, you know, all those Venmo, PayPal, those types of accounts that issue the 1099 K um, it's now up to 20,000 and more than 200 transactions. So that threshold has, has increased quite a bit. Um, so, you know, clients, you know, who usually receive these 1099 K s doesn't mean again, that the income is not taxable or reportable. It's just that we've increased the, um, the thresholds for having to file those forms. So and that's a big jump. Yeah.

Roger Harris, EA: [00:29:11] That's going to create a really interesting dynamic. For years we didn't have to report anything because there was no 1099 case. Yeah. Then we got an amount and people had to go chase them down and report it. Now the threshold has gone back up. And so it's like, what's the IRS going to do? When they saw nothing, then they saw one year and then it goes away again. Yeah.

Annie Schwab, CPA: [00:29:31] Yeah.

Roger Harris, EA: [00:29:31] I mean, you would think they would go, huh. That probably means they had some before and after and compliance here.

Annie Schwab, CPA: [00:29:40] We'll see how.

Roger Harris, EA: [00:29:41] That I doubt. I don't think their systems will allow them. But it does create some interesting information that and from a due diligence standpoint, if they reported stuff last year and all of a sudden nope, didn't have it this year. Really? Yeah.

Annie Schwab, CPA: [00:29:54] Yeah.

Roger Harris, EA: [00:29:55] Did you just really not have it? Yeah. So you got to ask some questions and make sure you're covered. And don't just assume that the only year they actually had income was the only year that they had to, that they got a 1099 K for it, you know.

Annie Schwab, CPA: [00:30:07] So so those yeah. So two two relatively new. I know we've talked about it, but new for this calendar year are the NEX, the 1099 and then the 1099 K. And then of course, we've talked about the new boxes and the new reporting of qualified overtime and tip income. So we've spoken before. They've added boxes and there's a box with a code for tips and another one for overtime. And then we've got, um, you know, plus a new box for box 14. So there's a new one for box 14. And then there's different new codes for box 12. So, um, and while you know, okay, there's a code, okay, you know, I get it. It's going to be gathering that information from the taxpayer or from the employer in order to prepare those w-2s because there's no, there's no transition relief kind of thing. There's no give it your best guess. There's no, um, you know, if it's not on the W-2, you can't report it. So, um, that's, that is a change for 2026 returns.

Roger Harris, EA: [00:31:16] And those codes I think are going to be important because that's what's going to identify what it is. So you may have the amounts right. But if you don't put the code in again I don't know all the systems. Maybe the systems won't print the W-2 without a code. Who knows. But, um, yeah, this year, to your point, you know, last year it was like, well, just, you know, do the best you can.

Annie Schwab, CPA: [00:31:34] Get out of jail free card for that one. Yeah. 2025. It was, it was easy. You just now, I wouldn't, I shouldn't say it was easy because it was retroactive to the beginning of the year. So people were particularly over out.

Roger Harris, EA: [00:31:45] Which was really challenging last year.

Annie Schwab, CPA: [00:31:47] But hopefully in 2026, um, this kind of data collection has been placed, you know, and so now it will be hopefully available. The actual amounts will be available and it won't be a bunch of, you know, off off the side calculations. So, but you know, there could be those clients that are like, well, I did get tips and overtime and now it's not on the W-2, you know, you're preparing it and they're saying they had it and they've had it last year and and it's not there. And so, you know, there might be some level you got to go back to the employer. We can't just put it in there. It's got to match the W-2. So, um, you know, there could be some situations where it's kind of going back and forth and trying to decipher what to do.

Roger Harris, EA: [00:32:29] And you might want to, again, I don't know what kind of organizer, if you use organizers, if you don't, if you have ways to modify them or things like that. But if you have taxpayers who came to you who got tips and overtime, you know, it might be a good hint to put in your organizer or however you communicate with them to make sure when they get their W-2, they check to make sure that the W-2 they get has the proper information before they come to you. And if it's not, send them back to their employer before they come to you to make sure that the form, the amounts are there and the codes are there. So that. So you got to look at it both if you're preparing the w-2s or if you're just receiving them from the taxpayer that, that they're, uh, Compliant with the new rules.

Annie Schwab, CPA: [00:33:10] Yeah. And I know our in our tech software, like we can do like a query or we can data mine for certain things. I'm sure, you know, most of the tax products have a way to identify who had tips or overtime in previous years, you know, either by the data entry or the form or whatever. Um, you might be able to run some sort of query and identify those clients and send them, you know, a little reminder as it gets, you know, close to the end of the year.

Roger Harris, EA: [00:33:37] Yeah. When you get your W-2, look here for this box and this code. Otherwise, go back to your employer before you come to see us because because I'm going to send you back if you don't. Yeah. And it'll just delay the process. So because it's, again, it's a change for both the people issuing the forms as well as the people receiving the forms.

Annie Schwab, CPA: [00:33:57] Yep. Um, I think those were all the really new payroll processing. Um, there's always, you know, it's always a good time of year to, you know, see if you need to have a have a client pay in with a fourth quarter voucher. Um, maybe it needs to be adjusted. Maybe they usually don't, but something happened. Um, so it's a good time of year to kind of reevaluate. Maybe those that are um, generally do estimated tax payments. Again, you could query that in your software and just make sure that we don't, nothing needs to be adjusted. Um, you can also adjust, you know, your last payroll cycle W-2 withholding. Um, that's always a good way. You know, it's considered as earned, um, throughout the year, the year. Right. So if you, you know, need to throw in a big withholding on that last paycheck, um, you know, you're not subject to those sort of annualized rules. Uh, and then another reminder to like, look at reasonable comp, um, guaranteed payments. Last thing you want is, you know, client coming to you and after they've gotten their W-2 or, or, or maybe they didn't get a W-2 and they needed to take guaranteed payments or are reasonable comp or reclassify distributions. Um, so much easier to handle before year end than to get all these amended forms done when you're in the process of tax preparation. So that's another good point.

Roger Harris, EA: [00:35:20] That's a great tip on the wages because that's that's kind of a savior at the end of the year, if you're way behind in your tax payments and you control your payroll and your salary to go ahead and do it through payroll as opposed to making an estimated tax payment, because that's made tax payments going to fix it for the fourth quarter, but it's not going to fix it for the first three. Whereas you throw it in the W2, you get credit as if you did it all year. So that's a huge tip. One other thing, you know, if you have business clients who do their own accounting, whether it's QuickBooks, Xero, whatever, um, it might be a good idea if you don't have access to it online, is to ask them to bring in their most current statement and take a look at it and look for the things that you just know aren't right.

Annie Schwab, CPA: [00:36:08] Yeah. Get them corrected.

Roger Harris, EA: [00:36:10] Instead of trying to fix that stuff in the middle of a filing season when your time is of the utmost importance. A lot of that stuff, if you fixed it in November or December, would make your tax season much easier, because the problem may have happened back in June or July, and it's not going to, you know, manifest itself after you fix it. So take a look at those people who are doing their own record keeping, who, you know, historically, they've brought you the records and they said, here it is. I got all my accounting and you looked at it and went, well, yeah, you got numbers. But these aren't these aren't right. And how much time you spent at the busiest time of the year trying to fix it. Go ahead and let your staff and yourself work on that now, and at least you've corrected it for 10 or 11 months. And if the problem shows up again, you know it's in December and.

Annie Schwab, CPA: [00:37:01] It'll well make.

Roger Harris, EA: [00:37:03] Your life simpler.

Annie Schwab, CPA: [00:37:04] Pitch it if you want. You know you're looking for more accounting work or bookkeeping work, and you've got clients who, you know, just bring you their version. You know, this is a time of year to, to pitch, you know, see if you can expand the services that you provide to the client.

Roger Harris, EA: [00:37:18] Right. Right. And I hope if you have those clients who say they're keeping their own books and then they bring to you, and it's nothing but a bunch of garbled numbers that you're factoring that into what you charge, because that's not just doing a tax return. I mean, you've basically taken on a year's worth of accounting and fixed it, and that should be on top of the normal fee, because the normal fee for a tax return doesn't assume you had to go back and fix all their records.

Annie Schwab, CPA: [00:37:44] Recreate the books.

Roger Harris, EA: [00:37:45] Right. To do it. So, um, again, shift that into a time when you're not as busy.

Annie Schwab, CPA: [00:37:50] Yeah. And also, you know, consider, you know, if you've got somebody who's under withholding or over withholding, um, go ahead and encourage them to adjust their W-4 with their employer so that, you know, they can get more even keel. Now, look, some people really like to get these big refunds, and that's totally fine if that's you know what, there's not a right or wrong. But you know, it's something maybe you should, you could remind them there is the ability to, you know, adjust your W-4 so that you're not, you know, not getting this big balance due or this big refund. Um, in the future.

Roger Harris, EA: [00:38:24] And then expect a phone call when they get the W-4 and go, I don't know how to do this.

Annie Schwab, CPA: [00:38:28] Yeah, it's not as easy as you think.

Roger Harris, EA: [00:38:30] And again, that's, that's potential revenue stream. If you need to help everybody correct their W-4 because they're still going to be looking for a place to say, how do I put married with one?

Annie Schwab, CPA: [00:38:40] Yeah.

Roger Harris, EA: [00:38:40] And well, you can't.

Annie Schwab, CPA: [00:38:42] But not anymore.

Roger Harris, EA: [00:38:43] So it's unfortunately, it's not as simple as it once used to be.

Annie Schwab, CPA: [00:38:48] Yeah. So that's your year end sort of informational form reminders. Um, a couple of new things. Not not a ton that we haven't even covered before, but, um, yeah, I just wanted to make sure everybody's got that on the radar.

Roger Harris, EA: [00:39:05] Go ahead and get ready for it because it's not going to go away. It's going to happen. And obviously finish getting your CPE for the year. If you haven't done that, you know, hey, you're getting an hour more podcast. That's right. You're getting an hour right now and you can go back and listen to, I guess, all of them for a year. So, um, yeah, check on your CPE. Um, yeah, I'm trying to think, is there anything else that you could kind of give them tips or something to be thinking about now? But I think for the most part, it's, you know, get through.

Annie Schwab, CPA: [00:39:36] Yeah. I mean, I, we encourage our offices to send out like engagement letters and write our org, you know, and questionnaire organizer, whatever you use to collect the data from clients. I mean, maybe you're doing it through a portal, maybe it's a checklist, you know, however you, however you do it, you know, consider what you did last year. Did it work? Did it not work? What do you need to, you know. Was there anything that needed to be adjusted or added? Maybe something specific to the state that you live in? Um, those are always good kind of things to remember. Are most softwares are coming out? Um, the next year of that software is coming out like November ish, um, which usually has the questionnaires or organizers in it. Um, you know, review review that pro forma your clients over, um, update any type of pricing that you have in there, um, perhaps and make sure that you're sending out, um, the organizers and sending them out is one thing, but you need to also train the clients, send them to give it back. Um, actually we hear all the time, well, my clients just won't fill it out. And I was like, I bet they would if you wouldn't prepare their tax return before they fill it out. Like, you know, you need to set the parameters, um, like we said, you know, encourage them and you to have those online accounts because those will be useful when you're looking for missing documents or trying to, you know, get a transcript or, or something like that. Um, so there, I mean, there are some things that you can do, you know, November, December, early January to really, um, encourage the clients. I mean, you could put that calendar link on your, um, cover letter or engagement letter or with the questionnaire where they can schedule an appointment. You can get that all on the calendar. Um, well before tax season really kicks off. Um, those are, those are also some good ideas.

Roger Harris, EA: [00:41:30] Yeah. Identify any issues that you've got in your processes. Mhm. Um, while you have time to, to fix them. Uh, and then ask and make sure clients stick to them because the process and the system is no good if nobody follows it. So you got to get your staff and change trained. You got to get your clients trained and, and take full advantage of it. And you mentioned software. If you haven't figured out what software you're using yet, it's, I don't know what you're waiting on, but you better go ahead. If you're hoping the price is going to go down, you get a better deal. You better make a decision soon because, you know, it does take a while to learn a new software.

Annie Schwab, CPA: [00:42:03] So don't know if you're converting from one to the next. That's always a process. And then, you know, I mean, you, you, there's always going to be some type of learning curve to when you're learning a new software. I mean, you know, how to prepare taxes, but you know, each software has its little kinks to it or, or processes to it. Um, one other thing, we mentioned it earlier on, I just don't want to forget to, to talk about it again. Last year was the no more paper checks, right? Lots of issues with notices. Um, lots of people waiting for refunds longer than they normally do because they did not provide banking information. Uh, I don't know how you gather that through. Is it, you know, the questionnaire, the organizer or whatnot, but I would suggest getting that from all your clients. Um, and keeping that on file. Obviously, every year they're going to need to confirm that that is still the correct account. You can upload those banking account, the banking account stuff into the online account. So um, they can also do it that way instead of providing it to you. But, uh, definitely, definitely need to avoid the chaos from last year, um, with no paper checks. And, you know, I hope the software's this year. I hope they won't even let you e-file unless that's provided. Like, you know.

Roger Harris, EA: [00:43:23] Unless I don't.

Annie Schwab, CPA: [00:43:24] Do.

Roger Harris, EA: [00:43:24] They don't know what the.

Annie Schwab, CPA: [00:43:25] Exception to being able to get up, get a paper check. Um, hopefully that'll be, I know for our software, it was not a smooth process. I would have preferred more diagnostics and reminders and, and stuff like that.

Roger Harris, EA: [00:43:38] So hopefully that's not going away. I mean, no, this is, this is here to stay. And, and for people who for whatever reason, didn't want to give you their bank account or you forgot to ask for it, you really need to stress that this year, because if nothing else, and not going to read an article that, you know, the amount of paper checks they issued was obviously way down compared to prior years. So that's a positive. So they're not backing off on this. And who knows before they, you know, require perhaps that payments be drafted.

Annie Schwab, CPA: [00:44:07] I was just about to say I think it's coming. I mean, you'd think the IRS would just take your money. I mean, I haven't seen them be like, no, I don't want your money. But I do think that it's leading towards, you know, making doing online payments, um, direct deposits, direct withdrawals, just doing everything automated.

Roger Harris, EA: [00:44:24] So yeah, to the extent that you had problems with that last year where your clients got the notice that said, you can't, you know, we're not going to send you a refund, you know, don't, don't just ignore it and let it happen again. Go ahead and be proactive and, and, um, now there's some that maybe they, I don't have a bank account. I'll never have a bank account. You're just gonna have to say, all right, you're just going to have to wait, you know, to get your refund. But to the extent that they are being stubborn about it. Just remind them. Look, this is crazy. You know, they're not they're not giving in. They want your checking account and they're going to put your money there. And your point. Another advantage of the online accounts. You know, make sure if they have to change something, they can go in their online account and update it. And you can go look in and see the account. And at least if they have to get a check, they'll at least be able to find a checking account somewhere.

Annie Schwab, CPA: [00:45:18] Yeah.

Roger Harris, EA: [00:45:19] Yeah, yeah. It's just they're not going away.

Annie Schwab, CPA: [00:45:22] Exactly. Um, what else do we have? Roger. Um, we've got Trump accounts still. Those are not going away. Um, they've been a couple of enhancements to it. Um, so that just kind of makes it easier. I don't know if you have clients who are setting the like as the employer, setting these up so that their employees can contribute or they can contribute to the employees, um, there is the, there will be a reporting form for the Trump accounts this year. So you may see that. Um what else? Um I think that's in the news. Anything in the news that we.

Roger Harris, EA: [00:46:00] Oh no. On a legislative side, um the House has been out for a while campaigning. Um, but a couple of things have come through the Senate that um, something's going to have to happen soon on the, the one that we've talked about before is the tax act, which is, uh, the bill that includes a lot of IRS reforms. But maybe the thing to the accounting associations that's most important is it created some minimum standards for tax preparers so that everybody preparing tax returns would have to take some sort of CPE credits, pass some background checks, things like that. Um, the Senate actually passed that bill. I want to say 70 something to 20 something. So it had pretty good bipartisan support. And so now it's sitting over waiting on the House to come back, which I don't think they're scheduled to come back till after the election. So when they come back, some of them will know they have a job, some will know they don't have a job. And so we'll see how their attitudes change. But one thing that we hope will happen, and if you don't understand the inner workings of Washington, is that the House will pick up the Tax Act and will pass it and send it on to the president for signature, because if they don't do that before this session of Congress ends.

Roger Harris, EA: [00:47:22] In other words, when the people who lost are out and the people who won come in, they can't pick up the Senate bill, then it has to go back to the Senate and start, because it has to initiate and be passed all within the same session of Congress. So when the House comes back, there's going to be a short period of time to do everything, pass any bill in either chamber that the other one has sent to them before this Congress ends, which is in January 20th or something like that, when the new Congress will come in. So it's not like they can just put it off and pass it in June. They've got to get it done quickly. So we hope that that will happen because I think that'll be good for our tax system personally. The Senate also passed the Protect College Sports Act and sent it to the House. And they did that, um, with a very good bipartisan vote. In fact, I may have quoted the college vote. I think the, uh, Tass act was actually done on unanimous consent, which means technically it was 100%. They just they didn't vote. They just nobody objected. And it went through. But anyhow, both of.

Annie Schwab, CPA: [00:48:27] Them, you're right, I think I think it did pass the Senate, you know.

Roger Harris, EA: [00:48:30] Unanimous consent. So both of them came with very good bipartisan support. And they're both waiting on the House.

Annie Schwab, CPA: [00:48:36] And tell our listeners a little bit about the football player protection.

Roger Harris, EA: [00:48:41] It's, you know, it's going to it's the main thing it's going to do is it's going to give the NCAA some ability to create rules and not have to go to court and have them all thrown out. They'll get some antitrust exemptions, but it's going to say five years to play sports and you've got five years to do five years. One transfer. You know, there's there's you know, it's not the best, but it's better than just the wild, wild west that's out there right now. Everybody most wants everybody. Most everybody in that you've heard of, you know, supports it and wants it done. So, um, yeah, it was kind of surprised it got out of the Senate because there are people who oppose it, you know, for, I think, crazy reasons because it's not perfect, but it's better than nothing.

Annie Schwab, CPA: [00:49:21] So what we had.

Roger Harris, EA: [00:49:22] Yeah, but and then there's other bills. Look, those are just two. And the football one doesn't. If you don't like college sports you could care less about that one. But I, I like college sports so I follow that one very closely. Um, but you know, the big thing to understand is any bill that came from either chamber waiting on the other one has got to get done before January when the congressional and. And then we. Who knows how the elections will turn out right.

Annie Schwab, CPA: [00:49:48] I was just about to say will surely be back here talking in the next couple of weeks about, you know what, we.

Roger Harris, EA: [00:49:54] Actually have that edge scheduled, uh, to be on one of our podcasts. And you've heard him before, he's our representative, uh, to talk about based on the results of the elections. What does that mean for tax policy? Um, and, you know, we could have the Senate stay the same and the House change. We could have them both change or both stay the same. They all have different dynamics to what's possible and what can get done. And, you know, that's why I think everybody's trying to get everything done. While at least we know what the particularly the Republicans, because they want to get everything done right while they control both houses. Because if you put one house in the other party's hands.

Annie Schwab, CPA: [00:50:35] Things get difficult to get passed.

Roger Harris, EA: [00:50:37] Well, they're not going to get passed unless they both want it because one house can stop it. So it's going to be interesting. So we've got that. I don't remember the date, but it's sometime obviously after the election to come back and kind of see where the dust settles and who controls.

Annie Schwab, CPA: [00:50:51] What predictions or what's coming down the pipeline. It'll be interesting. Yeah.

Roger Harris, EA: [00:50:55] There's going to be some folks who lose their seats, there's no doubt about it. Well, yeah, we don't know who they are yet, but it'll be an interesting election. I'm just glad when it's over with. I'm tired of the phone calls. I'm tired of the junk mail. I'm tired of the commercials messages.

Annie Schwab, CPA: [00:51:09] I've got it all too. Yeah. For sure. So so. Well, good. Well, um, I think that's all I had on my list. I know we're getting close to the top of the hour. Um, I hope everybody's listening to this after the October 15th deadline. Maybe you're doing something fun in the fall weather. Um, watching football, making chili, whatever it is you like, whatever.

Roger Harris, EA: [00:51:31] You want to do.

Annie Schwab, CPA: [00:51:32] Yeah. Um, congratulations on, on getting, getting through another one. And hopefully some of the things we talked about today will hit home and you can make some adjustments to your practice and how you do business or how you communicate with your clients. Um, so thank you for listening, Roger. I'll let you take it from here.

Roger Harris, EA: [00:51:52] Yeah. Thanks, Andy. Thanks for all the work you did putting this together. And thank you guys for listening. We've got some. Besides that, we've got a lot of other good guests coming up over the next few months. So thank you for listening to this version of the Federal Tax Update podcast, and we hope you'll continue to tune in and tell a few friends to come give it a try. So Andy, thank you as always. Ladies and gentlemen, thank you for listening. And we'll be back soon with another Federal Tax Update podcast. Bye, everyone.

Speaker 4: [00:52:29] All content from this podcast by Smallbiz pros incorporated. Dba Pageant Business Services is intended for informational purposes only.