Professional Tax Services at Knob Creek - Richard C Crain, CPA

01/12/2026

New Tax Law Changes You Need to Know About

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01/07/2026

This is the most serious thing concerning 2026 tax returns, the ones you will file in 2027! Plan ahead, or perish!

The impact of the ACA cliff returning in 2026:

A married couple with no dependents (age 64) covered by a Marketplace plan (in TN):

With a household income (MAGI) of $84,600, their Premium Tax Credit is $2,076/mo. = $24,912/yr.

But with an income of $84,601, their Premium Tax Credit is $0.

Yes, a $1 increase in income triggers a $24,912 increase in their health insurance premiums.

This type of situation will be an ugly surprise when taxpayers file in early 2027. Would anyone be excited about writing the IRS an unexpected $25,000 check on 4/15/2027? No! So plan ahead accordingly!

*(This cliff could go away if Congress renews favorable ACA rules that have been in place the last 5 years.)

01/06/2026

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10/17/2025

TAX TIP: Tax Breaks for QCDs from Your IRA

If you’re age 70 1/2 or older, the IRS allows you to make charitable contributions directly from your IRA to approved organizations, such as your church.

These transfers, known as qualified charitable distributions (QCDs), have become even more powerful under the new One Big Beautiful Bill Act (OBBBA)—and could be one of the most effective ways to give.

How QCDs Work

A QCD allows you to transfer funds directly from your IRA trustee to a qualified charity. The money never touches your hands, and the transfer is wholly excluded from your taxable income. While this means you cannot claim the gift as an itemized deduction, you don’t need to—because avoiding taxation is the best. It’s far better than a 100 percent deduction.

For 2025, the annual QCD limit is $108,000 per person. If both you and your spouse have IRAs, each of you may contribute up to that amount separately.

Tax-Saving Advantages

QCDs provide you with many distinct benefits, including the five below:

1. Lower taxable income. Unlike regular IRA withdrawals, QCDs do not increase your adjusted gross income (AGI) or modified AGI (MAGI). This helps you stay out of higher tax brackets and avoid triggering phaseouts of other deductions and credits.

2. Avoid new OBBBA restrictions. Starting in 2026, the OBBBA reduces itemized charitable deductions by floors and limits tied to income levels. QCDs are exempt from these rules.

3. Meet required minimum distributions (RMDs). If you are age 73 or older, QCDs can count toward your annual RMD, allowing you to satisfy the requirement without adding taxable income.

4. Preserve other tax breaks. By keeping AGI and MAGI lower, QCDs can help you avoid Medicare premium surcharges, the 3.8 percent net investment income tax, and the loss of valuable deductions such as those for state and local taxes.

5. Achieve estate planning benefits. QCDs reduce the size of your taxable estate, potentially lowering future estate tax exposure.

Takeaway

If you are charitably inclined and have reached age 70 1/2, QCDs may be your path to give generously and cut your tax bill. The OBBBA makes them even more attractive in 2025 and beyond.

09/26/2025

Tax-Saving News You Can’t Miss – The OBBBA Just Changed the Game & Everything is More Complicated!

One Big Beautiful Bill Act (OBBBA) has passed, I'm calling it O'BuBBA, and it’s bringing some of the biggest tax breaks in years. Whether you’re a business owner, employee, or investor, these changes could impact you starting NOW. Here’s what you need to know:

💼 100% Bonus Depreciation is Back (and Permanent!)

Buy equipment, furniture, computers, or software for your business? Deduct 100% of the cost in year one. Or take it up another level and Cost Seg your Airbnb.

Land improvements like landscaping also qualify.

No dollar limits, and you can even create a loss and carry it forward.

👉 Effective for property acquired and placed in service on or after Jan 20, 2025.

🏭 New Deduction for Manufacturing Property

Factories, refining halls, and assembly lines now qualify for a one-year, 100% deduction instead of 39 years of depreciation.

Applies to projects built Jan 20, 2025 – Dec 31, 2028, placed in service by Jan 1, 2031.

Even some existing properties may qualify if not used recently for production.

🧓 No Tax on Social Security Benefits (OBBBA Win!)

Starting in 2025, Social Security benefits are no longer taxable at the federal level.

Before OBBBA, up to 85% of your benefits could be taxed if your income exceeded certain thresholds.

Now, whether you’re working, retired, or drawing other income, your Social Security check is 100% tax-free.

👉 This is one of the most popular provisions of the Act — it means more spendable income for retirees and workers nearing retirement.

🕒 Overtime Deduction – A New Break for Workers

Deduct up to $12,500 (single) or $25,000 (married filing jointly) of overtime income each year, 2025–2028.

Covers the “extra” portion of overtime pay above your regular rate. So "the half" is tax-free, not both "time and a half".

High-income phaseout: begins at $150k (single) / $300k (joint), ends at $275k / $550k.

Requirements: must file with SSN, employer must report qualified overtime on W-2.

⚠️ Business owners generally can’t pay themselves “overtime” to qualify.

🍽️ No Tax on Tips – A Win for Service Workers

Beginning in 2025, tips earned by employees in restaurants, salons, hotels, and other service industries are 100% tax-free at the federal level. You may deduct up to $25,000 in qualified tip income per return per year. High-income phaseout: begins at $150k (single) / $300k (joint)

Previously, tips were treated as regular taxable wages — subject to both income and payroll taxes.

Now, tipped workers get to keep every dollar of what customers leave, without losing a chunk to the IRS.

Employers must still report tips for wage and hour law purposes, but they are excluded from federal income tax calculations.

📑 Itemized Deductions – Winners and Losers

Permanently repealed: Miscellaneous itemized deductions (like unreimbursed employee expenses, investment expenses).

Still allowed: Mortgage interest, state and local taxes, charitable contributions, medical expenses, casualty/theft losses.

New cap for high earners (2026+): If you’re in the 37% tax bracket, deductions capped at 35% of their value.

📌 Strategy tip: Get reimbursed through your business instead of taking unreimbursed deductions.

📈 Qualified Small Business Stock (QSBS) Gets an Upgrade

Cap raised from $50M → $75M in total assets for eligible companies.

Still excludes finance, insurance, law, accounting, hospitality, farming, and consulting.

New rules: partial exclusions if you hold stock 3–4 years; full exclusion at 5 years.

Dollar exclusion raised from $10M → $15M, while keeping the 10x-basis rule.

💡 Example: Invest $100k in QSBS in 2026, sell for $1.1M in 2031 → $1M gain completely tax-free.

🎲 Gamblers Beware – New Limits on Losses

Starting 2026, you can only deduct 90% of your gambling losses.

Example: Win $10k, lose $10k → you still pay tax on $1k of “phantom income.”

Applies to both casual and professional gamblers.

Lawmakers may fight this, but for now, keep detailed records of wins/losses by session (not per bet).

⚖️ Section 179 Changes

Section 179 expensing limit raised to $2.5M (2025), phaseout begins at $4M.

Still requires 51% business use, cannot create a loss, and has annual caps.

🔑 The Big Takeaway

The OBBBA delivers huge opportunities for business owners, workers, and investors — but also a few traps. With new deductions, expanded stock benefits, and overtime relief, there’s a lot to gain. But itemizers, high earners, and gamblers need to watch out.

📅 Effective dates vary, so planning ahead is critical.

07/22/2025

Tennessee Sales Tax Holiday 2025

The state of Tennessee will observe its annual sales tax holiday from 12:01 a.m. Friday, July 25, 2025 to 11:59 p.m. Sunday, July 27, 2025.
During this period, qualifying purchases of clothing, school supplies, and computers will be exempt from sales tax.

Eligible items and restrictions

Clothing: General apparel priced at $100 or less per item, including shirts, pants, socks, shoes, and dresses. Clothing items costing more than $100, and accessories such as jewelry, handbags, and sports equipment, will still be subject to sales tax. Items that are typically sold together, like pairs of shoes, cannot be separated to qualify for the exemption.

School and art supplies: Individual items priced at $100 or less, including binders, backpacks, crayons, paper, pens, pencils, rulers, glazes, clay, paints, drawing pads, and artist paintbrushes.

Computers: Computers purchased for personal use with a price of $1,500 or less. This includes laptops and tablets priced at or below $1,500.

Important notes

The sales tax exemption applies to both in-store and online purchases made during the holiday period.

Items purchased during the sales tax holiday must be for personal use, not for business or trade.

The Tennessee Department of Revenue website provides further information about the sales tax holiday, including a comprehensive list of eligible items.