Passelli Accounting Services, LLC

Passelli Accounting Services, LLC CPA specializing in small business taxes, individual taxes, tax planning, and bookkeeping.

The largest expansion of health savings accounts in two decades took effect this year, and many of the people who became...
09/02/2026

The largest expansion of health savings accounts in two decades took effect this year, and many of the people who became eligible have no idea.

Three changes as of January 1, 2026:

Bronze and catastrophic ACA plans now count as HSA-compatible. Most previously didn't qualify, which shut out a large share of marketplace enrollees. If you're self-employed and buying your own coverage, you may be able to open an HSA for the first time.

Direct primary care arrangements no longer disqualify you. If you pay a flat monthly fee to a primary care practice, you can still contribute as long as the fee is $150 or less per month for individual coverage ($300 for family). Those fees also became a qualified medical expense payable from the HSA.

Telehealth relief is now permanent. A plan can cover virtual care before you meet the deductible without costing you eligibility.

2026 contribution limits: $4,400 individual, $8,750 family, plus a $1,000 catch-up at 55.

Why it matters: the HSA is the only account in the code with a triple benefit — deductible going in, tax-free growth, tax-free out for medical costs. For a self-employed owner, it's often the most efficient dollar available after the retirement plan.

Review it before open enrollment, not during.

09/01/2026

The $600 1099 threshold survived since 1954. It did not survive the One Big Beautiful Bill Act.

For payments made in 2026, you file a 1099-NEC or 1099-MISC only once you've paid a vendor $2,000 or more for the year. The threshold indexes for inflation beginning in 2027.

Separately, the 1099-K threshold reverted to $20,000 and more than 200 transactions, retroactive to 2022. The $600 phase-in that had everyone worried about Venmo and PayPal never landed.

Three things not to misread:

The income is still taxable. Pay a contractor $1,900 and they still report it, you still deduct it. What changed is whether a form gets filed — not what's owed.

Some payments kept their old thresholds. Gross proceeds to attorneys stay at $600. Royalties stay at $10.

States don't automatically follow. Some conform to federal, some set their own. If you have filing obligations outside Florida, verify before assuming fewer forms.

The practical takeaway: your W-9 process shouldn't change at all. You won't know who crosses $2,000 until the year is over, and chasing a W-9 in January from a vendor you paid in March is exactly how penalties happen. Collect it before the first check goes out.

#1099

If you give to charity, 2026 changed the math. Three things took effect this year.1. A new floor for itemizers. You can ...
08/30/2026

If you give to charity, 2026 changed the math. Three things took effect this year.

1. A new floor for itemizers. You can deduct charitable contributions only to the extent they exceed 0.5% of AGI. At $200,000 of AGI, the first $1,000 of giving isn't deductible — donate $2,000 and half of it disappears. The floor applies to everything combined: cash and non-cash, public charities and private foundations.

2. A new deduction for non-itemizers. If you take the standard deduction, you can now deduct up to $1,000 of cash gifts ($2,000 joint) on top of it. No 0.5% floor applies here. It doesn't cover donor-advised funds or certain supporting organizations.

3. A cap for top-bracket donors. Taxpayers in the 37% bracket now receive only a 35% benefit from itemized deductions, charitable ones included.

C corporations get their own version: contributions below 1% of taxable income aren't deductible.

The planning response is the same one that came out of the 2017 standard deduction increase — bunching. If your annual giving sits near the floor, two years of gifts in one year clears it with room to spare, while giving evenly can waste part of both years.

The board member who gives $500 a year to the organization they serve may now get nothing for it. Worth a conversation before December.



Two Things Crypto Holders Need to Know Right NowFirst, the reporting regime is tightening.For 2025 transactions, brokers...
08/28/2026

Two Things Crypto Holders Need to Know Right Now

First, the reporting regime is tightening.

For 2025 transactions, brokers reported gross proceeds only. Most Forms 1099-DA arrived with the "noncovered security" box checked and no cost basis. For digital assets acquired in a custodial account after January 1, 2026, brokers must also report basis, acquisition date and holding period — and that data feeds the same automated matching system the IRS has run against stock sales for decades.

Translation: mismatches between your return and broker-reported data will generate notices automatically, at scale.

The gap that causes trouble is everything else. Assets held before 2026, moved between wallets, or run through DeFi remain noncovered, and the burden of proving basis is yours. Reconstructing it years later from exchange exports and on-chain history is slow and expensive. Build those records now, while you still can.

Second, there's an active scam. The IRS has warned about letters mailed to digital asset holders directing them to a fake "Digital Asset Compliance Portal" that mimics IRS.gov to harvest personal information. Verify anything you receive through your IRS Individual Online Account or with your tax professional before entering a single field.

And the baseline rule hasn't changed: you report digital asset income, gains and losses whether or not a 1099-DA shows up.

Third quarter estimated tax payments are due Tuesday, September 15.If you're self-employed, an S corp shareholder, a par...
08/27/2026

Third quarter estimated tax payments are due Tuesday, September 15.

If you're self-employed, an S corp shareholder, a partner, a landlord, or anyone with meaningful income not subject to withholding — this one's yours.

Two things worth checking before you send the number you guessed back in April:

Has this year actually looked like last year? A strong Q2, a property sale, a large distribution or a bonus changes the math. So does the opposite. If income is down, you may be overpaying and handing the government an interest-free loan until April.

Are you inside a safe harbor? Pay 100% of last year's tax liability — 110% if your prior-year AGI exceeded $150,000 — or 90% of this year's, and the underpayment penalty generally goes away regardless of what you owe next spring. For volatile income, the prior-year safe harbor is usually the cleaner target.

Three things people miss:

• The estimated tax penalty is not covered by the IRS's new automatic penalty relief
• Withholding is treated as paid evenly across the year, so a Q4 withholding bump can fix an earlier underpayment in a way a Q4 estimate can't
• Florida has no personal income tax, but property or business activity in another state can create estimates there

If you're unsure where you stand, a mid-year projection takes far less time than fixing it in April.

Treasury and the IRS released proposed regulations on August 20 covering what Trump Accounts can actually be invested in...
08/26/2026

Treasury and the IRS released proposed regulations on August 20 covering what Trump Accounts can actually be invested in — and the answer is narrower than many parents expected.

Refresher: a Trump Account is a new type of traditional IRA for a child under 18, created by the Working Families Tax Cuts. Children born 2025 through 2028 are eligible for a $1,000 government seed contribution, and parents and employers can add more.

The proposed rules limit investments during the "growth period" — from account opening through December 31 of the year the child turns 17 — to funds that track a qualified index of primarily U.S. companies, don't use leverage, and carry only nominal annual fees.

In practice: low-cost broad-market index funds and ETFs. No stock picking, no leveraged products, no high-fee funds.

Treasury's logic is that fees compound against a child the same way returns compound for them. Over a horizon this long, an expense ratio isn't a rounding error.

The regulations would generally apply to tax years beginning on or after January 1, 2026. Comments are open through October 20, 2026.

Worth thinking through before funding one: how a Trump Account interacts with a 529, a custodial account, or an existing gifting plan. These aren't interchangeable, and the withdrawal rules differ in ways that matter.

"No tax on overtime" may be the most misunderstood provision in the tax code right now. The IRS issued Fact Sheet 2026-1...
08/24/2026

"No tax on overtime" may be the most misunderstood provision in the tax code right now. The IRS issued Fact Sheet 2026-13 this month to clean it up.

Three things people get wrong:

1. Overtime is still taxed. This is a deduction on your return, not an exclusion from your paycheck. Withholding, Social Security and Medicare still apply to every overtime dollar.

2. Only the premium counts. On time-and-a-half, only the "half" qualifies. Ten OT hours at a $30 regular rate? The deduction is built on $150, not $450.

3. It has to be FLSA overtime. Extra pay required only by a union contract, state law or company policy doesn't qualify — just overtime mandated under Section 7 of the FLSA.

The limits: up to $12,500 ($25,000 joint), phasing out above $150,000 MAGI ($300,000 joint). Available whether or not you itemize. Runs 2025 through 2028.

The real change for 2026: employers must report qualified overtime in Box 12 of the W-2 under Code TT. That reporting was waived for 2025, and many workers reconstructed the number from pay stubs. Not anymore — if it isn't in Box 12, it isn't deductible. A self-prepared Form 4852 won't substitute; you'd need a corrected W-2c.

Employers: your payroll system needs to track this now, not in January.

Workers: check Box 12 against your pay stubs before you file.

08/24/2026

How to hire your children and cut your tax bill

The IRS just quietly changed how penalty relief works — and most taxpayers won't hear about it until it helps them.First...
08/23/2026

The IRS just quietly changed how penalty relief works — and most taxpayers won't hear about it until it helps them.

First Time Abate is being phased out. Its replacement: the Automatic Exemption from Penalty (AEP).

What's different: under FTA, you or your CPA had to call or write the IRS and ask. Under AEP, the IRS identifies eligible taxpayers during return processing and simply doesn't assess the penalty. No form, no phone tree, no Form 843.

Who qualifies: generally a clean compliance history for the prior 3 years — or 12 consecutive quarters for quarterly filers — on the same return type.

What it covers: failure-to-file, failure-to-pay and failure-to-deposit penalties on Forms 1040, 1065, 1120, 940, 941, 943, 944, 945 and CT-1.

What it doesn't: information returns, Forms 706 and 709, and accuracy-related penalties. Interest and the underlying tax are still owed.

Scale matters here. The Taxpayer Advocate estimated roughly 220,000 taxpayers received FTA in FY2025. Had AEP been in place, about 1.5 million would have qualified.

The catch: we're mid-transition. AEP applies to 2025 returns and 2026 quarterly returns, fully replacing FTA for returns due on or after 1/1/2027. During the phase-in, some eligible taxpayers will still receive penalty notices.

So don't ignore a notice assuming the system will fix it. If you have a clean history and got hit anyway, it's worth challenging.

08/20/2026

Pre-Tax vs. Post-Tax Retirement Contributions: Which Is Right for You?

One of the most common questions I hear from clients is whether to contribute to a traditional (pre-tax) or Roth (post-tax) retirement account. The answer depends less on which is "better" and more on when you want to pay the tax bill.

Pre-Tax Contributions

Money goes in before taxes are taken out, lowering your taxable income today. Your investments grow tax-deferred, and you pay ordinary income tax when you withdraw in retirement. This works well if you expect to be in a lower tax bracket later, or if you want an immediate deduction to offset a high-earning year.
Post-Tax (Roth) Contributions
You pay taxes now, but qualified withdrawals — including all growth — are completely tax-free in retirement. This is attractive if you're early in your career (likely in a lower bracket now than later), or if you simply want to diversify your future tax exposure.

The Bracket Question

The core decision comes down to one estimate: will your tax rate be higher or lower when you withdraw the money? Since none of us can predict future tax law with certainty, many clients split contributions between both account types to hedge that risk.
A Few Other Factors

Roth accounts have no required minimum distributions during the owner's lifetime
Pre-tax accounts can reduce your current-year AGI, which may affect other credits or phase-outs

Income limits apply to direct Roth IRA contributions (but not Roth 401(k)s)

The right mix depends on your income trajectory, current bracket, and retirement timeline. A quick planning conversation can help you decide how to allocate between the two.

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