Stephen L. Luke, PC, CPA

05/25/2026

05/22/2026

Just a reminder that our office is closed on Fridays from May 1st through Labor Day.

05/18/2026

The One Big Beautiful Bill Act made some changes to the charitable donations deduction effective with the 2026 tax year.

Starting in 2026 for those who do not itemize and take the standard deduction instead, you are now allowed to take up to a $1,000 deduction for donations for individuals and $2,000 for married couples filing jointly. You still must have the proper documentation, but essentially, your “standard deduction” increases by that amount.

So start saving those charity receipts for 2026 now for next tax season. They're going to be useful even if you don't itemize

05/11/2026

Are your kids working for you in your business? Wages paid to your children under 18 are exempt from F**A taxes. So you can get a tax deduction on your return, not have to pay F**A taxes on the child's wages, and it's generally not taxable to the child if they have less than $16,100 of income for the year.

But there are a few rules and recommended practices.

1) This only works if the business is a sole proprietorship or partnership (children of the partners are working in the partnership). It does not work if you are a C or S corporation.
2) The F**A exemption only applies to your child. Any other child is just another employee and is subject to F**A taxes.
3) You need to pay the child reasonable pay for reasonable work performed. You should pay them what you would pay anybody else to do the same job and the child must be capable of doing it.
4) The child gets to keep their money. You can not restrict their access to their money or "borrow it back" from them or have them gift it back to you.
5) You should keep records of days and hours worked. It doesn't need to be fancy. Hours written on a calendar or in a notebook will suffice. But you should have documentation.
6) You should pay them on a regular basis, not just at the end of the year. No other employee would wait to get paid once at the end of the year so it makes paying your kid look less like a real business transaction if you do it.
7) You need to comply with all Federal and State payroll tax laws, which means filing the proper payroll tax returns and giving the child a W-2 at the end of the year.

The key is to make this look like a bona fide business transaction and not simply a tax avoidance scheme. The closer you follow these 7 points, the more likely that the IRS will allow the deduction if they question it.

Be sure to consult with your tax advisor to see if this strategy can work for you and how to do it properly.

05/04/2026

As school is almost over and kids will be starting summer jobs, it's time for my usual public service announcement to all parents, employers, payroll clerks and treasurers about not withholding income taxes from the paychecks of kids.

If your kid has a part time job and will make less than $16,100 in 2026, be sure that they claim "exempt" on their Form W-4 for their job. By claiming "exempt", they won't have any Federal or State income tax withheld from their paychecks. (They will still have F**A withheld). If they don't have any income tax withheld and their income is less than $16,100, they won't owe any tax and won't need to file a return.

This saves me the hassle and you the cost of filing a tax return for a kid that has a $1,000 W-2 and $150 of withholding just to get the $150 tax refunded.

Be sure to check with your own tax preparer to make sure this works for your kid.

EMPLOYERS NEED TO PAY ATTENTION TO THIS!!!!!

This is something that employers should be aware of. If you hire that kid for the summer and you know they're going to make less than $16,100, take the time to set the kid up as exempt (with their permission) so they don't have to file a tax return just to get the income tax withholding back. Be proactive and don't just blindly set the kid up as a regular employee regardless of how they fill out their W-4. Pay attention and ask questions.

04/02/2026

The IRS has waived the estimated tax penalty if you are a qualified farmer that owes tax and didn't file/pay by March 1st as long as you file/pay by April 15th this year.

Farmers can avoid the March 1st deadline and have until April 15th to file/pay if they make a single estimated tax payment by January 15th of the following year (01/15/27 for 2026 tax year). The window for filing farm tax returns by March 1st gets narrower every year with everything from waiting on K-1s and brokerage statements to last minute tax law changes and software delays. The time to complete a return is often being reduced to just a couple of days between when the last piece of information needed to complete the return is received and March 1st.

I know this would be a big change for farmers that have been taught since birth that they have to file by March 1st, but it is something to consider. Times have changed and farmers are much more sophisticated businessmen and investors with more complicated tax returns than they where when this tax law was written in 1954.

Due to issues with Form 8995, IRS is eliminating the underpayment penalty for farmers, however, this is more than a month late for most.

03/18/2026

You can still feed your farm help. You just can't deduct it any more starting in 2026.

The Tax Cuts and Jobs Act changes kicks in this year

02/03/2026

On behalf of myself and tax preparers everywhere, please don't send us cellphone pictures of your documents. They're a pain to download, open and print. And they're usually blurry or too dark to print a legible copy of for your file.

It's fine to send a picture of a document for quick reference. But if the document should be used as part of your tax return or go in your file, you should send the us the actual document or a scan or a fax of the document.

Invest in a good scanner. They're cheap.

Send a message to learn more

01/29/2026

It's time to give up on paper refund checks and switch to direct deposit of your tax refund.

The IRS has essentially stopped issuing paper refund checks for individuals. While there are very narrow exceptions for legal requirements or extreme hardship, the default is now exclusively electronic.

What happens if you leave the banking info blank?

Filing without direct deposit information won’t get your return rejected, but it will trigger a process that looks like this:

The Notice: You’ll receive a CP53E notice in the mail.

The Window: You have 30 days to respond.

The Method: You must use your IRS Individual Online Account (Which means you need to set up an online account) to provide banking info. IRS employees cannot take this information over the phone or in person for security reasons.

The Last Resort: If you don’t respond within that window, the IRS will eventually release a paper check, but only after a six-week delay.

Send a message to learn more

01/27/2026

If you want to claim the tax credits for qualified energy efficiency improvements or residential energy property in 2025, the IRS requires that the Qualified Manufacturer Identification Number (QMID) be included on the tax return for any qualified exterior doors, windows, air conditioners, heaters, furnaces or boilers that you want to claim the energy tax credits on.

So if you want to claim a tax credit, look for the QMID on the receipt for the item you purchased. If there isn't a QMID listed, go back to whoever sold it to you and get it. They will need to provide it. We can't look it up for you.

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