Wed, 18 Mar 2026 01:53:15 -0700WeeblyFri, 24 Oct 2025 23:42:55 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/new-tax-brackets-what-they-mean-for-youThe IRS just announced new federal tax brackets for 2026.  What are tax brackets and what do they mean for you?  Here's a good summary based on an article by Dawn Papandrea in SoFi's On The Money.

The U.S. has  a progressive tax system, meaning your income isn’t taxed at one rate. Instead, you pay tax on layers known as brackets. As your income goes up and crosses various thresholds, the tax rate on each layer of income rises. When you look up which bracket your taxable income falls into, the corresponding tax rate isn’t the tax rate you pay on all your income. These are the marginal tax rates for each income range, meaning that tax rate only applies to the portion of your income that’s not taxed at lower rates. The withholding from your paycheck reflects this, estimating your average tax rate. That average tax rate is also known as your effective tax rate

2026 tax brackets for a single person
10% for income less than $12,400
12% for income between $12,401 and $50,400
22% for income between $50,401 and $105,700
24% for income between 105,701 and $201,775
32% for income between $201,776 and $256,225
35% for income between $256,226 and $640,600
37% for income over $640,601

2026 tax brackets for a married couple
10% for income less than $24,800
12% for income between $24,801 and $100,800
22% for income between $100,801 and $211,400
24% for income between 211,401 and $403,550
32% for income between $403,551 and $512,450
35% for income between $512,451 and $768,700
37% for income over $768,701

This is how it works.  Let’s say you’re married and you and your spouse are filing together with $105,000 in taxable income in 2026. Taxable income is what remains after your various tax deductions, such as the itemized or standard deduction, contributions to an IRA and for 2026, 2027 and 2028 the special deductions for seniors, tips, overtime and car interest.

The $105,000 puts you in the 22% bracket, because, as the table above shows, you make over $100,800 but less than $211,400. That means you only owe 22% on income over $100,800. In other words:
•  The first $24,800 is taxed at 10% = $2,480 
•  The next $76,000 ($100,800 – $24,800) is taxed at 12% = $9,120
•  And then the remaining $4,200 ($105,000 – $100,800) is taxed at 22% = $925
In total, you and your spouse owe $12,525. ($2,480+$9,120+$925)

This is where your average tax rate comes in. That’s the percentage of all your income you pay in taxes. So in this example, since you and your spouse owe $12,525 of the $105,000, your effective tax rate would be 11.9%. 

Once you know your effective federal tax rate you should check your federal withholding and make sure it is at least as much as your effective rate and probably a little more, just to give you a cushion for any unexpected changes in the tax law.  For example, if that $105,000 is paid out in monthly paychecks, you and your spouse should have a combined federal withholding of at least $1050 per month ($105,000/12 = $8750 x .12 =$1050).

​There is a calculator on the IRS website that helps you determine how much should be withheld for taxes based on your income and the frequency of your pay (weekly, biweekly, monthly) but it has not been updated yet to reflect the new tax brackets and it is not expected to be updated until the government shutdown is over.  

States also have progressive tax systems that operate in the same way as the federal system. They have varying numbers of brackets (for example, California and New York have nine brackets) but most rely on an effective tax rate to determine how much you need to pay.   Most states also have online calculators that can help you figure out your effective tax rate so that you can make sure your state withholding is sufficient. 

A big tax bill when come April 15 is not something anyone wants to deal with, so make sure you are having sufficient funds withheld to avoid that.

]]>Sun, 06 Jul 2025 17:23:31 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/new-tax-billOn Friday, July 4th President Trump signed the new tax bill - the One Big Beautiful Bill Act also known as OB3.  It will take some time to review all 940 pages of the legislation and even longer for the IRS to issue numerous regulations and directives to implement it.  As more information becomes available, Turner's Tax Service will post updates here.  For now, here's what we know, based on articles in the New York Times, Forbes and the Wall Street Journal.

THE GOOD NEWS

• Existing tax brackets and rates remain largely the same.
• The standard deduction is increased by $750 ($1500 for couples).
• The cap on the amount of state and local taxes that you can write off as an itemized deduction is increased from $10,000 to $40,000 through 2030.  After that it reverts to $10,000.  The cap is reduced for those making over $500,000 a year.
• A new deduction of $6000 is created for those over 65 but ends after three years.  The deduction decreases for those with income over $75,000 ($150,000 for couples) and is reduced to zero once income reaches $175,00 ($250,000 for couples).  SOCIAL SECURITY REMAINS TAXABLE.
• A new deduction of up to $25,000 is created for income from tips but ends after three years.  The deduction phases out for those making more than $150,000 ($300,000 for couples).
• A new deduction of up to $12,500 ($25,000 for couples) is created for overtime wages but ends after three years.  The deduction phases out for those making more than $150,000 a year.  Salaried employees are not eligible.
• A new deduction of up to $10,000 a year in interest paid on auto loans is created if you purchase a new car that goes through final assembly in the Unites States.  The deduction phases out for those making more than $100,000 ($200,000 for couples).
• Mortgage insurance premiums are restored as an itemized deduction.
• Up to $1000 in charitable donations ($2000 for couples) can be written off in 2026, even for those taking the standard deduction.  
• The child tax credit is increased from $2000 to $2200 and is tied to inflation after that.
• Babies born in 2025 through 2028 will receive a $1000 deposit into a special investment account controlled by the government.
• The adoption tax credit will be partially refundable.  
• The threshold for estates being taxed is increased to $15 million.
• There are additional eligible expenses that can be paid from 529 plans.
• As on July 1, 2026 FAFSA eligibility calculations will no longer take into account certain assets of family farms, fishing operations or small businesses.
• Starting July 1, 2026 Pell Grants can be used for non-degree programs like job training but only if the school doesn't give grant aid that equals or exceeds the cost of attending the school.

THE BAD NEWS

• The bill ends tax credits for residential energy credits, including solar and geothermal, at the end of 2025
• The bill ends the credit for electric or plug-in hybrid vehicles purchased after September 30, 2025.
• A new work requirement is imposed in order to receive Medicaid unless the taxpayer has children younger than 14. Eligibility must be redetermined every six months rather than once a year. 
• A new work requirement is imposed on those 18 to 65 to qualify for Food Stamps unless the taxpayer has children younger than 14.  
• Additional rules and paperwork are imposed to qualify for health insurance provided by the Affordable Care Act.
• Beginning in 2026 only 90% of gambling winnings can be offset by losses, making 10% taxable income. 
• Beginning July 1, 2026 additional options for repaying student loans are added but new borrowing limits are put in place.

]]>Thu, 13 Feb 2025 17:15:32 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/new-requirements-to-claim-home-improvement-creditsThe IRS just released  new and revised guidance on the energy efficient home improvement credit.

Beginning January 1, 2025, only products from a Qualified Manufacturer (QM) will be eligible for the credit.  Each product from a QM will be provided a PIN number and taxpayers must include the PIN on their tax returns.  PIN numbers are not required for insulation materials or home energy audits.

If you plan to make energy efficient home improvements - new windows, new HVAC system, new water heater, etc. - make sure the company you are buying from is a Qualified Manufacturer and that they provide the PIN number for each product you purchase.  The IRS will publish a list of QMs to help taxpayers verify eligibility before purchasing items.  The PIN will be affixed to the product, packaging or a document inside the packaging.  If it is missing, you can request the PIN from the manufacturer.  For purchases in 2025 a manufacturer can provide you with a 4-digit QM code in lieu of a PIN but beginning in 2026 they must provide a 17-digit PIN.

]]>Sun, 26 Jan 2025 01:41:04 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/and-even-more-rumorsAccording to posts on TikTok and Instagram, you can claim a child as a dependent on your tax return if you pay child support for them.  THIS IS NOT TRUE!  In most instances, the custodial parent (the parent with whom the child lives) claims the child as their dependent.  The non-custodial parent (the parent paying child support) can claim the child as a dependent IF, AND ONLY IF,  the custodial parent gives them permission to do so.  Permission is granted by providing the non-custodial parent a Form 8332.  The IRS can assess penalties of up to 75% of taxes due for knowingly filing a fraudulent tax return.  Social media is not the best source of information about tax laws and regulations.  If you have any questions about whether you can claim a child as your dependent, please contact us.]]>Thu, 23 Jan 2025 18:58:30 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/rumors-rumors-rumorsYou may have seen or heard  reports on social media that tips, overtime pay, Social Security payments and other types of income are no longer taxable.  THESE REPORTS ARE NOT TRUE! While President Trump has suggested he'd like to see many changes to the tax laws, including making certain types of income nontaxable, those changes must be made by Congress by passing legislation. Congress has just started talking about changes to the tax law and it will probably be months before legislation is prepared, passed by Congress and signed into law by the President.  As you prepare your tax returns reporting your 2024 income and expenses, you must report all income as you have done in the past.  If you have any questions about whether a certain type of income is taxable or not, please contact our office.]]>Mon, 13 Jan 2025 23:05:17 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/wildfire-reliefTaxpayers in Los Angeles County have been granted a postponement to October 15, 2025, to file their 2024 federal and California tax returns and make any tax payments that would have been due January 7, 2025, through October 15, 2025. This applies to all taxpayers located in Los Angeles County, even if they were not directly impacted by the fires.
This includes relief from the following deadlines:

• Quarterly estimated tax payments normally due on January 15, April 15, June 15, and September 15, 2025
• Passthrough entity elective tax payments normally due on March 15 and June 15, 2025
• Business entity corporate or passthrough entity tax returns normally due on March 15 and April 15, 2025
• Individual tax returns and payments normally due on April 15, 2025 
• Tax-exempt organization returns normally due on May 15, 2025

]]>Sun, 11 Jun 2023 20:40:43 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/june-11th-2023​IRS Statement on the Mailing of Balance Due Notices to California Taxpayers

The IRS reassures California taxpayers that they continue to have an automatic extension until later this year to file and pay their taxes for those covered by disaster declarations in the state.

The current mailings being received by some taxpayers, the IRS Notice CP-14, are for taxpayers who have a balance due, and they are sent out as a legal requirement. While the notice received by taxpayers says they need to pay in 21 days, most California taxpayers have until later this year to pay under the disaster declaration. These letters include a special insert that notes the payment date listed in the letter does not apply to those covered by a disaster declaration, and the disaster dates remain in effect.

The IRS apologizes to taxpayers and tax professionals for any confusion as we continue to review the situation. Taxpayers receiving these letters do not need to call the IRS or their tax professional.]]>Wed, 28 Dec 2022 22:12:45 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/irs-delays-new-income-reporting-formTaxpayers are required to report all earned income on their tax returns.  Believing that many taxpayers do not comply with that requirement and are part of the so-called "underground economy," Congress enacted a provision in the American Rescue Plan of 2021 to enhance compliance.

In the past, third-party settlement organizations such as eBay, Etsy, Paypal, Venmo, Square and credit card companies were required to submit a report to the IRS when they collected payments for products and/or services for a taxpayer with more than 200 transactions in a year totaling $20,000 or more.  Both the IRS and the taxpayer received a Form 1099K.  The taxpayer included the income shown on the 1099K on their tax return and the IRS matched the information on their copy of the 1099K with what the taxpayer reported.

The American Rescue Plan dramatically changed the reporting threshold.  Beginning with 2022, third-party settlement organizations were required to issue a 1099K if more than $600 had been collected for a taxpayer in a year no matter how few transactions they processed.  Taxpayers were to be issued a 1099K by January 31, 2023, reporting income received in 2022.

Many concerns were raised with the IRS about implementation of the new reporting requirement.  Hundreds of thousands of taxpayers were expected to receive a 1099K for the first time and not know what to do with it.  Additionally, there were concerns that third-party settlement organizations would incorrectly include personal transactions such as gifts, donations, paying someone for a household bill, or sharing the cost of a meal on the 1099K.

In response to the concerns raised, the IRS announced on December 23rd that it would delay implementation of the new reporting thresholds for one year.  Because the delay was announced at the last minute, some taxpayers may receive a 1099K for 2022 based on the new thresholds.  In the coming weeks, the IRS will provide guidance about what a taxpayer should do if they receive a 1099K  they believe they should not have received.  However, taxpayers are reminded that all earned income must be reported whether they receive a form or not.

If you have income from sources that you have previously not reported, be sure to discuss that with your tax preparer as soon as possible so that you are in compliance with reporting requirements.  


]]>Wed, 28 Dec 2022 04:20:10 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/new-electric-vehicle-creditsThinking about buying an electric vehicle?  The Inflation Reduction Act provides new incentives for purchasing electric vehicles beginning on January 1, 2023.  A credit of up to $7500 will be available to taxpayers who purchase certain new electric vehicles and hybrids. A credit of up to $4000 will be available to taxpayers purchasing a used electric vehicle.  Which taxpayers and which vehicles qualify is complicated and will remain uncertain until the Treasury Department issues proposed rules later this year.

What is known is that in order to qualify for the credit a new electric sedan cannot have a price above $55,000 and pickup trucks, SUVs and vans cannot have a price over $80,000.  Vehicles must be purchased from a dealer, not a private party.  There are also requirements  related to where the vehicle is made and where the batteries are produced.  Additionally, the credit for new electric vehicles will only be available to taxpayers with adjusted gross income below certain levels - $150,000 for single taxpayers, $300,000 for those filing jointly and $225,000 for those filing as head of household.

Used electric vehicles must cost less than $25,000, must be at least two years old and must be purchased from a dealer, not a private party, to qualify for the credit.  There are no requirements related to where the vehicle was made or where the batteries were produced.  Eligibility for the credit is also based on adjusted gross income below certain levels - $75,000 for single taxpayers, $150,000 for those filing jointly and $112,500 for those filing as head of household.

For new cars purchased in 2023 the credit is based on the make and model and will be claimed on 2023 tax returns filed in 2024.  Starting in 2024 the credit can be transferred to a dealership to lower the vehicle purchase price but eligibility for the credit will be reconciled on the 2024 tax return in 2025.

For used cars the credit will be 30% of the purchase price, up to a limit of $4000. For used cars purchased in 2023 the credit will be claimed on 2023 tax returns filed in 2024.  Starting in 2024 the credit can be transferred to a deanship to lower the vehicle purchase price but eligibility for the credit will be reconciled on the 2024 tax return.

THESE ARE NON REFUNDABLE CREDITS.  That means the credit is used to reduce the amount of tax owed in the year the vehicle is purchased.  If the credit is greater than the tax owed, the balance does not carry forward into the next year.

Until the Treasury Department issues regulations later this year, taxpayers should be cautious about purchasing a vehicle to take advantage of these credits as there are still so many unknowns.


]]>Tue, 13 Jul 2021 14:57:35 GMThttps://www.turnerstaxserviceonline.com/recent-tax-updates/child-tax-creditThe American Rescue Plan increased the child tax credit from $2000 to $3000 or $3600 for children under 6  for taxpayers with income under certain limits - $75,000 for Single, $112,500 for Head of Household and $150,000 for Married.  The Plan also increased the eligibility for the credit from 16 to 17.

Beginning this week, the IRS will start sending out checks for half the amount taxpayers are eligible for - essentially an advance on an anticipated 2021 refund.  Those eligible for only the $2000 credit will receive $166.66 per month for the next six months.  Those eligible for $3000 will receive $250 and those eligible for $3600 will receive $300.  Letters  have started to go out to taxpayers advising them of how much they will receive.

For some taxpayers, receipt of this advance will create problems when they file their 2021 tax return and have to reconcile the advance - 

• Refunds will be reduced by the amount of the advance and could cause taxpayers to have to pay rather than receiving the refund they're used to getting.
• Taxpayers who receive the higher refunds based one their 2020 income may not be eligible for the higher amount if their 2021 income is over the income limits.
• Taxpayers who receive an advance because they claimed a dependent child in 2020 but don't claim that child on their 2021 return will have to pay the advance back.  Divorced parents who alternate claiming children will be particularly impacted by this provision of the Plan.

Taxpayers may opt out of the advanced payments by going to the IRS website - www.irs.gov.  

Additional information about the advanced payments is available at both the IRS website and at www.childtaxcredit.gov.]]>