1/27/26 Newsletter

This is your final boarding call. If you have employees or contractors, their W-2s and 1099s need to be in the mail (or email inbox) by this Saturday, Jan. 31.

This week’s lineup:

• 🍔 The secret menu for 2026 taxes.

• 🧾 1099s. One covers labor, the other covers rent (and fish).

• 🛡️ Beat scammers and shorten your audit window by filing early.

• 🥩 A bodybuilder tried to deduct three pounds of bison meat a day.

Money Moves

🍔 The 2026 "Secret Menu" for Standard Filers

Last week, we talked about the heavyweight fight of 2026: The standard deduction vs. the new SALT cap. It’s the biggest question for retirees and homeowners.

But while everyone is busy arguing about property taxes, they are missing the free appetizers sitting right on the table.

The "One Big Beautiful Bill Act" (OBBBA) didn't just change the big math; it added a "secret menu" of deductions that apply to millions of working Americans. The best part? You do not need to itemize to get them.

These are "above-the-line" deductions. They lower your adjusted gross income (AGI) directly, which can lower your tax bill and potentially help you qualify for other credits.

Here are the three new write-offs you might be eligible for — even if you take the standard deduction.

1. The "No Tax on Tips" Reality Check

We heard the campaign slogans, but now we have the tax code. If you work in the service industry — bartenders, servers, hairstylists — the rules have shifted in your favor.

You can now deduct up to $25,000 of qualified tip income. This isn't automatic.

• "Qualified" Means Reported: If you aren’t reporting your cash tips to your employer, they don’t exist to the IRS. You can’t deduct what you didn’t declare.

• The Paper Trail: You need to ensure your W-2 box 7 (Social Security Tips) matches your records. This deduction is a reward for being honest about your cash tips.

2. The Overtime "Premium" Deduction

This is one of the most confusing (and lucrative) additions to the 2026 code. Congress decided to give a tax break to the grind.

You can now deduct the "premium" portion of your overtime pay.

• How it works: If you make $20/hour, your overtime rate is $30/hour. That extra $10 is the "premium."

• The Cap: You can deduct up to $12,500 of that premium pay ($25,000 for married joint filers).

Who this helps: Nurses, factory workers, emergency responders, and anyone punching the clock for 50+ hours a week. If you lived at work last year, the IRS is finally buying you a drink. Use the 2025 Schedule 1-A Form for these deductions.

The deduction that hasn't existed since the ‘80s is back. See which car loans are now tax-deductible (and the "gotcha" you need to avoid). Keep reading →

Business & Gigs

🧾 Know Your 1099s

Anyone who has ever run a business, hired a freelancer, or tried to make sense of year-end tax prep knows the government loves forms. And sometimes, when the IRS gets bored, it takes one form, slices it in half, and leaves the rest of us trying to decode which version goes to the contractor and which goes to the landlord.

Enter the 1099-NEC and 1099-MISC. To most people they sound the same. To the IRS, they are as different as a penguin and a toaster.

The 1099-NEC: The “New” Kid That Isn’t New

Despite its reputation, the 1099-NEC is not new. It is a revived form from the early 1980s, brought back to give “non-employee compensation” its own home.

If you pay an independent contractor, gig worker, consultant, or that drywall repair hero who saved your office after the holiday party, this is their form. The rule is simple: if you paid them $600 or more, the IRS expects a 1099-NEC.

Almost everything lands in Box 1. For once, the IRS chose simplicity. The form is short, direct, and hard to mess up unless you forget to file it.

The 1099-MISC: The IRS Junk Drawer

If the NEC is a precision tool, the MISC is the kitchen drawer where everything else ends up. It catches income that does not belong anywhere else.

What shows up here:

• Rent for office space (Box 1)

• Royalties for writers, artists, and mineral rights owners (Box 2)

• Prizes and awards (Box 3)

• Payments to attorneys (Box 10)

And yes, Box 11 is for cash payments for the purchase of fish for resale. We do not know why it is only fish. The tax code contains mysteries that no mortal can solve.

Deadlines and Details That Actually Matter

The forms look similar, but the deadlines are not.

• 1099-NEC is always due January 31 to both the recipient and the IRS.

• 1099-MISC goes to the IRS later: February 28 on paper or March 31 electronically.

And here is the big filing update: if you file 10 or more information returns of any type, you must file electronically. Paper filing is becoming an endangered species.

Confused? We’ve got a simple test to tell them apart, plus the one “corporate” exception you absolutely cannot afford to miss. Keep reading →

Filing 101

🛡️ Early Filing Isn’t Eager. It’s Defensive.

We all know that person who files their taxes on February 1. They’re smug. They talk about their refund while you’re still digging W-2s out of a pile of unopened mail.

It’s irritating.

And unfortunately, they’re right.

Filing early isn’t about being a teacher’s pet. In 2026, it’s a defensive move. It protects your identity, shortens your audit window, and gets your money back faster. Waiting doesn’t make taxes easier. It just leaves more doors unlocked.

The Race You Didn’t Know You Were In

The IRS processes returns largely on a first-come, first-served basis. If someone else files a return using your Social Security number before you do, the IRS computer doesn’t stop to investigate intent. It just accepts the first valid return it sees.

When you later file your real return, it gets rejected as a duplicate.

That’s when the real pain starts. Paper filings. Identity theft affidavits. Months of waiting. Sometimes more than a year before you see your refund.

Filing early shuts this down. Once your legitimate return is accepted, any scammer who tries to file afterward gets automatically blocked. You win by showing up first.

Preventing the Audit Clock From Running Longer

There’s also a quiet legal benefit to filing early.

The IRS generally has three years to audit a return, starting from the date it’s due or the day it’s filed, whichever is later.

• File by April 15, 2026, and the clock typically expires on April 15, 2029.

• File on extension in October 2026, and the clock runs until October 2029.

That’s six extra months the IRS can come back with questions.

Filing earlier doesn’t reduce audit risk, but it shortens the window in which an audit can happen. That alone is worth something.

Think an extension is a harmless way to buy time? Think again. Here is the expensive reality of pushing that deadline back. Keep reading →

Wild Tax Tales

🥩 Beefing with the IRS

When you mix a union boilermaker with a competitive bodybuilder, you get a tax return that’s half job-site mileage and half specialty protein. That’s exactly what happened when Corey Wheir, a Wisconsin welder who also competed in bodybuilding, filed his taxes.

Wheir claimed two big deductions:

• Car expenses for traveling to 19 temporary job sites

• The cost of his “fuel” for bodybuilding: three pounds of buffalo meat a day, protein shakes, and vitamins

The IRS pushed back hard. Their stance? Wheir’s “tax home” was basically the entire state of Wisconsin, so none of his driving counted as deductible travel. The Tax Court wasn’t buying it. It ruled that trips beyond his 35-mile radius from home did qualify as business travel for his boilermaker work.

Then the court turned to the buffalo.

Wheir argued that his meat-heavy diet was an ordinary and necessary expense of his bodybuilding business. Without the protein, he said, he couldn’t compete or maintain his professional condition. The court didn’t doubt the protein helped. It just didn’t matter.

Groceries are “inherently personal expenses.” Everyone needs food. The fact that Wheir ate three pounds of bison a day didn’t transform dinner into a business deduction.

Still, he walked away with one small win. The court allowed deductions for his specialized bodybuilding oils — products used to prep for competitions and marketed specifically to bodybuilders, not the general public.

The IRS won the beef battle. But Wheir kept the shine.

The quick (and slightly prickly) stories we didn’t have time to get to:

• 🏛️ New IRS chief reorganizes agency ahead of 2026 filing.

• ✂️ Lawmakers target $11.7 billion in new IRS funding cuts.

• 🔄 Fresh Start tax relief qualifications remain largely unchanged for 2026.

If you made it this far, you’re our kind of nerd. Hit reply and tell us which story you want us to dive deeper into next week.

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