Question 1

What is the 2026 information reporting threshold for payments to nonemployees?

Accepted Answer

For reportable payments made after 2025, the threshold increases to $2,000 for both information reporting (e.g., Form 1099) and backup withholding, per IRS Publication 334 and section 6041(a). This means businesses are required to file an information return only when cumulative payments to a single payee reach $2,000 during the calendar year.

Question 2

Who can still deduct unreimbursed employee business expenses?

Accepted Answer

Under current law, only four categories of employees may deduct job-related expenses: Armed Forces reservists, fee-basis state or local government officials, qualified performing artists (who meet specific income and multi-employer tests), and employees with impairment-related work expenses. These individuals file Form 2106 and report the deduction on Schedule 1 (Form 1040), line 12, per IRS Publications 463 and 529.

Question 3

Can I deduct the cost of driving from home to my regular workplace?

Accepted Answer

No. IRS Publication 463 states that transportation expenses between your home and your main or regular place of work are personal commuting expenses and are never deductible. This is true even if you haul tools or instruments in your car. However, travel from your regular workplace to a temporary work location expected to last one year or less is deductible.

Question 4

Is the 20% qualified business income (QBI) deduction still available in 2026?

Accepted Answer

Yes. IRS Publication 334 confirms that P.L. 119-21 (OBBBA, section 70105) permanently extends the 20% QBI deduction for qualified active trades or businesses. Income thresholds for QBI deduction limitations have increased and are indexed for inflation for tax years beginning after 2025. Check the latest IRS instructions for exact 2026 threshold amounts.

Question 5

How do tips and fringe benefits affect my tax return?

Accepted Answer

Tips of $20 or more per month from any one employer must be reported to that employer by the 10th of the following month, per IRS Publication 505. They are included on your return on the same line as regular wages. Noncash fringe benefits, such as personal use of a company car, are also taxable income. Your employer generally withholds income tax on these benefits from your regular pay, though Publication 505 notes employers can choose not to withhold on personal use of an employer-provided vehicle if they notify you.

Question 6

How do tips and fringe benefits affect my tax return?

Accepted Answer

Tips of $20 or more per month from any one employer must be reported to that employer by the 10th of the following month, per IRS Publication 505. They are included on your return on the same line as regular wages. Noncash fringe benefits, such as personal use of a company car, are also taxable income. Your employer generally withholds income tax on these benefits from your regular pay, though Publication 505 notes employers can choose not to withhold on personal use of an employer-provided vehicle if they notify you.

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