Patterson Tax & Accounting CPA

Patterson Tax & Accounting CPA Certified Public Accountant offering tax & accounting services for
businesses and individuals.

Certified Public Accountant * income tax * payroll * small business accounting

If you’re a business owner or self-employed and spend a lot of time behind the wheel, the IRS just gave your 2026 tax re...
06/04/2026

If you’re a business owner or self-employed and spend a lot of time behind the wheel, the IRS just gave your 2026 tax return a boost.

The standard mileage rate for business driving has officially increased to 72.5 cents per mile—up from 70 cents in 2025! 📈

While a few cents might not seem like much, those miles add up quickly when it comes to lowering your taxable income.

Here is the breakdown for the 2026 rates:

✅ BUSINESS MILEAGE:
Now 72.5 cents per mile. This applies to all eligible business-related driving, whether you’re meeting clients or picking up supplies.

✅ MEDICAL & MOVING:
These rates are set at 20.5 cents per mile for 2026.

✅ CHARITABLE DRIVING:
The rate for driving in service of a charitable organization remains at 14 cents per mile.

✅ CHOOSE YOUR METHOD:
You have options! You can either use the Standard Mileage Rate to simplify your record-keeping, or the Actual Expense Method (tracking gas, oil changes, repairs, and insurance). Depending on your vehicle and how much you drive, one may offer a significantly higher deduction than the other.

✅ DOCUMENTATION IS NON-NEGOTIABLE:
Regardless of which method you choose, the IRS requires a contemporaneous log. That means you need to track the date, miles, and business purpose of every trip.

A tax return is a look at where you've been—but your mileage log is a look at how hard you've worked!

Don't leave money on the table by guestimating your miles at the end of the year.

Not sure which deduction method will save you the most?
Call our office today!

We can help you review your vehicle expenses and ensure you’re maximizing every mile you drive for your business.

Generally, scholarships are a huge win for students, but they aren't always a "get out of taxes free" card. If you or yo...
06/02/2026

Generally, scholarships are a huge win for students, but they aren't always a "get out of taxes free" card. If you or your child is heading to campus in 2026, understanding the distinction between qualified and non-qualified expenses is essential to avoiding a surprise bill.

The IRS has specific rules on what money they can—and can't—touch.

Here is the breakdown:

✅ QUALIFIED (TAX-FREE) EXPENSES:
Amounts used for tuition, mandatory enrollment fees, and required books, supplies, or equipment are generally tax-free for degree candidates.

✅ NONQUALIFIED (TAXABLE) EXPENSES:
This is where many families get caught off guard. Any scholarship money used for room and board, travel, or optional equipment is considered taxable income.

✅ SERVICE REQUIREMENTS:
If a scholarship requires the student to perform services—like teaching or research—the portion of the "award" paid for those services is generally taxable income and must be reported.

✅ THE "KIDDIE TAX" TRAP:
Any taxable portion of a scholarship must be reported on the student’s tax return. If that amount is high enough and isn't tied to performing services, it might trigger the “kiddie tax,” meaning that income could be taxed at the parents’ higher tax rate.

A tax return is a look at where you've been—but a solid education plan is about where you’re going.

Don't wait until next April to realize your "free" money came with a cost!

Unsure how your student's financial aid package will affect your 2026 return?

Call our office today!

We can help you review your scholarship details and ensure you’re maximizing your education credits while staying in full compliance.

Growth is often viewed as the ultimate goal for any small business, but without a solid plan, it can quickly become unsu...
05/28/2026

Growth is often viewed as the ultimate goal for any small business, but without a solid plan, it can quickly become unsustainable.

Recent 2026 data shows that while most owners want to expand, many are struggling to achieve those goals without straining their cash flow or overwhelming their staff.

The good news? Most growth missteps are predictable and preventable.

Here is what you should watch for as you scale:

Expanding too quickly without a clear operational plan can weaken your service quality and stress your systems. Before you add more customers, evaluate your staffing needs and process efficiency. Phased growth helps protect your profitability.

Revenue growth doesn't always equal financial stability. Higher sales often lead to higher expenses—like payroll, inventory, and marketing. Without careful forecasting, you could find yourself short on working capital despite strong sales.

Hiring too early creates unnecessary costs, but waiting too long leads to burnout. Thoughtful workforce planning ensures that every new team member contributes to measurable business outcomes from day one.

As your business grows, your leadership style has to evolve. Owners who try to control every tiny decision often become the bottleneck. Empowering your staff frees you to focus on high-level strategy rather than daily tasks.

Growth should never come at the cost of your stability or your financial health. A tax return is a look at where you've been, but a growth strategy is a look at where you’re going!

Ready to turn your growth goals into a sustainable reality?
Call our office today!

We can help you model your cash flow and build a financial roadmap that supports your vision without the stress.

Turning a favorite pastime into a source of income is rewarding, but it raises a critical tax question: Is your activity...
05/26/2026

Turning a favorite pastime into a source of income is rewarding, but it raises a critical tax question: Is your activity a hobby or a business?

The answer matters more than ever in 2026 because the tax rules for each are worlds apart.

While you must report income from both, the ability to deduct your expenses depends entirely on your classification.

Here is how the IRS draws the line:

The IRS looks at whether you conduct the activity in a businesslike manner. This means keeping complete records, tracking every dollar, and taking active steps to improve your operations and profitability.

The amount of time you devote to the activity is a major factor. If you’re putting in the work to make it profitable rather than just recreational, the IRS is more likely to view it as a business.

Does the income from this activity help support you, or are your other earnings primarily funding it? If it's purely for "enjoyment or relaxation," it may be classified as a hobby.

Under the "One Big Beautiful Bill Act" of 2025, the suspension of hobby deductions is now permanent. This means if your activity is a hobby, you pay tax on every dollar of income but get zero deductions for expenses. If it’s a business, you can generally deduct expenses and even use losses to offset other income.

The IRS considers your track record. If you’ve had success in similar ventures or if your current losses are typical for a new startup, it strengthens your case for a business classification.

The line between a hobby and a business isn’t always clear, and a course correction now can save you a major headache during tax season.

Ready to turn your passion into a profitable venture?
Call our office today!

We can help you evaluate your specific situation and ensure your business structure and recordkeeping are set up for success.

One tax dispute is stressful—but two can quickly become a crisis for your business. If you receive a notice from the IRS...
05/21/2026

One tax dispute is stressful—but two can quickly become a crisis for your business.

If you receive a notice from the IRS, it’s easy to focus solely on the federal level.

However, a resolution with the IRS doesn't automatically settle the score with the state.

In fact, if the IRS adjusts your taxable income, your state's Department of Revenue is often right behind them, ready to adjust their own assessment to match—or even take a more aggressive stance.

Here is what you need to know about navigating "dual disputes":

Because states and the federal government share data, an audit in one area frequently triggers a second review in the other. This is a common trap for businesses that operate in multiple states or have complex payroll and worker classifications.

Every response must be strategic. A statement that helps you with a federal auditor might inadvertently create a new problem with a state tax tribunal. You need a unified strategy that aligns both positions to avoid conflicting outcomes.

Missing a response window can limit your rights to appeal and lead to compounding penalties. Managing the different timelines and technical requirements for both agencies is critical to protecting your cash flow.

Unresolved disputes can lead to liens, levies, or damage to your business credit. A tax return is a look at where you've been—but a tax dispute requires a steady hand to protect where you’re going.

Tax disputes are about more than just the numbers; they are about managing the process.

If you’ve received a notice from more than one tax authority, don't try to juggle them alone!

Ready to move from reactive stress to proactive control?
Call our office today!

We specialize in coordinating these complex responses to ensure your business stays protected on all fronts and focused on growth.

There is nothing quite like the excitement of opening your doors for the first time. But before you sell your first prod...
05/19/2026

There is nothing quite like the excitement of opening your doors for the first time.

But before you sell your first product or sign your first client, there’s a critical "behind-the-scenes" step that determines your long-term success: choosing your tax structure.

The "exciting" part of business is the vision, but the "sustainable" part is the strategy.

Here is what every new founder needs to have on their radar from day one:

Whether you’re operating as a sole proprietorship, an LLC, a partnership, or a corporation, your choice dictates almost everything about your tax life. It affects which forms you’ll file, how much self-employment tax you’ll owe, and even your eligibility for certain credits.

Beyond just picking a structure, you’ll likely need an Employer Identification Number (EIN) for tax purposes. This is your business’s social security number and is essential for opening bank accounts and hiring your first team members.

Good bookkeeping isn't just about staying out of trouble with the IRS; it’s about having the data you need to make smart growth decisions. Without a clear trail of income and expenses, you could be leaving valuable deductions on the table.

From income and employment taxes to specific excise taxes, understanding your federal responsibilities early avoids costly headaches come tax season.

Starting a business is a major milestone, and getting the tax details right is the first step toward a secure financial future. Don't wait until next April to realize you need a course correction!

Ready to transition from "side hustle" to "official business"?
Call our office today to schedule a setup consultation.

We’ll help you choose the right structure and set up a tax-ready system so you can focus on building your dream.

For the last few years, the Alternative Minimum Tax (AMT) hasn't been a major concern for most, but a "hidden" shift in ...
05/14/2026

For the last few years, the Alternative Minimum Tax (AMT) hasn't been a major concern for most, but a "hidden" shift in the rules for 2026 is putting high earners back in the crosshairs.

While the new "One Big Beautiful Bill Act" (OBBBA) made larger exemptions permanent, it also introduced a much faster phase-out.

This means the tax-free "cushion" you’ve relied on disappears twice as fast as it did last year.

Here is what you need to watch for:

For married couples, the AMT exemption phase-out now begins at $1 million (down from over $1.25 million in 2025). As your income rises, you lose that protection quickly, potentially pushing you into AMT territory before you realize it.

The new law quadrupled the limit for State and Local Tax (SALT) deductions to roughly $40,000 for your regular return. But here’s the catch—SALT is not deductible for AMT purposes. That big deduction you’re counting on could actually be the trigger for this "shadow tax."

If you have significant long-term capital gains, high dividend income, or you’ve recently exercised incentive stock options (ISOs), your risk of hitting the AMT is even higher.

A tax return is a look at where you've been, but good planning is about where you’re going.

Timing your income or deductions now can be the difference between staying in the clear and a surprise bill.

Don't let the AMT catch your 2026 strategy off guard!

Concerned about how these moving parts affect your bottom line?
Call our office today!

We’ll help you review your asset allocation and income timing to ensure your financial future is as secure as possible.

If you’ve been buying, selling, or trading cryptocurrency or NFTs, the "honor system" for reporting those gains is offic...
05/12/2026

If you’ve been buying, selling, or trading cryptocurrency or NFTs, the "honor system" for reporting those gains is officially a thing of the past.

The IRS has introduced the brand-new Form 1099-DA, and it’s designed to give them the same transparency into your digital assets that they’ve always had with your stock portfolio.

While the way your crypto is taxed hasn't changed—it’s still treated as property—the way the IRS hears about it definitely has.

Here is what you need to know for 2026:

✅ THE NEW 1099-DA:
Starting with the 2025 tax year, brokers and exchanges are now required to report your gross proceeds directly to the IRS. By 2026, they’ll also be reporting your cost basis, making it easier than ever for the IRS to spot mismatches on your tax return.

✅ ACCURACY IS VITAL:
This shift in enforcement marks a major move toward transparency. If your digital portfolio has become a tangled web of transfers and trades, now is the time to clean up your recordkeeping before those 1099s start hitting your mailbox.

✅ THE DEFI GAP:
If you’re using decentralized finance (DeFi) platforms or certain foreign brokers, you might not receive a 1099-DA at all. In those cases, the burden of proof for your cost basis and transaction history still falls entirely on you.

✅ NO MORE GUESSWORK:
The IRS will receive the same information you do, making mismatches between reported income and your tax return a major red flag for notices and audits.

A tax return is a look at where you've been—and with the IRS looking closer at your digital wallet, you want that look to be crystal clear.

Don't wait until next April to realize your records are incomplete!

Not sure how your crypto trades will impact your filing?
Call our office today!

We specialize in navigating these complex reporting requirements to keep you in full compliance and ensure your digital assets don't become a tax liability.

If your business spends money on research, product development, or even software improvements, 2026 is bringing a major ...
05/07/2026

If your business spends money on research, product development, or even software improvements, 2026 is bringing a major win to your tax return.

For the last few years, the law forced businesses to spread out their domestic research and experimental (R&E) deductions over five years—a massive hit to cash flow for many startups and small businesses.

The good news?
The One Big Beautiful Bill Act has officially reinstated the ability to immediately deduct these expenses.

Here is what this means for your bottom line:

✅ IMMEDIATE DEDUCTIONS:
If you’re investing in U.S.-based innovation, you can once again use those costs to reduce your taxable income in the year they happen, rather than waiting years to see the full benefit.

✅ THE RETROACTIVE WINDOW:
There is a huge opportunity for small businesses (generally those with $31M or less in gross receipts) to look backward. You may be eligible to file amended returns for 2022, 2023, and 2024 to claim those deductions retroactively and potentially trigger a refund.

✅ ACCELERATED SAVINGS:
For larger businesses, there are "catch-up" options to accelerate your remaining unamortized deductions onto your 2025 or 2026 returns.

✅ DOMESTIC INCENTIVES: These changes make it significantly more attractive to keep your research activities right here in the U.S. to maximize your tax position.

Whether you’re developing a new product or bringing your research activities back onshore, these changes are designed to keep more money in your business.

However, deciding whether to amend prior years or how to balance deductions with research credits requires a strategic look at your specific numbers.

Ready to see how much you could save?
Call our office today!

We can help you model these changes and decide if amending prior years is the right move for your cash flow.

If you’re 50 or older and hitting your stride in your career, there’s a major tax shift landing in 2026 that needs to be...
05/05/2026

If you’re 50 or older and hitting your stride in your career, there’s a major tax shift landing in 2026 that needs to be on your radar right now.

As part of the SECURE 2.0 Act, the IRS has officially changed the rules for high-income earners making "catch-up" contributions to their retirement plans.

Here is what you need to know to stay ahead:

✅ Starting this year, if your wages exceeded $150,000 in the previous year, your catch-up contributions must be designated as Roth. This means those extra retirement dollars are made with after-tax money, rather than reducing your taxable income upfront.

✅ Because these contributions no longer lower your taxable income, it could potentially nudge you into a higher tax bracket or affect other income-based deductions you usually rely on.

✅ For those in this specific age range, the catch-up limit has increased to $11,250 for 2026. This allows for a total contribution of $35,750—a powerful way to supercharge your nest egg.

✅ If your current plan doesn't offer a Roth option, you might be restricted from making catch-up contributions altogether until they add one.

A tax return shows you where you’ve been, but retirement planning is all about where you’re going.

Don't let these new 2026 regulations catch your portfolio off guard!

Ready to see how this shift affects your 2026 tax strategy?
Call our office today to schedule a consultation.

We’ll help you navigate these new SECURE 2.0 requirements and ensure your retirement plan stays on the right track.

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