L. Lopez CPA & Associates

03/12/2026

CLIENT UPDATE: 401(k) limit increases to $24.5K for 2026…
IRA limit increases to $7,500

WASHINGTON — The Internal Revenue Service announced that the amount individuals can contribute to their 401(k) plans in 2026 has increased to $24,500, up from $23,500 for 2025.
The IRS also issued technical guidance regarding all cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2026 in Notice 2025-67 PDF, posted today on IRS.gov.
Highlights of changes for 2026
The annual contribution limit for employees who participate in 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $24,500, up from $23,500 for 2025.
The limit on annual contributions to an IRA is increased to $7,500 from $7,000. The IRA catch up contribution limit for individuals aged 50 and over was amended under the SECURE 2.0 Act of 2022 (SECURE 2.0) to include an annual cost of living adjustment is increased to $1,100, up from $1,000 for 2025.
The catch-up contribution limit that generally applies for employees aged 50 and over who participate in most 401(k), 403(b), governmental 457 plans, and the federal government’s Thrift Savings Plan is increased to $8,000, up from $7,500 for 2025. Therefore, participants in most 401(k), 403(b), governmental 457 plans and the federal government’s Thrift Savings Plan who are 50 and older generally can contribute up to $32,500 each year, starting in 2026. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for employees aged 60, 61, 62 and 63 who participate in these plans. For 2026, this higher catch-up contribution limit remains $11,250 instead of the $8,000 noted above.
The income ranges for determining eligibility to make deductible contributions to traditional Individual Retirement Arrangements (IRAs), to contribute to Roth IRAs and to claim the Saver’s Credit all increased for 2026.
Taxpayers can deduct contributions to a traditional IRA if they meet certain conditions. If during the year either the taxpayer or the taxpayer’s spouse was covered by a retirement plan at work, the deduction may be reduced, or phased out, until it is eliminated, depending on filing status and income. (If neither the taxpayer nor the spouse is covered by a retirement plan at work, the phase-outs of the deduction do not apply.) Check out IRS.gov for more information

Send a message to learn more

02/12/2026

Tax Guidance for workers eligible to claim deductions for tips and for overtime compensation for tax year 2025.

Notice 2025-69 PDF clarifies for workers how to determine the amount of their deduction without receiving a separate accounting from their employer for cash tips or qualified overtime on information returns such as Form W-2 or Form 1099, as those forms remain unchanged for the current tax year. It also provides transition relief to workers who receive tips in the course of a specified service trade or business.
The IRS is in the process of updating income tax forms and instructions for taxpayers to use this filing season that will assist them in claiming these deductions.
No Tax on Tips
Under the One, Big, Beautiful Bill, workers may be eligible for new deductions for tax years 2025 through 2028 if they received qualified tips. For tipped workers, the maximum annual deduction is $25,000, which phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
It is estimated that there are about 6 million workers who report tipped wages.
Examples of how the rules work for tipped employees
Today’s guidance provides examples to illustrate various situations tipped employees might encounter; below are abridged versions of some of those examples.
Waiter with reported tips in box 7, Form W-2
Ann is a restaurant server whose 2025 Form W-2, box 7 reports $18,000 of social security tips. Ann did not report any additional tips on Form 4137. Ann may use $18,000 in determining the amount of her qualified tips for tax year 2025.
Bartender with additional reported tips on Form 4137
Bob is a bartender who reports $20,000 in tips to his employer during the 2025 tax year on Forms 4070 and reports $4,000 of unreported tips on Form 4137, line 4. Bob’s 2025 Form W-2 reports $200,000 in box 1 and $15,000 in box 7. Bob may use either the $15,000 in box 7 of the Form W-2, or the $20,000 of tips reported to Bob’s employer on Forms 4070 in determining the amount of qualified tips for tax year 2025. Regardless of the option chosen, Bob may also include the $4,000 of unreported tips from Form 4137, line 4 in determining the amount of qualified tips.
Self-employed travel guide
Doug is a self-employed travel guide who operates as a sole proprietor. In 2025, Doug receives $7,000 in tips from customers paid through a third-party settlement organization (TPSO). For tax year 2025, Doug receives a Form 1099-K from the TPSO showing $55,000 of total payments. The Form 1099-K does not separately identify the tips. However, Doug keeps a log of each tour that shows the date, customer, and tip amount received. Because Doug has daily tip logs substantiating the $7,000 tip amount, he may use the $7,000 tip amount in determining qualified tips for tax year 2025.
No Tax on Overtime
For tax years 2025 through 2028, individuals who receive qualified overtime compensation may deduct the pay that exceeds their regular rate of pay (generally, the “half” portion of “time-and-a-half” compensation) that is required by the Fair Labor Standards Act and reported on a Form W-2, Form 1099, or other specified statement furnished to the individual.
• Maximum annual deduction is $12,500 ($25,000 for joint filers).
• Deduction phases out for taxpayers with modified adjusted gross income over $150,000 ($300,000 for joint filers).
The deduction is available for both itemizing and non-itemizing taxpayers.
Certain employees are exempt from the rules on overtime
Generally, the FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at not less than time and one-half their regular rate of pay for all hours worked over 40 in a workweek. However, the law provides for certain exemptions.

Send a message to learn more

01/29/2026

GOVERNMENT ANNOUNCES NEW CHILDREN'S TAX-ADVANTAGED INVESTMENT ACCOUNT STARTING IN JULY.

We’re building long-term financial security for millions of children by creating tax-advantaged investment accounts for U.S. citizens under the age of 18. Coming in July, 2026.

Get $1,000 for every American child born between January 1, 2025 and December 31, 2028.

The account is fully in your child’s name, and you are the sole custodian until they turn 18. No contributions necessary—but you can deposit up to $5,000 per year to maximize growth

Launching July 5, 2026

Enroll your child by making an election when you file your taxes
A financial institution will receive your funds and activate your account.
Sit back and watch the money grow. Contribute anytime (or not).
Big things start with small steps.

Jumpstart their financial future

Build your child’s financial foundation right from the beginning. With $1,000 from the U.S. Treasury, your child has a huge head start on the American dream.

The power of time in the market

Your account balance will grow over time on its own, whether you choose to contribute additionally or not. You may contribute up to $5,000 per year to accelerate gains.

Proven winners. All-American growth.

Your child’s funds will automatically be invested in American companies. The app lets you see exactly what stocks they own and how they’re performing.

Growing their finances. And their education.

As they get older, they’ll learn about investing and watch their money compound in real time. They’ll gain more than just money. They’ll gain financial literacy.

At 18 the Trump Account is all theirs

They’re free to continue letting it grow, or they can withdraw funds right away to use for things like education or a home—with all the tax advantages of a traditional IRA.

Your child's account grows with them.

Contributing to your child's Trump Account is optional. The balance will continue to grow over time, with or without contributions.

contributing $0/year:

$5,800

Over 18 years

Contributing $250/year:

$20,700

Over 18 years

Contributing $5,000/year:

$303,800

Over 18 years

Estimates are for illustration only and are based on an account opening at birth with $1,000 opening deposit and are derived from historical S&P 500 averages. Actual results may differ and are not guaranteed.

Send a message to learn more

01/27/2026

Friends: Actively Seeking a High-Level Tax Manager

We are seeking a highly motivated and experienced Tax Manager to join our boutique CPA firm in California.
Location: Redwood City, CA.
Compensation: The salary range for this position is competitive and commensurate with experience and qualifications. We offer a comprehensive benefits package designed to support the well-being and growth of our team members.

Industry
Tax Preparation/Accounting
Employment Type/Full-time

Any strong candidates, please inquire at 650-361-1235 x3

Send a message to learn more

12/15/2025

NEW TAX LAW CHANGES FOR 2026 TAX RETURNS-Business Tax Provisions

-Business Tax Provisions:
Permanently restores immediate expensing for domestic research and development (R&D) expenses; small businesses with gross receipts of $31 million or less can retroactively expense R&D back to after December 31, 2021; all other domestic R&D between December 21, 2021 and January 1, 2025 can accelerate remaining deductions over a one- or two-year period.

Permanently reinstates the EBITDA-based limitation on business net interest deductions.

Permanently restores 100 percent bonus depreciation for short-lived investments.

Temporarily provides 100 percent expensing of qualifying structures, with the beginning of construction occurring after January 19, 2025, and before January 19, 2029, and placed in service before January 1, 2031.

Makes the Section 199A pass-through deduction permanent; increases phase-in range of limitation by $50,000 for non-joint returns and $100,000 for joint returns.

Implements a one percent floor on deduction of charitable contributions made by corporations.

This is our final tax assistance post for 2025.

We hope you and your families have a GREAT Holiday Season and a healthy and happy New Year from all of us at L. Lopez CPA and Associates!!

Send a message to learn more

11/25/2025

NEW TAX LAW CHANGES FOR 2026 TAX RETURNS AND AFTER

As the TCJA changes were set to expire at the beginning of 2026, the 2025 One Big Beautiful Bill makes many of these once-temporary changes permanent. Much of what takes effect beginning in 2026 is a permanent continuation of the
TCJA of 2017.

While there are a handful of changes that are retroactive to 2025, most of the changes in the One Big Beautiful Bill take effect
on January 1, 2026. Some are permanent, while others last a few years.
In addition to the tax-year 2025 retroactive changes, 2026 and thereafter tax changes include many changes, including:
•AMT
Makes the increase in the alternative minimum tax (AMT) exemption permanent; reverts AMT exemption phaseout thresholds
to 2018 levels of $500,000 for single filers and $1 million for joint returns indexed for inflation thereafter; increases the phaseout rate.

•Increase of Estate Tax Exemption
Permanently increases the estate and lifetime gift tax exemption to an inflation-indexed $15 million for single filers, and $30 million
for joint filers, beginning in 2026.

•Above the Line Charitable Contributions
Creates a permanent $1,000 above-the-line deduction for charitable contributions ($2,000 for joint filers).

•L i m i t s o n t h e V a l u e o f I t e m i z e d D e d u c t i o n s
-Limits the value of itemized deductions to 35 cents on the dollar for taxpayers in the top tax bracket.
-0.5 % f l o o r o n c h a r i t a b l e c o n t r i b u t i o n s i n
o r d e r t o t a k e t h e m a s a n itemized d e d u c t i o n .

• Elimination of Personal and Dependent Exemptions
• I n c r e a s e d S t a n d a r d D e d u c t i o n s
• C u r r e n t T a x B r a c k e t s
• Increased Child Tax Credit
• $750,000 Deductible Personal Mortgage Limit
• Limitation on Personal Casualty Losses, Miscellaneous
Itemized Deductions, and Moving Expense Deduction
for Most Taxpayers
• Increased AMT Exemption
• Deduction for Qualified Business Income (QBI) at 20%

Part 2 to follow in mid-December. Happy Holidays!

Send a message to learn more

10/29/2025

L. Lopez CPA & Associates ranked as "Best of Redwood City 2025!" A huge "Thank You " to our loyal clients for their incredible support!

10/21/2025

NEW TAX LAW CHANGES FOR 2025 TAX RETURNS-PART II

-Increased Child Tax Credit
Makes the expiring child tax credit permanent with an increased maximum of $2,200 in 2025, inflation adjusted thereafter.

-Increased Section 179 Limits
Expands the Section 179 expensing cap to an inflation-adjusted $2.5 million with a phasedown starting when the cost of qualifying
property exceeds an inflation-adjusted $4 million;
applies after Dec. 31, 2024.

-Partially Refundable Adoption Credit

-Trump Savings Accounts for Eligible Children Born Between 2025-2028 - One Time $1,000

-End of the Electric Vehicle Credit as of September 30, 2025

Additional items included in the bill mainly having an impact on
businesses include:
- Restoration of 100% Bonus Depreciation
- Restoration of Expensing of Certain R&D Costs
- Business Interest Deductions Moving Back to the EBITDA standard
- 100% Expensing for Certain Manufacturing Structures (Temporary)

Send a message to learn more

10/15/2025

NEW TAX LAW CHANGES FOR 2025 TAX RETURNS-PART 1

Most of the changes in the One Big Beautiful Bill take effect on January 1, 2026, but some are retroactive
and could impact 2025 tax returns. Many of the changes have certain requirements, such as adjusted gross income limits,
and some are temporary. Changes that might affect most 2025 tax returns include:

- A d d i t i o n a l S e n i o r D e d u c t i o n
Temporarily adds a senior deduction of $6,000 for each qualifying individual for both itemizers and non-itemizers that phases out
when modified adjusted gross income exceeds $75,000, available from 2025 through 2028.

- Increased State and Local Tax (SALT) Itemized Deduction
Temporarily increases the cap on the itemized deduction for state and local taxes (SALT) to $40,000 for 2025, and increases
the cap by one percent each year from that level
through 2029, subject to a phaseout for taxpayers with incomes above $500,000, then reduces the cap to a flat $10,000 thereafter.

- Increase in the Standard Deduction
Makes the standard deduction increase permanent with an enhancement, starting in 2025 at $31,500 for joint filers,
$23,625 for head of household, and $15,750 for all other filers, inflation-adjusted thereafter.

-No Tax on Tips
Temporarily makes up to $25,000 of tip income deductible for individuals in traditionally and customarily tipped industries for tax years 2025 through 2028; deduction phases out at a 10 percent rate when adjusted gross income exceeds $150,000 ($300,000 for joint filers).

-N o T a x o n O v e r t i m e
Temporarily makes up to $12,500 ($25,000 for joint filers) of the premium portion of overtime compensation deductible for itemizers and non-itemizers for tax years 2025 through 2028;
the deduction phases out at a 10 percent rate when adjusted gross income exceeds $150,000 ($300,000 for joint filers).

-Deduction for Interest Payments on Certain Vehicles
Temporarily makes auto loan interest deductible for itemizers and non-itemizers for new
autos with final assembly in the United States for tax years 2025 through 2028; deduction
limited to $10,000, and phases out at a 20 percent rate when income exceeds $100,000
for single filers and $200,000 for joint filers.

Send a message to learn more

09/02/2025

Interest Rates remain the same for the 4th Quarter of 2025:
IR-2025-87, Aug. 25, 2025

WASHINGTON — The Internal Revenue Service today announced that interest rates will remain the same for the calendar quarter beginning Oct. 1, 2025.

For individuals, the rate for overpayments and underpayments will be 7% per year, compounded daily. Here is a complete list of the rates:

7% for overpayments (payments made in excess of the amount owed), 6% for corporations.
4.5% for the portion of a corporate overpayment exceeding $10,000.
7% for underpayments (taxes owed but not fully paid).
9% for large corporate underpayments.
Under the Internal Revenue Code, the rate of interest is determined on a quarterly basis. For taxpayers other than corporations, the overpayment and underpayment rate is the federal short-term rate plus 3 percentage points.

Generally, in the case of a corporation, the underpayment rate is the federal short-term rate plus 3 percentage points and the overpayment rate is the federal short-term rate plus 2 percentage points. The rate for large corporate underpayments is the federal short-term rate plus 5 percentage points. The rate on the portion of a corporate overpayment of tax exceeding $10,000 for a taxable period is the federal short-term rate plus one-half (0.5) of a percentage point.

The interest rates announced today are computed from the federal short-term rate determined during July 2025. See the revenue ruling for details.

Send a message to learn more

08/25/2025

Hmmmm...Does the Amalfi Coast sound like a good place to open a satellite Office?

08/21/2025

Updated on 2/11/2025: This news release has been updated to clarify that qualified wildfire relief payments made to Los Angeles County taxpayers affected by California wildfires that are not covered by insurance or other reimbursements are excluded from income, even if these payments are made by nonprofit organizations or other non-governmental entities.

IR-2025-10, Jan. 10, 2025

WASHINGTON — The Internal Revenue Service announced today tax relief for individuals and businesses in southern California affected by wildfires and straight-line winds that began on Jan. 7, 2025.

These taxpayers now have until Oct. 15, 2025, to file various federal individual and business tax returns and make tax payments.

The IRS is offering relief to any area designated by the Federal Emergency Management Agency (FEMA). Currently, individuals and households that reside or have a business in Los Angeles County qualify for tax relief.

The same relief will be available to any other counties added later to the disaster area. The current list of eligible localities is always available on the Tax relief in disaster situations page on IRS.gov.

Filing and payment relief
The tax relief postpones various tax filing and payment deadlines that occurred from Jan. 7, 2025, through Oct. 15, 2025 (postponement period). As a result, affected individuals and businesses will have until Oct. 15, 2025, to file returns and pay any taxes that were originally due during this period.

This means, for example, that the Oct. 15, 2025, deadline will now apply to:

Individual income tax returns and payments normally due on April 15, 2025.
2024 contributions to IRAs and health savings accounts for eligible taxpayers.
2024 quarterly estimated income tax payments normally due on Jan. 15, 2025, and estimated tax payments normally due on April 15, June 16 and Sept. 15, 2025.
Quarterly payroll and excise tax returns normally due on Jan. 31, April 30 and July 31, 2025.
Calendar-year partnership and S corporation returns normally due on March 17, 2025.
Calendar-year corporation and fiduciary returns and payments normally due on April 15, 2025.
Calendar-year tax-exempt organization returns normally due on May 15, 2025.
In addition, penalties for failing to make payroll and excise tax deposits due on or after Jan. 7, 2025, and before Jan. 22, 2025, will be abated as long as the deposits are made by Jan. 22, 2025.

The Disaster assistance and emergency relief for individuals and businesses page has details on other returns, payments and tax-related actions qualifying for relief during the postponement period.

The IRS automatically provides filing and penalty relief to any taxpayer with an IRS address of record located in the disaster area. These taxpayers do not need to contact the agency to get this relief.

It is possible an affected taxpayer may not have an IRS address of record located in the disaster area, for example, because they moved to the disaster area after filing their return. In these kinds of unique circumstances, the affected taxpayer could receive a late filing or late payment penalty notice from the IRS for the postponement period. The taxpayer should call the number on the notice to have the penalty abated.

In addition, the IRS will work with any taxpayer who lives outside the disaster area but whose records necessary to meet a deadline occurring during the postponement period are located in the affected area. Taxpayers qualifying for relief who live outside the disaster area need to contact the IRS at 866-562-5227. This also includes workers assisting the relief activities who are affiliated with a recognized government or philanthropic organization. Disaster area tax preparers with clients located outside the disaster area can choose to use the bulk requests from practitioners for disaster relief option, described on IRS.gov.

Send a message to learn more