Preparing for the 2026 Tax Filing Season

HFM CPAs + Business Advisors
Jan 12
3 min read

The IRS has issued its annual filing season guidance, and 2026 brings substantial changes that will impact how you file your 2025 tax returns. From the phase-out of paper refund checks to new deductions and expanded reporting requirements, this filing season demands careful preparation and strategic planning.

The End of Paper Refund Checks

A significant operational shift is underway: the IRS is eliminating paper refund checks as part of the presidential executive order "Modernizing Payments To and From America's Bank Account." This change affects millions of taxpayers who traditionally received paper checks.

What this means for you:

Direct deposit becomes essential for receiving refunds
Taxpayers without bank accounts should establish banking relationships now
Processing delays may occur for those unprepared for the transition

The IRS is directing unbanked taxpayers to resources at fdic.gov/getbanked to help establish accounts before filing season begins.

New Deductions and Credits from Recent Legislation

The One Big Beautiful Bill Act introduces several new tax benefits that could significantly impact your 2025 return. However, these benefits come with specific eligibility requirements that weren't present in previous years.

Key requirement: To claim certain credits for dependents, both taxpayers and spouses (on joint returns) must have valid Social Security numbers or Individual Taxpayer Identification Numbers issued on or before the return's due date, including extensions.

Trump Accounts: A New Savings Vehicle

A notable addition to the tax landscape is the launch of Trump Accounts—specialized retirement savings accounts for children under 18 with valid Social Security numbers. Parents, guardians, and other authorized individuals can open these accounts for eligible children.

The program includes a pilot contribution of $1,000 specifically for children who are U.S. citizens and born between January 1, 2025, and December 31, 2028.

Parents and authorized individuals can access complete details at https://trumpaccounts.gov/.

Payment App Reporting: Updated Thresholds

The gig economy and digital payment landscape continue to evolve, bringing important reporting changes for Form 1099-K:

Payment card companies: Will issue forms for any transaction amount
Payment apps and online marketplaces: Will issue forms when payments exceed $20,000 AND involve more than 200 transactions annually

Remember: All income from part-time work, gig activities, or sales is taxable, regardless of whether you receive a 1099-K form.

Digital Assets: Expanded Reporting Requirements

Digital asset reporting remains a priority for the IRS, with continued emphasis on comprehensive disclosure requirements.

You must report if you:

Bought, sold, or received cryptocurrency, stablecoins, or NFTs
Engaged in any digital asset transactions during 2025

Important: All taxpayers must answer the digital asset question on Form 1040 and report related income, gains, or losses—even if you don't receive Form 1099-DA from brokers.

Essential Preparation Steps

The IRS recommends taking action now to ensure a smooth filing experience:

Set up your IRS Individual Online Account - Access account information, make payments, and manage communication preferences 24/7
Review banking arrangements - Ensure you have direct deposit capability for refunds
Organize digital asset records - Compile comprehensive transaction records for all cryptocurrency and NFT activities
Understand new deduction opportunities - Review how recent legislation might benefit your situation

How These Changes May Affect You

New legislation, digital payment requirements, and expanded reporting obligations create both opportunities and potential pitfalls during this filing season. Preparing early can maximize new benefits while avoiding compliance issues that could trigger audits or penalties.

The elimination of paper checks alone will affect millions of Americans, while the new deductions and credits could provide substantial tax savings for eligible taxpayers. However, the enhanced reporting requirements, particularly for digital assets, demand careful attention to detail.

Questions?

Contact HFM CPAs for questions on how these changes may affect your specific situation. Our team stays current with evolving tax and related legislation to help you navigate new opportunities and requirements.

HFM CPAs provides specialized accounting, tax, and assurance services to individuals and businesses across Connecticut and Rhode Island.