• $7,500 IRA Contributions (+$1,100 age 50 and older)

• $17,000 Simple IRA (+$4,000 age 50-59 and older. +$5,250 age 60 - 63)

• $72,000 SEP IRA Contributions (not to exceed 25% of compensation)

• $4,400 HSA Contribution ($8,750 family plan, +$1,000 age 55 and older)

• $2,200 Maximum Child Tax Credit per dependent

• $20,000 Virginia Land Credit (per taxpayer)

• $19,000 Annual Gift Tax Exclusion

• $15M Lifetime Estate Tax Exemption

• 9/15/2026:

  • Extended Partnership / S Corp Tax Returns

  • Quarter 3 estimated payment due

• 9/30/2026:

  • Extended Trust & Estate Returns

• 10/15/2026:

  • Extended Individual / C Corp Tax Returns

• 12/31/2026:

  • • Roth conversions

    • Required Annual Distributions (RMD)

    • Tax loss harvesting

    • Qualified Charitable Distribution (QCD) transactions

    • Purchase Virginia land credits

• 1/15/2027:

  • Quarter 4 estimated payment due

• 2/1/2027:

  •  Issue W-2s & 1099s.

• 3/5/2027:

  • Complex trust & estate distributions (with 65-day rule election)

• 3/15/2027:

  • • S - election

    • Partnership/S Corp Tax Returns

    • Maryland & Virginia PTE tax election - due with the filing of the return or extension.

• 4/1/2027:

  • First RMD if you turned 73 in 2026

• 4/15/2027:

  • • Individual/Trust/C Corp Tax Returns (or extension)

    • Quarter 1 estimated payment due

    • IRA & HSA contributions (2026 tax year)

• 83(b) elections due 30 days after restricted stock grant date

Disclaimer: Tax laws are complex and subject to change. Please consult a qualified tax professional, like Scalese CPA, LLC for advice tailored to your specific needs.

Main benefit - self-employment tax savings.

Example: Sue earns her living by operating a lawn mowing business that makes $150,000 per year in net income. She spends 20 hours a week delegating and coordinating the work for others to do.

• Case 1: Not an S Corp: Sue reports net income directly on her individual income tax return on Schedule C. She will owe approximately $21,000* (or 15.3% of net self-employment income) in self employment taxes.

• Case 2: Is an S Corp: With an S Corp, Sue wears two hats - one as an employee, another as the owner. 

  • • If she pays herself, say, $60,000**, then Social Security and Medicare taxes will be withheld and matched totaling $9,000.***

    • The S Corp deducts $60,000 and Sue as an employee includes the same in income (conceptually netting to zero).

As this basic example illustrates - Sue can save approximately $12,000 as an S Corporation.

*This accounts for the self-employment tax deduction

**Must be a "reasonable compensation"

***Does not account for unemployment taxes

Issues to consider:

• Additional reporting. Sue would now need to file the following:

  • • S Corp Tax Return - Form 1120-S.

    • Form 940, Quarterly Form 941s (if she doesn't already have employees)

    • Form W-2 for herself.

• Only one class of stock allowed (does not apply to voting rights).

  • • All distributions, income, and losses out of the S Corp must go to all shareholders in proportion to ownership. As the sole owner, this does not affect Sue.

• Sue cannot take losses that exceed her basis in the business. As an S Corp having outstanding debt does not add to her basis, unless she personally guarantees the debt.

• Limitations on who can be an owner.

These are rough estimates and may not apply to your specific situation. Please consult your tax advisor to determine if making an S - election is right for you.

These terms are sometimes used interchangeably and can easily get confused.

Dividends: C Corps pay dividends (technically a dividend is a type of distribution). These are taxable income to the shareholders, leading to "double taxation". If the dividends are qualified, shareholders receive long-term capital gains treatment.

Distributions: S Corps and Partnerships make "distributions". These are generally NOT taxable to the owners. They may be taxable when:

• C Corps that convert to an S Corp later distribute prior C Corp earnings.

• Distributions are in excess of the owner's basis in the business.

Example:

Sue purchased commercial real estate as follows - which represents her initial basis in the assets:

$500,000 Building

$200,000 Land

$700,000 TOTAL

Sue calculates that she can take $19,500  each year as depreciation expense on the building for the next 39 years. At the end of Year 1, her basis in the building would be as follows:

$500,000 Initial basis in building

-$19,500 Less year 1 depreciation

$480,500 Basis at the end of year 1

The basis in the building will decrease in increments of $19,500 per year, until at the end of year 39, the basis will be $0. Sue will have expensed the entire building.

If Sue later sells the building the gain is calculated as Revenue - Basis = Taxable Gain.

Land is not depreciable, so the basis in the land remains at $200,000.

Gifts

If you made a large gift(s) - more than $19,000 for the 2026 tax year - then the amount in excess of this annual exclusion are considered “taxable". What that really means is “it might be taxable”. It is only taxable if the accumulation of all these “taxable” gifts in your lifetime is greater than $15,000,000 (for the 2026 tax year). Most people do not pay gift taxes.

Estates

The value of the net assets in the legal possession of a decedent on the date of death is what makes up that decedent’s estate. Generally, if that value is more than $15,000,000 (for the 2026 tax year), less “taxable” gifts, then the Estate must file a tax return to compute and pay estate taxes (Form 706). It is wise to file this tax return for the decedent’s spouse for larger estates even if not required to do so.

If the estate has income generating assets (e.g. rental properties, investments, pensions, etc.), with more than $600 of annual gross income, then the estate must file another tax return to compute and pay income taxes (Form 1041) – to be filed each year.

Trusts

Grantor trusts – a trust where the grantor (creator of the trust) is also the beneficiary – often set up solely to avoid probate. Income generated is claimed directly on the grantor’s individual tax return as if earned directly by the grantor. An informational tax return is optional.

Non-grantor trusts – Much more complex than grantor trusts. Income may be claimed and taxed by either the trust, the beneficiary, or both. If annual gross income is greater than $600, a tax return (Form 1041) must be filed.

S Corps and Partnerships are “pass-through” (or “flow-through”) entities because the income is “passed” directly to the owners and taxed at the individual rates (currently the maximum rate is 37% - plus 3.8% for investment income). A separate business tax return is required.

C Corps pay their own taxes, currently at the rate of 21%. Although the rate is much lower than the maximum individual rate, when money is withdrawn from the business, it is taxed a second time as a dividend, usually at a max rate of 23.8%. A separate business tax return is required.

Disregarded entities are sole proprietorships that are usually reported on Schedule C and included on the owner’s individual tax return. No separate business tax return is required.