Investing in a Home Brings Tax Benefits

Purchasing a home is the most significant investment most people will make. Owning your home comes with valuable tax advantages that can reduce your annual tax bill. One of the primary benefits is the mortgage interest deduction, which allows homeowners to deduct the interest paid on mortgage loans, up to certain limits. This can be particularly beneficial in the early years of a mortgage when interest payments are highest. In addition, property taxes paid on your primary residence are generally deductible, up to the IRS limit for state and local taxes (currently $10,000 for individuals or married couples filing jointly). Contact us to learn about other tax-related benefits of owning a home.

New Limits for Health Savings Accounts in 2026

If you’re covered by a high-deductible health plan (HDHP), you can contribute pretax income to a Health Savings Account (HSA) up to certain limits. Funds can be withdrawn tax-free to pay qualified medical expenses. The IRS annually adjusts HSA and HDHP contribution limits for inflation. For 2026, the maximum HSA contribution amount for individuals will be $4,400 ($4,300 for 2025) and $8,750 ($8,550 for 2025) for family coverage.

The minimum HDHP deductible for individuals will be $1,700 ($1,650 for 2025) and $3,400 for family coverage ($3,300 for 2025). The maximum HDHP out-of-pocket cost will be $8,500 for self-coverage ($8,300 for 2025) and $17,000 for family coverage ($16,600 for 2025).

Is Day Camp Deductible as Child Care?

Most kids will be out of school soon for the summer, if they aren’t already. And many will head to summer camp. Sending your child to a summer day camp while you work may count as an expense toward the federal Child and Dependent Care Credit. Under current law, this credit ranges in value from 20% to 35% of the day camp cost, depending on the working parents’ income. For one qualifying child under age 13, you may use up to $3,000 of unreimbursed expenses to claim the credit or $6,000 for two or more children. Note, overnight camp costs don’t qualify for the credit and aren’t deductible.

What To Do When You Can’t Pay Your Tax Debt

If taxpayers can’t pay the tax they owe in full, one option is to seek an offer in compromise (OIC) from the IRS. That’s a way to potentially settle the debt for less than you owe. The IRS states it will generally accept a reasonable offer. Be aware, the tax agency will first do a thorough review of your financial situation to assess your ability to pay. Suppose your OIC is rejected. What then? You can appeal within 30 days of the rejection letter date by submitting Form 13711 (Request for Appeal of OIC), or by sending a letter to the IRS with certain details. Be prepared to support the facts and explain why you’re seeking an appeal. 

Taxability of Gig Income and “Other Income”

Summer is coming soon, a time when many students and others earn money through the gig economy. This means they use online platforms to find and perform on-demand work and provide services. Regardless of how this money is received, it’s subject to self-employment tax and may trigger a Form 1099-K if earnings exceed $600.

Selling items online also generates taxable income, subject to self-employment tax. One seller learned this the hard way. After selling $41,972 in movie memorabilia online, he reported the amount as “other income” exempt from self-employment tax. The U.S. Tax Court ruled the income wasn’t exempt and added penalties due to the tax deficiency. (TC Memo 2025-13)