Tony Passwater 
Make 2026 Great for Your Business!
Driving High-Performance Leadership & Smart Financial Strategies
The Year End is upon us, and probably not soon enough for many.
How did your business do this year? Did your business reach the goals you were looking for in 2025? Looking forward, what do you want to do in 2026 better than you didn’t do in 2025?
A mistake we often see is that small business owners treat their business as if it is just a “job” that has maximum job security, not realizing nothing is guaranteed. This has become a stark reality to many over recent years.
Many owners often treat their business so badly, its health and sustainability is compromised. Then when there is a business climate change, it suffers badly. Whether you have one employee or over fifty … having the right mindset and commitment to your business are critical to long term success.
As the Owner, you are the CEO of the business. This position has great responsibility and is not just a “job”. The leadership you display is what employees look for during tough times. As CEO, you are not just repairing vehicles, you are in charge of the leadership for the business that repairs vehicles, and its success and health are dependent upon you. Being a great CEO in 2026 will go a long way in allowing you and your business to reach the level of success you plan to obtain.
Beware of Taxable Employee Gifts
It is common practice this time of year for employers to give their employees gifts. Where a gift is infrequently offered and has a fair market value so low that it is impractical and unreasonable to account for it, the gift’s value would be treated as a de minimis fringe benefit. As such, it would be tax-free to the employee, and its cost would be tax deductible by the employer.
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De Minimis Fringe Benefits
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Cash Gifts & Gift Certificates
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Group Meals & Celebrations
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FICA and Wage Withholding Obligations
De Minimis Benefits — In general, a de minimis benefit is one that, considering its value and the frequency with which it is provided, is so minor as to make accounting for it unreasonable or impractical. De minimis benefits are excluded from income under Internal Revenue Code section $132\text{(a)(4)}$ and include items not specifically excluded under other sections of the Code. Examples of de minimis benefits include:
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Occasional snacks, coffee, donuts, etc., furnished to employees.
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Occasional tickets for entertainment events given to employees.
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Holiday gifts from the employer to the employees (non-cash).
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Controlled, occasional employee use of a company photocopier.
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Personal use of an employer-provided cell phone for business purposes.
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Flowers, fruit, books provided under special circumstances (e.g., illness).
In determining whether a benefit is de minimis, you should always consider its frequency and value. An essential element of a de minimis benefit is that it is occasional or unusual in frequency. It also must not be a form of disguised compensation. If a benefit is too large to be considered de minimis, the entire value of the benefit is taxable to the employee, not just the excess over a designated de minimis amount.
⚠️ IRS THRESHOLD RULE:
The IRS has ruled previously that items with a value exceeding $\$100$ cannot be considered de minimis, even under unusual circumstances.
Holiday Gifts — A gift of cash, regardless of the amount, is considered additional wages and subject to employment taxes (FICA) and withholding taxes.
🔴 Caution: If the gift recipient is a W-2 employee, the employer may not issue them a Form 1099-NEC or a 1099-MISC for a holiday gift of cash; the amount must be treated as W-2 income.
When an employer gives gift certificates, debit cards, or similar items that are convertible to cash, the value is considered additional wages regardless of the amount. However, if the gift is a coupon that is nontransferable and convertible only into a turkey, ham, gift basket, or the like at a particular establishment, the gift coupon is not treated as a cash equivalent.
Holiday group meals, cocktail parties, picnics, or similar events for employees are also treated as de minimis fringe benefits. Before you create unexpected tax consequences for both your employees and your business, please give us a call.
Spousal IRAs Can Save You Money!
One frequently overlooked tax benefit is the spousal IRA. Generally, IRA contributions are only allowed for taxpayers who have compensation (which includes wages, tips, bonuses, professional fees, commissions, taxable alimony, and net income from self-employment).
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Spousal IRA Basics
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Compensation Requirements
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Maximum Contribution Limits ($7,000)
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Traditional vs. Roth IRA Allocation
Spousal IRAs are the exception to that rule and allow a non-working or low-earning spouse to contribute to his or her own IRA, as long as the working spouse has adequate joint compensation.
The maximum amount that a non-working or low-earning spouse can contribute is the same as the limit for a working spouse, which is $\$7,000$ for the 2026 tax year. If the non-working spouse’s age is 50 or older, that spouse can also make “catch-up” contributions (limited to $\$1,000$), raising the overall contribution limit to $\$8,000$. These limits apply provided that the couple together has joint compensation equal to or greater than their combined IRA contributions.
📐 Practical Example:
Tony is employed and his W-2 for 2026 is $\$100,000$. His wife, Rosa, age 45, has a small income from a part-time job totaling $\$900$. Since her own compensation is less than the contribution limit for the year, she can base her contribution on their combined compensation of $\$100,900$. Thus, Rosa can contribute up to $\$7,000$ to her Spousal IRA for the 2026 tax year.
The contributions for both spouses can be made either to a traditional or Roth IRA, or split between them as long as the combined contributions don’t exceed the annual contribution limits.
Deductibility & Income Thresholds (2026 Limits):
Traditional IRAs — There are no income limits restricting contributions to a traditional IRA. However, if the working spouse is an active participant in any other workplace retirement plan, a tax-deductible contribution can be made to the non-participant spouse’s IRA only if the couple’s adjusted gross income (AGI) does not exceed $\$236,000$ for the 2026 tax year.
Roth IRAs — Roth IRA contributions are never tax-deductible. Full contributions are permitted if the couple’s AGI does not exceed $\$236,000$ for 2026. The allowable contribution is ratably phased out for joint AGIs between $\$236,000$ and $\$246,000$. No Roth IRA contributions are permitted once the joint AGI exceeds $\$246,000$.
“Rosa can designate her contribution as either a deductible traditional IRA or a Roth IRA because their AGI is under $\$236,000$. Had their joint AGI been $\$241,000$, Rosa’s allowable contribution to a deductible traditional or Roth IRA would be limited to $\$3,500$ because of the phase-out range. The remaining $\$3,500$ could be contributed to a traditional IRA and designated as non-deductible.”
Please give us a call if you would like to discuss IRAs or need assistance with your year-end retirement planning.
Business Value Spotlight: Merchant Processing
It is important for businesses to control their costs, and look not for “cheap”, but value in the products and services they purchase and use. One area that we see many clients waste a lot of money on is credit card processing.
It seems everyone that calls you can “save you money” processing credit cards. To be honest the credit card processing industry is almost a scam. We have looked at hundreds of providers over the years and these can actually save you money or even eliminate your processing costs completely.
Processing Costs: How much do you spend for your total cost of taking credit cards? Do any of these describe your situation?
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Customers charge whole bills just to get “points” or “Cash Back”.
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Hidden fees add up to make your “real costs” higher than quoted.
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You pay equipment rental/lease payments to process credit cards.
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You pay a high monthly fee just to maintain the Merchant Account.
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Quoted rates are not the actual rates applied to your deposits.
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You are tired of every company claiming they can “beat” the rates.
We have found two simple solutions:
Standard Processing: A program guaranteed to reduce your processing costs with robust, native integrations for QuickBooks and other ERP software.
Customized Zero-Fee Program: Completely eliminates processing, equipment, PCI, and monthly merchant fees, dropping your net billing to ZERO.
The Best Standard Merchant Services
We have reviewed 20 – 30 offerings over the recent years, and found a company that has exceeded our expectations, and will provide the best program. Their system has so many well thought out options on how to get paid, and integrates nicely into almost all accounting systems including QuickBooks. We encourage our clients to check them out without the pushy sales attitude.
The Best “No Fees” Merchant Services (Edge)
If you are tired of Customers taking advantage of your business by instead of just giving you the insurance check, they deposit it and then charge the entire bill on their best rewards card… costing you a lot of dollars, this program is what you should consider. The Edge program is an innovative offering made possible by the Supreme Court ruling that allows you to share or transfer the costs of processing back to the customer. This program also allows for zero equipment fees, transaction fees, and all the hidden costs, or share the costs based on charge levels. You can decide to take all credit cards for deductibles or sales up to $500.00 at no sharing costs to the Customer, but for charges above this amount you can set a sliding scale. Over $\$1,000$, they pay the whole cost. It is all very easy to setup, automated, and easy to use.
EPX Edge — This new program is a game changer … Click Here for more information.
How much money can this save you on your bottom line?
You can also contact us directly and we can explain both of these programs and connect you to the right person to get an analysis of your savings. Our company AEII, QuickBooks R Us, is always here to assist any small business with a full range of services, and provide the training and support needed to achieve excellent results. We have assisted businesses worldwide, and we specialize in the collision repair and service industry.
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We also have a free self-help site with helpful procedures and videos at: QbHelp.us
Thank You, and I look forward to sharing small business and QuickBooks Tips and Tricks with you in the future…
