Shop Courses > Annual Tax Season Update: 2027 Filing Season

Annual Tax Season Update: 2027 Filing Season #292426

Course Overview

Credit

Amount

CPA

CDFA^®

EA / OTRP

Course Author: Paul J. Winn CLU ChFC Field of Study (CPA): Taxes Field of Study (CDFA): Taxes Field of Study (EA/OTRP): Federal Tax Law Update

Course Description

Publication/Revision Date: This course was published on 6/17/2026.

Each year, income tax return preparation is affected by inflation-related changes to various limits and new tax laws. This course will look at those changes and new laws.

The 2027 Annual Tax Season Update course is based on the Annual Federal Tax Refresher course and is designed to provide valuable information to persons preparing individual 1040 income tax returns reflecting clients’ 2026 income. It does not, however, satisfy the Internal Revenue Service’s voluntary annual filing season program.

The course a) examines new tax law and changes in various limits that reflect inflation, b) provides a general tax review, and c) discusses important rules governing tax return preparer ethics, practices and procedures.

Table of Contents

Chapter 1 – New Tax Law/Recent Updates1

Introduction	1
Chapter 1 Learning Objectives	1
Annual Inflation Adjustments	1
Education Expenses of Elementary and Secondary School Teachers	1
Interest on Education Loans	2
Amounts Included as Interest	2
Foreign Earned Income Exclusion	2
Earnings Excluded in Foreign Earned Income	2
Limitation on Foreign Earned Income	3
Annual Exclusion for Gifts	3
Standard Mileage Rates	4
Business Use of a Taxpayer's Personal Vehicle	4
Personal Vehicle Use for Charitable Purposes	4
Use of a Taxpayer's Personal Vehicle to Obtain Medical Care	5
Moving Expenses in Military and Intelligence Community Relocations	5
Basis Reduction Amount	5
Payment Card and Third-Party Transaction Reporting Requirements	5
OBBBA Repeals Change to Third-Party Network Reporting	6
Transactions that Require Reporting	6
Transactions not Requiring Reporting	6
Information Reporting Threshold Changes- Forms 1099-MISC and 1099-NEC	6
OBBBA Increases Child and Dependent Care Credit & Income Limit	6
Adoption Credit Now Partially Refundable	7
Eligible Child	7
Qualified Adoption Expenses	7
SSN Requirement for American Opportunity and Lifetime Learning Credits	8
Alternative Fuel Vehicle Refueling Property Credit	8
Alternative Fuel Vehicle Refueling Property Credit Limits	8
Alternative Fuel Vehicle Refueling Property Defined	8
OBBBA Accelerates End of Alternative Vehicle Refueling Property Credit by 5 ½ Years	9
Itemized Deduction Updates	9
Itemized Deduction Limitations	9
OBBBA Eliminates Miscellaneous Deductions Subject to 2% for Other than Educator Costs	9
Limitation on Tax Benefit of Itemized Deductions	9
OBBBA Imposes Reduction on Itemized Deductions	9
OBBBA Makes Mortgage Insurance Premiums Deductible for Itemizers	10
OBBBA Makes Casualty Loss Changes	10
Gambling Loss Deduction	10
OBBBA Reduces Wagering Loss Deduction & Includes Travel & Lodging in Losses	11
Deduction for State & Local Taxes Temporarily Increased (SALT Deduction)	11
Reduction of SALT Limitation Based on Income	11
Form 1040, Schedule 1-A, Additional Deductions	12
Deduction for Tip Income	12
Qualified Tips Defined	12
Deduction for Overtime Pay	12
Qualified Overtime Compensation Defined	13
Deduction Limited by Modified Adjusted Gross Income	13
Auto Interest Loan Deduction	13
Qualified Passenger Vehicle Loan Interest Defined	13
Applicable Passenger Vehicle Defined	13
Enhanced Deduction for Seniors	14
Charitable Contribution Deduction	14
0.5 Percent Floor on Deduction of Contributions	14
529 Plan Account Disbursements	14
Trump Accounts and Contribution Pilot Program	15
Trump Account Eligibility Requirements	15
Trump Account Contributions	15
Trump Account Distributions	16
Form 4547 Trump Account Election	16
Health Savings Accounts	16
Direct Primary Care Service Arrangements	16
Bronze & Catastrophic Plans Considered HDHPs	16
Summary	16
Chapter 1 review	18

Chapter 2 – General Income Tax Review I19

Introduction	19
Chapter 2 Learning Objectives	19
Filing Status Review	19
Benefits of Filing as Qualified Surviving Spouse	20
Criteria for Filing as Qualifying Surviving Spouse	20
Exceptions and Special Circumstances	20
Qualifying Relative Tests	21
Not a Qualifying Child Test	21
Relationship Test	21
Gross Income Test	21
Support Test	21
Taxability of Earnings	21
W-2 Form, Wage and Tax Statement	22
Advance Commissions and Other Earnings	23
Allowances and Reimbursements	23
Back Pay Awards	23
Bonuses and Awards	23
Differential Wage Payments	24
Government Cost of Living Allowances	24
Nonqualified Deferred Compensation Plans	24
Notes Received for Services	24
Severance Pay	24
Sick Pay	25
Social Security and Medicare Taxes Paid by an Employer	25
Stock Appreciation Rights	25
Tax on Tips Reduced	25
Qualified Tips Defined	25
Form 4137 - Tax on Unreported Tips	26
Who Must File	26
Allocated Tips	26
Tips Reported to the Employer	27
Payment of Tax	27
Schedule B, Interest, Dividends, Foreign Accounts and Trusts	27
Retirement Income Reporting and Taxability	28
Social Security Benefits	28
Taxability of Benefits	28
Reporting	29
Qualified Retirement Plans	29
Contributions to Qualified Employee Plans	30
Employee Plan Contributions	30
SECURE 2.0 Act Affects Catch-Up Contributions	30
Qualified Retirement Plan Distributions	30
Form 1099-R	30
Early Distributions	31
Required Qualified Plan Minimum Distributions	31
Qualified Plan Rollovers	31
Plan Death Benefits	31
Designated Roth Account Distributions	32
Annuities	32
Nonqualified Annuity	32
Individual Retirement Accounts	33
Traditional IRAs – Contributions & Distributions	33
Premature Distributions	34
Premature Distributions Avoiding Tax Penalty	34
Required Distributions during Owner's Lifetime	34
Roth IRAs	35
Limits on Roth IRA Contributions	35
Non-Qualified Roth IRA Distributions of Gain before 59½ Subject to Tax Penalty	35
No Required Roth IRA Lifetime Distributions	35
IRA Rollover Per-Year Limit	36
Form 1099-R	36
Form 5498	36
Summary	37
Chapter 2 Review	39

Chapter 3 General Income Tax Review II40

Introduction	40
Chapter 3 Learning Objectives	40
Reporting and Taxability of Unemployment Compensation	40
Unemployment Compensation Taxable	40
Nondeductible Contributions to Governmental Unemployment Compensation Plan	42
Repayment of Unemployment Compensation	42
Alimony – Pre 2019 and Post 2018 Divorce Agreements	42
Schedule C, Profit or Loss from Business (Sole Proprietorship)	42
Income & Expenses Defined	42
Business vs. Hobby	43
Business Use of a Home	44
Methods of Figuring the Home-Office Deduction	44
Actual Expense Method	44
Nature of the Expense	45
Percentage of the Home Used for Business	45
Calculating Percentage of Home Used for Business	45
Deductible Expenses for Home-Office Deduction	45
Expenses Deductible by All Homeowners	45
Expenses Deductible only by Taxpayers Using a Home for Business	46
Deduction Limit	46
Simplified Method	47
Recordkeeping Requirements	48
Gross Receipts	48
Inventory	48
Expenses	48
Entertainment Expenses	48
Exceptions for Certain Food and Beverage Expenses	49
OBBBA Increases Meal Deduction for Restaurants & Others	49
Section 179 Expense Limits	49
Depreciation	50
Bonus Depreciation	50
Qualified Property	50
Luxury Auto Depreciation Limits	51
Listed Property Updates	51
Deduction for Employees	52
Business-use Requirement	52
Passenger Automobile Limits and Rules	52
Summary	52
Chapter 3 Review	53

Chapter 4 – General Income Tax Review III54

Introduction	54
Chapter 4 Learning Objectives	54
Capital Gains and Losses	54
Short-Term and Long-Term Capital Gains and Losses	54
Reporting Capital Gains and Losses	54
IRS Form 8949, Sales and Other Dispositions of Capital Assets	54
Schedule D	55
Maximum Capital Gains Rate	55
Standard Deduction Eligibility	55
Standard Deduction Made Permanent & Increased	56
Standard Deduction for Blind and Senior Taxpayers	56
Standard Deduction Summary	56
Itemized Deductions Schedule A	56
Medical and Dental Expenses	57
State and Local Tax (SALT) Deduction	57
Home Mortgage Interest and Home Equity Loans	57
OBBBA Makes Mortgage Insurance Premiums Deductible for Itemizers	58
Indebtedness Refinancing	58
Charitable Contributions	58
60% AGI Limit for Cash Contributions	58
Contemporaneous Written Acknowledgement	58
Content and Timing of Contemporaneous Written Acknowledgement	59
Casualty Loss Deduction	59
Casualty Loss Deduction Limitation Extension and Modification	59
Moving Expense Deduction	59
Moving Expenses in Active Military and Intelligence Community Relocations	59
Recordkeeping and Documentation of Deductions	60
Summary	61
Chapter 4 Review	61

Chapter 5 – General Income Tax Review IV62

Introduction	62
Chapter 5 Learning Objectives	62
Tax Credit Eligibility	62
Child Tax Credit	62
Child Tax Credit Phaseout and Nonrefundable Amounts	62
Social Security Number Requirement	63
Credit for Other Dependents	63
Limits on the CTC and ODC	63
Claiming CTC and ODC	64
Additional Child Tax Credit	64
Child and Dependent Care Credit	64
Enhancement of the Dependent Care Assistance Program	64
Eligible Care Recipients Limited to Qualifying Persons	65
Eligible Taxpayers	65
Education Credits	65
American Opportunity Credit	65
Figuring the American Opportunity Credit	66
Lifetime Learning Credit	66
Figuring the Lifetime Learning Credit	67
Earned Income Tax Credit	67
Adjusted Gross Income Limits	68
Valid Social Security Number Required	68
Tax Filing Status	68
Separated Spouses	68
Citizenship or Residency	69
EITC Rules That Apply Only if the Taxpayer Has a Qualifying Child	69
EITC Rules That Apply if Taxpayer Does Not Have a Qualifying Child	69
Summary	69
Chapter 5 Review	70

Chapter 6 – General Income Tax Review V71

Introduction	71
Chapter 6 Learning Objectives	71
Tax Treatment of Virtual Currency	71
Form 1099-DA, Digital Asset Proceeds From Broker Transactions	72
Alternative Minimum Tax (AMT)	73
Alternative Minimum Tax Exemption Amount Increased	74
QBI Deduction	74
Qualified REIT Dividend	74
Qualified Publicly Traded Partnership Income	74
Deduction Eligibility	75
Pass-Through Deduction Generally Limited to Qualified Trade or Business	75
Qualified Trade or Business	75
Exception for Specified Service Trade or Business	75
IRS Forms for Qualified Business Income Deduction – 8995 & 8995-A	76
Qualified Business Income Deduction Simplified Computation - Form 8995	76
Qualified Business Income Deduction - Form 8995-A	76
Taxable Income Threshold	79
Pass-Through Deduction for Qualified Trade or Business Owners	80
QBI Component Calculation	80
Qualified Property	80
Rental Real Estate Safe Harbor	81
Kiddie Tax – Unearned Income of Minor Children	81
Kiddie Tax Applicability	81
Tax for Certain Children Who Have Unearned Income - Form 8615	81
Parents' Election To Report Child's Interest and Dividends - Form 8814	81
Section 529 Plans	83
Payments From Qualified Education Programs - Form 1099-Q	84
Section 529 Plans and Post Secondary Credentials	85
Post-Secondary Credential Program Defined	86
Achieving a Better Life Experience (ABLE) Account	86
Tax-Deferred Account	87
ABLE Account Distributions	87
ABLE Account Contributions	87
OBBBA Makes Rollovers to ABLE Accounts Permanent	87
Cancellation of Student Debt	87
Net Operating Loss (NOL)	88
OBBBA Reduces EBL Limitation & Makes Rule Permanent	88
Premium Tax Credit	88
Federal Poverty Level	89
Amount of the Credit	89
Benchmark Plan	90
Taxpayer's Expected Contribution	90
Additional Tax Limitation Eliminated	90
Employee Fringe Benefits	90
Cafeteria Plans	90
Qualified Transportation Fringe Benefits	90
Medical Savings Accounts	91
Archer MSA Benefits	91
Archer MSA Eligibility	91
High Deductible Health Plan Requirement	91
Archer MSA Contributions	92
Health Savings Accounts	92
HSA Benefits	92
HSA Eligibility	93
HSA High Deductible Health Plan Requirement	93
HSA Contributions	93
HSA Distributions	93
Tax Withholding and Estimated Tax Payments	94
Tax Withholding	95
Form W-4	95
Exemption from Withholding	95
Penalties	95
Withholding from Nonwage Income	95
Estimated Tax	96
Requirement to Pay Estimated Tax	96
Balance Due and Refund Options	96
Payment of Income Tax Owed	97
Refunds	97
Limit on Direct Deposit Refunds	97
Federal Income Tax Return Filing Due Dates and Filing for Extensions	97
Calendar Year and Fiscal Year Taxpayers	97
Extensions of Time to File	98
Automatic Extension of Time to File	98
Individuals Outside the United States	99
Individuals Serving in a Combat Zone	99
Summary	100
Chapter 6 Review	101

Chapter 7 – Practices, Procedures & Professional Responsibility102

Introduction	102
Chapter 7 Learning Objectives	102
Tax Related Identity Theft (Publication 5199)	102
Assisting Victims of Identity Theft	103
Safeguarding Taxpayer Data (Publication 4557)	103
Laws and Regulations Requiring Privacy/Security	103
Best Practices to Safeguard Data	104
Extended Validation SSL Certificate	104
External Vulnerability Scan	104
Information Privacy and Safeguard Policies	105
Protection Against Bulk Filing of Fraudulent Income Tax Returns	105
Public Chapter Name Registration	105
Reporting of Security Incidents	105
Individual Taxpayer Identification Numbers	105
Who Needs an ITIN?	106
ITIN Renewals	106
Preparer Penalties	107
Due Diligence in Tax Preparation	108
Head of Household Filing Status	109
Taxpayer Considered Unmarried	109
Required Marriage Test Supporting Documents	109
Keeping up the Taxpayer's Home	110
Required Keeping Up a Home Test Supporting Documents	110
Qualifying Person	110
Qualifying Child	111
Required Qualifying Person Test Supporting Documents	111
Common Head of Household Errors	111
Earned Income Tax Credit	112
EITC Due Diligence Requirements	112
Most Common EITC Errors	112
Education Tax Credits	113
Most Common AOTC Errors	113
Child Tax Credit	113
Most Common CTC/ACTC/ODC Errors	113
Compliance with E-file Procedures	114
Affected Tax Return Preparers	114
Timing of Taxpayer Signature	114
Timing of Filing	114
Recordkeeping	114
Prohibited Filing with Pay Stub	115
Proper Handling of Rejects	115
Tax Return Preparer Duties and Restrictions	115
Tax Pro and Individual Online Accounts	116
Tax Pro Account	116
IRS Individual Online Account	116
Summary	116
Chapter 7 Review	119

Glossary120

Answers to Review Quizzes123

Chapter 1 review	123
Chapter 2 review	124
Chapter 3 review	125
Chapter 4 review	126
Chapter 5 review	127
Chapter 6 review	128
Chapter 7 review	129

Index131

Appendix A134

Appendix B135

Appendix C – Form W-2138

Appendix D – Form 1099-R139

Course Details

Author: Paul J. Winn CLU ChFC

Paul J. Winn CLU ChFC — Financial Writer, Editor & Trainer. Education: B.A., St. John’s University (1961–1964); Law School, University of Virginia (1964–1965); MBA program Binghamton University (1986–1989); CLU (1985); ChFC (1987). Experience: Thirty years in the life insurance and investment industry (1965–1995). Thirty-one years as a financial writer, editor and trainer (1995–2026). Paul held positions at Mutual Life Insurance Company of New York as product developer and compensation officer; at Security Mutual Life Insurance Company as general agent, marketing vice president, and agency vice president; at Principal Financial Group as agency manager; and as president of Maryland Financial Corporation, managing a financial adviser corporation providing tax, investment and financial planning. As a writer and editor, Paul is a published book author whose books include Tax Planning from the Heart, Business Succession Planning, and Dominating Obamacare. He served as writer and editor of a major mutual life insurance company’s agent training university, created more than 200 insurance, securities and tax training courses in online, print and scripted classroom formats, and is the founder and CEO of Winn Publications LLC, a tax and insurance continuing education course licensor.

Publication/Revision Date: 6/17/2026

Course Exam Questions (online): 45 (multiple-choice)

Program Delivery Method: Self-Study (NASBA QAS Self-Study)

Available Formats of Course Text: Downloadable PDF, Printed/Mailed

Course Level, Prerequisites, and Advance Preparation Requirements

License	Course Level	Prerequisites	Advance Preparation Requirements
CPA	Overview	None	None
CDFA®	Intermediate	Familiarity with federal taxation	None
EA/OTRP	Overview	None	None

* This program is appropriate for professionals at all organizational levels.

Sponsor ID Numbers

National Registry of CPE Sponsors I.D.: 107615

Registered with the Institute for Divorce Financial Analysts

IRS Qualified Sponsor I.D.: FWKKO — Course I.D.: FWKK0-U-00781-26-S

State CPA Board Sponsor ID Numbers (where applicable)

Florida Division of Certified Public Accounting: 0004761

Hawaii Board of Public Accountancy: 14003

New York State Board for Public Accountancy: 002146

Ohio Accountancy Board: CPE .51 PSR

Pennsylvania State Board of Accountancy: PX178025

Texas State Board of Public Accountancy: 009349

Learning Objectives

As a result of studying the course material, you should be able to meet the objectives listed below:

Identify the principal individual income tax changes brought about by recent legislation;
Apply the inflation-adjusted and other limits to the proper preparation of taxpayers' income tax returns;
Recognize the federal income tax filing statuses and the criteria for their use;
Identify the types of income that must be recognized;
Apply the tax rules to the various credits and adjustments to income that are available to taxpayers;
Recognize the penalties that may be imposed on a preparer for failing to meet ethical and practice standards in preparing tax returns; and
Identify the duties and restrictions imposed on tax preparers under Circular 230.

Online Book, Online Exam

$65.00

Hardcopy Book, Online Exam

$83.00