Five tax decisions that may not have an obvious answer in 2026

A client brings you a nursing home bill. Another asks what to do with an inherited IRA. The governing rules may be familiar, but the first fact rarely settles the return or the advice. You know the rules. NATP's Tax Season Updates, offered virtually and in person, helps you work through how to apply them to the 2026 decisions your clients bring to you.

Here are five topics worth slowing down for before a reasonable assumption becomes a filed position.

TSU Day 1: Apply the 2026 rules to the return

1. How much of a nursing home bill is medical care?

A client hands you the year's invoices and asks to deduct the entire amount on Schedule A (Form 1040), Itemized Deductions. Ask why the person entered the facility. When a principal reason is medical care, meals and lodging may be included along with care. When the reason is personal, only the medical or nursing care portion may qualify. The invoice total alone cannot answer that question; request an itemized statement and enough information about the reason for the stay to document the tax treatment.

2. Does the larger SALT cap help this client?

The overall state and local tax (SALT) deduction limit for 2026 is $40,400 ($20,200 for married filing separately (MFS)). It begins to decrease when modified adjusted gross income (MAGI) exceeds $505,000 ($252,500 for MFS), though it cannot fall below $10,000 ($5,000 for MFS). A client with $30,000 in state and local taxes may expect to deduct all of it. First, test the income phase-down and whether itemizing on Schedule A beats the standard deduction. If the client is near the threshold, a projected income change may alter the expected benefit.

3. Does this health arrangement permit HSA contributions?

Starting Jan. 1, 2026, bronze and catastrophic health plans are treated as high-deductible health plans for health savings account (HSA) purposes, and certain direct primary care arrangements no longer prevent an otherwise eligible person from contributing. It doesn’t make every client with a bronze plan or a monthly primary care fee eligible. Identify the actual plan and any other disqualifying coverage before calculating the allowable contribution.

TSU Day 2: Work through the family decisions

4. Should the surviving spouse keep an inherited IRA or treat it as their own?

A spouse who inherits a traditional individual retirement account (IRA) may have choices unavailable to other beneficiaries. Keeping beneficiary status or becoming the owner can produce different required minimum distribution (RMD) timing. Compare the spouses' ages and the applicable RMD rules, then model the tax effect of the survivor's cash needs before settling on a path. Check any remaining required distribution for the year of death before moving funds; you can’t roll over that amount. The easiest account transfer is not necessarily the best tax answer for the survivor.

5. Who may act when a client can no longer handle IRS matters?

A daughter says she has her father's durable power of attorney (POA) and asks you to discuss his notice with the IRS. The document's title alone does not actually establish federal tax representation authority. Review whether it satisfies IRS requirements for a substitute Form 2848, Power of Attorney and Declaration of Representative. If a conservator or other fiduciary has been appointed, determine whether Form 56, Notice Concerning Fiduciary Relationship, is required to notify the IRS of that fiduciary relationship. Establish the authority before responding on the client's behalf; raise the question while clients can still put suitable documents in place.

Documenting 2026 tax decisions

For any decision that looks settled at first glance, add a four-line note to the client file:

• Proposed treatment: What is the client asking you to do?
• Fact still needed: Which document or answer could change the result?
• Rule to verify: What authority and tax year govern the choice?
• Decision and follow-up: What did you choose, and when should you revisit it?

These are the kinds of decisions Tax Season Updates is designed to help you work through before filing season puts them in front of you. Day 1 digs into the 2026 rules affecting returns, while Day 2 moves into the family situations and planning questions where the right answer often depends on what you ask next. Join NATP's Tax Season Updates, offered virtually and in person, to work through the 2026 issues you're likely to see.