Compliance
Avoiding Common Compliance Pitfalls in the 2026 Filing Season
With new laws from the One, Big, Beautiful Bill taking effect, compliance missteps can easily sneak in—learn what to watch out for when filing 2025 returns.
By NomadicTax Research Team • 5-8 min read • April 4, 2026
## Introduction
The **2026 filing season** comes with substantial compliance risks for individual taxpayers. Many provisions under the **One, Big, Beautiful Bill** (signed July 4, 2025) are now effective for returns filed in 2026 (tax year 2025). From deduction eligibility to electronic payment rules, misinterpretation can lead to costly surprises. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
## Key Compliance Areas to Watch
### 1. New Deductions & Phase-outs
The tax filing season brings fresh deductions (or expansions), but not everyone qualifies:
- Seniors 65+ may claim an **additional deduction up to $6,000**; eligibility phases out based on income. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
- Tipped workers are now eligible to deduct up to **$25,000** of qualified tips. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
- Overtime work deduction: up to **$12,500** ($25,000 for joint filers) for qualified overtime. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
- Qualified passenger vehicle loan interest deduction: up to **$10,000**. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
**Tip:** Determine your adjusted gross income (AGI) to test phase-out thresholds before claiming.
### 2. Child Tax Credit & Adoption Credit Requirements
- For Child Tax Credit, the taxpayer (and spouse, if filing jointly) and each qualifying child must have a valid Social Security number **issued before the return’s due date** (even if filing extension). ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
- Adoption Credit changes: part of it is now **refundable up to $5,000 per eligible child**, index-adjusted annually. Also, **Tribal governments** can determine special needs status in some cases. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
### 3. Electronic Payments & Refunds
- Executive Order 14247 mandates that **federal payments and collections transition to electronic methods**, including tax refunds and payments due. Paper instruments will be phased out where permitted by law. ([irs.gov](https://www.irs.gov/newsroom/modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
- To comply, ensure **bank routing & account numbers are up to date**, and consider opening accounts if unbanked. ([irs.gov](https://www.irs.gov/newsroom/irs-issues-frequently-asked-questions-about-executive-order-14247-modernizing-payments-to-and-from-americas-bank-account?utm_source=openai))
## Exceptions & Document Retention
- Some changes are **retroactive to the start of 2025**—if withholding or estimates weren't adjusted, refunds or tax bills may shift. ([irs.gov](https://www.irs.gov/newsroom/taxpayers-could-see-a-change-in-their-2025-tax-bill-or-refund?utm_source=openai))
- Maintain records of eligibility, overtime or tip documentation, SSN issuance dates, and contributions.
## Example Compliance Mistake & How to Avoid It
*Scenario:* Maria, age 66, files jointly with her husband. In 2025 they claim her additional senior age deduction, plus overtime deductions. They forgot that their AGI was above the phase‐out limit, so they've claimed too much, leading to audit risk.
*Avoidance:* Pre-compute deductions before filing. Use IRS withholding estimator tool to reflect deductions or credits; if AGI threatens phase-out, consider lowering AGI via retirement contributions or charitable giving.
## Conclusion & Action Plan
- Use updated IRS tools—including changes from the “One, Big, Beautiful Bill”—to estimate your withholding. ([irs.gov](https://www.irs.gov/newsroom/news-releases-for-current-month?utm_source=openai))
- Double-check eligibility of all new deductions and tax credits.
- Ensure compliance with Executive Order 14247 by moving toward electronic payment/refund options.
- Stay current: upcoming IRS guidance including final regulations may modify current rules.