One of the more common tax questions is whether you need to file a federal tax return this year. The answer is: it depends. But not filing a tax return when you should can cost you plenty, especially with the passage of a major piece of tax legislation like the One Big Beautiful Bill Act. Here are some quick tips to help you determine your answer.
Many employees accumulate company stock inside their retirement plans over the course of their careers. When retirement approaches, that stock may qualify for a little-known tax treatment called Net Unrealized Appreciation (NUA).
When handled correctly, NUA can significantly reduce the tax burden associated with distributing company stock from a retirement plan. When handled incorrectly, the opportunity disappears and the entire distribution may become taxable as ordinary income.
Understanding the mechanics of NUA is therefore important before taking any action with employer stock held inside a retirement account.
Net Unrealized Appreciation (NUA) refers to the increase in value of employer stock that occurs while the stock is held inside a qualified retirement plan, such as:
401(k) plans
Profit sharing plans
ESOPs (Employee Stock Ownership Plans)
When certain requirements are met, the appreciation on that stock may eventually be taxed at long-term capital gain rates, rather than being fully taxed as ordinary income.
The tax treatment occurs in stages.
While employer stock is held inside a retirement plan, all growth in the stock accumulates tax-deferred, just like any other retirement asset.
At this point, the stock consists of two components:
Cost Basis – the original value of the stock when it was acquired inside the plan
Net Unrealized Appreciation – the increase in value while the stock remained in the plan
To qualify for NUA treatment, the stock must be distributed from the retirement plan in-kind, meaning the actual shares are transferred out of the plan rather than being sold inside the plan.
At the time of distribution:
The cost basis of the stock is taxed as ordinary income
The NUA portion is not taxed yet
This is the key moment where the tax treatment changes.
Once the shares are distributed from the retirement account, they are typically held in a taxable brokerage account.
At this stage:
The NUA portion continues to grow tax-deferred
No tax is due on the appreciation until the shares are sold
When the stock is eventually sold outside of the retirement plan:
The NUA portion is taxed as long-term capital gain
Any additional appreciation occurring after the distribution is taxed according to normal capital gain rules
This can produce a significantly lower tax rate compared with treating the entire distribution as ordinary income.
A critical requirement for NUA treatment is how the stock leaves the retirement plan.
The shares must be distributed directly from the plan as stock. If the stock is instead sold while still inside the retirement plan, the NUA opportunity is lost.
In that case, the entire distribution generally becomes ordinary income, just like any other retirement withdrawal.
A common situation occurs when a retirement plan is rolled into a rollover IRA after leaving employment.
While rollovers are often appropriate for many retirement assets, employer stock must be handled carefully. If employer stock is rolled into an IRA, the NUA opportunity is typically eliminated.
Once inside an IRA:
The stock is treated like any other IRA asset
Future withdrawals are generally taxed entirely as ordinary income
Because of this, employees with large positions in company stock should review their options carefully before completing a rollover.
Assume an employee has company stock in their 401(k):
Value at retirement: $1,000,000
Cost basis: $100,000
Appreciation (NUA): $900,000
If the stock qualifies for NUA treatment:
$100,000 is taxed as ordinary income when the stock is distributed.
$900,000 is not taxed immediately.
When the shares are sold later, the $900,000 is taxed as long-term capital gain.
If the stock had instead been sold inside the retirement plan or rolled into an IRA first, the entire $1,000,000 would typically be taxed as ordinary income when withdrawn.
Net Unrealized Appreciation can provide a valuable tax benefit for individuals who accumulated company stock inside their retirement plans. However, the rules are very specific, and the opportunity can easily be lost if the stock is sold inside the plan or rolled into an IRA before the distribution is structured correctly.
Before taking action with employer stock inside a retirement account, it is often wise to review the available options with a tax professional who can evaluate the sequence of transactions and determine whether NUA treatment may apply.
The information above is intended for general educational purposes and does not constitute tax or legal advice. Individual circumstances can vary significantly, and professional guidance should be obtained before making decisions involving retirement plan distributions.
If you’ve gotten used to reporting gambling winnings and then “washing them out” with gambling losses on your tax return, 2026 is where that muscle memory can betray you. A federal law change effective for tax years beginning after December 31, 2025 rewrote the wagering-loss rule in IRC §165(d) so the deductible amount is now generally 90% of your wagering losses, and it’s still capped at your wagering gains (winnings). Translation: even a break-even gambling year can create taxable “phantom income” that you’re not accustomed to seeing.
The IRS doesn’t care how exciting your rodeo belt buckle is… they care whether you’re engaged in the activity with the actual intent to make a profit.
If it’s a business, losses are deductible.
If it’s a hobby, deductions are limited and can’t create a net loss against other income.
Every year taxpayers are hit with tax surprises that could be avoided if they just knew the rules.
Here are five big ones that are easy to avoid with some simple planning.
For some reason, some believe it's better to receive than to give when it comes to filing taxes.
While that may help your savings account, it's not always a great idea. Here's why:
Most income you receive is taxable income that is reported to the federal and state tax authorities. However, renting out your home or vacation property on a short-term basis can be done tax-free if you follow the rules.
Some issues fly under the radar until they trigger an unexpected tax return notice, penalty, or tax bill. What may seem like routine financial activity can quickly turn into a costly mistake if it’s reported incorrectly.
Below are seven commonly misunderstood tax situations that deserve careful attention before filing.
The tax term head of household is one of the more misunderstood tax phrases inside the U.S. tax code.
However, if your situation warrants head of household status, there are two big tax benefits:
First, a higher standard deduction.
Second, lower effective tax rates for virtually every income level.
This is great, but only if you qualify.
The recently passed One Big Beautiful Bill Act (OBBBA) addresses some tax law uncertainty while creating several benefits impacting your 2025 tax return. One of these benefits is a new $6,000 deduction for seniors. Here is what you need to know.
The IRS is penalizing late filers of S corporation and partnership tax returns. This despite the fact that late filing of the tax returns (Forms 1120S and 1065), due March 15th, often does not impact the receipt of the taxes due on April 15th. Those that are getting this penalty are often couples and other small firms who have formed these business entities to provide legal protection for their shareholders.
With the passage of the One Big Beautiful Bill Act (OBBBA) of 2025, there's the ability to receive a deduction for overtime pay from your federal tax obligation. Here's a recap of the rule and several tax tips to ensure you receive the full benefit of the deduction.
Before you file away your tax return and all its related records, now is the time to make a final review of the material. This can be in either paper or digital form as long as you know where it is, it's securely stored, and you feel it will meet the requirements of substantiation. Here are some tips:
It's one thing to be taxed on retirement contributions and their related earnings when you withdraw funds from your IRA or 401(k) during retirement. It's quite another when you pay the tax PLUS a 10% penalty for an early withdrawal. Need funds prior to retirement and want to avoid the early withdrawal penalty? Here is what you need to know.
If you have problems getting to sleep at night and you turn to the IRS tax code for help, you might find some vocabulary that is very foreign to words you use every day. One of the more common words used by the IRS is the term contemporaneous. So what does it mean and why should you care?
In March 2025, a presidential executive order directed federal agencies to move federal payments and collections away from paper and into electronic systems “to the extent permitted by law.” That includes IRS refunds and, eventually, payments to the IRS as well.
Following that order, the IRS announced that it would begin phasing out paper refund checks for individual taxpayers starting September 30, 2025.
For the 2026 filing season and beyond, taxpayers should assume that refunds will normally be paid electronically, with paper checks reserved for a shrinking set of exceptions.
OBBBA adds a temporary, targeted deduction for tips. It is not a universal no tax on tips. Many tipped amounts are still taxable, and payroll taxes still apply.
Here is the clean, CFO-level breakdown:
For years, crypto tax reporting has lived in a strange world where taxpayers were expected to self-report everything while the IRS had limited third-party visibility. That era is ending.
Starting with 2025 transactions, custodial crypto platforms must begin reporting certain digital asset sales and exchanges on a new IRS information return: Form 1099-DA (Digital Asset Proceeds From Broker Transactions).
That means more taxpayers will receive crypto tax forms that look and feel a lot like the brokerage forms we have dealt with for decades.
Convenient? Eventually.
Pain-free? Do not get carried away.
Big news for 2026: Updated mileage rates are here! The way you record your travel could earn you extra cash in your pocket.
