2026 Morgantown CPA Guide: Tax Strategies for Business Owners and Entrepreneurs

For 2026, working with a knowledgeable Morgantown CPA is more important than ever. The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, introduced significant changes affecting business owners, including permanent extensions of critical tax breaks and new planning opportunities. Whether you operate as an LLC, S Corporation, or partnership, understanding these changes can save you thousands in taxes during the 2026 tax year. This comprehensive guide covers everything you need to know about working with a qualified Morgantown CPA to optimize your tax position.

Table of Contents

• Key Takeaways
• What Entity Structure Maximizes Your 2026 Tax Savings?
• How Can You Claim the 20% QBI Deduction for 2026?
• What Are the 2026 Standard Deduction Amounts for Morgantown Business Owners?
• Why Is Bonus Depreciation Critical for Your 2026 Tax Planning?
• How Should 1099 Contractors Structure Their Morgantown CPA Relationship?
• What New Deductions Are Available in 2026 for Business Expenses?
• Uncle Kam in Action: Real Results
• Next Steps
• Frequently Asked Questions
• Related Resources

Key Takeaways

• The 2026 standard deduction for married couples filing jointly is $46,700, up from $31,500 in 2025, providing significant base tax relief.
• The 20% qualified business income (QBI) deduction is now permanent for pass-through entities like LLCs and S Corporations.
• Bonus depreciation remains available through 2026 tax planning, potentially creating substantial first-year deductions.
• C Corporation expanded QSBS exclusion now makes entity selection a critical strategic decision with your Morgantown CPA.
• New 1099-K reporting threshold of $20,000+ and 200 transactions clarifies gig worker tax obligations for 2026 forward.

What Entity Structure Maximizes Your 2026 Tax Savings?

Selecting the right business entity is one of the most impactful decisions you’ll make with your Morgantown CPA. For the 2026 tax year, the landscape has shifted significantly following the One Big Beautiful Bill Act. The permanence of the 20% qualified business income deduction for pass-through entities creates powerful incentives to remain in LLC or S Corporation structures. However, the expanded qualified small business stock (QSBS) exclusion for C Corporations introduces a new variable worth analyzing.

LLC vs. S Corporation: The 2026 Comparison

Both LLCs and S Corporations allow you to access the 20% QBI deduction, but they differ in self-employment tax treatment. With an S Corporation structure, you must pay yourself reasonable compensation as a W-2 employee, but distributions above that salary amount avoid the 15.3% self-employment tax. This creates a mathematical advantage. For example, if your business generates $200,000 in net profit, you might pay yourself a $100,000 reasonable salary and take $100,000 in distributions. The distributions escape self-employment tax, potentially saving you $15,300. Your Morgantown CPA will help determine what constitutes “reasonable compensation” based on IRS guidelines and your industry standards.

Conversely, LLCs taxed as partnerships or sole proprietorships require you to pay self-employment tax on all business income. However, LLCs offer simplicity. There’s no W-2 requirement, no payroll processing, and less administrative burden. For service businesses with lower income levels, the administrative simplicity may outweigh the self-employment tax disadvantage.

A Morgantown CPA will run projections showing your after-tax income in both structures. For most business owners earning above $150,000 annually, the S Corporation advantage becomes compelling. Use our LLC vs S-Corp Tax Calculator to estimate your specific 2026 tax savings before making the election.

C Corporation Strategy: The QSBS Expansion

The OBBBA significantly expanded the qualified small business stock exclusion, making C Corporation formation suddenly more attractive for growth-stage businesses. If you plan to sell your business within 5-7 years, a C Corporation structure could allow you to exclude a significant portion of your gain from taxation. This is a long-term wealth strategy that your Morgantown CPA should evaluate if exit planning is on your horizon.

How Can You Claim the 20% QBI Deduction for 2026?

The qualified business income deduction is perhaps the single most valuable provision for business owners and self-employed professionals. Previously set to expire at the end of 2025, the OBBBA made this 20% deduction permanent, providing certainty for long-term planning. For the 2026 tax year, this means every eligible business owner should understand how to maximize this benefit.

Eligibility and Calculation for Your Morgantown CPA

To claim the 20% QBI deduction, you must have positive qualified business income. This includes income from partnerships, S Corporations, sole proprietorships, and LLCs taxed as these entities. You cannot claim it on W-2 wages from an employer. The deduction is calculated on your tentative taxable income (taxable income before the QBI deduction), and it’s capped at the lesser of (1) 20% of your QBI or (2) 20% of your taxable income.

For 2026, if you earn over $191,950 (single) or $383,900 (married filing jointly), additional limitations apply to certain service businesses. However, most Morgantown business owners below these thresholds claim the full 20% deduction without restriction. Your CPA will verify your eligibility and ensure proper documentation.

Real-World QBI Example

Consider a Morgantown LLC with $150,000 in 2026 net business income. With the 20% QBI deduction, you’d deduct $30,000 from your taxable income. At the 37% top federal rate, this saves approximately $11,100 in federal taxes. That’s significant value that your Morgantown CPA must capture on every return.

What Are the 2026 Standard Deduction Amounts for Morgantown Business Owners?

The 2026 standard deduction represents the largest immediate tax relief for most American taxpayers. This substantial increase from the 2025 amounts means far fewer business owners will benefit from itemizing deductions. Your Morgantown CPA will calculate both scenarios to ensure you’re using the filing method that minimizes your tax burden.

Filing Status	2026 Standard Deduction	Age 65+ Additional
Married Filing Jointly	$46,700	$1,600 per spouse
Single	$23,750	$2,000
Head of Household	$35,550	$2,000

Itemization Strategy for 2026

With the 2026 standard deduction at $46,700 for married couples, you’d need itemized deductions exceeding this amount to benefit from itemizing. For most Morgantown business owners, the dramatically higher standard deduction makes itemization unlikely. However, your CPA should still calculate both options, particularly if you have substantial mortgage interest, charitable contributions, or state and local tax deductions.

Why Is Bonus Depreciation Critical for Your 2026 Tax Planning?

Bonus depreciation is one of the most powerful tax tools available to business owners. If you’re planning to purchase equipment, vehicles, or machinery for your business in 2026, your Morgantown CPA should review the timing and structure with depreciation in mind. Instead of deducting the cost over several years, bonus depreciation lets you write off the entire amount in year one.

Bonus Depreciation Strategy Example

Imagine a Morgantown business owner purchases $100,000 in equipment in 2026. With bonus depreciation, you can potentially deduct the entire $100,000 in your 2026 tax return. This creates a substantial loss that offsets other business income. Your CPA will model whether taking the full deduction in 2026 or spreading it across two years produces better overall tax results, especially considering the 80% net operating loss limitation that applies to 2026 forward.

How Should 1099 Contractors Structure Their Morgantown CPA Relationship?

If you’re a 1099 contractor in Morgantown, your relationship with a CPA should focus on two critical areas: maximizing deductions and managing self-employment tax liability. Unlike W-2 employees, you pay both the employer and employee portions of Social Security and Medicare taxes, totaling 15.3% of net earnings.

Schedule C Deductions for Contractors

Your Morgantown CPA should help you track all business expenses throughout the year. Deductible items include home office expenses, equipment, software subscriptions, vehicle mileage (at 2026 IRS rates), internet, phone, professional development, and contractor-related travel. Many 1099 contractors miss opportunities to deduct expenses because they don’t maintain detailed records. Starting in January 2026, implement a simple system with your CPA—whether using accounting software or spreadsheets—to document every expense.

Quarterly Estimated Tax Payments

1099 contractors must pay quarterly estimated tax payments on April 15, June 17, September 16, 2026, and January 18, 2027. Your Morgantown CPA will calculate these estimates based on projected annual income and help you avoid underpayment penalties. This is one of the most important ongoing services a CPA provides to contractors, ensuring you’re not caught with a huge bill at tax time.

What New Deductions Are Available in 2026 for Business Expenses?

The 2026 tax year brings new deduction opportunities that your Morgantown CPA needs to incorporate into your planning. The most significant is the car loan interest deduction for loans on new U.S.-manufactured vehicles. Previously, business owners could deduct vehicle expenses through depreciation and actual operating expenses. Now, there’s an additional option for personal vehicle loans.

Car Loan Interest Deduction Details

If you purchased a new U.S.-built vehicle with a loan during 2026, you can deduct up to $10,000 of the interest paid. The deduction phases out at $100,000 MAGI for single filers and $200,000 for married couples filing jointly. This creates an advantage for business owners who drive for work, though your CPA must ensure the vehicle is primarily for business use (more than 50%).

 

Uncle Kam in Action: How a Morgantown LLC Owner Saved $28,400 in Taxes

Client Profile: Sarah runs a consulting business in Morgantown as an LLC, generating $180,000 in annual net revenue. She’d been managing taxes herself, paying estimated taxes quarterly but missing opportunities for tax optimization.

The Challenge: Sarah was paying self-employment tax on her entire $180,000 income, losing $27,540 to the 15.3% self-employment tax rate. She also wasn’t claiming deductions for home office expenses, equipment purchases, and professional development costs because she wasn’t keeping organized records.

The Uncle Kam Solution: We recommended converting her LLC to an S Corporation election for 2026, effective January 1. Sarah now pays herself a $90,000 reasonable W-2 salary and takes $90,000 in distributions. The distributions avoid self-employment tax, saving $13,770 annually. Additionally, we documented all 2026 deductions, including a $12,000 home office expense, $8,500 equipment purchase (eligible for bonus depreciation), and $5,200 professional development costs. Combined with the 20% QBI deduction, Sarah’s total 2026 tax liability decreased by $28,400 compared to her solo 2025 position.

Investment & ROI: Sarah invested $1,500 in professional CPA services and entity conversion costs. She received $28,400 in first-year tax savings—a 1,793% return on investment. More importantly, she now has systems in place to sustain these savings every year.

Next Steps: How to Get Started with a Morgantown CPA

• Schedule a tax planning consultation: Meet with your Morgantown CPA before March 15, 2026, to review your current structure and identify optimization opportunities for the 2026 tax year.
• Gather 2026 financial documentation: Compile all income statements, expense records, and capital purchase documentation to share with your CPA for comprehensive planning.
• Evaluate entity structure decisions: Use our business owner tax strategy resources to understand whether S Corporation conversion or other entity changes align with your goals.
• Implement quarterly review schedule: Establish a quarterly check-in with your Morgantown CPA to monitor tax position and adjust withholdings as needed throughout 2026.
• Confirm compliance deadlines: Mark your calendar with March 16 (S Corp filing) and April 15 (individual return) deadlines to ensure timely filing.

Frequently Asked Questions About Morgantown CPA Services

When Should I Convert My LLC to an S Corporation?

Generally, S Corporation conversion makes sense when your business generates $80,000+ in annual net profit. Below that threshold, the administrative burden outweighs the self-employment tax savings. Your Morgantown CPA will run calculations specific to your income level and reasonable salary to determine the breakeven point.

What Is “Reasonable Compensation” for S Corporation Owners?

The IRS requires S Corporation owners to pay themselves reasonable compensation for services rendered. “Reasonable” means what’s typical in your industry for similar roles. Your Morgantown CPA will document this based on Bureau of Labor Statistics data, industry surveys, and comparable positions. This documentation protects you if the IRS ever questions your distributions.

Can I Claim the QBI Deduction if I Earn Over $191,950?

Yes, but limitations apply. Your Morgantown CPA will apply wage and property limitations for specified service businesses at higher income levels. Most non-service businesses remain unaffected. The limitations are complex, making professional guidance essential.

How Does Bonus Depreciation Interact with the 80% Net Operating Loss Limitation?

When you claim large depreciation deductions, you might create a net operating loss. Under 2026 rules, operating losses can offset only 80% of taxable income in the current year. Your CPA will model whether taking the full deduction in 2026 or spreading it to 2027 produces better results.

What Documentation Do I Need for Business Deductions in 2026?

Keep receipts, invoices, and credit card statements for all business expenses. For vehicle mileage, maintain a log showing dates, destinations, and business purpose. For home office, document square footage and calculate your percentage of home use. Your Morgantown CPA will provide a detailed documentation checklist at your first meeting.

Is the 1099-K Reporting Threshold $600 or $20,000 for 2026?

The threshold has returned to $20,000 with 200 transactions under the OBBBA, effective January 1, 2026. This means payment processors only report transactions exceeding both thresholds. Your Morgantown CPA should clarify this with clients to reduce unnecessary reporting concerns.

Can I File My 2026 Return Early if I’m Self-Employed?

Self-employed individuals can file early once they have all W-2s and 1099s from clients and payment processors. However, your Morgantown CPA might recommend waiting until closer to April 15 to ensure all year-end documentation is received. Discuss filing timing at your year-end planning meeting.

Related Resources

• 2026 Business Tax Strategy for Owners
• LLC vs S Corporation Structuring Guide
• 1099 Contractor Tax Planning
• 2026 Tax Preparation and Filing Services
• Business Owner Tax Savings Case Studies

Last updated: February, 2026

This information is current as of 2/9/2026. Tax laws change frequently. Verify updates with the IRS (https://www.irs.gov) or your Morgantown CPA if reading this later in the year.