The Internal Revenue Service has issued News Release IR-2026-02, formally announcing the commencement of the 2026 filing season. For tax practitioners, this season presents significant compliance changes resulting from the "One, Big, Beautiful Bill." Key developments include the introduction of Schedule 1-A to handle new exclusions for tips and overtime, the deployment of Form 1099-DA for digital assets, and a mandatory shift toward electronic funds transfer for refunds.

Filing Season Timeline and Volume

The Service has established Monday, January 26, 2026, as the official opening of the filing season. The filing deadline adheres to the statutory date of Wednesday, April 15, 2026, for filing 2025 returns and remitting taxes due. The Service projects a volume of "about 164 million individual income tax returns this year, with most taxpayers filing electronically".

Regarding early processing capabilities, the "IRS Free File program will begin accepting individual tax returns starting Friday, Jan. 9 for qualified taxpayers," while the "Fillable Forms" utility opens alongside the general season on January 26.

Legislative Implementation: The "One, Big, Beautiful Bill"

Practitioners must prepare for immediate implementation of provisions from the "One, Big, Beautiful Bill," which Acting IRS Commissioner Scott Bessent notes "delivered working families tax cuts". The release emphasizes that "several new tax law provisions... become effective, which could impact federal taxes, credits and deductions".

1. New Schedule 1-A: Targeted Exclusions and Deductions

The most substantial compliance adjustment for the 2025 tax year is the introduction of Schedule 1-A. This form is designated for claiming specific statutory deductions and exclusions. The release explicitly states:

"Taxpayers will use the new Schedule 1-A to claim recently enacted tax deductions, such as no tax on tips, no tax on overtime, no tax on car loan interest and/or the enhanced deduction for seniors".

Practitioners should segregate these income streams in their workpapers to ensure accurate populating of Schedule 1-A.

2. "Trump Accounts" (Child IRAs)

The legislation creates a new vehicle for tax-advantaged savings. Defined as "Trump Accounts," these allow "Parents, guardians and other authorized individuals [to] establish a new type of individual retirement account for their children". While specific contribution limits are not detailed in the release, professionals should direct clients to "trumpaccounts.gov" for technical specifications regarding establishment and funding.

Information Reporting: Digital Assets and Third-Party Networks

The 2026 season continues the Service’s focus on information reporting compliance.

Form 1099-DA (Digital Assets): Practitioners must be vigilant regarding the new Form 1099-DA. The release clarifies that this form "is used to report digital asset proceeds from broker transactions".
Form 1099-K: The Service reiterates that this form covers "payments received from credit cards, payments apps and online marketplaces".

Crucially, the Service reminds practitioners that statutory income reporting requirements exist independent of form receipt: "Taxpayers must report all taxable income on their federal tax returns, even if they don’t receive either form".

Procedural Changes: Refund Disbursements

A significant procedural shift is occurring regarding refund issuance. Relying on the executive order Modernizing Payments To and From America’s Bank Account, the Service is moving to eliminate paper checks. The release states the IRS "is phasing out paper tax refund checks due to the executive order" and "strongly encourages taxpayers to establish a bank account to receive their tax refunds via direct deposit". Client expectations regarding paper checks should be managed accordingly.

IRS Operational Readiness and Leadership Commentary

IRS leadership has emphasized the modernization of information systems to accommodate these legislative changes. IRS Chief Executive Officer Frank Bisignano affirmed the technical readiness of the agency:

"IRS information systems have been updated to incorporate the new tax laws and are ready to efficiently and effectively process taxpayer returns during the filing season".

Similarly, Acting Commissioner Bessent noted the agency’s preparatory posture:

"Prior to the passage of the One, Big, Beautiful Bill... Treasury and IRS were diligently preparing to update forms and processes for the benefit of hardworking Americans, and I am confident in our ability to deliver results".

Conclusion

As we approach the January 26 start date, CPAs and EAs must integrate Schedule 1-A data collection into their client organizers and prepare for the reconciliation of Form 1099-DA against digital asset trading logs.

Although the IRS may start accepting electronically filed returns on January 26, the News Release does not specify whether all necessary forms will be ready for processing by that date. Based on past experience, particularly in years following significant tax legislation, it is highly probable that several forms will not be available for initial filing on January 26.

Prepared with assistance from NotebookLM.