Worldwide: Tax

The IRS has finalized its list of occupations eligible for the income tax deduction on qualified tips under the "One Big Beautiful Bill Act," making only minor modifications from its preliminary guidance. Employers must now prepare to report employee occupation codes and cash tip amounts on 2026 Form W-2s, while navigating new rules that distinguish between qualifying and non-qualifying tips based on job duties and payment circumstances.

A Texas-based radiologist who performed all work from his home state faced California income tax assessments on earnings from a California company contract. The California Court of Appeal rejected the Franchise Tax Board's attempt to apply the unitary business principle to a sole proprietor, creating new grounds for non-resident individuals to challenge similar assessments.

Understanding foreign tax credits is essential for taxpayers with international income. This analysis examines the qualification criteria for creditable foreign taxes, the basket system that limits cross-crediting across income categories, and the procedural requirements for claiming these credits on U.S. tax returns.