We’re expecting a huge event at the beginning of this week—one that’s expected to impact more than 150 million people.

Of course, I’m referring to the winter storm. States from Texas through the mid-Atlantic (including my own state of Pennsylvania) and New England are bracing for heavy snow, freezing rain, dangerous ice, and extreme cold. As of this writing, fourteen states and Washington, D.C., have declared states of emergency, and preparations are underway for widespread impacts. That’s top of mind for many of us right now, and here’s hoping the impact is minimal.

But I suspect that many of you are also thinking about tax season, which officially opens on January 26. This year, it looks to be a doozy.

In a recent Tax Notes Talk episode, Philip Hwang, national chair of the Taxpayer Advocacy Panel, said the IRS has shown resilience in adapting to past disruptions, but limited resources could strain customer service, slow amended return processing, and increase confusion as taxpayers try to understand new provisions. Common issues—such as refund delays, difficulty reaching the IRS, and questions about return processing—are expected to persist, particularly as taxpayers respond to headlines promising larger refunds.

Hwang said the biggest challenge this season will be managing expectations. While the One Big Beautiful Bill Act (OBBBA) expanded deductions and credits—including those for overtime and tips—many taxpayers may assume they qualify when they do not, and not everyone will benefit equally. He also warned that staffing reductions in compliance and accounts management could exacerbate delays, especially in fraud resolution and amended returns, even as the IRS transitions away from paper checks to reduce refund fraud. Despite the hurdles, Hwang expressed cautious optimism, emphasizing that better digital tools, clearer communication, and proactive education by tax professionals will be critical to helping taxpayers navigate what is likely to be a noisy and uneven filing season.

Meanwhile, the IRS has been churning out guidance for the season, including details on how the new deduction for qualified overtime compensation works, who can claim it, and how it will be reported. The IRS confirmed that the deduction applies only to the Fair Labor Standards Act (FLSA)-required overtime premium—specifically, the portion of overtime pay that exceeds an employee’s regular rate (the “half” in time-and-a-half). The deduction is capped at $12,500 ($25,000 for joint filers), subject to income phaseouts, and requires a valid Social Security number and (for married taxpayers) joint filing.

Whether you’re eligible for the deduction depends on whether you’re covered by (and not exempt from) the FLSA. That means many salaried and “white-collar” employees—including, sadly, lawyers and accountants—won’t qualify, even if they work long hours.

The IRS also issued a clarification on the one-time $1,776 “Warrior Dividend” payments made to roughly 1.45 million service members in December 2025. Those payments are not taxable and do not need to be included in gross income. Although President Trump referred to them as dividends, the payments were administered through the military pay system as a supplemental Basic Allowance for Housing (funded by congressional housing appropriations), placing them in the same category as other non-taxable military allowances, rather than as wages or bonus pay. That means the payments did not increase taxable wages, were not subject to federal income tax withholding, and will not appear in Box 1 of service members’ Forms W-2.

Speaking of Forms W-2, you’re likely to receive yours soon—if you haven’t already. Employers must furnish Forms W-2 by February 2, 2026, and most common Forms 1099 (including 1099-NEC, 1099-INT, and 1099-DIV) are due by the same date. Some forms arrive later in February, and others—like Form 5498 for IRA contributions—won’t show up until June. This year, Forms W-2 may not capture everything needed to support special deductions for tips or qualified overtime pay, making pay stubs and other records especially important.

If a form doesn’t arrive, start by checking electronic portals and email, then........

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