If your income involves more than a single W-2, relying on a once-a-year trip to a tax preparer or DIY tax software is likely insufficient for accurate filing.
Today, more than one-third of Americans earn extra money through side hustles, investment income, real estate or selling stocks or crypto. This complex income demands ongoing tax planning to proactively reduce your tax liability and keep more of what you earn.
The critical mistake for those with complex income is poor recordkeeping, which can lead to trouble with the IRS. Filing inaccurately might also mean missing deductions that could lower your tax bill or lead to a refund.
For example, business owners with pass-through entities who fail to file, assuming they made no money, can face failure-to-file penalties that run into thousands of dollars and continue to accrue, according to Joel Salas at Elevated Tax Strategies and an expert at JustAnswer.com.
"The best [tax] planning isn't trying to find a loophole; it's just making sure your basis records are audit-ready,” said Salas.
In this guide, we break down the 2026 tax filing rules for complex investments -- including capital gains, partnerships, real estate incomes, foreign investments and 1099-K income -- and provide broad strategies to potentially reduce your tax burden.
While it’s always best to speak to a tax professional who can offer guidance tailored to your finances, if you plan to file your own taxes, we recommend either H&R Block or TurboTax, as both offer professional support for complex filing.
Capital gains reporting nuances
If you sell real estate, stocks, cryptocurrency, and even items like jewelry and collectibles at a profit, you’re subject to capital gains tax. There are two types of capital gains tax: short-term and long-term.
Short-term capital gains occur if you earn money on the sale of an investment held for less than one year. The year is counted from the date you buy the asset up to the date you sell it. If you sell an appreciated asset on day 366, it’s taxed at the long-term rate.
... continue reading