Editor’s Note
August tends to fly under the radar. The spring rush is over, the year end deadlines have not arrived yet, and it would be easy to assume nothing much is happening on the tax front. Behind the scenes, it is one of the busier stretches of my year. This is extension season, and for many of you I am deep in the work of finishing the business and personal returns we placed on extension back in the spring. It is also, and not by coincidence, the best window of the year for the kind of forward planning that actually moves the needle, done now with enough runway to do it right, rather than in a December scramble.
So this issue goes a little deeper than usual. Rather than skim the surface of one idea, I want to hand each of you something you can genuinely use. For those of you with equity, a clear eyed look at what makes incentive stock options worth planning around, and why 2026 raised the stakes. For the business owners, the retirement plan that lets a solo operator shelter far more than most realize, and why the calendar matters. Different situations, same principle: the details are where the money is.
As always, both sides of my practice will find something here. No jargon, no noise, just what you need.
Matt Curtin, CPA
ON THE CALENDAR
Upcoming Dates to Know
September 15: Q3 Estimated Payment and Extended Business Returns.
This is the next estimated tax deadline, and it is also the final due date for any partnership or S-Corp that filed an extension back in March. If your return is one of the ones I am working through right now, you will hear from me. If we have not started gathering your documents, this is the moment to start.
October 15: Extended Individual Return Deadline.
If we put your personal return on extension in April, the clock is now running in earnest. The value of an extension is the time it buys for thoughtful planning. The trap is treating October like it is still summer. It is not.
December 31: Retirement Plan Setup Deadline.
Some of the most valuable retirement plans for business owners, including the solo 401(k) in this issue, have to be established before year end to count for 2026, even if they are funded later. That makes this a fall decision, not a last week of December one.
MARKET MINUTE
What’s Happening and What It Means for You
Markets closed out last week at fresh record highs, capping their strongest week since April. The S&P 500 finished around 7,758, the Dow above 54,000, and the Nasdaq near 26,691. The surprising part is what drove the rally. Friday's July jobs report was weak, showing the economy actually lost about 23,000 jobs against expectations for a gain, with unemployment at 4.1% and labor force participation at its lowest in over five years. Ordinarily soft jobs numbers rattle markets. This time investors read them as the push that finally brings a Federal Reserve rate cut in September, and stocks rose on the news. Underneath the headlines, corporate earnings have held up well, with more than 85% of S&P 500 companies beating expectations for the quarter.
For most of you, the daily moves are noise. What a rate cut and a strong market can do is quietly change the math on a few decisions, from what your idle cash earns to how a future stock sale might be sequenced. None of that calls for action this week. It simply means the second half of the year is a good time to make sure your plan still fits the landscape. The next section is where that gets specific for each of you.
THE PLANNING ANGLE
Your Situation Is Specific
There is no single move that fits everyone this month, and that is the point. Below is the one thing I would most want you thinking about right now, depending on where your income comes from. Read the one that fits, or read both.
FOR EQUITY COMP PROFESSIONALS
What Makes an ISO Worth Planning Around
If you hold incentive stock options at a private company, you hold something genuinely valuable, and something genuinely easy to mishandle. I want to explain why they deserve careful attention. I am not going to tell you what to do with them, because the right answer depends entirely on your own numbers and your own circumstances.
Here is what makes them special. When the timing lines up, the gain on an ISO can be taxed at long term capital gains rates rather than as ordinary income, which is one of the friendlier outcomes anywhere in the tax code. The complication is that this treatment is tied to specific holding periods, and to how an exercise interacts with the Alternative Minimum Tax. Even though exercising an ISO creates no regular taxable income, the difference between your strike price and the value of the shares can count as income for AMT purposes. That is how a person can end up owing tax on shares they have not sold and cannot yet spend, which is a surprise nobody enjoys.
Why I am raising it now is a change that quietly made 2026 a tougher AMT year for higher earners, while still leaving most people untouched. AMT exposure now begins to build for married households once income climbs past about $1,000,000, and for single filers past about $500,000. The reason is the exemption that normally keeps you out of the AMT. It starts to disappear once your income crosses those thresholds, and for 2026 both thresholds dropped, from roughly $1,253,000 to $1,000,000 for joint filers and from about $626,000 to $500,000 for singles, and the exemption now erodes twice as fast once you cross the line. So a married household between about $1,000,000 and $1,280,000, or a single filer between $500,000 and $680,000, can now lose part or all of that protection where a year ago they would have kept it. For anyone in that range exercising incentive stock options, which already count toward the AMT, that lost protection is what can turn a manageable exercise into a larger bill. None of this is a nudge in either direction. It is a reason the timing deserves careful modeling rather than a guess.
None of this is a recommendation to exercise, hold, or sell anything, and the investment side of the decision belongs with your financial advisor. The outcome swings so much on timing and on details specific to you that a rule of thumb is worse than useless here. If you have incentive stock options and any kind of liquidity event on the horizon, even a distant one, this is exactly the sort of thing worth mapping out together, calmly, well before any window opens. That is a conversation I always enjoy.
FOR ENTREPRENEURS
The Solo 401(k) Most Owners Underuse
If you run a business with no employees other than yourself, and perhaps a spouse, there is a retirement plan built for exactly your situation that shelters far more than a SEP or a traditional IRA ever could. I have helped several of you open one in just the last few weeks, so it is very much front of mind for me right now.
What makes it powerful is that a solo 401(k) lets you contribute as both the employee and the employer. As the employee, you can defer up to $24,500 in 2026, with an extra $8,000 if you are 50 or older, or $11,250 if you are between 60 and 63. On top of that, as the employer, your business can add up to 25% of your compensation, which for an S-corp owner means 25% of your W-2 wages. All in, the combined limit reaches $72,000 for the year. Many solo 401(k) plans also offer a Roth option, so you can choose whether that money is sheltered now or set up to grow tax free for later. For a profitable year, that is a meaningful amount of income you can move off this year's bill or into decades of tax advantaged growth.
The reason this is an August conversation rather than a December one is timing. If your business is taxed as an S-Corp, the plan generally needs to be established before December 31 to count for this year, and your employee contributions have to run through payroll between now and then. Waiting until the final weeks of the year leaves almost no room to actually get the money in. Set it up now, and the rest of the year does the work quietly.
If you have had a strong year and no plan in place, this is worth a conversation while every option is still open. It is one of the cleaner wins available to a solo owner, and the window to use it fully is open right now.
QUICK HITS
A Few Other Things Worth Knowing
Massachusetts tax free weekend is here. This weekend, August 8 and 9, most retail purchases under $2,500 are exempt from the state's 6.25% sales tax. If a big personal purchase has been sitting on your list, this is the weekend for it.
Summer is the time to revisit your W-4. If your life changed this year, a marriage or divorce, a new baby, or a big new job or a second household income, the withholding you set last year may no longer match your situation. Left alone, that quietly becomes a surprise bill or an oversized refund next April. There are still plenty of paychecks left in the year to fix it painlessly.
Trump Accounts are open. The new tax advantaged accounts for children went live in July, with a one time $1,000 government contribution for children born between 2025 and 2028 and room for up to $5,000 a year in family contributions. Families can open one at TrumpAccounts.gov. If you have young children, or one on the way, this is worth a look.
FROM MY DESK
Let's Keep the Conversation Going
If anything here hits close to home, hit reply and tell me. The best issues of this newsletter start with a question from one of you, and those come straight to me. If you would rather reach me directly, you can always find me at kindledplanning.com.
Looking forward to being in your corner every month.
Matt Curtin, CPA
P.S. Know someone with equity compensation or a business who would find this useful? Forward it their way, and they can subscribe in a few seconds at brief.kindledplanning.com.