2026 Tax Changes and Tax Crime Risks for Cross-Border Families

The 2026 tax year is more generous than many taxpayers expected, and less forgiving. The One Big Beautiful Bill Act, signed on July 4, 2025, raised several deductions and loosened some reporting thresholds. Over roughly the same period, IRS Criminal Investigation reported that the tax fraud it identified more than doubled from the prior year. Those two facts belong in the same conversation.

My read, for families and business owners with ties to both China and the United States: the new law lowers the bill for many people, but the expensive problems are rarely about the rate. They come from cash handled casually, foreign accounts, income, or gifts not reported when required, personal data handed to the wrong person, and an honest error left alone until it starts to look deliberate.

On Friday, October 23, 2026, the Chinese American CPA Association, where I serve as Vice President, hosted a two-hour live CPE webinar on exactly these two subjects. The 2026 tax update was presented by Susanne Guo and Yong Li of IRS Communications & Liaison, and the tax crimes session by Melinda Ball and Richard Nadas, Supervisory Special Agents with the IRS Criminal Investigation Los Angeles Field Office. This article is my own practitioner's view, written as a companion to that session. It does not summarize or speak for the IRS presenters.

Part one: the 2026 numbers that actually change a return

The SALT cap is a California story

For a South Bay homeowner whose state income tax and property tax together run well past $10,000, moving the cap to $40,400 is the largest single change in the law. The phase-down is where planning starts.

Above $505,000 of modified AGI, every additional dollar of income removes 30 cents of SALT deduction, until the cap bottoms out at $10,000 at roughly $606,000. For a joint filer in the 35% bracket whose state and property taxes exceed the cap, the effective federal rate on income inside that band is about 45.5%, not 35%, before considering the alternative minimum tax and other limitations. Inside that band the SALT cap behaves less like a deduction and more like a surcharge.

That makes the timing of a property sale, a year-end bonus, or a business distribution worth modeling before December 31, not after. A household sitting at $560,000 that can move $50,000 of income into January has a real decision to make. A household at $900,000 does not; it is already at the floor.

Trump Accounts, and the cross-border catch

The law created a new savings account for children under Internal Revenue Code §530A. The key facts:

• A one-time $1,000 federal pilot contribution is available for a child who is a U.S. citizen, born after December 31, 2024 and before January 1, 2029, with a valid Social Security number.
• The account is opened by an election on Form 4547, either with a filed return or online through the IRS Individual Account. Families who filed a 2025 return without it can still elect.
• Contributions began July 4, 2026. Family and other contributions are capped at $5,000 a year in aggregate. An employer may contribute up to $2,500, which counts inside that $5,000.
• The money is generally locked until the year the child turns 18.

The catch for immigrant families is the citizenship requirement. A child with a green card and a Social Security number can have an account, but does not receive the $1,000. A child born in the U.S. to parents on visas generally does. In a family with one child born abroad and one born here, the two children are treated differently under the same program.

My view is simple. The $1,000 is worth claiming for every eligible child; it costs a form. Putting family money in on top of it is a separate decision that should be compared against a 529 plan or a custodial account, because the lock-up and the tax treatment are different.

One more detail, because it connects to the second half of this article. Initial activation emails come only from no-reply@TrumpAccounts.Treasury.gov, and later emails come from addresses ending in @trumpaccount.com. Treasury and its authorized service providers may also contact families by text message or automated phone call, which is exactly why scammers find this program attractive. Treasury says it will never ask for a password or a one-time verification code. If a message is unfamiliar, do not click its link or share personal information; go to TrumpAccounts.gov directly, or call the official Trump Account call center at 1-866-872-4547.

What changes for business owners

Bonus depreciation is back at 100% and is now permanent for qualifying property acquired after January 19, 2025. For tax years beginning in 2026, the Section 179 expensing limit is $2.56 million, reduced dollar for dollar once qualifying property placed in service during the year exceeds $4.09 million. The 20% qualified business income deduction for pass-through owners no longer has an expiration date.

Domestic research costs are deductible again. New §174A allows immediate expensing of U.S. research and experimental expenditures paid or incurred after December 31, 2024. Research performed outside the United States is not covered and is still amortized over 15 years.

That second point is the one I would raise first with any company that has engineers abroad. For a company whose developers sit in Shenzhen and whose sales entity sits in California, where the work is performed now decides whether the cost is deducted this year or spread across fifteen. Intercompany service agreements written before 2025 deserve a second look.

For U.S. groups that own foreign subsidiaries, 2026 is also the first tax year under the reworked international rules, with GILTI replaced by "net CFC tested income" and the FDII deduction redesigned. Those changes need their own modeling and are outside the scope of this piece.

On the 1099 thresholds, one sentence matters more than the rest: a missing form is not missing income. Fewer 1099s will be issued, and taxable income is exactly what it was. In an examination, the IRS reconstructs income from bank deposits, not from the forms it happened to receive.

The 1% remittance tax

Since January 1, 2026, a 1% federal excise tax applies to remittance transfers sent from the U.S. to recipients abroad when the sender funds the transfer with cash, a money order, a cashier's check, or a similar physical instrument (§4475). The provider collects it at the counter. Transfers funded from a bank account or a U.S.-issued debit or credit card are generally outside the tax.

For families who send money home to parents, the lawful answer is straightforward: fund the transfer from a bank account. What does not work is splitting cash into smaller transfers. The 1% is a percentage of each transfer, so splitting changes nothing about the tax. And breaking up cash transactions to stay under the $10,000 currency reporting line is structuring, a federal crime under 31 U.S.C. §5324 even when every dollar was earned legally. I would rather a client pay the 1% than learn that distinction the hard way.

Part two: scams, impersonation, and your data

The IRS put impersonation scams at the top of its 2026 "Dirty Dozen" list and warned specifically about spoofed caller IDs and AI-generated voices. The defenses are the same as they have always been, and they work because the IRS's own behavior is predictable.

The IRS initiates most contact by regular mail, and someone who owes tax will generally receive a bill and several notices before any call or visit. Payments go to the "United States Treasury," not to a person, a gift card, or a crypto wallet. The IRS cannot revoke a driver's license, a business license, or immigration status. That last sentence matters in our community, because the threat of immigration trouble is the one most likely to frighten a recent arrival into paying a stranger.

In-person contact has also become more predictable. Since July 2023, IRS revenue officers working an unpaid balance generally do not arrive unannounced; they first mail an appointment letter (Letter 725-B) and schedule a meeting, with surprise visits reserved for rare situations such as serving a summons or seizing assets. IRS Criminal Investigation special agents are different and may still visit a home or business without notice. In either case you are entitled to see credentials, and you have the right to be represented. Calling your CPA or a tax attorney before answering substantive questions is not obstruction. It is a right written into the Taxpayer Bill of Rights.

The data side is where the most avoidable risk sits. Passport pages, Social Security cards, and W-2s photographed on a phone and sent through a messaging app are now routine, and every copy sits on at least two devices indefinitely. Tax professionals are required to maintain a written information security plan; it is reasonable for a client to ask how their preparer receives and stores documents. Any taxpayer who can verify their identity can also request an IRS Identity Protection PIN, which helps prevent someone else from filing a fraudulent return under their Social Security number. It is free and takes a few minutes.

Suspicious emails claiming to be from the IRS can be forwarded to phishing@irs.gov. Phone impersonation can be reported to the Treasury Inspector General for Tax Administration.

Part three: where a mistake ends and a crime begins

IRS Criminal Investigation's fiscal year 2025 annual report gives a sense of scale. About 3,000 employees identified $10.59 billion in financial crimes, of which $4.5 billion was tax fraud, up 111.8% from the prior year. Nearly two-thirds of investigative time went to tax crimes. The agency also seized 2.35 petabytes of digital data, close to 60% more than the year before. Records on phones, in cloud accounts, and in chat histories are part of the evidentiary picture now.

Willfulness is the central factor separating most civil tax violations from criminal tax offenses. A mistake, even a large one, is handled with tax, interest, and civil penalties. The criminal statutes require the government to prove a voluntary, intentional violation of a known legal duty, and each statute adds elements of its own; tax evasion, for example, also requires a tax deficiency and an affirmative act of evasion. Tax evasion under §7201 carries up to five years in prison; signing a false return under §7206(1), up to three years; willful failure to file under §7203, up to one year.

A single year can create criminal exposure if the conduct was knowing and intentional. What a repeated pattern adds is evidence: conduct that continues after the taxpayer understood the obligation makes willfulness far easier to prove. The patterns I would put at the top of any small-business owner's list:

• Cash receipts that never reach the books. Restaurants and retail are the classic setting, and bank deposit analysis is designed to find exactly this.
• Payroll taxes withheld from employees and not paid over. That money belongs to the government from the moment it is withheld, and the people responsible for paying it can be held personally liable.
• Foreign accounts and foreign income left unreported after the taxpayer has learned about FBAR or Form 8938.
• Structuring cash, described above, which is a crime on its own regardless of the source of funds.

The repair routes all depend on one thing: coming forward before the IRS comes to you. The single most valuable fact in a voluntary correction is the date.

For individuals whose foreign reporting failures were non-willful, the Streamlined Filing Compliance Procedures remain available. A U.S. resident generally files three years of returns and six years of FBARs and pays a 5% miscellaneous offshore penalty; qualifying nonresidents can pay no offshore penalty. The non-willfulness certification is signed under penalty of perjury and the IRS can examine it, so the facts have to support it.

For a late Form 3520 reporting a gift or inheritance of more than $100,000 from a foreign person, the penalty can reach 5% of the gift per month, up to 25%. Since late 2024 the IRS has stopped assessing that penalty automatically and reviews reasonable-cause statements first. That change makes a well-documented late filing far more practical than it used to be.

Where the conduct was willful, the IRS Criminal Investigation Voluntary Disclosure Practice is the formal path. A disclosure counts as timely only if it reaches the IRS before an examination or investigation has begun, and before the IRS has received information about the taxpayer's noncompliance from a third party such as an informant, another government agency, or a John Doe summons. The IRS proposed updates to the practice in December 2025, so the current terms should be confirmed at the time of filing. That decision should be made with a tax attorney.

Questions worth answering before year-end

My parents in China sent me $200,000 for a down payment. Do I owe tax on it? Not as income. A gift from a foreign individual is not taxable to the U.S. recipient, but gifts from foreign persons totaling more than $100,000 in a year must be reported on Form 3520. The reporting is the obligation, and the penalty for skipping it is calculated on the gift, not on any tax.

Our son has a green card and was born in China. Can he get the $1,000 Trump Account deposit? No. The pilot contribution is limited to U.S. citizen children born from 2025 through 2028. He may still be able to have an account if he has a Social Security number, without the federal $1,000.

Someone called and said there is a warrant for my arrest over unpaid taxes. Hang up. The IRS does not open a collection matter with a threatening call. If you are worried that you owe something, check your IRS online account or call your CPA, using a number you looked up yourself.

I just learned I should have been filing FBARs for years. Am I facing criminal charges? Not automatically. The consequences depend on what the taxpayer knew and intended, and the civil and criminal standards are not the same. For civil FBAR penalties, the IRS treats willful blindness and reckless disregard as forms of willfulness. Criminal exposure is a separate, fact-specific question of whether the violation was knowing and willful. Genuinely not knowing may support a non-willfulness position, but the answer depends on the full record: prior advice from a preparer, how tax organizer questions were answered, the history of the accounts, and what the taxpayer did after learning of the requirement. Speak with a professional before filing anything, because the forms you sign to come into compliance are themselves statements under penalty of perjury.

The rules in effect for 2026 give many taxpayers a smaller bill. The cheapest time to fix a tax problem is still before anyone asks about it.

360 CPA helps families and business owners review year-end tax planning, foreign reporting obligations, and business recordkeeping before a problem becomes more expensive. Schedule a consultation or call 310-997-0995. Where the facts may involve willful conduct or criminal exposure, a taxpayer should consult qualified tax counsel before making any filing.

Official references

• IRS, One, Big, Beautiful Bill provisions: individuals and workers
• IRS Revenue Procedure 2025-32 (2026 inflation adjustments: standard deduction, Section 179)
• IRS, About Form 4547, Trump Account Election(s); TrumpAccounts.gov
• 26 U.S.C. §4475 (remittance transfer tax); IRS Notice 2025-55
• 26 U.S.C. §174A, §168(k), §179, §199A, as amended by Pub. L. 119-21
• IRS, How to know it's really the IRS calling or knocking on your door
• IRS, IRS ends unannounced revenue officer visits to taxpayers (IR-2023-133)
• IRS Criminal Investigation, Fiscal Year 2025 Annual Report (Publication 3583)
• IRS, Criminal Investigation Voluntary Disclosure Practice
• IRS, Streamlined Filing Compliance Procedures
• IRS, About Form 3520
• 26 U.S.C. §7201, §7203, §7206; 31 U.S.C. §5324

This article is general information, not tax or legal advice. It reflects the author's own views and does not represent the IRS or the Chinese American CPA Association. Facts and timing change outcomes; consult a CPA or tax attorney on your specific situation before acting.