Tax Brief Issue 15: New W-2 Reporting Rules & Estate Relief

01. New 2026 Form W-2 reporting changes

• For wages paid after 2025, the Form W-2 reporting threshold increases from $600 to $2,000 if no federal income, Social Security, or Medicare tax was withheld.
• The 2026 Form W-2 adds Box 14b for Treasury Tipped Occupation Codes and introduces new Box 12 codes for Trump accounts (TA), cash tips (TP), and qualified overtime (TT).

Source: IRS Internal Revenue Bulletin · 2026-08-03

02. Tax-free division of inherited estate IRAs

• Dividing an estate-inherited IRA into separate inherited IRAs for individual beneficiaries via trustee-to-trustee transfer does not trigger a taxable distribution.
• Once an inherited IRA is properly subdivided and retitled, subsequent distributions are reported as income directly to the individual beneficiaries rather than the estate.

Source: IRS Written Determinations · 2026-07-31

03. Late estate portability election relief granted

• The IRS granted 120-day extensions in two separate rulings for estates to file Form 706 and make late portability elections for the deceased spousal unused exclusion (DSUE) amount.
• Relief for a late portability election is permitted because the estate's gross value was below the Section 6018(a) filing threshold, making the election deadline regulatory rather than statutory.

Source: IRS Written Determinations · 2026-07-31