U.S. taxpayers with foreign income face unique complexities, primarily due to the risk of double taxation. The two primary relief tools, the foreign earned income exclusion (FEIE) and the foreign tax credit (FTC), serve distinct purposes. Understanding how each operates under IRS guidance and code provisions is critical for practical client advice.

Understanding the mechanisms

Foreign earned income exclusion (FEIE)

The FEIE enables eligible taxpayers to exclude up to $130,000 of foreign-earned income in 2025, as increased by inflation adjustments from $126,500 in 2024. Qualifying requires meeting either the physical presence test (330 full days abroad in a 12-month period) or the bona fide residence test and establishing a foreign tax home. The exclusion applies only to earned income, such as wages or self-employment earnings, not to passive income, such as dividends, interest, capital gains or rental income. Importantly, FEIE does not reduce self-employment tax nor support eligibility for certain credits tied to earned income such as the additional child tax credit or earned income credit and excludes the income from IRA contribution calculations.

Foreign tax credit (FTC)

The FTC offers a nearly dollar-for-dollar offset against U.S. tax liability for foreign income taxes paid or accrued, up to the amount of U.S. tax on that same income. It applies to both earned and passive income and may generate carryback or carryforward opportunities for unused credits. However, the FTC process generally demands more rigorous recordkeeping and use of Form 1116, Foreign Tax Credit (Individual, Estate or Trust), a more complicated form.

Strategic decision-making

When FEIE is preferable

Clients residing in low-tax or tax-free jurisdictions may benefit most from the FEIE.

For example, Sarah, a U.S. citizen and freelance IT consultant, relocates to the United Arab Emirates (UAE) for a two-year contract. The UAE does not levy income tax on individual earnings. Sarah earns $110,000 in 2025 from her contract and is physically present in the UAE for 340 days of the tax year. She therefore qualifies for the physical presence test and files Form 2555, Foreign Earned Income (Form 1040),to report and then exclude her income. Her income is below the 2025 cap of $130,000, so her income of $110,000 is fully excluded from U.S. taxable income.

Note that since she paid no foreign income tax, the foreign tax credit is not applicable.

When FTC offers superior relief

The FTC generally delivers more comprehensive protection against double taxation for taxpayers living in high-tax countries. Since foreign tax rates often exceed U.S. rates, the FTC can diminish U.S. tax liability if the more complex rules are followed.

For example, Mark, a U.S. citizen and executive, lives and works in Germany, a country with high income tax rates. In 2025, he earns wages of $200,000 and pays €65,000 (approximately $70,000) in German income taxes. He is eligible for the foreign tax credit for three important reasons that seem overly simple, but which are important:

1. A tax was imposed on Mark that would have also been imposed in the U.S.
2. Mark paid the tax
3. An actual tax liability is established

Mark’s entire $200,000 is reported as income on his Form 1040, U.S. Individual Income Tax Return. He files Form 1116 and claims a foreign tax credit of $70,000 against his U.S. tax liability of about $46,000. Because his foreign taxes exceed his U.S. liability, he owes no U.S. income tax, and he carries forward the unused $24,000 credit for up to 10 years under §904(c).

Using both, with care

Taxpayers may occasionally leverage both FEIE and FTC within the same year, but never on the same portion of income. A common strategy is to apply FEIE to the first chunk of earned income (up to the exclusion limit), then claim FTC for foreign taxes paid on income above that limit or passive income. Practitioners must carefully allocate income and taxes to avoid IRS scrutiny.

The heavy highway vehicle use tax is uncharted territory for many tax professionals. But suppose you serve clients in transportation, agriculture or construction, or want to do so. In that case, this annual federal excise tax offers a steady, year-round opportunity to add value and expand your services.

Whether your clients are truckers, small fleet owners, farmers or construction companies, understanding Form 2290, Heavy Highway Vehicle Use Tax Return, isn’t just about compliance; it’s about keeping vehicles on the road and creating loyal clients who come back every year.

The basics of heavy highway vehicle use tax

The heavy highway vehicle use tax (HVUT) is an annual federal excise tax on heavy highway motor vehicles with a “taxable gross weight” of 55,000 pounds or more, that operate on public highways. Taxable gross weight includes

• The vehicle’s weight when fully equipped for service, plus
• The weight of any trailers, and
• The maximum load typically carried

If your clients operate these vehicles, even for part of the year, they may owe the tax. And if they don’t owe anything, they might still need to file a Form 2290.

The tax period and filing deadlines

Form 2290 must be filed by the last day of the month following the month of first use (see IRS chart). The current tax period runs from July 1, 2025, to June 30, 2026. Filing deadlines depend on the month the vehicle is first used on a public highway, not its registration date.

For example:

• First use in July 2025: file Form 2290 and pay the tax by Sept. 2, 2025
• First use in October 2025: file and pay by the first day of December 2025

The IRS provides a prorated tax table to determine the amount owed for vehicles placed in service after July.

Mileage limit exception: Vehicles expected to travel 5,000 miles or fewer (7,500 for farm vehicles) must still file a return, but no tax is due unless these mileage limits are exceeded. If it is, the tax must be paid for the entire period.

Filing Form 2290

• Separate filing: Form 2290 is a standalone IRS excise tax return, not part of any income tax return.
• E-filing is generally required if the taxpayer reports 25 or more vehicles in their name.
• Even for fewer vehicles, e-filing is faster. IRS-approved e-file providers can issue an electronically stamped Schedule 1 (proof of payment) within minutes.
• If filing by mail, use the correct IRS mailing address (listed in the Form 2290 instructions).
• The stamped Schedule 1 is returned within about six weeks.

Schedule 1 matters:

• This document is required for state vehicle registration unless the vehicle is exempt.
• For multiple vehicles, all should be reported on the same Schedule 1.

Key compliance points to watch

• First-use deadlines matter. Missing them can delay registration and trigger penalties.
• Proration rules apply for mid-year vehicle additions; don’t let clients overpay.
• Mileage exception filings still require tracking odometer readings; exceeding the limit triggers full payment.
• Recordkeeping is critical. Maintain VINs, weight classifications and proof of payment for at least three years after the tax is due or paid.

Practice-building angle for tax pros

There’s a large, often underserved client base that needs help with Form 2290:

• Independent truckers and owner-operators
• Small trucking companies and fleets
• Farms and agricultural haulers
• Construction and equipment transport businesses

You can build your HVUT service by:

• Bundling it with quarterly estimated tax preparation, payroll services or bookkeeping
• Partnering with local trucking associations, farm bureaus or industry suppliers
• Creating reminders to contact clients before their filing deadline, especially for first-use dates other than July

Pro tip: Offer an “HVUT compliance check” each June to ensure clients are ready for July 1 deadlines.

Client scenarios you’ll see

1. First-time buyer in July

A client buys and starts using a taxable truck on July 10, 2025. Their Form 2290 and payment are due by Sept. 2, 2025. If missed, registration delays and penalties can follow.

2. Seasonal farm use

A farmer operates a 60,000-pound truck only during harvest. They still file Form 2290, mark it as suspended, and pay nothing unless they exceed 7,500 miles. If they do, an amended return and full payment are required.

3. Mid-year fleet expansion

A construction firm adds a new truck in March 2026. The tax is prorated from March through June, with filing due by April 30, 2026.

IRS FAQs every tax pro should know

The IRS offers a “Do I Need to Pay the Heavy Highway Vehicle Use Tax?” tool that walks taxpayers through eligibility questions. Common takeaways:

• Exempt vehicles, like certain government-owned ones, don’t owe the tax but may still require documentation to prove vehicle use.
• Suspended vehicles under the mileage limit still need to be reported.

The IRS FAQs for truckers also clarify that:

• Anything other than weight, mileage or VIN corrections require filing a Form 2290 amendment.
• Sold or destroyed vehicles can qualify for a credit or refund of tax paid.
• Electronic filing errors can often be fixed without starting a new return.

Tips for a smooth filing season

1. Start outreach early. Contact clients before their first-use month ends.
2. Use e-file for speed. The stamped Schedule 1 is often needed immediately for registration.
3. Track suspended vehicles. Set reminders to check mileage before the end of the tax period.
4. Verify vehicle details. Incorrect VINs delay processing and can block registration.
5. Educate clients. Many don’t realize the tax is based on first use, not registration renewal.

The bottom line

For your clients, a timely and accurate Form 2290 filing keeps them on the road and out of trouble. For you, it’s a service that builds trust, loyalty and repeat business.

By knowing the deadlines, filing rules and exceptions, and by using IRS tools like the HVUT eligibility guide and trucker FAQs, you can confidently add this niche to your offerings. With minimal competition and consistent demand, the heavy highway vehicle use tax could be one of your most reliable growth opportunities.

Multi-factor authentication (MFA) sounds technical, but it’s really just adding one more lock to your digital front door. It’s now a legal requirement for tax professionals under the Federal Trade Commission’s (FTC) safeguards rule, and it’s one of the simplest, most effective ways to stop cybercriminals in their tracks.

If you prepare returns, store client documents, or access sensitive data in the cloud, you must have MFA turned on, no matter the size of your business. Skipping it isn’t just risky, it’s against the law.

Think of MFA as the easiest security upgrade you’ll ever make. Most tax software, email services and cloud platforms already have it built in; you just need to flip the switch. The payoff? Both peace of mind and better protection for your clients and practice.

What exactly is MFA?

MFA means you confirm your identity with at least two different types of credentials before logging in. These factors generally fall into three categories:

• Something you know: your password, PIN or the answer to a security question
• Something you have: a code from an authenticator app, a text message or a physical security token
• Something you are: biometric identifiers like a fingerprint or facial scan

Requiring more than one factor makes it much harder for hackers to break in, even if they’ve managed to steal your password. Think of it like having a key and an alarm code; you need both to get inside.

Why MFA matters for tax professionals

The FTC Safeguards Rule makes MFA mandatory for businesses handling sensitive financial data. That includes sole practitioners, small firms and large practices alike. Here’s why it’s more than just a compliance checkbox:

• It’s proven protection. MFA stops many phishing, social engineering and password-cracking attempts.
• It’s cost-effective. Many MFA tools are free or included in your existing services.
• It builds client trust. Clients want to know you’re serious about protecting their personal and financial information.

Tax professionals are prime targets for cybercriminals because of the high-value data they hold. A compromised account can often lead to fraudulent returns, stolen refunds and IRS scrutiny, all of which create headaches no one wants.

How to set up MFA without the tech headaches

You don’t need to be an IT expert to get started. Here’s a simple plan:

1. Identify your accounts. List all systems and applications where client information is stored or accessed, including tax prep software, email, cloud storage and bookkeeping tools.
2. Turn on MFA. Most providers have MFA settings under “Security” or “Account Settings.” Look for step-by-step guides or vendor support pages.
3. Pick your preferred method. Authenticator apps are considered more secure than text messages, but as discussed below, SMS codes, hardware tokens and biometrics are also valid.
4. Roll it out firmwide. Ensure every staff member has MFA enabled for every applicable account.
5. Review annually. Technology changes fast. Set a calendar reminder to check for new MFA options or updated security features from your providers.

Types of MFA and how they work

• Authenticator apps: Generate time-sensitive codes that refresh every 30 seconds. Examples include Microsoft Authenticator and Google Authenticator.
• Hardware tokens: Small devices plug into your computer or display a one-time code.
• Biometric verification: Uses your unique physical characteristics, such as a fingerprint or face scan.
• SMS codes: Text messages with verification codes. While widely used, they’re more vulnerable than other methods, so pair with another security layer when possible.

Keep your MFA strong and up to date

Keen tax preparers must know that cybersecurity isn’t “set it and forget it.” Once MFA is in place:

• Update passwords regularly and use a password manager to keep them unique and strong.
• Train staff to recognize phishing attempts. MFA can’t stop someone from voluntarily giving away their login information.
• Monitor logins for unusual activity and investigate any alerts from your providers.

Build layers of protection

MFA is powerful, but it’s even more effective alongside other safeguards:

• Antivirus software with automatic updates
• Firewalls on all devices and networks
• Encrypted data backups stored securely
• Regular security awareness training
• Incident response plan so you can act fast if something goes wrong

The IRS offers two publications that provide excellent step-by-step security recommendations tailored to tax professionals:

• Publication 4557, Safeguarding Taxpayer Data: A Guide for Your Business
• Publication 5293, Protect Your Clients; Protect Yourself - Data Security Resource Guide for Tax Professionals

Bottom line

MFA isn’t just about checking a compliance box; it’s a simple, high-impact way to protect your business. With most tools already available in your existing software, setting it up can take less than 10 minutes. For such a small investment of time, you get one of the strongest defenses available against today’s cyberthreats.

Stay ahead of threats, stay compliant and give your clients confidence in your services.

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