The 2026 engagement letter is the cheapest insurance the practitioner carries all year. Three clauses cover the ground that has shifted in the last twelve months and that clients will not volunteer to discuss.
1. §199A QBI documentation clause
The client agrees to provide the records the practitioner needs to substantiate the §199A deduction: W-2 wages paid, UBIA of qualified property, and the SSTB determination for any trade or business above the threshold. Without this clause, a §199A claim that fails the W-2 wage test is a practitioner-side exposure on a return the client signed off on.
2. §174 R&E capitalization clause
Specify whether the practice absorbs the §174 R&E capitalization adjustments for clients with research or development spend, and whether those expenses stay on a §1.263A-1 UNICAP method or move to a §174-only treatment. The 2022–2025 transition rules and the 2026 changes are now both in play for any return with multi-year R&E carryforwards.
3. Digital-asset disclosure clause
The client confirms whether they held, sold, exchanged, or received any digital assets during the year and agrees to the §6038 virtual-currency question on the Schedule B of Form 1040. Yes/no ambiguity on the disclosure is the most common IRS-issued summons trigger solo practices see in a four-year cycle.
Closing
All three clauses are one-paragraph additions to the standard letter. Solo practitioners reviewing their own engagement letters against this post can copy the language verbatim — and ship it before the next client signs.