Rarely does a week go by that I don’t receive a call or email from a scammer or someone who has been scammed. I’m guessing you may have a similar story—we likely all know someone who has been a target. You may even know someone who has been a victim. More than one in three U.S. adults (34%) have experienced financial fraud or a scam, and nearly two in five (37%) of those who did lost money.
That’s because scammers are becoming increasingly effective, sometimes aided by technology. And while it may be tempting to think that you could spot a scam as amateurish, it’s more likely to be from professional fraudsters and identity thieves, often located offshore.
(I occasionally post screenshots of scams that I receive on Facebook and Instagram, if you’re interested in what they may look like.)
When it comes to scam victims, there’s no one-size-fits-all. They can be any age and live almost anywhere. They can be blue-collar workers or executives. They can even be tax professionals.
The scammers might build a relationship with a target through social media, like this woman who told me last year that she needed help settling a foreign estate for a friend.
Or scammers might use phishing tactics to gain access to your computer, which is what happened to my dad.
But most likely, they’ll start with a phone call, like what happened to Larry and Barb Cook.
I talked to Larry about what happened and how it impacted his family. It was devastating. And not just because of the lost money (it took Larry and his wife a lifetime to save over a million dollars, and only took them about six months to lose it all in a scam). But the consequences of losing your money to a scam can go well beyond an empty bank account. In Larry’s case, it resulted in a surprise tax bill and a confusing Medicare cost increase.
He’s not alone. After the Tax Cuts and Jobs Act (TCJA) of 2017 changed the rules for personal casualty and theft losses, taxpayers who suffered financial losses due to a scam didn’t qualify for a deduction. In 2025, the IRS Office of Chief Counsel released a memo clarifying the deductibility of theft losses for scam victims. The memo stressed that the theft loss deduction remains available to businesses and individuals who incur losses on transactions entered into for profit. However, in some instances, relief applies when a scammer misled taxpayers into transferring money under the false belief that they were protecting their own money (which the IRS considers a profit motive).
I hope you’ll take a moment to read Larry’s story. He chose to share it because he hoped it would make a difference and maybe help someone else avoid the same fate. I hope so, too.
And speaking of making a difference, as the 2026 tax season approaches, the IRS is urging taxpayers to take a few simple steps now to make next year’s filing process smoother, faster, and less stressful. The agency has launched the first in a series of special “Get Ready” reminders designed to help individuals prepare well before it’s time to file. The overall message is straightforward: a little preparation now—gathering documents, organizing financial information, and staying up to date on new laws—can make a big difference when it’s time to submit your tax return.
This year, early preparation is especially important given the significant changes to your tax picture under the One Big Beautiful Bill Act (OBBBA). OBBBA contains several high-impact provisions that taxpayers will need to understand before filing, including new rules like “no tax on tips,” “no tax on overtime,” “no tax on Social Security,” and “no tax on car loan interest.” Importantly, these aren’t exemptions—they are temporary tax deductions, and a number of rules and exceptions apply.
Since OBBBA became law, the IRS has been issuing guidance and expects to release even more information about the new law as tax season approaches. (Don’t worry—we’ll keep you up to date!)
One more thing: you’ll definitely want to take a quick paws to click through this absolutely fur-real story about a lawsuit that was filed to recognize pets as dependents. (I won’t apologize for the bad puns, I couldn’t help myself.)
Kelly Phillips Erb (Senior Writer, Tax)
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Questions
This week, a reader asks:
I am 62 and on Social Security. That is my only income. I get health insurance through healthcare.gov. Since my income is low, I receive a premium tax credit. My son, who is 22, lives with me and works part-time. He gets his health insurance through his school. I read where if I claim him as a dependent on my tax return this year that I have to include his income as it relates to income reporting for healthcare.gov even if he is not getting his health insurance through there. I don’t want to include his income, so can I choose not to claim him as a dependent on my tax return so that I don’t have to include his income for tax credit purposes?
Yes. You can choose not to claim your 22-year-old son as a dependent. If you do that, his income need not be included in your HealthCare.gov (Marketplace) household income for premium tax credit purposes.
Your Marketplace household income includes you and anyone you claim as a dependent on your federal tax return. If you claim your son as a dependent, then his income must be included even if he is not enrolled in Marketplace coverage. If you do not claim him, he is not part of your tax household, and his income is not included in the calculation of your premium tax credit. (When you reconcile the premium tax credit on Form 8962, it must match what you told the Marketplace.)
Even if your son could qualify as your dependent, you are not required to claim him. The law makes clear, under section 151, that the choice “shall be allowed,” not that it is required.
However, whether or not someone qualifies as a dependent isn’t a choice. If you choose not to claim someone who qualifies as your dependent on your return, they won’t be able to claim themselves on their own return, even if you don’t.
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Statistics, Charts, and Graphs
Since the charitable deduction was created in 1917, taxpayers have had to itemize their deductions to claim it (and that’s still the case for the 2025 tax year—you’ll use Schedule A). That means that taxpayers who did not itemize—about seven in ten taxpayers in the 2016 tax year—didn’t get a tax break. When the tax laws changed in 2017, boosting the standard deduction, the number of taxpayers who itemized dropped even further. Now, fewer than one in ten taxpayers itemize their deductions.
As the standard deduction goes up, the number of households itemizing their returns goes down—that impacts charitable giving.
The Tax Policy Center estimates that the law cut the share of households itemizing their charitable contributions by more than half, from 21% to about 9%. The share of middle-income households claiming the charitable deduction dropped by two-thirds, from roughly 17% to just 5.5%.
The standard deduction got another boost in 2025, thanks to the One Big Beautiful Bill Act (OBBBA). In 2025, the standard deduction was retroactively increased to $15,750 for single taxpayers and married individuals filing separately, $31,500 for married couples filing jointly, and $23,625 for heads of household. (In 2026, the standard deduction will increase to $16,100 for individuals and married couples filing separately, to $32,200 for married couples filing jointly, and to $24,150 for heads of household.)
Now Congress has an answer for charitable organizations that are worried the increase might lead to another drop in charitable gifts: a new deduction for taxpayers who do not itemize.
Beginning in 2026, taxpayers who claim the standard deduction can claim a deduction for charitable giving of up to $1,000 for single filers and up to $2,000 for married couples filing jointly. Donations must be cash contributions to qualified public charities—this means no gifts to donor-advised funds or private foundations (you can read more on private foundations here).
Other changes include caps on deduction benefits for high-income donors and charitable giving floors for taxpayers who itemize and for corporations. (A floor means that you have to donate a certain % of income before you can take advantage of the deduction—it’s the same idea as your medical expenses deductions.)
The bottom line? Charitable giving will look different for many donors in 2026.
Wondering where you should put your dollars? Check out Forbes’ 2025 list of America’s Top 100 Charities. Our ranking, now in its 27th year, is designed foremost as a tool for individual donors and is based entirely on private contributions in each charity’s last reported fiscal year.
A Deeper Dive
The IRS has issued guidance on Health Savings Accounts, answering questions about telehealth services, bronze and catastrophic plans under the ACA, and direct primary care arrangements.
HSAs were established by Congress in 2003. HSAs officially became available starting January 1, 2004.
It’s no coincidence that the 2003 law also established high-deductible health plans, or HDHPs, since the two were meant to work together. The idea was to allow insurance plans that cover major expenses to be paid with lower premiums—you could use your HSA to cover out-of-pocket costs with tax-advantaged savings.
Here’s how it works. You can make pre-tax contributions to your HSA out of your paycheck. Your employer may also kick in funds. Employer contributions are not considered income for tax purposes, so not only is it free money, it’s tax-free.It gets better. Funds in an HSA grow federal income tax-free. And when you take them out? Distributions for qualified medical expenses (including dental and vision expenses) are not taxable for federal income tax purposes.
And unlike a Flexible Spending Account (FSA) that requires you to spend your funds each year or lose them, you can roll over your HSA contributions from year to year and continue to save. Plus, an HSA is portable, meaning you can keep it if you change employers, retire, or otherwise leave the workforce.
You and your employer can make contributions to your HSA in the same year. If family members or other folks want to make contributions on your behalf, that’s okay, too, subject to contribution limits.
The more money that you can put away, the money you can save, subject to IRS limits. In 2025, the annual contribution limit for an individual with self-only coverage under an HDHP is $4,300 ($8,550 for a family), while at age 55, individuals can contribute an additional $1,000. In 2026, the individual limit will be $4,400 ($8,750 for a family), and at age 55, individuals can contribute an additional $1,000.
Tax Filings And Deadlines
📅 December 31, 2025. Deadline for required minimum distributions (RMD) for most individuals subject to RMDs. (If you turned 73 in 2024, you should have taken your first RMD (for 2024) by April 1, 2025, and you also need to take your 2025 RMD by the end of the year.)
📅 January 15, 2026. Fourth quarter 2025 estimated tax payment due for individuals.
📅 January 31, 2026. Deadline for employers to provide employees with wage statements (like W-2s), and for certain information returns to be issued.
Tax Conferences And Events
📅 December 29, 2025 at 11:00 a.m. Eastern Time. Public meeting of the Community Development Advisory Board at the Community Development Financial Institutions Fund (CDFI). This meeting will be conducted virtually.
📅 January 5, 2026. National Society of Tax Professionals 2026 Las Vegas Grand Event. The Orleans Hotel and Casino, Las Vegas, NV. Registration required.
📅 January 15-17, 2026. American Bar Association Section of Tax 2026 Midyear Tax Meeting, Marriott Marquis San Diego Marina, San Diego, CA. Registration required.
Do you have a tax conference or event that you think our readers would be interested in? Let me know.
Trivia
While pets may not be treated as dependents, they can be beneficiaries—in most states, that requires a trust since pets are considered property. Which controversial figure left $12 million for the care of their Maltese Terrier, Trouble?
(A) Leona Helmsley
(B) Robert Maxwell
(C) Ivana Trump
(D) Gianni Versace
Find the answer at the bottom of this newsletter.
Positions And Guidance
The American Institute of CPAs (AICPA) submitted a letter to the IRS with recommendations to simplify the tax reporting requirements for partnerships and S corporations (collectively, passthrough entities, or PTEs). The suggestions include recommendations to help alleviate time compression constraints currently impacting the ability of tax practitioners to prepare complete and accurate returns for PTEs, specifically those with tiered structures.
The Tax Law Center issued a statement that Treasury should not issue guidance allowing retroactive Research and Experimentation (R&E) expensing for corporate alternative minimum tax (“CAMT”) purposes since that would violate the purposes of the statute and would be nothing more than yet another tax cut to large corporations that Congress elected not to provide in the One Big Beautiful Bill Act (OBBBA). Earlier this year, Treasury and the IRS published Notice 2025-28, which the Tax Law Center says adds significant complexity and ambiguity to the CAMT regime, undermining key statutory purposes and increasing deficits.
The IRS issued Revenue Procedure 2026-6 allowing States, including the District of Columbia, to make an Advance Election to participate in a new tax credit for calendar year 2027. This new credit, established under OBBBA is for contributions to Scholarship Granting Organizations that serve elementary and secondary school students from low- and middle-income families.
Noteworthy
The IRS and the Urban-Brookings Tax Policy Center are inviting proposals for papers for the 16th Annual Tax Administration Research Conference, to be held June 25, 2026, at the Urban Institute in Washington, DC. Organizers are looking for work on compliance, taxpayer burden and complexity, service and enforcement strategies, and how changes in law, regulation, or third-party reporting shape administration. Proposals are welcome from government and non-government researchers from the U.S. and abroad, and are due by COB Wednesday, January 7, 2026.
Centri Business Consulting LLC welcomes Rich Petillo as Partner and Tax Advisory Practice Leader to the firm. His appointment highlights Centri’s strategic focus on growing its tax advisory capabilities and ensuring clients receive guidance in navigating complex compliance and reporting requirements.
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In Case You Missed It
Here’s what readers clicked through most often in the last newsletter:
You can find the entire newsletter here.
Trivia Answer
The answer is (A) Leona Helmsley.
In 2007, famous New Yorker Leona Helmsley left $12 million ($23,090,050 in today’s dollars), the bulk of her estate, for Trouble’s care. However, a judge later ruled that $12 million exceeded the funds actually needed to care for Trouble, whose “inheritance” was reduced to $2 million. Trouble died in 2011.
(Helmsley’s will also stipulated that Trouble would have a spot in the 12,000-square-foot Helmsley family mausoleum in Sleepy Hollow Cemetery in Westchester County, N.Y.)
Helmsley, nicknamed the “Queen of Mean,” served 18 months in federal prison after being convicted of tax evasion in 1989 (she was indicted by then-U.S. Attorney Rudy Giuliani). At trial, an employee reported that Helmsley famously declared, “Only the little people pay taxes,” further cementing her reputation as one of the most hated women in America.
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