Key Takeaways
- Over 20 percent of filers have claimed the overtime deduction.
- Senior deduction inspires scammers.
- IRS "looks on the bright side."
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A new reconciliation plan—and how it could go wrong.
- 100% tariffs on medicines.
- Disclaimers and inherited retirement accounts.
- National Caramel Popcorn Day.
Workers Are Claiming ‘No Tax on Overtime’—Maybe a Bit Too Much - Richard Rubin and Ashlea Ebeling, Wall Street Journal:
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There are several possible explanations. The estimates could have been wrong because people were already working more overtime than suggested by the spotty official data. They also might have changed their behavior by taking on extra shifts or juggling schedules to rely more on tax-advantaged overtime pay.
But a big reason, tax preparers and analysts say, is that taxpayers might be claiming deductions beyond what the law allows, both intentionally and accidentally. Many workers don’t have clear information from their employers this year about whether they received overtime pay that technically qualifies for the new deduction.
‘I Got Back Every Penny’: Inside Trump’s Supercharged Tax Season - Andrew Duehren, New York Times:
That is because they depend on whether someone works for tips or overtime — or qualifies for one of the other new tax cuts, like an additional deduction for people 65 and older. And even for those who can claim one of the new tax cuts, the savings will reflect how much money they make. Someone who does not owe much in taxes gains little from a tax cut.
Tax Time Brings Surprises for Some Who Receive ACA Subsidies - Julie Appleby and Andrew Jones, KFF Health News:
And that can lead to surprises. Some may find they get money back if their income was less than they estimated. But, if their income went above their initial or updated estimates, they probably qualify for less in assistance and will have to pay money back.
IRS Warns Of New Tax Scams Linked To The One Big Beautiful Bill Act - Kelly Phillips Erb, Forbes:
Despite the messaging, the OBBBA does not eliminate tax on Social Security benefits. Instead, it provides a temporary deduction of up to $6,000 per qualifying taxpayer age 65 or older (up to $12,000 for married couples), available from 2025 through 2028 and subject to income phaseouts. The deduction reduces taxable income but does not change whether Social Security benefits themselves are taxable under existing law. Importantly, the law is age-based, not benefit-based (whether you receive Social Security benefits does not impact the deduction).
Scammers are telling a different story. They may contact seniors by phone, email, text, or mail, claiming that immediate action is required to “enroll,” verify eligibility, or qualify for a deduction. Some ask for fees or personal information, including Social Security numbers or bank details. None of that is required.
Meanwhile at IRS
“With less than two weeks left in the filing season, the IRS continues to provide historically outstanding service to taxpayers,” said IRS Chief Executive Officer Frank J. Bisignano. “Tens of millions of Americans are getting their refunds direct deposited in their bank accounts and their returns processed promptly without error or delay.”
If everything on the return is accurate, especially tax payment and banking information, the season is going fine. Any errors can mean months of delay.
IRS Looks on the Bright Side Even Amid Filing Season Snags - Benjamin Valdez, Tax Notes ($):
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While most returns appear to be going through without an issue, some taxpayers are seeing their returns automatically rejected over small discrepancies, said Tom O’Saben, an enrolled agent and director of government relations for the National Association of Tax Professionals.
According to O’Saben, most automatic rejections happen when a taxpayer forgets to provide their identity protection PIN — a number the IRS requires to prevent more than one return from being filed with the same Social Security number — and it often affects newly married taxpayers and dependents who file their own returns.
White House Proposes 12.5 Percent Cut to IRS Funding - Cady Stanton, Tax Notes ($):
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A separate fact sheet from the OMB released April 3 on ending weaponization of the federal government adds that “the Budget proposes to use spending reform to disempower the targeted harassment of conservatives and disfavored groups by the IRS.”
Brandon DeBot of the Tax Law Center at New York University School of Law called the administration’s claims of prioritizing taxpayer privacy hypocritical, citing the IRS’s recent sharing of confidential taxpayer information with U.S. Immigration and Customs Enforcement in an exchange that may have conflicted with legal safeguards.
There is a Legislative Branch
Capitol Hill Recap: The Plan for Reconciliation - Alex Parker, Eide Bailly:
Senate Majority Leader John Thune said the reconciliation package would be kept “as narrow as possible,” to ensure passage by the June 1 deadline set by President Trump.
That’s the plan—but as the phrase goes, man plans, God laughs.
It makes sense that the leadership would want to keep the package as small as possible, especially when they’re hoping to fund ICE and CBP for three years. Adding anything more could complicate matters and make passage trickier, given the Republicans’ slim majority.
But the low margin for error could also be a reason why keeping it narrow will be difficult. Individual lawmakers will have strong leverage to push for their own items, whether they’re related to tax or other issues. (Under the reconciliation rules, only items that affect revenue and meet other requirements can be included.)
How reconciliation could go wrong - Laura Weiss, Punchbowl News:
New Week, New Tariffs
Trump unveils 100% tariff on some patented drugs on ‘Liberation Day’ anniversary - Wyatte Grantham-Philips, Associated Press:
Companies that have signed a “most favored nation” pricing deal and are actively building facilities in the U.S. to onshore production of patented pharmaceuticals and their ingredients will have a 0% tariff. For those that don’t have a pricing deal but are building such projects in the U.S., a 20% tariff will apply but will increase to 100% in four years.
A senior administration official told reporters on a press call that companies still have months to negotiate before the 100% tariffs kick in — 120 days for bigger companies, and 180 days for everyone else.
So, government by special arrangement. What could go wrong?
US Tariffs Hiked Consumer Prices By 0.5% To 1%, Report Says - Kevin Pinner, Law360 Tax Authority ($):
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"The most important thing to understand about our April 2 estimate is that it reflected a state of the world that never came to pass," the report said.
Within days, the global tariff regime rates had changed, and they kept changing until the U.S. Supreme Court struck them down, the report said. Trump then replaced the regime using different rates and separate legislation.
Heirs and Errors
When Heirs Are Right to Say ‘Thanks but No Thanks’ to an Inheritance - Laura Saunders, Wall Street Journal:
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I’m betting many older savers are overlooking disclaimers as an IRA tax-planning tool. I was one of them. However, I recently disclaimed part of a traditional IRA I inherited, and it worked out well. My adult children received a legacy from a relative they loved, and the overall taxes will be lower.
As a result, I’m struck by how useful disclaimers can be for retirees and preretirees who have traditional IRAs far larger than they expected. Thanks to diligent saving, 401(k) rollovers and market growth, these accounts are often a retiree’s largest asset. While this is a great problem to have, it poses dilemmas for savers trying to minimize income taxes.
Related: Eide Bailly Wealth Transition Services.
Blogs and Bits
DHS employees get new May 15 tax filing deadline - Kay Bell, Don't Mess With Taxes. "Now they have one less thing to worry about. They now have until May 15 instead of the fast-approaching April 15 due date to file their 2025 tax year returns."
Bozo Tax Tip #6: Remitting Sales Tax Is an Unnecessary Activity - Russ Fox, Taxable Talk. "Yes, if you are collecting sales tax, you must remit said sales tax to the taxing authority. If you do not, you are committing a Bozo act."
IRS Provides Blanket Underpayment Penalty Relief for Qualifying Farmers Filing 2025 Returns - Kristine Tidgren, Ag Docket. "This waiver applies automatically to all qualifying farmers or fishermen filing a calendar year 2025 return."
IRS Waives Penalties For Reasonable Cause—Not For AI Tax Research - Robert Wood, Forbes. "According to the unit of the IRS called the Taxpayer Advocate Service, relying on AI tax advice that you have not vetted with a tax professional is unlikely to be considered reasonable. That means no relief from penalties."
Remit Employment Taxes, File Your Returns
Vermilion County Business Owner Sentenced to Jail for Tax Fraud - U.S. Attorney's Office, Central District of Illinois (Defendant name omitted, emphasis added):
On July 24, 2025, Defendant pleaded guilty before U.S. Magistrate Judge Eric I. Long to fifteen separate counts of collecting employment taxes from his employees, which included taxes for his employees’ Social Security and Medicare payments, but then failing to turn over those taxes, or pay the employer’s portion of those taxes, to the IRS. At the time of his plea, Defendant admitted that he had failed to pay those taxes from 2013 through 2020. Defendant also pleaded guilty to three counts of failing to file a personal federal income tax return from 2018 to 2020.
At the sentencing hearing, the government presented evidence establishing that Defendant was the sole owner of... a collision repair and car painting business located in Danville, and employed several individuals. Defendant generated and distributed Forms W-2 to his employees whereby he deducted federal employment tax withholdings from their salaries, but then failed to pay those taxes, or the employer’s share of those taxes, to the IRS. Defendant failed to pay employment taxes from at least 2013 through 2020, totaling an employment tax loss of $351,152. Moreover, Defendant failed to file a personal federal income tax return or pay federal taxes for 2018, 2019, and 2020, despite income of $698,354, $1,058,401, and $772,603, respectively, resulting in an additional federal income tax loss of $505,871. The evidence showed that Defendant has a substantial net worth and continues to operate... in Danville.
If you want to guarantee a visit from the IRS, this is a good template. When you report employment taxes on a W-2, your employees will use those numbers when they file their returns. If those claims don't match payments from the employer, even the ancient IRS computer systems flag that.
On top of that, the man stopped filing altogether. If you have taxable income in the high six-figures from a legitimate business, it's almost impossible to not have information returns issued in your name. When no return is filed to match the reported income, hello IRS.
But he did economize on his return preparation costs.
What day is it?
It's National Caramel Popcorn Day! The popcorn makes it health food, right?
Make a habit of sustained success.
