11/11/25 Newsletter

Today, we pause to thank the veterans in our community and the families who’ve stood beside them. Your service and sacrifice make everything we do possible. 🦅

This week’s lineup:

• 💰 Why your VA benefits are tax-free (and your Social Security isn’t).

• ⏰ The IRS gives you 10 years to pay, but they never forget.

• 📱 That TikTok “tax hack”? It’ll cost you $5,000.

• 💀 The $600 1099-K rule is dead (again). Here’s what that means for you.

• 🎓 The nurse who beat the IRS at its own game.

Personal Finance

💰 Your Social Security & VA Benefits Are Stuck in the ‘80s

In 1984, a gallon of gas was $1.10, and Prince topped the charts. That same year, Congress set the income thresholds for taxing Social Security benefits. They haven’t budged since.

So yes, you’re paying 2025 prices on 1984 rules. Gag us with a spoon.

Here’s how it still works:

Single Filers

• Under $25,000: Tax-free

• $25,000–$34,000: Up to 50% taxable

• Over $34,000: Up to 85% taxable

Married Filing Jointly

• Under $32,000: Tax-free

• $32,000–$44,000: Up to 50% taxable

• Over $44,000: Up to 85% taxable

And when we say “85% taxable,” the IRS isn’t taking 85% of your check. It means 85% of your benefits count as taxable income, taxed at your normal rate.

Meanwhile, VA disability compensation is living its best tax-free life. Disability payments, education benefits, and even vehicle grants are 100% exempt from federal taxes.

If you receive both Social Security and VA benefits, your VA payments don’t count toward your “combined income.” That means they won’t push your Social Security into a higher tax bracket.

And finally, one small 2025 win… Congress added a new $6,000 deduction for seniors 65 and older (with income limits). Naturally, it’s not indexed for inflation and does expire in 2028.

👉 Want the full breakdown of how Social Security and VA benefits are taxed (and the fine print on that new senior deduction)? Read our full guide →

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Tax Strategies

⏰ The IRS Has a Checkout Time (But You Keep Hitting Snooze)

The IRS is like that houseguest who arrives uninvited, drinks all your coffee, and inspects your medicine cabinet for undeclared assets. But here's the good news: they have a checkout date.

It's called the Collection Statute Expiration Date (CSED), and it gives the IRS exactly 10 years from the date they assess your tax debt to come after you. After that? They're legally done.

Except (and this is a big except) that clock has more snooze buttons than your morning alarm.

Things That Pause Your 10-Year Clock

• Requesting a payment plan: Clock stops while you negotiate

• Filing an Offer in Compromise: Trying to settle for less? Timer pauses

• Declaring bankruptcy: Adds 6 months after it's resolved

• Leaving the country: Gone 6+ months? Clock freezes until you return

It's as if the IRS is saying, "No, no, after you. We'll wait."

If you're genuinely broke, there's a Currently Not Collectible (CNC) status. You prove you can barely cover rent and groceries, and the IRS backs off—while the 10-year clock keeps ticking.

They'll check in periodically, but if nothing changes financially, that debt can eventually expire into the void.

The IRS has 10 years to collect. Don’t turn it into 20 by hitting snooze.

IRS Survival Guide

📱 That “One Weird Tax Trick” Could Cost You $5,000

That viral “one weird tax trick” you just saw on TikTok? It’s a fantastic way to get a $5,000 bill from the IRS.

We’ve seen it all—people with $80,000 W-2s filing returns claiming they earned $0. It’s a bold move, and the IRS has a special name for it: the Frivolous Tax Return Penalty.

Under Section 6702, the IRS can fine you $5,000 (or $10,000 for joint filers) for submitting a return based on a “fundamentally baseless” argument. Basically, it’s their official penalty for wasting their time.

Some of the greatest hits making the rounds online include:

• “Wages aren’t income.” (They are.)

• “The 16th Amendment wasn’t ratified.” (It was.)

• “Filing is voluntary.” (It’s not.)

The latest twist? Promoters are telling regular wage earners to claim things like the Fuel Tax Credit. Unless you own a qualifying business, that claim is fraudulent and a fast track to that $5,000 penalty.

If you file one, you’ll get a Letter 3176C, which is the IRS’s polite way of saying, “You’ve got 30 days to fix this.” File an amended return, and you’re usually fine.

Ignore it, and the $5,000 fine lands—plus whatever other penalties apply.

Businesses & Gigs

💀 The IRS Just Killed the $600 1099-K Rule

Just when you were bracing for a 1099-K for that $600 you made on Etsy, the IRS slammed on the brakes.

A law signed in July 2025 officially killed the plan and restored the old thresholds.

What You Need to Know:

• The Old Rule Is Back: The reporting limit for Form 1099-K reverts to $20,000 and 200+ transactions (retroactive to 2022).

• The $600 Rule Is Repealed: The entire phased-in plan — $5K in 2024, $600 for casual sellers — is gone.

• Other 1099s Are Changing: Starting in 2026, the thresholds for 1099-NEC and 1099-MISC jump from $600 to $2,000.

The $600 rule was meant to catch unreported income, but it mostly created a mountain of paperwork for everyone — sellers, platforms, and the IRS itself. Even Congress agreed it was overkill.

For casual sellers and side-hustlers, this is a big win. You won’t get a 1099-K for selling your old guitar or unloading a few items on eBay.

This change only affects who sends the form, not what is taxable. If you make money, it’s still income. But the IRS might not automatically get a copy.

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Wacky Tax Tales

🎓 The Nurse Who Schooled the IRS

Ever thought about getting another degree to be better at the job you already have?

That’s exactly what Lori Singleton-Clarke, a nurse with a 24-year career, decided to do. She was already in high-level roles, even directing 110 other nurses, when she enrolled in an MBA program for health care management.

She paid $14,787 for the courses and deducted it as a business expense.

The IRS, predictably, disallowed it.

You can deduct education that improves your current job skills. But you cannot deduct it if it qualifies you for a new trade or business. The IRS argued that an MBA is a classic "new business" qualifier.

But the Tax Court sided with the nurse.

The judge looked at her 24 years of experience. She wasn't a new grad trying to break into management; she was already a manager.

The court ruled the MBA didn't prepare her for a new career. It just improved the "preexisting skill set" she was already using.

She got to deduct the full $14,787.

The quick (and slightly prickly) stories we didn’t have time to get to:

• 📄 IRS kills Direct File for 2026. Bye, free filing.

• 📈 New 2026 capital gains brackets. Slightly kinder math.

• 💻 83(b) elections go digital. Founders rejoice.

If you made it this far, you’re our kind of nerd. Hit reply and tell us which story you want us to dive deeper into next week.

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