1/13/26 Newsletter

The holiday decorations are down, the confetti is swept, and just as you settle back into reality, the IRS is here with a friendly reminder that last year’s Q4 estimated tax payment is due in exactly 48 hours.

This week’s lineup:

• 💰 Higher tax rates only apply to extra earnings, so you never lose money by getting a raise.

• 🧮 Math error notices aren't audits, but you only have 60 days to dispute them.

• 💼 A bad W-4 means giving the government an interest-free loan all year.

• 🍷 “Real Housewives” stars flashed cash while pleading poverty, swapping fame for federal prison.

Money Moves

💰 The Truth About Tax Brackets in 2025

Everyone knows the “Water Cooler Economist.” He’s the guy who refuses overtime because he’s convinced an extra thousand dollars will shove him into a higher tax bracket, trigger an IRS ambush, and somehow make him poorer. It’s one of the most expensive myths in America.

For 2026, there’s no secret new tax law driving the bracket changes. It’s simply inflation doing what inflation does. But the core rule is unchanged: earning more money always leaves you with more money.

The Bucket Theory: How Your Income Actually Gets Taxed

You don’t have one tax rate. You have several, and your income flows through them like a series of buckets.

Bucket #1: The “Free” Bucket (Standard Deduction)

Before the IRS taxes a single dollar you earn, you get a massive deduction:

• Single: $15,000

• Married Filing Jointly: $30,000

A married couple earning $30,000 pays roughly zero in federal income tax.

Bucket #2: The 10 Percent Bucket

After the Standard Deduction, the first $11,925 of taxable income (single) is taxed at just 10 percent.

Bucket #3: The 12 Percent Bucket

The next chunk of income, up to $48,475 for single filers, is taxed at 12 percent.

Bucket #4: The “Scary” Bucket (22 Percent)

This is where the myths start. If you earn more than $48,475 (single), you enter the 22 percent bracket. Only the dollars above that line get taxed at 22 percent.

All your earlier income still enjoys the 0 percent, 10 percent, and 12 percent rates. You’re not losing money. You’re paying a slightly higher rate only on the new money you made. 

Does that mean all your money is suddenly taxed at 22 percent? (Spoiler: No). Click to see how the math really works and why you should never turn down a raise. Keep reading →

IRS Survival Guide

🧮 Guide to IRS Math Errors

Opening your mailbox and seeing “Internal Revenue Service” on the envelope is an instant stress spike. Heart races, stomach drops, brain goes straight to one word: audit.

But for the 2026 tax season, if you get a notice, odds are you are not being audited. In many cases, you are looking at a Math Error Notice, one of millions of automated letters the IRS sends every year when its computer system spots a discrepancy on your return.

These notices are usually less serious than an audit, but they are not harmless. They are what the IRS calls a summary assessment, which means your bill can change fast, and your rights to fight that change expire on a strict timeline.

This guide walks you through what those notices mean, how to read them, and what to do next.

What the IRS Really Means by a “Math Error”

When most of us hear “math error,” we think of a simple mistake. You added $200 and $300 and somehow got $600. Those mistakes count, but the IRS definition is much broader.

Under what is known as Math Error Authority (MEA), Congress lets the IRS correct certain “clerical” or obvious mistakes without going through a full audit. Common triggers include:

• Arithmetic mistakes: Basic addition, subtraction, or multiplication errors on the return.

• Data mismatches: A Social Security number or name for you or a dependent does not match what the Social Security Administration has on file.

• Missing information: You claimed a credit, such as the Earned Income Tax Credit (EITC), but did not include a required form or schedule.

• Exceeding legal limits: You claimed more of a credit or deduction than the law allows for your income or filing situation.

In short, if the IRS computer can clearly tell that an entry is wrong or incomplete based on what it already knows, it may “fix” your return on its own and then send you a notice showing the change. Sometimes that means a smaller refund, sometimes a bigger one, and sometimes a new balance due.

CP11, CP12, CP13: How To Decode Your Notice

To figure out exactly what changed, look in the top right corner of your letter. You will usually see one of these codes:

• CP11: The IRS found an error, corrected it, and now you owe money. Sometimes this means your refund was reduced so much that you now have a balance due.

• CP12: The IRS found an error, corrected it, and your refund amount changed. You may still be getting money back, just a different amount than you expected.

• CP13: The IRS found an error, corrected it, and the result is a zero balance. No money owed, no refund coming.

Inside the notice, you should see a side-by-side breakdown, usually labeled something like:

• “Figures from your return”

• “Figures we used”

That table is your roadmap. It shows exactly where the IRS changed your numbers.

Discover the new 2026 law that forces the IRS to explain their math — and the one deadline that kills your chance to fight back. Keep reading →

Filling 101

💼 New Job? Don't Mess Up the W-4

Ah, the new job. It’s a beautiful thing. A fresh start, a bigger salary, maybe even an office with a window that doesn’t look directly at a brick wall. You’ve navigated the awkward interviews, negotiated your salary like a pro, and now you’re ready to conquer the world.

But amid the flurry of orientation meetings and learning where they hide the good coffee, you’ll be handed a stack of paperwork. And nestled within it, like a viper in a bouquet of roses, is the infamous Form W-4.

Your New Job and the W-4: What You Need to Know

Form W-4, officially the "Employee's Withholding Certificate," is the form you use to tell your new employer how much federal income tax to lovingly carve out of your paycheck. For such a small form, it packs a mighty punch. Fill it out wrong, and you could be in for a nasty surprise come Tax Day.

Years ago, it was all about "allowances," a mysterious number you sort of guessed at based on how many cats you owned. The new W-4 is a bit more direct. It wants to know about your dependents, your spouse's income, and any other jobs you might have. It’s less of a guessing game and more of a "please, just tell us what's going on so we don't have to send you a bill later."

The Withholding Puzzle: Not Too Little, Not Too Much

The goal with your W-4 is to get your withholding just right.

If you withhold too little, you'll owe a big chunk of money to the IRS in April, possibly with a side of underpayment penalties. It’s like eating dessert all year and then having to eat nothing but broccoli for a month.

If you withhold too much, you’re essentially giving the government an interest-free loan with your money. Sure, getting a big refund feels nice, but it’s your money to begin with. You could have been using it all year for important things, like buying more of that good coffee.

Remember to revisit your W-4 whenever you have a major life change, like getting married, having a baby, or if your spouse lands a new gig, too. 

Learn why your signing bonus might trigger a surprise tax bill and which "free" company perks the IRS actually considers taxable income. Keep reading →

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Wild Tax Tales

🍷 Table Flips & Tax Fraud: The Giudice Saga

There is a specific kind of audacity required to go on national television, flip a table in a rage, and pay for furniture with wads of cash while simultaneously telling the U.S. government you are destitute. Most people commit tax fraud in the dark; Teresa and Joe Giudice did it in Bravo high-definition.

The “Real Housewives” stars didn’t just make a math error. They treated the federal tax code like a suggestion box. Here is how they went from reality royalty to federal inmates.

The "Oopsie" Bankruptcy

In 2009, the couple filed for bankruptcy, claiming they were drowning in debt. The problem? The bankruptcy trustee had a TV. He noticed they were hiding assets, rental income, and a massive reality TV salary while claiming to be broke. Lying to a bankruptcy court is a federal crime, and by filing, they essentially invited the feds to audit their entire existence.

The Laundry List

The indictment was a "greatest hits" of financial crimes. The Giudices used fake W-2s to get $5 million in mortgages they couldn’t afford. Joe failed to file tax returns for years despite earning millions. In 2014, they pleaded guilty to 41 counts of fraud.

The Aftermath

Teresa served 11 months in federal prison; Joe served 41 months. Because Joe never became a U.S. citizen despite living there since he was a toddler, he was deported to Italy immediately after his release.

And the drama isn’t over. As of 2024, Teresa is reportedly facing over $3 million in new tax liens. It seems the lifestyle of the rich and famous is expensive — especially when you forget to pay Uncle Sam.

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

• 🏛️ Congress targets crypto rules and tax extenders for 2026 agenda.

• 💸 Inflation adjustments in 2026 could slightly increase your paycheck.

• 🚗 New deduction allows write-offs for U.S.-made car loan interest.

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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