The Dirty Dozen represents the worst of the worst tax scams
The Dirty Dozen represents the worst of the worst tax scams.
Compiled annually, the Dirty Dozen lists a variety of common scams that taxpayers may encounter anytime but many of these schemes peak during filing season as people prepare their returns or hire someone to help with their taxes. Don’t fall prey.
For a detailed description of each scam, please refer to the list below:
Prior year information on the IRS Dirty Dozen:
- 2024 — Dirty Dozen: Bogus tax avoidance strategies, schemes with an international element wrap up annual taxpayer awareness campaign
- 2023 — IRS wraps up 2023 Dirty Dozen list; reminds taxpayers and tax pros to be wary of scams and schemes, even after tax season
- 2022 — IRS wraps up 2022 Dirty Dozen scams list: agency urges taxpayers to watch out for tax avoidance strategies
- 2021 — IRS announces Dirty Dozen tax scams for 2021
- 2020 — IRS unveils Dirty Dozen list of tax scams for 2020; Americans urged to be vigilant to these threats during the pandemic and its aftermath
- 2019 — IRS concludes Dirty Dozen list of tax scams for 2019: Agency encourages taxpayers to remain vigilant year-round
- 2018 — IRS wraps up Dirty Dozen list of tax scams for 2018; encourages taxpayers to remain vigilant
- 2017 — IRS summarizes Dirty Dozen list of tax scams for 2017
- 2016 — IRS wraps up the Dirty Dozen list of tax scams for 2016
- 2015 — IRS completes the Dirty Dozen tax scams for 2015
- 2014 — IRS releases the Dirty Dozen tax scams for 2014
The 2026 filing season (Tax Year 2025) marks a historic turning point for American taxpayers. Defined by the proposed "One Big Beautiful Bill" (OBBB), the current landscape introduces major changes that move beyond standard deductions to provide targeted relief for homeowners, workers, and families. If you are an individual or a small business owner, here is what you need to know to stay ahead. 1. The End of the $10,000 SALT Ceiling For years, the State and Local Tax (SALT) deduction was capped at $10,000, forcing many middle-class families to take the standard deduction. The new OBBB proposal quadruples this cap to $40,000 . The Strategy: For residents in high-tax districts, the math has changed. It is time to re-evaluate whether itemizing your property and income taxes will yield a higher return than the standard deduction ($31,500 for joint filers). 2. The "Drive American" Interest Deduction In a boost for domestic manufacturing, a new "above-the-line" deduction allows you to deduct up to $10,000 in interest on a loan for a new, personal-use vehicle. The Catch: To qualify, the vehicle must be assembled in the U.S. (verified by a VIN starting with 1, 4, or 5) and weigh under 14,000 lbs. This benefit is available even to those who do not itemize, making it a powerful tool for new car buyers. 3. Relief for the Service and Industrial Workforce Through the new Schedule 1-A, specific income streams are seeing unprecedented relief: Tax-Free Tips: Qualified professionals may exclude up to $25,000 in tips from their gross income. Overtime Protection: Up to $12,500 ($25,000 for joint filers) of the "half-time" premium for qualified overtime is now deductible. These benefits begin to phase out at $150,000 MAGI ($300,000 for joint filers), so timing and income tracking are critical. 4. Legacy Wealth: The "Trump Account" For families who welcomed a child in 2025, a new pilot program offers a $1,000 government seed contribution . These tax-deferred accounts are designed to grow until the child reaches age 18, with annual funding limits up to $5,000. Enrollment is made via the new IRS Form 4547. 5. The Fully Digital IRS Under Executive Order 14247, the IRS is officially transitioning away from paper checks. All refunds are now mandated to be electronic. Whether you prefer direct deposit or a digital wallet, ensuring your IRS Online Account is verified and updated is no longer optional—it is a requirement for a timely refund. Looking Ahead While these provisions offer significant opportunities for wealth preservation, they are technically complex. Eligibility often hinges on Modified Adjusted Gross Income (MAGI) thresholds and specific documentation requirements (like VINs and FLSA-qualified pay stubs). As these legislative drafts move toward finalization, we recommend a personalized consultation to ensure your 2026 filing strategy is both compliant and optimized. _________________________________________ Disclaimer: The information provided in this document is for general educational purposes only and does not constitute professional tax, legal, or investment advice. Tax laws are subject to change. The specific application of these provisions depends on the individual facts and circumstances of each taxpayer. We strongly recommend a personalized consultation with a Qualified Tax Professional (CPA or Enrolled Agent) before making any financial decisions.
by Maureen Leddy, Thomson Reuters February 6, 2025 8 minute read
Don’t let the process of starting a new business deter you from your future success! While it may seem overwhelming, the IRS has provided a number of great resources to help brand-new business owners understand their tax responsibilities. Below are some tax basics for setting up a new business: Choose a business structure The type/form of a business determines which income tax return a business will need to file. The most common business structures are: Sole proprietorship : An unincorporated business owned by an individual. There’s no distinction between the taxpayer and their business. Partnership : An unincorporated business with ownership shared between two or more members. Corporation : Also known as a C corporation. It’s a separate entity owned by shareholders. S Corporation : A corporation that elects to pass corporate income, losses, deductions and credits through to the shareholders. Limited Liability Company : A business structure allowed by state statute. If a single-member LLC does not elect to be treated as a corporation, the LLC is a “disregarded entity,” and the LLC’s activities should be reflected on its owner’s federal tax return as a sole proprietorship. Choose a tax year A tax year is an annual accounting period for keeping records and reporting income and expenses. A new business owner must choose either: Calendar year : 12 consecutive months beginning January 1 and ending December 31. Fiscal year : 12 consecutive months ending on the last day of any month except December. If an individual files their first tax return using the calendar tax year and later begins business as a sole proprietor, becomes a partner in a partnership, or becomes a shareholder in an S corporation, they must continue to use a calendar tax year unless they get IRS approval to change it. Apply for an Employer Identification Number An EIN is also called a Federal Tax Identification Number and it is used to identify a business, much like a person’s social security number. Most businesses need one of these numbers, but some don’t. For example, a sole proprietor without employees who doesn’t file any excise or pension plan tax returns doesn’t need an EIN. The EIN checklist on IRS.gov can help business owners know if they need an EIN. Make sure all employees complete these forms when hired: I-9, Employment Eligibility Verification U.S. Citizenship and Immigration Services W-4, Employee’s Withholding Certificate Pay yearly business taxes The form of business you chose above determines what taxes should be paid and how to pay them. Check with your business accountant to find out what tax liabilities you are responsible for. Visit the state’s website Prospective business owners should also visit their state’s website for info about state tax requirements, as those may be different than federal tax obligations. Talk to a tax professional Before you fill out any paperwork or online forms to set up a new business, speak with a tax professional to make sure your forms are filled out correctly! Give us a call at 412-931-1617 or shoot us an email at info@cottonmather.com.
