I learned two disturbing things about Wawa this week. (For those unfamiliar, Wawa is our beloved southeastern Pennsylvania convenience store and gas station chain, although some of you are lucky enough to have one nearby now.)

First, Wawa is testing sushi. I love a Wawa hoagie as much as anyone, but nobody needs gas station sushi (in case it’s not clear, that’s not Wawa sushi in the photo).

Second, gas prices at the pump are crazy. 

Even crazier? Some of the claims on social media about how the federal government plans to fix them. I saw headlines claiming that fuel is now “tax-free” for all Americans.

President Trump signed an executive order focused on fuel taxes. But the October 5 executive order addresses red-dyed diesel fuel, which is generally used for off-road purposes like farming and construction. Using that fuel on public roads can trigger taxes and penalties, but the order directs the IRS to provide temporary penalty relief through December 31, 2026.

There's another catch: The order doesn't eliminate the diesel tax. Instead, it directs Treasury to determine whether it has the authority to postpone certain diesel excise tax payments under an existing provision of the tax code typically associated with disaster relief. Postponing a tax isn't the same as eliminating it, and the obligation could still come due later.

For context, the federal gasoline tax is 18.4 cents per gallon, while diesel is taxed at 24.4 cents per gallon. Neither rate has changed since 1993. Despite periodic calls for relief when prices spike, Congress has never enacted a federal gas tax holiday. So while the executive order may provide some relief, it's a far cry from making fuel tax-free for everyone.

Fuel prices are likely to be top of mind for voters this November. So far this year, at least four states—Georgia, Indiana, Ohio, and North Carolina—have temporarily suspended fuel taxes, while others have cut rates or frozen scheduled increases. But fuel taxes aren't the only taxes getting attention at the ballot box.

Voters in at least 17 states will weigh in on tax policy this November, with proposals ranging from billionaire wealth taxes and property tax relief to constitutional restrictions on future tax increases. California voters, for example, will consider a one-time wealth tax of up to 5% on residents worth more than $1 billion. Washington voters will decide whether to repeal a newly enacted 9.9% tax on income above $1 million before it takes effect in 2028.

In Colorado, voters face competing proposals that would take the state's income tax system in opposite directions. One would replace the constitutionally required flat tax with graduated rates, while the other would cap individual and corporate income tax rates at 4.4%.

The proposals are a reminder that tax policy isn't just something Congress debates in Washington. This November, voters in states across the country will have a direct say in how—and how much—they're taxed.

And speaking of taxes and elections, there's another place where the two come together: Form 1040.

You know that little checkbox asking whether you'd like to contribute $3 to the Presidential Election Campaign Fund? Checking it doesn't increase your tax bill or reduce your refund. It simply directs $3 of your existing federal income taxes to a fund intended to help finance presidential campaigns.

The checkbox has been around for more than 50 years, but the program looks very different today—even the tickbox used to be its own form.

Participation peaked in 1980, when 28.7% of returns included the election. By 2024, that figure had fallen to just 3.14%.

And presidential candidates aren't exactly lining up for the money. Only two candidates qualified for primary matching funds in 2024: Mike Pence and Jill Stein. Neither Donald Trump nor Kamala Harris accepted public financing for the general election.

So if you've ever wondered whether checking that little box actually makes a difference, the answer is more complicated than you might think.

Speaking of voting, last week I asked you to weigh in on a money-losing horse-breeding business. 59% of you sided with the IRS in our poll. But if you voted for Frank Chapin and Sydney Gutierrez-Chapin, congratulations! You agreed with the Tax Court.

In Chapin v. Commissioner, the Tax Court ruled that the couple's horse-breeding activity was a business, not a hobby, despite six consecutive years of losses and a bankruptcy. The court looked beyond the losses to the couple's decades of experience, the considerable time and effort they devoted to their horses, and their business practices. Their records weren't perfect, and they clearly loved what they did, but neither fact meant they lacked a genuine profit motive. Losing money doesn't automatically make an activity a hobby. Neither does enjoying the work.

There was a catch: The Chapins couldn't substantiate all their claimed expenses, so they didn't win every deduction. And because the case involved tax years 2009 through 2014, there's an important distinction under current law: Hobby income is still taxable, but ordinary hobby expenses generally aren't deductible.

Let’s talk more tax.

Q: A few weeks ago, you wrote about RMDs. I get what they are, but what happens if I just skip it?

A: So, you already know that a required minimum distribution (RMD) is the minimum amount the IRS requires you to withdraw each year from certain tax-advantaged retirement accounts, like a traditional IRA.

If you don't take your RMD by the deadline, you could face an excise tax equal to 25% of the amount you failed to withdraw. And here's the kicker: The excise tax is on top of any income tax you owe when you eventually take the distribution. In other words, missing an RMD can be an expensive mistake.

The good news? You may be able to reduce that excise tax to 10% if you correct the mistake within the correction window, generally by taking the missed distribution and satisfying the reporting requirements. Better still, the IRS can waive the excise tax entirely if you can show the shortfall was due to reasonable error and that you're taking reasonable steps to fix it.

Don’t skip your RMDs and if you missed an RMD, don't ignore it. Take steps to correct it now, including a review of IRS Form 5329, which is used to report the excise tax or request a waiver.

Hot assets? Yes, that's a real tax term. And no, it doesn't refer to that spectacular beachfront property you've been eyeing. In tax law, hot assets generally refer to certain partnership assets that can trigger ordinary income treatment when a partner sells or exchanges a partnership interest. Under Section 751 of the tax code, these include unrealized receivables and inventory items. The rules are designed to prevent partners from turning what would otherwise be ordinary income into more favorably taxed capital gains simply by selling their partnership interests.

Here's where things get spicy: When a partner sells an interest in a partnership, the gain is generally treated as capital gain. But to the extent the gain is attributable to hot assets, it may be taxed as ordinary income instead. And despite the name, hot assets aren't necessarily exciting or valuable in the traditional sense. They're simply assets that carry the potential for ordinary income tax consequences. So, while hot assets might sound like something you'd find on a dating app, the IRS is interested in their tax character, not their appeal.

(Hey, eyes up here on the K-1!)

Speaking of politics and taxes, in 1991, royalties from which author's book accounted for more than half of President George H. W. Bush and Barbara Bush's adjusted gross income?

A. George H. W. Bush
B. Barbara Bush
C. Their dog, Millie
D. Their son, George W. Bush

Find the answer at the bottom of this newsletter.

This week, get to know Robert K. Morrow, a California tax attorney and former law professor who once dreamed of a career in international arms control. More than 30 years later, he's still practicing tax law—but he's also a lifelong science fiction fan, published fiction writer, LEGO enthusiast, and self-described geek. We talk about his unexpected path into tax, the tax advice that drives him crazy, and why he'd happily trade his law practice for a successful career writing fantasy novels.

If you know someone who should be featured in a future Getting To Know You Tuesday, you’ll find nomination and submission information at the bottom of the post.

Take a look at your statements. I recently filed my tax return and was shocked to see that we had a bit of a tax bill. It was my goof. But in the last year, my dad died unexpectedly, my mom moved in with me and immediately fell and broke her collarbone, and my daughter moved to Berlin. So when our broker sold some stocks and we realized a biggish capital gain, I didn’t pay attention, which means I didn’t move things around to mitigate the tax. Even worse, I also didn’t factor it into estimated payments. It happens. Don’t make the same mistake. With 2026 drawing to a close, review your statements. If you notice something out of the ordinary, plan now so you don’t end up with an unexpected tax bill in 2027.

October 15, 2026 — Extended individual income tax returns due. This is the big one for individuals who requested a timely extension to file their 2025 Form 1040. (Remember, it’s an extension to file, not to pay: tax was due April 15.)

October 15, 2026 — Extended C corporation returns due. Calendar-year corporations that timely requested an extension generally must file Form 1120. 

October 15-16 — National Association of State Bar Tax Sections Annual Conference, Philadelphia. Topics include digital-product sales tax, AI ethics, state conformity, college-athlete compensation, retirement planning, and IRS enforcement priorities. 

October 22 — UCLA Tax Controversy Conference, Beverly Hills. The annual conference focuses on tax controversy and litigation.

November 9-10 — AICPA National Tax Conference, Washington, DC + virtual. Federal tax developments, IRS priorities, and legislative changes. Speakers include National Taxpayer Advocate Erin Collins and my former Forbes writing colleague, Tony Nitti.

November 15-20 — NYU Institute on Federal Taxation, New York City. Focus on tax controversies, partnerships, trusts and estates, international tax, and more. 

AICPA raises privacy concerns about new refund form. The AICPA is asking the IRS to clarify that Form 8050, Direct Deposit of Tax Exempt or Government Entity Tax Refund, won’t become part of publicly disclosed tax-exempt organization returns. The concern? Accidentally making banking information public.

IRS and U.K. team up on whistleblower program. The IRS helped the U.K.'s tax authority develop a whistleblower reward program targeting serious tax avoidance and evasion. Both countries encourage tips about offshore accounts, hidden assets, and cross-border tax schemes, with potential monetary awards.

Treasury and IRS publish their regulatory to-do list. The 2026–2027 Priority Guidance Plan is out, identifying tax guidance projects the agencies intend to tackle. It's a useful look at where Treasury and IRS resources may be directed next.

The tax world is full of interesting people. Here’s who’s making news.

Treasury Secretary Scott Bessent announced that economist Judy Shelton will serve as a Counselor in the Office of the Secretary, advising on currency policy, particularly financial conditions in China. Shelton previously served as U.S. Director of the European Bank for Reconstruction and Development and has held research positions at Stanford's Hoover Institution.

The answer is C. Millie.

Well, sort of. Barbara Bush wrote Millie's Book from the family's English springer spaniel's perspective, and the book generated $889,176 in royalties in 1991—more than half the Bushes' adjusted gross income. The Bushes donated $789,176 in after-tax proceeds to Barbara Bush's literacy foundation. In terms of a draw, apparently Millie was the family's literary superstar.

Working from home has its perks. No commute, easy access to the coffee pot (some might say too easy), and the freedom to make your workspace your own (which explains the skulls and giant spider web up in my office a few weeks before Halloween). But what happens when making that workspace your own involves a little home renovation?

One California couple expanded their home office, installed new carpeting and heating, and made several other improvements. Then they claimed nearly $25,000 in home-office deductions.

The IRS wasn't convinced. Was this a deductible business expense or a home improvement? This week, you be the tax judge. I’ll share the answer in next week’s newsletter.

(And if you’re looking for a place to do a little watercooler chatting about You Be the Tax Judge or anything else in the newsletter, check out our Taxgirl community. Like the newsletter, it’s free!)

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