This week, it finally started getting cold in Pennsylvania—but nowhere near snowpants cold. I’ve only ever been that cold once: last tax season, when I was in Alaska. It was minus 25 degrees Fahrenheit, and that was before the blizzard.

I was part of a team of tax attorneys participating in a volunteer tax preparation program organized by the Alaska Business Development Center (ABDC) and conducted in partnership with the American Bar Association Section of Taxation and the IRS’s Volunteer Income Tax Assistance (VITA) program. The VITA program is nationwide—in warm areas, too—and the IRS is currently looking for volunteers. 

My experience in Alaska changed the way I think about tax administration. We tend to talk about taxes in terms of tax rates, enforcement, audits, and filing deadlines. But for most taxpayers, the tax system is more personal: Can I get help when I need it? Can I understand what I’m supposed to do? Can I actually reach someone when something goes wrong?

That theme came up more than once this week, as taxpayers tried to sort through a lot of information coming at them all at once.

For one, more than 20 million Medicare beneficiaries are about to receive an unexpected $90 payment from the federal government. The Trump administration is calling it a Medicare Part B “premium rebate,” but it isn’t a refund of an overpayment, and it won’t reduce Medicare premiums. The money is coming from a little-known Medicare fund that Congress has been moving money into and out of for nearly two decades. Now, for the first time, the government is spending it.

Medicare beneficiaries aren’t the only people getting checks. The federal government has also begun sending $500 payments to nearly one million people who bought health insurance through the Marketplace without premium assistance. Those have been dubbed “Working Families Obamacare Refunds,” but again, the word refund requires a little unpacking. Consumers weren’t separately charged a $500 fee that is now being returned to them. The money comes from accumulated Marketplace user fees—and there are still some unanswered legal and tax questions about the payments.

Also generating a lot of questions this week: Trump accounts. New Treasury regulations mean that Trump accounts, also called section 530A accounts, will now be established automatically for eligible children. But—and this is an important but—an auto account does not mean an automatic $1,000 from the federal government. The $1,000 pilot contribution has separate eligibility requirements and requires an election.

A lot of misinformation about these accounts has been floating around online, so after my initial piece, I went back and did a follow-up answering the questions I kept seeing: Does every child get $1,000? Can an automatic account have a zero balance? Can parents contribute to an unclaimed account? Is the money tax-free? Is this basically a 529 plan?

Short answers: no, yes, no, no, and definitely no.

If those questions make you want to pick up the phone and call the IRS, you might want to block off some time. This week, I published a guest piece by enrolled agent Angeline Balsitis, who did something I never would have had the patience to do: She tracked 188 calls to the IRS between June and September. She spent 92 hours on the phone. About 74 of those hours were spent waiting.

Much of the waiting didn’t happen before someone answered. It happened after an IRS employee picked up and put her on hold. By September, her average answered call took about 77 minutes.

Which brings us to Congress. The Senate has unanimously approved the Taxpayer Assistance and Service (TAS) Act, a package of 65 tax-administration reforms aimed at improving IRS service, strengthening taxpayer rights, expanding electronic processing, improving online accounts and callback technology (!), and making it easier for taxpayers to understand what’s happening with delayed refunds and other IRS problems.

There’s broad bipartisan support. The Senate Finance Committee approved it 26-1. The full Senate passed it without objection. There’s just one problem: the House went home. Members aren’t scheduled to return for regular voting until November 9. That leaves a relatively short post-election window for the House and Senate to agree before this Congress ends. As I noted in the article, whether House leaders will make the TAS Act a priority during that window remains to be seen. (I’m not convinced.)

And take a breath—we’re just getting started. Let’s talk more tax.

Q: In your Trump account article, you said that Trump accounts are not the same as 529 plans. I’m embarrassed to admit that I don’t know what a 529 plan is. Can you explain?

A: Don’t be embarrassed—there’s a lot of tax code out there!

A 529 plan is a tax-advantaged savings plan designed to help families pay for education. You contribute after-tax dollars, and the funds can grow tax-deferred. When you make withdrawals to pay for qualified education expenses, those are generally federal income tax-free. Depending on where you live, your state may also offer a tax deduction or credit for contributions.

529 plans are most commonly associated with college costs, including tuition, fees, books, supplies, and certain room and board expenses, but they’re more flexible than they used to be. The rules now allow 529 funds to be used for certain K-12 and registered apprenticeship expenses, as well as some student loan repayments. 

Unlike a Trump account, a 529 plan is designed for education. The account owner—often a parent or grandparent—typically controls the funds and names a beneficiary, such as a child or grandchild. If the beneficiary doesn't need all the money for education, options include changing the beneficiary to another qualifying family member. Under current law, some unused 529 funds may also be rolled over into a Roth IRA for the beneficiary, subject to various restrictions and limits.

A grantor trust is a trust in which, for federal income tax purposes, the person who created or funded it—called the grantor—is treated as owning some or all of the trust's assets. As a result, the trust's income, deductions, and credits are generally reported on the grantor's individual income tax return rather than taxed separately to the trust.

Many revocable living trusts are grantor trusts because the creator retains significant control over the assets, including the ability to revoke the trust. But a trust doesn’t have to be revocable to be treated as a grantor trust. Under the grantor trust rules in sections 671 through 679 of the tax code, certain powers or interests retained by the grantor can cause some or all of the trust to be treated as owned by the grantor for income tax purposes.

Sometimes that's exactly the result the grantor wants. Trusts reach the highest federal income tax rate at much lower levels of income than individuals, so having income taxed to the grantor can produce a better income tax result.

In estate planning, an irrevocable trust may also be deliberately structured as a grantor trust. The assets can be outside the grantor’s taxable estate for federal estate tax purposes, while the grantor continues to pay the income tax. Because those taxes are paid with assets outside the trust, the trust assets can continue to grow while the grantor’s taxable estate is reduced.

Grantor trust status doesn't necessarily last forever. A revocable grantor trust will typically stop being a grantor trust when the grantor dies. At that point, the trust may become a separate taxpayer and need its own taxpayer identification number and income tax return.

The IRS’s main individual taxpayer assistance number is 800-829-1040. What do the middle three digits, 829, spell on a telephone keypad?

A. IRS
B. PAY
C. TAX
D. USA

Find the answer at the bottom of this newsletter.

This week, get to know Julie Susskind, a CPA and Senior Tax Manager at Gelt who combines tax strategy, a paper-free home office, and dreams of Broadway. Julie talks about growing up with an accountant for a father, why retirement planning deserves more attention, the tax myth she’d most like to bust, and how she uses AI as a starting point for research.

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.

Consider tax-loss harvesting. If you have investments that have dropped in value, now is a good time to consider whether selling makes sense. Capital losses can offset capital gains, and if your losses exceed your gains, you can generally deduct up to $3,000 of the excess against ordinary income, carrying additional losses forward to future years. Just don't let the tax tail wag the investment dog—and watch the wash-sale rule.

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.

A new federal school-choice tax credit is taking shape. Treasury and the IRS have proposed regulations for the new Education Freedom Tax Credit, which takes effect in 2027. Taxpayers will be able to claim a nonrefundable credit of up to $1,700 ($3,400 for married couples) for qualifying cash contributions to eligible Scholarship Granting Organizations. States must opt into the program.

The IRS is offering additional relief related to the conflict in Israel. Certain taxpayers affected by ongoing events in Israel now have until September 30, 2027, to file various federal tax returns, make tax payments, and complete other tax-related actions.

A new federal fraud task force has launched in Philadelphia. The U.S. Attorney's Office for the Eastern District of Pennsylvania has created an Interagency Fraud Task Force bringing together prosecutors and federal law-enforcement agencies—including IRS-CI and TIGTA—to target fraud.

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

Kenneth Kies is headed to EY. The former Treasury assistant secretary for tax policy and acting IRS chief counsel will join EY as a managing director in November. Kies left the Trump administration in July after reportedly clashing with White House officials over involvement in IRS audits. Before joining Treasury, Kies ran a tax lobbying firm and served as chief of staff of the Joint Committee on Taxation.

Gary Wingrove has officially taken the top job at KPMG. Wingrove began his four-year term as global chairman and CEO of KPMG International on October 1, succeeding Bill Thomas. Wingrove, who previously served as CEO of KPMG Australia and most recently as KPMG International's chief operating officer, leads a global network of more than 276,000 people. 

The answer is C. TAX.

The IRS switched from 800-424-1040 to 800-829-1040 on October 1, 1990, and was soon advertising the new number as 1-800-TAX-1040. More than 35 years later, it’s still the main number for individual taxpayers.

And, kids, some of us are old enough to remember phone books. Fun fact: The number changed late enough that some 1991 telephone books still contained the old 424-1040 number, leading taxpayers to call the old number—only to hear a recording that it was no longer in service.

This week on You Be the Tax Judge: An Idaho couple spent decades raising cattle and breeding horses—and losing money. The IRS says their horse operation was a hobby. They say it was a business. You decide. 

And after you cast your vote, you have somewhere to make your case. The Taxgirl Community is open! You can weigh in on the Tax Judge question, ask a tax question of your own, or talk about anything you’ve read on Taxgirl. I’m hoping it becomes a place where readers can swap ideas and—because I know you—occasionally argue about the tax code. Come join the conversation.

A quick note: Sponsorships help me keep the Taxgirl newsletter free for readers. I try to choose offers that I think might be a good fit for you. I hope this one is.

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