When I was younger, I spent an entire summer with my great-grandmother (who famously–and presciently–told me that I sounded just like a Philadelphia lawyer). Her house was in Greenville, S.C., a town my 12-year-old self would have described as a bit sleepy. What a difference a few decades make.
This year, that Greenville made Forbes’ list of Best Places To Retire alongside 24 other cities like Athens, Georgia, and Apache Junction, Arizona. To assemble the list, Forbes compared more than 950 locales in America with populations above 10,000 on everything from housing costs to healthcare, air quality, crime and climate change and natural hazard risk.
Since money matters, especially for many retirees, Forbes also looked at state taxes, including marginal tax rates, income tax exemptions for Social Security benefits and other retirement income, and the existence of state estate or inheritance taxes. You can find out more about the data and how Forbes picked the list here.
Before you assume that my aversion to sleepy towns is somehow rooted in a childhood otherwise jam-packed with urban adventures, it may help to know that the town I grew up in was much less exciting. I tried to determine the population count from when I was a kid and came up empty. But 15 years ago–following years of growth–the Census reported a population of 4,083. When I say it was rural, it was indeed rural. And resources were limited—we didn’t even have a library in my town when I was younger. Television service was spotty and expensive, but we got Public Broadcasting System (PBS) television for free. We could typically watch ABC and NBC, and if the weather was just right and if my brother held the antenna a certain way, we could occasionally get CBS. But PBS was how folks in my town watched television, especially educational television and the news.
That made me a PBS (Public Broadcasting System) kid. Our family was an NPR (National Public Radio) family. So, when I reported on President Donald Trump’s executive order cutting federal funding for NPR and PBS, I brought that perspective with me. I am not neutral on the issue, and that’s exactly why I wrote about it.
That wasn’t the only entertainment-related news this week. Monday, May the Fourth, was unofficially Star Wars Day, based on the iconic phrase “May the Force be with you.” I spent the day watching the original Star Wars movies with my family–and writing up the tax consequences of the first movie. (If you weren’t previously aware, the concept hinged on trade wars and tariffs, as explained in the fourth film in the Star Wars series and the first film in the prequel trilogy.)
It’s the first of the series for summer. If you have a movie for me to review—especially those with an interesting tax or financial crimes twist—send me an email (kerb@forbes.com) for consideration.
I also have a quick mea culpa: I had hoped to share the updated small business toolkit in this newsletter. It’s not quite ready for prime time yet, but for a good reason: We’re working on packaging the articles for you in one place. Unfortunately, that takes a little more technical and artistic skill than I can manage on my own, which has pushed out the publication date a bit. Keep an eye out for it–it’s coming soon!
Enjoy your weekend and give your mom a hug if you can,
Kelly Phillips Erb (Senior Writer, Tax)
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Questions
This week, a taxpayer asked:
I’m retiring this year. How early can I take Social Security?
Congrats on your retirement!
How much you will receive in Social Security retirement benefits depends on your age. You can receive your Social Security retirement benefits as early as age 62. However, you’ll only receive your full benefits if you wait until your full retirement age to claim your money.
For those born between 1943 and 1954, your full retirement age is 66. For those born after 1960, your full retirement age is 67. For those born between 1955 and 1959, your full retirement age is between 66 and 67—you can find out exactly when it is by clicking over to the Social Security website and plugging in your birth year.
The longer you wait, generally, the higher your monthly benefit will be. Specifically, if you wait to take your benefits from your full retirement age until age 70, your benefit amount will increase.
If you receive benefits early, your benefits will be reduced by a small percentage for each month before your full retirement age. You can figure out how much your benefit will be reduced if you receive benefits from age 62 up to your full retirement age by checking out this Social Security Administration website chart.
(You can also check your online account to see how much you’ll get when you apply at different times between the ages of 62 and 70.)
If you’re eligible because of a spouse’s work, the amount doesn’t increase if you wait. If your spouse has passed away, you may be eligible for Survivor benefits starting at age 60, or age 50 if you are disabled.
You’ve noted that you’ve recently retired, but if you were to continue to work, it could impact your benefits. If you claim benefits and continue to work before you reach your full retirement age, your benefit payment will be temporarily reduced if you earn more than your earnings limit, which varies by age. You can work after your full retirement age and earn as much as you’d like without reducing your benefit payment—for 2025, that includes those born before 1958.
You can learn more about how Social Security and Supplemental Security Income (SSI) benefits will increase by 2.5% in 2025 for more than 72.5 million Americans here. On average, Social Security retirement benefits increased by about $50 per month starting in January.
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Statistics, Charts, And Maps (Oh My!)
Once again, the most popular names for babies born in the United States are Liam and Olivia. The second most popular names, Emma and Noah, also didn’t budge. The rankings are measured by the Social Security Administration (SSA) data based on applications for Social Security cards.
According to agency data, Social Security numbers were recorded for 3,612,777 new babies, with male births (1,845,330) edging out female births (1,767,447) in 2024. That reflects an increase over 2023, which recorded 3,595,309 new babies. It reverses—just slightly—a trend of fewer births in the U.S. since the highest year on record, 2007, which welcomed 4,330,961 new babies.
The lists are compiled from names on Social Security card applications. Today, getting a Social Security number at birth typically happens when you submit information for the birth certificate.
If you decline to get a Social Security number for your child when you submit information for the birth certificate, you can always apply later, but that’s a little more complicated and time-consuming since the Social Security Administration (SSA) will have to verify your child’s birth certificate. That could be even more of a challenge if SSA offices close due to potential budget cuts (a charge that the agency has labeled as “false”).
Why get a Social Security number at birth? Taxes. Your child must have a Social Security number for you to claim your child as a dependent on your income tax return. If you can’t claim your child as a dependent, you can’t claim certain tax breaks, including the earned income tax credit (EITC), the child tax credit, and the additional child tax credit. Additionally, without a Social Security number for your child, you can’t file as head of household (HOH) or a qualifying widow(er) with a dependent child.
Your child may also need a number if you plan to open a bank account (including a 529 savings plan) for them, buy savings bonds for their benefit, get medical coverage or insurance for them, or apply for government services on their behalf.
A Deeper Dive
While Artificial Intelligence, or AI, can take many forms, it’s largely technology that allows computers and machines to simulate human learning, problem-solving, and decision-making. That’s a broad statement, but that’s because it’s powerful technology, and we’re still figuring out what it can do, including when it comes to tax.
The IRS already uses AI to select individuals and partnerships for audit, identify fraud, and perform other compliance and enforcement functions. But that doesn’t mean that machines alone can run the IRS. A Government Accountability Office (GAO) study on government use of AI confirmed that it requires both high-quality data and a skilled workforce to truly recognize the benefits. (That workforce is shrinking, as a recent report from the Treasury Inspector General for Tax Administration found, noting that there have been IRS job losses in every state, the District of Columbia, and Puerto Rico.)
That includes chatbots like the Interactive Tax Assistant on the IRS website, which can answer a number of questions you might have about your tax obligations, such as “Do I have to file a tax return?” or “When is the tax return due?”
But limitations still exist—remember that AI answers questions based on what information has been provided. That can result in simplexity, described as occurring when the law is complex and the government doesn’t simplify the underlying law and instead presents the law as though it’s simple. The result can be that the government can present the formal law as something other than what it actually is.
There are also challenges in the private sector. In a recent U.S. Tax Court case, Dealers Auto Auction of Southwest LLC v. Commissioner, an Arizona company purchased specialized software intended to assist with compliance in preparing Form 8300. Despite having the software in place, the IRS determined that the company failed to file the required forms and assessed $118,140 in penalties. While the Tax Court rejected the IRS’s “blanket assertion” that software malfunctions cannot qualify for reasonable cause, it did not provide penalty relief. The company could not convince the Tax Court that the software was really to blame. As AI attempts to take more human interaction out of the tax process, it will be interesting to watch how “reasonableness” is determined.
Generally, taxpayers prove reasonable cause by detailing facts and circumstances that show they acted with ordinary business care and prudence, notwithstanding the compliance failure. But in some instances, taxpayers can’t raise the reasonable cause defense as a matter of law. For example, in U.S. v. Boyle, the Supreme Court held that taxpayers can’t use reasonable cause as a defense for a late-filing penalty if the taxpayer merely relied on a tax professional to file the return. The government raised Boyle in Dealers Auto and a second case filed in Tax Court, Murphy v. U.S. The lesson to be learned from both? Taxpayers should attempt to distinguish between reliance on a tax professional to file a tax return by a filing deadline (not reasonable cause) and reliance on a tax professional to advise on the necessity of a certain filing obligation (potentially reasonable cause).
Tax Filings And Deadlines
📅 May 15, 2025. Due date for many tax-exempt organizations to file their 2024 tax returns.
📅 June 16, 2025. Due date for individuals living and working abroad to file their 2024 federal income tax return and pay any tax due.
📅 September 30, 2025. Due date for individuals and businesses impacted by recent terrorist attacks in Israel.
📅 October 15, 2025. Due date for individuals and businesses affected by wildfires and straight-line winds in southern California that began on January 7, 2025.
📅 November 3, 2025. Due date for individuals and businesses affected by storms in Arkansas and Tennessee that began on April 2, 2025.
Tax Conferences And Events
📅 May 13-14, 2025. National Association of Enrolled Agents 2025 Capitol Hill Fly-In, Washington, DC. Registration required (NAEA members only).
📅 June 16-19, 2025. Latino Tax Fest. MGM Grand Hotel & Casino, Las Vegas, Nevada. Registration required.
📅 June 18, 2025. Avalara CRUSH on Tour. Bridgeport Art Center (Skyline Loft), 1200 W. 35th Street, Chicago, IL 60609. Registration required.
📅 June 26, 2025. Avalara CRUSH on Tour. Iron23 (Flatiron District), 29 West 23rd Street, New York, NY 10010. Registration required.
📅 July 18-19, 2025. Tax Retreat “Anti Conference.” Denver, Colorado. Registration required.
📅 July 21-23, 2025. National Association of Tax Professionals Taxposium 2025. Caesars Palace, Las Vegas, Nevada. Registration required.
📅 July 22-24, 2025. Bridging the Gap Conference. Denver Marriott Tech Center, 4900 S. Syracuse Street, Denver, Colorado. Registration required.
Trivia
Speaking of retirement, on the television show, “The Golden Girls”, which character was audited by the IRS?
(A) Blanche
(B) Dorothy
(C) Sophia
(D) Rose
Find the answer at the bottom of this newsletter.
Positions And Guidance
The IRS published IRB 2025-20.
The American Bar Association (ABA) Section of Taxation submitted comment to the IRS about the discussion draft of the Taxpayer Assistance and Service Act, which seeks to amend the tax code to improve the efficiency and effectiveness of the IRS and broaden the options available to taxpayers to challenge adverse determinations by the IRS in a prepayment forum. If enacted, the draft legislation would modernize certain functions of the IRS, provide additional taxpayer services, and address administrative and judicial inefficiencies through targeted tax law reform.
Noteworthy
The American Institute of CPAs (AICPA) announced that Carl Peterson, vice president of small firm interests, will retire June 30. The AICPA says Peterson’s retirement caps “a career defined by advocacy and an unwavering commitment to elevating the voices of small firms across the accounting profession.”
Taxbit, the enterprise-grade tax and accounting compliance platform for digital assets, has appointed six executives in Austria, Brazil, Italy, Norway, Spain, and the UK. The executives bring regulatory knowledge and policy development experience to Taxbit’s team of regional experts.
Milbank LLP announced that John G. Green has joined its Washington, D.C. office as a partner in the firm’s Global Project, Energy and Infrastructure Finance Group. Green concentrates his practice on federal tax planning and controversy, advising clients on complex tax issues that arise in both domestic and international contexts.
The IRS will begin accepting applications for Low Income Taxpayer Clinic (LITC) matching grants from May 15, 2025, to July 14, 2025. The period of performance for the grant will be January 1, 2026, to December 31, 2026. An LITC must provide a dollar in matching funds for every dollar of funding the IRS awards. An LITC must also provide services for free or for no more than a nominal fee (except for reimbursement of actual costs incurred).
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In Case You Missed It
Here’s what readers clicked through most often in the newsletter last week:
You can find the entire newsletter here.
Trivia Answer
The answer is (B) Dorothy.
In a Season Three episode titled “The Audit,” Dorothy and her ex-husband, Stan, are audited and find out that they owe the IRS $5,000. According to the auditor, they’ll go to jail if they don’t each come up with $2,500.
A few quick notes: Married couples who file jointly remain responsible for the bill, even after a divorce (the show got that right). However, as far as the IRS is concerned, a married couple is jointly and severally liable for the total–that means that the IRS can collect all of it from either or both. You can petition the IRS to sever the liability so that you’re each responsible for only half, but that’s not very common.
One more thing: If you simply can’t pay your tax bill, the IRS won’t toss you in jail–we don’t have a debtor’s prison system. That said, it is a crime to evade taxes or hide income or assets to avoid payment–those actions can land you in jail.
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