Pat's Income Tax Service

10/31/2026

A Trump account is a traditional IRA opened for a child, and since Oct. 1, 2026, Treasury has been enrolling eligible children automatically. The account still has to be claimed by a parent or other authorized adult in the Trump Accounts app.

Any child with a valid Social Security number qualifies for the account itself, as long as they won't turn 18 before the end of the year it's set up. A smaller group can also get money from the government: a child who is a U.S. citizen, born from Jan. 1, 2025 through Dec. 31, 2028, can receive a one-time $1,000 contribution once an adult makes the election on Form 4547.

After that, others can add money. Family members and anyone else can put in up to $5,000 a year in total, and that limit rises with inflation after 2027. An employer can contribute up to $2,500 for an employee's child without it counting as the employee's income, but that money counts inside the same $5,000 limit. States, local governments, tribal governments and charities can add money outside the limit, but only as a general contribution spread across a whole group of children, not a gift to one child.

The investments are narrow on purpose. Until the year the child turns 18, the money can only sit in mutual funds or ETFs that track the S&P 500 or another index made up mostly of U.S. companies, with no leverage and annual fees of 0.1% or less.

The money stays locked until the first day of the year the child turns 18. From there it follows the rules of a traditional IRA, and a traditional IRA can be converted to a Roth IRA. Withdrawals are taxed on everything except what was put in with after-tax dollars, and the $1,000 government contribution and employer money don't count as after-tax dollars.

That's where a 529 plan compares well for college. Money in a 529 grows without tax, and withdrawals used for qualified higher education expenses aren't taxable. A Trump account's earnings are taxed when they come out. The $1,000 seed is still money a family doesn't have to put in.

Source: 26 U.S.C. 530A, 128 and 6434 (Cornell LII); IRS, Trump Accounts; IRS Instructions for Form 4547; IRS, Retirement plans FAQs regarding IRAs; IRS Topic 313, Qualified tuition programs. Read Oct. 29, 2026.

Educational information only, not financial, tax, legal, or investment advice. Eligibility and timing depend on your child and your family's situation, so confirm details with the IRS or a tax professional.

10/17/2026

📋 The IRS already has a copy of every 1099 a payer filed with your Social Security number on it. The only question is whether you do.

Every W-2 and 1099 a payer sends you also goes to the government, W-2s through Social Security and 1099s straight to the IRS. After you file, an automated system compares the two piles. When something doesn't line up, an IRS examiner looks at the return, and if the discrepancy holds, a CP2501 or CP2000 notice goes out. The IRS closed about 1 million of those underreporter cases in fiscal 2025.

A CP2000 is not a bill. The IRS doesn't count it as an audit either; it calls these "tax return reviews by mail." It is a proposed change, and you have 30 days from the date on the notice to agree or explain, 60 if you live abroad. Plenty of people pay it reflexively anyway, which is the expensive version of a missing form.

The free fix is your Wage and Income transcript, inside your IRS Individual Online Account. It shows forms such as the W-2, 1098, 1099, and 5498 filed under your number, for this year and the nine before it. It does not show state withholding. New users verify identity first,.

The part the original version of this post got wrong, and several of you pointed out: the transcript is only as complete as what payers have filed. W-2s and 1099-NECs are due by January 31, so those show up in February. Bank and brokerage 1099s can be filed with the IRS as late as March 31, so they often don't appear until April. Corrected brokerage forms and Form 5498 land after the filing deadline.

Your own copies come much sooner. Payers owe you most 1099s by January 31 and brokerage statements by February 15, so you can file on your copies. The transcript is the cross-check, not the source.

For retirees, the two forms that matter most are the SSA-1099 from Social Security and the 1099-R from every pension, IRA, or annuity that paid you. Both arrive in January.

Two things to look for when you compare the transcript to your folder. A form on the transcript you never received: get a copy from the payer. A form with a number that doesn't match yours: that is the payer's error, and you want a corrected 1099 before you file, because the IRS will match against the wrong one. If a payer won't fix a W-2 or 1099-R, the IRS has a process for that too, starting with a call to them after the end of February.

One rule sits above all of this. Income is taxable whether or not anyone sent a 1099. The transcript tells you what the IRS knows. It does not tell you what you owe.

If you get a lot of 1099s, one more limit: the online transcript stops generating at roughly 85 documents, and past that you request it with Form 4506-T.

Do you check your transcript before you file, or has a CP2000 ever shown up in your mailbox?

R.J. Weiss, CFP

The content shared here is for educational and informational purposes only. It is not personalized investment, tax, legal, or financial advice. Consult a licensed professional before making decisions based on your specific situation.

10/17/2026

1. What Is an SSN?

SSN (Social Security Number) is a personal identification number issued by the Social Security Administration (SSA).

Common uses:

* Filing personal income taxes
* Employment and Social Security benefits
* Identifying individuals on tax documents
* Opening personal bank accounts
* Certain credit and financial activities

Format: 9 digits (e.g., 123-45-6789).

2. What Is an EIN?

EIN (Employer Identification Number) is a federal tax identification number issued by the Internal Revenue Service (IRS) to identify businesses and certain other entities.

Common uses:

* Filing business tax returns
* Reporting employment taxes
* Hiring employees
* Opening business bank accounts
* Registering and operating certain business entities

Format: 9 digits (e.g., 12-3456789).

Important: Applying directly through the IRS is free.

3. Key Differences: EIN vs SSN

Feature SSN EIN
Issued by SSA IRS
Identifies Individuals Businesses and certain entities
Main purpose Personal identification and tax reporting Business tax reporting
Number of digits 9 9
Used for employment taxes Employees provide SSNs Employers report using their EIN
Required for every business? Depends on the owner’s tax situation Depends on the business structure and tax obligations
Available to foreign applicants? Only to eligible individuals Eligible foreign applicants can apply

4. When Can You Use Your SSN for Business?

You may be able to use your SSN if:

* You operate as a sole proprietor.
* You have no employees.
* You are not required to obtain an EIN for another federal tax purpose.
* Your business structure and tax obligations permit using your personal taxpayer identification number.

Example: A sole proprietor with no employees may report business income on their personal tax return using Schedule C and their SSN.

5. When Do You Need an EIN?

You generally need an EIN if:

* You hire employees.
* You operate a partnership or corporation.
* You have certain employment or excise tax obligations.
* You operate a qualifying tax-exempt organization.
* Your business needs an EIN for certain banking or state tax purposes.

Important: A single-member LLC may not always need an EIN for federal income tax purposes, but it may need one for employment taxes, certain excise taxes, banking, or other requirements.

6. Can Foreigners Apply for an EIN?

Yes! Eligible foreign individuals and business owners can apply for an EIN even if they do not have an SSN.

International applicants whose principal place of business is outside the United States can apply using the IRS’s international application procedures, including Form SS-4.

However, obtaining an EIN does not automatically establish immigration status, work authorization, or exemption from U.S. taxes.

Foreign business owners should also determine whether they need an ITIN or have additional U.S. tax filing obligations.

7. Real-Life Examples

Example 1: Freelance Graphic Designer

A U.S. sole proprietor with no employees may be able to use an SSN to report business income.

Example 2: Online Store Owner

A business owner forming a corporation generally needs an EIN for federal tax purposes.

Example 3: Small Business Hiring Employees

An employer needs an EIN for applicable employment tax reporting and must collect employees’ SSNs for payroll reporting.

Example 4: Foreign Entrepreneur

A foreign entrepreneur may qualify for an EIN without having an SSN, but must follow the IRS application requirements.

8. Security Tip 🔐

* SSN = Personal identity
* EIN = Business tax identity

Protect both numbers. Avoid sharing them unnecessarily, and use secure methods when providing tax identification information to banks, employers, or authorized business partners.

An EIN is not a replacement for an SSN when an individual taxpayer identification number is legally required.

9. Quick Summary 💡

✅ SSN: Identifies an individual for Social Security and tax purposes.

✅ EIN: Identifies a business or other eligible entity for federal tax purposes.

✅ Sole proprietors: May be able to use an SSN if an EIN is not required.

✅ Corporations and partnerships: Generally need an EIN.

✅ Foreign applicants: May qualify for an EIN without an SSN.

✅ EIN applications: Free through the official IRS website.

Official IRS resource: Apply for an EIN through the IRS⁠

Tax requirements depend on your business structure and circumstances. Always verify the rules that apply to your situation.

10/09/2026

👶 If you have a child under 18 with a Social Security number, the U.S. Treasury opened a Trump Account in their name on October 1, unless you had already signed them up. More than 60 million accounts were created that day.

Trump Accounts launched on July 4, but only for kids whose families signed them up. Few did. By July 30, parents had filed about 5.6 million sign-up forms for roughly 73 million eligible children, according to Treasury's own figures.

Treasury has not said how many of the new accounts have been claimed since.

An unclaimed account can't take money from family or an employer. And for babies born from January 1, 2025 through December 31, 2028, it won't get the $1,000 Treasury seed on its own.

A parent or guardian has to claim the account and file the $1,000 election, IRS Form 4547, which can be done in the official Trump Accounts app. Only U.S. citizens with a Social Security number qualify for the $1,000.

The $250 works the opposite way. Michael and Susan Dell's pledge puts $250 into the accounts of 25 million children born from 2016 through 2024 who live in ZIP codes with a median family income of about $118,000 or less, and it is deposited with no application. A parent only needs to claim the account to see it.

Kids born 2009 through 2015 get no seed money, but their account is already open. Claiming it matters if a grandparent or an employer wants to add money. Family and employer contributions together are capped at $5,000 a year per child.

Grandparents can't claim the account themselves unless they are the child's legal guardian. They can mention it to the parents, and contribute once it's claimed.

The money is locked up until the year the child turns 18, and after that it follows traditional IRA rules. For most families, the free $1,000 or $250 is worth claiming even if you never add a dollar of your own.



P.S. Once a week, I email the best money article I read, with my take on this week's top Facebook posts and what's new on the Ways to Wealth blog. It's free, and you can sign up on the Ways to Wealth home page.

R.J. Weiss, CFP®

The content shared here is for educational and informational purposes only. It is not personalized investment, tax, legal, or financial advice. Consult a licensed professional before making decisions based on your specific situation.

09/30/2026

09/30/2026

We encourage everyone to register for an IRS account. Furthermore, the new application serves as an effective tool for monitoring your account activity with the IRS.

IRS2Go has a new name and more features!

The IRS app gives taxpayers secure access to services from their phone. View available balance information, make a payment, access certain notices and letters, review tax records, and more. Current IRS2Go users don't need to download a new app. If automatic updates are enabled, the app will update on its own. You can also update it through the Apple App Store or Google Play.

For verified links to the official app and to help protect yourself from scams, start here: IRS.gov/app

09/11/2026

🇺🇸🙏🕊✨️

09/01/2026

TAX TIP TUESDAY!