Don’t Let This Be You: Tax Stories of 2025
Not because of the IRS—but because people waited too long to plan
Every year, I have the joy of helping people across so many different areas of life:
Newly married couples who need guidance on taxes and new careers
Seniors looking to shield themselves from the increased tax burden
New business owners are looking to properly plan for taxes and proper bookkeeping techniques.
Seasoned business owners who know how to make money but need someone to handle it all, from bookkeeping, tax advising, and tax preparation.
But in all of these, there are always situations I think many of us can learn from to make better decisions and better plan for the future. I am going to do my best to share the stories and then give my opinion below
“Still Working at 72… and Getting Taxed on Social Security”
The Situation
I had a client this season, a really sweet 72-year-old woman, come to me to handle her federal and Louisiana taxes.
She’s still working at Walmart, making about 32K a year, because where she lives is expensive and she can’t afford to stop working. She’s renting, she doesn’t have much in retirement, so working isn’t really optional for her; it’s necessary just to get by.
As I started going through her return, I saw that because of her income level, a large portion of her Social Security was being taxed, in her case, close to that 80 to 85 percent range. She had no idea it could even happen, so there was confusion and frustration right away.
Then, digging a little deeper, it looked like her previous preparer hadn’t been reporting her Social Security benefits at all in prior years, which isn’t correct under the law. So now, not only is she dealing with the reality that it's taxable, but it also feels inconsistent with what she experienced before.
So from her perspective, it feels like something is wrong, or like she’s being treated unfairly, when really it’s just everything catching up at once.
My Opinion
“To me, this isn’t really a tax problem; it’s a combination of poor guidance over time and lack of planning.
Yes, the prior preparer's handling of Social Security is part of the issue. But the bigger picture is that there was never a real conversation around how her income, Social Security, and lack of retirement all work together.
And to be clear, I don’t think this is her fault. She made the best decisions she could with the information she had. But when people don’t fully understand their tax situation, it usually leads to frustration and sometimes even anger when the outcome doesn’t match expectations.”
How to Address It Going Forward
Going forward, this is where proper planning makes all the difference.
First, it’s about education, making sure she understands how her income affects her Social Security taxation, so there are no more surprises.
Second, it’s about putting a plan in place year to year so we can manage the outcome rather than react to it.
And the bigger picture, this is why retirement planning matters so much. Because situations like this don’t just happen overnight, they build over time.
The goal now is simple: give her clarity, give her a plan, and make sure she’s never in the dark about her situation again.
Horror Story: 40K Tax Bill from Doing It Themselves
The Situation
“I had a couple come to me this season who now both work regular W2 jobs, but they used to run a business starting back in 2019.
From 2019 up until now, they have been doing their own taxes using FreeTaxUSA, just trying to save money and handle it themselves.
Over time, they ended up owing about 40K in back taxes, and it’s still growing with interest because they never set up a payment plan or really addressed it.
When I started digging into their returns, I saw something pretty concerning. Even though the business was only in one spouse’s name, they were reporting the income twice, basically once under each spouse.
So they were paying tax on the same income two times.
On top of that, based on the records they actually had, they weren’t taking a lot of deductions they should have been. Things like home office, mileage, and other normal business expenses just weren’t being fully captured.
So not only were they double-reporting income, but they were also missing opportunities to reduce it.”
My Opinion
“This is a perfect example of how trying to save money up front can end up costing way more in the long run.
The issue here wasn’t just a small mistake; it was years of compounding errors. Double reporting income alone is a huge problem, and then you stack that with missed deductions and no real strategy, and it just snowballs.
And again, I don’t think they were trying to do anything wrong. They just didn’t fully understand how to report it correctly, and tax software doesn’t always catch that.
But this is where DIY taxes can get dangerous, especially when you have a business involved.”
How to Address It Going Forward
“Now the focus is on fixing what we can and putting structure in place.
The first step is to go back and amend returns where appropriate, correcting double-reported income and capturing the deductions they should have taken. Based on what I saw, at a minimum, they should owe significantly less, potentially closer to half of what they’re at now.
Second, getting them on a proper plan with the IRS so the balance stops getting worse and they can actually manage it.
And going forward, making sure everything is reported correctly, deductions are tracked, and they’re no longer guessing about their taxes.
Because situations like this don’t happen overnight, they build year after year when there’s no clear guidance.”
Horror Story: Doing the “Right Thing” and Still Losing 6K a Year
The Situation
“I had a couple come to me making about 140K a year in California.
Because of her student loans, they file married filing separately to keep her payments lower, which makes sense from a loan strategy standpoint.
She claims the kids on her return and gets herself pretty close to net zero when everything is said and done.
But then, when I looked at the full household picture, they’re losing about 6K a year on the tax side.
Most of that is coming from him. His withholding is off, and he’s not set up properly for the situation they’re actually in.
And on top of that, since they’re in California, a community property state, income and taxes are essentially split 50/50, which adds another layer of complexity that they weren’t accounting for.”
My Opinion
“This is a good example of doing one thing right, but not coordinating everything else around it.
Filing separately for student loan purposes can absolutely make sense. But when you do that, you lose certain tax benefits, and you have to be very intentional with how everything else is set up.
In this case, it looks like his W-4 is still set up as if they’re filing jointly with kids, even though he’s not the one claiming them. So his withholding isn’t matching reality.
And when you combine that with California community property rules, it creates a mismatch that costs them every year.
So again, not really a tax problem, it’s a lack of coordination between tax strategy, withholding, and long-term planning.”
How to Address It Going Forward
“Going forward, this just needs to be tightened up.
First, his W-4 needs to be corrected so his withholding reflects their filing status.
Second, we need to account for California community property rules and make sure income is being planned for properly between both of them.
Third, they should be using retirement accounts more intentionally. A 401K for him and a 403B for her can help bring down taxable income, especially in a high tax state like California.
And most importantly, this is something where you run the numbers ahead of time. Filing separately might still be the best move, but you don’t guess on that. You plan it out so you’re not losing money every year.”
Horror Story: When Business Owners Grow… But Don’t Plan
The Situation
“One big pattern I saw this year was with newer business owners.
A lot of them actually did better than they expected in 2025, which is great, but most of them were still in that 50K range and didn’t really understand what comes with it.
I had several people come in who had no idea they were supposed to be making quarterly tax payments, and they weren’t setting anything aside for taxes at all.
So they made money, felt good about it, and then tax season hits, and now they owe and aren’t prepared.
I also saw people jumping into S Corps way too early, like businesses only making 4K a year, trying to run an S Corp when it doesn’t really make sense yet.
Then, on the flip side, I had married couples where both spouses are working in the business, but the LLC is in only one person’s name. In a state like Florida, that means they’re not both getting credit toward Social Security the way they could if it were structured properly, such as in a partnership.
And another big one, people coming in with just bank statements, expecting everything to get cleaned up and filed before April 15th.
At that point, the year is already over. If the books aren’t right, there’s only so much that can be done.”
My Opinion
“To me, this all comes down to a lack of understanding of what it actually means to run a business.
Making money is one part of it, but taxes, structure, and bookkeeping are just as important.
A lot of people are either getting advice from the wrong places, moving too fast into things like S Corps, or waiting too long and expecting everything to be fixed at tax time.
And the reality is, tax season is not the time to fix these problems. That work has to be happening throughout the year.”
How to Address It Going Forward
“Going forward, it starts with getting the basics right.
Understanding that if you’re making money, you need to set some of it aside and make quarterly payments.
Making sure your business structure actually matches your income level and situation, not just doing something because you heard it saves taxes.
If you’re married and both work in the business, make sure it’s set up in a way that benefits both of you long-term.
And most importantly, keep your books clean throughout the year, so when tax season comes, you’re not trying to rebuild everything from scratch.
Because at the end of the day, the goal is to be in control of your numbers before the year ends, not scrambling after it’s already over.”
Wrap Up
“When I look back at this tax season, none of these situations were really about bad people or even bad intentions.
They were all just people trying to do their best, but without the right information or a real plan.
And that’s the common theme across all of this.
Waiting until tax season to figure things out is where the problems start. By then, most of the decisions are already made, and you’re just dealing with the outcome.
Whether it’s someone working at 72 and getting surprised by Social Security taxes, a couple who accidentally created a 40K problem trying to do it themselves, or business owners making money but not understanding what comes with it, it all comes back to the same thing.
Lack of planning.
The goal isn’t to be perfect. It’s just to be proactive.
Have a plan before the year ends. Understand how your decisions affect your taxes. And make sure everything is working together, not against you.
Because tax season shouldn’t be a horror story.
It should just be confirmation that your plan worked.”