If you’ve been reading the news, you know that at least three important things happened this week: Bad Bunny was named as the half-time performer for the 2026 Super Bowl, Taylor Swift released her twelfth album, the highly anticipated “Life of a Showgirl” and the government shut down.

In my house, that list varies in order of importance, depending on whom you talk to, so I’ll address them in the order listed above.

Bad Bunny, born Benito Antonio Martínez Ocasio, is a Puerto Rican musician. The former Forbes 30 Under 30 lister (he’s now 31) and magazine cover star will play the Super Bowl on February 8, 2026. The spot provides enormous visibility–last year’s Kendrick Lamar's 2025 performance reached 133.5 million viewers,

The pick raised a lot of eyebrows, including those from folks who seem to have forgotten that Puerto Rico is, in fact, American. Puerto Rico is a U.S. territory which means that it offers U.S. legal protections and, as Steve Forbes reminds us, a special provision of the U.S. tax code (section 936) that used to allow American corporations operating there to avoid federal taxes on profits earned on the island. Washington eventually phased out section 936, which Forbes calls a mistake that should be reversed. It would be, he suggests, key to restoring the kind of incentives that once made Puerto Rico a pharmaceutical powerhouse.

Billionaire Taylor Swift (yes, really, thanks to the earnings from her Eras Tour and the value of her music catalog) also had tongues wagging with the release of her 12th studio album, The Life of a Showgirl. As all good Swifties expected, it’s filled with Easter eggs and messages for fans about the tour and her relationship with NFL star Travis Kelce.

When Swift announced the release of the album on the New Heights podcast–co-hosted by Kelce and his brother, Jason–she promised a peek into "everything that was going on behind the curtain" during the Eras tour. Tucked into the 12-tracks was a song called “Wi$h Li$t” where she croons, “Have a couple kids, got the whole block lookin' like you…Got me dreaming 'bout a driveway with a basketball hoop…Boss up, settle down, got a wish list.”

It has many fans thinking that Swift is ready to hang up her Louboutins and find some place to plot out the next stage of her life.

She’s not alone. Many working Americans are thinking about their next step–including retirement. A good place to start? Forbes’ new list of the Best Places To Enjoy Your Retirement In 2025. These are great locations for settling down and perhaps, hooping it up.

Successful businesspeople who opt to settle down abroad are often surprised to learn that retirement planning across borders isn't always straight-forward, even where there might be a tax treaty. There are significant differences in retirement planning depending upon the goals of the retiree and their countries of affiliation.

Taxpayers who are looking for guidance on retirement, pension and other tax issues from the IRS will have to act fast: The IRS likely won’t be picking up the phone for a while.

A government shutdown officially began in Washington on October 1, 2025, at 12:01 a.m. However, according to the IRS’ contingency plan, there will be no changes to IRS operations for the first five days of a government shutdown, thanks to a reallocation of money from the Inflation Reduction Act. (And yes, there’s a great deal of irony to be found from the fact that the IRS is using money to stay open that Congress had been desperately trying to claw back.) The IRS confirmed that it would be business as usual at the tax agency through Tuesday, October 7, 2025. What happens after that is unclear.

What is clear is that taxpayers with a valid filing extension for the 2024 tax year still face a deadline of October 15, 2025–that hasn’t changed. Earlier this year, the IRS estimated that nearly 19 million taxpayers would file on extension.

Similarly, any payments or collection activities will not be moved—you should continue to make scheduled payments, including those that are part of installment agreements. Employers must also continue to deposit federal income tax withholdings, along with Social Security and Medicare taxes, according to the regular deposit schedule.

Of course, with extensions looming, taxpayers and tax professionals are busily trying to finish up tax returns—and many rely on my drink of choice, coffee. Estimates suggest that 2.25 billion cups of coffee are consumed daily worldwide, making coffee second only to oil as the most valuable legally traded commodity globally. That translates to nearly 120 million people who depend directly or indirectly on coffee for their economic survival.

Unfortunately, my love of coffee is going to cost me: The U.S. price of coffee is already 39% higher than a year ago. Bad weather and supply-chain disruptions have contributed to that price boost, but tariffs on imports from Brazil and Vietnam—the world’s two biggest suppliers—are threatening to send prices soaring even more.

A tariff is a tax on imports. The idea is that tariffs make it more expensive to use foreign goods. In theory, this should mean a decline in imports and an uptick in the use of domestic goods, assuming that the goods are manufactured or available at home.

But even the most protectionist tariffs can’t spur production of items that can’t be easily produced or grown in the U.S.—like coffee. Only one U.S. state (Hawaii) grows coffee at any reasonable scale (it produces far less than 1% of the world’s coffee). To help keep the country caffeinated, Representatives Don Bacon (R-Nebraska) and Ro Khanna (D-California) introduced the bipartisan “No Coffee Tax Act.” The Act would repeal the tariffs on all coffee products except “coffee substitutes containing coffee” retroactive to January 19, 2025. Fingers crossed.

And that’s a wrap for this week–keep reading for more good stuff below, including some more IRS updates.

Enjoy your weekend,

Kelly Phillips Erb (Senior Writer, Tax)

This is a published version of the Tax Breaks newsletter, you can sign-up to get Tax Breaks in your inbox here.

Questions

This week, a reader asks:

I can’t pay what I owe in taxes, but I’m scared to call the IRS. I know I can make payments. What is the least amount that I can pay?

If you can’t pay your tax bill right away, the IRS will let you make smaller monthly payments over time. (Keep in mind that you’ll still owe penalties and interest until the balance is paid off.)

The good news is that you don’t have to call the IRS. The IRS offers options other than calling to set up an agreement, including applying online through the IRS website and by mail.

Applying for an installment plan is pretty straightforward. As part of the process, the IRS will ask how much you can afford to pay each month. The agency, of course, will want you to pay as much as possible, while most taxpayers want to pay as little as possible.

A quick rule of thumb as to what the IRS will accept? Divide your total balance by 72 months–that’s typically the default.

If you can pay off your balance within 180 days and you apply online, there’s no setup fee, and you won’t have to submit any financial information. For longer-term plans, you may still be able to apply online, but there will be a processing fee. (If you prefer to call or mail in a form, the fees are typically higher.)

The installment plan that you qualify for typically depends on how much you owe.

If you owe $10,000 or less, you can apply online. You’ll input some basic information, including how much you owe, and the IRS will let you propose an amount to pay each month, assuming that you can pay the entire balance in three years or less. To qualify, you and your spouse must have filed and paid on time for the last five years, and you can’t have another plan already in place.

If you owe between $10,000 and $50,000, you can still apply online–you typically have to commit to paying your balance in six years or less. If you owe more than $25,000, you’ll have to agree to pay by direct debit or payroll deduction. You aren’t usually required to provide detailed financial information unless you can’t afford the standard monthly payment (the amount owed divided by 72).

If you owe more than $50,000, you can’t apply online or over the phone. Instead, you’ll need to mail Form 9465 along with disclosures about your income, assets, investments, and bank accounts.

If any of this sounds intimidating, consider working with a tax professional. But if you think you can pay your balance over time, setting up an installment plan is generally much easier—and less scary—than most people expect.

–

Do you have a tax question that you think we should cover in the next newsletter? We'd love to help if we can. Check out our guidelines and submit a question here.

Statistics, Charts, and Graphs

It’s become clear that many Americans don’t understand the differences between Medicare and Medicaid. It’s understandable since they do have some similarities: Medicare and Medicaid are the two largest public health coverage programs in the U.S. However, there are several key differences.

Medicare is a federal health insurance program that mainly covers people based on age and specific health conditions. It is available to those aged 65 or older, regardless of income, as well as to some younger individuals with disabilities. Because it is a federal program, Medicare operates the same way no matter where you live in the country.

Medicaid is a joint federal and state program that offers health coverage to low-income families. Eligibility varies by state but typically includes children, pregnant women, seniors (especially those needing long-term care), and individuals with disabilities. Unlike Medicare, Medicaid is run by states relying on federal guidelines—that means there can be significant differences in eligibility rules and benefits depending on where you live.

You can qualify for Medicaid based on income, household size, disability, family status, and other factors in all states (though again, that can vary from state to state). But in states that have expanded Medicaid coverage, you can qualify based on your income alone.

(Forty-one states currently have expanded Medicaid coverage, as shown in the map above.)

Medicare is primarily funded by payroll taxes. In contrast, state and federal governments pay for Medicaid.

(Overall, Medicaid spending reached approximately $890 billion during the 2023 federal fiscal year. The federal government covered most of those costs (69%)—the exact funding amounts vary from state to state. That funding is wrapped up in general revenues.)

One of the sticking points in the Medicaid funding battle is the treatment of immigrants. Undocumented immigrants have never been eligible for full Medicaid benefits—they may not enroll in regular Medicaid. Undocumented immigrants can qualify for Emergency Medicaid, which covers only emergency medical conditions.

Lawfully present immigrants—including those here on a green card—may qualify for Medicaid but typically face some restrictions. For example, unless otherwise exempt, even immigrants with legal status must wait five years after obtaining lawful permanent residency before qualifying for Medicaid.

Undocumented immigrants also do not qualify for Medicare. Typically, to enroll in Medicare Part A or Part B, you must be a U.S. citizen or a qualified lawfully present immigrant aged 65 and older who has paid into the system for a period of time (10 years for most people). You might also be able to qualify in some circumstances based on your spouse’s work history.

Some exceptions apply, including legal permanent residents (green card holders), certain Cuban and Haitian immigrants, and individuals residing under the Compact of Free Association (COFA). Immigrants who do not meet the criteria are not eligible to enroll in Medicare under any circumstances, regardless of their work history or marital status.

A Deeper Dive

The U.S. is renowned–though not necessarily in a good way–for its citizenship-based tax model. For years, American taxpayers abroad have been championing a residency-based tax approach.

Last year, Representative Darin LaHood (R-Ilinois) introduced legislation–the Residence-Based Taxation for Americans Abroad Act (H.R. 10468)—that would align the U.S. tax system with the rest of the world, shifting from a citizenship-based taxation model to a more equitable residency-based approach. The legislation would be a welcome change for the estimated five million Americans living and working or retiring abroad.

LaHood’s bill would allow eligible Americans abroad to elect treatment as nonresident aliens for U.S. tax purposes, subjecting them only to taxation on U.S.-source income. The bill didn’t go anywhere.

But now, two former top IRS officials, Charles P. Rettig and Tom Cullinan, argue that modernizing the U.S. tax code is very important, not only as a matter of fundamental fairness to the millions of Americans abroad, but to place Americans in a position of being invaluable global ambassadors for their country. In a recent op-ed for Tax Fairness for Americans Abroad, Rettig, who served as IRS Commissioner from 2018 to 2022, and Cullinan, former Counselor to the Commissioner, noted that legislation like LaHood’s would allow eligible Americans living abroad to elect to be taxed solely on their U.S.-source income, just like nonresident aliens.

“Wealthy individuals electing into this system would remain subject to an exit tax based on the fair market value of their global assets, with thresholds aligned with existing estate and gift tax exclusions,” they note, adding, “The IRS would retain the authority to conduct targeted examinations of high-income or highly mobile taxpayers.”

Tax Filings And Deadlines

? 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, Kentucky, and Tennessee that began on April 2, 2025.

Tax Conferences And Events

? October 7, 2025 at 1 p.m. ET. Individual and Family Taxes Under the One Big Beautiful Bill: What's Changed? American Bar Association Section of Taxation webinar focused on the bill's individual and family tax provisions. CLE available, Registration required.

? October 15, 2025 at 12 p.m. ET. Join Forbes for a members-only live webinar with audience Q&A discussing key tax tips and tricks for year end. Registration required.

? October 19-25, 2025. 2025 Pro Bono Celebration Events. American Bar Association. Events by state.

? October 21-22, 2025. National Association of Tax Professionals Orlando Tax Forum. The Florida Hotel & Conference Center, Orlando, Florida. Registration required.

Trivia

The first official U.S. government shutdown occurred in 1981 due to a disagreement over domestic spending. The following year, there was another shutdown even though Congress had reached a compromise on spending. Congress opted out of the vote because of major social events for both Republicans and Democrats. What were they?

(A) A museum gala and a ceremonial pitch during the World Series playoffs

(B) A White House barbecue and a fundraising dinner

(C) A hastily called press conference on the Tylenol murders and a picnic

(D) A meeting with the NFL commissioner to address the strike and a prayer breakfast

Find the answer at the bottom of this newsletter.

Positions And Guidance

The IRS has published Internal Revenue Bulletin 2025-41.

The IRS announced that it is continuing to seek feedback regarding the draft Instructions for Form 6765 and is extending the dates for certain reporting requirements related to the Credit for Increasing Research Activities.

The IRS has issued guidance on Qualified Opportunity Zone investments in rural areas as provided for under OBBBA. Notice 2025-50 provides clarification on two provisions: the definition of “rural area” and the application of the substantial improvement threshold for certain improvements to property located in a QOZ comprised entirely of a rural area.

The American Institute of CPAs (AICPA) has renewed its call to allow IRS employees to work for the duration of the shutdown. According to the organization, the “consequences of such a drastically reduced workforce during a tax filing deadline and immediately preceding the start of next year’s tax filing season would be dire” and “would result in confusion and undue stress on taxpayers, practitioners and the IRS.”

The IRS has lowered the cost of issuing or renewing a Preparer Tax Identification Number (PTIN) from from $11 to $10. The $10 user fee will take effect at the start of the next PTIN renewal cycle, beginning October 16, 2025. The user fee is in addition to the $8.75 payable directly to a third-party contractor.

Noteworthy

The IRS Independent Office of Appeals is launching a two-year pilot program to make Post Appeals Mediation (PAM) more attractive to taxpayers. Taxpayers can request PAM at the conclusion of an unsuccessful Appeals proceeding, and if the request is accepted, the parties meet in an accelerated mediation session where they make a final attempt to negotiate a mutually acceptable resolution.

A federal appeals court will hold a hearing in a lawsuit against the Department of Homeland Security and U.S. Immigration and Customs Enforcement. The lawsuit, filed by Public Citizen Litigation Group, Alan Morrison and Raise the Floor Alliance, seeks to block the IRS from sharing taxpayer information with ICE and DHS.

The Indiana Department of Revenue is warning residents about a text message scam targeting people with fake promises of tax refunds. In the scheme, scammers are sending texts claiming taxpayers' refund requests have been processed and approved, but requesting bank account information to complete the deposit. Similar scams have been reported in states and municipalities across the country.

Withers has announced the appointment of its new Chief Executive Officer, Ceri Vokes, who will formally take on the leadership of the business on July, 1 2026. Vokes, a private client and tax lawyer who has been with the firm since 2006, will work closely with current CEO Margaret Robertson, who has led the firm for nearly 25 years.

The American Bar Association Section of Tax has announced that it is accepting applications for the second year of the Alaska VITA Project, which will take place in February or March of 2026. After a successful launch of the program during the winter of 2025, the Section will again host volunteers to travel and prepare tax returns for taxpayers living in remote parts of Alaska. (Have questions about this? Ask me–I went in 2025!)

Even if you’re not willing to commit to going to Alaska, the IRS is looking for volunteers to support the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE) programs.

–

If you have tax and accounting career or industry news, submit it for consideration here or email me directly.

In Case You Missed It

Here's what readers clicked through most often in the newsletter last week:

• IRS Confirms That It Will Make The Switch From Paper Refund Checks
• How To Navigate Retirement Savings If Your Company Suspends 401(k) Plan Matches

You can find the entire newsletter here.

Trivia Answer

The answer is (B).

President Reagan invited all members of Congress to a barbecue at the White House, while Democrats were having a $1,000-a-plate fundraising dinner.

The Office of Management and Budget indicated that no harm would be done if the bill were enacted the following day. “Everybody goes to work tomorrow,” said Edwin L. Dale Jr., spokesman for the agency. ”All nonessential workers may have to go into a shutdown mode, canceling all meetings and not doing their ordinary business, but we do not anticipate any furloughs.”

This trivia question was tricky. The Tylenol murders, an NFL strike and the Orioles in the hunt for the World Series? Those were all things that happened in 1982.

Feedback

How did we do? We'd love your feedback. If you have a suggestion for making the newsletter better, submit it here or email me directly.