When you answer a client's tax question by email or by text, you are giving written advice. Circular 230 section 10.37 says so in its first line: written advice includes advice given by means of electronic communication. The rule lists two exceptions, and a quick reply is not one of them. What the rule asks of you, said plainly - Base the advice on facts and assumptions that are reasonable. - Consider every relevant fact you know or should know. - Make a reasonable effort to find out the facts. Ask before you answer. - Do not rely on what a client tells you when relying on it would be unreasonable. - Connect the law to that client's facts. A rule with no facts behind it is not advice. - Never count on the return not being audited. The chance of an audit is not part of the answer. Who this reaches Enrolled agents, CPAs and attorneys are bound by it. If you hold an Annual Filing Season Program Record of Completion, you agreed to follow Subpart B of Circular 230 for the period it covers, and section 10.37 is in Subpart B. That consent is in Revenue Procedure 2014-42, section 4.05. The habit that protects you Before you send a tax answer in writing, put the facts you are relying on in the message itself. One line is enough, something like: this is based on what you told me, that you were married on December 31 and have lived apart since March. If the facts turn out to be different, the record shows what you were told and what you answered. The IRS measures this against what a reasonable practitioner would have done, looking at what the client actually asked. Sources: 31 CFR 10.37, as it reads on eCFR today. Revenue Procedure 2014-42, section 4.05.

Heads up. There is a brand new federal tax credit landing on January 1 2027, and it is the first nationwide school choice program the country has had. Treasury and the IRS put out the rules on October 1. The short version - A person gives cash to a certified scholarship organization and gets a federal credit back, dollar for dollar. - Up to 1,700 dollars per person, 3,400 dollars on a joint return. - It is nonrefundable, and it only works if your state signed up. Thirty states are in so far. - It gets claimed on a new Form 8525 attached to the Form 1040. The date is the part people are going to get wrong It does not apply to the 2026 returns you are about to prepare. The law reaches taxable years ending after December 31 2026, and a 2026 year ends on that date. So the first return that carries this credit is tax year 2027, the one you file in early 2028. Which also means the money has to move in 2027. A client who donates in November or December 2026 gets nothing for it. If somebody in your office is already excited about this, tell them to wait until January. That one sentence will save a client 1,700 dollars. The full breakdown is already in the Classroom side of the house I wrote the whole thing out in OBBBA and Law Changes, from the beginning. What counts as a qualifying organization, the income test for students, the two traps that quietly cancel the credit, the donor number you cannot file without, and what the statute of limitations actually is. Go read it there. One more date, if you want a say These rules are proposed, not final. Comments close December 1 2026 and there is a public hearing on December 15. If you prepare in a state that already runs its own scholarship credit, you are going to see the problem with this before Washington does. You are allowed to tell them. Where this comes from - Proposed regulations, Federal Scholarship Tax Credit, REG-117199-25, 91 FR 62818, October 2 2026. - Temporary regulations, TD 10057, 91 FR 62655, October 2 2026. - IRS news release IR-2026-117, October 1 2026. - Internal Revenue Code section 25F, added by section 70411 of Public Law 119-21.

On October 1 Treasury and the IRS put out the rules for a brand new federal tax credit, and it is the first one of its kind in the country. It pays people to fund private school scholarships. Most of your clients have never heard of it, and the ones who have heard of it have heard it wrong, so here is the whole thing from the beginning. First, where this came from It is not a new bill. It is section 25F of the Internal Revenue Code, created by section 70411 of the One Big Beautiful Bill Act, Public Law 119-21, signed July 4 2025. The law has been on the books for over a year. What happened on October 1 is that Treasury and the IRS finally said how it will actually work. They released two things on the same day, and the difference between them matters. - Proposed regulations, REG-117199-25. These explain the credit itself. They are a proposal. They are not final. - Temporary regulations, TD 10057. These set the procedure for states to sign up and for organizations to get certified. These are effective December 1 2026. So the credit is real law. The detailed rules around it are still being argued over. Keep those two sentences apart when a client asks you. What the credit actually does A person gives cash to a certified scholarship organization. In return they get a credit against their federal tax, dollar for dollar, up to a cap. - The cap is 1,700 dollars per taxpayer, per year. - A married couple filing jointly can reach 3,400 dollars, because the cap applies to each spouse separately. - It is a credit, not a deduction, so it is worth the same whether or not the client itemizes. - It is nonrefundable. It can take the tax bill to zero and no further. - The contribution has to be cash. Not stock, not a car, not goods. Which year does it start, exactly This is the question to get right, because the wording invites a wrong answer. The statute says section 25F applies to taxable years ending after December 31 2026. A calendar year 2026 ends on December 31 2026. Not after it. So 2026 does not qualify. The first taxable year that ends after that date is calendar year 2027.