President Trump and Elon Musk aim to slash the IRS budget and workforce. Here’s a cost effective service that should survive.
By Kelly Phillips Erb, Forbes Staff
The middle-aged woman seated across from me in Kotzebue, Alaska in late February couldn’t conceal her delight. Last year, she’d spent nearly $2,000 to have her simple 1040 tax return prepared–money that covered a 547-mile flight to Anchorage, a $500 commercial tax prep fee and a hotel room for a couple nights as she waited to see if the preparer had questions. Kotzebue, population 3,000 (with 70% of residents Native Americans), has no tax pros. But this year she’d heard on public radio KOTZ-AM (the borough’s primary news source), that volunteers from the lower 48 would be available to help prepare taxes—for free.
Some 3,662 miles away in Washington, D.C., rumors were swirling about the deep cuts in the Internal Revenue Service’s budget and workforce that President Trump and Elon Musk’s so-called Department of Government Efficiency (DOGE) would be demanding. Already IRS hiring had been frozen and 7,000 “probationary” workers laid off. The first cuts had targeted thousands of new workers hired under the 2023 Inflation Reduction Act to beef up auditing and collection. Particularly from rich tax avoiders. Then reports spread of a General Services Administration plan to close more than 110 IRS offices that serve as Taxpayer Assistance Centers and to cut the IRS workforce by as much as half, which would mean deep cuts in service.
There are no IRS offices or employees in Kotzebue. But three of us (all tax lawyers) had flown there as volunteers to help out, after finishing a week’s worth of special training. We each bought tickets to Alaska and shelled out for our own gear, including mandatory snow pants and the dehydrated meals and snacks we’d live on as we were ferried by single-engine planes, pick-up trucks (the primary method of transportation in the villages), and even snowmobiles to four towns over six days in subzero temperatures–before the wind chill is figured in. (A part of our expenses was defrayed by a small stipend from the American Bar Association Section of Taxation and the rest was tax deductible under the rules described in the box below.)
Our experience was relevant to the Washington debate over IRS funding for a couple of reasons. First, the Alaska volunteer effort is run by the tax-exempt Alaska Business Development Center (ABDC) in concert with the ABA and gets help from the IRS’ Volunteer Income Tax Assistance (VITA) grant program. For the 2025 fiscal year, the IRS awarded $53 million in such grants to 315 VITA organizations and 41 groups participating in a sister program, Tax Counseling for the Elderly (TCE). In 2023, grant recipients from the programs helped taxpayers file more than 2.1 million tax returns. A variety of taxpayers are eligible for this free help, including seniors and those with incomes below $67,000, or disabilities or limited English-skills.
Whether the looming IRS budget cuts will leave room to support taxpayer services like VITA and TCE is an open question.
Second, the tax complications facing our clients, some unique to Alaska, but others encountered by ordinary families nationwide, demonstrate why taxpayer service isn’t a frill. I’m a tax lawyer who writes about taxes for a living and does frequent volunteer work, but I’m still amazed by how many tax traps await ordinary Americans.
Looking out at Mount Susitna (the sleeping lady) in our first stop, Anchorage, Alaska.
Kelly Phillips Erb
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hose who read my Forbes Tax Breaks newsletter (you can subscribe here or listen to my new weekly podcast version here) know how much I was looking forward to this Alaska experience. Our team of three tax attorneys—Karen Lapekas (from Florida), Mandi Matlock (from Texas) and me (from Pennsylvania) trained for weeks before flying to Anchorage, where we met up with team leader Traci Wanner (an ABDC employee from Alaska) and got still another day of training. Each preparer carried a laptop, related peripherals and envelopes for intake forms, tax forms, and to-be-shredded paper. Since taxpayer data is private, we didn’t leave anything behind—we carried misprinted sheets with us from village to village, until they could be shredded. Since most of our work was done in community spaces without access to office “luxuries” like staplers or a printer, those items were packed inside a large tote weighing about 50 pounds.
Each morning, we would set up and wait for our first customers, relying on radio stations, Facebook posts and VHF radio to get the word out. Most days, we were scheduled to work 10-12 hour days, but we stayed as long as taxpayers were waiting–one night until nearly 1 a.m.
Excited to have arrived in Alaska!
Kelly Phillips Erb
Some of the issues we helped with were pretty Alaska specific–we prepared returns for commercial fishermen, assisted a whaleboat captain with her record-keeping, and helped taxpayers report their dividends from the Alaska Permanent Fund (APF). Created in 1976 to save and invest the state’s oil revenues, the APF distributes a portion of its earnings annually to Alaskans. Each of the state’s 740,133 residents (give or take a person) is generally eligible for the dividend if they state an intention to remain an Alaska resident indefinitely at application. In 2024, the dividend was $1,702. PFD payments are taxable for federal income tax purposes, as are many additional annual dividends paid (as part of the Alaska Native Claims Settlement Act) to Native Americans. Depending on the region, those dividends range from less than $2,000 to as much as $11,000 annually.
One tricky tax result? Since children can receive dividends, they are also responsible for the resulting tax. A child with $1,300 or more of unearned income (think dividends and interest) for the 2024 tax year will need to report that income on a tax return. Typically, a parent is responsible for reporting income for all of their children—often resulting in multiple tax returns filed per family. It wasn’t unusual in Alaska to have to file six tax returns for what we initially believed to be one taxpayer.
Many of these families would not have been able to file their taxes without VITA volunteers. While some owed taxes—remember those dividends?—many others were filing to receive a refund. Former IRS Commissioner John Koskinen often said that the refund due to some taxpayers is one of the largest checks they receive all year. That was true in Alaska and is true across the country.
You can be entitled to a refund for many reasons, including over-withholding on dividends or wages. In some instances, taxpayers who work multiple jobs may not adjust their Form W-4 and will have the maximum amount taken out of every paycheck, resulting in a large refund. Other taxpayers may not have accounted for dependents and related credits like the child tax credit (CTC), which pays up to $2,000 per qualifying child; the Earned Income Tax Credit (EITC), the Additional Child Tax Credit (ACTC) and the American Opportunity Credit. (You can find a rundown of filing thresholds and popular credits here.)
Often, families who qualify for those credits and refunds can’t afford to engage a paid preparer—or if they do, their refund may be eaten up by fees. That’s where VITA volunteers make a big difference, since they can prepare most Form 1040 returns, including those with itemized deductions, self-employment tax and simple interest, dividends, and capital gains.
These volunteers may also assist with tax and tax-adjacent issues, like applying for name changes, a tricky but common issue. (A reader asked about name changes in our last newsletter.) Bottom line: Your name on your tax return needs to match the name on your Social Security card; if it doesn’t, your return could be rejected or take longer to process. And remember, with the cuts to IRS staff that have taken place or are planned, a mismatch could take a disturbingly long time–including hours spent on hold– to sort out.
You often encounter this problem when getting married or divorced, but you may also see it when your everyday name is different from your legal name—that’s true not only for the Charleses of the world who go by Chuck or Charlie but for those Native Americans who use a different Anglicized name than is shown on their Social Security cards.
We helped sort out other tricky situations, too. For example, the CTC and the EITC have surprisingly complicated eligibility rules. The EITC is a refundable tax credit designed to help low income workers, especially those with children. (Refundable means a family might get back more than they paid in income taxes.) The IRS estimates one in five taxpayers eligible to receive the EITC don’t claim their refund, leaving money their families need on the table.
With no roads connecting the villages, we relied on single-engine planes for transportation.
Kelly Phillips Erb
It’s not just tricky tax rules that can create practical tax filing problems in rural Alaska. For example, in one village, after one postmaster died and the new postmaster quit, it became difficult to get mail. No mail means no tax forms, especially with unreliable internet service. In one instance, we explained to a new taxpayer how to go in person to his employer and ask for a paper Form W-2. In another, to ensure a tax return was filed on time, we used a courier to get it to a village with a working post office,
We explained the benefits of getting tax refunds by direct deposit—not only is it handy when you can’t rely on the post office, but the IRS encourages all taxpayers to use it. It’s fast and efficient, and you can even deposit your refund using certain mobile apps like Cash App (this was new to me). We also explained how to use Direct Pay, a free IRS service that lets you make tax payments online directly from your bank account to the IRS. If you don’t want to pay immediately (remember the due date for payment is April 15), you can schedule a payment up to 365 days in advance.
VITA volunteers may also offer some tax counseling services. Typically, that involves providing resources to assist with tax debts and wage or Social Security garnishments—those matters may be handled through low-income tax clinics. Sometimes, however, we can offer help onsite. For example, we provided information related to injured spouse relief, which I’ve also done at VITA sites in Philadelphia. Injured spouse relief is different from innocent spouse relief. You seek innocent spouse relief when you have a tax liability and believe it is not yours (meaning it belongs to your spouse or former spouse). You are an injured spouse if your share of a tax refund is offset to pay your spouse’s past-due federal debts (including student loans), state taxes, or child support payments. If you are entitled to injured spouse relief, you may be able to get your share of the refund released to you by filing an extra form. That’s a much better result for most taxpayers than opting to file as married filing separately, which some tax preparers mistakenly advise.
Another taxpayer who used DIY software misreported her rental income, losing a depreciation deduction in the process. Sadly, this wasn’t the first year that it happened. We were able to redirect her to a clinic that could help her fix her previous mistakes. She was so grateful, noting, with tears in her eyes, that her husband who had recently passed away used to take care of these things for her.
As with many tax preparation and advice services, our volunteer work involved listening and handholding. I heard stories about life in Alaska, watched elementary students practice their cursive (apparently, still taught in schools in Alaska) and listened as taxpayers spoke of marrying high school sweethearts and losing lifelong loves—you can learn a lot about a person from their tax returns.
You don’t have to fly to Alaska to get help–or, if you’ve got the necessary training, to give it. VITA and TCE sites are located in community and neighborhood centers, libraries, schools, shopping malls, and other public locations nationwide. To find a VITA or TCE site near you, use the VITA Locator Tool or call 1.800.906.9887. (Most TCE sites are operated by the AARP Foundation’s Tax Aide program. To locate the nearest AARP TCE Tax-Aide site between January and April, use the AARP Site Locator Tool or call 1.888.227.7669.)
Tax Breaks For Volunteers
The IRS does not allow a charitable deduction for volunteering your services, even if you can easily put a dollar amount on your time. So if, as an architect, you usually charge $350 per hour and use that time instead to help a qualified charitable organization, you’re allowed a deduction of $0—that’s not a typo. The same rule applies whether you’re a lawyer, doctor, artist, nurse, accountant, or writer for Forbes.
While you can’t deduct the value of your time, most out-of-pocket expenses relating to volunteering are deductible so long as they’re not reimbursed to you or considered personal. Out-of-pocket charitable expenses that might be deductible include parking fees, tolls, and other travel expenses; uniforms or other related clothing worn as part of your charitable service; and supplies used to perform your services.
For 2025, the tax deduction rate for mileage driven in service of charitable organizations is just 14 cents per mile. The rate is currently fixed by Congress and has never been adjusted for inflation—which is why it hasn’t budged in years, even though gas is more expensive. (It’s worth noting that the 2025 standard mileage rate for business expenses is 70 cents per mile—some organizations look to the business mileage rate as a mark of what’s reasonable for purposes of reimbursements.)
As with other donations, keep good records for out-of-pocket expenses—documentation is critical. Read more charitable giving tips here.
In every village, taxpayers asked if we would come back. I wanted to say yes, but I worry that funding could be problematic under the Trump Administration, especially with the IRS as a primary cost-cutting target. Not everyone qualifies for free tax services through VITA, but there are other free options available through IRS programs like Free File and Direct File (for now, those remain in place for the tax season but some in Congress have made clear that they want to eliminate Direct File).
A blizzard brought high winds and snow to Point Lay, Alaska, closing schools and temporarily grounding our plane.
Kelly Phillips Erb
So, why should those taxpayers who don’t directly benefit from VITA care about the program? The U.S. income tax system is built on voluntary compliance—nearly 85% of taxpayers file and pay on time each year. Programs like VITA make it easier for taxpayers to keep those numbers up and our tax gap down.
This was made clear to me near the end of our trip. We were experiencing a blizzard so terrible that school was closed, a rarity in a village with a snowy period of nine months of the year. Still, even with a forecast advising “dangerously cold wind chills as low as 50 below zero” (the official measurement was -62 degrees Fahrenheit), villagers made their way to the community center to get their taxes done. When I asked one couple why they would do it, they looked surprised. “My taxes are my civic duty,” explained the taxpayer. “I’ve done them for 30 years, why stop now?”
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