The old Social Security double taxation argument (“my wages were taxed with my FICA contributions, and now I’m taxed on my SS distribution”) gets shot down yet again in Charmaine A. Gray, T. C. Memo. 2026-61, filed 7/27/26. In a footnote, yet. 

Judge Jeffrey S. (“Schwer”) Arbeit: “Petitioner’s argument that the taxation of SS benefits constitutes “double taxation” because she previously paid Social Security taxes on her wages is unavailing. Congress expressly provided in section 86 that SS benefits may be subject to incometax when a taxpayer’s income exceeds certain thresholds. Moreover, petitioner’s assertion that taxing SS benefits is unconstitutional has long been rejected by numerous courts. See, e.g., McAdams v. Commissioner, 118 T.C. 373, 379 (2002) (“We have repeatedly held that section 86 does not suffer any constitutional infirmities.”); Clark v. Commissioner, T.C. Memo. 1998-280, slip op. at 5, aff’d, 187 F.3d 641 (8th Cir. 1999) (unpublished table decision); Roberts v. Commissioner, T.C. Memo. 1998-172, slip op. at 6, aff’d, 182 F.3d 927 (9th Cir. 1999) (unpublished table decision); see also Kelley, T.C. Memo. 2021-2, at *8–10 (rejecting constitutional challenge to section 86(c) and concluding that Congress had a rational basis for filing status distinction, even if the resulting tax treatment may appear inequitable).” T. C. Memo. 2026-61, at p. 4, footnote 4. For the backstory on Kelley, see my blogpost “Constitutionally Speaking,” 1/11/21.

And Judge Arbeit obliges with an example of how to compute taxable Social Security benefits at pp. 4-5, much better than IRS’ infernal Social Security Benefits  Worksheet – Lines 6a and 6b. See T. C. Memo. 2026-61, at pp. 4-5.

Lawrence Hubbard, T. C. Memo. 2026-62, filed 7/27/26, is a versatile fellow, “sometimes self-employed working as a barber, a musician, and a chef.” T. C. Memo. 2026-62, at p. 2. But his claimed business income and deductions lack substantiation, he fails to report unemployment compensation (though he claims to be victim of a fraud, he notified his bank but did not show he notified CA EDD of any fraud. STJ Peter (“HB”) Panuthos recognizes the difficulty of a taxpayer proving s/he did not receive income, but Hubbard didn’t show what happened to his fraud claim. “Information as to the outcome of the claim would have been useful for the Court to make a finding based on conclusions reached by the payor of the unemployment benefit. Petitioner did not provide any other relevant documentation for the year in issue and, instead, provided evidence of unemployment compensation received for a different tax year. Taken on their own, petitioner’s assertions substantiate only that he made a fraud claim.” T. C. Memo. 2026-62, at p. 5.

A new Tax Court look is Hubbard’s claim for refundable credits per Families First Coronavirus Response Act (FFRCA) and American Rescue Plan Act (ARPA), for leave taken during the COVID lockdowns. STJ Panuthos goes through the substantiation requirements exhaustively, T. C. Memo. 2026-62, at pp. 6-8.

Leaving aside Hubbard’s self-employment, want of substantiation denies the credits. “Even were we to consider that petitioner was engaged in a trade or business for the year in issue, petitioner failed to substantiate eligibility for these credits. Petitioner did not include with his tax return Form 7202 to support his claimed refundable COVID–19-related sick and family leave credits. While petitioner testified that he was sick at some point during the year in issue, he failed to specify the dates of his sickness. Further, he failed to provide any documentation related to the ‘need for leave’ criteria and his inability to work. Therefore, petitioner is not entitled to any COVID–19-related sick and family leave credits for the year in issue. ” T. C. Memo. 2026=62, at p. 8.

IRS concedes the Section 6676 erroneous claim for refund or credit chop, T. C. Memo. 2026-62, at p. 1, footnote 2.