Markus Andrews

While IRS tax audits are rare, some filers worry their returns could be picked for examination.
You can avoid future issues by keeping receipts and other records to support your claims, experts say.

Maria Korneeva | Moment | Getty Images

As millions of taxpayers file returns, many worry that certain claims could boost their chances of being picked for an IRS audit. 
After an infusion of funding, the agency said it aimed to more than double the audit rate for the wealthiest taxpayers. But the IRS’ future priorities are unclear amid changing leadership and a Republican-controlled Congress and White House. 

Still, some areas can be “low-hanging fruit for the IRS,” said Mark Baran, managing director at financial services firm CBIZ’s national tax office.    
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Regardless of your income, you shouldn’t round numbers or estimate expenses on your return, Baran said.
“You’re really playing the audit lottery and increasing your risk,” he said.
Here are some other common IRS red flags for audit, according to some tax experts.

Underreported income

The IRS often finds missing income via so-called “information returns,” or tax forms, which employers and financial institutions send to taxpayers and the agency.
For example, these could include Form W-2 for wages, 1099-NEC for contract or gig economy work or 1099-B for investment earnings.
IRS software compares these tax forms to your return, and it can be “flagged for audit” when there’s a mismatch, explained Elizabeth Young, director of tax practice and ethics for the American Institute of Certified Public Accountants, or AICPA.   

High deductions compared to earnings

Another area for IRS scrutiny can be high tax breaks compared to your income, Baran said.
The agency has a program that compares your return to others in a similar tax bracket, he said. The software uses an algorithm to determine whether your deductions are higher than average.      
For example, if your charitable deduction is 30% to 50% of your adjusted gross income, that could prompt “another set of eyes,” Baran said.

Earned income tax credit

Another common target is the earned income tax credit, or EITC, a refundable tax break for low- to moderate-income workers, experts say.
“There are people who claim it improperly for one reason or another,” said Syracuse University law professor Robert Nassau, director of the school’s low-income tax clinic. “It can be confusing,” with eligibility based on earnings, residency and family size.  
Higher earners are more likely to face an audit, but EITC claimants have a 5.5 times higher audit rate than the rest of U.S. filers, partly due to improper payments, according to the Bipartisan Policy Center.

‘Substantiation’ can protect from audits

While there are red flags, IRS audits are still relatively rare.
Through fiscal year 2023, the IRS examined 0.44% of individual returns filed for tax years 2013 through 2021, according to the latest IRS Data Book. 
When audits involve “mistakes or innocent omissions,” they are typically conducted via so-called “correspondence audits,” which happen by mail, Baran said.
More than 77% of fiscal year 2023 audits occurred via correspondence, the IRS reported. The remaining were face-to-face “field” audits.
Either way, filers with “substantiation really should not fear,” said Baran, noting the importance of receipts and other records to support claims on your return.
“The IRS knows when somebody is prepared and they will move on,” he said.   More

The Phillips 66 Los Angeles Refinery Wilmington Plant stands on November 28, 2022 in Wilmington, California. 
Mario Tama | Getty Images

Company: Phillips 66 (PSX)

Business: Phillips 66 is an energy manufacturing and logistics company. It operates through the following segments: Midstream, Chemicals, Refining, and Marketing and Specialties (M&S). The Midstream segment provides crude oil and refined petroleum product transportation, terminaling and processing services, as well as natural gas and natural gas liquids (NGL) transportation, storage, fractionation, gathering, processing and marketing service. The Chemicals segment consists of the company’s 50% equity investment in Chevron Phillips Chemical Company LLC (CPChem), which manufactures and markets petrochemicals and plastics on a worldwide basis. The Refining business refines crude oil and other feedstocks into petroleum products, such as gasoline, distillates and aviation fuels, as well as renewable fuels, at 12 refineries in the U.S. and Europe. Finally, the Marketing and Specialties segment purchases for resale and markets refined petroleum products and renewable fuels.
Stock Market Value: $52.88B ($128.04 per share)

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Phillips 66 shares over the past year

Activist: Elliott Investment Management

Ownership: ~4.6%
Average Cost: n/a
Activist Commentary: Elliott is a very successful and astute activist investor. The firm’s team includes analysts from leading tech private equity firms, engineers, operating partners – former technology CEOs and COOs. When evaluating an investment, the firm also hires specialty and general management consultants, expert cost analysts and industry specialists. It often watches companies for many years before investing and has an extensive stable of impressive board candidates. Elliott has historically focused on strategic activism in the technology sector and has been very successful with that strategy. However, over the past several years the firm’s activism group has grown, and it has been doing a lot more governance-oriented activism and creating value from a board level at a much larger breadth of companies.

What’s happening

On Feb. 11, Elliott issued a letter and presentation to the Phillips 66 board outlining “Streamline66,” a plan to resolve the company’s continued underperformance and poor corporate governance practices despite its portfolio of attractive assets. It includes the following steps: (i) streamline the company’s portfolio through a sale or spin-off of the midstream business as well as a potential sale of its interest in CPChem; (ii) initiate an operating review by committing to ambitious refining targets and closing the EBITDA-per-barrel gap with its peers; and (iii) increase oversight and bolster accountability of Phillips 66’s management team by adding new independent directors to the board.

Behind the scenes

Phillips 66 (PSX) is an energy manufacturing and logistics company. The company maintains four valuable asset segments, each offering scalability and strong competitive positioning. Its Midstream segment operates a vertically integrated wellhead-to-water natural gas liquids (NGL) business across the Permian and DJ basins. The Chemicals segment comprises their world-scale petrochemical joint venture CPChem. The Refining segment is one of the largest refining systems in the U.S. The Marketing and Specialties segment consists of a scaled fuels marketing business and production of specialty products. Despite the attractiveness of these assets individually, Phillips trades at a significant discount to its sum-of-the-parts valuation. While approximately 70% of the company’s earnings before interest, taxes, depreciation and amortization comes from the premium multiple Midstream, Chemicals and Marketing segments, which trade as high as 10-times EBITDA, PSX trades closer to the multiple of its lowest-valued Refining segment at 6.6-times. As a result, the company has significantly underperformed the average of its closest peers, Valero Energy (VLO) and Marathon Petroleum (MPC), in cumulative total return by 9%, 33%, and 97% over the past 1-, 3-, and 5-year periods, respectively.

Elliott first publicly engaged PSX in November 2023, when the firm sent a letter to the board of directors announcing its $1 billion investment in the company. Elliott criticized PSX for its history of underperformance, citing issues such as shifting away from and being poorly prepared to take advantage of the refining super-cycle in ’22 and ’23, rising refining operating expenditures (OPEX) per barrel in absolute and relative terms compared to peers VLO and MPC, and increasing costs relative to peers in the wake of a cost-reduction program. Elliott saw a potential stock price of more than $200 per share at the time, but the firm shared Wall Street’s concern that PSX was primarily an execution story.  
Despite this, Elliott acted the way we want active shareholders to do so, as opposed to how they are perceived by many. The firm gave CEO Mark Lashier the opportunity to demonstrate meaningful progress on his targets of $14 billion of mid-cycle EBITDA by 2025, non-core asset divestitures of $3 billion and increasing PSX’s long-term capital return policy. They quickly and amicably agreed with the company to add two new directors with refining experience to the board. The company added Robert Pease, a former executive of Cenovus, to the board in February 2024, and agreed to continue to work with Elliott on identifying a second director in the coming months. The second director never materialized.
Now, more than a year later, Elliott has increased its position to $2.5 billion and is going to become more active in creating shareholder value, issuing a public letter and presentation to “Streamline66.” Elliott identifies three primary sources of PSX’s underperformance. First, the firm argues that the company’s intrinsic value has been obscured by its inefficient conglomerate structure, resulting in it trading in line with its lowest multiple refining segment despite a majority of EBITDA coming from its other premium businesses. Second, PSX’s operating performance has failed to meet management’s targets and profitability continues to lag peers. In 2024, PSX delivered annualized adjusted EBITDA of between $4.5 billion and $8.7 billion, well short of its $14 billion 2025 mid-cycle target. The company’s OPEX per barrel has risen in two consecutive quarters, and its EBITDA per barrel profitability gap has only widened versus VLO. Third, Elliott asserts that management’s continuous claim of a successful turnaround without any tangible financial results has eroded their credibility with investors. The firm also said the board has failed in its fundamental oversight duties, rewarding management with compensation disconnected from the company’s performance.
This is what has led Elliott to releasing its three-pronged plan to: (i) streamline PSX’s portfolio, (ii) review operational performance with an eye toward refining margin improvements, and (iii) improving management credibility with the addition of new directors. First, Elliott suggests spinning or selling PSX’s midstream assets, estimating that they could deliver approximately $40 billion to $45 billion as a standalone or in a sale to a strategic buyer. In addition, Elliott also suggests the sale of CPChem and JET, estimating that net proceeds of $48 billion from the three assets would be equivalent to 96% of the company’s current market cap. The raising of that amount of capital could allow PSX to repurchase between 60% and 90% of the company’s shares outstanding and increase the payout ratio to 100% of free cash flow like its refining peers. With enhanced oversight enabled by the addition of new directors with industry and operational experience, PSX could get on track towards improving its EBITDA per barrel and progress towards its refining targets.
Elliott estimates that this plan could yield a share price of approximately $200 per share. Moreover, the firm asserts that if PSX executes the playbook Elliott employed in its engagement at MPC, shares could increase to over $300. At Marathon, Elliott helped facilitate the addition of a new director, transition to a new CEO, closure of the gap in per barrel EBITDA with VLO, retirement of 50% of its shares outstanding since 2021, and sale of the Speedway retail operation for $17 billion in after-tax cash proceeds. Since Elliott sent its first letter to Marathon on Nov. 21, 2016, MPC has outperformed VLO and PSX by 56% and 116%, respectively.
Having a good plan is the first step, implementing it is another story. This time, Elliott will not be settling for one or two directors, especially after PSX failed to follow through on the agreement last time to add a second director with refinery experience. Elliott gave management time to execute. Management failed. Now, Elliott will do what the board is supposed to do, but did not: hold management accountable. Elliott does not explicitly state that it’s looking to replace senior management, but it does discuss management’s damaged credibility and eroded investor confidence, and that is hard to fix without replacing management. Moreover, Elliott does cite CEO replacement as the first item which led to successful turnarounds in their engagements at Marathon and Suncor. With the company’s nomination window closing this week and four directors on the 14-person board up for election, we expect Elliott will nominate a full slate of four directors, if only to preserve its options while discussing governance with the board.
Ken Squire is the founder and president of 13D Monitor, an institutional research service on shareholder activism, and the founder and portfolio manager of the 13D Activist Fund, a mutual fund that invests in a portfolio of activist 13D investments. More

If your federal tax refund or tax bill is more than expected, you may need updates to your paycheck withholding.
There’s a quick calculation to see if you’re on track, or you can use a free tool from the IRS known as the “tax withholding estimator.”

Prapass Pulsub | Moment | Getty Images

If you have a tax bill or bigger than expected refund this season, it may be time to update your paycheck withholding, which can be tricky, experts say.  
Typically, there’s a refund when you overpay taxes throughout the year, and a tax bill when you don’t pay enough. It’s up to the employee to tell employers how much federal tax to withhold from each paycheck via Form W-4. 

The form “seems like a calculus problem,” said Tommy Lucas, a certified financial planner and enrolled agent at Moisand Fitzgerald Tamayo in Orlando, Florida. But there’s a “quick and dirty” way to figure it out, he said.
More from Personal Finance:You could see tax Form 1099-K for the first time this seasonCredit card debt hits record $1.21 trillion, Fed research showsAmericans to spend a record $14.6 billion on Valentine’s Day

‘Back-of-the-napkin’ math for your withholding

After filing your 2024 return, you can see your “total tax” on line 24 on the second page of your filing, Form 1040, Lucas said. If your earnings and tax situation are the same for 2025, your tax liability should be similar.
Next, you’ll need to know how much you’re withholding from each paycheck and how many pay periods remain for 2025 to see if you’re on track, he explained.
For example, let’s say your “total tax” was $10,000 for 2024. If there are 23 pay periods left in 2025, you’ll need to withhold roughly $435 from each paycheck, Lucas said.

To withhold more, you can resubmit Form W-4 with an “extra withholding” added in the “other adjustments” section of step 4, he said.
“That’s the simple, back-of-the-napkin method,” Lucas said.
However, you’ll need to readjust your W-4 at the beginning of the next tax year. It should also be updated as your tax situation changes — like a bonus, second job, marriage, divorce, having a child and more.

Use the IRS ‘tax withholding estimator’

If your tax situation has changed or you want a more detailed update, you can use a free IRS tool known as the “tax withholding estimator,” Lucas said.
“It’s intuitive and it actually does a really good job,” he said.
You’ll also need pay stubs from all jobs (including your spouse) and most recent tax returns. But it won’t be a good fit “if your tax situation is complex,” according to the IRS.
With rapid changes in income, investment earnings or retirement plan distributions, you may need quarterly estimated tax payments to avoid IRS penalties, said Sheneya Wilson, a certified public accountant and founder of Fola Financial in New York.  More

Americans plan to spend $14.6 billion on their significant others for Valentine’s Day, according to the National Retail Federation.
While consumers may not feel great about the broader economy, “they still feel very willing to spend on what’s important to them,” said Katherine Cullen, vice president of industry and consumer insights at the National Retail Federation.

Sanja Radin | E+ | Getty Images

It seems that love is in the air, and so is the spending as more people are apparently getting into the Valentine’s Day spirit this year.
Americans shopping for their significant others are expected to spend $14.6 billion this year, according to the latest annual survey by the National Retail Federation and Prosper Insights & Analytics. That is up from $14.2 billion in 2024.

The survey polled 8,020 adult consumers about their Valentine’s Day shopping plans in early January.
Despite strong spending trends, inflation could play a role in whether consumers choose to splurge or scale back, experts say. To that point, this record Valentine’s Day spending comes at a time when inflation is still relatively high in the U.S. The consumer price index, an inflation gauge, jumped 3% for the 12 months ending in January, according to the Bureau of Labor Statistics. 
The January reading is up from 2.9% in December, the fourth consecutive month of increases in the annual inflation rate when it was at 2.4% in September.
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While consumers may not feel great about the broader economy, “they still feel very willing to spend on what’s important to them,” said Katherine Cullen, vice president of industry and consumer insights at the National Retail Federation.

“These moments of celebration throughout the year have really seemingly grown in the consumer psyche,” or “becoming moments of joy,” she said.
“We’ve also seen people more likely than before the pandemic to say that they’re really living in the moment because the future is a little more uncertain,” Cullen added.
It can be a nice experience to splurge on the holiday. But if you find yourself with a tighter budget this year, there are financially savvy ways you can express your love, experts say. 

How Americans are spending for Valentine’s Day

The National Retail Federation found that candy was the most popular Valentine’s gift. More than half, or 56%, of surveyed respondents plan to give candy, followed by flowers and greeting cards equally at 40%, an evening out at 35% and jewelry at 22%. 

According to the NRF report, shoppers plan to spend approximately $6.5 billion on jewelry, with further spending allocated toward “an evening out” at $5.4 billion and flowers at $2.9 billion.
As you browse online or hit the stores for Valentine’s Day shopping, it can be tempting to put the purchases on your credit card. Before you do, keep in mind that Americans’ total credit card balance is $1.211 trillion as of the fourth quarter of 2024, according to the latest consumer debt data from the Federal Reserve Bank of New York. That is up from $1.166 trillion in the third quarter of 2024 and is the highest balance since the New York Fed began tracking in 1999.
If you can’t afford to make these purchases, here are ways to celebrate the holiday without going over budget, according to experts:

1. ‘Shift your Valentine’s Day’

If you can’t make dinner or evening plans on Valentine’s Day this year, consider celebrating the holiday on a different date, experts say. 
“Shift your Valentine’s Day,” said Carolyn McClanahan, a physician and certified financial planner and the founder of Life Planning Partners in Jacksonville, Florida.
If you’re willing to go out the night before or the night after or more, the move “can potentially be a way to save,” said Ted Rossman, a senior industry analyst at Bankrate.

2. Make a special meal at home

Try to make some adaptations if you’re unable to shift the date or be flexible with timing, Rossman said. 
For instance, red roses go “sky high around Valentine’s Day,” he said. “Maybe you could get a different type of flower.”
If you’re having a hard time booking reservations or costs are too high, try cooking a special meal at home, or something that you wouldn’t normally prepare, experts say.
“Buy yourself a really good bottle of wine and cook something special,” said McClanahan, who is also a member of CNBC’s Financial Advisor Council.

3. A meaningful gift

If you plan to give your significant other an extravagant gift such as a piece of jewelry, keep this in mind: “The more expensive the jewelry doesn’t mean the more love you’re giving,” McClanahan said.
Instead of jumping immediately to high ticket-price items, consider what your gift-giving history with each other has been, McClanahan said.
“Get something special that may not be as expensive, something a person would really want,” she said. More

Many taxpayers could receive Form 1099-K for the first time this season, according to the National Taxpayer Advocate.
If you had more than $5,000 in business transactions from apps like PayPal or Venmo or online marketplaces like eBay, you could receive Form 1099-K for 2024.
However, business income should be reported on your tax return even if you don’t receive the form.

Artistgndphotography | E+ | Getty Images

As millions of Americans gather paperwork to file their returns, many could see a tax form for business payments “for the first time ever,” according to the National Taxpayer Advocate.
For 2024, if you had more than $5,000 in business transactions from apps like PayPal or Venmo, along with online marketplaces like eBay, you could receive Form 1099-K, which reports that income to the IRS.

The 2024 reporting threshold is down from the 2023 limit of more than 200 payments worth above $20,000. For 2025, the threshold drops to more than $2,500 no matter the number of transactions, and a limit above $600 applies to calendar year 2026 and beyond, according to IRS guidance released in November.
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Congress enacted the $600 reporting threshold via the American Rescue Plan of 2021, but the IRS has delayed the threshold change amid bipartisan scrutiny from lawmakers and complaints from the tax community.
The IRS in 2023 unveiled phased-in limits to “avoid problems for taxpayers, tax professionals and others,” former IRS Commissioner Danny Werfel said in a statement at the time.

How to report Form 1099-K on your return

While the 1099-K reporting threshold is lower for 2024, “there are no changes in what counts as income,” said April Walker, lead manager for tax practice and ethics with the American Institute of CPAs. “This is just a reporting mechanism.”

This season, you could receive Form 1099-K after selling items, such as vehicles, furniture, clothing or concert tickets via payment apps. You could also see the form for services paid via such platforms. However, “personal payments” between family and friends shouldn’t be reported via Form 1099-K, according to the IRS.

If you made a profit selling an item — meaning the sales price is more than what you originally paid — you need to report that gain on Form 8949 and Schedule D.
You can’t deduct items sold at a loss, but you should “zero out” the gross income at the top of Schedule 1 so you don’t owe taxes on the reported income, according to the IRS. The same strategy applies if you receive Form 1099-K for personal payments.
But if you’re subtracting these payments on Schedule 1, you should keep records, such as receipts, to prove the income isn’t taxable, Walker said. More

As an agency authorized by Congress, the Education Department cannot be eliminated without congressional approval.
But in the meantime, the Trump administration, Elon Musk and his DOGE team can slowly cripple it.
While some of the department’s programs may be transferred to other agencies, that transition could cause major disruptions to the nation’s $1.6 trillion student loan program, experts say.

The Trump administration has already begun carrying out its plans to close parts or all of the Department of Education, which is responsible for underwriting student loans, disbursing college aid and ensuring equal access to education.
President Donald Trump campaigned on a pledge to “find and remove the radicals who have infiltrated the federal Department of Education,” and suggested that Linda McMahon, his nominee for Education secretary, would help gut the department.

McMahon’s Senate confirmation hearing began Thursday morning.
“I want Linda to put herself out of a job,” Trump said at a White House press conference Feb. 4.

Linda McMahon, former administrator of the US Small Business Administration and US education secretary nominee for US President Donald Trump, during a Senate Health, Education, Labor, and Pensions Committee confirmation hearing in Washington, DC, US, on Thursday, Feb. 13, 2025.
Al Drago | Bloomberg | Getty Images

Former President Jimmy Carter established the U.S. Department of Education in 1979. Since then, the department has faced other existential threats. Former President Ronald Reagan called for its end, and Trump, during his first term, attempted to merge it with the Labor Department.
Efforts by the Trump administration to dismantle the Education Department will face criticism.
To that point, 61% of likely voters say they would oppose the Trump administration’s use of an executive order to abolish the Education Department, according to a poll conducted by Data for Progress on behalf of the Student Borrower Protection Center and  Groundwork Collaborative. Meanwhile, just 34% of respondents approve of such a move. The survey of 1,294 people was conducted Jan. 31 to Feb. 2.

Deep cuts already underway

As an agency authorized by Congress, the Education Department cannot be eliminated without congressional approval.
But in the meantime, the Trump administration, Elon Musk and his advisory group known as the Department of Government Efficiency can slowly cripple it.
Already, the Institute of Education Sciences, the research arm of the Education Department, was scaled down significantly by Musk’s DOGE team.
In a statement Monday, the American Educational Research Association and the Council of Professional Associations on Federal Statistics said 169 contracts were canceled, including some related to the collection and reporting of education statistics.
“Sensible public policy for education depends on strong research and basic collection and availability of data on institutional performance and student outcomes,” said Sameer Gadkaree, president and CEO of The Institute for College Access & Success.  “Without it, Americans will be in the dark on shifts in debt, student success, and how public dollars should be invested to increase effectiveness.”
More from Personal Finance:How Musk’s DOGE took over the Education Department$2.7 billion Pell Grant shortfall poses a threat for college aidStudent loan debt swelled under Biden, despite forgiveness
Some experts say further dismantling the Education Department could have serious economic consequences.
“Most of the Department’s budget funds federal student aid for higher education, subsidies for elementary and secondary schools with large shares of students from low-income families, and special education programs for children with special needs,” said Brett House, economics professor at Columbia Business School.
“While some of the Department’s funding programs may be transferred to other agencies, there is no guarantee that they would be continued at the same scale or impact,” House said.

Student loans could be administered by Treasury

Even if the Education Department no longer existed, another government agency would likely administer the task of distributing student financial aid funds, experts say.
Some experts have speculated that the Treasury Department would be the next most logical agency to administer student debt. However, it’s uncertain whether Treasury would be as focused on students as the Education Department, said former U.S. Under Secretary of Education James Kvaal.
“People take out student loans at a very young age, and Congress created all these benefits that are available on student loans that aren’t available on other types of credit,” Kvaal said. “There’s a question if the Treasury would have the same ethic of prioritizing students.”
Instead, “Would they [the Treasury] prioritize loan collection?” Kvaal asked.
“One of the intents [of the administration’s actions] is to redistribute funding from the federal department of education to states and localities,” said Tomas Philipson, a professor of public policy studies at the University of Chicago and former acting chair of the White House Council of Economic Advisers. 
“If such a redistribution takes place, this will likely improve, as opposed to hurt, learning as state and locals are better suited to address their heterogeneous needs,” Philipson said. “The one-size-fits-all nature of federal regulations and spending programs can often be improved upon.” 
Still, no other agency is equipped to service a $1.6 trillion student loan program, according to Karen McCarthy, vice president of public policy and federal relations at the National Association of Student Financial Aid Administrators.
“It wouldn’t be an easy process to make that transfer,” McCarthy said. “Our biggest concern is that if something like that were to happen, it wouldn’t go smoothly.”
The process could potentially unsettle millions of current college students, as well as the more than 42 million borrowers with federal student loan debt, she said.
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Iron Mountain shares have struggled this week after Elon Musk mentioned the company’s processing and storage of retirement records in a Pennsylvania mine.
But the company said other parts of its business can actually benefit from the push for a more efficient government.
Wall Street analysts dismissed the declines in the stock following Musk’s comments.

A man exits the Iron Mountain Inc. data storage facility in Boyers, Pennsylvania, U.S., on Tuesday, Feb. 13, 2018. The underground data center, located in a former limestone mine, stores 200 acres of physical data for many clients including the federal government.
Stephanie Strasburg | Bloomberg | Getty Images

Elon Musk stood beside a seated President Donald Trump in the Oval Office on Tuesday and ranted about examples of government inefficiency his DOGE department was seeking to root out of the federal government.
“There’s a limestone mine where we store all the retirement paperwork…This mine looks like something out of the ’50s, because it was started in 1955, so it looks like it’s, like, a time warp,” said Musk, who went on to explain that the mine’s elevator speed determines the pace at which the government can process the retirements of federal employees.

“Doesn’t that sound crazy?,” he asked.
That mine is run by a little-known company named Iron Mountain, whose shares were hit this week in the wake of Musk’s comments.
But Iron Mountain CEO Bill Meaney on Thursday said that he sees the new government efficiency initiative led by Musk as a “growth opportunity,” given the company’s other work in digital transformation with federal agencies.
“We see this as a continued opportunity for the company,” Meaney told analysts during Iron Mountain’s Thursday morning earnings call. Earlier, he said this digitizing arm of the company aligns with the “drive to be more efficient” within the federal government and noted “recent interest” in Iron Mountain’s federal business dealings.
Meaney said Iron Mountain rakes in $130 million in revenue from its data center and digitization transformation businesses. That figure dwarfs the $10 million earned from the government storing physical documentation in sites like the namesake Iron Mountain mine. In all, Meaney said that $10 million accounts for less than half of one percentage point of Iron Mountain’s total physical volume.

‘Working in a mine shaft’

The Pennsylvania mine, which was the focus on Musk’s statements about the company, is where the federal government houses and processes retirement paperwork more than 200 feet underground. Located less than an hour outside of Pittsburgh, the mine is billed by the company as offering “unbeatable” levels of security and protection from disasters.

The interior of the Corbis Film Preservation Facility, located in an Iron Mountain underground storage facility in Pennsylvania. The 10,000-square-foot Corbis facility houses over 13 million photographic negatives, engravings and prints. 
James Leynse | Corbis Historical | Getty Images

DOGE — the acronym for the Department of Government Efficiency — has been central to conversations and criticisms around President Trump’s return to the White House as Musk’s team scours federal agencies for fat to cut. Musk’s comments about the government’s contracts with Iron Mountain bring attention to a quirky setup for document storage used by the federal government, which has been under Republican scrutiny for a perceived lack of efficiency.
Additionally, these comments — and the company’s subsequent explanation of its work — can offer a roadmap for what firms that work with federal agencies can expect amid the Trump administration’s focus on slashing spending.
Musk’s critical analysis of Iron Mountain’s work with the federal government appeared to hurt the stock as concerns mounted that the contracts could be on the chopping block. Shares have dropped more than 10% so far this week, pulling the stock down more than 9% on the year. (A large chunk of those declines came in Thursday’s session as investors reacted to the company’s slight miss on revenue expectations from analysts.)

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Iron Mountain, 5-day chart

DOGE posted photos of the mine on X, the social media platform owned by Musk. Text accompanying the photos noted that more than 700 employees work in the mine, and Musk said that at most 10,000 retirement applications can be processed each month through this system.
“Instead of working in a mine shaft and carrying manila envelopes to boxes in a mine shaft, you could do practically anything else, and you would add to the goods and services of the United States in a more useful way,” Musk said.

FILE PHOTO: Elon Musk speaks as his son X ? A-12 and U.S. President Donald Trump listen in the Oval Office of the White House in Washington, D.C., U.S., February 11, 2025. 
Kevin Lamarque | Reuters

In describing Iron Mountain’s work with government entities, Meaney told analysts the company partners with more than 200 federal government agencies as either a direct provider or subcontractor of services. Additionally, he also pointed to an agreement with a state government for a hard drive destruction program that can be used within its agencies.

‘A big overreaction’

Wall Street, for its part, sees the stock’s decline following Musk’s comments and the DOGE post as unreasonable.
“We view it as a big overreaction,” Wells Fargo analyst Eric Luebchow wrote to clients on Wednesday.
Luebchow said the company’s revenue is not driven by any single customer, meaning that it likely wouldn’t take a hit even if the federal government ended its deal with the mine. If the government does pull out, Luebchow said it would likely have to pay Iron Mountain termination fees that can amount to around one or two years of annual rent.
The analyst also backed up Meaney’s claim that a focus on efficiency may actually be a boon for other parts of Iron Mountain’s business.
Barclays’ Brendan Lynch agreed, adding that the government has a legal requirement to keep records that Iron Mountain stores somewhere.
“We see this as a non-issue,” Lynch told clients on Wednesday, before recommending they “buy the weakness.” More

A new law, the Social Security Fairness Act, provides benefit increases for more than 3.2 million individuals including certain teachers, police officers, firefighters and other public servants.
Yet the Social Security Administration has said it may take more than a year to process all of the benefit changes.
“Congress either provides funding to cover the implementation costs, or SSA is going to struggle to work these cases,” one expert says.

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More than 3.2 million individuals scored a legislative victory due to a new law that will increase the Social Security benefits for which they are eligible.
However, many of those individuals now face a lengthy wait for the extra benefit money coming to them.

The Social Security Fairness Act was signed into law on Jan. 5 by then President Joe Biden. The law eliminates certain provisions — the Windfall Elimination Provision and the Government Pension Offset — that previously reduced Social Security benefits for people who receive pensions from non-covered employment.
The changes will result in higher monthly payments ranging from $360 to $1,190, depending on their circumstances, the Congressional Budget Office has estimated. In addition, the law also provides lump-sum payments for those benefit increases dating back to benefits payable for January 2024 and after.
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The Social Security Administration is already helping some affected beneficiaries, the agency stated on its website. However, it cannot commit to a timeline as to when it will have processed the benefit increases for everyone affected.
“Under SSA’s current budget, SSA expects that it could take more than one year to adjust benefits and pay all retroactive benefits,” the Social Security Administration’s website states.

SSA will struggle without more money, expert says

On Feb. 5, a bipartisan group of Senators sent a letter to Acting Social Security Commissioner Michelle King urging for swift implementation of the benefit changes affecting certain teachers, police officers, firefighters and other public servants.
“We call for the immediate implementation of this legislation to provide prompt relief to the millions of Americans impacted by WEP and GPO,” the Senators wrote.
However, some experts say the agency needs more financial resources to make that happen.
“Congress either provides funding to cover the implementation costs, or SSA is going to struggle to work these cases,” said David A. Weaver, a former Social Security Administration executive who currently teaches statistics at the University of South Carolina.
The Social Security Fairness Act was voted into law with broad bipartisan support in both the House and Senate. Yet retirement policy experts have strongly criticized the new policy. One sticking point is the cost — estimated by the CBO to tally $200 billion over 10 years — with no offsets to help pay that increase.
That outlay will move Social Security’s trust fund depletion date six months closer, according to estimates.

The Social Security Administration is funded through a continuing resolution set to expire in the middle of March.
“When Congress addresses that … it’d be useful for Congress to increase SSA’s budget to account for the implementation costs,” Weaver said.
At a minimum, the agency will need around $200 million to implement the Social Security Fairness Act’s changes, he said.
The last time there was a similar change was with the Senior Citizens Freedom to Work Act of 2000, in which Social Security beneficiaries who had reached full retirement age no longer saw benefit reductions due to earned income.
That law affected about 1 million beneficiaries and cost about $65 million to implement in today’s dollars, according to Weaver. The new Social Security Fairness Act will affect about three times as many beneficiaries, he said.
The Social Security Administration’s staffing is currently at a 50-year low, said Dan Adcock, director of government relations and policy at the National Committee to Preserve Social Security and Medicare.
Prior to President Donald Trump taking office, it had been suggested that additional funding would help the Social Security Administration to fulfill the demands of the WEP and GPO repeal.
If instead the appropriations from Congress to the agency are reduced, the implementation of the new law may take even longer than one year, Adcock said.

Why new law may be complex to implement

As the Social Security Administration works to implement the law’s new benefit changes, the agency will face some pain points that may contribute to delays, according to Weaver.
When the Social Security Fairness Act was first introduced in 2023, the bill called for the changes to go into effect starting with benefits payable for January 2024.
As lawmakers rushed the legislation through in late December, that effective date was not changed. Calculating those back payments will create more work for the Social Security Administration, according to Weaver.
The effective date also presents other potential complications. For example, in any given year, 4% of Social Security beneficiaries die. Consequently, the Social Security Administration will be tasked with identifying more than 100,000 beneficiaries who are affected by the law who may have died in 2024 and distributing money to their survivors, Weaver said.
Moreover, individuals who were affected by the Government Pension Offset, which reduced Social Security benefits for spouses and widows of people who received non-covered pensions, may have previously been told they were not eligible for benefits, Weaver explained. As a result, in some cases they may have never applied for benefits. For those who did apply, their personal addresses or bank account information on file with the agency may be outdated, he added.
For those individuals affected by the GPO, the Social Security Administration will likely have to do a lot of work to find basic information on how to pay them, Weaver said.
For survivors and spouses who are newly eligible for benefits, the agency will also have to confirm those relationships.
The Social Security Administration may be able to automate 95% of the Windfall Elimination Provision cases, Weaver said. Yet some unusual cases may crop up, for example if a beneficiary was also affected by the earnings test. That will require manual input from Social Security employees, and therefore more time to process, Weaver said. More