The waiting room at the free VITA tax clinic inside the San Jose Public Library on North San Pedro Street smelled like coffee from a machine that had been running since 7 a.m. It was a Saturday in late January 2026, and the line of people clutching manila folders and W-2s stretched past the reference desk. I had come to report on how middle-income families navigate the tax system after a financial crisis. Phil Dillard was sitting near the window, a thermos on his knee, flipping through a stack of papers held together with a binder clip.
He was not hard to notice. At 60, Phil has the kind of hands that tell their own story — calloused, scarred in two places from sheet metal, the knuckles of a man who has spent thirty years crawling through attics and commercial rooftops as an HVAC technician in the South Bay. When I introduced myself and explained what I was working on, he laughed and said, “You picked the right guy. I am a walking cautionary tale.” Then he said, “Sit down. This is going to take a minute.”
A Career Built on Other People’s Comfort
Phil Dillard has worked in heating, ventilation, and air conditioning since he was 29 years old. He is licensed, experienced, and — in San Jose’s scorching summer months — genuinely indispensable. His employer, a regional contractor, pays him roughly $74,000 a year. That sounds comfortable on paper. In Santa Clara County, where the median home price hovers above $1.4 million according to U.S. Census Bureau data, it means Phil and his wife Sandra rent a two-bedroom apartment in Berryessa and drive cars with over 150,000 miles on them.
Their son, Marcus, is 22 and has autism spectrum disorder requiring full-time support. Sandra stopped working in 2019 to become his primary caregiver after his day program lost funding during the pandemic. That decision cost the family approximately $38,000 a year in Sandra’s former income as a dental assistant — a number Phil still recites without hesitation, the way people remember the exact figure of a debt.
Phil told me he had never enrolled in his employer’s 401(k) plan. Not because he didn’t know it existed, but because every time he ran the numbers, the margin after rent, groceries, Marcus’s supplemental therapies, and the car payment was too thin to feel safe locking money away. “I kept telling myself, next year,” he said. “Next year turned into thirty years.”
The Identity Theft That Erased What Little He Had Built
In March 2023, Phil received a letter from the IRS informing him that a tax return had already been filed under his Social Security number for the 2022 tax year — and that a refund of $3,200 had been issued to a bank account he had never heard of. Someone had stolen his identity, filed a fraudulent return, and collected his money before he had even sat down with his own documents.
The cleanup took fourteen months. Phil filed an IRS Identity Theft Affidavit (Form 14039), worked with the FTC through IdentityTheft.gov, and eventually received an Identity Protection PIN from the IRS — a six-digit code now required on every return he files. But the fraudulent accounts opened in his name during the same period had already done their damage to his credit report. His score dropped from 701 to 524 in the span of four months.
The fraudulent accounts have since been removed after disputes with all three bureaus, but Phil’s score in January 2026 sat at 618 — still not where he needs it to be to access better financing rates. He is currently monitoring his file monthly through a free service and has placed a security freeze as a precaution.
What the Tax Clinic Volunteer Found in His Returns
The reason Phil was at the VITA clinic that Saturday — rather than using tax software or paying a preparer — was partly cost and partly frustration. He had filed his own returns for years using a commercial software platform. But after the identity theft, he didn’t trust himself to catch everything, and he couldn’t afford the $300 a paid preparer in his neighborhood was quoting.
The certified VITA volunteer who reviewed Phil’s situation, a retired accountant named Gerald, spent nearly an hour with him. What Gerald found in Phil’s prior returns was, in Phil’s word, “infuriating.” Phil had been eligible for the Child and Dependent Care Credit for years — specifically because of the documented costs associated with Marcus’s care and therapeutic programs — and had never claimed it. For tax year 2025, the credit can cover up to 35% of qualifying care expenses up to $3,000 for one dependent, according to IRS guidance.
Phil also learned about the Saver’s Credit (formally, the Retirement Savings Contributions Credit), a federal tax credit designed specifically for low-to-moderate income workers who contribute to a retirement account. Depending on adjusted gross income, the credit can be worth between 10% and 50% of contributions up to $2,000 per person. At Phil’s income level — roughly $74,000 filing jointly with no second income — he would qualify for the 10% tier, according to current IRS eligibility tables.
The Numbers Phil Is Now Working With
Gerald walked Phil through what a 2025 return might look like if he opened an IRA before the April 15, 2026 filing deadline — a move that can still count toward the prior tax year. If Phil contributed $2,000 to a traditional IRA, he would qualify for a Saver’s Credit of $200 while also reducing his taxable income by $2,000. Combined with the Child and Dependent Care Credit — estimated between $600 and $1,050 depending on documented expenses — the total tax benefit could reach roughly $1,250 on this year’s return alone.
Gerald also flagged something Phil had never heard of: an ABLE account (Achieving a Better Life Experience), a tax-advantaged savings vehicle available to individuals with disabilities diagnosed before age 26. Marcus qualifies. Contributions are not federally tax-deductible, but the account grows tax-free and can be used for disability-related expenses without affecting SSI or Medicaid eligibility, as outlined by the Social Security Administration. Phil left the clinic with a printed information sheet and a list of steps.
The Side Hustles, the Regret, and the Road Ahead
Phil is, by his own description, restless. On weekends when he isn’t working overtime, he picks up residential HVAC jobs on the side — small repairs, filter replacements, tune-ups booked through word of mouth in his neighborhood. He estimates he earns an additional $8,000 to $12,000 a year this way, cash and checks, all of it reported on a Schedule C. “I’ve always figured if I just work more, I can outrun the problem,” he told me. “But you can’t outrun a credit score. You can’t outrun sixty.”
The regret Phil carries is not theatrical. He doesn’t dramatize it. When I asked him what he would tell a younger version of himself, he paused for a long time before answering. “Open the 401(k). Even fifty dollars a month. I thought I was being smart keeping the cash liquid. I wasn’t being smart. I was just scared.”
As of the day I spoke with him, Phil had not yet opened an IRA. He was waiting to confirm the exact dollar amount he could set aside without cutting into the following month’s bills. Gerald had told him the IRA contribution deadline for tax year 2025 was April 15, 2026 — which gave him roughly ten weeks from that Saturday morning to act.
The outcome here is not a triumph. Phil is not suddenly financially whole. His credit is recovering slowly. His retirement account still does not exist. What changed that morning was smaller and more real than a turnaround story: Phil left that library knowing things he hadn’t known when he walked in, and knowing what it would cost him — in real, specific dollars — to keep doing nothing.
When I packed up my recorder and stood to leave, Phil was still at the table with Gerald, asking follow-up questions about the ABLE account. His thermos was empty. He had a pen behind his ear and his reading glasses on, squinting at a printed IRS worksheet. He looked, for the first time in our conversation, like a man with a plan — even if it was a small one, even if it started late.
Related: My 2026 Tax Refund Showed ‘Processing’ for 31 Days — Here Is What the IRS Actually Told Me
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