“The hardest thing to understand in the world is the income tax” – Albert Einstein You may have spoken to clergy members about many things, but I’ll bet you never spoke with them about their tax issues. Did you ever wonder whether and how clergy are taxed and how they pay taxes? Clergy taxation has some surprising twists and turns. Are they employees or self-employed? Is their income taxable or exempt from income tax? Can they deduct their business expenses? If these were multiple-choice questions, you might need an “all of the above” option. Or, as is often the case with tax-related questions, an “it depends” option. Tax compliance pitfalls and tax planning opportunities abound. Read on for more.

As cryptocurrency continues to become more popular, its reach into areas not normally associated with crypto has expanded dramatically. One of the largest areas of growth is the DeFi Gaming sector. DeFi games function like regular video games with one major difference: They are either built on or rely on a blockchain to record activity. This can allow in-game assets to be NFTs that can be bought, sold, or even used in different gaming platforms. While this is a highly desirable ability for the player, it also carries with it tax consequences that gamers have previously not had to consider. With careful planning however, these tax consequences can be mitigated. Continue reading to learn more!

Karin Slaughter’s novel False Witness focuses on a lawyer in a prestigious Atlanta firm gearing up for a criminal trial. Coincidentally we have this week the outcome of her own legal drama, which likely only excites the tax blogosphere. Her appeal to the Eleventh Circuit of a 2019 Tax Court decision confirming that she owed almost $190,000 in self-employment tax for 2010 and 2011 was unsuccessful. Read on to find out what we can learn from this lesson!

Congress created one of the best tax savings vehicles in 2003. It wasn’t the individual retirement account (IRA). It wasn’t the Roth IRA.It was the health savings account (HSA). The HSA is the only tax-preferred savings vehicle in which a taxpayer potentially gets both an upfront tax deduction in addition to tax-free and penalty-free distributions. The IRS wrote the HSA rules to give taxpayers maximum flexibility in how they use their HSAs for medical expenses. Strategic use of the HSA can lead to lifelong tax savings opportunities. Let’s review the basic rules as to how an HSA operates, the little-known rules that create tax savings opportunities, and examples of how the HSA can be used to provide tax-free and penalty-free distributions when the taxpayer has a cash need.

If you’re disabled or support someone who is, a 529A plan can be a powerful way to save for the future. Potential earnings grow tax-free, and you won’t have to pay taxes when you withdraw, as long as the withdrawals meet qualifications. Also known as Qualified ABLE (Achieving a Better Life Experience) programs, these will not only assist you next time you are playing Tax Code Jeopardy but help you create a tax advantaged savings account. One reason you may not hear much about these tax vehicles is that there really is no way I can discern that advisers can make money on them. But since you and I are members of the same club as tax practitioners, I’m confident you will tell your clients about things that can help regardless of whether there is any profit in it. As my first managing partner the late Herb Cohan used to say, “The world is longer than a day.” To learn more about future tax-free money, keep reading.

Question: Can I avoid depreciation recapture by not claiming it before I sell? Answer: Nice try. You may save yourself unnecessary worry and fear about so-called recapture, but it won’t save you any tax impact when you do sell. If you want to learn the truth about depreciation, keep reading to learn more.

Regular readers of this column may know that I came involuntarily to the tax business. I inherited it from my mother in 2010. Less well known is that the tax business was Mom’s side hustle. Mom’s main business was as an independent insurance agent. The insurance side of the business closed in 2017, but during the time I was administering that side of the business (I was never a licensed agent), I learned a lot about insurance. One of the most important lessons I learned was that the longer you hold a policy, the more the rates increase and that it pays to make the effort to review (and shop) your various insurance policies regularly. Another important lesson was that all coverage is not equal and, just as when looking for a tax professional, price should be a consideration but not the consideration. The third important lesson was to know your coverage before you need the insurance. Many times we had to remind a customer they had refused uninsured motorist coverage to save a few dollars after an uninsured motorist totaled the client’s vehicle or to explain the limits of flood coverage after a building flooded. Regularly reviewing your insurance policies for coverage and value provides peace of mind and is just good business. Click here to learn the ins and outs of getting a great deal.

If you’re thinking about extra forms that might have to go in with a 1040, Form 8082 is probably not the first thing that pops into your mind. But if what you need to do includes Form 8082 – Notice of Inconsistent Treatment or Administrative Adjustment Request, and you leave it out, there might be no way to recover. That appears to be the result in the Second Circuit decision in Laurence Gluck’s appeal of a Tax Court decision. There is also a lesson about like-kind exchanges that may have continuing significance despite changes in the law. With a deficiency of more than $1.5 million, it seems like a pretty big deal. It turns out that Laurence Gluck is one of New York City's largest landlords, so it may not have been that big a deal for him. On the other hand, it makes it surprising that the issue tripped him up. Click here to continue reading.