Stories about accounting and tax firms having trouble finding help seem to be popping up everywhere . Also, I pick up a lot of chatter about it on #TaxTwitter. It has even invaded my home. The firm that I consult for occasionally has recruited my covivant Evie as a remote preparer. After we withdrew from the boutique practice that capped our careers, she kept her family and friends freebie 1040 practice. Even the freebie practice has grown as the first of ten grandchildren got her first W-2 last year. So when my high school friend called me and told me that his 25 year old son who had gone from a bachelors in something or other to a series of low level food service jobs was contemplating a masters in accounting, I was enthusiastic. For a long time I have held the view that accounting probably gives a young person the best bang for their educational buck. My buddy had a request though that intimidated me. He wanted me to tell the kid what it was like to be an accountant. When I thought about it, I realized I didn’t have much of a clue as to what it is like to be an entry level accountant. I started thinking about what it was like when I started and how irrelevant that experience seems. Nonetheless, I do have an idea that those of you scrambling to find help might want to consider and it arises from my memories of the old days.

Lots going on at Tax Court in February, 2023. Here are my highlight picks...

I remember trying to explain the dealer versus investor concept to a would-be real estate entrepreneur. I asked him whether he was holding the property for sale. He kind of looked at me and smiled and said “Everything is for sale. It just depends on how much.”. If there is any ambiguity it is easy to know what the answer is after the fact. If there was a big gain relative to expenses then you were an investor. If there was a loss, then you were a dealer. Unfortunately, you really are not supposed to practice that way. I am going to assume that you want investor status and that you are blessed with a gain. What can you do to make sure the IRS respects your investor status?

"I have a way you can avoid paying taxes on part of your household income and get more work done in your business. Are you interested in hearing about it?" Those are two sentences most of our business clients would love to hear. You may be able to e-mail those two sentences to your client after reading this article. Who wouldn't want a way to be more efficient and reduce their tax liability? Have you had clients calling you to ask if they can save $12,000 by hiring their child? My favorite is, "I heard I can pay my child tax-free. Is that true?" I have received the call and e-mail quite a few times. There has been an uptick since 2018. The misinformation makes me cringe, but the strategy makes me smile. So today we are going to look at the strategy and answer these questions: ● How much can a taxpayer pay their child and neither one pays Federal income tax? ● Which business entities does this strategy work with? ● How can a business avoid paying payroll taxes when hiring their child?

Here we are in the thick of another tax season and tax professionals everywhere are bemoaning the standard litany of issues: unreconciled bank accounts, balance sheets that don’t balance, unfiled 1099s, etc. It doesn’t have to be this way, at least not for you and your clients. Tax season is actually the perfect time to review and/or set and implement best practices for tax and accounting compliance in your clients’ businesses—and yours. Physician, heal thyself.

The trick to any tax preparation or tax planning engagement is to do the work as if you would have to defend it in an audit. And when it comes to an audit, “Google said I could” is about as defensible as saying “I saw it on TikTok,” “I read it on Reddit,” “My cousin's friend said I could,” or the Twinkie Defense. What you need to defend in an audit and win is substantial authority (and really good books and records, but that is a topic for another day). This article provides some tips for conducting tax research that will get you to the authority you need.

The tax law disadvantages gamblers with its treatment of gambling gains and losses. Add that to the fact that gamblers often aren’t the best recordkeepers, and you have a recipe for years of overpaying taxes. How most tax professionals attempt to reconcile gambling reporting on the tax return can cost gamblers thousands of dollars a year in increased taxes and Medicare premiums (if over age 65). We’ll discuss how to calculate gambling gains on the tax return, which in many cases reduces or eliminates the excess taxes many gamblers could pay.

What is one thing that most business owners have in common? Why did you start your business? Many business owners I have talked to over the past decade started their entrepreneurship journey for similar reasons. Think about your clients and what reasons they have given you and see if these ring true. “I want to be in control of my time.” “I need to spend more time with my family.” “I don’t want a cap on my earning potential.” I find those to be pretty noble reasons. I haven’t come across a business owner yet that says, “I want to pay more taxes for fun.”. So as an advisor how can we help our clients have freedom, time with family, and save on taxes? One strategy is to hire family members. It can’t be any family member though, remember there is a strategy to this. I know some of you are thinking, “that sounds great!”. Then others of you are thinking, “who wants to work with their family?”. Well trust me, when saving money is the topic of discussion more people tend to listen. The least you can do is present your clients with the facts, and here they are: • The taxpayer can avoid paying certain payroll taxes by hiring a family member. • You can help them potentially drop a tax bracket while keeping the spending power in the family. • Protecting a spouse from tax debt. • Lower Federal student loan payments. To do this we have to make sure the client hires their family as employees. This whole strategy goes down the drain if the family member is a contractor that receives a 1099. Today we will focus on how to properly implement the game plan when hiring a parent or spouse.