Thomas A. Gorczynski, EA, USTCP is a nationally recognized speaker and educator on federal tax law matters. He is editor-in-chief of EA Journal. In addition, Tom is the co-author of the PassKey Learning Systems EA Review Series and co-owner of Compass Tax Educators.
He is an Enrolled Agent, a Certified Tax Planner, a National Tax Practice Institute TM Fellow, a Certified Tax Resolution Specialist, and admitted to the bar of the United States Tax Court as a non-attorney.
Tom earned a Master of Science in Taxation from Golden Gate University and a Certificate in Finance and Accounting from the Wharton School at the University of Pennsylvania. He received the 2019 Excellence in Education Award from the National Association of Enrolled Agents and the 2018 Member of the Year Award from the American Institute of Certified Tax Planners.
Tom’s tax practice in Phoenix, Arizona focuses on implementing advanced tax reduction strategies and representing taxpayers with complex tax problems before the IRS and in the United States Tax Court.
Learn more about Tom and his upcoming educational offerings at www.gorczynski.tax.
The Inflation Reduction Act of 2022 expanded existing energy credits and created brand new ones. There are now several new ways tax professionals can help taxpayers save thousands of dollars a year by planning for these tax credits. In this webinar, we will cover the credits likely to be used by individuals and small businesses. We will also discuss tax planning considerations and areas in need of additional guidance.
The Treasury Department offers two types of federal savings bonds, Series EE and Series I, for individuals and businesses to invest in cash savings.
Until 2021, federal savings bond rates were low; however, with the dramatic increase in inflation and interest rates, interest in federal savings bonds as a savings vehicle has skyrocketed. For example, in May 2023, TreasuryDirect issued $230 million in I bonds in that one month; in May 2020, only $13 million were issued.
Federal savings bonds have very favorable tax features. At the federal level, the interest earned is generally tax-deferable and sometimes entirely excluded from tax. At the state level, the interest is always entirely excluded from tax.
This article will review the differences between Series EE and Series I savings bonds and the tax savings opportunities available to owners of these bonds.
Your optimal choice of entity depends on many factors, including which tax breaks and loopholes are available for that entity type. The C corporation leaps to the top of entity choices if your C corporation stock will qualify as small business stock (QSBS).
The tax law gives two huge tax breaks to QSBS:
1. Up to $10 million of gain exclusion upon sale or the stock’s liquidation; or
2. Tax-deferred rollover of gains if the taxpayer purchases additional QSBS.
But beware: There are two issues that are ambiguous under the law that could cause you to not qualify for either of these tax benefits. Read on to learn more!
Thanks to the Inflation Reduction Act of 2022, the federal government is giving out tens of billions of dollars in tax credits to incentivize taxpayers to purchase electric vehicles. As with any government program, claiming the benefits can be complicated. Since Congress used tax credits to deliver the program, and the personal tax credits are income-limited, tax planning can help a taxpayer who would otherwise not qualify for these benefits. This article will briefly overview the two personal electric vehicle tax credits, followed by several tax planning strategies to unlock these credits for taxpayers who may not otherwise qualify.
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.
Millions of taxpayers in the United States are using crowdfunding websites like GoFundMe and Kickstarter to raise money for important needs, such as paying medical bills, paying legal fees, or funding a new business venture.
Both the IRS and the courts have been surprisingly silent on the tax consequences of crowdfunding platforms.
The good news is that established tax law provides a clear road map for answering most tax questions created by raising money from a crowdfunding website.
By knowing these rules, taxpayers can use crowdfunding to raise cash and minimize their overall tax exposure.
When an individual sells a stock for a loss, it is a capital loss, and Congress makes it difficult for individuals to use their capital losses.
The tax law only allows capital losses to the extent of capital gains. If capital losses exceed capital gains, the individual can only use up to $3,000 per year against ordinary income ($1,500 if married filing separately).
However, there is a way around this rule: Losses on Section 1244 stock are ordinary losses, and claiming this valuable tax benefit allows an individual to save thousands of dollars in tax in the year of sale compared to the standard capital loss treatment.
Let’s review what qualifies as Section 1244 stock, what benefits a taxpayer can get from Section 1244 stock, and how to claim those benefits on a tax return.
The IRS loves to issue penalties to taxpayers. In fiscal year 2019, the IRS imposed a whopping $40.5 billion in civil penalties.1
If a taxpayer wants to contest an IRS penalty, it usually takes a really good explanation plus a lot of time and effort.
However, there is a little-known IRS policy that allows a taxpayer to get penalty relief with no explanations required.
Taxpayers who file returns late can quickly rack up huge penalty bills.
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.
Federal, state, and local governments, as well as private organizations, have collectively given trillions of dollars in financial support to individuals and businesses during the pandemic through a maze of government and private programs.
These benefits will help taxpayers to a greater extent if they are tax-free, but are they? In some cases, we have a definite answer. For many, it is the classic tax law answer: “It depends.”
We’ll review the general tax law rules applicable to deciding, then show three ways you can use the tax law to exclude these benefits from a taxpayer’s income.
Many taxpayers use S corporations (governed by Subchapter S of the Internal Revenue Code) or C corporations (governed by Subchapter C of the Internal Revenue Code) to legally reduce income taxes, payroll taxes, and self-employment taxes for their business.
However, without careful planning, a taxpayer may have a surprise tax bill from using a corporation for federal tax purposes.
This article will tell you when these unexpected tax hits can happen and how the taxpayer can avoid them with proper planning.
Tax season is prosperous, summer is dry until extension season. Do you find yourself in that cycle? Clients are “easy” to get during tax season when taxes are top of mind. Then the direct deposits go dry by June, and you are looking for what’s next. Stop the search, you don’t have to add another service. You need better marketing to highlight the service that you offer and specialize in. This will allow you to have a predictable client pipeline. You can do tax preparation, planning, and or representation all year long.
This article focuses on the OBBB from the House offering a variety of observations to help understand the range of changes, relevance to compliance and planning, process considerations and some unexpected provisions. While the final OBBB will not include all of the House provisions or will modify some of them, there are lessons to learn to understand the tax legislation process and results now and in the future.
In the competitive accounting world, where trust and reliability are paramount, client retention is not just a success metric—it’s a vital strategy for sustainable growth. For Certified Public Accountants (CPAs), accountants, and bookkeepers, maintaining a solid relationship with existing clients can unlock new business opportunities, turning satisfied clients into powerful referral sources.
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Tax season is prosperous, summer is dry until extension season. Do you find yourself in that cycle? Clients are “easy” to get during tax season when taxes are top of mind. Then the direct deposits go dry by June, and you are looking for what’s next. Stop the search, you don’t have to add another service. You need better marketing to highlight the service that you offer and specialize in. This will allow you to have a predictable client pipeline. You can do tax preparation, planning, and or representation all year long.
This article focuses on the OBBB from the House offering a variety of observations to help understand the range of changes, relevance to compliance and planning, process considerations and some unexpected provisions. While the final OBBB will not include all of the House provisions or will modify some of them, there are lessons to learn to understand the tax legislation process and results now and in the future.
In the competitive accounting world, where trust and reliability are paramount, client retention is not just a success metric—it’s a vital strategy for sustainable growth. For Certified Public Accountants (CPAs), accountants, and bookkeepers, maintaining a solid relationship with existing clients can unlock new business opportunities, turning satisfied clients into powerful referral sources.
Jack Sprat did pay no tax. His wife paid all of hers. But when they filed a joint return, She learned she owed all of his! This is the heart of the innocent spouse! The innocent spouse filed a joint return with a balance due – but didn’t really create the tax obligation. S/he did everything right, paid all the proper withholding or estimated tax payments. Yet, s/he suddenly finds out that the spouse has a balance due and doesn’t have the money to pay it all.
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Looking to save money by moving to a low tax state? If so, determining how much you will save in taxes by moving is a question many people are often asking that doesn’t have a simple answer. Many people miss out big time because they simply think about state income taxes. However, there are so many other types of taxes that can be just as important when thinking about moving to a new state. Simply because a state has low (or no) income taxes doesn’t necessarily mean it’s a low overall tax state. Other taxes such as sales tax, payroll tax, and property tax can have just as big an impact on your taxes as the traditional income tax. Don’t get hit with unexpected “stealth taxes,” when moving to a low tax state, while state tax free states are great, out of the seven states without an income tax, three are not in the top 10 lowest tax burden states. Keep reading to learn how to choose the lower tax places to live.
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Question: Is it possible to qualify for both PPP forgiveness and COVID-related tax credits? Answer: The short answer, of course, includes, “it depends.” We were fortunate that the Consolidated Appropriations Act passed in December 2020 made it so that businesses that received PPP loans may now be eligible for the Employee Retention tax credits retroactively. The tax credits are great – a dollar for dollar reduction of tax, and for 2020 the value is up to $5,000 per employee! It is a credit against the employer’s share of the Social Security tax, but it is refundable, so if the amount of the credit is more than the tax, you’ll get free cash from the IRS. In addition, we’ve discussed previously in Think Outside the Tax Box about paid leave tax credits and even how to get them if you are a small business. These credits are also applicable even if you received PPP forgiveness provided you otherwise qualify. Here’s where it gets complicated. You can stack the benefits, but you can’t double dip. While no one likes a double dipper at the snack bowl (especially during COVID) there are ways to get the benefit from forgiven PPP funds and tax credits allowing you to have your chips and “dip” them too. Keep reading to learn how to legally take these benefits.
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Ever thought of using a recreational vehicle like a boat to lower your taxes? Yes, it’s possible using the right strategies, and there’s no time like the present to make that happen. Even more than pre-pandemic taxpayers may be considering buying their own island. Those for whom buying an actual island is beyond the budget may be considering buying a boat or an RV for use as a residence, an office, or both. Whatever the type of use, there are tax strategies available for boat owners if they meet the requirements. As with any tax strategy it is important to have a full understanding of the requirements to ensure the deduction is legal and to ensure the taxpayer can substantiate the deduction should the tax authorities examine the return. This is the first of two articles discussing the tax strategies available to boat owners. Part 1 focuses on using a boat as a residence, but if that doesn’t meet your needs, stay tuned because Part 2 will cover boats for business use (including as a home office). Why not consider both options and see how your tax savings can help fund your floating condo? Keep reading to learn more.
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Looking to write off your favorite wine? Better yet, how about deducting it while lacking the receipts? For nearly a century, freewheeling salespeople, hobnobbers, and schmoozers alike have treated potential customers and employees to fine dining and entertaining all while seeking the maximum tax break in the process with minimal substantiation. While proving these expenses has certainly gotten easier with technology, smart planners have made use of the so-called Cohan rule to enjoy the deductions without the paperwork nightmare. Want to make use of it yourself? Read on to learn more.
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Ever thought of using a recreational vehicle like a boat to lower your taxes? Yes, it’s possible using the right strategies, and there’s no time like the present to make that happen. Even more than pre-pandemic taxpayers may be considering buying their own island. Those for whom buying an actual island is beyond the budget may be considering buying a boat or an RV for use as a residence, an office, or both. Whatever the type of use, there are tax strategies available for boat owners if they meet the requirements. As with any tax strategy it is important to have a full understanding of the requirements to ensure the deduction is legal and to ensure the taxpayer can substantiate the deduction should the tax authorities examine the return. This is the first of two articles discussing the tax strategies available to boat owners. Part 1 focuses on using a boat as a residence, but if that doesn’t meet your needs, stay tuned because Part 2 will cover boats for business use (including as a home office). Why not consider both options and see how your tax savings can help fund your floating condo? Keep reading to learn more.
Read MoreQuestion: How are you pricing Employee Retention Credit claims? Answer: The Employee Retention Credit (ERC) has seemed more confusing than some of the other tax credits simply because it was mostly ignored by the tax community early in the pandemic. While small businesses happily pocketed PPP funds rather than claim the credit, the choice between the two benefits was clear. As we now know, business owners can have both PPP loan forgiveness as well as access to the ERC tax credits. But many smaller firms and payroll processors felt overwhelmed by the demand, and with refunds taking months to process, some businesses are often looking for help on their own. So many new players have entered the game selling access to these credits, up to $33,000 in cash per employee. Firms selling R&D studies and cost segregation are advertising – hard. Most are charging a percentage of the total credit amount. You don’t want to miss out on this valuable service for your client to capture this free cash, yet many advisors are passing on this work due to the time, research, and education requirements for something that has such a short shelf life. Is it worth losing income to meet everyone’s needs? Continue reading to check out the results of a short survey asking tax pros how they are charging for this type of work.
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Frequent flyer miles and similar programs for other forms of consumption like grocery shopping raise a host of tax issues. There are the concerns of the recipients of the “rewards” and also of the issuers of the various sorts of points. A recent Tax Court decision brought the taxability of rewards into focus again and the opinion encourages the IRS to provide more guidance. Here is where we seem to be now. This is the first of two articles discussing the tax strategies available to boat owners. Part 1 focuses on using a boat as a residence, but if that doesn’t meet your needs, stay tuned because Part 2 will cover boats for business use (including as a home office). Why not consider both options and see how your tax savings can help fund your floating condo? Keep reading to learn more.
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