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New tax reduction strategies carefully explained and exhaustively researched every two weeks. Receive breaking news updates on tax law changes. Members only monthly AMA with TOTTB.tax.
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How Do Community Property States Affect Tax Returns?
Question: How do community property states affect tax returns? Answer: While fairly easy to determine your filing status when married (either joint or separate), tax rules get more complicated when you live in a community property state. Generally, the state laws where you live govern whether you have community property and community income or separate property and separate income for federal tax purposes. Not only do these rules affect how much income is taxable to you, but they also impact rules in things such as deductions, credits, taxes and payments, basis for things like capital gains, and participation rules. In some states, the income you earn after you separate and before a final divorce decree continues to be community income. In other states, it is separate income. Under special rules, income that can otherwise be characterized as community income may not be treated as community income for federal income tax purposes in certain situations. This year particularly is important for evaluating whether or not to file separately if married, especially if there is a big difference in each spouse’s income. What may appear on the surface to qualify for stimulus and child tax credits, may, in fact, be disqualified once you report community property income. Click here to see if these disadvantages impact you and how to avoid them.
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CURRENT EDITION
Remember, Influencers, the IRS Follows You Too!
The influencer marketing industry was able to grow during Covid as many advertisers had to adjust or cancel their marketing campaigns. This was because more people were sitting at home consuming content on social media. This new opportunity for smaller influencers has created a new group of taxpayers who need to know their new filing obligations. They’ll also be open to tax planning strategies that you have to help them reduce their tax liability.
Hobby Loss Regulations And Loper Bright
For me, the most exciting Tax Court opinion of 2025 was Judge Joseph Goeke’s supplement to his 2024 opinion in the case of Gary M. Schwarz. With a $1,851,878 tax deficiency, it is the largest hobby loss opinion since 2019. (The really big dollar cases tend to settle.)
Consult, Don’t Convince: Turning Discovery Calls into Advisory Opportunities
The most successful accountants aren’t the ones who pitch the hardest, they’re the ones who listen the most. When you ask better questions, you can diagnose problems that clients didn’t even know they had, which then helps us clarify outcomes instead of listing services. When we shift from “convincing” to “consulting,” discovery calls stop being “sales” conversations and start becoming advisory conversations. And advisory conversations naturally lead to advisory engagements.
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PRACTICAL IMPLEMENTATION
Think Outside the Tax Box provides tax reduction strategies along with practical
implementation advice in order to reduce your clients’ federal tax bill with ease.
