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TO REDUCE TAX?
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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FEATURED CONTENT
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
Kwong v. United States: A Pandemic-Era Decision That Could Reshape Tax Deadlines, Penalties, and Refund Opportunities
The 2025 court decision, Kwong v. United States, is quietly gaining traction among tax professionals for exactly these reasons. Its implications could be far-reaching, potentially opening the door to refund claims, penalty abatements, and revived tax deadlines that many assumed were long closed. But there’s a catch: the opportunity to act may be time-sensitive, and the window to preserve claims could begin closing in just a few short weeks. Here’s what the court actually decided and why it matters now.
Untapped State Benefits for Veterans: Planning Opportunities for Advisors and Families
Two veteran clients with seemingly similar financial profiles can end up with very different outcomes, simply based on where they live and how informed they are. Much of that difference comes down to smaller, state-specific benefits that tend to sit just outside the typical planning checklist. But when layered alongside federal veteran benefits, they can reshape major decisions like where to buy a home or settle long-term. For advisors working with military families, recognizing how these state benefits show up in real life can go a long way in helping veteran clients feel seen, understood and better supported in the decisions ahead.
What The Heck Is A Cash Balance Plan?
One of my obsessions is about what we can do for somebody who has high earnings and not much else. When I review multiple collections of year-end tax tips, there is not much for HENRY (high earnings not rich yet) other than a couple of Captain Obvious things like maximizing 401(k) contributions. Henry doesn’t have losses to harvest and is not about to set up a private foundation or a donor advised fund. Charity begins at home. So I got excited when I saw ads about cash balance plans. Was this the great white whale that I have been seeking that is a good answer for Henry? Or is it some sort of scam? As we will see it turns out to be neither, but it is probably something you should consider for some high earners.
SIMPLIFIED TAX STRATEGIES &
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.
