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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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ERC Rebellion: A CPA’s Toolkit for Dealing with Disregarded Advice
Question: I have several long-term clients I’ve advised they didn’t qualify for ERC under the requirements. I’ve discovered over time that all three were sold by an ERC mill and filed amended tax returns to claim credits. What are the risks they will be audited and what are my responsibilities in representing them? Should I release them as clients because they didn’t listen to me? Answer: You know, the Employee Retention Credit (ERC) might sound like a pretty sweet deal, especially if your business took a hit during the pandemic. It's a tax break designed to help you out. But don’t be fooled. It's not as simple as it sounds. You need to know the ins and outs before you jump in. Some new kids on the block, a bunch of specialist firms, are offering to help businesses claim this ERC. Unless you’ve been trapped in a cave (or under a pile of tax files) you’ve probably seen the mail, heard the commercials, clicked the ads. They make it seem so easy, don’t they? Just let us take care of everything and ignore the rules. This is music to the ears of employers – especially if we’ve already told them based on the rules, they don’t qualify. We want our clients to know they gotta be careful. These mills may promise you the moon and the stars, but the reality is, there's a pretty tight rule book on how and when you can claim the ERC. Misunderstanding these rules could mean you lose out on a potential $26,000 tax credit per employee. Worse, you could be tricked into claiming money you're not actually entitled to and end up with a nasty surprise later. And when you factor in the steep fees charged by these fly-by-nights, often up to 30% of promised refunds - there is a real risk of loss should these businesses lose their claims.
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CURRENT EDITION
Lessons Learned from the Tax Court: What’s at Stake?
Astute readers of this publication may recognize that I frequently write on Cryptocurrency and also on Tax Court cases. It feels like Christmas to me to be able to write about a tax court case about crypto. This is only the Third Tax court case to even mention crypto, and the first to look at the underlying principles of taxation. (The other two were about including crypto assets in a CDP hearing and a frivolous tax protester argument). Today’s case, Paschall v. Commissioner, is about the taxation of staking income.
What’s New With Hobby Loss: Recent Developments in Section 183
Recent developments in the Section 183 (Hobby loss) area have not led me to change my basic conclusions. Taxpayers who have a sincere objective of ultimately making a profit should not hesitate to claim losses from the underlying activities. That is so even if you believe that profits are improbable. It is critical that they meet the standard of behaving in a businesslike manner. The other regulatory factors should not be ignored, but often there is not that much you can do about them. Reilly’s 18th Law of Tax Planning – Honest objective trumps realistic expectation.
The Art of Income Shifting: Powerful Planning Strategies That Stand Up to Scrutiny
Income shifting strategies address taxation at its most fundamental level by directing income to taxpayers in lower brackets or with offsetting deductions. Unlike many tax strategies that merely time recognition or enhance deductions, effective income shifting can permanently reduce the tax burden on a given dollar of income—often creating tax savings that compound year after year. In this article, we’ll explore systematic approaches to income shifting that create extraordinary value for clients while maintaining impeccable compliance.
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.
