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Tax Research Resources for New Firm Owners


A 🧵:

Aspiring and new tax firm owners are likely accustomed to having tax research resources provided by their former employer. They’re accustomed to walking down a hall or texting with a colleague or boss who has experience and expertise.

At least this was the case for me when I started working for myself.

Read 46 tweets
Just like a landlord raises rent to increase revenue and leave room for vacancy.

You should raise prices for services you sell and leave room for excess capacity.

Operating at capacity is an opportunity cost for ALL of us, and it can ruin a business too👇 Image
Opportunity Cost = (returns on best Forgone Option) - (returns on Chosen Option)

Assume you can't take anymore customers, unless you hire more employees.

You're at capacity.

The problem isn't lack of employees, it's you over extending your current capacity.

This is bad.
You're trying to maximize capacity, and likely decrease expenses as a means of growth.

Your employee's don't find solutions, or revenue opportunities because they're worried about getting work done, and they don't feel fairly compensated.
Read 18 tweets
Thread on Taxation and Tax Planning through Minor’s Income

We will see:
👉🏻PAN & ITR filing of Minor
👉🏻How Clubbing of Income happens?
👉🏻Taxation of Minor Income
👉🏻Tax Planning

@Spaysocial @investyadnya @AdeParimal @gaurav28jain #minor #TaxTwitter #taxplanning
Q. Can minor apply for PAN?

Absolutely yes, Income Tax Act does not bar minors from applying to PAN. Even today’s born baby can also apply for PAN.

There is no age limit for applying for PAN.
Q. Can Minor file his ITR?

Yes again. There is no provision in income tax act which says minor cannot file his ITR.

Income tax return can be filed by his representative also.

#incometax #IncomeTaxReturns
Read 19 tweets
Taxpayers who has missed to file ITRs for FY 2019-20 and FY 2020-21 can file now – A thread 🧵

#IncomeTaxReturns #TaxTwitter
The income tax department has notified Form ITR-U for filing the ‘Updated’ income tax return available in Section 139(8A) for any person who has furnished/not furnished ITR
Taxpayers filing returns for FY 2019-20 will need to pay the tax due and interest along with an additional 50 per cent of such tax and interest. For FY 2020-21, the additional amount will be 25 per cent of the tax payable and interest
Read 7 tweets
All of my GOP friends who are worried about 87,000 IRS enforcement agents coming after the little guy... How about just don't cheat on tax returns? A fully truthful and accurate tax return is bulletproof in an audit. I never understood the fear of an IRS audit. Don't lie. Period.
I get that it's a headache to go through and audit. Nobody wants to do that. And I get that it's costly to go through an audit and nobody ever wins when an audit comes knocking. But enforcement is important. Catching the cheats lowers the liability the rest of us need to pick up.
In this budget, the IRS should have a built-in pay-for program for tax pros who represent audits for tax returns under X dollars in AGI (may as well be the $400k threshold). If the IRS audits a tax return under that mark, the government pays X to the tax pro if there's no change.
Read 4 tweets
Can't believe this paper is finally out!😍 It has been six years in the works - almost spanning my entire career😅 Phew.

What did we do? Why did it take so long? And is it worth the read? 🙏A personal (long) thread below👇🧵 1/10
So - it all began six years ago when I sat in Gabriels office at Berkeley.

I was showing him some mind boggling data on tax enforcement in Denmark that me and @TTorslov had stumpled upon (we ended up writing another paper on that topic - but that's another story..) 2/10
Gabriel asked me: How much tax revenue does Denmark actually lose to tax havens?

That simple question was very difficult to answer based on the existing body of research (incl. my own earlier work). 3/10
Read 13 tweets
Thread 🧵 on Important Points while Filing Income Tax Returns.

Which in turns saves you from any notice from Income Tax Department.

@Spaysocial @investyadnya @AdeParimal @gaurav28jain

Request to retweet for maximum reach 🙏🏻
1. Do check AIS (Annual Information Statement) & TIS (Tax Information Summary)

Both available on income tax portal under services tab.

Please note there might be errors in figures reported in those statements but you can submit appropriate feedback if showing wrong details.
2. Choosing of correct ITR Form is the most important thing.

If you choose wrong ITR form your ITR will be considered defective. This will lead to invalidate your ITR if response not submitted in due time.

Invalid ITR is as good as you have not filed ITR.
Read 12 tweets
"I have a new piece at @MilkenInstitute "Requiem for the Child Tax Credit".

I usually try to summarize articles with a tweet thread - but one this is a bit long, so I'm only going to quickly touch on the main themes.…"
One thing to note is that this was initially going to be a "History of welfare reform through AFDC and TANF and how it has led us to the CTC" piece.

It had to be written substantially earlier this year when that didn't happen 🫠
Theme #1: The hollow intellectual arguments for welfare reform in the 1990s.

A lot of the case for welfare reform was based on Charles Murray's "Losing Ground". But I think the book's arguments are very weak.
Read 14 tweets

This is the best info I've found about nodes & US taxation so far. It's a synopsis of a Nov. 2021 Q&A with @CryptoTaxGirl

If any US-based CPAs on #taxtwitter spot errors, PLEASE tell me.

Full thread is here:

Please RT! 🧵👇
2/8 The IRS has offered no clear guidance on crypto taxation since 2014... Nodes, DAOs & NFTs are less than a year old, so the crypto space needs clarity on how to list income & expenses.

Until then, we must rely on CPAs to do their best to interpret the IRS's intent.

@CryptoTaxGirl says that in order to claim deductible expenses on a Schedule C form, you'd need to be a legit business. (Did I get that right?)

Depending on how much you make in a year, this should be an LLC or S-Corp (1 person C Corp).
Read 9 tweets
It's announcement time on #taxtwitter mega🧵 Starting now Jan 2022 I am no longer working "full time" as a partner in public accounting and I do not ever intend to go back. I've decided to take my talents to "part time" and I'll try to explain what I mean. Insert fav gif here 1/
My firm has been a very good place to work at times, even a great place to work at times. Sure there are things I'd change, but it's not about the firm, it's about my life. Partners work about 2400 hours/year, a bunch during tax season and close to 40 the rest of the year. 2/
Maybe your firm is more, maybe a bit less, but 2400 hours is about what we expect anyways and some people go over. I know there are plenty of firms that are way higher than 2400 hours, our relatively modest expectations compared to the industry is one of our great attributes. 3/
Read 26 tweets
Reminder - you can take advantage of the overnight crypto dip. Crypto is an asset that allows you to tax loss harvest without being subject to the loss sale rule (for now..)

Sell your crypto and buy it back, realize the loss.

Here are 6 other year end savings tips - THREAD 👇🏼
1. Defer income/Expedite expenses -

Always important not to let the tax tail wag the economic dog. That goes with any financial advice.

Income that you know you can defer to 2022, or expenses that you can bring forward can both be effective tax savings strategies.
2. Get into debt!

Don't tell Dave, but you can purchase business equipment, vehicles, etc using debt toward the end of the year and use bonus depreciation. Walk out of a car dealership on 12/31 with zero down and a large write off.

Obviously only buy stuff you need folks!!
Read 11 tweets
As much of a relief as it is to have this nightmare filing season behind us, I don't think workload wise it's going to get much better just on its own. A few reasons why:

1 - The ERC. This shitshow of a credit will haunt us next year for a variety of reasons.

2 - Residual from PPP. Those that didn't run it through in 2020 now will. Those that did will likely need to account for forgiven interest.

3 - EIDL issues. Payments will start kicking in. Enforcement will likely tick up. At-Risk nightmares continue to plague taxpayers.

4 - EIP 3 drama. The ridiculous 8/15 date will trigger lots of consternation amongst clients that would have qualified for 2020, didn't get processed in time, and don't qualify for 2021.

5 - TCJA. Seems odd, but COVID put a bit of pause on the evolution of TCJA stuff.

Read 7 tweets
An established business can still open a Recovery Startup Business to claim up to $100,000 of Employee Retention Credit in Q3/Q4 of 2021.

ERC can be claimed for a RSB opened in either a new entity OR AN EXISTING ENTITY.

How do we do this correctly? Thread time:

IRS Notice 2021-49 was released last Wednesday. It gave us guidance in many areas of ERC but didn’t break major ground on the topic of a Recovery Startup Business. The law was brief and caused confusion in this area. The confusion didn’t go away after reading this notice.
The IRS has said what they will about RSBs. It’s time to dig deeper. Let’s start with RSB code at §3134(c)(5).
Read 39 tweets
You have run out of wages to maximize ERC and PPP.

Before giving up, consider creating more wages by using an estimate of tips paid.
The same wages cannot be used for both the ERC and PPP relief programs. So maximization can be hard. But significant differences in the two programs make opportunities to be creative.
One particular area of confusion has been tips. Some practitioners have gone as far as not claiming any tips for either program. I believe that is a mistake.

It's unlikely that we will get any further guidance on tips. Time to move forward with what we have.
Read 15 tweets
So here’s the scoop on the new child tax credit changes. It’s being implemented very quickly. It’s using some of the same infrastructure set up for the economic impact (stimulus payments) but it’s different in many ways. #tax #CTC #TaxTwitter
Here’s the gist of it, tho there’s situations that I won’t cover here. Please consult a tax professional for advice in your own situation. This does not constitute advice in your particular situation.
Over the past couple years, the max child tax credit has been $2,000 per child. This is being raised to $3,000 for 2021 per child age 6 - 17 at the end of 2021, and $3,600 per child under 6 at end of 21.
Read 12 tweets
With global tax reform in the news, and what with me being an international tax adviser, the day job is finally fleetingly relevant. So here's a thread.
This weekend's announcement may seem new but it's been a long time in gestation. 1/24
Whilst it's certainly radical it is some way off implementation and will eventually just become an accepted norm and boring compliance requirement. So what is this global reform the G7 leaders agreed this weekend and why have they done it?
Though it may have seemed to come 2/24
from nowhere with Janet Yellen's 21% global min tax proposal, this is not "Biden's tax plan". It's the less catchy Pillars 1 and 2 of the OECD's BEPS 2.0 programme, which was first consulted on in March 2019. BEPS 2.0 implies there was a BEPS 1. So there was, and to 3/24
Read 26 tweets
How to maximize ERC and PPP interplay: A thread

After spending far too much time in this area, I wanted to share some ideas for maximizing the employee retention credit. Will try to include everything from the obvious to the obscure.

1)Get the payroll data by employee by pay.

The key to getting max benefits is in slicing and dicing payroll. We can pick and choose which wages are claimed for either ERC or PPP specifically. This could mean anything even down to dividing a single paycheck.
2)Be comfortable in excel or find someone who is.

Until @JStaatsCPA automates ERC for us, we are stuck figuring out this mess in excel. If you have never used Vlookup, Iferror, or If/then formulas, it’s probably best to hand this off to a team member or outsource entirely.
Read 48 tweets
Relatives of a greater than 50% owner are not eligible wages for ERC.

But are relatives of a LESS THAN 50% owner eligible for ERC? You would think so, but often even these relatives are ineligible.

Let's look at a very common example:
An S-Corporation is owned 50/50 by unrelated individuals, A and B. Each owner has a son employed in the business as well - Y and Z.

In total, the S-Corporation has four employees: owners A and B, and sons Y and Z.
The sons are obviously relatives of the owners, but since neither owner has greater than 50% of the S-Corporation ownership, there are no disallowed relative's wages. Right?

If this were the extent of the facts, I would agree. All four employee's wages qualify for ERC.
Read 17 tweets
#TaxTwitter The @IRSnews and @USTreasury granted a 30-day extension today to file 1040 returns and pay 2020 taxes. They did not grant an extension of the 1st Q 2021 payment, nor did they take into account state deadlines, nor did they extend C Corp, Trusts/Estates, NFP 1/X
They also failed to take into account we are helping clients with UE benefits they retroactively made tax exempt $10,200 for FED purposes only(does not address states),the 3rd round of PpP™️ (yes it really is the 3rd round), the fact we have retro ERTC calcs for a shit ton of 2/X
clients, trying to determine when to apply for PpP™️ forgiveness, the fact Congress is likely going to fix the issue of allowing Schedule C's to go back retro to get more in PpP™️ round 1 (which they are sure to need help with based on gross receipts), then getting a Round 3 3/X
Read 7 tweets
Greetings, economist twitter! I invite you to pre-order Joel Slemrod and Mick Keen's forthcoming masterpiece, published by @PrincetonUPress.
As you can see from my name, the first author is my dad, and I want his book to make the NYT bestseller list.…
The book is called “Rebellion, Rascals, and Revenue: Tax Follies and Wisdom through the Ages." A classic beach read. Won’t you, people I'm tagging but don’t know (except @wwwojtekk, hi) help me in my quest? @DinaPomeranz @Claudia_Sahm @umichECON @J_C_Suarez #makemydadsbookahit
While searching for people to help spread the word, I saw this quote from @jeffreypclemens: "Nobody does dry tax humor better than Joel Slemrod." I am fairly certain this is not one of the blurbs, but it should be. @JavierFerri1 @gsignoret Pre-order here:…
Read 9 tweets
As far as I can tell this is the link to the bill that the house passed this morning…

Tax Provisions seem unlikely to change so I guess I'm going to read it today. Cat gifs!
Remarkably it's only like 600 pages so we are getting off easy this time #taxtwitter

First 45 pages are pretty random, then the minimum wage phase up to $15 is on page 46. Sounds like that'll be removed in the Senate so I'll skip all that.
Some child care grants mixed into the HHS section I suspect we'll get to more tax items about child care eventually.

Page 97 COBRA benefit continuation with an associated credit.

Page 126 begins the actual public health section, I doubt there is much here I'll even understand
Read 33 tweets
In an effort to help my Jr preparers I'm building a list of bookkeeping items that can be optimized for tax reporting #taxtwitter

Not accounting fixes, just items to optimize for tax savings

Would love to organize some ideas here

Here's 5️⃣ I've got thus far:
1️⃣ Pulling advertising out of donations

If signage was provided, or ads in a publication, pull the expense to advertising

Exception if cost was astronomical relative to spend
2️⃣ 100% deductible meals

-Team events
-Events for the public
-Reimb'd under an accountable plan
Read 7 tweets
I'm open sourcing the tool I built with Realize to triage ERC & PPP2 advising

I'll run several hundred of my own clients through it in the coming weeks #taxtwitter

🥑It's now free for anyone to use🥑

A thread re: how it works 👇 Image
1/ Full docs for the tool, how it works, and how it handles fringe scenarios can be found here:
2/ This is an unopinionated data collection tool

It's hard to give concrete advice right now

That doesn't mean we shouldn't start collecting the data needed to advise once the rules come further into focus
Read 17 tweets

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