May 3rd, 2023
Today we spent the first few minutes of class answering some questions posed by the group. Then we moved into the case study that was brought by Irina. Question 1: A potential client that is looking to buy a property they will use as an Air BNB. Can they qualify as a Schedule C filer instead of a Schedule E? No, unless they are providing substantial services (hotel-like services) at the Air BNB. Question 2: Client who insists on paying himself a large W2 wage insuring the loss on his S Corp. How can I show him through TaxPlanIQ that this is a bad idea? Veronica walks through this. Case Study: Clients own several apartments on a Schedule E. What tax strategies are available to them? We create a tax plan with possible savings in TaxPlanIQ. Veronica suggests creating a partnership for the business so that more opportunities are available to them.
May 10th, 2023
Our two case studies today were submitted by Vee Davis and Haley Nguyen. Vee has a client who is married but filing separate due to a social security disability by the spouse. The filing must be kept separate in order for the spouse to keep his Social Security Disability. The wife currently has a Schedule C entity of buildings she leases back to her own businesses. First, we determined it is best to change the entity to an S Corp. Next, the wife must give herself reasonable compensation. A reasonable compensation analysis will need to be performed.
Haley submitted a tax return for a single male with no dependents who owns a home health care business. He does have two children but does not claim them on his tax return. His company has about 70 employees. Several tax strategies that were identified were: pay the children a salary, making to Roth IRA contributions, and possibly considering a Donor Advised Fund.
May 17th, 2023
Today we had a great Q&A Session! Our conversations centered around C Corps and the complexity of bookkeeping that can sometimes accompany these. We discussed the advantages of using these in situations where the effective tax bracket is over 21%. They can also be valuable when a client has multiple companies. The C Corp can even act as management of the companies. CPA Academy offers a C Corp course. This is a valuable resource to gain additional education on the subject. We also discussed the Education Assistance Program. We looked in TaxPlanIQ to see the requirements for the EAP and some resources available there for additional information. We also briefly mentioned the LIRP for clients that have maximized their retirement already.
May 24th, 2023
Today we had a case study submitted by Tunde Akinrinmade of a client that is married filing jointly with 2 kids aged 7 and 10. The husband and wife are both W2 earners. They took the standard deductions. Husband works full time in an unrelated company and he and the wife own a business (Delivery Service). They are essentially a hub and control deliveries. They indirectly work with amazon and they have drivers and payroll for them. The wife quit her full time job to do this business. Husband has a full time job and helps manage the business as well. They also own a management company. What are some tax strategies that we can implement to save them on taxes? We will be planning for 2023.
May 31st, 2023
Today Samuel Dickey uploaded a tax plan for us to work on. The clients are married filing jointly with 3 kids ages 6, 10, and 12. They have an IT Consulting business. They have $436,000 in wages; both earning by W2. We are looking at tax strategies for both the family and the business. We discussed paying the children, contributing to a Roth IRA, claiming non-cash charitable contributions, a pass through entity SALT, the pros and cons of reasonable compensation for the business, 401k, Defined Benefit Plan, and the Augusta Rule. One important thing to note: these individuals did not complete a client questionnaire, therefore, we are not certain how much money we have available for tax planning. Having potential clients complete the questionnaire helps create the best possible tax plan!