FAQ: What are the most common tax questions taxpayers ask about the 1040 form, and how can I answer them confidently?

Main Objective: Prepare you to address the most frequent taxpayer questions about the 1040 form with clear, accurate answers to enhance client trust and compliance.

Description: In Episode 9 of Tax Masters, we wrap up our three-part series tackling the most common 1040-related questions taxpayers ask. 

FAQ: What are the most common tax questions taxpayers ask about the 1040 form, and how can I answer them confidently?

Main Objective: Prepare you to address the most frequent taxpayer questions about the 1040 form with clear, accurate answers to enhance client trust and compliance.

Description: In Episode 8 of Tax Masters, we kick off a three-part series tackling the most common 1040-related questions taxpayers ask. 

FAQ: What are COGs, and why do I need to identify them and report them differently than other expenses? And where do I do this? 

Main Objective: Learn how to identify expenses that need to be reported as COGs and where to report them on the different tax forms. 

Description: In Episode 7 of Tax Masters, we unpack the essentials of Cost of Goods Sold (COGS), a key deduction for businesses that sell products. We explain how to calculate COGS, covering inventory costs, direct labor, and materials, and clarify its role in reducing taxable income. You’ll learn how COGS is reported on Schedule C for sole proprietors, Schedule F for agricultural businesses, Form 1065 for partnerships, and Form 1120S for S corporations. We highlight IRS guidelines, common errors like misclassifying expenses, and strategies for maintaining compliant inventory records. Plus, we offer practical tips to maximize deductions and minimize audit risks. Tune in to confidently guide your clients through COGS and tax reporting!

FAQ: How do marriage, divorce, and kids affect income taxes? 

Main Objective: Teach you how to navigate the tax implications of marriage, divorce, and children, focusing on filing status, dependency claims, and maximizing credits for the 2025 tax year.

Description: This episode explores how marriage, divorce, and children influence income tax returns. We cover filing statuses (Married Filing Jointly, Married Filing Separately, Head of Household, Qualifying Widow(er)), rules for claiming dependents, and eligibility for credits like the Child Tax Credit ($2,200 per child) and Earned Income Tax Credit (up to $8,046). Topics include alimony (post-2018 rules), child support, property settlements, and handling complex cases like 50/50 custody or international families. We discuss required documentation, audit risks (e.g., missing Form 8332), and effective client interview questions to identify critical life changes. The episode includes practical examples and a Q&A to address common preparer challenges.

FAQ: How do I handle filing a 1040 when my client lives or works in multiple states? Do I have to file all of these?

Main Objective: Help you understand the complexities of multi-state 1040 filings - residency vs income from other states, etc. 

Description: In this episode, we dive into the challenges of filing a 1040 when clients live or work in multiple states. We break down the differences between residency changes and working across state lines, and explain how to handle various income types—like Social Security, interest, dividends, Schedule C, and Schedule E. We emphasize the importance of educating clients on proper withholding to avoid tax season headaches. Plus, Diamond Womack sheds light on ongoing issues with Oregon state return e-filing acceptance, offering insights to navigate these hurdles. Tune in to learn how to confidently guide clients through multi-state tax filings!

FAQ: What is the difference between the types of K1s? (Spoiler alert: it really matters! They are not taxed the same.)

Main Objective: Teach you the basics of different K1 forms (K1P, K1F, K1S) and how to guide clients through their tax implications and reporting.

Description: In this episode, we dive into the world of K1 forms, breaking down the differences between K1P, K1F, and K1S and their unique tax implications. We share strategies for reducing self-employment tax on K1P income and stress the importance of accurate data entry, especially for QBI information. We also cover the careful handling of multi-state K1s and withholdings to avoid costly mistakes. Plus, we explain why K1 losses only flow through to the 1040 if there’s sufficient basis, often requiring manual verification. Tune in to learn how to confidently navigate K1 complexities and guide your clients with ease!

FAQ: How do I handle taxes for household employees like nannies?

Main Objective: Teach you the basics of how taxes are handled for household employees (spoiler alert: it’s way different than other 1099 contractors).

Description: In this episode, we dive into the tricky world of household employee taxes, often called "nanny taxes." We clarify that the IRS treats nannies and similar household workers as employees, not 1099 contractors, and break down the role of Schedule H for employer taxes—plus why those taxes aren’t deductible for the employer. Tune in to learn how to confidently guide clients through nanny tax complexities!

FAQ: Should my business be an S Corp or LLC? How should it file?

Main Objective: Help you understand basic business entity structures and identify key indicators to guide clients on the best setup for their needs.

Description: In this episode, we break down the essentials of business entity structures to help you guide clients with confidence. We explore how to choose between an S Corp or LLC, explaining how an LLC’s tax filing varies—Schedule C, 1120S, or 1065—based on its setup. We share why S corporations are great for profitable businesses and partnerships work well for passive income and lower audit risks, while steering small businesses away from C corporations. We dive into spotting key indicators like client risk tolerance, profitability, and IRS rules to determine the best structure. Plus, we offer practical tax planning tips, from solid record-keeping and audit prep to setting aside the right tax savings percentage. Tune in to learn how to spot the signs and advise clients on the perfect business setup!

FAQ: I've inherited something, do I need to file a trust tax return?

Main Objective: Equip you with the knowledge to guide clients on whether they need to file a trust tax return and understand K1F forms.

Description: In this episode, Kristy Pack dives into the essentials of guiding clients who’ve inherited assets and are wondering if they need to file a trust tax return (Form 1041). She shares practical tips on spotting when a trust is involved, key questions to ask clients to determine if a trust tax return is necessary, and how to explain K1F forms in a way that clicks. Kristy clarifies why most inherited assets (except pre-tax IRAs or 401(k)s) are tax-free and why passing income to beneficiaries can sidestep higher trust tax rates. Plus, she suggests creating a decision tool to help your team guide clients confidently. Tune in to learn how to answer your clients’ trust tax questions like a pro!