Tag Archives: tax preparation

Santa’s Tax Situation Doesn’t Look Good!

Santa’s Tax Situation Doesn’t Look Good!

It is Christmas! While the happiness that comes with the holiday is enjoyed by most of us, the IRS continues to do their job undeterred by the season and its traditions. We will now take a look at the situation involving the income tax audit of one Kris Kringle, also known as Santa Claus.

Santa employs many elves at the North Pole place of business where the toys are made for all the good girls and boys. With all those elves, Santa must make sure the proper employment forms are on file. Significant penalties could be assessed against Santa if his files don’t include the I-9 immigration form for the foreign elves. The New Hire form must be filed with the applicable states so they may track down any elves that are behind on their school loans or little elf support. Don’t forget the W-4 form must be completed for each elf on the payroll to assure the proper amount of withholding is taken from their toy making pay.

To deliver the toys to all the good girls and boys, Santa and his reindeer travel thousands of miles over the Christmas holidays. If he fails to adequately document his mileage, rooftop parking and tolls, he could lose valuable deductions and result in a significantly higher tax bill this year.

Santa is paid for the toys he delivers to stores. The toys he leaves at the houses for all the girls and boys are free! This calls into question the profit motive for the entire operation. How could Santa possibly expect to make a profit when he gives away such a high percentage of the products the elves make? Santa needs to document his business model in order for his toy making and delivery business not to be deemed a hobby and therefore any losses are not deductible.

What about all those elves? Do they qualify as Santa’s dependents? Each elf must complete a form outlining their sources of income and support outside of their North Pole toy making income. Santa must also track where each elf sleeps every night in order to establish custody. Without this key piece of information, he loses the right to claim many of the elves as dependents. This could result in a significant assessment to Santa and cause old Saint Nick to not be so jolly.

If Santa needs a good CPA, he can find one in Jefferson, Maryland.

New Tax Laws for 2019!

New Tax Laws for 2019!

This week I attended a two-day seminar on the new tax laws taking effect for 2019. The sheer number of changes is a little overwhelming. There are new reporting requirements for anyone who files Head of Household status. There is also an expanded due diligence checklist for any taxpayer that claims college expenses, the child… Continue Reading

Ethics in Tax Practice

Ethics in Tax Practice

In the course of operating a tax practice, we sometimes find ourselves dealing with issues and situations that seem harmless or insignificant, but that are really landmines waiting to explode. As practice owners, we must set the standards of performance and adherence to policies that our clients and staff members are expected to follow. No… Continue Reading

Many New Tax Law Changes are Just Around the Corner!

Many New Tax Law Changes are Just Around the Corner!

Last week I spent three fantastic days at the IRS Nationwide Tax Forum! Many new tax laws and changes to the tax forms are slated for the next filing season. The amount of new information, procedural changes and tax form modifications discussed was at times, overwhelming. The increasing number and types of new tax scams… Continue Reading

Hired Guns

Hired Guns

When you operate a seasonal business, your workload is concentrated into a few months out of the year. The very nature of this beast makes it difficult to assemble a talented workforce. Most experienced employees desire year-round income. This limits the business to finding seasonal help. Every year we experience a backlog at the review… Continue Reading

Do You Need to File a Form 1099 Misc?

Do You Need to File a Form 1099 Misc?

A Form 1099 Misc should be filed for every unincorporated vendor or contractor who you paid $600 or more during the calendar year 2017. The amounts to be reported are for services only. If you paid someone for products and services, only the labor charges are to be reported in box 7 of Form 1099… Continue Reading

Should You Use Technology for Record Keeping?

Should You Use Technology for Record Keeping?

Technology can be helpful when it comes to bookkeeping! There are many new gadgets and applications on the market that assist with tracking business expenses. While these “apps” eliminate paper, they do not eliminate the need to provide your tax preparer with the records they deem necessary to prepare your income tax returns. For example,… Continue Reading