Learning Center for Tax and Financial Insights

If someone were to craft a "Mount Rushmore" featuring the likenesses of some of the most influential musicians of all time, Aretha Franklin would undoubtedly be on it.Born in 1942, Franklin was more than just another singer or songwriter. She was a brilliant pianist. She penned some of the most influential songs of all time. She became a massive commercial success after signing with Atlantic Records in the 1960s, essentially creating her own genre along the way. The list goes on and on.Having said that, it's important to note that Franklin passed away in 2018 and when she did, she left some financial troubles behind her that her estate had to take care of. How much did Aretha Franklin owe to the IRS and what eventually became of the situation? The answers to those questions require you to keep a few key things in mind.Express Newspapers / Hulton Archive via Getty ImagesAretha Franklin's Estate Tax Problems: An OverviewWhen Aretha Franklin passed away a few years ago, the IRS quickly determined that her estate owed almost $8 million in back taxes. All of this further complicated a situation that was already ongoing, where family members were battling it out in court (and in the public eye) to see who was owed what in terms of the assets that the esteemed singer had left behind.Aretha Franklin left behind four children - all boys - who quickly entered into negotiations with the IRS. After years of jumping through legal hoops, it seems like all parties have reached a conclusion that they are satisfied with. After the estate makes an immediate payment of $800,000 to the IRS, Franklin's sons are allowed to continue to question the amount that they say is owed. So while it does not seem like the situation is well and truly over, it does appear that things are moving in the right direction.

If you list your property on Airbnb, you know it has been a remarkable boon for property owners looking to earn income from their available space. The online marketplace makes it easy for you, offering free listings and the ability to set your own price while also offering Host Damage Protection and shouldering the payment process. But for all of the success that hosts worldwide have realized, there have also been frustrations. Some hosts have been disappointed by their earnings and disgruntled by the tax ramifications of their rental income. There are actions you can take – both big and small – to maximize your Airbnb rental income. Likewise, you can take steps to reduce your tax obligation. Let’s take a look at both.Boosting Your Airbnb RevenueThough the money you make by listing your property on Airbnb is referred to as passive income, it is the listings whose owners put in the most effort who make the most money. While offering a property in a convenient or desirable location may be enough to bring people in, there are steps you can take that will make your space more attractive and generate more positive reviews. This in turn will keep your property booked and allow you to raise your rates. Try these strategies:Make sure that your space looks its best when you’re taking photos and that you’ve used positive, descriptive language to describe your property.Take the time to understand who is renting your property and cater to their needs. If you’re attracting beachgoers be sure to provide colorful, plush towels and beach chairs. Families with children will appreciate books, toys, and video games, and business travelers will be quick to rent a spot that has a dedicated work area. Compare your rates to those of successful listings in your area to make sure that they are in line. Small amenities make a big difference. Leaving a bag of coffee grounds on the counter, a loaf of bread, and a dozen eggs in the refrigerator are a small touch that goes a long way. Similarly, putting out curated soaps or shampoos costs little, but will result in enthusiastic positive reviews that will attract more guests, and may allow you to increase your price to more than cover the small cost incurred.

In 2022, the tax deduction for educators who invest in classroom supplies will be increased. This is great news for teachers and educators, who often have to spend their own money on supplies for their classrooms. The extra deductions will help offset the cost of supplies and make it easier for teachers to afford what they need for their students. Watch the video to learn more and take advantage of this tax opportunity.

Article Highlights:MarriageBuying a HomeHaving or Adopting ChildrenGetting DivorcedDeath of SpouseThroughout your life there will be certain significant occasions that will impact not only your day-to-day living but also your taxes. Here are a few of those events:Getting Married – If you just got married or are considering getting married, you need to be aware that once you are married you no longer file returns using the single status and generally will file a combined return with your new spouse using the married filing jointly (MFJ) status. When you file MFJ all of the income of both spouses is combined on one return, and where both spouses have substantial income, that could mean your combined incomes could put you in a higher tax bracket. However, when filing MFJ you also benefit by being able to claim a standard deduction equal to twice that of the standard deduction for a single taxpayer. It may be appropriate for a couple planning a wedding, or even those who just got married, to estimate differences of filing as unmarried and filing married so there are no unpleasant surprises at tax filing time. It may be appropriate to adjust withholding to compensate for the MFJ status. Be mindful that filing status is determined on the last day of the tax year, so no matter when you get married during the year you will be considered married for the entire year for tax purposes. Once married here are some tasks that should be done:Notify the Social Security Administration − Report any name change to the Social Security Administration so that your name and SSN will match when you file your next tax return. Informing the SSA of a name change is quite simple and can be done on the SSA’s website. Alternatively, you can call the SSA at 800-772-1213 or visit a local SSA office. Your income tax refund may be delayed if it is discovered that your name and SSN don’t match at the time your return is filed. Notify the IRS - If you have a new address, you should notify the IRS by completing and sending in Form 8822, Change of Address. Notify the U.S. Postal Service - You should also notify the U.S. Postal Service of any address change so that any correspondence from the IRS or state tax agency can be forwarded to your correct address. Notify the Health Insurance Marketplace – If either or both of you are obtaining health insurance through a government health insurance marketplace, your combined incomes and change in family size could reduce the amount of the premium tax credit to which you would otherwise be entitled, requiring payback of some or all of the credit applied in advance to reduce your monthly premiums. More complicated yet, if either or both of you are included on your parents’ marketplace policy, those insurance premiums must be allocated from their return to your return. Here are a few tax-related items you should be aware of when filing a joint return:• New Spouse’s Past Liabilities – If your new spouse owes back taxes, past state income tax liabilities or past-due child support or has unemployment debts to a state, the IRS will apply your future joint refunds to pay those debts. If you are not responsible for your spouse’s debt and do not want your share of any tax refund used to pay your spouse’s past debts, you are entitled to request your portion of the refund back from the IRS by filing an “injured spouse” allocation form. As an alternative, you can file separately using the “married filing separate” filing status; however, that generally results in higher overall tax. Capital Loss Limitations – If an individual has sold stock or other investment property at a loss, when filing as unmarried, each individual can deduct up to $3,000 of capital losses on their tax return for a possible combined total of $6,000, but a married couple is limited to a single $3,000 loss and if they file married separate, then the limit is $1,500 each.Spousal IRA – Contributions to “Spousal IRAs” are available for married taxpayers who file jointly where one spouse has little or no compensation; the deduction is limited to the lesser of 100% of the employed spouse’s compensation or $6,000 (2022) for the spousal IRA. That permits a combined annual IRA contribution limit of a certain amount (up to$12,000 for 2022). The maximum amount is $7,000 if you or your spouse is age 50 or older ($14,000 if you are both 50+). However, the deduction for contributions to both spouses’ IRAs may be further limited if either spouse is covered by an employer’s retirement plan. Deductions – The standard deduction in 2022 for a married couple (both spouses under age 65) is $25,900 and for a single individual is $12,950. So, if both of you have been taking the standard deduction, there is no loss in deductions. However, if in past years one of you had enough deductions to itemize and the other took the standard deduction, and after your marriage you’ll be filing jointly, you would either have to take the joint standard deduction or itemize, which likely will result in a loss of some amount of deductions.Impact on Parents’ Returns – If your parents have been claiming either of you as a dependent, they will generally lose that benefit. In addition, if you are in college and qualify for one of the education credits, those credits are only deductible on the return where your personal exemption is used. That generally means your parents will not be able to claim the education credits even if they paid the tuition. On the flip side, unless your income is too high, you will be able to claim the credit even though your parents paid the tuition. Buying a Home – Buying a home, especially your first home, can be a trying experience. Without a landlord to take care of repairs and upkeep of the property those tasks will become your responsibility as a home owner. When you rent, you are responsible for making a rental payment which is not tax deductible. On the other hand, when you own a home, in addition to being responsible for its maintenance, you have to make homeowner’s insurance, mortgage, and real property tax payments. While routine upkeep costs aren’t tax deductible, the interest on the mortgage and the property taxes you pay may be tax deductible, providing you with a significant saving in income tax. However, if the standard deduction amount for your filing status exceeds the total of all itemized deductions the law allows you to claim, you won’t get a tax benefit from the home mortgage interest and property tax payments. So, when figuring if you can afford a home be sure to take into account whether you’ll benefit from those home-related tax savings. Also consider the long-term benefits of home ownership. Homes have generally appreciated in value in the past, so you can look forward to your home gaining value, and when you sell it, the gain up to $250,000 ($500,000 for a married couple) can be excluded from income if the property has been owned and used as your primary residence for any 2 of the 5 years just prior to the sale. Many taxpayers don’t feel the need to keep home improvement records, thinking the potential gain will never exceed the amount of the exclusion for home gains ($250,000 or $500,000 if both filer and spouse qualify) if they meet the 2-out-of-5-year use and ownership tests. Here are some situations when having home improvement records could save taxes: (1) The home is owned for a long period of time, and the combination of appreciation in value due to inflation and improvements exceeds the exclusion amount. (2) The home is converted to a rental property, and the cost and improvements of the home are needed to establish the depreciable basis of the property.(3) The home is converted to a second residence, and the exclusion might not apply to the sale. (4) You suffer a casualty loss and retain the home after making repairs. (5) The home is sold before meeting the 2-year use and ownership requirements.(6) The home only qualifies for a reduced exclusion because the home is sold before meeting the 2-year use and ownership requirements.

Today, Atlassian isn't just one of the most successful startups in Australia - it's one of the most successful companies of its type on Earth.As an organization, it is worth more than $50 billion. The portfolio of products that it creates - with software like Jira and Trello being two prominent examples - is used by literally thousands of teams all over the globe. Whether you're talking about its products, its best practices, or its work ethic, Atlassian has created an exceptional reputation for itself in a short amount of time - and it's one story that can certainly serve as an inspiration for us all.The Unlikely Journey of Atlassian: Breaking Things DownAtlassian originally began life in Australia in 2002, based out of Sydney. Flash forward to today and as of 2022, it was estimated that the company had over 242,000 customers all over the world in 190 different countries. In terms of monthly active users, the number was anticipated to be roughly 10 million - one that any company would certainly be happy with.The organization itself was founded by a man named Mike Cannon Brookes who, with his partner Scott Farquhar, developed a partnership while they were both studying together at the University of South Wales. They knew they had a viable idea for a company and just needed to convince everyone else of the same idea, which is why they ultimately ended up bootstrapping Atlassian for a number of years.During the same year, the company released a product that it would become renowned for - Jira. Just two years later in 2004 it also released Confluence. One theme remained consistent throughout this time - Atlassian and its founders remained committed to communication, collaboration, and team building at all costs. It was evidenced in the way they ran their business and in the products they developed as well.When Atlassian started in 2002, they couldn't afford a sales team. They pioneered the freemium or product-led sales approach. This focus on user experience and self-guided user experiences helped them change the software industry and scale to heights not previously imagined.

Last month, we created records for products and services. Now, we’ll talk about where they’re used in QuickBooks Online.If you’ll recall, we went over two product-related concepts in QuickBooks Online in last month’s column. We first discussed getting the site ready for creating and using product and service records. You click the gear icon in the upper right and select Account and Settings, then click the Sales tab to indicate your preferences.To create a product or service record, you hover your mouse over Sales in the left vertical pane on the main page and click Products and services. Click New in the upper right corner and open a blank record for an Inventory or Non-inventory part, a Service, or a Bundle (assembly). Once you complete a record and save it, it will appear in the list back on the Product and services page.Working with Products and ServicesThat’s where we’ll start today, on the Products and services screen. This is a comprehensive table, a dashboard (or home page) for your products and services. It displays real-time information about your items’ pricing and inventory levels, as well as their type and tax status. At the top of the page, you’ll see big, colorful buttons that provide a total of the number of items that are low on stock or out of stock. When you click on one, a list of those products appears. QuickBooks Online’s Products and services page displays inventory levels and warns you when your stock is low and at zero.Each row on this screen contains details about the item listed there, like Description, Sales Price and Cost, and Qty On Hand. If you look down at the end of the row, you’ll see options for several types of Actions: Edit, Make inactive, Run report, and Duplicate. Click the gear icon above the table to modify the columns in the table. The More menu at the top of the screen contains more options: Manage categories, Run reports, and Price rules. If you want to know what actions you can take on multiple items simultaneously, check the box in front of each and click the Batch actions menu, over to the right (Adjust quantity, Reorder, etc.).Warning: Be very careful using the Adjust quantity option. There are legitimate reasons for employing it, but you need to make very sure that you understand how this will affect other areas of your accounting. Please ask us if you’re unsure.