Anyone know if Qualified Terminable Interest Property (QTIP) trusts have different tax rules? My spouse and I are updating our estate plan and our attorney mentioned QTIP but I'm not sure about the tax implications.

One thing to consider that hasn't been mentioned much is the "throwback rule" for complex trusts. If a trust accumulates income for several years and then makes a large distribution to beneficiaries, the IRS can "throw back" that income to prior years and tax it at higher rates, plus add interest charges. This can create a nasty surprise for beneficiaries who receive distributions from trusts that have been accumulating income. Also, watch out for state tax implications - some states don't recognize grantor trust status and will tax trust income at the state level even if it's flowing through to you federally. Others have no state income tax on trusts at all. The state where the trust is established, where the trustee resides, and where beneficiaries live can all potentially create tax obligations. If you're thinking about funding the trust with appreciated assets, remember that trusts don't get a stepped-up basis like inherited property does. So if you put stock worth $100k (that you bought for $20k) into a non-grantor trust, and the trust later sells it, the trust pays capital gains tax on the full $80k gain.

My CPA told me that the hobby loss presumption kicks in after 3 years of losses, but you get 5 years for activities involving horses (weird exception lol). For your YouTube channel, document EVERYTHING that shows you're trying to make money. Schedule C should show increasing income even if expenses are higher.

One thing I haven't seen mentioned yet is that the IRS also considers the "manner in which you carry on the activity" as one of the nine factors. For YouTube creators, this means treating your channel like a real business - having a content calendar, tracking analytics, actively seeking sponsorships, and reinvesting profits back into the channel. I'd recommend keeping a business journal documenting your efforts to monetize and grow the channel. Note down networking activities, market research, content strategy changes, etc. This creates a paper trail showing you're genuinely trying to build a profitable business, not just pursuing a hobby that happens to make some money. Also, don't artificially limit your legitimate business expenses just to show a small profit. The IRS would rather see realistic business operations than obvious manipulation of numbers. Focus on building a strong case for business intent through your actions and documentation.

Just wanted to add another perspective based on my experience helping clients with similar situations. While everyone's covered the estate tax basics well, don't overlook the importance of reviewing beneficiary designations regularly. I've seen cases where clients had outdated beneficiary forms that didn't reflect their current wishes, or worse, no beneficiary listed at all which can force the IRA through probate. Make sure your mom's IRA custodians have current beneficiary forms on file, and consider naming contingent beneficiaries too. Also, if she has multiple IRA accounts, she might want to consider consolidating them to simplify management and ensure consistent beneficiary designations across all accounts. This becomes especially important if she decides to implement any of the trust strategies mentioned earlier.

One important detail that hasn't been mentioned yet - make sure your mom understands that while her estate may be well under the federal exemption now, those exemption amounts are set to change dramatically in 2026. The current high exemption ($13.61 million for 2024) is scheduled to sunset and revert back to pre-2018 levels, which would be around $6-7 million adjusted for inflation. This "exemption cliff" in 2026 could potentially affect larger estates, though with your mom's current $2.6 million total, she'd still likely be safe. But it's worth keeping in mind for planning purposes, especially if her assets continue to grow or if she inherits from other family members. Also, since you mentioned you're the sole beneficiary, you might want to discuss with her whether she wants to add any contingent beneficiaries just in case something happens to you before her. Having a clear succession plan can avoid complications later.

Great summary Isabella! One additional consideration for your client - since they're a franchise operation, make sure to check if the franchisor has any specific requirements about POS system depreciation methods for consistency across their network. Some franchisors provide guidance on accounting treatments to ensure uniform financial reporting across locations. Also, if they're planning to open additional locations in the next few years, establishing a consistent depreciation policy now will make future locations much easier to handle. Document your rationale for the 5-year classification so you have support for when you're dealing with multiple locations down the road. The Section 179 election is definitely worth exploring given the current limits, especially if this is their only significant equipment purchase this year. Just keep in mind the potential recapture issues if the business use drops below 50% in future years (though that's unlikely for restaurant POS systems).

As someone who's worked with numerous franchise operations over the years, I can confirm that most restaurant franchisors do provide standardized accounting guidelines, including equipment depreciation policies. It's worth reaching out to the franchisor's operations or accounting department early in the process. Regarding franchise fees and equipment allocation - this can get tricky. If the POS system cost is bundled into the initial franchise fee, you'll need to allocate the fair market value of the equipment separately from the intangible franchise rights. The equipment portion gets depreciated over its useful life (5 years for POS systems), while the franchise fee portion continues to be amortized over 15 years. If the franchisor requires specific POS systems but the franchisee purchases them separately, then you treat them as regular business equipment purchases. Just make sure to maintain clear documentation of what was included in franchise fees versus separate equipment purchases. One more tip: many franchisors have relationships with preferred POS vendors and may have negotiated volume pricing. Sometimes they can provide invoices that clearly separate hardware, software, installation, and training costs, which makes your componentization much cleaner from the start.

The commission income definitely adds complexity to your W4 setup! Here's what's worked for me in a similar situation: Since your wife has the higher, more stable income at $78k, I'd recommend having her claim both kids on her W4 in Step 3. This keeps things simpler and more predictable for withholding calculations. For your commission income, here's the key: estimate your total annual commission and divide by your number of paychecks, then use that amount in the IRS withholding calculator. The calculator will tell you exactly how much extra to withhold on line 4(c) of your W4. One trick that's helped me - I actually slightly overestimate my commission income when doing these calculations. Better to get a small refund than owe money! You can always adjust mid-year if your commission patterns change significantly. Also, since commission income can push you into higher tax brackets unexpectedly, consider having a flat extra amount withheld from each of your paychecks (like $100-200) just as a buffer. This has saved me from surprise tax bills multiple times. The bottom line: use the IRS withholding calculator quarterly to stay on track, especially with variable income in the mix.

One thing I haven't seen mentioned yet is the timing of when you update your W4s during the year. Since you have commission income that varies, I'd suggest reviewing your withholding after each quarter, especially if you have a particularly high or low commission quarter. Also, with two kids, make sure you're taking advantage of the Child Tax Credit properly. The current credit is $2,000 per qualifying child, and this gets factored into your withholding calculations when you claim them in Step 3 of the W4. A tip from my own experience with variable income: I keep a simple spreadsheet tracking my year-to-date commission versus what I estimated when I last updated my W4. If I'm running significantly higher or lower than projected by mid-year, I'll run the IRS calculator again and adjust my withholding for the remaining months. The key is staying proactive rather than waiting until tax time to discover you're off target. With your combined income levels and two kids, you're probably in a sweet spot where small adjustments can make a big difference in getting your withholding just right.