I hadn't considered that approach! Her tuition for spring was around $15,000 plus I covered about $8,000 in housing and other expenses through May. Her job pays about $60,000 annually, so she'll make roughly $35,000 for the 7 months she works this year. Would the tuition I paid count toward the support calculation?

Yes, the tuition you paid absolutely counts as support! The IRS considers support to include tuition, fees, books, supplies, and room and board. So the $15,000 tuition plus the $8,000 in housing and other expenses means you provided $23,000 in support. For your daughter's income, it's not just what she earns but what she actually spends on support items. If she makes $35,000 but saves some of it or spends on non-support items like retirement contributions or entertainment, that doesn't all count as self-support. You'd need to calculate what she actually spends on housing, food, medical expenses, etc. after graduation.

This is such a good point! My son graduated last year and his tax liability for his first half-year of work was only about $3,000, so he couldn't use the full LLC amount. Would have been better if I could have claimed it since I was in a higher tax bracket.

How often should HNW clients have their tax strategy reviewed? Is it something that needs adjustment every year or is a good strategy supposed to last for several years? And does having multiple properties across different states complicate things significantly?

Tax strategies should be reviewed quarterly at minimum, with a comprehensive overhaul annually. Tax laws change frequently, and as a portfolio grows, different strategies become available. What works for 3-4 properties often becomes suboptimal at 10-12 properties. Multi-state portfolios absolutely complicate matters and often require state-specific expertise. Each state has different tax treatments for out-of-state owners, and some entity structures that work well in one state can create unnecessary tax burdens in others. This is especially true with states like California, New York, and Texas, which have very different approaches to taxation.

DSTs have serious downsides though. You lose operational control, returns are often lower than direct ownership, and the fees can be substantial. Plus, you're locked in for the duration with very limited liquidity. They're not always the best choice for active investors who want to grow their portfolio.

That's really helpful - I'll make sure she focuses on those specific credits first. Is there anything else she should have ready besides the Form 8867 and supporting documentation?

She should also have her written due diligence procedures available - even if it's just a basic checklist of what she asks clients and what documents she collects. The IRS wants to see that she has a consistent process. Also have her review her records for any cases where she might have rejected claiming a credit when a client couldn't provide adequate documentation. This shows the IRS she's not just rubber-stamping everything. And remind her that they'll likely ask questions about her knowledge of the eligibility requirements for these credits, so a quick review of the current rules wouldn't hurt.

Is there a way to know which returns they'll select? My practice got notice of a visit too and I'm freaking out trying to organize everything!

Is 30% really enough? I've been setting aside 35% and still ended up owing more last year.

It really depends on your income level, state taxes, and available deductions. For many people, 30% is a good starting point, but if you're in a high-tax state or making over $100k, you might need to set aside more like 35-40%. If you found 35% wasn't enough last year, try bumping it up to 38-40%. It's always better to end up with a small refund than to owe more than you expected. Also make sure you're maximizing your business deductions - things like home office, business mileage, health insurance premiums, and retirement contributions can significantly reduce your taxable income.

Thanks for mentioning this! Do you know what qualifies as "financial hardship" for an Offer in Compromise? With my house repairs and existing debt, I'm definitely struggling financially, but I do still have income coming in.

The IRS looks at your assets, income, expenses, and ability to pay both now and in the future. There's no specific income threshold - instead, they calculate something called your "reasonable collection potential." In your case, having necessary home repairs (especially structural ones) and existing debt would be factors in your favor, but they'd also look at your ongoing income potential. The fact that you're actively working and earning would make an OIC harder to qualify for, but not impossible. The IRS has a pre-qualifier tool on their website that can give you a rough idea if you might qualify. But honestly, for most people with ongoing income, a payment plan is the more realistic option. The retirement account suggestion would be more helpful for reducing next year's taxes rather than dealing with what you currently owe.

What about companies formed in 2023? I thought we had different deadlines than older companies. Does this pause affect all businesses the same way?

Companies formed in 2023 fall under the "existing entities" category, which originally had until January 1, 2025 to file their initial reports. Companies formed in 2024 have 90 days from formation to file. The enforcement pause affects all businesses subject to the CTA equally - regardless of when they were formed. However, it's important to note that the technical legal requirement still exists for all applicable businesses, even though there's no enforcement mechanism currently in place. My recommendation remains to prepare your information so you're ready when enforcement resumes, which it almost certainly will.

You didn't waste your time. If anything, you're ahead of the game. The database still exists and your information is properly recorded. When enforcement resumes (which most experts think it will), you won't have to scramble like everyone else.