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!

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.

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.

I've never heard of the Taxpayer Advocate Service. Do they help with complicated situations involving multiple years and different income sources? Also, do they help negotiate payment plans or is that a separate process?

Yes, they absolutely help with complicated multi-year situations - that's actually their specialty. My case involved W2 income, freelance work, and some investment income across several years. They're particularly helpful when your case has special circumstances or when you've tried to resolve issues through normal IRS channels without success. The advocate can help with the entire process including setting up payment plans and exploring options like Offers in Compromise if you can't pay the full amount. They'll look at your financial situation holistically and recommend the best approach. They can even request holds on collection activities while you're working with them. To contact them, call 1-877-777-4778 or find your local office on the IRS website.

This is a really good point. My brother thought he'd owe thousands, but ended up getting about $1,500 back because his W2 withholding more than covered what he owed from his side gig. Don't assume you'll owe until you run the numbers!

Oh that's super helpful - I didn't even think about mileage! I was taking the campus shuttle to most sessions but sometimes I did drive to off-campus locations. Do you need any special documentation for mileage or just a log?

A simple log is enough! Just note the date, starting location, ending location, purpose of trip (tutoring), and miles driven. I keep mine in a notes app on my phone so I can update it right after each session. You don't need anything fancy - just enough detail that you could explain it if questioned. Only track the miles specifically for tutoring though, not your regular commute to campus or personal trips.

Yep, that self-employment tax is brutal! But remember you can deduct half of it on your 1040, which helps a little bit. Schedule SE calculates this automatically.