 Income tax 2023-2024. Why and how to learn tax law. Get ready and some coffee because we're going to stop the tax man in his tracks with income tax preparation 2023-2024. Whenever learning a new topic the first question that comes to mind is why? Why learn tax preparation? Why learn tax law? And the response which gushes out of every American heart every American soul is to save money from the dumpster fire that is government spending pulling her into the promised land of the private sector where she can grow, where she can flourish rather than being burnt as a sacrificial offering to the gods of big government boondoggles. Alright I might have got a little bit dramatic there but that's probably the first thing that comes to mind saving some money. Our next objective to be in compliance with the law. When we're talking about tax law that of course means paying the taxes that were legally required to pay and being in compliance with filing requirements were legally required to do. You might think that these first two objectives are contradictory to each other but they're not really because our objective in tax preparation will often be to pay the least amount of taxes that we are legally required to pay. Because of the complexity of the income tax system it's quite easy to accidentally pay more taxes than you're legally required to pay which means that you've sacrificed more of that money to the dumpster fire of government spending and government boondoggles and is it likely that you're going to be getting that money back? Probably not so our objective is to get it right the first time. Now you might argue about whether or not you agree with particular tax laws and we'll talk a little bit more about this in a second but if you know the tax system and you know the tax law and tax preparation you'll be better informed to have discussions with people about what the best kind of tax system would be and the rationale for it and you can make those types of arguments once again within the compliance of the law. You might also be learning taxes because you want to be in business doing tax preparation in some way shape or form. If that is the case then I would think that you would want to narrow down your focus to think about what that exactly looks like. Oftentimes I find that when we think about goals we have a very broad type of idea of the goal which we really need to narrow down into particular steps so that we can go onto an objective that we can actually achieve. So for example first a word from our sponsor. Actually we're sponsoring ourselves on this one because apparently the merchandisers they don't want to be seen with us but that's okay whatever because our merchandise is better than their stupid stuff anyways. Like our CPA six pack shirts a must have for any pool or beach time mixing money with muscle always sure to attract attention. Yeah even if you're not a CPA you need this shirt so you can like pull in that iconic CPA six pack stomach muscle vibe man. You know that CPA six pack everyone envisions in their mind when they think CPA yeah as a CPA I actually and unusually don't have tremendous abs. However I was blessed with a whole lot of belly hair. Yeah allowing me to sculpt the hair into a nice CPA six pack like shape which is highly attractive. Yeah maybe the shirt will help you generate some belly hair too and if it does make sure to let me know maybe I'll try wearing it on my head. And yes I know six pack isn't spelled right but three letters is more efficient than four so I trimmed it down a bit okay. It's an improvement. If you would like a commercial free experience consider subscribing to our website at accountinginstruction.com or accountinginstruction.thinkific.com. Are we thinking about doing tax preparation at another firm or are we thinking about having our own business where we can do tax preparation. Is there an area that we can specialize in taxation itself is huge. So generally you're going to want some kind of specialization. You might specialize for example in lower income tax returns in which case the business model will typically be you're going to be charging less for the preparation. But you're going to be doing a lot more of them. So you're going to make less money per return but you're going to have to do more returns in that case or you do tax preparation for larger or more wealthy individuals. In that instance then they have more complex returns generally you're going to make more per return and possibly do more work in planning and tax preparation as well as tax planning type of services in that instance. You can also specialize in certain areas. Do you want to specialize in for example one location where you don't have a bunch of different state tax returns or possibly you want to specialize. You have multiple state tax returns and possibly income in different areas for an income is are different types of areas you can specialize. You also might be more interested on the business side of things versus the personal side of things doing business tax returns that have a schedule C for sole proprietorship or an S corporation flow through entities like an LLC or corporate type return partnership type of returns. Oftentimes people with accounting backgrounds like myself tend to enjoy that side of things because you get to use more of that you know the double entry accounting system. So in any case highly recommend that if you're looking to start working in some area of taxation that you start breaking down the goals to particular steps and I think that'll make it easier to move forward. Now some other questions that come up with relation to tax law that might not be as obvious are what is the purpose of government. Who should pay for government services. So what is just what is fair. What are these terms even mean. Oftentimes people think of these kind of questions as possibly more interesting than tax law then tax preparation then tax code. What is the government for. What's the best kind of system. Should we be more capitalistic or should we be more communistic or socialistic type of business should the government be running more of the private sector should the government be distributing money and some type way shape or form. Those are kind of interesting questions that come up all the time but again they seem to come up in some kind of an abstract type of format when you get down to the nitty gritty of it when you get down to how what does that actually work. Taxes are going to play a crucial role in that as we've seen all the way through the the the founding of the United States for example which was primarily based on tax arguments was one of the big topics as a colony. So when we get into the questions of you know how is a government taxing it's going to touch in on a lot of these questions that people seem to think of as more interesting than taxation. So for example in politics you will often hear people using words such as just or fair to describe many different things and often times to describe the tax system. They will say things like we need to have a just tax system. We need to have a fair tax system and learning more about tax law I think will get us better at basically being able to pick out those key words and trying to hone down on them and ask critical questions rather than having these broad blanket statements that are in essence meaningless. In other words no one argues that you should not have a just tax system. No one argues that you should not have a fair tax system where the argument lies is what does just mean with regards to taxation. What does fair mean with regards to taxation. So once you start learning what the taxes are actually doing what the impacts they're having. What are the incentives that are being put in place with the tax code because that's what the tax code is being used for oftentimes. When you think about the types of credits that have been put in place for example what kind of behavior is the government trying to incentivize with the taxes that are being are being put in place if people are saying that they want a just tax system or a fair tax system. Then we need to get critical and say what do you mean by just and fair. If the response of just and fair is something like well we need to take all the money into the federal government and then distribute it evenly or distribute it to the people that have the least to the most kind of thing. That's like a communist type of system right or or if you're saying that just or fair means that the people that are actually you know earning the money within within the system they're making things. Then those are the people that possibly should have should be able to keep more of their money or something like that. Well those type of people are arguing more for a capitalist type of system. So you can see the answer to these questions with regards to taxation are going to tell you what a lot of the questions about these vague terms that we kind of throw we throw around in terms of how big should the government be. Should we have more capitalist systems. What's what should how much of a safety net should we have within within our system. All of that is tied into of course the taxation because the government doesn't actually produce things in general. The government is could be a force of redistribution is the is the general idea. So the question is what should the government be in charge of. And again we can really drill down on that by concentrating on some of the tax laws that go through. All right. Well how do we learn tax law. So you're going to you're going to want to question the law. You're going to want to reason with it. You're going to want to debate it. In other words you don't really want to learn tax law or anything by just trying to rogue memorize it. You don't just you're not going to be able to just repeat the tax law enough times so that it's stuck in your head by repetition. It's too big of something to be able to do that. And even if you were able to do that you don't really develop any conceptual understanding of the tax law because oftentimes there's there's gray area just like with any type of law. If you're not learning anything the general idea of learning it is going to be tell a story about it. And even when you're talking about learning a series of numbers then oftentimes if you can break those numbers into a pictorial format you can make a picture. You can you can link the number to an image and then make a story about those images that's going to help you to basically remember just even a series of numbers. So just from a practical standpoint when you're learning the tax law for whatever you want to do you want to make a story about it. Fortunately the tax law already has a story because everything that the tax law has been put together someone put that together because they thought it was a good idea. They've been arguing it's a process that came out of the creation of the law arguments have happened and this thing came out of that. So the question is you can ask questions like well what were they thinking when they put this law in place. Do I agree with the law that was put in place. Now that this law is put in place what are the incentives that that's going to have is that going to incentivize people to grow the economy. Is it going to incentivize people to reduce the economy. Is it OK that the economy is being possibly depressed in some way or reducing GDP if we can get a more even distribution through redistribution policies and these kind of questions are things that you will see. If you if you start looking at the at the tax law and it's just like any kind of text that you engage with if it was like a philosophical text or something like that you're going to be reading it and say why why does this person think that you're going to like debate. And and you don't just like just read it and just kind of take it in. Well that's what that person thinks I'm not going to question it or if you're if you're looking at books like the Homer or Shakespeare or something you're going to be asking questions like well. Why did Achilles do that. He's acting like a baby. I don't know what he's doing over here. You're going to you know you're going to question the motives of the characters. Well the characters in tax law are the people that put in the law. And so we can we can basically ask questions in terms of why those laws have been put in place. And then and then that will help us at least with the memorization of it. It will also help us to engage it when we're actually trying to do things with the law. And if we have clients or are working with people that are interested in the law you have something to actually talk about. You can give some opinion as to not just what the law says but possibly what the incentives or motives were behind it. Now that could get you in trouble because people have different different opinions about what is fair if you just say we want a fair tax code. That's a pretty safe thing to say and of almost evasive thing to say. Right. If you actually get into the details in terms of what you think is fair and those kind of questions then you're going to annoy people sometimes but those are more honest debates. And so and there will be more more engaging debates with the clients and if you engage in more engaging debates you might have more clients than actually hopefully you genuinely agree with which would be a better a better system usually if that's possible. But in any case that's the idea.