QTax, LLC

06/04/2026

Tax Tip of the Week 4-30

Do I Have a Hobby or a Business?

There is a difference in the eyes of the IRS between a business and a hobby, and that difference can have a significant impact on your tax return.

If you enjoy reading IRS regulations in your spare time (and if you do, we should probably talk), here is the official guidance on Activities Not Engaged in for Profit:

https://www.ecfr.gov/current/title-26/chapter-I/subchapter-A/part-1/subject-group-ECFRcc67ec453a5e514/section-1.183-2

The IRS considers several factors when determining whether an activity is a business or a hobby:

• Is there an intent to make a profit?
• Is the activity carried out like a business with complete and accurate books and records?
• Do the taxpayers and their advisors have the knowledge needed to carry out the activity as a successful business?
• How much time and effort is devoted to the activity?
• Are operations adjusted to improve profitability?
• Does the taxpayer depend on income from the activity for their livelihood?
• Are losses due to circumstances beyond the taxpayer's control, or are they normal during the startup phase?
• Has the activity made a profit and, if so, how much?
• Can the taxpayer expect to make a future profit from appreciation of assets used in the activity?

Why does this matter?

A taxpayer operating a legitimate business may deduct ordinary and necessary business expenses, even when those expenses exceed income and create a loss.

A hobby is different. Hobby income is generally taxable, but hobby expenses are generally not deductible for federal income tax purposes.

The line between a hobby and a business is not always obvious. If you have an activity that generates income, it is a good idea to work with a qualified tax professional to ensure it is reported correctly.

I do read IRS regulations and Tax Court cases. Here are two fairly recent Tax Court cases on this topic: Kolar v. Commissioner (T.C. Memo. 2026-15), where the Court sided with the taxpayer, and Young v. Commissioner (T.C. Memo. 2025-95), where the Court sided with the IRS. In each case, the Court applied the nine-factor profit-motive test.

We speak (and read) tax so you don't have to.

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05/14/2026

Tax Tip of the Week 4-29

The “Kwong Decision” for Dummies Edition

“Wait… the IRS MAY owe ME money because of COVID penalty rules!”

Possibly.
(Yes, really.)

A recent court case — Kwong v. United States — basically said the IRS may have improperly charged certain penalties and interest during the COVID disaster period.

Let’s break this down in plain English (or as plain as tax law allows).

What the Court Said
The nationwide COVID disaster declaration may have automatically extended a whole bunch of IRS deadlines from:

January 20, 2020 → July 10, 2023

If those deadlines were extended, then some penalties and interest the IRS charged during that window may not have been legal.

Translation for Normal Humans
If you were hit with:

Failure-to-File penalties

Failure-to-Pay penalties

Interest charges

…there might be money sitting on the table.

BUT… before you start planning a Caribbean vacation:
The IRS is appealing the case.

Refunds are NOT automatic.

You generally need to file a protective claim to preserve your rights.

The big deadline appears to be July 10, 2026.

This is one of those classic tax situations where:

“The answer is maybe… and it depends…”

Which means:

👉 Talk to your friendly neighborhood Tax Pro before doing anything.
👉 Do NOT file a protective claim because you watched a 43‑second TikTok from “TaxBro420.”

We speak tax so you don’t have to.

05/08/2026

Tax Tip of the Week 4-28

Film Noir Mode: ON

“We must see your papers,” said the IRS agent from the shadows.

Claiming charitable donations?
Business mileage?
Home office?
Energy credits?
Tips or overtime deductions?

Documentation matters.

If you claim deductions without records, the IRS may deny the deduction and may assess accuracy-related penalties.

Just ask Thomas Langlois. In Langlois v. Commissioner, T.C. Memo. 2025-12, the Tax Court denied unreimbursed employee business expenses and partnership losses for lack of substantiation. He was also hit with accuracy-related penalties. Your Tax Pro may ask annoying questions like:

“Do you have a mileage log?”
“Was it written down at the time?”
“Who did you meet, where, when, and why?”

That is not because we are trying to ruin your day. It is because “trust me” is not a tax strategy.

Your documentation should be contemporaneous. If you drive to Gilford on May 6 to meet a client, record it that day: where you went, who you met, why you went, and how many miles.

Get in the habit of saving receipts and recording your actions.

Because in tax world, if it is not documented, it may not have happened.

We speak Tax, so you don’t have to.

Send a message to learn more

04/29/2026

Tax Tip of the Week 4-27

I’m still recovering from Tax Season… (yes, yes—two weeks ago… I know, I know 😄).

But in the meantime, Internal Revenue Service Tax Tip 2026-26 is actually worth a look—especially if you’re a gig worker. There’s some solid guidance in there that could save you headaches (and maybe a few dollars).

Give it a read at the link below.

And when you’re done trying to decode it… you probably want to reach out to your friendly neighborhood Tax Pro.

Because remember—
We speak tax, so you don’t have to.

Tax Tip 2026-26: Filing tips and updates for gig economy workers Internal Revenue Service (IRS) sent this bulletin at 03/31/2026 10:50 AM EDT IRS Tax Tips March 31, 2026 Issue Number: Tax Tip 2026-26 Filing tips and updates for gig economy workers One, Big, Beautiful Bill What is gig economy? Income...

04/25/2026

Tax Tip of the Week 4-26

🏡 Section 121 – Sounds Simple… Until It Isn’t

Under Internal Revenue Code Section 121, homeowners may exclude up to $250,000 of capital gain ($500,000 if married filing jointly) on the sale of their primary residence—if they’ve owned and lived in the home for at least 2 of the last 5 years.

Pretty straightforward… right?

Not so fast.

Here’s where things get interesting:
What if you used your home as a short-term rental?
Do the 2 years have to be consecutive?
If there are multiple owners, can each claim $250,000?
How is basis determined (and why does it matter so much)?
Can you qualify for a reduced exclusion?
For married couples:
Do both spouses need to meet the use test?
Do both spouses need to meet the ownership test?
Did you claim a home office?
What if the property is a multi-family home?
What about a trust-owned property?
How often can you actually use Section 121?

Bottom Line

Section 121 is one of the most powerful tax breaks available to homeowners…

…but only if it’s applied correctly.

One rental period, one wrong assumption, or one missed detail can turn a “tax-free” sale into a taxable one.

Before you assume your gain is fully excluded, have the conversation.

📞 Contact your tax professional.

We speak tax so you don’t have to.

Send a message to learn more

04/02/2026

Tax Tip of the Week 4-25

Please & Thank You – Small Words, Big ROI

“Please” and “Thank you.”
Three simple words. Minimal effort. Big return.

At this point in tax season, Tax Pros are working long hours to make sure returns are prepared accurately and filed on time. A little courtesy along the way is always appreciated—so when you’re speaking with or corresponding with your Tax Pro, don’t forget those three words.

Just a quick reminder—paying for a service doesn’t replace basic manners. It goes hand in hand with them.

I’ll admit, I’ve started keeping a short list of clients I may not continue with after the season. Near the top are those who seem to think common courtesy is optional.

The good news? The overwhelming majority of clients are great. They’re respectful, easy to work with, and make this busy season much more manageable—and that’s always appreciated.

But for the few who are…let’s say a little light on manners…they tend to stand out more than they probably realize.

Send a message to learn more

03/25/2026

Tax Tip of the Week 4-24 🔮

Your Tax Pro Is Good… But Not That Good

Ever drop off your tax docs and think:
"They’ll figure it out if anything’s missing…”

Yeah… no. 😄

Despite our many talents, Tax Pros do not possess psychic abilities. If we did, we’d be too busy picking winning Powerball numbers to prepare returns.

If you opened a new account, had stock trades, earned interest, or took a retirement distribution—we only know if you tell us (or send the forms!).

📌 Common “Oh yeah, I forgot…” items this season:

Retirement distributions
Interest from multiple bank accounts
1099-Consolidated brokerage statements

For returning clients, we might notice something missing based on prior years. For new clients, prior returns help. But chasing documents = delays, extra emails, and slower turnaround times.

💡 Bottom line:
The more complete your info is upfront, the faster—and more accurate—your return gets done.

So help us help you…
👉 Share everything tax-related. No surprises!

We speak tax so you don’t have to.

Send a message to learn more

03/19/2026

Tax Tip of the Week 4-23

💸 “Why is my refund so small?!”

I heard that exact question last week after finishing a return—refund was under $200 and the client was NOT thrilled.

Here’s the reality:
She started a new job in early 2025 and filled out her W-4 with HR’s help… and guess what?

✅ It worked exactly as designed.

The IRS Withholding Estimator is built to get you as close as possible to break-even—not a big refund.

👉 A big refund doesn’t mean you “won.”
👉 It means you gave the government an interest-free loan all year.

Want a bigger refund anyway?
✔️ You can add extra withholding on Line 4(c) of your W-4.

But here’s where it gets tricky…
Multiple jobs, side gigs, interest income—it can throw everything off fast.

That’s where your Tax Pro comes in.

📊 We help you dial in the outcome YOU want—whether that’s break-even or a bigger refund.

Remember, we speak Tax, so you don’t have to.

Check your W-4 tax withholding with the IRS Tax Withholding Estimator. See how your withholding affects your refund, paycheck or tax due.

03/11/2026

Tax Tip of the Week 4-22

“He who hesitates is lost.”
— Cato (the Roman statesman… not the Green Hornet’s sidekick)

If you have a Tax Professional, they should also be one of your advisers.

Your adviser can help you make smarter decisions before you start something new—like launching a business, driving for DoorDash, or picking up other 1099 work.

Don’t wait until March of the following year for your Tax Pro to discover a stack of 1099-NECs or 1099-Ks when they open your portal.

One client did exactly that last year. Because they didn’t reach out earlier, they missed out on tracking mileage and several other deductions that could have reduced their tax bill.

When you have professionals in your corner—
• Tax Pros
• Financial Advisers
• Attorneys

Use them before making decisions, not after the paperwork shows up.

A short conversation early can save tax, time, and headaches later.

We speak tax so you don’t have to.

Send a message to learn more

03/04/2026

Tax Tip of the Week 4-21

🚗 Car Loan Interest Deduction

OB3 introduced a NEW car loan interest deduction of up to $10,000 per year.

To qualify, the vehicle must meet the following requirements:

New vehicle, purchased for personal use

Final assembly in North America

Gross Vehicle Weight Rating (GVWR) of 14,000 lbs or less

Must be a passenger car, SUV, pickup truck, or van

“Scott, how do I know if my vehicle qualifies?”

Simple — send me the VIN. Using my magic tax pro powers (also known as a VIN decoder), I can determine whether the vehicle meets the requirements.

As always, we speak tax, so you don’t have to.

Send a message to learn more