It’s been almost a year since our shindig with the Logan Square Chamber of Commerce, clients, and friends — celebrating 21 years of working with small businesses in our community. Today we celebrate our 22nd trip around the sun in this amazing neighborhood, and it’s high time we share all those great memories of the blow-out party that was.
Gratitude also goes out to cherished long-time client Vinejoy for the prosecco, Revolution Brewing for the beer, SipJeng for the CBD mocktails, Dill Pickle Food Co-op for the soft drinks, and the amazing Nick Connell for the balloon twisting and general merriment. We couldn’t have done any of this without the dedicated help of Sage Ferguson and her family, as well as the enthusiastic Candy Minx.
Most importantly, we have to thank our entertainers for the event: the best honky-tonk band in Chicago, if not the world — Wild Earp & The Free-For-Alls, with special guest Michelle Billingsley. We are indebted to them for their spirit, talent, charm, camaraderie, generosity — and patience, as the Chamber dealt with power and light challenges at the newly-activated Solidarity Triangle.
Speaking of the Logan Square Chamber of Commerce — this whole crazy event was dreamed up by their energetic Executive Director, who also invited our wonderful drink and food pop-ups, and we were touched that the two previous directors of the Chamber also attended (wish I’d thought to get a photo of all three of them together)! What an honor. Our neighborhood owes so much to LSCC, as well as their incredible Farmers Market.
I could go on and on about what an incredible celebration it was — pretty sure I floated on Cloud Nine for weeks afterwards. Suffice it to say that having hundreds of clients, community members, friends and neighbors come together to commemorate the difference we’ve made together… feels really great. Thank you for letting us be a part of your neighborhood.
Nancy modeling at the Beehive In Bloom Fashion Show | photo by Zak Jacobson
It’s not often I am described as either brilliant or insightful — so it’s a banner day when referred to as both.
And what better day than today, the 22nd anniversary of starting my own accounting firm?
To celebrate, I am delighted to share a recent interview with CanvasRebel, an online magazine and podcast that highlights voices of small business owners — in their words, “stories about our business or career that we might share at dinner or over coffee, but that wouldn’t necessarily make it into our memoir at the end of our lives; stories that illustrate the nitty-gritty details of what it takes to be successful day to day, how to build and grow a client base, recruit, train and manage a team or generate a living.”
I agree wholeheartedly with the folks who interviewed me. “There is so much we can learn from each other, and we hope these stories inspire you to pursue your passion and support those who are doing so themselves.”
Their questions were thought-provoking and caused me to truly reflect and think about some of the universal truths that I’ve learned in working with small business owners as their CPA. Questions such as:
What’s the best advice you’ve ever given to a client?
How did you get to where you are today?
What do you think helped you build your reputation within your market?
Do you have any insights you can share related to maintaining high team morale?
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
QuickBooks ProAdvisors are first nominated, and then go through a lengthy vetting process, before eventually opening up to a public vote. Applicants for this prestigious award are ranked based on their performance across various categories, measuring everything from QuickBooks knowledge and continuing education, to utilizing the best tools and partner apps within the QuickBooks ecosystem. Real-world experience with clients is a requirement. Winners have said the Top 100 recognition by peers and their industry has opened doors and provided inspiration and new perspectives.
I would love to express great appreciation to Gary DeHart and the entire Insightful Accountant team for their hard work evaluating the nominees — it’s quite special to receive an award from a publication that has been a trusted go-to resource for so many years. And special thanks to all those who voted, in particular my esteemed colleagues and valued clients. It’s extremely exciting to share space with luminaries in the Intuit QuickBooks world such as Alicia Katz Pollock, Lynda Artesani, Michelle Long, Caleb Jenkins, Marnie Stretch, Stacey Byrne, and Veronica Wasek. Looking forward to the formal announcement at Scaling New Heights. If you see me there, please come on up and introduce yourself!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
The focus of this webinar is to teach existing accountants who are already familiar with co-op accounting about the similarities and differences between the types of clients they already work with, and contrast them against a few other co-op types that are becoming more popular.
Consumer, Housing, and Worker Co-ops have been around for a long time and are experiencing a surge in popularity, but many experienced cooperative accountants know little about them. By introducing NSAC members and other accountants to unfamiliar cooperative structures, they can leverage their existing expertise in areas common to all co-ops, and build on that knowledge. We will explore these three co-op types and learn to recognize what they have in common with other co-ops, as well as explain the differences. Our goal is to help identify and create additional business opportunities for cooperative accountants to expand their scope and offerings.
The learning objectives will be: 1) Identify distinguishing characteristics of consumer, housing and worker co-ops. 2) Recognize the unique benefits and challenges of each type, as well as common industries. 3) Explore additional resources and next steps to expand scope and offerings to potential clients.
Normally the cost is $56 for the one-hour session for non-NSAC members, but they have been generous enough to allow me to offer a code to blog readers to attend at no charge. Simply visit: https://nsacoop.memberclicks.net/022123 and enter the code $DAVIP2023$ to attend at no cost.
Hope to see you there!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Speaking with Mark was a truly gratifying experience — he was kind, organized, interested, and sincere, and asked great questions. As a sneak preview of a few good ones:
How did you end up being interested in Music from an education standpoint, and how did you end up moving towards accounting?
At what point did you decide to further your education with the Masters in Financial Analysis and why that particular major? Was it difficult to return to school?
How has your practice evolved over the years? I see you use the DBA The Dancing Accountant. Was that always the case, or did that come later? Is it related to a niche, or more about branding?
You’ve been listed on the 50 Top Women in Accounting list. Congratulations! How does that make you feel? Is it acknowledgement of hard work, even more responsibility, honor…?
What does the future look like for you if it goes exactly how you would like it to go? When you look back on your career & life, what will you want to be able to say you accomplished?
If you could go back in time and give your younger self just one piece of critical advice, what would that be?
We spoke for over half-an-hour and I felt like we could have gone on for days… his conversational style was comfortable and disarming. I enjoyed sharing personal stories, talking about the great folks I’ve studied and worked with, about how hard it was to go back to school while working, how much I love helping small businesses in my neighborhood, how much I hate saying “no”, how a client came up with my business name… and so on. Give it a listen — and raise a glass to our amazing team while you’re at it!
I would love to be remembered as someone who helped keep our communities vibrant by helping small businesses succeed. That’s the whole point of any of this, and my staff is a group of women who feel the same way. Our work really has meaning. ~Nancy McClelland, CPA
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
“Really great interview. I appreciated how the highlights were amplified. Nancy is smart and real. Blake does a great job allowing the interviewee talk and share her knowledge. Well done!” -YouTube viewer comment
I was honored to be interviewed recently by the one-and-only Blake Oliver for Relay‘s “Gearing Up” series, where every two weeks, he talks to a real accountant or bookkeeper about ONE challenge in their firm — and how to solve it.
In this episode, we discuss how to build a team with whom you love to work (kudos to Bookkeeping Buds for helping me make that happen).
As our firm grew, I realized that building The Dancing Accountant in a traditional way was re-creating working conditions that our team and I didn’t love — it was immensely important to me that above all, we enjoy working with each other.
But first I had to convince myself I had something to offer — and decided to focus on what I knew employees wanted: meaningful work.
In the latest episode of Gearing Up with our host Blake Oliver, I open up about the a-ha moment that led to our building an entirely different kind of remote firm. In the episode, you’ll learn: Why Nancy is known as The Dancing Accountant Nancy’s favorite tool in her tech stack Three things employees want from work The non-traditional structure of Nancy’s team
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
So excited to share this year’s Top 50 Women In Accounting list from Ignition! It was one of the greatest honors of my career to be included on it last year — and I’m privileged to support this year’s awardees, who are driving change and creating opportunities for the next generation within the Accounting and Bookkeeping industry. Special shout-outs to Cindy Schroeder & Madeline Pratt — two of my inspirations! Congratulations.
This Journal of Accountancy article walks through the particular scenario where this relief — only for tax year 2021 — applies. They note that:
The relief announced Wednesday applies where:
In tax year 2021, the direct partners in the domestic partnership are not foreign partnerships, foreign corporations, foreign individuals, foreign estates, or foreign trusts.
In tax year 2021, the domestic partnership or S corporation has no foreign activity, including foreign taxes paid or accrued or ownership of assets that generate, have generated, or may reasonably be expected to generate foreign-source income (see Regs. Sec. 1.861-9(g)(3)).
In tax year 2020, the domestic partnership or S corporation did not provide to its partners or shareholders, nor did the partners or shareholders request, the information on the form or its attachments regarding:
Line 16, Form 1065, Schedules K and K-1 (line 14 for Form 1120-S), and
Line 20c, Form 1065, Schedules K and K-1 (controlled foreign corporations, passive foreign investment companies, 1120-F, Sec. 250, Sec. 864(c)(8), Sec. 721(c) partnerships, and Sec. 7874) (line 17d for Form 1120-S).
The domestic partnership or S corporation has no knowledge that the partners or shareholders are requesting such information for tax year 2021.
To learn more, I recommend this excellent Compass Tax Free 10-Minute Webinar update from 2/17/22 on the new FAQ relief for partnerships and S corporations with Thomas Gorczynski, EA USTCP, and Kevin J. Todd, EA, CPA.
(Our original blog post is below, for context and reference.)
K-2 Mountain (courtesy of Wikimedia Commons)
Yes, that photo is of K-2, the second-highest mountain on Earth, where apparently one person dies on the mountain for every four that reach the summit. (Didn’t expect that to show up in my search for a common-usage-right image of an IRS K-2 form.)
The good news is that — as frustrating and arduous as this new IRS K-2 and K-3 reporting requirement is — no one is likely to die while attempting to complete it, and therefore I think we should just all keep this extremely challenging K-2 mountain in mind before we get too frustrated about additional complexities in tax preparation.
In all seriousness, here’s the story: 1) The IRS, in an attempt to deter fraud, for 2021 began requiring all pass-through entities to disclose foreign transactions as part of the tax returns and the K-1 package to shareholders and partners. 2) Initially, the new schedules were only to be used by entities with international transactions to report. 3) In mid-January, the IRS issued revised instructions for the schedules that may require domestic partnerships and S corporations without any foreign source income or assets to prepare Schedules K-2 and K-3. 4) If even one of the partners or shareholders plans to or is required to report foreign tax credits on Form 1116, Foreign Tax Credit, the Partnership or S-Corp must prepare Schedules K-2 and K-3. 5) As a result, the complex and comprehensive “reporting requirement applies to a much larger percentage of pass-through-entity (PTE) returns than perhaps the IRS intended”, as Forbes pointed out.
“This seems like an overly burdensome requirement to quietly clarify in the middle of filing season.” – Tom Gorczynski, EA
All is not lost. Yes, we’re talking about well-over 20 additional pages of tax forms — but it’s likely that you won’t have to fill them all out. An exception from filing Part II and Part III, Section 2, on Schedule K-3 may apply for a pass-through-entity that:
only has US-source income;
does not have income or deductions that the partners can source or allocate and apportion; and
only has limited partners owning less than 10% of the capital and profits of the partnership at all times during the tax year.
(Though the IRS clarified that a business with no foreign-source income must still file Part II (foreign tax credit limitation) and Part III (information for preparing Forms 1116 or 1118) on Schedules K-2 and K-3 if their partners have items of international tax relevance.)
From the NATP Blog: “For preparers who are handling the returns of both the partnership and the partner, the partner can choose alternatives to filing Form 1116 and triggering the Schedules K-2 and K-3 filing requirements if one of the following applies:
The partner neither paid nor accrued any foreign taxes and there was no foreign tax credit carryover for the tax year;
The foreign tax paid was under the $300 individual reporting threshold ($600 for married filing jointly) for Form 1116, or an election is made under Section 904(j) of the Tax Code to report the credit without the form;
Schedule A is used to report a deduction for foreign taxes (which also avoids the $10,000 SALT cap).
“Preparers who are not completing returns for the partner reporting foreign tax payments will need to ask the partners/shareholders directly for their information. If they fail to respond to the request, the preparer will at least have made a documented, good-faith effort to obtain the required information and should be eligible for the good-faith relief outlined in Notice 2021-39.”
Therefore, for preparers who have to file Schedules K-2 or K-3, there are three options. – One is to extend the returns, as e-filing is not available until after the current due date of both the S corporation and partnership returns. – Another option is to paper-file the return, which will cause delays in processing. – The third option (what we will likely do for those returns we cannot reasonably extend) is to prepare the K-2/K-3 forms and attach them to e-filed S-Corp and Partnership returns as a PDF. Generally the IRS is not great about referring to these attachments, and some tax software programs have problems delivering them; but at least it will show a good-faith attempt in the case of an audit.
Per Amber Gray-Fenner in Forbes, “These alternatives, while prudent, present some potentially serious unintended consequences:
The IRS may be inundated with PDF attachments that it is not prepared to process and review. PDF attachments are often separated from original returns never to be seen again—at least not until the taxpayer receives a notice looking for the “missing” information.
Many more PTE returns may be put on extension than would normally be the case.
Extended PTE returns mean extended 1040s, which is unsatisfactory to many taxpayers and tax professionals.”
In that same article, my colleague Fred Stein hopes “Occam’s Razor ‘kicks in and IRS realizes the unintended consequences this creates for many small businesses.’ If not, the additional work involved could cause PTE return preparation prices to increase by thirty to fifty percent.”
A summary from last week’s AICPA Town Hall:
We will be reaching out to all our S-Corp and Partnership clients to let them know about these new rules, and to ask that they obtain signed confirmation from each of their owners as to any personal requirement to file Form 1116 or another foreign-related tax form on the 1040 returns.
As you may have guessed, this unexpected new guidance will cause additional time, effort, and cost to all our small business S-Corps and Partnerships — almost none of whom actually have any foreign transaction exposure. After all the requests we’ve made of the IRS to reduce the tax preparation burden on small business owners and their CPAs, I wish I could say this is laughable.
In case that wasn’t enough for you, we’ve compiled a rich list of resources for your reading and watching enjoyment.
Compass Tax Resources: • 2/10/22 Free 15-Minute Webinar – discussion on the new requirements for partnerships and S corporations with Thomas Gorczynski, EA USTCP, and Kevin J. Todd, EA, CPA Compass Tax Resources: • 2/17/22 Free 10-Minute Webinar – update on the new FAQ relief for partnerships and S corporations with Thomas Gorczynski, EA USTCP, and Kevin J. Todd, EA, CPA
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Last year we began requiring all clients to submit a copy of their IRS Account Transcript along with their Tax Organizer and other annual tax prep documentation.
The initial issue was that not everyone kept the Form 1444 notices regarding how much stimulus was received. Why would this matter? If a taxpayer did not receive the full amount, then they are entitled to recoup the difference on their annual tax return. (But don’t worry: if you received too much, you don’t have to pay it back — unless it was obtained fraudulently.) Not only does this issue remain for 2021, but the problem is exacerbated, because now we also have child tax credit payments to track — some folks received advances while others decided to opt out (and unlike stimulus payments, any excess child tax credit payments may have to be repaid).
In addition, we’ve also noticed quarterly estimated taxes are often reported incorrectly by clients — especially with additional complexities due to recent state legislation to get around federal limits on deducting state taxes.
We’ve come to the conclusion that the best solution to these concerns is to continue to ask clients to download their annual Account Transcript and provide it to us via secure upload. It’s free, reasonably easy, and reliable.
Instructions for obtaining the Account Transcript for folks who have already registered for an IRS online account follow — if you did this last year, you don’t need to follow all the steps in last year’s post about how to create an account. Just sign in to the system and you should be golden.
(Yes, the IRS will ask you to create a new ID.me account “as soon as possible” and you won’t be able to log in with your existing IRS username and password starting in summer 2022. But for now, no need to create a new account in the new system — the old one works just fine.)
You’ll need to select the reason you need a transcript.
In this case, you would select “Other”.
4. Leave the Customer File Number blank and click “Go”.
5. The screen will display all four types of transcript options and the available years.
6. Select “2021” under “Account Transcript” (the box in the lower-left).
Make sure you are selecting the right kind of transcript — in this case you want an Account Transcript. (Click here for information on what each of the types of transcripts are.)
And like magic, a pdf pops up in a new tab of your browser with a letter from the IRS — and if you scroll down to the bottom, there’s section detailing all the transactions you need.
At this point, print the file to pdf and save somewhere safe, along with the rest of your tax season documents.
What about state information?
To get a list of the estimated tax payments you’ve made to the state of Illinois, go to https://mytax.illinois.gov/?link=1040EPy and enter your SSN, Name, and the year (in this case 2021).
If you also made payments from a corporation or partnership, you’ll need to log into your MyTaxIllinois business account to get those.
Done! Let the tax return preparing begin!
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. This allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
In an already unprecedented year, the IRS is taking an unprecedented approach toward managing taxpayer expectations, and with good reason: with tax season officially beginning this coming January 24th, the IRS is dealing with a severe lack of staffing — facing workforce headcounts at 1970s levels — and a backlog of tax returns from the past two years. They say to expect frustration this tax season.
The IRS has been dealing with budget shortages for many years now, and Covid forced their mailrooms to close down for months at a time, creating a massive backlog from which they have not yet recovered. Add to that the unbelievable number of new demands placed upon the agency: three rounds of stimulus payments, Employee Retention Credits for both 2020 and 2021, and demands for guidance in an unbelievable number of groundbreaking areas of code… it is certainly understandable that they would not be able to meet taxpayer needs.
So what can taxpayers do to avoid additional problems? Filing electronically with direct deposit, and avoiding a paper tax return — at almost any cost — is more important than ever this year. Additionally, those who received an Economic Impact Payment or an advance Child Tax Credit last year should be especially careful to order an IRS transcript ahead-of-time to confirm these amounts before filing a return. (We are requiring all clients to submit both federal and state transcripts this year, in their own interest.)
Also, keep in mind that by law, the IRS cannot issue a refund involving the Earned Income Tax Credit or Additional Child Tax Credit before mid-February, though eligible people may file their returns beginning on January 24. The law provides this additional time to help the IRS stop fraudulent refunds from being issued.
Due to the Emancipation Day holiday falling on Friday, April 15th, the filing deadline to submit 2021 tax returns or an extension to file is Monday, April 18, 2022. Taxpayers requesting an extension will have until Monday, Oct. 17, 2022, to file (but not an extension to pay; make sure to pay an estimate of tax with your extension).
The American Institute of CPA’s VP of Tax, Ed Karl, has repeatedly shared in AICPA Town Halls and articles that the IRS Commissioner himself testified that during busy season the IRS gets 1500 calls per second — this translates into their only being able to answer 2% of calls. “No, that is not a typo.” The AICPA strongly supports penalty relief measures that are fair, reasonable and practical, and would mitigate the negative effect of the coronavirus on taxpayers and require less contact with the IRS. Such an approach would alleviate the daily struggles that taxpayers, their advisers and the IRS face. Specifically, the AICPA urges Treasury and the IRS to:
Stop compliance actions until the IRS is prepared to devote the necessary resources for a proper and timely resolution of erroneous notices, missing refunds and other matters. At a minimum, stop automatic collections at least for 90 days after the filing deadline.
Align requests for account holds with the time it takes the IRS to process any penalty abatement requests.
Provide taxpayers with targeted relief from underpayment of estimated tax penalty and the late payment penalty.
Offer a COVID-19 reasonable cause relief, similar to the procedures of first-time abatement and generally facilitate the easier adoption of reasonable cause relief.
In the meantime, here are several important dates from Tax Practice Advisor that taxpayers should keep in mind for this year’s filing season:
January 14: IRS Free File opens. Taxpayers can begin filing returns through IRS Free File partners; tax returns will be transmitted to the IRS starting January 24. Many tax software companies also are accepting tax filings in advance.
January 18: Due date for tax year 2021 fourth-quarter estimated tax payments.
January 24: IRS begins 2022 tax season. Individual 2021 tax returns begin being accepted and processing begins.
January 28: Earned Income Tax Credit Awareness Day to raise awareness of valuable tax credits available to many people – including the option to use prior-year income to qualify.
April 18: Due date to file 2021 tax return or request extension and pay tax owed.
April 19: Due date to file 2021 tax return or request extension and pay tax owed for those who live in MA or ME due to Patriots’ Day holiday.
October 17: Due date to file for those requesting an extension on their 2021 tax returns.
Best of luck — and please remember to be kind and patient with your tax preparer and agency representatives. We’re all human beings struggling with an imperfect system during a difficult time.
If this or any other posts on the website were useful to you, and your financial situation permits it, please consider contributing to my tip jar. Ths allows me to continue to provide free accounting resources to small businesses who do not have the funds available to hire a CPA.
Why Nancy is known as The Dancing Accountant 
Nancy’s favorite tool in her tech stack 
Three things employees want from work 
The non-traditional structure of Nancy’s team
