Non-Tax Questions and Comments
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Learning Tax
Posted by: dErF, July 4, 2012 02:38PM
Hello Fairmark,

I am an accounting student at a qualifying institition currently taking a tax course.

May one share some thoughts on how one can effectively learn and maintain such knowledge on so many tax issues? Or is it through real life practice can one only retain the knowledge. I find it difficult to retain tax knowledge compared to financial accounting and managerial accounting courses.

I do practice the problems as given at the end of the book. But once done, they go out the window very quickly. There are just too many issues in one chapter.

To anyone who have taken the CPA exam, is it heavily emphasized on detailed tax questions or knowledge? This course is putting great fear onto me due to the great details that I have been reading the book so far.

Re: Learning Tax
Posted by: goose, July 4, 2012 03:34PM
The only way to get a good solid grasp on tax subjects is to actually learn it by doing it.
Every year the tax rules change, and that requires going to take continuing education courses.
True - computer technology has made it easier and less time consuming to do all the calculations - but you're still required to comprehend the basic tax theory.

The CPA exam is based on accounting and auditing principles. A very small portion of the exam is based on taxation.

Re: Learning Tax
Posted by: dErF, July 4, 2012 03:51PM
How do you "do the practice" when at most one have a few relatives who do not have to calculate the AMT tax, or determine the gift tax, or barely even have a lot of itemized deductions?

It seems as these practices are very limited in my life? So I guess I would need to find a internship or job that would deal with these issues is a good way to start.

Re: Learning Tax
Posted by: Art, July 4, 2012 05:02PM
When I retired (as a network designer) I read an ad the IRS placed in a local paper asking for volunteer tax preparers to take a free one-week tax prep course in their Volunteer Income Tax Preparation (VITA)program.

Now, one week isn't enough to learn what you need to prepare taxes, but VITA is limited to low income taxpayers with relatively easy tax returns, so it was doable, and I found it very interesting.

That was quite some years ago, and in the meantime I also got involved in the AARP's TaxAide program and then began seasonal work for a local tax/accounting service, where I've been every since.

Learning by doing is probably the best way to get familiar with income tax prepation. You migh try volunteering in at least one of these programs.

I find it's also very helpful if you have a passion for preparing tax returns.

Do your ears perk up when someone at the next table in a restaurant mentions taxes? Even if it's a false alarm and they were really talking about carpet tacks. If so, you're on your way.

And if not, well, not everybody is cut out to prepare taxes.

Re: Learning Tax
Posted by: tomd37, July 4, 2012 05:51PM
+1 for Art's comments about VITA and Tax-Aide programs. I will be going into my tenth year in both programs next season.

Two local universities (Belmont U. and David Lipscomb U.) require their tax course participants to volunteer a certain number of hours at one or more of the local VITA sites as a core requirement of the course. It is nice to see young people get a good grasp on taxes and finances.

Tom D.

Re: Learning Tax
Posted by: Kaye Thomas, July 5, 2012 04:16AM
Depending on how the material is presented, tax can seem like an impossible jumble of arbitrary rules or a logical system of principles (with an overlay of arbitrary rules). When you gain a grasp of the underlying principles, many of the rules seem less arbitrary, and you can often figure out what the answer to a question should be before you look it up and confirm that your answer is correct. Getting to that point isn't easy, but there's a book countless law students have relied on for over 30 years as a backup to their assigned reading. It's called Federal Income Taxation but we all knew it simply by the author's name. "You're taking tax? Get Chirelstein!" Looking back, I suspect that reading Chirelstein is what put me on the path to becoming a tax lawyer. I don't know if the book would be as helpful when studying tax for an accounting degree instead of a law degree, but I highly recommend it to anyone who wants to understand the principles instead of merely memorizing rules. And to anyone struggling through a tax course in law school, I'll offer the advice I was lucky enough to receive all those years ago: Get Chirelstein!

Kaye Thomas
Fairmark.com

tax concepts
Posted by: jainen, July 17, 2012 11:22PM
>>difficult to retain tax knowledge compared to financial accounting and managerial accounting courses<<

Your particular course may be poorly structured, or not flexible enough for every learning style.

The IRS has a free online book called Pub 17 that gives a surprisingly clear explanation of basic tax issues. It is updated every year and is quite comprehensive. Try looking up how they explain some of the things you find confusing.

If you want a supplemental class, check the H&R Block Basic course. It takes a very different approach using the actual forms needed, instead of just tax concepts.

Re: Learning Tax
Posted by: Sven, August 1, 2012 05:40PM
Oh my God! When did they put a tax on learning? What will be next? Bodily functions, maybe? Oh, wait a minute. Never mind.


Re: Learning Tax
Posted by: Kaye Thomas, August 1, 2012 05:45PM
Maybe a tax on humor?

Kaye Thomas
Fairmark.com

Re: Learning Tax
Posted by: Sven, August 1, 2012 06:53PM
Well, then, I'd certainly be in the zero bracket!

better than average
Posted by: jainen, December 7, 2012 07:21PM
>>There are just too many issues in one chapter.<<

Normally I wouldn't recommend beginning students look at investment magazines and news articles. But we are in a very interesting time, and the breadth of commentary going on now can give some genuine perspective. Just remember that most December magazines went to press before the election.

It looks to me like most financial advisors were surprised at the election results last month. They expected a change in the balance of power which is so polarized. Now they are thinking in new ways about compromises.

There are lots of new proposals with lots of new implications. The tax theories may be hard to follow, dErF, but don't worry--much of it is nonsense anyway. And since you have done well with accounting courses, you can at least understand the statistics and other numbers being hurled around. Much of that is nonsense too, of course, but you have a better than average skill there.





Re: Learning Tax
Posted by: edh, July 22, 2013 03:02AM
The first thing to realize is that you are right: there really are a LOT of rules, some of which seem to make no sense. Further, those rules are in a constant state of flux. If you decide to work in tax, be prepared for a lifetime of learning.

All of the posters on this topic have made excellent points, with which I fully agree. There is one tip that seems too trivial to mention, but which you might find useful: Many tax rules are written as a general statement, followed by a long list of conditions or requirements. Peek ahead to the next to last line to see whether the connecting conjunction is "and" or "or." This gives you a quick idea of the direction of what you are reading.

Re: Learning Tax
Posted by: edh, July 22, 2013 02:43PM
"How do you "do the practice" when at most one have a few relatives who do not have to calculate the AMT tax, or determine the gift tax, or barely even have a lot of itemized deductions?"
-------

You seem to be forgetting your Aunt Annie who just happens to have a very large deduction for employee business expenses (even after subtracting the AGI percentage) and state income taxes, as well as significant W-2 wages.
Why not download paper copies of the forms you will need, then make up suitable figures, and complete them by hand?
This is actually a great way to learn taxes. Your "aunt's" return will provide practice with the basic forms, itemized deductions, employee business expenses, and AMT (depending on amounts entered).

Unfortunately, it can consume a lot of time. The next step would be to get access to tax prep software that allows you to "play games" with it -- i.e., create fictional returns that will never be filed.

Oh, don't forget about your Uncle Bob, who had 3 rental houses: one was rented the entire year, the second was purchased during the year, and the third was sold in the year.





Re: Learning Tax
Posted by: Bill Brown, July 27, 2013 12:13PM
The CPA exam is a test of text book knowledge. Real world experience adds little to the knowledge required to pass the exam. Taking time off to gain real world experience simply gives the candidate time to forget the text book knowledge needed to pass the exam.

Jus' sayin'



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