Question: Jane earns $35,000 a year and receives non-taxable alimony and child support. She shares custody of their 2-year-old son with Mark. Their son lives with Jane Monday through Friday and stays with Mark on weekends. Jane and Mark, however, cannot agree on who should claim their son on their income tax returns. Which parent is entitled to claim their son – Jane or Mark?

Answer: According to §152(e), the parent the child spends the most time with – also known as the custodial parent – generally has the right to claim the child as a dependent. In Jane’s case, since their son lives with her during the week, she is considered the custodial parent. This means Jane is the parent entitled to claim their son as a dependent on her Form 1040, U.S. Individual Income Tax Return, as long as she meets the other requirements (§152). Mark, on the other hand, could only claim their son if Jane agrees in writing to release her dependency claim (Form 8332, Release/Revocation of Release of Claim to Exemption for Child by Custodial Parent, is usually used for such purpose).

It should be noted that even if Jane does agree in writing to allow Mark to claim their son as a dependent for tax purposes, Jane retains the right to file as head of household under §2(b), to claim the child and dependent care credit under §21 and earned income credit (EIC) under §32. More information can be found on the IRS’s website.

The holiday season is here, and it’s time to show the tax pro in your life just how much you appreciate their number-crunching, deduction-finding magic. They work hard all year (and extra hard during tax season), so why not surprise them with a gift that’s as thoughtful and unique as they are? We’ve rounded up some fun, practical and quirky gift ideas that are sure to make any tax professional smile.

1. Comfy office vibes

Tax season = long hours at the desk. Give the gift of comfort with ergonomic office goodies like a supportive chair cushion, a standing desk converter or even a heated blanket for those late nights. Bonus points if it makes their office feel like a cozy sanctuary!

2. Fancy coffee or tea setups

Fuel is everything when deadlines are looming. Treat them to a coffee or tea upgrade with a fancy brewing system, a selection of gourmet blends or an insulated mug that keeps their drink hot for hours. If they’re really into caffeine, throw in a cheeky mug with “Tax Pro Fuel” written on it.

3. Desk gadgets and organizers

Who doesn’t love a more organized workspace? Help them banish the clutter with fun and functional desk accessories like colorful file holders, tech-friendly charging stations or even a desktop organizer shaped like a retro calculator.

4. Stress relief for tax season

When the pressure’s on, relaxation is key. Think aromatherapy diffusers with calming scents, a weighted blanket to melt the stress away, or a stress ball shaped like, you guessed it, a calculator. Because let’s face it – every tax pro could use a little Zen in their life.

5. Tax-themed fun (because why not?)

Lighten the mood with quirky tax-themed gifts! Socks covered in dollar signs, a calendar with tax tips or jokes, or a T-shirt that says, “I Excel at taxes” will show you appreciate their sense of humor. For extra laughs, you could even give them a framed picture of their favorite IRS form.

6. Snacks and treats for late nights

Nothing says “I care” like snacks! A gourmet snack box, a subscription to a cookie delivery service or even tax-themed cookies shaped like dollar bills and calculators are perfect for powering through those marathon work sessions.

7. The ultimate gift: NATP membership

Here’s a gift that’s a total game-changer. An NATP membership gives them access to education, resources and a community of fellow tax pros who get it. It’s the gift that keeps on giving, helping them stay sharp and ahead of the curve all year long.

The best gifts are the ones that show how much you care – and maybe give them a little extra boost as they head into the busy season. Whether it’s something cozy, funny or just plain practical, your tax pro is sure to appreciate the thought.

From all of us at NATP, happy holidays! May your season be filled with joy, laughter and minimal last-minute tax law change.

On Dec. 12, 2024, the long-awaited Federal Disaster Tax Relief Act of 2023 was signed into law. This short but powerful act calls for three main disaster relief provisions.

Extension of casualty loss rules for disasters

First, the act extends the rules for the treatment of certain disaster-related personal casualty losses under Sections 301 and 304(b) of the Taxpayer Certainty and Disaster Tax Relief Act of 2020.

Currently, taxpayers are allowed a casualty loss deduction that exceeds 10% of their adjusted gross income (AGI) with a $100 price reduction for each casualty claimed. For qualified disaster-related personal casualty losses, the act eliminates the 10% AGI threshold and increases the $100 reduction to $500 per casualty claimed. Additionally, taxpayers do not need to itemize to take advantage of this benefit.

This relief is available for disasters between Jan. 1, 2020 – Jan. 11, 2025 (if declared by Feb. 9, 2025). Taxpayers impacted by disasters during this period, such as hurricanes Helene and Milton, the wildfires in Hawaii and California, and the East Palestine, Ohio, train derailment, may go back and amend their tax returns to adjust for these changes.

Exclude wildfire relief payments from gross income

Any amounts taxpayers received as a qualified wildfire relief payment from Jan. 1, 2020, through Dec. 31, 2025, are excluded from gross income under §139.

Qualified wildfire relief payments include payments received by or on behalf of an individual for losses, expenses, or damages incurred as a result of a qualified wildfire disaster, but only to the extent the losses, expenses, or damages are not compensated for by insurance or otherwise [§139(b)]. This includes compensation for additional living expenses, lost wages (other than compensation for lost wages paid by the employer which would have been paid as wages), personal injury, death, or emotional distress.

Qualified wildfire disasters are any federally declared disasters resulting from any forest or range fire.

One critical point to remember is that with tax-exempt payments such as these, there is no double dipping. Taxpayers are not eligible for any deductions, credits, or increases in basis or adjusted basis of the property to the extent of the amount they excluded from income.

Taxpayers have until Dec. 12, 2025 (one year following the passage of this law), to amend their returns to claim a credit or refund if the statute of limitations for a refund already expired or will expire before Dec. 12, 2025.

East Palestine, Ohio, train derailment payments

Lastly, as with the wildfire payments, payments made on or after Feb. 3, 2023, on behalf of the East Palestine, Ohio, train derailment that occurred on Feb. 3, 2023, are considered qualified disaster relief payments, making them excludable from income under §139.