Question: Aaron is 25 and serves as a member of the Army Reserve. He was ordered to active duty for 190 days. One month after being ordered to active duty, he took a distribution of $10,000 from his 401(k) retirement plan. The distribution was entirely allocable to elective deferrals, and Aaron met all of the requirements to take the qualified reservist exception to the 10% early distribution penalty. One year after his active-duty period ended, he decided he wanted to put the $10,000 back into his retirement account. Can Aaron repay the distribution, or will it be considered a new contribution into his account?

Answer: Yes, Aaron can repay the qualified reservist distribution. Although the distribution was originally from his 401(k) plan, he should make the repayment to an individual retirement plan such as an IRA or individual retirement annuity. To qualify, the repayment must be made within the two-year period beginning on the day after his active-duty period ends. He is not required to make a lump-sum repayment, but his repayment cannot exceed the original distribution amount and is nondeductible. It is also not included when determining his allowable IRA contribution for the year; meaning he can also still make a full IRA contribution as long as he otherwise qualifies to do so [IRC Sec. 72(t)(2)(G)(ii)].

With the ever-changing landscape of tax laws and regulations, there has never been a better time to invest in your education and expertise. A Master of Science in Taxation (MST) could be your ticket to unlocking new opportunities and advancing your career in this dynamic field. Here are three compelling reasons why pursuing an MST might be the right move for you:

1. Meeting the industry’s demands

The taxation industry is in constant flux, with frequent updates and revisions to tax laws both domestically and internationally. As such, there is a pressing need for tax professionals who possess specialized knowledge and skills to navigate these complexities effectively.

An MST equips you with the expertise needed to tackle the intricate challenges of tax planning, compliance and consulting, making you an invaluable asset to businesses, accounting firms and government agencies alike. By investing in your education with an MST, you position yourself to meet the growing demands of the industry head-on.

2. Flexibility to suit your lifestyle

Balancing work, family and education can be a challenge, but pursuing an MST doesn’t have to be. With the rise of online and after-hours programs, obtaining your master’s degree has never been more accessible or convenient. Online programs offer the flexibility to study at your own pace, from the comfort of your own home, while after-hours programs allow you to attend classes outside of traditional working hours.

3. Investing in your future

Earning an MST isn’t just about gaining knowledge – it’s an investment in your future career and earning potential. Employers highly value advanced degrees like the MST, recognizing the specialized expertise that comes with it.

With a master’s degree under your belt, you open doors to higher-level positions and increased earning potential in roles such as tax manager, senior tax consultant or tax analyst.

Furthermore, the advanced skills and knowledge you acquire through an MST can pave the way for specialized career paths in areas like international tax planning or forensic accounting, further enhancing your career prospects and opportunities for growth.

Since Schedule C is the primary method through which sole proprietors report their earnings, tax pros catering to clients who own small businesses must be adept in its preparation. It’s a cornerstone of tax compliance for this demographic, requiring attention to detail to accurately reflect the financial activities of the business.

Below, you’ll find a few of the top questions from a recent webinar on the topic and their accompanying answers. If you choose to attend the on-demand version of this webinar, you can access the full recording and the entire list of Q&As.   

Q: Is it true you can still deduct the cost of goods sold (COGS) related to your hobby if you sell items?

A: Yes, COGS are deductible, but only if the hobby generates income.

Q: Do Uber and Lyft fees belong on Line 10?

A: Yes, commissions and fees withdrawn by ridesharing services from a driver’s payment are deducted on Line 10.

Q: What are “Other Expenses” on Schedule C?

A: Other expenses include items not deductible elsewhere on Schedule C, such as amortization, business startup costs and bad debts.

Q: Should royalties from writing a book be reported on Schedule C?

A: If the taxpayer is a self-employed writer, they report income and expenses on Schedule C. Otherwise, most royalty income is reported on Schedule E.

To learn more about preparing Schedule C for sole proprietors, you can watch our on-demand webinar. NATP members can attend for free, depending on membership level! If you’re not an NATP member and want to learn more, join our completely free 30-day trial at natptax.com/explore.