Thursday, October 31, 2013

2014 Pension Plan Limitations, Contributions to 401(k) Plans

Most of the following information is provided because, the IRS must distribute all information involved with a particular topic.  What you really need to know is in the title.  The balance of the announcement is supporting documents, tax codes and the details involved in pension plan limitation and contribution limit(s) to retirement plans in 2014. 
 
IRS Announces 2014 Pension Plan Limitations; Taxpayers May Contribute up to $17,500 to their 401(k) plans in 2014
 
WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2014.

Some pension limitations such as those governing 401(k) plans and IRAs will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other pension plan limitations will increase for 2014. Highlights include the following:
  • The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $17,500.
  • The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government’s Thrift Savings Plan remains unchanged at $5,500.
  • The limit on annual contributions to an Individual Retirement Arrangement (IRA) remains unchanged at $5,500. The additional catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.
  • The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are covered by a workplace retirement plan and have modified adjusted gross incomes (AGI) between $60,000 and $70,000, up from $59,000 and $69,000 in 2013. For married couples filing jointly, in which the spouse who makes the IRA contribution is covered by a workplace retirement plan, the income phase-out range is $96,000 to $116,000, up from $95,000 to $115,000. For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $181,000 and $191,000, up from $178,000 and $188,000. For a married individual filing a separate return who is covered by a workplace retirement plan, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI phase-out range for taxpayers making contributions to a Roth IRA is $181,000 to $191,000 for married couples filing jointly, up from $178,000 to $188,000 in 2013. For singles and heads of household, the income phase-out range is $114,000 to $129,000, up from $112,000 to $127,000. For a married individual filing a separate return, the phase-out range is not subject to an annual cost-of-living adjustment and remains $0 to $10,000.
  • The AGI limit for the saver’s credit (also known as the retirement savings contribution credit) for low- and moderate-income workers is $60,000 for married couples filing jointly, up from $59,000 in 2013; $45,000 for heads of household, up from $44,250; and $30,000 for married individuals filing separately and for singles, up from $29,500.
Below are details on both the unchanged and adjusted limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Secretary of the Treasury annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

Effective January 1, 2014, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) is increased from $205,000 to $210,000. For a participant who separated from service before January 1, 2014, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2013, by 1.0155.

The limitation for defined contribution plans under Section 415(c)(1)(A) is increased in 2014 from $51,000 to $52,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2014 are as follows:

The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $17,500.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is increased from $255,000 to $260,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is increased from $165,000 to $170,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period is increased from $1,035,000 to $1,050,000, while the dollar amount used to determine the lengthening of the 5 year distribution period is increased from $205,000 to $210,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $115,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, is increased from $380,000 to $385,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $12,000.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $17,500.

The compensation amount under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes is increased from $100,000 to $105,000. The compensation amount under Section 1.61 21(f)(5)(iii) is increased from $205,000 to $210,000.

The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2014 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $35,500 to $36,000; the limitation under Section 25B(b)(1)(B) is increased from $38,500 to $39,000; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $59,000 to $60,000.
The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $26,625 to $27,000; the limitation under Section 25B(b)(1)(B) is increased from $28,875 to $29,250; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $44,250 to $45,000.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $17,750 to $18,000; the limitation under Section 25B(b)(1)(B) is increased from $19,250 to $19,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D) is increased from $29,500 to $30,000.

The deductible amount under Section 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,500.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $95,000 to $96,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $59,000 to $60,000. The applicable dollar amount under Section 219(g)(3)(B)(iii) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $178,000 to $181,000.

The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $178,000 to $181,000. The adjusted gross income limitation under Section 408A(c)(3)(B)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $112,000 to $114,000. The applicable dollar amount under Section 408A(c)(3)(B)(ii)(III) for a married individual filing a separate return is not subject to an annual cost-of-living adjustment and remains $0.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under Section 430(c)(2)(D) has been made is increased from $1,066,000 to $1,084,000.

Certain Tax Benefits Increase in 2014; Important Information for Taxpayers

In 2014, Various Tax Benefits Increase Due to Inflation Adjustments
 
WASHINGTON — For tax year 2014, the Internal Revenue Service announced today annual inflation adjustments for more than 40 tax provisions, including the tax rate schedules, and other tax changes. Revenue Procedure 2013-35 provides details about these annual adjustments.

The tax items for tax year 2014 of greatest interest to most taxpayers include the following dollar amounts.
  • The tax rate of 39.6 percent affects singles whose income exceeds $406,750 ($457,600 for married taxpayers filing a joint return), up from $400,000 and $450,000, respectively. The other marginal rates – 10, 15, 25, 28, 33 and 35 percent – and the related income tax thresholds are described in the revenue procedure.
  • The standard deduction rises to $6,200 for singles and married persons filing separate returns and $12,400 for married couples filing jointly, up from $6,100 and $12,200, respectively, for tax year 2013. The standard deduction for heads of household rises to $9,100, up from $8,950.
  • The limitation for itemized deductions claimed on tax year 2014 returns of individuals begins with incomes of $254,200 or more ($305,050 for married couples filing jointly).
  • The personal exemption rises to $3,950, up from the 2013 exemption of $3,900. However, the exemption is subject to a phase-out that begins with adjusted gross incomes of $254,200 ($305,050 for married couples filing jointly). It phases out completely at $376,700 ($427,550 for married couples filing jointly.)
  • The Alternative Minimum Tax exemption amount for tax year 2014 is $52,800 ($82,100, for married couples filing jointly). The 2013 exemption amount was $51,900 ($80,800 for married couples filing jointly).
  • The maximum Earned Income Credit amount is $6,143 for taxpayers filing jointly who have 3 or more qualifying children, up from a total of $6,044 for tax year 2013. The revenue procedure has a table providing maximum credit amounts for other categories, income thresholds and phaseouts.
  • Estates of decedents who die during 2014 have a basic exclusion amount of $5,340,000, up from a total of $5,250,000 for estates of decedents who died in 2013.
  • The annual exclusion for gifts remains at $14,000 for 2014.
  • The annual dollar limit on employee contributions to employer-sponsored healthcare flexible spending arrangements (FSA) remains unchanged at $2,500.
  • The foreign earned income exclusion rises to $99,200 for tax year 2014, up from $97,600, for 2013.
  • The small employer health insurance credit provides that the maximum credit is phased out based on the employer’s number of full-time equivalent employees in excess of 10 and the employer’s average annual wages in excess of $25,400 for tax year 2014, up from $25,000 for 2013.

Just Thought You Should Know, Founder of Amazon.com Purchased the Washington Post Co.

Amazon.com founder and chief executive Jeffrey P. Bezos formally took over as the owner of The Washington Post on Tuesday, officially ending 80 years of local control of the newspaper by the Graham family.

Bezos’s $250 million purchase was completed as expected with the signing of sale documents. The signing transfers the newspaper and other assets from The Washington Post Co. to Nash Holdings, Bezos’s private investment company.

Bezos, who founded the online shopping company in 1994 and became a billionaire in the process, has vowed to continue the newspaper’s long history of independent journalism. His technical and marketing savvy, long-term outlook and lack of an apparent ideological agenda made him an attractive steward for the paper, Post Co. chief executive Donald E. Graham said in August, when an agreement in principle was first disclosed.

2014 PTIN Renewal Period Underway for Tax Professionals

2014 PTIN Renewal Period Underway for Tax Professionals
 
WASHINGTON — The Internal Revenue Service today reminded the nation’s almost 690,000 federal tax return preparers that they must renew their Preparer Tax Identification Numbers (PTINs) for 2014. All current PTINs will expire on Dec. 31, 2013.

Anyone who, for compensation, prepares or helps prepare any federal return or claim for refund must have a valid PTIN from the IRS. The PTIN must be used as the identifying number on returns prepared.

“We ask that you renew your PTIN as soon as possible to avoid a last-minute rush. It’s easy to let this slip as the holiday season approaches,” said Carol A. Campbell, Director, IRS Return Preparer Office.

The PTIN system is ready to accept applications for 2014.

For those who already have a 2013 PTIN, the renewal process can be completed online and only takes a few moments. The renewal fee is $63. If you can’t remember your user ID and password, there are online tools to assist you. Preparers can get started at www.irs.gov/ptin.

If you are registering for the first time, the PTIN application fee is $64.25 and the process may also be completed online.

Form W-12, IRS Paid Preparer Tax Identification Number Application and Renewal, is available for paper applications and renewals, but takes four to six weeks to process. Failure to have and use a valid PTIN may result in penalties. All enrolled agents, regardless of whether they prepare returns, must have a PTIN in order to maintain their status.
There have been a number of enhancements to the online PTIN system since last year. They include:
  • The fully functional "Manage My Account" tool allowing preparers to self-correct almost any field at any time (including professional credentials). Previously, most changes had to be made during renewal. A phone call was required for users to make changes during the rest of the year. However, for security reasons, name changes still require written documentation.
  • Preparers can now view completed continuing education programs reported by IRS-approved providers beginning with 2013 courses. Providers report completed CE programs to the IRS based on your PTIN number. Enrolled agents must have a minimum of 16 CE hours annually and a total of 72 hours every three years. Others can also view voluntary programs completed. If something is missing, contact your provider directly as we only display what providers send to us.
  • Planning to take a year off for any reason? A new function allows certain preparers to inactivate their PTINs voluntarily and then reactivate the same number when they return to work. This is only for those preparers who plan to take a full year off. If you are paid to prepare tax returns during any part of a year, you must have a valid PTIN. Note: Enrolled agents must maintain a valid PTIN each year in order to maintain their EA credential and therefore are not eligible to inactivate their PTIN.
For more information about requirements for federal tax professionals and access to the online PTIN system, go to www.irs.gov/for-Tax-Pros.

Did the NSA Break Into Yahoo and Google Data Centers Around the World? Ups!

If it's true, no wonder Google is thought to be building a floating data center on Treasure Island, in San Francisco! 


By LOLITA C. BALDOR, The Associated Press

WASHINGTON (AP) — The National Security Agency has secretly broken into the main communications links that connect Yahoo and Google data centers around the world, the Washington Post reported Wednesday, citing documents obtained from former NSA contractor Edward Snowden.

A secret accounting dated Jan. 9, 2013, indicates that NSA sends millions of records every day from Yahoo and Google internal networks to data warehouses at the agency's Fort Meade, Md.,
headquarters. In the last 30 days, field collectors had processed and sent back more than 180 million new records — ranging from "metadata," which would indicate who sent or received emails and when, to content such as text, audio and video, the Post reported Wednesday on its website.

The new details about the NSA's access to Yahoo and Google data centers around the world come at a time when Congress is reconsidering the government's collection practices and authority, and as European governments are responding angrily to revelations that the NSA collected data on millions of communications in their countries. Details about the government's programs have been trickling out since Snowden shared documents with the Post and Guardian newspaper in June.

The NSA's principal tool to exploit the Google and Yahoo data links is a project called MUSCULAR, operated jointly with the agency's British counterpart, GCHQ. The Post said NSA and GCHQ are copying entire data flows across fiber-optic cables that carry information between the data centers of the Silicon Valley giants.

The NSA has a separate data-gathering program, called PRISM, which uses a court order to compel Yahoo, Google and other Internet companies to provide certain data. It allows the NSA to reach into the companies' data streams and grab emails, video chats, pictures and more. U.S. officials have said the program is narrowly focused on foreign targets, and technology companies say they turn over information only if required by court order.

In an interview with Bloomberg News Wednesday, NSA Director Gen. Keith Alexander was asked if the NSA has infiltrated Yahoo and Google databases, as detailed in the Post story.
"Not to my knowledge," said Alexander. "We are not authorized to go into a U.S. company's servers and take data. We'd have to go through a court process for doing that."

It was not clear, however, whether Alexander had any immediate knowledge of the latest disclosure in the Post report. Instead, he appeared to speak more about the PRISM program and its legal parameters.

In a separate statement, NSA spokeswoman Vanee Vines said NSA has "multiple authorities" to accomplish its mission, and she said "the assertion that we collect vast quantities of U.S. persons' data from this type of collection is also not true."

The GCHQ had no comment on the matter.

The Post said the NSA was breaking into data centers worldwide. The NSA has far looser restrictions on what it can collect outside the United States on foreigners.

But Google said the company has "long been concerned about the possibility of this kind of snooping." The statement said Google is "troubled by allegations of the government intercepting traffic between our data centers, and we are not aware of this activity."

Google, which is known for its data security, noted that it has been trying to extend encryption across more and more Google services and links.

Yahoo spokeswoman Sarah Meron said there are strict controls in place to protect the security of the company's data centers. "We have not given access to our data centers to the NSA or to any other government agency," she said, adding that it is too early to speculate on whether legal action would be taken.

The MUSCULAR project documents state that this collection from Yahoo and Google has led to key intelligence leads, the Post said.

Congress members and international leaders have become increasingly angry about the NSA's data collection, as more information about the programs leak out. A delegation from the European Union Parliament came to Washington this week to conduct intense talks about reported U.S. spying on allied leaders, including the collection of phone records. And a German delegation met with U.S. officials over allegations that the NSA was monitoring Chancellor Angela Merkel's cellphone.
Alexander told lawmakers that the U.S. did not collect European records, and instead the U.S. was given data by NATO partners as part of a program to protect military interests.

Congress members, however, are working on plans that would put limits data collection. And Sen. Dianne Feinstein, chairwoman of the Senate Intelligence Committee, has called for a "total review of all intelligence programs"

More broadly, Alexander on Wednesday defended the overall NSA effort to monitor communications. And he said that as Congress considers proposals to scale back the data collection or provide more transparency to some of the programs, it's his job to lay out the resulting terrorism risks.

"I'm concerned that we give information out that impacts our ability to stop terrorist attacks. That's what most of these programs are aimed to do," Alexander said. "I believe if you look at this and you go back through everything, none of this shows that NSA is doing something illegal or that it's not been asked to do."

Pointing to thousands of terror attacks around the world, he said the U.S. has been spared much of that violence because of such programs.

"It's because you have great people in the military and the intelligence community doing everything they can with law enforcement to protect this country," he said. "But they need tools to do it. If we take away the tools, we increase the risk."
___
Associated Press writers Mike Liedtke in San Francisco and Raphael Satter in London contributed to this report.

For the full Washington Post story, click here.

Wednesday, October 30, 2013

Tax Breaks Set to Expire in 2014


 


Tax breaks set to expire at the end of the year include:

-- The deduction of up to $250 for K-12 teachers' out-of-pocket expenses.

-- The above-the-line deduction for tuition and fees for qualified higher education expenses.

-- The ability to exclude up to $2 million in cancellation-of-debt income in connection with a qualified principal residence.

-- The deduction of mortgage insurance premiums by homeowners.

-- The Personal Energy Property Credit, a tax credit (with a $500 lifetime cap) for qualified residential energy efficiency projects.

-- The Qualified Small Business Stock gain exclusion. Qualified Small Business Stock acquired after Dec. 31 will qualify for a 50-percent gain exclusion, not the 100-percent exclusion currently allowed.

-- Beginning in 2014, taxpayers can no longer deduct up to $250,000 of qualified leasehold, restaurant and retail property improvements.

To view the entire list you can download the PDF

Kindle Free Days, New Book: Are We Insane Yet? Personal Investing and America’s Political Climate

Compare your own financial stress-level with the countries stress-barometer during the years of 1968 to 2011. Can you determine the financial climate for the upcoming years, regardless of what wall-street tells you? What exactly are savvy investors looking at each month besides the countries current events?

Learn about one of the most solid investment guidelines available, which is 100% free.  Download  "Are We Insane?" by C. Ingraham, RTRP and use the Kindle App to read on your desktop or laptop.  Free in the Amazon's Kindle Store from October 30, to November 3, 2013. 

Warning to Taxpayers With Unfiled Taxes or Who Owe Back Taxes


A woman in Connecticut says she checked her bank account only to find out all of her money was gone and wants to warn others so it does not happen to them.

This particular incident was with the State of Connecticut, however taxpayers should know that the same thing can happen with the Internal Revenue Service.  Taxpayers have the option for a payment plan if they owe taxes which they don't have the money to pay.

Ignoring notices from the IRS or any State tax agency is never a good idea.  Of course if you never receive the notices, that can create a problem.  Always be sure the IRS has a current address for you.  If you have a bank account or a job, "they" can find your money, even if they can't find you.

Tuesday, October 29, 2013

Is Google Building a New Floating Data Center on San Francisco's Treasure Island?

 An even more important question is, what does this new project, if anything, have to do with Google's stock sky rocking in the last 30 days?


 Google could be building a new data center — on top of a barge that could take it anywhere in the ocean. CNET gives a comprehensive report on a secret project underway on San Francisco’s Treasure Island. Someone is building something out of shipping containers on top of an old barge — but the whole project is fenced off, so it’s impossible to get closer. There’s no confirmation that Google is responsible, but telling factors point to the company being involved. Google won patents for water-based data centers in 2009. Photos obtained through Google’s own mapping service show a fenced-off collection of shipping containers outside a building known as Hangar 3. People with access badges for that same Hangar 3 have been known to buy food at nearby shops with Google-branded credit cards, and a contact number on the property lease leads to a dead-end phone somewhere within Google. If you can keep the saltwater from corroding the sensitive electronics, a boat-based datacenter has unique upsides. “The advantages of such a project would be the cheap and efficient cooling, using seawater. The cooling is one of the biggest expenses of a datacenter.” (Via Softpedia ) And no, you wouldn’t have to plug it in. “It’s theoretically possible to power it by generating electricity from wave motion—about as clean a source of energy as you can imagine.” (Via ReadWrite ) Of course, floating it out away from land-based computer networks could prevent high-speed connections to whatever Google stores there. “Another potential issue will be shuttling data in and out of the floating byte bucket, but since Google owns a world-spanning fibre-optic cable it could theoretically tap its ocean-bound facility into this.” (Via The Register ) Still, such a datacenter could theoretically be moved anywhere across the world’s oceans, or as Mashable points out, held in international waters outside the jurisdiction or surveillance range of governments. There’s no indication as to when this floating project might launch. If it is Google behind the construction, we’ll have to wait for it to say something.

Friday, October 25, 2013

Book Now, Hotels 2016 Summer Olympics in Rio de Janeiro : T360Travel Classifieds, Travel Articles, Deals,

Book Now, Hotels 2016 Summer Olympics in Rio de Janeiro : T360Travel Classifieds, Travel Articles, Deals,

Big Mess Over the IRS's Announcement to Delay the 2014 Tax Season

Rep. Dave Camp, R-Mich., the influential chairman of the tax-writing House Ways and Means Committee, has written a letter to the acting head of the Internal Revenue Service complaining that the IRS’s decision to delay tax season because of the government shutdown will be a financial burden to people who count on early tax refunds.

The IRS announced Tuesday that the 16-day government shutdown this month had delayed the testing of its tax-processing systems, and it was still dealing with a backlog of correspondence it received during the recently ended shutdown (see IRS: Shutdown to Delay Tax Season). In a letter Wednesday, addressed to IRS acting commissioner Danny Werfel, Camp said it appears the agency is putting a higher priority on implementing ObamaCare than tending to its core mission of processing nearly 150 million tax returns.

“The IRS claims that it will be unable to process tax returns on time, despite being able to do so multiple times in the past when it has been responsible for adopting major changes to tax law,” Camp wrote. “Given that the agency has already had nine full months, and still has nearly three more, there is no reason the IRS should not be able to do its job on time. The failure of the IRS to start the filing season as scheduled will be a financial burden to potentially millions of hardworking taxpayers who depend on an early tax refund to pay their rent, make a car payment or pay off bills from the holiday season. While the IRS says it cannot start the filing season on time, somehow it found the most essential operation to be the implementation of the President’s health care law. The IRS needs to explain why implementing the President’s health care law is more important than processing tax returns in a timely manner.”

House Republicans, including Camp, had held up approval of a continuing resolution to fund the government, in addition to legislation to raise the debt ceiling, in an effort to force the Obama administration and Democrats in Congress to agree to defund or at least delay by a year the health care reform law.

Ultimately, after Obama and congressional Democrats refused to give in to those and other demands, Republican lawmakers agreed to end the government shutdown and raise the debt ceiling as pressure mounted and their poll numbers declined precipitously.

Camp’s Democratic counterpart on the Ways and Means Committee, ranking member Sander Levin, D-Mich., had a far different reaction to the IRS’s announcement of a tax season delay.

“This is yet another unfortunate effect of a shutdown that Republicans should have never caused,” Levin said in a statement Tuesday. “The entirety of the shutdown’s harmful impact won’t be known for months, if not longer. But what is already clear is that it has cost our economy tens of billions of dollars and tens of thousands of jobs. This tax-filing delay just adds insult to injury for Americans hoping to get a jump start on their tax refunds in January.”

Camp’s press office, however, said the IRS’s delay effectively “stiffs early filers as it dedicates time to ObamaCare.” No later than November 6, Camp called on the IRS to provide the following information:

• Is it your position that IRS officials working on ACA implementation are essential for the protection of “life or property?”
• Notwithstanding the plan, which deemed 81 IRS employees as essential for ObamaCare implementation, how many IRS employees worked in this capacity during the shutdown, and for how many hours?
• What system changes, updates or testing is necessary to open the start of the filing season given that no substantive changes have been made to tax law over the last year?
• Specifically, what additional changes or testing does the IRS need to complete prior to the opening of the filing season that are directly related to the implementation of ObamaCare?
• How many IRS staff would have been required to have been deemed essential in order to ensure that tax filing season could open on time?
• According to the IRS’s announcement, “nearly 150 million,” filers will face delays. To date, how many applications for ObamaCare has the IRS been directly involved in processing?
• Did the IRS consult with the Treasury Department or White House in the creation of the Plan or regarding its operation during the shutdown? and
• Provide all communication between IRS and the U.S. Department of the Treasury and/or White House regarding the Plan and/or ObamaCare implementation during the shutdown.

Camp’s office noted that in light of the fact that the IRS is 13 weeks away from the originally scheduled start of tax filing season, it claims it cannot make-up 12 work days lost during the government shutdown. In the letter, Camp pointed out the IRS did not delay last year’s filing season after changes to the tax code were signed into law just 13 days before its start.

Wednesday, October 23, 2013

Urgent Information: 2014 Tax Season Will Be Delayed According to the IRS

The IRS backlog due to the recent government shutdown appears to be serious.  Here is information which was in my in-box directly from the IRS from yesterday late afternoon.
 
** 
 
2014 Tax Season to Start Later Following Government Closure; IRS Sees Heavy Demand As Operations Resume
 
WASHINGTON–The Internal Revenue Service today announced a delay of approximately one to two weeks to the start of the 2014 filing season to allow adequate time to program and test tax processing systems following the 16-day federal government closure.

The IRS is exploring options to shorten the expected delay and will announce a final decision on the start of the 2014 filing season in December, Acting IRS Commissioner Danny Werfel said. The original start date of the 2014 filing season was Jan. 21, and with a one- to two-week delay, the IRS would start accepting and processing 2013 individual tax returns no earlier than Jan. 28 and no later than Feb. 4.

The government closure came during the peak period for preparing IRS systems for the 2014 filing season. Programming, testing and deployment of more than 50 IRS systems is needed to handle processing of nearly 150 million tax returns. Updating these core systems is a complex, year-round process with the majority of the work beginning in the fall of each year.

About 90 percent of IRS operations were closed during the shutdown, with some major workstreams closed entirely during this period, putting the IRS nearly three weeks behind its tight timetable for being ready to start the 2014 filing season. There are additional training, programming and testing demands on IRS systems this year in order to provide additional refund fraud and identity theft detection and prevention.

“Readying our systems to handle the tax season is an intricate, detailed process, and we must take the time to get it right,” Werfel said. “The adjustment to the start of the filing season provides us the necessary time to program, test and validate our systems so that we can provide a smooth filing and refund process for the nation’s taxpayers. We want the public and tax professionals to know about the delay well in advance so they can prepare for a later start of the filing season.”

The IRS will not process paper tax returns before the start date, which will be announced in December. There is no advantage to filing on paper before the opening date, and taxpayers will receive their tax refunds much faster by using e-file with direct deposit. The April 15 tax deadline is set by statute and will remain in place. However, the IRS reminds taxpayers that anyone can request an automatic six-month extension to file their tax return. The request is easily done with Form 4868, which can be filed electronically or on paper.

IRS processes, applications and databases must be updated annually to reflect tax law updates, business process changes, and programming updates in time for the start of the filing season.
The IRS continues resuming and assessing operations following the 16-day closure. The IRS is seeing heavy demand on its toll-free telephone lines, walk-in sites and other services from taxpayers and tax practitioners.

During the closure, the IRS received 400,000 pieces of correspondence, on top of the 1 million items already being processed before the shutdown.

The IRS encourages taxpayers to wait to call or visit if their issue is not urgent, and to continue to use automated applications on IRS.gov whenever possible.

“In the days ahead, we will continue assessing the impact of the shutdown on IRS operations, and we will do everything we can to work through the backlog and pent-up demand,” Werfel said. “We greatly appreciate the patience of taxpayers and the tax professional community during this period.”

Monday, October 21, 2013

The IRS Plays Catch-Up After Shutdown, What Tax Professionals and Taxpayers Can Expect

After re-opening operations on Oct. 17, the IRS said in an email to tax professionals Friday that its employees are reporting back to work, and the agency is assessing the impact of the 16-day shutdown on its national operations.
 
“At this point, we know we received a large amount of correspondence during the closure,” the IRS said on its Web site. “We know there will be a substantial increase in demand for our phone services and many other operations. On Oct. 17, we started reopening our phone lines and our Taxpayer Assistance Centers, both of which will take time to ramp up to normal operating status. In addition, other business operations have started resuming, including the processing of billions of dollars of refunds for individuals and businesses and honoring transcript and authorization requests from third parties.”
 
Given the high demand for services, the IRS said it is encouraging taxpayers to wait to call or visit if their issue is not urgent, and to continue to use automated applications on the IRS website, www.IRS.gov, whenever possible.

Taxpayers who need immediate assistance are being encouraged to visit Taxpayer Assistance Centers in their area or try call centers but should be aware there will be delays. The IRS also has delayed the start of its 2014 renewal season for tax preparers to apply for their Preparer Tax Identification Numbers, or PTINs (see IRS Delays PTINs for 2014).

“In the days ahead, we will continue assessing the effect of this unprecedented situation on IRS operations, and we will do everything we can to resume our normal operations as quickly as possible so that we can best serve the needs of the American taxpayer,” the IRS added. “We greatly appreciate the patience of taxpayers and tax professionals during this period.”

Saturday, October 19, 2013

Drought-Stricken Farmers and Ranchers Have More Time to Replace Livestock; 38 States Affected

All to often we forget about the farmers who provide food for our tables.  The IRS has extended the time necessary to replace livestock and defer taxes on any gains due because of the forced sales.  For those of you who are interested, this is what's happening with the farmers and ranchers in 38 states. 

**

WASHINGTON — Farmers and ranchers who previously were forced to sell livestock due to drought, like the drought currently affecting much of the nation, have an extended period of time in which to replace the livestock and defer tax on any gains from the forced sales, the Internal Revenue Service announced today.

Farmers and ranchers who, due to drought, sell more livestock than they normally would may defer tax on the extra gains from those sales. To qualify, the livestock generally must be replaced within a four-year period. The IRS is authorized to extend this period if the drought continues.

The one-year extension of the replacement period announced today generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes due to drought. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, and poultry are not eligible.

The IRS is providing this relief to any farm located in a county, parish, city, borough, census area or district, listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center (NDMC), during any weekly period between Sept. 1, 2012, and Aug. 31, 2013. All or part of 38 states are listed. Any county contiguous to a county listed by the NDMC also qualifies for this relief.

As a result, farmers and ranchers in these areas whose drought sale replacement period was scheduled to expire at the end of this tax year, Dec. 31, 2013, in most cases, will now have until the end of their next tax year. Because the normal drought sale replacement period is four years, this extension immediately impacts drought sales that occurred during 2009. But because of previous drought-related extensions affecting some of these localities, the replacement periods for some drought sales before 2009 are also affected. Additional extensions will be granted if severe drought conditions persist.

Details on this relief, including a list of NDMC-designated counties, are available in Notice 2013-62, posted today on IRS.gov. Details on reporting drought sales and other farm-related tax issues can be found in Publication 225, Farmer’s Tax Guide, also available on the IRS web site.

Friday, October 18, 2013

IRS Delays PTIN Renewals for Tax Professionals Due to Shutdown

The Internal Revenue Service has delayed the 2014 season for renewing Preparer Tax Identification Numbers because of the government shutdown that ended 10/17/2013.
 
On a Web page that the IRS set up to provide updates on how the shutdown is affecting the agency, the IRS recently added the question, “What is the status of renewing Preparer Tax Identification Numbers (PTIN) for 2014?”

The online PTIN system is still available for users to log in and view or change information or to secure a PTIN for 2013. Additional information will be provided on this site as it becomes available.”

You can access the page for renewing a PTIN for next tax season, click here,

Wednesday, October 16, 2013

Small Business Funding Available for Holiday Season

Not to worry even though the US Gov will take time to get up and running again; you can always get a micro-loan In the face of the shutdown, Kabbage is still helping small businesses SBAs not the only game in town, in fact Kabbage funding is much faster and easier to obtain then a micro-SBA loan.

Small business owners who are concerned about how they are missing out on opportunities and having challenges gearing up for the holiday season with uncertainty around the availability of funds, can visit the Kabbage website today, and have funds by tomorrow.  (Usually takes 7 minutes to qualify) 

Understanding Tax Avoidance Which is Seen as a Human Rights Violation

The facilitation of tax avoidance strategies could constitute a violation of international human rights law, according to a new report by the International Bar Association.
 .
The report, released Tuesday by the London-based organization of international legal practitioners, bar associations and law societies at the IBA’s annual conference in Boston, argues that some tax strategies cross the line into “tax abuses” that may violate internationally accepted norms of human rights. Prepared by the IBA’s Human Rights Institute Task Force, the report contends that the actions of states that encourage or facilitate tax abuses, or that deliberately frustrate the efforts of other states to counter tax abuses, could constitute a violation of their international human rights obligations, particularly with respect to people’s economic, social and cultural rights.

The report, Tax Abuses, Poverty and Human Rights, asserts that tax practices contrary to the letter or spirit of international and domestic tax laws and policies have a significant negative impact on the realization of human rights in developing countries. Profits flowing out of developing countries can thus deprive governments of the resources that they need to alleviate poverty and uphold international human rights standards.

The IBA report draws on case studies from Brazil, the Isle of Jersey and Southern Africa, examining where to draw the line between legitimate tax avoidance maneuvers and immoral tax practices. The report highlights concerns over the “morality” of sophisticated tax planning strategies, in which corporations and wealthy individuals end up paying little or no money in taxes. Among the types of tax behavior seen as potentially abusive are transfer pricing and other cross-border intra-group transactions, the negotiation of tax holidays and incentives, the taxation of natural resources and the use of offshore accounts.

“The fact that sophisticated tax planning strategies are technically legal is no longer a justification for their use,” said Yale University professor Thomas Pogge, who chairs the IBA Human Rights Institute Task Force. “The impact of tax abuses, facilitated by secrecy jurisdictions, on global poverty is tremendous. The international community has not only a legal obligation but also a moral duty to ensure that states use the maximum resources available to fulfill the civil, political, economic and social rights of citizens.”

The report urges states to implement international standards of transparency and information exchange in tax matters, and businesses to undertake due diligence measures and impact assessment of all operations, including tax planning strategies. Lawyers also need to balance their obligations to defend their clients’ interests with their responsibilities to uphold human rights in their practice, including with respect to tax planning strategies, the report argues.

“The legal profession has an important role to play in confronting the negative effects of tax abuses on human rights,” said Sternford Moyo, who co-chairs the IBA Human Rights Institute and is a member of the task force. “Lawyers have a duty to balance their obligation to their client’s interests with their obligations to uphold human rights and the rule of law.”

The report also takes note of the role of accountants, quoting one unnamed expert interviewed by the task force who observed, “Those who siphon funds out of developing countries can and should know that they are thereby actively diminishing funds that go to efforts to reduce poverty. And those who facilitate tax abuse (e.g., tax havens, secrecy jurisdictions, and certain lawyers and accountants) can and should know that their activities likewise take funds away from efforts to reduce poverty.”

This original article can be found at Accounting Today dot Com

To learn more about legal tax avoidance strategies you may want to read the Book; Tax Loopholes, Tax-Free Living & Retirement by C. Ingraham, RTRP

Sunday, October 13, 2013

Kindle FREE Days, Tax Loopholes, Tax-Free Living & Retirement

 Learn how to legally reduce your taxes, now or during retirement.  Tax loopholes used by the wealthy for decades explained in detailed.  Free in the Kindle Store on Amazon on October 16th through the 20th, 2013.  You can read on your desk top or laptop by downloading the free Kindle App which can be found on the right side of the page on Amazon.  Tax Loopholes, Tax Free Living & Retirement

Download on FREE days, October 16th through October 20th.

Friday, October 11, 2013

Three Tax Tips That Could Save You Thousands in 2014

3 Tax Tips That Could Save You Thousands in 2014
By Nick Hodges, CPA/PFS, MBA, CFP
You’re considering an international lifestyle. You have a shortlist of overseas havens and you’ve set the date next year when you’re going to make the move. Along with your other research, thorough tax planning can help you save money and avoid hassle. Here are the three things I always talk through with prospective expats...
1. What you need to disclose:
There are as many as six additional federal tax disclosure forms when you move abroad. While these forms usually don’t change your U.S. income tax amount, each form carries a minimum $10,000 per year penalty if not correctly filed. If it takes a few years for you to find out which forms you should have been filing, these penalties can quickly add up.
So better to know before you go. If you are involved in any of the activities I mention in the current issue of International Living magazine while living or working abroad, you will likely have additional disclosure reporting requirements and should consult a tax professional skilled in international tax.
2. Keep important documents safe and accessible:
Most of us keep our important documents in a safe deposit box or filing cabinet. Things like birth certificates, insurance policies, wills, deeds, tax returns and health records. But what do you do when you need those documents while abroad?
One solution is to scan and save your files to a USB or thumb-drive. And that’s certainly a great idea. But to avoid the hassle that goes with losing or damaging that device you can look to an online vault.
These days there are several outfits offering secure, online storage for your important documents and data, which you can then access from anywhere in the world. Simply scan and upload your documents. This also means that your tax advisor or attorney can access these as well.
3. Leave from the "right" state: You could save a bundle on state income tax and avoid future harassment from state authorities by making your overseas move from a "no income tax" state. But you have to establish residence there before you leave the U.S.
When you move abroad from an income tax state, that state assumes that you are only temporarily away and you are still a resident of the state for tax purposes.
But there are nine "no income tax" states you can consider. Move to one of these before you head overseas and you can save significantly.
As part of the proof that you have permanently left a state, you must do two things...
Editor’s note: In the current issue of International Living magazine, Nick reveals much more about this important subject, including the two things you must do in order to benefit from a "no income tax" state...and gives you his pick of the best "document vaults" available on the market.
You get instant access to that article now when you subscribe...and if you do it before midnight tonight, we’ll give you the Escape Plan that could save you thousands in taxes...help you to grow your nest egg...and safeguard your privacy. Find out more here.

The IRS Halts Tax Liens and Levies During Shut Down; Mailing Returns, Tax Transcripts

The Internal Revenue Service is putting the brakes on tax liens and levies during the federal government shutdown.
 
The IRS said in a Web page about the shutdown that it is not sending out levies or liens, either those generated systemically or those manually generated by employees. In a previous Web posting last week, the IRS had suggested that it would continue to send out automated notices of various kinds (see IRS Suspends Tax Refunds and Tax Court Closes during Government Shutdown).

In an effort to clarify the previous information, the IRS noted that taxpayers might still receive levy or lien correspondence with October mailing dates, but those notices were printed before IRS shutdown operations were fully complete. The IRS explained that it is standard practice for such notices to be printed with a future date to allow for mailing time to reach taxpayers.

In addition, the IRS pointed out that other letters related to liens and levies—such as notifications that a taxpayer could potentially be subject to a lien or a levy at a future date—continue to be automatically generated by IRS systems during the appropriations lapse. “However, the IRS emphasizes that these notices are not actual levies or liens; just a notification of potential future action,” said the IRS. For more information on the IRS collection process, see Publication 594.

The IRS also clarified whether its personnel are continuing to take enforcement actions during this period:

“In non-criminal cases, the only enforcement actions the IRS is taking during the appropriations lapse involve isolated instances where we need to take immediate action to protect the government's interest,” said the IRS. “So any enforcement action in this category—such as seizures—would be extremely limited. For example, where the expiration of the statute of limitations on collection action is imminent. For criminal issues, most IRS Criminal Investigation employees continue to work during this period, similar to other federal law-enforcement agencies.”

Tax Return Processing

The IRS also clarified its procedures for tax return processing. Last week, it noted that individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. It urged taxpayers to file electronically because most e-filed returns will be processed automatically. Payments accompanying electronic tax returns will be accepted as the IRS receives them, although the IRS said it would be unable to issue refunds during the shutdown.

The processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them, though the IRS will be unable to issue refunds during this time. Paper tax returns will be considered to be timely filed even though the IRS is not processing paper returns, the IRS clarified. Since the U.S. Postal Service is continuing to operate during the shutdown, and they will postmark and deliver mail to the IRS. “Any return postmarked by the due date will be considered timely filed by the IRS even though processing of the return may not occur until after the return due date depending on the length of the lapse in appropriations,” said the IRS.

Tax Transcripts

The IRS also noted that individual taxpayers are able to obtain tax transcripts during the shutdown. “This is an automated process,” said the IRS. “Taxpayers can still use automated tools, including IRS.gov, to request that a transcript of their personal tax records be sent to their address of record; the taxpayer will typically receive transcripts in the mail within five to 10 calendar days.”
However, a third party cannot obtain a tax transcript during the shutdown. The IRS explained that transcript requests from third parties require actions by IRS employees, who are not available due to the current lapse in government appropriations. “During this period, transcript requests by third parties, such as financial institutions, cannot be processed through the Return and Income Verification Services and Income Verification Express Service,” said the IRS. “These processes are not automated. However, individuals requesting their own transcripts can use the automated process, which remains available.” The IRS did not specify whether the transcripts are available to tax practitioners.

Wednesday, October 9, 2013

Secrets to Help Men Stay Healthy

Interesting reading, Dr. Illiadas, MD list eight self-exams which helps men to stay healthy.  I would like for my clients and potential clients to stay healthy.  Read more.

Monday, October 7, 2013

Example of How AR Funding Can Make a Difference in Your Bottom Line


 
Issue: Middle market sized commercial electrical contractor was asked out by their bank due to large loss in prior year. This was a very complex deal due to the fact that they also were renegotiating commercial real estate with the same bank.
 
 

Solution: Since the payoff of the revolver would've squeezed most of client's availability, a negotiated settlement allowed for a rollover of over half of facility into the existing real estate loan. The Lender then provided a competitive fee structure and advance rate to fund the construction/progress billing A/R. We also negotiated a subordination agreement with the bank while the real estate restructure was occurring. The combination of the restructured real estate loan and Lender's A/R line has allowed the company to affordably increase cash flow, grow its business by working on its backlog and head back to profitability.



 
Win/Win Solution: Client felt relieved and thankful that the Lender was able to understand their complex funding issues, and offer the necessary flexibility to extend an aggressive funding program to handle their turnaround situation.
 
 
We find Lenders for deals such as the one above and for manufacturing, healtcare, engineering, consulting services, distributors, temporary staffing, BOL, and security. 
 
C. Ingraham, RTRP
Email: Taxeswilltravel @ aol dot com
 
 

October 15 Deadline, Over 12 Million Taxpayers Still Need to File a Tax Return for 2012

Tax-filing and payment extensions expire in just days. Many of the more than 12 million taxpayers who requested an automatic six-month extension this year have yet to file, according to the IRS. October 15 is the last day for most filers.
 
Some have more time, such as military personnel in combat zones and some residents of flood-soaked Colorado -- but most do not.

“Late filers? God love them,” said Delmar Gillette, of Delmar C. Gillette Economic Planning Services Inc., in Newport News, Va., which in a typical year has between 5 percent and 7 percent of clients on extension. “They’re a challenge because they have postponed starting to file their return. How well do you think these people gather the necessary information to file an extended return? Just getting them to the office for a scheduled appointment is a major challenge.”

“We certainly don’t encourage late filing, because it really just spreads the work load further into the year for us,” said EA Cynthia Jeanguenat with Horizons Unlimited in Virginia Beach, Va.
“The clients who usually request an extension are not always the more organized clients, so the danger in giving them six more months to collect their information is that more information might be lost or misplaced,” she added. “That lost or misplaced information generally takes longer to replace, since payroll firms or departments are more than halfway through a new year and the prior-year info may not be as readily available in September as it was in February or March.”

“We’ve never encouraged extensions, but certainly have some,” said Steven Hanson, a CPA with Minnesota-based Piehl, Hanson, Beckman PA and president of the National Society of Accountants, who added that his firm’s number of individual extensions remains about the same over the last several years.

“We’ve always taken pride in getting most of our returns done on time without extensions,” Hanson said. “That has become more difficult over the years, especially corporate returns with their earlier March due date.”

Not favorite clients
According to Stephen DeFilippis, an EA with the DeFilippis Financial Group in Wheaton, Ill., only about 3 percent of his clients file for an extension -- and he doesn’t encourage them. “[We] only file them in cases where my client does not have all of their documents prior to the regular filing deadline,” he said. “I prefer to get as much done during filing season as possible.”

“I hate extensions! I do not use the word extension without the descriptive ‘GD’,” said Robert Flach, blogger at The Wandering Tax Pro. “One of the reasons I was first attracted to the tax preparation business was that one could work 12 hours a day, seven days a week for three and a half months and basically take off the rest of the year. I long for the days when the tax season truly ended on April 15.”

‘Mad rush’
Recent rule changes allowing automatic extensions until October 15 actually delayed the filing of several individual returns until close to the October filing deadline, according to Hanson. “With the automatic extension only going until August 15, we filed more returns earlier than now. It helped spread our workload out a little better. We now have a mad rush in October to meet the deadline, as a good share of the clients who extend like to wait until the last minute.”

“Most enrolled agents like to get things filed on time so we can move on to other issues we handle during the year,” said Jeanguenat. “Our firm also offers business services, so we are a year-round operation. We also have to find time to fulfill our continuing education requirements, so we have plenty to keep us busy after April 15.”

Fees
The IRS urges taxpayers whose extensions run out on October 15 to double-check returns for overlooked tax benefits and then e-file returns.

“We announce up front that if all of the necessary information is not available by April 1, [clients] will go on extension,” said Gillette. “The group always pushing the April deadline is a predictable list and we know almost to the person who will be on it. We do have our favorite clients who sometimes find themselves with unexpected complications and need to be placed on extension. In our clients, going on extension is almost a sin. Some fight it tooth and toenail because it appears to be an admission of some fault. They’re concerned about an extended return being a red flag.”

Late filers, said Gillette, “are certainly worth charging a premium for all of the frustration they bring with them.”

Saturday, October 5, 2013

The Schedule E Tax Loophole, Kindle Free Days: October 9-13,2013


One of the reasons major investors play in the industry of real estate is:
 

1.     The last time they looked, God wasn't making any new land. In fact with global warming, the globe is losing land.
 
      2.      The IRS provides a locked-in tax-write off  on Schedule E in the amount of $25,000
 
 

Let me make it clear. If you have investment real estate your tax write off can be up to $25,000 EACH year. This is $25,000 which is subtracted from your income, which utomatically lowers your tax liability.

Example:


You earn $80,000 a year. You purchase a four-plex and rent each unit out for $600 a month. (One-bedroom, one bath units) Your mortgage payments are $2,460 a month. Your mortgage interest for the year is $24,000. Your income from rentals is $12,800. (Not all the units were rented)

 

You have additional expenses, such as waste management, up-keep of the property, property taxes, gardening, painting, pluming, travel to and from the property, insurance,  ads for rentals, ten-percent for property management and a host of other small expenses that comes with providing shelter for four separate units.

 

You end up with rental income of $12,800, and total expenses of $32,000. You have a loss of $19,200. You place this lost on Line 17 of Form 1040 and your total income is reduced by $19,200. This means your Adjusted Gross Income will now be (if there are no more adjustments) $80,000 minus $19,200. So instead of paying taxes on $80,000 you will pay taxes on $60,800.
 

Plus you will still have ownership of the rental property and can carry over previous year’s losses and repeat the same process next year, if the tax laws remain the same.
 

This is called building wealth “with” the IRS. Small private real-estate investors do well with this major tax loophole each year.  The book The Schedule E Tax Loophole, by C. Ingraham, RTRP goes into details about this massive tax loophole and how to build wealth when using it.

 
There is one major drawback if you earn over $100,000 a year the passive activity loss limitation rules may apply and the amount you can forward over to Line 17 of the Form 1040 may be reduced.  For this reason, many investors create corporations, who manage not to pay them, so they can keep their annual income below $100K.

 
If your annual income is over $100,000, you may want to look for an experienced tax attorney to set up the best corporate structure.  If your income is less than $100,000 check out the book: The Schedule E Tax Loophole and see how several tax-payers saves thousands in taxes each year. (You don't have to have an e-Reader, you can download Amazon's free app and read on your desk-top or laptop)
 

Note of caution:  If you report your rental property on Schedule E, rather than a corporation, you may want to increase the liability insurance on the property to decrease your personal liability.
 

                                                     

Simple Formula for Getting Rich Online, by Co-Founder of Twitter

“Here’s the formula if you want to build a billion-dollar internet company...Take a human desire, preferably one that has been around for a really long time…Identify that desire and use modern technology to take out steps.”  Read more of what the serial tech-guru/entrepreneur who co-founded Twitter says.

Twitter Going Public, Reveals $1 Billion IPO Plan

Twitter Inc. on Thursday revealed plans to raise up to $1 billion in a public offering, looking to cash in on a messaging service that has transformed public conversation but is still losing money and facing challenges attracting new users and advertisers.

image
Twitter CEO Dick Costolo


Twitter released the filing for its initial public offering on Thursday. The social media company did not specify the amount of shares or price range, but set a maximum amount for the deal at $1 billion. MarketWatch's Dan Gallagher reports. (Photo: Getty Images)

Potential buyers for the first time saw the financials behind one of the most anticipated stock-market debuts of the year, which showed the social network's revenue more than doubled to $254 million in the first six months of this year.

Twitter revealed plans to raise $1 billion in an initial public offering, looking to cash in on a service that has transformed public conversation but is still proving itself as a business. Telis Demos and Michael Chasen, SocialRadar CEO, discuss. Photo: Getty Images.
 

But its net loss grew by 40% to $69 million as the company's expenses ballooned. Twitter's user growth is also slowing, and prices for advertisements, which make up the bulk of the company's revenue, are falling.  Read more

Tuesday, October 1, 2013

Limited IRS Services During the Gov Shut Down

IRS Operations During The Lapse In Appropriations

 
Due to the current lapse in appropriations, IRS operations are limited. However, the underlying tax law remains in effect, and all taxpayers should continue to meet their tax obligations as normal.
Individuals and businesses should keep filing their tax returns and making deposits with the IRS, as they are required to do so by law. The IRS will accept and process all tax returns with payments, but will be unable to issue refunds during this time. Taxpayers are urged to file electronically, because most of these returns will be processed automatically.
No live telephone customer service assistance will be available, however most automated toll-free telephone applications will remain operational. IRS walk-in taxpayer assistance centers will be closed.
While the government is closed, people with appointments related to examinations (audits), collection, Appeals or Taxpayer Advocate cases should assume their meetings are cancelled. IRS personnel will reschedule those meetings at a later date.
Automated IRS notices will continue to be mailed. The IRS will not be working any paper correspondence during this period. Here are some basic steps for taxpayers to follow during this period.
How does this affect me?
  • You should continue to file and pay taxes as normal. Individuals who requested an extension of time to file should file their returns by Oct. 15, 2013.
  • All other tax deadlines remain in effect, including those covering individuals, corporations, partnerships and employers. The regular payroll tax deadlines remain in effect as well.
  • You can file your tax return electronically or on paper –– although the processing of paper returns will be delayed until full government operations resume. Payments accompanying paper tax returns will still be accepted as the IRS receives them.
  • Tax refunds will not be issued until normal government operations resume.
  • Tax software companies, tax practitioners and Free File will remain available to assist with taxes.
What IRS services will be available?
  • For taxpayers seeking assistance, only the automated applications on the regular 800-829-1040 telephone line will remain open.
  • The IRS website, www.IRS.gov, will remain available, although some interactive features may not be available.
  • The IRS Free File partners will continue to accept and file tax returns.
  • Tax software companies will continue to accept and file tax returns.
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