Saturday, November 30, 2013

Ten Reasons You May Want to Rethink Your Hidden Offshore Account



In light of the new agreement between the Department of Treasury (IRS) and Costa Rica and the Cayman Islands (11/29/2013) concerning disclosure of U.S. Taxpayers Offshore Account, we put together (comedy) ten reasons you may want to rethink your hidden offshore account.



  1.          If you didn’t know six months before it happened that the Department of Treasury was planning an Agreement with Costa Rica and the Cayman Islands to disclose assets of U.S. taxpayers then perhaps you may want to re-evaluate your financial consultants

    2.      If you believed that you could hide hundreds of thousands of dollars, to millions in an offshore bank account with a bank who does business in or with the United States, and therefore didn’t answer yes to Part III on Schedule B of your Form 1040 Tax Return, then you may want to rethink having an offshore bank account.

    3.      If you don’t have a business with a foreign country address, in which you can claim income from, then perhaps you shouldn’t have an offshore bank account poising as offshore income.

    4.      If you don’t have an experienced tax attorney with knowledge about U.S. and International tax codes, then perhaps you may want to rethink this whole offshore account thing.


    5.      If you have a spouse who may want a divorce in the distant future and already knows about your offshore dealings, which you forgot to report on your U.S. tax returns, then you may want to rethink your offshore bank account.

    6.      If you are extremely forgetful about large sums of income which you secretly took out of the country $9,999 at a time over the years, then you may want to rethink your offshore account.

    7.      If you have children who are waiting for you to die, so they can spend all your money, and you decided that hiding your money offshore would be better than it showing up on your tax return, then you may want to rethink how you hide your money.  Offshore may no longer be the best solution if you are doing business with a bank that does business in or with the United States!

    8.      If you live offshore and you earn offshore and you didn’t bother to file Form 5555 with the IRS, you may want to talk to an International tax professional immediately.

    9.      If your International bank does business with or in the United States, regardless of where they are located, you may want to review your privacy clause.

    10.   If you are hiding money from your business partner or shareholders in an offshore account and are doing business with an offshore bank which has to now abide by the Foreign Account Tax Compliance Act (FATCA), you may want to do things differently.



Full Disclosure from Cayman Islands and Costa Rica on U.S. Citizens Assets

Press Release from Department of Treasury;  Costa Rica and Cayman Island Agreement http://www.treasury.gov/press-center/press-releases/Pages/jl2226.aspx 

Click here for the IRS page Foreign Account Tax Compliance Act

Double Edge Sword, IRS Could Receive Billions From Unreported Revenue

On one hand the recent news, explained below is good news.  Billions in extra revenue from offshore accounts could help the national debt.  And on the other hand it could cause strife between the have and have nots, as the wealthy take their angry out by removing more jobs from the U.S. 

Agreements Designed to Provide IRS Billions in Unreported Revenue

The two agreements are in support of the Foreign Account Tax Compliance Act (FATCA). FATCA, which went into effect in March 2010, requires that individuals include their holdings in accounts held by foreign banking institutions when they file income tax returns with the Internal Revenue Service (IRS).

The Internal Revenue Code has historically required that citizens of the United States or those who otherwise earn income in the United States report income from all sources to the IRS. However, many individuals have chosen to hide earnings in accounts based in other countries such as the Cayman Islands and Costa Rica because of the favorable tax laws of those nations.
Experts believe the Department of Treasury loses over $100 billion each year in taxes that individuals should pay on unreported foreign income.

FATCA seeks to address this practice by allowing the United States to sign intergovernmental agreements (IGAs) with other countries in which those countries would provide bank account details to the IRS. If individuals choose not to provide their foreign bank account information to the IRS, the United States is instead simply working out deals with the governments of those countries to provide bank account details on all of those individuals with account balances above a certain threshold that have addresses tied to the United States.

With the signing of the agreements with the Cayman Islands and Costa Rica, the United States now has IGAs with 12 nations, including the United Kingdom, Switzerland, Germany, Spain, France, and Italy.

The need for a law like FATCA became readily apparent in 2009 when the Swiss banking institution UBS announced it would pay a $780 million fine to the United States. The fine came because of an investigation by the Federal Bureau of Investigation into over 50,000 United States-based customers with UBS bank accounts, an investigation that found that individuals with UBS had helped those customers to hide their funds from the IRS.

Banks Based in United States Again Reciprocal Sharing of Information

Despite the victory the Department of Treasury and the IRS are taking with the signing of these agreements, FATCA is not without its controversy.

FATCA allows the United States to enter into a reciprocal sharing agreement with other nations. A reciprocal agreement means that while the other nation is willing to share bank account information with the United States, the United States must in return share bank account information with that foreign nation.

All of the IGAs signed to date have been reciprocal agreements. This fact is one that banking institutions have not ignored.

In April 2013, banker associations in Texas and Florida filed a lawsuit against the Department of Treasury in an attempt to block them from sending bank account information of those in the United States to foreign governments. The filing cited among other concerns the violation of privacy of residents of the United States.

The case is under review by the United States District Court of the District of Columbia.

Thank you to  Tax Law Home for the above article.

Friday, November 29, 2013

Urgent News, This is Not Good For Some Tax Payers, IRS and Cayman Islands Has Teamed Up To Fight Tax Evasion

Bottom Line:   Cayman Islands to report US Citizens' assets
GEORGE TOWN, Cayman Islands (AP) - The Cayman Islands has signed an agreement with the U.S. government to fight offshore tax evasion and encourage financial  transparency.
The U.S. Department of Treasury said in a statement Friday that the Cayman Islands will share tax information about U.S. account holders with the U.S. Internal Revenue Service.
The Cayman Islands signed a similar pact with the United Kingdom earlier this month.
The British territory is considered the world's sixth largest financial center and a major haven for private equity.

Sunday, November 24, 2013

Employer Based Health Coverage Don't Meet Obamacare's Standards?

There appears to be more questions than answers concerning the new health care bill.  The Motley Fool sums it up best.  Below is an over-view of the new law.  My only comment is that regardless of how much press there is, or how many arguments there are, this health care bill is LAW and there are penalties for not complying.  Learn what you can, do what you can.


What Your Health Care Will Look Like Under Obamacare

Obamacare's provisions promise that everyone will have individual health insurance, and the individual mandate within the legislation requires everyone to have that coverage or face potential penalties. Yet millions of Americans are worried about what their insurance policies will look like after Obamacare fully takes effect and whether the coverage those policies will provide will be better than what many of them already have.

Not all of the details have been fleshed out yet. But early signs point to a few likely things you'll see from your health insurance when Obamacare's provisions take full effect.

1. Those without employer-based group coverage now will likely get better benefits.

 One likely outcome of the Affordable Care Act is that the vast majority of individual health insurance plans — as opposed to group plans that employers provide — will have to provide more comprehensive coverage than they do currently. A 2012 study from researchers at The University of Chicago found that among the roughly 14 million Americans who have individual health coverage rather than group coverage through an employer or other organization, more than half of those plans didn't provide enough benefits to qualify under Obamacare's standards.

Under Obamacare, those substandard plans will be replaced by newer coverage. Some preliminary figures from state health insurance exchanges show that in many states, that new coverage is coming with higher premiums, especially for those plans that provided much more limited benefits than will be required under the new law. Whether better benefits will provide enough of an offset to result in lower overall costs will vary from person to person and across different policies. People who have minimal health expenses will likely end up paying more overall, while those who use their health benefits more often could see cost savings under Obamacare plans.

2. Those covered under employer-provided plans already have generally strong coverage.

The same study also examined people covered under group plans, typically through their employer. The differences in quality were staggering. The study authors divided different insurance policies into tiers based on how much of a patient's medical bills each policy would cover. In group plans, almost two-thirds of members had policies that covered 80% or more of their costs, compared to just 2% of those who had to get their coverage individually. Moreover, thanks to employer contributions, those in group plans paid less than half what individual-plan members paid in out-of-pocket costs.

As a result, most people covered by their employers would probably prefer to keep their existing coverage. But many workers are afraid that employers might choose to discontinue offering health insurance of their own, deciding instead to let Obamacare's other provisions take care of their workers.

3. Whether employers will continue providing coverage will depend greatly on how health insurance exchanges look.

Despite fears of widespread employer abandonment of group health-insurance coverage, the 2012 National Survey of Employer-Sponsored Health Plans from HR consulting firm Mercer found that very few employers plan to cancel their health insurance benefits after Obamacare takes full effect. But smaller employers were much more likely to say they would cut coverage — with 16% of employers with fewer than 500 employees planning health plan cuts compared to just 6% of employers with 500 or more workers.

For many, the decision may well hinge on what the individual and small-business health insurance exchanges under Obamacare end up looking like. States have the choice to run their own exchanges, but if they don't, the federal government will have exchanges to cover their residents. Many states have already released some details about their exchanges, although others are still pending. With open enrollment in the exchanges still scheduled for Oct. 1, 2013, it should be much clearer soon whether it will make sense for employers to drop coverage even in the face of penalties for some businesses that drop their plans, as well as the loss of tax credits that some eligible businesses will get for providing coverage.

Waiting for the details

Unfortunately, there's still a lot up in the air about how Obamacare will work, especially as some states are still figuring out what they will offer their citizens under the law. Clearly, some people will get far better health insurance coverage under Obamacare than they do now. But some people will also end up paying more than they do now for coverage they'd be just as happy to keep if they could.

How Obamacare Changed Your Taxes

As much as Obamacare will affect your medical care and your health insurance coverage, the effects don't stop there. The legislation also made major changes to the tax laws — with ramifications not just for this year but extending well into the future.

Lawmakers embedded several different tax provisions into the broader Obamacare legislation. Those changes will have an impact on taxpayers at all income levels.

Perhaps the biggest change in the law expanded the tax that workers currently pay for Medicare to cover both higher amounts and different types of income. Until this year, workers paid 1.45% of their wages in Medicare withholding taxes, with employers paying another 1.45% out of their own pockets. Self-employed individuals paid the combined 2.9% on their own. Although the amount of wages subject to Medicare tax used to be limited in the same way as Social Security withholding, that changed in 1991, and by 1994, the limits on wages subject to Medicare taxation were removed entirely.

Going forward, though, Obamacare imposes additional Medicare taxes on certain individuals. In particular, two groups will be affected:
  • Joint filers with wages or other work-related earnings greater than $250,000 and singles earning more than $200,000 will have to pay an additional 0.9 percentage points in Medicare tax, bringing their total to 2.35% for employees or 3.8% for self-employed workers. Employers are supposed to handle this requirement in their withholding, but for two-earner couples, that may prove impossible, as your employer will have no knowledge of what your spouse earns.
  • Those with total adjusted gross incomes of more than $250,000 for joint filers or $200,000 for singles will have Medicare taxes imposed on their investment income as well. On whatever amount of investments exceeds the $250,000 gross-income level, you'll have to pay the full 3.8% surtax yourself.
The net effect on high-income earners will be to bring total top tax brackets to 43.4% — the 39.6% regular tax amount plus the 3.8% Medicare tax.

Hitting lower-income workers

Those who earn less than these $200,000 and $250,000 thresholds shouldn't assume that their taxes will be unaffected by Obamacare. New limitations on flexible spending arrangements have hit taxpayers of all income levels, limiting the amount you can set aside tax-free in a flex plan to $2,500 per year. Previously, there was no technical upper limit, although most employers imposed a $5,000 maximum. But for those who have high levels of predictable medical expenses, the forced reduction in flex-plan use could cost you hundreds of dollars in extra income, Social Security withholding, and Medicare withholding taxes.
Moreover, those who rely on deducting medical expenses won't be able to get as big a tax benefit from them. Obamacare raised the floor on itemized medical expenses from 7.5% of gross income to 10%. That may not sound like much, but it could reduce your deduction by thousands of dollars and thereby increase your tax bill substantially.

Will you get any benefit?

The question, of course, is whether Obamacare's benefit will exceed the extra taxes you'll pay. The jury's still out on that question, but some have watched the way that health insurance and hospital stocks have reacted to Obamacare and have concluded that much of the benefit will go to industry players rather than to individuals. For newly covered individuals, the fact that they'll have coverage at all may be the only benefit they'll get from Obamacare, with higher taxes simply being part of the price we all pay for it.

Regardless, as you consider your taxes this year, don't forget about the new Obamacare provisions. Planning for them now could save you from a big headache down the road.

To read the entire article provided by The Motley Fool, you can click here and gain access.

Saturday, November 23, 2013

Eight Tax Breaks That Could End in 2014; Tax Plan Now to Keep Your Taxes Lower

Now is the time to sort out old clothes, furniture and house appliances and drive them over to the Goodwill or your favorite charity.  You will need to take advantage of any and all legal tax loopholes between now and December 31st.  Several tax provisions are scheduled to expire at the end of this year. Many of these tax breaks have been extended in the past, so it's possible Congress could extend them again over the next few months, but it may be too close to call, so use the next 45 days to make sure your taxes are lower with or without the following deductions.


1. Teachers' classroom expense deduction. Eligible educators who work in a school providing primary or secondary instruction can deduct up to $250 worth of unreimbursed classroom expenses.

2. Exclusion of cancellation of indebtedness on principal residence. The U.S. tax code treats forgiven debts as taxable income. However, if your principle residence is foreclosed or sold in a short sale before the end of the year, this provision allows you to exclude up to $2 million of forgiven debt from your taxable income.  (This is a big one - just hope this tax deduction is renewed)

3. Transit benefits. In 2013, employees can spend up to $245 pretax per month on transit benefits such as rail passes, which is on par with the $245 pretax they can spend on parking. That parity is scheduled to sunset at the end of this year so that the benefit for public transportation would drop to $130 per month pretax, while higher parking benefits will remain.

4. Mortgage insurance premiums. Homeowners who have less than 20 percent equity typically pay for private mortgage insurance (also known as PMI). Those premiums were deductible in 2012 and 2013, but that provision is scheduled to expire at the end of the year.

5. IRA distributions to charity. People older than age 70½ are required to take minimum distributions from their individual retirement accounts, so this provision allows them to contribute that money to charity without counting those distributions as income. The provision can keep income low enough for an individual to qualify for other tax breaks that may have phase-out limits.

6. State and local sales tax. If you pay state or local income tax, you can deduct that amount from your federal taxes if you itemize. (If you live in states such as Texas and Florida, which don't have state income tax, check with your tax professional)
7. Electric vehicles. Consumers who buy a qualified electric plug-in vehicle may be eligible for a tax credit of up to $7,500 depending on the size of the car's battery pack.

8. Remodeling your home for energy efficiency. Homeowners who remodel for energy-efficiency can take a credit of up to $500 over their lifetime. This provision has existed since 2006, so many taxpayers have already used the credit. There is a separate $500 credit available for energy-efficient appliances. If you haven't used the credit yet, there's still two months left to install new windows or buy an energy-efficient washing machine.

Friday, November 15, 2013

Investment Tip, Is Cable Becoming a Service of the Past?

Imagine what cable companies would do if everyone stopped watching...

Well, after some number-crunching, The Motley Fool determined that industry big wigs like Comcast would lose $2.2 trillion! And tech moguls like Apple and Google are convinced that Comcast’s nightmare scenario is approaching faster than you think...

Experts are calling it "The Death of Cable TV." All because 3 little-known companies could allow 99% of Americans to drop their cable bills - and bankrupt Comcast - by 2014! 

This information was published in the DailyFinance.

More Americans Than Ever Are Renouncing Their Citizenship

More of the wealthy are giving up their citizenship rather than pay more taxes.  This appears to be an ongoing pattern which is becoming even more popular after Facebook's Eduardo Saverine, the Brazilian Internet entrepreneur who help start Facebook and Denise Rich, the ex-wife of billionaire investor, Marc Rich to name a couple.  The founder of Carnival Cruise Line, Ted Arison who died in 1999, was an Israeli businessman who gave up his U.S. citizenship after buying the Miami Heat and becoming one of the wealthiest men in America. 

More Americans are deciding that they'd rather give up their citizenship than pay more taxes.

The Wall Street Journal reports that 2013 has already set a new record for "expatriations," defined as citizens renouncing their citizenship or permanent residents giving back their green cards. The Journal quotes tax lawyer Andrew Mitchel, who found that there have been 2,369 expatriations as of the end of the third quarter; that's an increase of 33 percent over all of 2011, the previous record-holder.

Expatriations are typically motivated by a desire to escape taxes, and the move is usually undertaken by Americans already living abroad. There was an uptick in expatriation at the beginning of President Obama's first term, which has been attributed both to anticipation of more burdensome taxation policies and to increased tax enforcement against expatriates. Indeed, the Journal notes that those who renounced last year may have done so to avoid a higher capital gains tax, and also points to the Foreign Account Tax Compliance Act, which makes it tougher for Americans to hide assets in offshore accounts.

Monday, November 11, 2013

National Debt Now at $17 Trillion, Congress Looking to End Major Corp Tax Loopholes


Reading the article below will support the statements I’ve been making to tax clients and readers. The country’s finances are in trouble and it's only a matter of time before major changes will be made to reduce the $17 trillion debt. In my book The Hidden Benefits in Schedule A (Tax Loopholes) I talk about the small changes Congress could vote on which would generate billions in additional tax revenue.  Looks like Congress is starting with S corporations first.  Nothing is off the table, including corporate jets, mis-categorizing income and the transferring of jobs offshore.


By Heidi Przybyla

(Bloomberg) Millionaires who avoid payroll taxes by claiming income as business profits are among those in Democrats’ sights as congressional budget negotiators seek a deal by next month.
 
Limiting the ability of some business owners to use the S corporation structure would save $12 billion over the next 10 years, according to a list of tax breaks obtained by Bloomberg News that Democrats are considering for elimination.

That provision allowed Newt Gingrich and John Edwards to avoid payroll levies, according to tax returns the two filed during their 2012 and 2004 campaigns for the White House.

“It shouldn’t be difficult for Republicans to agree to put just a few of the most egregious, wasteful loopholes and special-interest carve-outs on the table,” Patty Murray, chairwoman of the Senate Budget Committee and the lead Democratic negotiator, said on Nov. 5.

The clash with Republicans over revenue stands in the way of the lawmakers reaching a deal by a Dec. 13 deadline. Democrats have long urged Republicans to agree to scrap at least some of the tax preferences, while Republicans argue that doing so would undermine efforts for a broader tax-code revision.

In addition to closing what Democrats call the “John Edwards/Newt Gingrich loophole,” the party’s list of options includes carried-interest treatment that allows hedge-fund managers and private-equity advisers to pay a 20 percent tax rate on their income instead of the nation’s top income tax rate of 39.6 percent. Ending that break would save more than $17 billion over a decade, according to the Democrats’ estimates.

Corporate Jets
Another lets U.S. companies deduct their expenses when they send their plants overseas, which Democrats say encourages offshoring of American jobs. It would raise $200 million. Ending preferences for corporate jets and subsidies for yachts and vacation homes, combined, would bring in another $19 billion.

While budget aides say the two sides are finding some areas of compromise on spending cuts, such as farm subsidies, Republicans say ending tax preferences could hurt efforts by House and Senate tax-writing committees trying to strike a broader deal to revamp the code.

Representative Paul Ryan, the lead Republican negotiator and chairman of the House Budget Committee, is arguing against including any tax measures as part of a deal to establish an annual budget and to replace some of the $1 trillion in automatic spending cuts now in effect that are disliked by both parties. The 29-member panel, which first met on Oct. 30, will hold its next public meeting on Nov. 13.

Smaller Budget Package
Lawmakers on both sides of the aisle have played down prospects for a broader agreement to slow the growth of the U.S. national debt, which is now at $17 trillion.

They are instead looking at a package of no more than $70 billion to $100 billion to replace the automatic spending cuts for a year or two. Given the more limited nature of such a deal, revenue has no place in it, say Republicans, who also say Democrats are recycling “loopholes” they’ve unsuccessfully sought to use as bargaining chips in past budget negotiations.

“All these proposals the Democrats are putting out there are things there might be some support for if it were in the context of tax reform,” said Senator John Thune of South Dakota. “It’s going to be very hard for Republicans to vote for tax code-related revenue” as part of a budget conference, said Thune, the Senate’s No. 3 Republican. “Every time you close a loophole you’re raising taxes on somebody.”

Which Tax Breaks Will Be on the Table
Democrats say there must be at least some revenue as part of even a smaller-scale deal to replace the automatic budget cuts, known as sequestration, Murray said in an interview.

“What I want to know from Republicans is which ones they are willing to put on the table to help solve this?” Murray, of Washington state, said, urging the other party to come up with its own options for wiping out tax breaks.

“Revenues need to be part of the picture,” said Senator Angus King, a Maine independent who caucuses with Democrats and sits on the panel.

Democrats say allowing U.S. companies to deduct their expenses when they send their plants overseas hurts American workers.

“When somebody gets a write-off from moving their plant overseas, that’s the kind of spending in the tax code we ought to stop,” said Senator Debbie Stabenow, a Michigan Democrat on the committee.

Nuns on the Bus
Preparing for a showdown over revenue, Democrats are mobilizing groups such as Nuns on the Bus, a Catholic advocacy group that organized a tour in 2012 to protest Ryan’s budget blueprint on moral and religious grounds because of its cuts to programs like food stamps that feed the poor and children.

“We are urging reasonable revenue,” said Sister Simone Campbell while visiting the Capitol on Nov. 5. “It is wrong to just think you can cut.”

Republicans say they already voted for a tax increase, citing a law passed in January that let the top income tax rate rise to 39.6 percent. They also say the revenue collected from ending tax preferences is needed to help pay for lowering income tax rates for everyone as part of a broader tax overhaul.
“They’re pushing every little approach they can” to raise taxes, said Orrin Hatch, a Utah Republican and the top Republican on the tax-writing Senate Finance Committee. “They would like to snooker Republicans into just doing one part of tax reform. We can’t do that because you’re going to need all parts to come up with something that works.”

$1 Trillion at Stake
With an estimated $1 trillion in such revenue at stake, Murray and other Democrats say it isn’t a credible position. “I don’t buy it,” she said.

There is some truth to both arguments, according to Roberton Williams, a tax fellow at the Tax Policy Center in Washington. “It’s a matter of degree rather than black and white,” said Williams, a former Congressional Budget Office staff expert.

“If you get rid of some of the loopholes there will be less available to buy down tax rates. But will there still be a lot left? Yes,” he said. “But you’re taking away some of the easiest ones they can agree on.”

During the 2012 presidential campaign Gingrich, a Republican and former House speaker, released a tax return that showed income of about $3 million from an S corporation, Gingrich Productions, according to Tax Notes. He paid himself a salary of about $450,000, with the remainder treated as S corporation net income to him that wasn’t subject to payroll taxes. That cost the government $73,950 in employment taxes, Tax Notes said.

Edwards, who ran for the Democratic vice presidential nomination in 2004, disclosed that his S corporation paid him an annual salary of about $360,000, with more than $5 million per year that escaped payroll taxes.

“Some wealthy business owners knowingly mischaracterize their income as business profits instead of salary to avoid Medicare and Social Security payroll taxes,” the Democrats’ list of options says.
Gingrich didn’t respond to messages left on his phone asking for comment. Edwards also couldn’t be reached through his former campaign scheduler, Matthew Nelson.

Sunday, November 10, 2013

Tax Deductions and Credits for 2014

Below are a few reminders of major tax deductions and credits for your 2014 tax returns.

According to the Internal Revenue Service, more than 101 million income tax refunds were issued in 2013, averaging $2,651 each. The average was a couple hundred dollars more for taxpayers who elected to have their refund directly deposited into a bank account.

The credits and deductions available on federal returns due April 15, 2014 include:
  • Child and Dependent Care Credit - The maximum amount of child and dependent care expenses eligible for the credit is now $3,000 if you have one child or $6,000 if you have two or more children. These increased amounts are permanent.
  • Child Tax Credit - The credit has been made permanent at $1,000 per child under the age of 17 at the end of 2013. This credit may be claimed in addition to the Child and Dependent Care Credit.
  • Tuition and fees deduction - If you, your spouse or your dependent is enrolled in a postsecondary institution, you may be able to deduct tuition expenses as an adjustment to income, even if you don't itemize deductions. You generally take this deduction if you don't qualify for an education credit or other tax break for the same expenses.
  • American Opportunity Credit - The maximum amount of this credit for the first four years of post-secondary education costs in a degree or certificate program is $2,500 per student. Costs may include tuition, fees and course materials (books). If you don't owe any tax, you may also be eligible to receive up to 40 percent of the credit ($1,000) as a refund.
  • Educator expenses deduction - Elementary and secondary educators can deduct up to $250 in related job expenses as an adjustment to income, even if not itemizing deductions. Unlike most employee expenses, educator expenses are not reduced by 2 percent of your adjusted gross income.
  • Deduction for mortgage insurance premiums - If you pay mortgage insurance premiums, also known as private mortgage insurance (PMI), you may be able to deduct premiums as mortgage interest.
  • Alternative Minimum Tax - The AMT was created to ensure wealthy taxpayers receiving large tax benefits pay some tax. It will now be adjusted for inflation each year so fewer taxpayers are subject to the tax. The exemption amount rises in 2013 to $51,900 ($80,800, for married couples filing jointly). For married individuals filing separately, the exemption is $40,400.
  • Adoption credit - You may qualify for a credit equal to up to $12,970 of your adoption expenses including fees, court costs, attorney fees, traveling expense and other expenses directly related to and for the principal purpose of the legal adoption of an eligible child. If your employer provides adoption benefits, you may also be able to exclude up to the same amount from your income. Both a credit and exclusion may be claimed for the same adoption, but not for the same expense.
  • State and local sales tax deduction - For 2013, you can still deduct state and local sales taxes. You can take this deduction or a deduction for state income tax - but not both.
As with most tax benefits, you must meet certain criteria in order to claim them on your tax return, and even if you are eligible, you may not qualify for the entire amount.

Affordable Care Act Timeline; Provided by TaxACT

Q and A On Affordable Care Act 2014 Premium Tax Credit and Penalties

Affordable Care Act 2014 Premium Tax Credit and Penalties - TaxACT
Can provisions of the Affordable Care Act help you pay for health insurance coverage?

Yes! Starting January 1, 2014, you are generally required to have adequate health insurance or pay a penalty.

The good news is that if your income is within certain limits, you may qualify for an advanced premium tax credit to help pay for that coverage. This credit is paid directly to your insurance company as a subsidy.

How do I know if I qualify for a premium tax credit (subsidy)?

You may be able to get this tax credit if your employer doesn’t offer health insurance, or if they do, it covers less than 60% of covered benefits, or the premiums would cost you more than 9.5% of your annual household income.

To qualify, you must purchase insurance coverage through your state’s “marketplace” – the website for insurance.

Your income must not be too low or too high. You cannot get the credit if you qualify for government programs like Medicare and Medicaid. You are only eligible for the credit if your household income is above between 100% and 400% of the federal poverty level.

To see if you may qualify for the credit, use TaxACT’s Health Care Tax Credit Calculator.

How do I claim the credit?

You start by applying for insurance through your state’s health insurance marketplaces, also known as an exchange.

You must enroll before March 31, 2014, to receive health insurance through the exchange.
When you apply through an exchange, you’ll answer questions to determine whether you qualify for the credit.

What happens if my income is higher or lower than I expected?

Most of us can’t predict exactly how much we’ll make in a year. Make the best estimate you can, and when you file your 2014 income tax return, the amount is reconciled with the tax credit you should receive based on your actual income for the year.

If you incorrectly estimate your income, you may receive a bigger or smaller tax credit than you were entitled to. If you were entitled to a larger credit, you will get that money back. If you qualified for a smaller or no credit, you may have to pay back some or all of the credit.

If you don’t like the possibility of having to pay back money at the end of the year, you can pay your entire premium yourself during the year.

That way, you would receive your entire credit as a refund when you file your income tax return, provided you were entitled to one.

Who doesn’t have to get health insurance or pay a penalty?

Not everyone has to buy insurance or pay a penalty. You won’t be penalized for not having insurance if your income is low enough that the lowest cost plan would cost more than 8% of your 2014 income, or if you are not required to file a tax return based on your income level.

There are also exceptions for people whose religious beliefs prohibit medical treatment, members of a recognized health care sharing ministry, members of a federally recognized tribe, and people in other special situations.

How much penalty do I pay if I don’t get insurance?

The penalty for 2014, which will be paid on your tax return due April 2015, is 1% of your annual 2014 income or $95 per person, whichever is higher.

If you have children under age 18, the penalty is $47.50 per child – up to $285 total per family.
The penalty rises for 2015, and again for 2016. The maximum penalty per family in 2016 is $2,085.

Paying a penalty does not mean you are covered or entitled to any medical services.

Saturday, November 9, 2013

IRS Nationwide Tax Forum for 2013 Now Available Online

Seminars from the 2013 Forums Now Available at IRS Nationwide Tax Forums Online
 
Washington ― The IRS today reminds tax professionals that they can earn continuing professional education credits online through seminars filmed at the 2013 IRS Nationwide Tax Forums. The 14 self-study seminars are now available on the IRS Nationwide Tax Forums Online (NTFO) site. Self-study seminars provide information to students using interactive videos, PowerPoint slides and transcripts.

The 2013 NTFO seminars cover many topics of interest to tax professionals including the following subjects:
  • tax law updates,
  • Treasury Circular No. 230 overview,
  • child-related tax benefits,
  • retirement plan loans and hardship distributions,
  • and updates to the Form 706.
To earn CPE credit, users must create an account, answer review questions after viewing each chapter, and pass a short test at the end of the seminar. NTFO is registered with the IRS Return Preparer Office and the National Association of State Boards of Accountancy (NASBA) as a qualified sponsor of continuing professional education (CPE). For a fee, Enrolled Agents and CPAs taking NTFO seminars can earn CPE credit.

NTFO seminars can also be audited for free. Users who choose to audit seminars will not have access to the review questions or final examination and will not receive credit for the seminar.
In addition to the recently-added seminars, NTFO offers many other seminars from prior-year IRS Nationwide Tax Forums from 2009 through 2012.

Friday, November 8, 2013

Assets Which the IRS Can NOT Seize!

Diversification That Generates Cash...
A piece of property in a foreign country translates to diversification beyond U.S. markets and outside the U.S. dollar. No matter how many kinds of investments you hold, if they're all U.S.-based or all U.S. dollar-denominated, you are not diversified. You are at the mercy of U.S. markets and events, and today that's a dangerous place to be.

Certain places today present great opportunity, especially for the investor in search of a yield, thanks to expanding marketplaces. Meantime, other countries are in all-out crisis. Both scenarios present opportunity for the investor paying attention and ready to act.

Not Reportable...Or Seizable...


Furthermore, foreign property holdings are one of the few remaining asset classes that can be kept private. An American is not required to report foreign property holdings to the IRS, not even on the new IRS Form 8938. And foreign property holdings are safe. How is a U.S. plaintiff or creditor going to seize your condo in Panama City or your beachfront lot in Belize?

An overseas real estate investment made today for diversification, safety, and an annual rental yield can evolve into your retirement residence when you're eventually ready for that phase of life. Meantime, it can bring immediate personal enjoyment for you and your family. Your diversification and profit plan could take the form of an apartment in Paris, say, or a beach house in the Caribbean, meaning your offshore investment asset could double as your vacation getaway.

That's why, I say again: Foreign real estate is not only one of the best ways to invest your money today, it's also the smartest...and the sexiest.

But invest in foreign real estate? How? Where?

Lief Simon has a long and successful personal track record as a foreign property investor, with two decades of experience buying, selling, managing, renting, flipping, developing...and profiting. Lief knows how to build a portfolio of offshore property holdings from the ground up...because he's done it.  Learn more  If you think it would be better to live near your investments, (during the winter months, then check out the Offshore Book Store for more information.

Investment Guideline Report, the Countires Employment Rate Released for October

 
 

 
 
If you downloaded the Book "Are We Insane Yet?" by C. Ingraham, RTRP,  you would have a heads up on Investment patterns as it relates to the monthly Employment Rate.  This is the latest information from Washington DC.
 
WASHINGTON—Job creation accelerated in October and the prior two months of data were revised up, raising the prospect that the labor market may be strengthening enough for the Federal Reserve to start pulling back its easy-money policies soon.

U.S. payrolls advanced by 204,000 jobs last month, the Labor Department said Friday. That handily topped economists' forecast for an increase of 120,000.
 
The prior two months were revised up by a total of 60,000. The September gain was revised to 163,000 from an initial estimate of 148,000, and the August payroll improvement was revised to 238,000 from 193,000.

The Labor Department said the private sector added 212,000 jobs in October, the strongest gain since February, suggesting companies shrugged off the government shutdown last month.

Average job creation over the past three months now exceeds a 200,000 pace, matching the strong gains recorded in early in the year.

Thursday, November 7, 2013

Investment Tips: All of These Industries Were Replaced. What's the Next Industry to Be Replaced?

http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952
http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952http://www.fool.com/video-alert/stock-advisor/sa-cabletv-so/?source=isaspodft0000952



 

Google Explains What the Floating Barges Off the Coast of San Francisco Are For

"A floating data center? A wild party boat? A barge housing the last remaining dinosaur?  Google has shed more light on just what it plans to do with a pair of floating barges off either coast of the US.

The advertising giant told The Register that its two vessels, officially known as Google Barges, will in fact be designed to serve as nautical showrooms for the company's latest and greatest products.

Why is this important to a Tax Blog?  It's always important where and how data is stored.  Google is the group-leader in how our tax information can and may be protected in the future.  I personally believe that Google will ultimately place sensitive data servers onto the barges in case of an International disaster.

Wednesday, November 6, 2013

Fast Track Settlement Program Will Enable IRS to Increase the Number of Audits Each Year

This was in my Inbox today.  When I first read it, I was all excited thinking this is good news.  Great, audit issues can be resolved within 60 days, rather than months or years.  This has to be good news, right?  Wrong.  What this program does is systematize the audit process.  Meaning the IRS will be able to audit a lot more tax returns in a shorter period of time, with a LOT less man-power.  This isn't necessarily good for the taxpayer, but great for increasing IRS's audit ratios.
 
Fast Track Settlement Program Now Available Nationwide; Time-Saving Option Helps Small Businesses Under Audit
 
WASHINGTON — The Internal Revenue Service today announced the nationwide rollout of a streamlined program designed to enable small businesses under audit to more quickly settle their differences with the IRS.

The Fast Track Settlement (FTS) program is designed to help small businesses and self-employed individuals who are under examination by the Small Business/Self Employed (SB/SE) Division of the IRS. Modeled on a similar program long available to large and mid-size businesses (those with more than $10 million in assets), FTS uses alternative dispute resolution techniques to help taxpayers save time and avoid a formal administrative appeal or lengthy litigation. As a result, audit issues can usually be resolved within 60 days, rather than months or years. Plus, taxpayers choosing this option lose none of their rights because they still have the right to appeal even if the FTS process is unsuccessful.

Jointly administered by SB/SE and the IRS Appeals office, FTS is designed to expedite case resolution. Under FTS, taxpayers under examination with issues in dispute work directly with IRS representatives from SB/SE’s Examination Division and Appeals to resolve those issues, with the Appeals representative typically serving as mediator.

The taxpayer or the IRS examination representative may initiate Fast Track for eligible cases, usually before a 30-day letter is issued. The goal is to complete cases within 60 days of acceptance of the application in Appeals.

SB/SE originally launched FTS as a pilot program in September 2006. For more information on taking advantage of the Fast Track Settlement program, please view the short FTS video. Additional background is available on IRS.gov on the Alternative Dispute Resolution webpage and in IRS Announcement 2011-05.
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