TaxConnections


Tax Day – April 15, 2014 – It Can Be Easier

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The complexity of completing one’s federal and state income tax returns is not necessarily tied to one’s income level. One of the more complex federal tax rules is the Earned Income Tax Credit (EITC) for low-income workers. Could the individual income tax be simpler? Yes. Here are some ideas.

• Make all income you received subject to tax. What is income? Let’s say it is anything that increases your wealth. So, it would be any payment from the government, debt forgiveness, gross wages, employer-provided health insurance, scholarships, gains from selling assets, etc. What would not be income? Borrowing money (it does not increase your wealth because you have an offsetting liability). Receipt of expense reimbursements from your employer (it makes you whole for what you, in essence loaned to your employer when Read more

Who Should Form A Captive Insurance Company?

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In conjunction with the great people at TaxConnections, we’ve published a new eBook on captive insurance titled: “Who Should Form a Captive Insurance Company?”. You can buy a copy HERE. Cost: $4.98.

To help potential captive owners determine if they should form a captive, I’ve written the “10 questions,” one of which is:

Can I negotiate the coverage terms with my current insurance carrier, or, do they hand me a policy to sign?

Read more

A Collection… The Humorous Side of Tax… (14)

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♦ Each year on tax day I like to remember a Charles Schultz quote from the Peanuts comic strip: “No problem is so big or so complicated it can’t be run away from.”

♦ When it comes to finances, remember that there are no withholding taxes on the wages of sin. Mae West

♦ Every year around April 15 Americans have a rendezvous with debt.

♦ The client went to the tax preparer and said, I filed my taxes electronically to speed things up, and it worked. I got an audit letter in half the normal time.

♦ On April 15th you count your blessings . . . and then send them to Washington. Read more

Placing a Velvet Glove on the Wrecking Ball – IRS Due Process Collections

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According to Black’s Law Dictionary, due process is “a course of legal proceedings … which have been established … for the enforcement and protection of private rights.” Anyone facing an IRS federal tax lien or levy has already experienced the preliminary due process following the IRS determination that more taxes are owed.

Said due process involves a series of written or telephone notifications, and it’s all laid out in the tax code and the IRS letters the taxpayer receives in the mail that should definitely not be ignored.

Before the IRS wrecking ball goes into motion, the taxpayer has 30 days after receiving the IRS collection notice to preserve the right to go to Court. The taxpayer must compete IRS Read more

Retirement

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Let’s face it, we all know this country is facing a retirement crisis. The first of the Baby Boomers turned 65 and started retiring in 2011. The number of Boomers retiring each year will rise rapidly over the next decade or more. Before the end of this decade, Boomers will be turning age 65 at the rate of 8,000 per day.

This massive retirement of Baby Boomers will stretch our health care and health delivery systems to the max and beyond. Our public safety net – entitlements – has long been poorly managed, ill-thought-out and threadbare. Imagine what will happen as tens of millions of Boomers retire.

Yet the worst part of all is that so few people or families have saved anywhere near enough Read more

IRS Reminds Those with Foreign Assets of U.S. Tax Obligations

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The IRS reminds United States citizens and resident aliens, including those with dual citizenship who have lived or worked abroad during all or part of 2013, that they may have a U.S. tax liability and a filing requirement in 2014.

The filing deadline is Monday, June 16, 2014, for U.S. citizens and resident aliens living overseas, or serving in the military outside the U.S. on the regular due date of their tax return. Eligible taxpayers get one additional day because the normal June 15 extended due date falls on Sunday this year. To use this automatic two-month extension, taxpayers must attach a statement to their return explaining which of these two situations applies. See U.S. Citizens and Resident Aliens Abroad for details. Read more

“Foreign” Online Gambling Accounts – IRS Says FBAR Filing Is Required

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Given all the press surrounding “Report of Foreign Bank and Financial Accounts” or so-called FBARs, by now we all know about what should be reported on an FBAR, right? Well, given the Internal Revenue Service’s latest assertion in United States, v. John C. Hom, maybe we had better start studying once again.

Online Gambling Accounts

In the Hom case, the taxpayer was an avid and professional internet gambler with online gambling accounts maintained with overseas entities: FirePay.com (based in London), PokerStars.com (based in Isle of Man), and Partypoker.com (based in Gibraltar). Overseas gambling accounts were necessary because of US laws that prohibit the interstate operation of betting businesses in the United States, making online gambling technically illegal. The Read more

Bond Premium Carryforward

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In TD. 9653, the IRS issued final regs on the tax treatment of bond premium carryforwards in the final accrual period. The final regs adopt ,without substantiative change, the proposed regs [Reg. 140437-12, January 2013] and withdrew the temporary reg-T.D. 9609.

The temporary reg was issued to answer a holder’s question concerning the treatment of a taxable zero-coupon debt instrument, including a Treasury bill, acquired at a premium but having a negative yield. Under prior regs, a holder who elected to amortize the bond premium, would have a capital loss if the security was retired or sold.

The IRS said this situation arose as a result of market conditions and was not contemplated when the prior regs were issued in 1997. The new regs deal with this issue by adding a Read more

NOW Swiss Bank Information Can Be Disclosed To Foreign Tax Authorities WITHOUT Notice!

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We previously posted “Your Swiss Bank Info Is Being Transferred To The US Government As We Speak!… This Is Not An April Fools Joke!” on Wednesday, April 2, 2014, where we discussed that The United States Justice Department has received 106 requests from Swiss entities to participate in a settlement program aimed at ending a long-running probe of tax-dodging by Americans using Swiss bank accounts according to a senior US official.

These banks will have to disclose a great deal of information about their American clients, even including some of their names by April 30, 2014!

To make matters worse for US tax dodgers… if that is even possible… Swiss Parliament has approved a legal amendment that tax evaders will not always have to be told if Switzerland Read more

Internet Enables Thieves To Steal $4 Billion In Tax Refunds

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Criminals are utilizing their Internet connection to file false tax returns that help them steal refunds from the innocent. In 2013, fraudulent returns saw almost $4 billion sent into the hands of scam artists. Making things worse is the fact that the Internal Revenue Service is having a hard time stopping the fraud from happening in the first place.

The United States Attorney General, Eric Holder, says that 880 people have been charged to date, but also says that the scale and scope of the tax fraud schemes has grown substantially. Holder has been a victim of tax fraud himself. Two Georgia men recently plead guilty to charges stemming from their attempt to get a refund by using Holder’s name, Social Security number and date of birth on returns. Read more

The IRS Is Calling About Late Expat Taxes… Now What?

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If you have fallen behind on your US expat taxes, you are not alone! There are approximately six million Americans living abroad and only about half actually filed their US taxes, which is a US tax law requirement. So if the IRS has contacted you about delinquent tax returns, what should you do? First off, don’t panic! Here are a few tips on what to do next.

Tip #1 – Respond!

The worst thing you can do is ignore the notice. If you don’t think that you will be able to gather the proper documentation and file the return(s) by the deadline they provide, call them right away. Explain that you are aware of the delinquency and you are doing your best to resolve it. Often they will give you a few extra weeks if you are honestly trying to resolve the situation. If you do nothing at all, the IRS can file a return on your behalf and assess a Read more