taxes Tax Information: กุมภาพันธ์ 2009

วันพุธที่ 4 กุมภาพันธ์ พ.ศ. 2552

Need an Offshore Sales Office in a Tax Free Environment?

The 100 year old investment-banking firm of Warburg, Dillon Read (on Park Ave. N.Y.) (now UBS Warburg) has offices in 39 foreign countries - including the Bahamas, the tiny Cayman Islands, Hong Kong and the Channel Islands. Makes you wonder why, doesn't it?
 Non-resident foreign companies, trusts, banks and individuals can trade stocks, bonds, commodity contracts and options 100% free from U.S. capital gains taxes.
Under the U.S. Tax Code, only when a foreign company, foreign trust or nonresident alien individual takes up permanent residence within the United States will he be subject to U.S. capital gains taxes in the same way as domestic taxpayers. For a corporation permanent residence would be a U.S. office or warehouse. Capital gains realized by foreign corporations and other nonresidents "not engaged in a trade or business within the United States" are exempted from tax under IRC Section 871 and IRC Section 881 & IRC Section 897(c)(3). Moreover, U.S. Treasury Regulations Section 864-2(C)(1) & (2) provides an exception for what embodies being "engaged in a trade or business within the United States". Under U.S. regulations, a nonresident's Stock Market transactions carried-out through a U.S. stock broker, independent agent, or an employee are not considered to cause the nonresident to be "engaging in a trade or business within the United States".
 Publicly traded stock market gains (from NYSE, NASDAQ or AMEX listed stocks and bonds) accruing to an offshore company are free of US capital gains taxes by the Internal Revenue Tax Code's statutes, but "US Shareholders" can have a tax liability (indirectly) if the offshore company is a "Controlled Foreign Corporation (CFC) (i.e., "more than 50% of voting and non-voting stock is owned by US SHAREHOLDERS). See sections 951 thru 958 of the IRC. See especially Code-Section 951(b) for the definition of US SHAREHOLDERS.
American taxpayers that use tax havens are taking more risks (generally) than a foreign non-resident alien (not a US citizen). Whether an American citizen taxpayer will have a tax liability on the offshore company profits depends on a lot of things - including what kind of income is produced by the company (i.e., Subpart F or non-Subpart F) and how many shares in the company you own, and whether the offshore company is a CFC - as defined in the Internal Revenue Code in Sections 957 and section 958.

 More on the No-tax haven of Anguilla. Click onto the link below for the details <A target="_new" href="http://www.geocities.com/taxhavens123/caribbeantaxhavens.html">http://www.geocities.com/taxhavens123/caribbeantaxhavens.html </A>
 A Tribute in Honor of: Bank Confidential Ordinances in the Caribbean
<A target="_new" href="http://www.geocities.com/taxhavens123/bank_confidentiality.html">http://www.geocities.com/taxhavens123/bank_confidentiality.html </A>

The Old Monied Dupont Nemours and Roosevelt Families Buy a Tax Haven
Want to know why and how the old monied Dupont Nemours and Roosevelt families were able to buy 4,000 acres of waterfront property on the island of Provindentcials in the tax free, crown colony (or "Overseas Territory") of the Turk and Caicos Islands for 1 cent an acre? <IMG src="http://www.bahamasbahamas.com/images/gift.gif">
This 4,000 acre sale (now a marina and resort town - with an airport for jumbo jets (the $50,000,000 airport was donated by the UK government) went down in the 1970's - not the 1870's!?!?
Source: A Turks & Caicos Government 3 full page advertisement in Investor's Daily (1985).
Was this the most profitable real estate investment of the 20th century? A quarter acre lot in the gated community of Sandyport here in Nassau, Bahamas sells for approximately $260,000 today. Half acre canal lots in Lyford Cay sell for about one million dollars.
Do the math. On an initial investment of just $40, the 4,000 acre property might be worth almost 4 BILLION dollars today.

 YOU BE THE JUDGE.... Are the use of the world's tax havens a blessing or a detriment? Before you answer, see some of the IRS's loopholes from our "Tax Code" - discovered for your viewing below, and buried inside the tax law for the taxpayers! There's a very important loophole for the non-resident alien you should not overlook! 
Tom has lived offshore in the Bahamas for over 10 years. When I'm not working on my newsletter, or with a client, I'm out swimming, diving or <A target="_new" href="http://www.bahamasbahamas.com/images/gallery.html">sport fishing</A> in the sunny- tax-free Bahamas.

Call me at 242-327-7359 with your questions. - 9AM to 5PM - New York time zone is best. Tom Azzara New Providence Estate Planners, Ltd. (Lawyers and Consultants) 54 Sandyport Drive P.O. Box CB 11552 Nassau, Bahamas Fax/phone: (242) 327-7359 <A class=link1 href="mailto:taxman@batelnet.bs">email: taxman@batelnet.bs</A>

Gambling Income and Expenses - Tax Requirements

Hit a big one? With more and more gambling establishments, keep in mind the IRS requires people to report all gambling winnings as income on their tax return.

Gambling income includes, but is not limited to, winnings from lotteries, raffles, horse and dog races and casinos. Unfortunately, gambling income also includes the fair market value of prizes such as cars, houses, trips or other non-cash prizes.

Generally, if you receive $600 ($1,200 from bingo and slot machines and $1,500 from keno) or more in gambling winnings and your winnings are at least 300 times the amount of the wager, the payer is required to issue you a Form W-2G. If you have won more than $5,000, the payer may be required to withhold 25 percent of the proceeds for Federal income tax. However, if you did not provide your Social Security number to the payer, the amount withheld will be 28 percent.

The full amount of your gambling winnings for the year must be reported on line 21, Form 1040. If you itemize deductions, you can deduct your gambling losses for the year on line 27, Schedule A (Form 1040). You cannot deduct gambling losses that are more than your winnings.

It is important to keep an accurate diary or similar record of your gambling winnings and losses. To deduct your losses, you must be able to provide receipts, tickets, statements or other records that show the amount of both your winnings and losses.

Face it, the IRS gets you coming and going. Well, I'm off to play poker.

Richard Chapo is CEO of <a target="_new" href="http://www.businesstaxrecovery.com">http://www.businesstaxrecovery.com</a> - Obtaining tax refunds for small businesses by finding overlooked tax deductions and credits through a free tax return review.

Tax Trap #4 -- The Quagmire of Depreciation

If you are a Small Business Owner or Self-Employed Person, there's one especially lucrative tax break that not only puts money in your pocket, it also makes the filing of your business tax return much simpler.

What am I talking about? It's called the Section 179 deduction, and if there's one tax break you need to understand, this is it. Here's why:

The Section 179 deduction enables the Small Business Owner to "expense" (i.e. deduct in the current year) up to $102,000 of the cost of most business equipment, rather than use those stingy and complicated depreciation rules that require you to write-off the cost over five or more years.

What's so great about that?

Think about it like this: I've got a dollar and I'd like to give it to you. You have two choices -- I give it to you now, or I give it to you 5 years from now.

Which do you prefer?

Obviously, you'd rather have it now, right?

And why is that?

Because of what you learned way back in Finance 101: something your banker calls "the time value of money."

I'll spare you a boring textbook definition. Instead, let's just assume we agree on this simple point: Is a dollar worth more today or 5 years from today?

It's worth more today.

And that's why the Section 179 deduction is so valuable.

Huh?

Let's use an example to bring all this financial theory into reality.

You buy $5,000 worth of office equipment in 2004. Under normal depreciation rules, you wouldn't get to take a deduction for $5,000 in 2004. Instead, you'd write off the $5,000 over 6 years -- part in 2004, part in 2005, etc.

If you're in the 35% tax bracket, you get your $1,750 in tax savings over 6 years. Yawn. That's a long time!

You'd get your deduction, and the resulting tax savings, but you'd have to wait 6 years to realize all the benefits.

Section 179 says that if you meet certain requirements, you can deduct the full $5,000 in 2004. You reduce your taxes by $1,750 in Year 2004.

So let me repeat my rhetorical question: Uncle Sam has $1,750 he'd like to give you. When do you want it? All at once, or spread out over 6 years?

That's the beauty of Section 179.

But you have to meet certain requirements to benefit from Section 179. One requirement concerns the total amount of equipment you can deduct rather than depreciate. In 2002, the amount was $24,000. And for 2003, the amount was originally set at $25,000.

Then Congress and the President passed a new tax bill in late May 2003 that raised that amount to a whopping $100,000. And since that $100,000 gets adjusted for inflation, in 2004 the maximum Section 179 deduction is now $102,000.

Never liked depreciation? Well, you can pretty much kiss it good-bye now. If your business buys more than $102,000 of equipment in a single year, it ain't so "small" any more! So this new law should cover all small businesses. Enjoy!

One final note: A few other requirements must be met to claim the Section 179 deduction. Here's a brief, but not comprehensive, overview:

1. Most personal property used in a trade or business can be deducted via Section 179. Real property cannot. Typical examples of personal property include: office equipment such as computers, monitors, printers and scanners; office furniture; machinery and tools. Real property means buildings and their improvements.

2. The $100,000 amount (adjusted for inflation) can be used through 2007. In 2008, unless new legislation is passed, the amount goes back down to $25,000.

3. There are special rules regarding the application of Section 179 to the purchase of business vehicles. (Where there are tax breaks, there are always expections!) For example, the special "SUV rule" that allowed 6,000 LB vehicles to be fully deducted (up to the $100,000 amount) was recently changed to $25,000, effective October 22, 2004.

4. Your total Section 179 deduction is limited to the business' annual profit. In other words, you cannot use the Section 179 to create or increase a loss.

This is known as the "taxable income limitation." For "C" Corporations, this limitation is very cut and dried. But if your business is an "S" Corporation, Partnership, LLC, or Sole Proprietorship, it may not be as limiting as it seems. For these non-"C" Corp businesses, the Section 179 deduction can be used to offset both business and non-business income.

And if you're married filing jointly, the Section 179 deduction can offset your spouse's income, including W-2 income.

Example: You start a new business in 2004 that ends up with a loss for the year of $5,000 (before taking the Section 179 deduction). Your spouse has W-2 income of $60,000. Even though your business is unprofitable, you can still take the full Section 179 deduction of $5,000 (again, assuming your business is an entity other than a "C" Corporation).

Be sure to consult with your tax professional to get the scoop on all the Section 179 rules.

Wayne M. Davies is author of 3 tax-slashing eBooks for the self-employed, available separately or as a 3-volume set, "The Ultimate Small Business Tax Reduction Guide". <a target="_new" href="http://www.YouSaveOnTaxes.com/ultimate-guide">http://www.YouSaveOnTaxes.com/ultimate-guide</a>

To get your free copy of Wayne's 25-page report, "How To Instantly Double Your Deductions" visit: <a target="_new" href="http://www.YouSaveOnTaxes.com">http://www.YouSaveOnTaxes.com</a>

วันจันทร์ที่ 2 กุมภาพันธ์ พ.ศ. 2552

Corporations Failing To Claim AMT Exemption Overpay Taxes By $11,000

Does your incorporated business pay alternative minimum tax ["AMT]? If so, there is a 93% chance you have been overpaying your taxes by an average of $11,000 a year according to the Treasury Inspector General.

The Office of the Treasury Inspector General for Tax Administration was created in 1999 to oversee the IRS. One of the duties of the Treasury Inspector General is to study and report the efficiency of the tax payment system, particularly the accuracy of tax collection efforts. Many of the studies conducted by the office reveal starting results, particularly when it comes to businesses overpaying their taxes.

As part of this oversight, the Treasury Inspector General is reporting that many small business corporations are incorrectly paying AMT. The AMT was enacted in the late 1990s, but proved to be a huge burden on small businesses. The tax was confusing and the paperwork was incredibly complex. An amendment was subsequently added to give small business corporations relief from the AMT. Section 55(e) of the Internal Revenue Code now contains language exempting small business corporations from paying the AMT.

Small business corporations can claim an exemption from the AMT if gross revenues average $5 million or less for the initial three years of business. Thereafter, the business can continue to claim the exemption as long as revenues average $7.5 million or less of each subsequent three year period.

According to the Inspector General, companies that fail to claim an exemption to the AMT are overpaying taxes by an average of $11,638 each year. 93% of small business corporations qualify for the exemption. Since the IRS has no duty to notify taxpayers of overpayments, many small business corporations have no idea they are overpaying taxes and are due refunds.

All taxpayers have the right to file amended tax returns for the past three calendar years. Contact us now to find out if you failed to claim the exemption to the AMT and are due a refund for 2001, 2002 and 2003. If you failed to claim the AMT exemption, you may be due a refund totaling over $33,000.

The Internet Tax Man Cometh

Q: I was contacted by the city tax collector to say that my business is scheduled to be audited to see if I owe sales tax on items purchased on the Internet. Can they really make me pay sales tax on internet purchase? I thought you could buy things online tax free? -- Charlie B.

A: Sorry, but your local municipality is well within its rights to audit your business to identify items purchased online. The city can also demand payment of sales tax on those items if sales tax was not previously paid. Don't be surprised if the auditor asks for access to your books and to see purchase receipts and invoices for at least the past year.

One of my companies recently underwent such an audit and it really was not as painful as you might think. Being a software company, the majority of our online purchases were for computer equipment, technical manuals, and software development tools. Since we purchase computers from a large supplier who collects sales tax at the point of sale (ditto for the development tools), the only sales tax we ended up owing was for an inordinate number of technical manuals and books purchased at Amazon.com.

If your small business is like most, the majority of your large purchases are made locally from companies that already collect sales tax. Furniture and computer equipment are typically the largest ticket items a small business buys, so unless you bought your desks and computers off of Ebay (which is highly possible these days) you should be OK.

Internet sales taxation has been a topic of contention even before Amazon sold its first book and Priceline booked its first flight. One of the more controversial points is that no one, including our own government, seems to have a clue how to implement a fair and logical Internet taxation process. With over 7,500 different local, county and state taxation systems in the United States, you can understand the controversy.

In 1998, Congress did what it usually does when faced with a potentially explosive issue like Internet tax collection -- it decided to put off making a decision. Congress enacted a three-year moratorium on the collection of taxes to give an appointed advisory board time to come up with an acceptable solution. That moratorium ended in 2002 and opened the door for municipalities to begin collecting sales tax on their own.

Here in Alabama the state sales tax collection department has aired radio spots asking Alabamians to step up to - and toss dollars into - the proverbial collection plate. The commercial kindly suggests that if I have purchased anything from an online retailer, I am honor-bound to proclaim such purchases and submit the appropriate sales tax to the collection department right away. They thank me in advance for my cooperation.

So, Charlie, when the auditor shows up at your door the best thing you can do is smile politely and be totally forthcoming. The sales tax that you pay is a small price for the convenience of shopping online.

Or at least that's what you should tell yourself as you write the auditor a check.

Small Business Q&A is written by veteran entrepreneur and syndicated columnist, Tim Knox. Tim's latest books include "Small Business Success Secrets" and "The 30 Day Blueprint For Success!" Related Links: <a href="http://www.smallbusinessqa.com" target="_blank">http://www.smallbusinessqa.com</a> <a href="http://www.dropshipwholesale.net" target="_blank">http://www.dropshipwholesale.net</a>

Small Business Tax Issues for Self-Employed Individuals

The United States is a nation of entrepreneurs. There are literally tens of millions of self-employed individuals that enjoy pursuing their dream business. Of course, few of you enjoy the paperwork and confusing tax issues that arise from owning your own business.

Many self-employed individuals are considered "sole proprietors" or "independent contractors" for legal and tax purposes. This is true regardless of whether you are turning a hobby into a business, selling an indispensable widget or providing services to others. As a self-employed person, you report business revenue results on your personal income tax return. Following are a few guidelines and issues you should keep in mind if you are pursuing your entrepreneurial spirit.

Schedule C - Form 1040.

As a self-employed person, you are required to report your business profits or losses on Schedule C of Form 1040. The income earned through your business is taxable to you as an individual. This is true even if you do not withdraw any money from the business. While you are required to report your gross revenues, you are also allowed to deduct business expenses incurred in generating that revenue. If your business efforts result in a loss, the loss will generally be deductible against your total income from all sources, subject to special rules relating to whether your business is considered a hobby and whether you have anything "at risk."

Home-Based Business

Many self-employed individuals work out of their home and are entitled to deduct a percentage of certain home costs that are applicable to the portion of the home that is used as your office. This can include payments for utilities, telephone services, etc. You may also be eligible to claim these deductions if you perform administrative tasks from your home or store inventory there. If you work out of your home and have an additional office at another location, you also may be able to convert your commuting expenses between the two locations into deductible transportation expenses. Since most self-employed individuals find themselves working more than the traditional 40-hour week, there are a significant number of advantageous deductions that can be claimed. Unfortunately, we find that most self-employed individuals miss these deductions because they are unaware of them.

Self-Employment Taxes - The Bad News

A negative aspect to being self-employed is the self-employment tax. All salaried individuals are subject to automatic deductions from their paycheck including FICA, etc. In that many self-employed individuals often do not run a formal payroll for themselves, the government must recapture these taxes through the self-employment tax. Simply put, you are required to pay self-employment taxes at a rate of 15.3% on your net earnings up to $87,900 for 2004. For net income in excess of $87,900, you will pay further taxes at a rate of 2.9% on the excess.

In an interesting twist that reveals the confusing nature of the tax code, you are allowed a partial deduction for the self-employment tax. Simply put, you are allowed to deduct one-half of your self-employment taxes from your gross income. For example, if you pay $10,000 in self-employment taxes, you are allowed a deduction on your 1040 return of $5,000. Many self-employed individuals miss this deduction and pay more money to taxes than needed.

Health Insurance Deduction

This used to be a very messy area for self-employed individuals, to wit, you received little tax relief when it came to your health insurance bill. This was a particular burden for small business owners when considering the astronomical cost of health insurance. All of this has changed and you now may deduct 100% of your health insurance costs as a business expense.

No Withholding Tax

Unlike a salaried employee sitting in a cubicle, you are not subject to withholding tax on your paycheck. While this sounds great, you are required to make quarterly estimated tax payments. If you fail to make the payments, you are subject to a penalty, but the penalty is not the biggest concern.

A potential and dangerous pitfall of being self-employed is failing to pay quarterly estimated taxes and then getting caught at the end of the year without sufficient funds to pay your taxes. The IRS is not going to be happy if you fail to pay your taxes and you will suffer the consequences in the form of penalties and interest. Making sure you pay quarterly estimated taxes helps avoid this situation and it is highly recommended that you follow this course of action.

Record Keeping

You must maintain complete records of all business income and expenses. Simply put, document everything. Create a filing system for each month and file every receipt, etc. All business travel expenses must be documented, including auto mileage you incur when performing business tasks. Office supply stores sell business mileage books that you can keep in your car and use whenever you travel. If you have any doubt about documenting something, just do it!

In Closing

As a self-employed individual, your focus and time is spent on making your business successful. Your focus is not on the complexities of the tax code and how to limit the amount of taxes you owe. If any of the information in this article is new to you, then it is highly likely you have paid far more in taxes than required.

I Havent Filed a Tax Return with IRS in Years, What Do I Do?

In elementary school, kids come up with creative excuses why they did not bring in their homework. "My dog ate it" or "It was stolen by invisible space aliens" might be given as a reason why something was not turned in on time. Don't try those excuses with the IRS! Don't blame divorce, business failures, or family troubles either, because except under extreme circumstances, they won't register with the taxman.

If you have unfiled tax returns, you need to file at least the last 6-7 years. Although under law IRS could make you go back and file that return from the late 1970's when you were a disco diva or urban cowboy, the good news is that as a matter of policy they don't! In most cases, filing the last 6-7 years will be OK and IRS will consider you in compliance. So don't procrastinate any further, file the returns if you made over the standard deduction and personal exemption amounts during those years or were self-employed.

People delay filing returns for 3 main reasons:

1. They are afraid or embarrassed;

2. They have lost the records or don't know where to go to get the returns done; or

3. Some crackpot advised them income taxes are bogus and that they don't have to file.

Don't be afraid of filing, be afraid of what will happen if you don't file. IRS could file for you and you might owe more than if you would have done it yourself or IRS could send somebody out looking for you. It is not a crime to owe IRS money, it can be a crime under some circumstances for not filing a tax return or a false return.

If you lost your records relax, in most case you can get all your income data from IRS so that you can prepare the tax returns. If you had deductions, you may have to dig those up and organize your records.

IRS is a legitimate government agency and they can and do enforce the laws on filing a Federal Tax Return. It sounds good when somebody says IRS is a fraud, but it is a lie. We all have to pay taxes.

If you havent't filed in years you can call the IRS at 1-800-829-1040 and after lots of time on hold and maybe a few transfers, you will eventually get somebody who can help you get your W2 info mailed to you. Your local library may have old tax forms and tax books to help you do the returns. You can do it yourself, but I suggest getting a professional to help you.

Don't go to some guy or gal advertising on TV with a big company. Go to a professional person or small firm where you can talk one on one with a CPA, Enrolled Agent, or Tax Attorney. It doesn't have to be a local person, you could hire someone across the country. With email, fax, etc. you can avoid some embarassment of going to a local tax pro if you live in a small town by hiring someone far away. But don't hire somebody without checking them out. Read any contract they send you. Don't part with your hard earned money unless you are sure of their qualifications.

Members of the following organizations must adhere to high ethical standards and might be a good choice for you: National Society of Accountants (NSA); National Association of Enrolled Agents (NAEA); or the American Insitute of Certified Public Accountants (AICPA). You might also look for professionals holding the Accredited Tax Preparer (ATP) or Accredited Tax Advisor (ATA) designation.

Don't let your cousin Jimmy do your returns or that nice neighbor who says he is an expert. I have seen more screwed up returns done by friends and relatives than I care to remember.

Get peace of mind, file those returns. You may owe money but you may have a refund waiting. Guess what, if you file the return more than three years after the due date; you lose the refund!

Here are some sites that can give you more info:

www.irs.gov
www.naea.org
www.nsacct.org
www.exirsman.com

James Robert Coleman, E.A., A.T.A.
Enrolled Agent & Accredited Tax Advisor
Member: National Association of Enrolled Agents
Former IRS Revenue Officer, GS-11
<a target="_new" href="http://www.exirsman.com">http://www.exirsman.com</a>

วันอาทิตย์ที่ 1 กุมภาพันธ์ พ.ศ. 2552

Tax Jokes and Quotes

Do you realize that some tax forms ask you to check a box if you are BLIND?

Quote: "Two years ago it was impossible to get through on the phone to the IRS. Now it's just hard to get through. That's progress." -Charles Rossotti, former IRS Commissioner

Disappointed that you never had time to write the great American novel? Don't fret, just go dig out your past tax returns.

Quote: "The Eiffel Tower is the Empire State Building after taxes."

Under the Freedom of Information Act, a man with a small business sent a request to the IRS asking if they had a file on him. The IRS wrote back, "There is now."

Quote: "It would be nice if we could all pay our taxes with a smile, but normally cash is required."

Q: Who audits IRS agents?

Quote: "Next to being shot at and missed, nothing is quite as satisfying as an income tax refund."

Q: How do you drive a CPA insane?

A: Fill out Form 1040EZ.

Quote: "The government deficit is the difference between the amount of money the government spends and the amount it has the nerve to collect."

Why is it that when the IRS loses a tax return, it is considered a mistake, but when you lose a receipt, it is considered tax evasion?

Quote: "The wages of sin are death, but by the time taxes are taken out, it's just sort of a tired feeling."

Q: How do you humble a person that flaunts their wealth?

A: Have them fill out a tax return.

Quote: "Even when you make a tax form out on the level, you don't know when it's through if you are a crook or a martyr."

Q: Why is a tax audit like a tornado?

A: There's a lot of screaming and you end up losing your house.

Quote: "When are we going to be allowed to list the government as a dependent?"

People often say death and taxes are the same, but this is wrong. Death is a taxable event, but taxes never die.

taxes Tax Information