I hope you either have used or will use your tax stimulus payment to stimulate your own path to financial independence with an investment in your economic future.

But here’s something you should be aware of: Apparently the IRS has mistakenly issued duplicate tax stimulus payments to some taxpayers. If you get paid twice, don’t just cash the check and hope no one will notice. Instead, return the check to the IRS.

For more, read “Stimulating confusion: As millions of taxpayers await checks, others find themselves with two.”

Posted 05:52 PM | Permalink | Comments (0)

Tax Issues:

Preparing for an IRS Audit

The IRS has questions about your tax return—what do you do now?

By Jacquelyn Lynn

Last year, nearly 1.4 million individual tax returns were audited by the Internal Revenue Service (IRS), an increase of 7 percent over 2006. Audits of businesses in general increased almost 14 percent in 2007, although audits of S Corporations were up 26 percent and audits of partnerships rose almost 25 percent. The IRS calls this “increased enforcement,” and a key driver behind it is the government’s goal to close the tax gap, which is the difference between the amount of tax the agency determines should have been paid and the amount of tax actually collected.

Continue reading "Preparing for an IRS Audit" »

Posted 10:10 AM | Permalink | Comments (0)

WASHINGTON — March 13, 2008 – The Internal Revenue Service today issued its 2008 list of the 12 most egregious tax schemes and scams, highlighted by Internet phishing scams and several frivolous tax arguments.

Topping this year’s list of scams is phishing, which encompasses numerous Internet-based ploys to steal financial information from taxpayers. New to the “Dirty Dozen” this year is a scheme, which IRS auditors discovered, that relates to unreasonable and/or excessive fuel tax credit claims.

“Taxpayers should be wary of scams and promises to avoid paying taxes that seem too good to be true,” Acting IRS Commissioner Linda Stiff said. “There is no secret formula that can eliminate a person’s tax obligations. People should be wary of anyone peddling any of these scams.”

Continue reading "Phishing Scams, Frivolous Arguments Top the IRS' 2008 “Dirty Dozen” Tax Scams" »

Posted 08:57 PM | Permalink | Comments (0)

In their latest newsletter, here’s what Anderson Business Advisors had to say about the new tax laws:

IRS Will Have to Reprogram Computers to Account for the New Laws

After much debate and haggling, Congress passed a series of bills to create an AMT patch, to give debt forgiveness relief for beleaguered homeowners who endured foreclosures, to continue the mortgage insurance deduction and to give widowed spouses more time to sell their homes under the joint-filers' $500,000 gain exclusion.

The result of the tax law changes: the IRS will be scrambling to reprogram its computers to take into account all of the changes as the tax filing season gets underway. Estimates of 10 weeks have been given, so early filers may be facing a wait.

Posted 08:24 AM | Permalink | Comments (0)

Tax Actions to Take Now

What to do before the year ends to prepare for your 2007 tax return

By Jacquelyn Lynn

The one sure thing about taxes is change, and some significant legislative changes made over the past year could affect your 2007 tax bill. Because few tax strategies can be applied retroactively, it’s a good idea to be aware of this year’s changes now so you can consult with your tax advisor and take the most appropriate action for your circumstances while you still have time. Brian M. Lewis, CPA, a certified public accountant in Maitland, Florida, says primary issues you should be aware of include:

Continue reading "Tax Actions to Take Now" »

Posted 07:48 AM | Permalink | Comments (1)

Should men be more concerned with asset protection than women?

Absolutely not!

While the economic playing field as it relates to men and women is still far from level, things are changing. Women are gaining in their degree of financial literacy and independence. With those gains comes the need to protect their hard-earned assets.

As women continue to increase their share of wealth and assets, their need for asset protection grows. When it comes to financial security, people don’t always “play nice” and they often don’t play fair.

Every person, regardless of their situation, needs a carefully crafted, tested asset protection plan. Gender simply does not enter into the asset protection equation.

Jackie

Posted 07:34 AM | Permalink | Comments (0)

The Internal Revenue Services (IRS) has introduced a weekly news service, e-News for Small Business, that will contain timely, useful tax information for businesses and the self-employed. It’s free and scheduled for weekly distribution on Wednesdays. To subscribe, go to http://www.irs.gov/businesses/small/content/0,,id=154826,00.html.

Jackie

Posted 12:28 PM | Permalink | Comments (0)

If you buy a property with less than 20 percent down, many lenders require that you also purchase private mortgage insurance (PMI). Do not confuse this with mortgage life insurance (click to see my earlier post on that topic), which you should think carefully about buying.

PMI is the promise of a private insurer to repay your lender if you default on the loan. It’s a contract between your lender and the insurance company for which you pay the premiums. And the monthly PMI premiums can make a significant difference in the amount of your total mortgage payment.

Depending on the specific terms of the PMI contract, if you default on the loan, the lender can collect 20-25 percent of the total outstanding loan from the PMI insurer and then foreclosure on the property. Or the PMI insurer can pay off the entire loan and gain title to your property. Either way, you and your family are not protected—the lender is the entity that is protected with PMI.

Most lenders that require PMI also have provisions in their contracts for when the coverage can be dropped—typically after the loan is a certain age or the loan-to-value ratio reaches a certain point.

If you are required to buy PMI coverage, understand that this will not protect you from the consequences of defaulting on your loan or pay off your loan in the event of your death or disability. Read the contract carefully and make a note to follow up and get the insurance canceled when your lender allows.

Jackie

Posted 04:46 PM | Permalink | Comments (0)

Today is the deadline for filing your personal income tax return (unless you’re in one of the areas that was granted an extra two days due to bad weather). Are you getting a refund? If so, you may want to consider adjusting your withholding.

Cash windfalls are always nice, but large tax refunds are costing you money. Consider that every $1,200 you receive as a tax refund is $100 a month that you could have been getting and using—or even just saving in an interest-bearing account. Instead, the government was able to use your money absolutely interest-free for a year. If you want to loan the government money, consider savings bonds because at least that way you'll be getting interest.

A qualified tax advisor can help you plan your withholding (and your estimated tax payments on income not subject to withholding) so that your tax refund (or payment) is nominal.

Jackie

Posted 01:04 PM | Permalink | Comments (0)

This really isn’t directly related to real estate investing, but it’s a demonstration of how our income tax system is so pervasive and how we must consider the tax consequences of virtually everything we do, even when it comes to giving gifts.

Click here to read the news release from the IRS titled “IRS, Hollywood Foreign Press Association Reach Agreement On Gift Baskets.”

Then click here to learn about a solution to the problem, which is the FairTax.

Jackie

Posted 04:16 PM | Permalink | Comments (0)

I had my before-the-end-of-the-year tax consultation with my accountant the other day. One of the issues he wanted to be sure I knew about was that after Aug. 6, 2006, all charitable contributions must be documented to be deducted on your federal tax return.

This means that you won’t be able to deduct the cash you drop into the collection plate, the Salvation Army kettle, a firefighter’s boot, or any other place you might make an impulse contribution after Aug. 6.

Acceptable documentation includes a receipt from the charity, a canceled check, or a credit card statement showing the contribution.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 08:58 AM | Permalink | Comments (0)

Recent figures released by the U.S. Census Bureau estimate that the American household makeup includes some 5.2 million couples that are unmarried opposite-sex partners, 413,000 that are male couples, and 363,000 female couples.

Substantial percentages of these couples are buying homes together, investing in real estate together, and even owning businesses together. Regardless of your feelings on this issue, the fact is that a romantic non-married relationship does not benefit from the same laws and regulations that protect married couples.

Before you make a substantial purchase or investment with a partner to whom you are not married, consider what will happen to that asset if the relationship ends or if one of you dies or becomes incapacitated. Once you thought it through and decided what you want, write it down.

Continue reading "Asset protection for unmarried couples who own property or businesses together" »

Posted 08:59 AM | Permalink | Comments (2)

Our goal at Wealth Intelligence Academy is to give you the training and tools you need to build wealth, achieve financial freedom, and keep what you’ve earned. That last point is known as asset protection, and we believe having a solid asset protection in place before you need it is critical. That’s why we offer advanced training taught by qualified attorneys on asset protection and tax strategies.

What’s important is that you learn to recognize effective, legal, and ethical asset protection strategies and know how to differentiate them from scams. Here are some scams you should be aware of:

Abusive Trusts. These shams go by a variety of names – Pure Trusts, Patriot Trusts, Contract Trusts, Freedom Trusts, and more – and the scammers claim they are based at least in part on some bizarre constitutional interpretations which have never held up in court. One asset protection expert called these “Con Trusts” and another said that “Pure Trusts are pure fraud.”

Transfer your assets to a spouse or family member. No matter how much you trust this person, you’re giving him or her total control of your assets—not a great idea. And if you do it when you know you’re facing a problem, it will likely be considered a fraudulent conveyance.

Fake loans. Yes, they’re easy and cheap – and ineffective and silly. A judge will quickly see what you’re trying to do, so don’t bother.

Offshore accounts. This is a tired, worn out approach that doesn’t work. The IRS will find out about any money you’ve stashed offshore and they know all the techniques you might try to get your hands on your cash.

Remember that old cliché: if it sounds too good to be true, it probably is. If you try to cheat the U.S. government, you’ll probably get caught and go to jail.

Get your asset protection advice from a competent attorney that you’ve checked out. Then get your CPA involved. Yes, you’ll have to pay some professional fees, but it’s worth it. The easy and cheap solutions are generally ineffective and almost always illegal.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 01:15 PM | Permalink | Comments (0)

A fundamental asset protection strategy is to keep your assets that might generate liability separate from each other. The challenge with that is the expense and hassle of setting up separate ownership entities. For example, if you decide that the best ownership entity for your situation is an LLC and you have 20 income-producing properties, you could conceivably need 20 LLCs.

Some states have passed legislation creating a Series LLC which allows multiple units to be created under one LLC umbrella. Each of those units is separate, with its own assets, purpose, managers and members.

This sounds like a great idea for real estate investors but there are a couple of issues that require caution. First, the Series LLC is new and there is no case law to back up the statutes. We know what the legislation says, but we don’t know how the courts will interpret it. Second, the Series LLC has been adopted by only a few states so far, and we don’t know if a non-Series LLC state would honor this entity in the case of a dispute with parties in multiple states. As more states pass Series LLC legislation, that will become less of an issue.

Your best strategy right now is to talk to your attorney to find out if a Series LLC should be part of your asset protection plan. Or contact Anderson Business Advisors, PLLC.

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 05:55 PM | Permalink | Comments (0)

The recently passed Pension Protection Act of 2006 requires individuals and companies making non-cash contributions (such as real estate) to charitable organizations to attach a valuation report performed by an appraiser to an estate or gift tax return. The law also provides for new sanctions (including penalties) for appraisers for valuation misstatements in tax matters, giving the IRS new ammunition to discipline appraisers and taxpayers who do not provide support valuation opinions when making non-cash contributions to charities.

Essentially, this means that it will be easier for the IRS to identify taxpayers who try to fraudulently inflate the value of a contribution to reduce their tax liability.

We support the concept of making cash and non-cash donations to charities both to support the mission of the receiving organization and as part of your tax strategy. But the method by which you make the contribution and calculate the value should be both legal and ethical.

For more information on this issue, check out the IRS web site at: http://www.irs.gov/charities/contributors/index.html
To find a CPA/Accredited Business Valuation professional, visit:
http://www.aicpa.org/credentialsrefweb/ABVCredentialSearchPage.aspx

Jackie
Chief Blogger
Wealth Intelligence Academy

Posted 10:20 AM | Permalink | Comments (0)

Commercial property owners may qualify for a tax deduction for making their buildings energy efficient. The Internal Revenue Service has established a process to certify the required energy savings in order to claim the deduction.

The commercial building deduction, which was enacted in the Energy Policy Act of 2005, allows taxpayers to deduct the cost of energy-efficient property installed in commercial buildings.

The amount deductible may be as much as $1.80 per square foot of building floor area for buildings that achieve a 50-percent energy savings target. Buildings below the 50-percent threshold may, nevertheless, qualify for a deduction of up to 60 cents per square foot of building floor area if they meet a 16⅔-percent energy savings target.

To claim the deduction, the taxpayer must obtain certification that the required energy savings will be achieved. The Department of Energy will create and maintain a public list of software that must be used to calculate energy savings for purposes of providing the certification.

For more information, see notice 2006-52 at www.irs.gov.

Posted 12:58 PM | Permalink | Comments (0) | TrackBacks (1)