Chris Christie And 2012 Taxes Panacea Or A Pandora’s Box
Posted on | January 27, 2012 | No Comments
The Governor of New Jersey, Chris Christie has 2012 Taxes in mind with his ten percent income tax for the people of his state. Christie is also proposing that his tax plan can be applied to the Nation. The 2012 election is in November, and he is setting his sights on the 2016 presidential elections.
Chris Christie has deemed himself an economic architect who has the blueprint ready to rebuild New Jersey’s sagging economic foundation. He is so confident in this strategy that he feels strongly that this plan can bolster this country’s economy and restore consumer confidence. His flat tax rate of ten percent is a stark contrast to the governors of New York, Illinois and California. In all three of these states they have raised taxes and they have been proactive in increasing the tax rates for the most affluent individuals. He has claimed that his economic strategy gives back to the lawmakers and taxpaying citizens, who have sacrificed to help New Jersey’s economy. His image as a fiscal conservative has been further established by substantially cutting state spending. While he has lowered taxes for the wealthiest in his constituency, he wants to reinstate an earned tax credit for those with the lowest incomes, a program he had cut in 2010. His sweeping tax cuts would increase the state’s high deficit.
Chris Christie has a dramatic tax plan, but the downside is who will pay for these cuts. Time will be the judge if a ten percent flat tax will work.
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Tags: California > Chris Christie > Economic > Illinois > New Jersey > tax > TurboTax > United State
There’s an App for That: Taxes from Your Phone
Posted on | January 25, 2012 | No Comments
We do pretty much everything from our phones these days, turns out, taxes are no different. Accountants and techies are combining forces as new ways develop for those who choose to file from their phone. From an easier way to track and report expenses to hand-held glossaries and customer service, exploring ways to file from your phone will change the way taxes get done.
Tracking Expenses
Deducting expenses is essential for businesses owners or the self-employed. Keeping track of those expenses however can be incredibly cumbersome. Travel, meals, supplies, and mileage really add up and the ability to immediately input related data and transfer that information to taxes can keep things clear and easy when the time comes to report.
- iXpenseIt offers password protected expense tracking which can be programmed and stored in customizable categories.
- ShoeBoxed integrates snap technology and expense reporting into one package. The app allows users to snap photos of receipts and upload them into an organizationally customizable online platform.
- TripCubby provides the ability to track and record mileage and other travel data. The data collected can be exported into Excel using email or automatically added into deduction categories in the app itself.
Estimates
Mobile devices are especially handy for retrieving pertinent information for those who need an estimated income tax return but lack the actual W-2. Tax Caster by Turbo Tax doesn’t require exact figures to calculate return estimates which enable users to fulfill tax-based qualifications or anticipate amounts of returns without having to retrieve the actual tax information this includes more in-depth tax issues such as deductions related to family size, properties, alimony, and vehicles.
Much like expense reporting for businesses, keeping track of personal donations and other charitable activities is essential. A group of accountants created the iDonatedIt app which generates an itemized list of donated items, values and the date and location at which they were dropped off. Additionally, the app supports snapped photos of the donations which can be uploaded via email.
Questions and Support
Taxes can get confusing, particularly for those with more tax materials than the basic W-2. H&R Block has created the Tax Answers app which allows for a chat-based Q&A with their representatives. The app also provides FAQ categories and checklists as well as a handy glossary.
- Internal Revenue Code (IRC) app by LawToGo.net is aimed at professionals or filers with complex returns and contains a searchable database of the various codes determined by the IRS.
- TaxMama is an app which generates a costume tax calendar to suit various filing needs for those with different tax forms which carry different deadlines.
- IRS2Go, produced by the IRS allows users to check the status of their filed tax return and refund while also providing information on pertinent updates.
- MyTaxRefund by Turbo Tax can also track tax refund status, determine whether the return was accepted or rejected by the IRS and produce the expected date of refund arrival.
Filing
Phones have turned actual filing into a snap. Particularly with SnapTax which fills out the 1040EZ form using a snapped photo of a W-2. The information is filled automatically and can be filed after review. However, SnapTax is currently available only for Californian 1040EZ filers.
Katei Cranford is a freelance writer and tech lover who insists on filing taxes properly and helping others do the same.
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Tags: internalrevenueservice > irs > IRS tax forms > SnapTax > tax > Tax refund > tax return > tax returns > TurboTax
A Candidate’s Offshore Tax Havens
Posted on | January 22, 2012 | No Comments
Stories of offshore tax havens belonging to Mitt Romney have been causing a stir in the news media. Several sources such as Reuters and the Washington Post have unearthed troublesome material in the candidate’s most recent tax returns. Reuters journalist Sam Youngman reports that Romney may have sheltered offshore bank accounts as a result of his business dealings with Bain Capital. Youngman’s published findings do imply this information, though his actual wording is somewhat vague.
Romney has amassed a large fortune due to investments in several dozen funds with ties to this private equity firm that he helped start over 15 years ago. A number of Bain funds have connections to offshore accounts. This firm also has a record of generating tax breaks for only the most wealthy Americans.
Evidence in tax returns could reveal that Bain and Romney have avoided paying 2012 taxes with these offshore account tactics. A detailed analysis of his securities filings show that the candidate has Bain funds stashed in accounts located in far-flung regions, such as Bermuda, the Cayman Islands, Hong Kong, and Ireland.
Much of this information is true and verifiable, though it does not solidly point to tax evasion or avoidance. This type of corporation is only responsible for tax payment in cases of repatriation. These factors are often considered a grey area in terms of this implied information in the media about Romney’s supposed offshore financial holdings. Some of these early reports also describe conflicting roles of the Cayman Islands as locations for some of these holdings
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Tags: Bain Capital > Bermuda > Cayman Islands > Hong Kong > Mitt Romney > Reuters > Romney > tax > Washington Post
Tips For Small Business Owners
Posted on | January 18, 2012 | No Comments
For many sole traders or small businesses it can be difficult to find the time to maintain all paperwork on a regular basis, meaning a large amount of admin is left until it is absolutely necessary to sort out.
If this sounds like you, then you will need to make some changes to the way you work because the Inland Revenue is set to investigate two million small businesses – slapping many with big fines if records have not been kept in order. Here are 5 tips to help your business in 2012…
1) Get organised, get in a routine and get sorted
Under the HM Revenue and Customs initiative ‘Business Records Checks’, small businesses and sole traders will be subject to inspection to ensure all paperwork and bookkeeping is up-to-date and correct. If they find that your business isn’t hitting their standards, you’ll be fined £3,000. And as the HMRC have been given a target of £600 million to hit over the next four years, you can be sure they won’t be taking a lenient approach when it comes to handing out fines.
Getting organised seems like an obvious first step, but if you’ve set your admin duties to one side for quite some time, you’ll have your work cut out! Admin is part of your business, so set some time aside either at the start or end of the week (or whenever your quiet period is) and focus on your paperwork and bookkeeping.
Consistency and routine are key to ensuring you stay on top of this task.
2) Keep all receipts
It is essential you keep all receipts so that you can back up business expenses. You could get 12 envelopes and write the name of each month on them and store your receipts according to when you purchased goods / paid bills. Alternatively, you could separate receipts according to source, for example ‘rent’, ‘tools and supplies’ ‘stationery’ ‘miscellaneous’.
This also applies to documentation for purchases you want to claim the VAT back on.
3) Bank and building society documentation
It’s easy to see a letter or statement from a bank or building society and think ‘I know what that is, I’ll open it later’ and before you know it, you have a stack of unopened letters to sort through. This is a habit you need to break – open the letter, check payment transactions are correct and file it away. It only takes a few minutes at the most and means you’ll save yourself a great deal of time and effort later on.
4) File your tax return on time
If you’ve kept paperwork up-to-date as outlined in the points above, you’ll find that filing your tax return will be much more straightforward to complete on time – helping you to avoid fines for being late.
5) Don’t throw anything away!
We’re not suggesting that you become a compulsive hoarder and never throw anything away; we simply mean that at the end of every tax year, you box away important financial documents like receipts, invoices and bank statements, and keep them safe in case you need them in the future. You should keep documentation of this sort for at least six years.
Baines and Ernst help people deal with debt through debt consolidation and debt management plans. They offer help and advice on a range of financial issues to people around the UK.
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Tags: Business > Business and Economy > business card > Entrepreneur > Finance > Inland Revenue > internalrevenueservice > Market > Small business > Taxation > United States > Website
Dealing with Social Security Uncertainty
Posted on | January 14, 2012 | No Comments
Recent reports published in Daily Finance suggest that the Social Security trust fund is going to begin its collapse around the year 2036. This means that you have about 24 years to adjust your planning and savings to compensate for this problem. This really is adequate time for most people to figure out how to make up the difference between what Social Security promises and what it will be able to deliver.
Tip #1 – Understand the Predictions
Before you panic you need to understand what the predictions about the Social Security trust fund are and how they will impact your retirement. First of all Social Security will still be paying out benefits after 2036. Chances are, however, that these benefits will be only about 70 to 80% of what is promised. If you are depending solely on Social Security as your retirement income then this is a bigger concern than if you were only depending upon it as a supplement to your other retirement income options.
Talk with Your Financial Advisor Now
The more time you have to make adjustments to your retirement planning the better your results will be. The best thing you can do right now is to meet with your financial planner or the advisor for your retirement plan. Talk about what you need to do to increase your final retirement fund balance so that it will cover what Social Security will not. When you talk with your financial advisor ask about your options and do not forget to tell him or her what your retirement goals are so they have a better idea about what strategies will work best for you.
Find New Sources of Retirement Income
For many people facing an uncertain financial future because of the problems associated with Social Security the idea of retirement is a fading dream. Many people will need to continue working well past retirement age to compensate for retirement fund scandals, financial hardships and other issues that have made saving for retirement problematic. If you enjoy work then finding a post-retirement position or business opportunity is not a bad thing, but an opportunity to have a second or third career.
There are many options that older adults have to make money during their retirement years. These options include acting as consultants to corporations, starting a new business and working part-time in a field that interests them. Finding post-retirement income will be a challenge, so it is important to start thinking of what you will do right now.
Citations:
J.R. Budnar, the author of this article, reports about about personal finances online.
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Tags: 401(k) > Business > Finance > Financial adviser > Mandatory retirement > Ponzi scheme > retirement > Social security > Social Security Trust Fund > TurboTax > United States
Top Tax Reduction Methods
Posted on | January 13, 2012 | No Comments
Borrowing Against Shares
This method of borrowing allows share holders to realize the value of their stock market positions as cash, without incurring capital gains tax. It works very simply; rather than selling their shares, the holder can get a cash loan for their equivalent value, using them as collateral. By buying ‘puts’ and ‘calls’ for the shares they can ensure that they can be bought or sold later at a set price, offering protection against any depreciation that may occur.
The holder then has the cash available to do with what they will. If they don’t repay it, the shares go to the bank, but this would occur some time down the line. In the mean time the money gained has been working for them since the original deal, dramatically lessening the impact of the tax bill when it comes.
Deferred Compensation
Many top earning executives when negotiating their contract will be offered shares, often worth much more than their actual salary, as an incentive to put their signature on the dotted line. Of course, owning shares of such high value, will lead to a high tax bill.
However, this eventuality can be side stepped by the executive in question choosing options instead of shares (options being the right to eventually buy the shares when they see fit.)
As gains from options aren’t taxed until the option is exercised (i.e. the executive actually buys the shares) the holder can see the capital at their disposal go up, without being duty bound to pay tax on the increase.
As well as using stock options to this end, some highly paid individuals have their pay put into a deferred compensation plan, where funds can grow without being taxed for decades before any payment is due.
Planned Losses
Taxes payable on income from the sale of shares can be offset by the losses from the sales of shares. By planning ahead a trader can realize the tax benefit of a loss and offset his gains, without actually offloading the shares he has in a losing position.
The IRS forbid traders to sell at a loss and re-buy the same shares within 30 days, however this can be worked around by buying another block of the losing shares, equal to the amount already held, 31 days in advance. Buying ‘puts’ and ‘calls’ will effectively freeze their value, then it’s a case of waiting the 31 days out and selling the original block of shares.
This way the loss occurs, and the trader gets the tax benefit of it, but he still has the same number of those losing shares, at the same value as before.
Borrowing Against Property
To avoid paying tax on the income generated by real estate, its owner can borrow against it in such a manner that they effectively sell the property, without paying capital-gains.
By entering into a partnership with a potential buyer, the owner of the property can contribute their real estate to the partnership, alongside the assets of the other partner. The partnership can then borrow a sum equal to the value of the property using it as collateral, which is then distributed to the seller.
Although the value of the property is now in the owner’s hands in cash form, technically there’s been no sale, so none of the taxes that would have otherwise been charged are applicable.
Joan Bret writes on various tax issues, from filing timely returns, to finding the best ISA rates.
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Tags: Capital gains tax > Internal Revenue Service > irs > Option (finance) > Real estate > Share (finance) > tax > TurboTax
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