Category: bussiness

September 20th, 2017 by Suzi Elton

The hardest thing in the world to understand is the income tax.”- Albert Einstein

Albert was right: The U.S. tax code is difficult. In 1913, it was 400 pages long. Since then it’s exploded to 73,954 pages of complex language designed to extract as much money as possible from your wallet.

Who reads all of that? No one. The code is so complex that U.S. tax preparation is one of the major growth industries… not just in America, but globally.

But while you must pay the tax man his due, there are some important escape hatches for Americans. It may be too late for 2014’s tax year, but there’s plenty of time to prepare for next year… if you start now.

The Golden Rule: Reduce Your Taxable Income

The fundamental element of any short-term tax strategy is to reduce your taxable income for the calendar year. There are three basic ways to do this.

1. Gifting

Property acquired by gift or inheritance isn’t included in the taxable gross income of the beneficiary. That makes gifting an ideal way for a family to save tax.

For 2015, you can make tax-free lifetime gifts and bequests of up to $5.43 million. (For gifts or bequests to U.S. citizen spouses, the lifetime limits don’t apply.) Due to the concept known as “portability,” a surviving spouse can use a deceased spouse’s unused gift/estate tax exclusion. You could allocate some of your estate to your heirs, perhaps by creating a tax-deferred offshore private insurance policy.

Bear in mind that the first $14,000 (or $28,000 per married couple) that you gift in 2015 is tax-fee, and doesn’t apply towards your lifetime limit.

Payments made on behalf of another person to an educational institution for tuition, or to a medical provider for medical costs (including insurance), are also excluded from the gift tax, and don’t affect your lifetime cap. You might pay the tuition of a friend’s child, or the medical expenses of an employee. You can also still contribute to Section 529 education savings plans up to the annual exclusion amount. Money in these accounts grows and can be withdrawn tax-free, provided it is used to pay for college and related expenses.

Keep in mind that if you make a gift of anything other than cash or marketable securities, you need to get a professional appraisal, especially if it’s a hard-to-value asset, such as real estate or a share in the family business.

2. Maxing out your retirement contributions

One of the best ways to reduce before-tax income is to max out your retirement contributions. Here’s a summary of the maximum contributions for 2015:

401(k) and 403(b) Plans: Max = $18,000. Persons 50 and older can contribute an additional $6,000, for a total of $24,000.

SIMPLE IRA: Max = $5,500. This jumps to $6,500 if you are age 50 or older. If you have an employer retirement plan, however, the deduction for IRA contributions is being phased out for modified adjusted gross incomes between $61,000 and $71,000 in 2015 (double that for couples). Unlike 401(k) contributions, which generally need to be made by the end of the year, IRA contributions can be made up until the tax filing deadline.

SEP-IRA: Max = 25% of compensation up to $53,000. If you’re self-employed and have a SEP-IRA plan, the maximum contribution has increased by $1,000. The amount is limited to the lesser of 25% of your income or $53,000.

Roth IRA Max = $5,500: You can make Roth IRA contributions until your income is between $116,000 and $131,000 in 2015 ($183,000 to $193,000 for couples). If you’re over age 50, there’s a $1,000 catch-up contribution.

3. Juggling money

An oft-overlooked way to reduce your taxable income is to shift earnings into the following year or next year’s expenses into the current year. This reduces your adjusted gross (i.e., taxable) income.

For example, if possible, defer some 2015 income until 2016. There are many items for which you may be able to control timing: consulting income, self-employment income, real estate sales, gain on stock sales, other property sales and retirement plan distributions. On the expense side, you can prepay 2016 state and local income taxes, take losses on stock sales (up to $3,000 in net losses) and prepay 2016 real estate taxes, anticipated mortgage interest, margin interest and charitable contributions.

So there you have the three steps to reduce your taxable income… plan now for tax savings this time next year.

Posted in bussiness, Credit Counseling, Debt Management

September 20th, 2017 by Suzi Elton

The United States Treasury Department is now actively working with more than 50 nations to share Americans’ personal financial data that will reveal who is tax compliant, including American expats living overseas. The effort is in support of new FATCA (Foreign Account Tax Compliance Act) laws that require foreign financial entities to report Americans’ account information to US authorities and to undertake mandatory withholding from them to assure compliance with American income tax laws.

The trade-off is that the United States will reciprocate with the data of partner countries’ own citizens with accounts in the States. The laws have been rolling out in varying levels since its enactment in 2010. The US has principal agreements with the 5 big sovereigns of Europe, including the United Kingdom, Germany, France, Spain and Italy, and has signed a “model agreement” with the United Kingdom.

The inception of, roll out and implementation of FATCA has been clever, if not masterful on the part of the US Treasury. The United States enacted FATCA and began by leaning, mostly, on foreign financial entities and mandating that they comply with certain new rules, including reporting of data on American clients and withholding of monies, to ensure Americans were compliant with US tax laws. Foreign financial interests, in turn, desperately sought relief from their own governments. The US mandates were burdensome and cost prohibitive for them to implement. The solution for financiers was for their own governments, many of whom already have the data the US wants to take on the sharing requirement that the US, using its global financial clout, is forcing on everyone.

50+ countries in all are clamoring to get on board. In part because of the controversial nature of FATCA itself. Foreign financial entities are pleading with their own governments to facilitate the newly required reporting that the US laws mandate. For many, it is impossible to continue doing business with American clients and are closing their accounts. Additionally, foreign banks and investment houses who do not comply face a 30% withholding on their own transactions that occur within the US, so there’s no way to opt-out.

The US Treasury expects to finalize signed data sharing agreements by the end of the year with countries that include Norway, the Netherlands, Mexico, Jersey, Ireland, Isle of Man, Guernsey, Finland, Denmark, Canada, Switzerland, Japan, Spain, Germany, Italy and France.

Treasury is actively negotiating with the following countries to finalize and enact data sharing agreements – Sweden, Singapore, Slovak Republic, New Zealand, Malta, Malaysia, Liechtenstein, Korea, Israel, Hungary, Estonia, Cyprus, Cayman Islands, Belgium, Australia and Argentina. Their goal is to conclude agreements with as many as possible by year’s end.

The list goes on – The US Treasury is reaching out to and actively attempting to engage the following countries to agree to data sharing as well – South Africa, Slovenia, Sint Maarten, Seychelles, Russia, Romania, Luxembourg, Lebanon, India, Gibraltar, Czech Republic, Chile, British Virgin islands, Brazil and Bermuda.

Assistant Secretary of the US Treasury, Mark Mazur, in a public statement said, “Global cooperation is critical to implementing FATCA in a way that is targeted and efficient. By working cooperatively with foreign governments and financial institutions, we are intensifying our ability to combat tax evasion while minimizing burdens on financial institutions.”

Posted in bussiness, Uncategorized, Wealth Building

September 20th, 2017 by Suzi Elton

Even if you have a degree in your chosen field you probably didn’t learn how to make money or build wealth in school. Since we use money for nearly everything we do that seems like a pretty serious gap in our education system. Money or the lack of it in our lives will affect us more than anyone else so it is really up to us to get the “how to” information on this. Without that information it is like trying to compete in sports without knowing the rules of the game or having the proper equipment. If you are missing out on the “game” please allow me the pleasure of getting you up to speed.

Money is made by exchange. I am not talking about the printing of money or the minting of coins, but the gaining of money here, which is what really matters in our financial lives. We gain or obtain money by making exchanges. At the simplest level when two people come together and one has money and the other one has something or some service the first person wants we have the potential for such an exchange. The next step is a little communicating, you can’t exchange things if people don’t know they exist and you are willing to trade. Then we have negotiating. You have to agree on the amount of money to exchange for possession of the goods or to receive the service. We can also have terms, such as a guarantee or setting a time for delivery of the goods or service. There you have it, someone made money.

Let’s go over that again. You have something you want to exchange. That thing could be something material: a knife, a boat, a plate or a car, but it could also be some service: cooking your meals, cleaning your house, playing music or painting your house. Material things we often call goods and things you do we call services, but don’t let that confuse you, if you have services you offer, then those are your goods. Let’s keep it simple.

Next we have to communicate we have something to exchange, we have to make an offer. This happens all the time and we are pretty much flooded with offers in the forms of commercials. An offer can be an advertisement in the classified ad section of the newspaper or a radio or television commercial, but it can also be a sign in your yard that your house is for sale or just mentioning in a casual conversation you have something you want to sell.

If the person is interested we then begin negotiations. Negotiations can be as simple and present as asking how much the person in front of you will take for the item or the seller saying what they want, but online auctions and estate auctions are forms of negotiations too.

So now we come to the question, “If money is made by exchange then what can I exchange for money?” We could answer that with individual items and soon become overwhelmed. Cars, boats, hamburgers, radios, jewelry, pickles, socks and shoe strings are just some of the countless items we could exchange, but thinking of it in this way can quickly overwhelm us. There is another way to look at it. I divide it up into six categories when I teach this.

The six categories I use when I teach this are:

1. What you can do

2. What you have on hand

3. What you can get

4. What you know

5. A lie

6. A promise

Can you flip a hamburger? Can you drive a car? Can you paint a house? Those are some things you can do for money.

Do you have an extra car in the drive way? Furniture you want to replace? Some old jewelry you don’t wear? These are things on hand you could exchange for money.

Could you get water bottles and take them to the park? Could you buy a box of sunglasses to sell on a corner? Could you buy hotdogs and buns to sell in your food cart? These are things you can get to sell for money.

Can you teach a child how to tie their shoes? Can you explain to someone the best way to change their car battery? Can you tell someone the stock category is most likely to go up this year? These are things you know and can exchange for money.

Can you tell someone if they will pay you now you will bring them something you don’t have and can’t get? Can you borrow something you say you will return and then pawn it? These things are lying for money and we call it fraud.

Can you sell someone the promise that you won’t sell your home to anyone else for three months while they raise the money to buy it? Can you promise you will pay someone back and borrow money through what we call a promissory note? There are just some of the things you can promise to do or not do and exchange that promise for money.

There you have it, the basics on making money. Money is made by exchange, you can think of it as trading for money. Selling has so many bad ideas and feelings attached to it I often tell people to just think of this as trading for money. You can also think of the things you exchange as countless items or services, but it is more manageable and helpful to think of this in categories. It doesn’t matter if it is in the back yard, a car dealership or online, this is how it is done.

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Posted in bussiness

September 20th, 2017 by Suzi Elton

Have you saved any money for emergencies? How much have you saved in case you were laid off? Do you compile credit card debt instead of using your savings for emergencies? Do you have a problem with saving money vs. spending it? Have you tried it on your own and not been successful? Do you know there must be a better way?

Do you find it frustrating when you see other people having financial success? Wouldn’t you like to be one of those who don’t struggle and experience tremendous financial success? Don’t struggle any longer. Here are your 8 tips to build a solid foundation of savings for your future success.

    1. Write every purchase and deposit in your check register when it occurs. Be prompt. This way your checkbook and funds available balance is always current and accurate. You cannot overspend and you are aware of your balance. You won’t ruin your budget because it is current.


    1. Balance your checkbook weekly with your online bank register. Correct any errors in your check register such as missed entries. Add a check mark next to the balance amount on the date so you know where you were most recently accurate. Check the entries that have posted and keep this current.


    1. Use your credit cards if you need to and only if you are able to easily pay the complete balance by the end of the month or statement due date. You won’t incur any late fees or interest fees if you completely pay the balance early and on time.


    1. Withdraw $200 every week with an automatic transfer to a money market account – and do not use those funds unless there is an emergency. Act as though you were making a car payment and that money is gone and unavailable. Be disciplined and strong here. This is where you are paying yourself over $10,000 per year ($10,400 specifically).


    1. You can increase this incrementally by adding as little as another $50 per transfer adding another $2,600 per year for a total annual savings of $13,000 per year. This is your gift to you. Impressive!


    1. Next, deduct all of your regular expenses for this pay period right away in your check register and mark the actual date this will occur for each item.


    1. You are predicting your future budget here. This will give you an accurate financial picture of your available balance for the pay period and incidental expenses. We often imagine we have more available than the reality exposes.


  1. Watch your money market balance grow each week and enjoy the satisfaction in knowing that you are a saver – not a spender. It doesn’t take any discipline at all to spend money, and it takes a great deal of strength to save it.

Be powerful. Pay yourself first – over $10,000 per year and build your solid foundation of savings for your future success. You can do it. Be strong.

Posted in Budgeting, bussiness, finance, Payday Loans

September 20th, 2017 by Suzi Elton

A CPA who is approached by a client about one of the abusive arrangements and/or situations to be described and discussed in this article must exercise the utmost degree of caution, not only on behalf of the client, but for his/her own good as well. The penalties noted in this article can also be applied to practitioners who prepare and/or sign returns that fail to properly disclose listed transactions, including those discussed herein.

On October 17, 2007, the IRS issued Notice 2007-83, Notice 2007-84, and Revenue Ruling 2007-65. Notice 2007-83 essentially lists the characteristics of welfare benefit plans that the Service regards as listed transactions. Put simply, to be a listed transaction, a plan cannot rely on the union exception set forth in IRC Section 419A(f)(5), there must be cash value life insurance within the plan and excessive tax deductions for life insurance, in excess of what may be permitted by Sections 419 and 419A, must have been claimed.

In Notice 2007-84, the Service expressed concern with plans that provide all or a substantial portion of benefits to owners and/or key and highly compensated employees. The notice identified numerous specific concerns, among them:

1. The granting of loans to participants
2. Providing deferred compensation
3. Plan terminations that result in the distribution of assets rather than being used post-retirement, as originally established.
4. Permitting the transfer of life insurance policies to participants.

Alternative tax treatment may well be in the offing for such arrangements, as the IRS intends to re-characterize such arrangements as dividends, non-qualified deferred compensation (under IRC Section 404(a)(5) or Section 409A), split-dollar life insurance arrangements, or disqualified benefits pursuant to Section 4976. Taxpayers participating in these listed transactions should have, in most cases, already disclosed such participation to the Service. Those who have not should do so at the earliest possible moment. Failure to disclose can result in severe penalties – up to $100,000 for individuals and $200,000 for corporations.

Finally, Revenue Ruling 2007-65 focused on situations where cash value life insurance is purchased on owner employees and other key employees, while only term insurance is offered to the rank and file. These are sold as 419(e), 419A (f)(6), and 419 plans. Life insurance premiums are not inherently tax deductible and authority must be found in Section 79 to justify such a deduction. Section 264(a), in fact, specifically disallows tax deductions for life insurance, at least in some cases. And moreover, the Service declared, interposition of a trust does not change the nature of the transaction.

Posted in Bankcruptcy Medical, bussiness, finance

September 20th, 2017 by Suzi Elton

Staying out of debt is not easy. But still, if you closely follow the steps given below, you will find yourself in a much better position financially:

1. Save before you start spending

If your plan is to save whatever is left at the end of the month, you will almost always find yourself with nothing when the month ends. That is because it is far easier to save at the beginning of a month than to save when the month is about to end. So, prepare a budget as soon as a new month begins, and then leave aside your budget money. Also, keep a bit extra for emergency expenses that may come up. Once that is done, save the remaining income.

2. Make a list of items to shop for

Most of us feel a kind of euphoria when we shop, and that feeling encourages us to spend more than we are comfortable with. That is why whenever you go shopping for buying groceries, clothing items, or other essentials, be sure to make a list of things to buy before leaving the house. That way, you will be able to keep track of your spending habits. When you have a list, even when you buy something that is not in your list, you consciously know that you are overspending.

3. Live below your means

If Warren Buffet can drive a car that is more than a decade old, then does it really make sense for us to get new cars every two or three years? Maybe you do not change cars that often, but there must be many other habits that are not serving you very well financially. Like eating out a bit too much, buying unnecessary stuff impulsively etc. The truth is that you do not have to live in the most expensive house you can afford based on your salary. You do not have to have the most expensive cell phone or laptop you can afford, either. Learn to live below your means.

4. Educate yourself to become financially responsible

The internet has thousands of excellent articles on saving money. Read some of those articles. Save the pieces that you find particularly helpful and inspiring. In addition to that, you can buy books about saving money and staying away from debt. If you are really serious about saving money, you can even take a big step like attending a seminar about forming good money habits

Posted in bussiness, Wealth Building

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