Simply Junior

President Obama is tagging your Foreign Earned Income Exemption to help pay for huge federal budget deficits. He thinks to hide this motive behind recent White House announcements about U.S. companies, providing smokescreens such as: “I want to see our companies remain the most competitive in the world,” and “…the way to make sure that happens is not to reward our companies for moving jobs off our shores or transferring profits to overseas tax havens.”

The reality is that with tax gaps estimated in the $400 billion range, this administration is hard-pressed to come up with new sources of revenues to fill the deficit. It is estimated that offshore tax abuses cause the United States to lose approximately $100 billion each year in tax revenues. Recovering these funds represent a substantial portion of the annual U.S. tax gap, which is why President Obama has authorized an additional $128 million for the 2010 IRS budget, which includes the addition of 800 new IRS agents. Do not be fooled, they have declared war on YOU and are coming after YOUR money.

First, they are going after the companies you work for because they see companies operating abroad as a viable source of additional revenues. Currently, companies with overseas operations pay U.S. taxes only if they bring the profits back to the United States. They can defer paying U.S. taxes indefinitely if they keep the profits offshore. Obama’s plan, which would take effect in 2011, cracks down on these loopholes so that companies would no longer be able to write off domestic expenses for generating profits abroad. It is estimated that this change alone would generate $210 billion in new taxes over the next 10 years, making a modest dent in the forecasted $1.8 trillion federal deficit. Rest assured, this administration will encourage any possible avenue to be able to bring these monies back into the U.S.

And, they are coming after YOU. The recently released IRS report on the 2006 tax year indicates that the Foreign Earned Income Exclusion might be another modest source for helping to fill the tax gap. In tax year 2006, about U.S. taxpayers living abroad reported approximately $36.7 billion in foreign-earned income and claimed nearly $18.4 billion in income exclusions. And that was three years ago. There are more Americans living and working abroad now than ever. Can’t you just see the wheels turning in the minds of our government leaders? Removing the Foreign Earned Income Exclusion could add billions to U.S. tax coffers.

Perhaps you think they won’t find YOU. The historic legal struggle that has cracked Switzerland’s renowned reputation for banking secrecy is part of an on-going IRS quest to identify nearly 52,000 suspect offshore bank accounts. When the IRS increases their workforce by 800 new agents, they won’t be hiring new college recruits. They have announced that they will be hiring the fancy attorneys and investment advisors that have helped hide those assets offshore. Now, multiply the number of suspected offshore accounts by the $10,000 or possibly $20,000 in allowable fines for non-reporting, and you come up with another modest number toward the filling of the U.S. tax gap. If you have been one of those ‘tax evaders’ thinking they can hide assets in offshore bank accounts, think again. The IRS is already searching for you, cracking the international bank privacy policies and gearing up to hire professionals to find you.

All of these items add up to making the American Expatriate look like a great big piggy bank to the current administration. While there will likely be a huge fight in Congress regarding closing the corporate loopholes, it is even more likely that the tax benefits associated with your Foreign Earned Income Exclusion will be taken from you. Fines for unreported bank accounts will soon become automatic bills. This means that for you, the individual American Expatriate, the stakes are high and getting higher if you seek to hide your income off-shore or evade paying U.S. taxes on that income.

What action do you need to take as an expatriate? Stay abreast of the latest information that develops about the foreign earned income exclusion. The best way to accomplish this is to work with a reputable advisor who will focus on keeping you out of the scrutiny of the IRS by keeping your activities well above board and within the law. Your advisor must be well-versed in the nuances of expatriate tax law, so check with your advisor about his/her expertise in this arena and be ensure you’ve chosen your advisor wisely.

Copyright (c) 2009 Nick Hodges

What Is The Change?

The Ga Department of Revenue has proposed a change to Regulation: 560-3-2-.26 “Electronic Funds Transfer, Credit Card Payments, and Electronic Filing” that, if approved, will have a dramatic effect on virtually all small businesses operating in Georgia.

The essence of the proposed rule lowers the threshold at which businesses must submit tax payments electronically. That threshold was $10,000 for all tax payments made prior to January 1, 2007. It has been $5,000 for all tax payments made after January 1, 2007; but, it gets progressively lower over the next two calendar years.

Here’s the change. “Beginning January 1, 2010, all taxpayers owing more than $1,000 in connection with any return, report, or other document pertaining to sales tax, use tax, withholding tax, or motor fuel distributor tax shall pay any such tax or liability and all future payments to the state by electronic funds transfer using the ACH debit or credit method even if some payments for those tax types subsequently fall below $1,000.”

Oh, and the threshold goes down to $500, beginning with payments due January 2011 or later.

What Does It Mean?

It means that, going forward, business taxpayers will have to begin making electronic payments of all tax types, if any of their tax payments are greater than $1,000 (beginning January 2010) or $500 (beginning January 2011). And, once you cross that threshold, you have to make ALL subsequent payments electronically.

This eliminates the notorious “float” of several weeks that it normally takes the GA DOR to process checks. It removes flexibility in filing early, but sending payments later. It gives the department access to your bank account.

What Should I Do About It?

I would recommend that you work with a tax preparer, who can offer filing services, and who can warehouse your payment until the very last possible day to process it, in order to avoid late payment penalties and interest. Remember, that in Georgia, you have until the 20th of the month to file the previous month’s Sales and Use tax return – but only until 3 PM on the 19th of the month to pay the amount due.

I’m a sales tax guy, so I think in terms of Sales and Use tax, primarily, but the other tax types are in play as well. If the 20th falls on a weekend or holiday, you really only have until 3 PM on the Friday BEFORE the 20th to make your payment.

Most other states (and I file sales and use tax returns in 45 of them) allow the due date to slip back to the Monday or Tuesday AFTER the due date, if the due date falls on a weekend of holiday. Even those states whose due dates fall on the last day of the month allow the due date to slip to the Monday or Tuesday afterwards in this case.

I’m still unsure as to why Georgia is the only state that I am aware of with this rule in place, other than to speed up receipt of funds.

Under the current system, if you file a sales tax return in Georgia and mail it on the 20th, you can almost certainly count on two to three weeks “float” time before you check is processed. I track the checks I mail for my clients monthly, and find this to be pretty accurate. Under the new system, this all goes away.

I’ll give credit to the policy makers at the Georgia Department of Revenue, though. They have finally carried through on a pledge that the State Revenue Commissioner made when he was appointed in 2003, that being to require as many taxpayers as possible to file and pay electronically.

It is commonly said that there are only two things certain in life: death and taxes. 2011 seems to be the exception. We are close to the end of 2010 and we still don’t know how dividends and capital gains will be taxed or what the estate tax rate will be in 2011. This makes it difficult for anyone to come up with a precise financial plan for next year. One thing we do know is that the current economy has depreciated investments and real estate. This makes it a great year to gift assets at a greatly reduced tax cost.

A gratuitous transfer of ownership of a property will generate a gift tax. However, there are two exemptions from the gift tax. First, gifts up to $13,000 per person per year (in 2010) are not subject to the tax. In addition, an individual can make gifts up to this amount to as many people as he/she wants to each year. The exemption allows a married couple to combine their individual gift exemptions and gift up to $26,000 per recipient per year without incurring any gift tax liability. There is a lifetime gifting limit of $1,000,000; any gift beyond that amount incurs a gift tax.

Consider 2010 a good year to be generous.Generally, any gifts you make now and all the future appreciation will be out of your estate at your death and not subject to the estate tax. The decline in the stock and real estate markets created discounts for almost all asset classes. Consequently, now is the time to consider gifting assets that are at unusually low values. When the economy rebounds, these assets will begin to increase in value, and that future appreciation will occur outside your estate. The maximum gift tax rate is currently at a historic low of 35%, and under existing law, the rate will be increased to 55%. Congress is expected to enact legislation to reduce the increase, but there is no guarantee that this will happen. That is why you should consider making large gifts to children and grandchildren, even if that may mean paying a gift tax.

Another tax benefit to gifting in 2010 is that there is also currently no generation-skipping transfer (GST) tax, it has been repealed only for this year. The GST tax is a separate tax that applies, in addition to any estate or gift tax, to transfers to grandchildren or future generations. This tax is imposed at the highest estate tax rate and is intended to replace the estate tax that is in effect avoided at the skipped generation. The GST tax is expected to be reinstated next year at a rate of 55%. Therefore, year-end 2010 is a great time to make gifts to grandchildren and descendants of younger generations. The gift can be made outright, in the form of a Limited Liability Company, Limited Partnership or to a Trust.

Given the current economic and tax legislation uncertainty, great care and thorough thought are required to execute financial and estate plans. At the very least a prudent individuals will need to review their current estate plan, and seek advice from their estate planning attorney or tax advisor to ensure that it is consistent with their goals and objectives.

In 2011, online tax return softwares will be used by millions of people in USA. These softwares have become very popular not just because they make process of filing very easy, but also because through most of them tax refunds are received very quickly.

But for 2011, there are more than 10 tax filing software that are available in the USA. They are all good and are user friendly.

But, you want to select the best online tax software for 2011 returns.

How to select one? Let me give you 3 important tips to help you make that decision -

1. Guarantee associated with the software – The 1st and foremost you should check is what form of guarantees are given by the tax software company. Some companies will give guarantee that you will receive the highest tax refund for 2011 returns. Others will give you guarantee that using their software you’ll receive the fastest refunds. Of course, select the one that gives you the highest tax refunds

2. Best Customer support – Even though the 2011 tax softwares a very user friendly, often you’ll have some questions about some of the data or amount that you must enter when preparing returns. During such cases, a good customer support is very necessary. The support can be through forums where you can post tax related questions, can be a helpline telephone number or a customer support desk which answers your questions over email.

3. Ease of use and Feedback – It is highly necessary that the 2011 online income tax software is very user friendly and has very good feedback from users. You don’t want the software to stop working or crashes in the middle of your filing. Do you? So definitely check out the review of the Tax software.

TurboTax’s Tax Return Calculator for 2010, 2011

If you want to have a preview of your 2010 and 2011 income taxes, you should try using these calculators for your tax from TurboTax.

TurboTax helps you get an estimate and calculations of your tax refund. You can also use it to know the amount you need to pay for your taxes. At the same time, it also allows you to calculate your deductions which you can avail.It also gives you information about the savings you can get from your home mortgage.

Tax Refund Estimator – Knowing the amount of refund you can get this year.

There are many life changes which will have a direct impact on your refund such as career shifts, salary adjustments, a new apartment, a new vehicle, or even a new member to a family. The Tax refund Estimator helps you calculate the amount you are expected to pay in 2009. To add more accuracy, they also included more changes in Alternative Minimum Tax (AMT).

Calculator for Tax Rebate – Can you get the Internal Revenue Service stimulus tax rebate cheque this spring?

It is helpful to know at this point that even though you are qualified, the government is not going to send a stimulus tax to you. You need to get it from your tax return in 2009. This is going to be a big help since many taxpayers who are hoping to avail of loans or credits can benefit from this.

Calculator for Average Tax Rate – How to determine the exact tax rate?

If you need to know the average rate from your income, you just have to enter the exact figures. Then, this calculator will instantly provide you with the exact percentage you will paying for your taxes.

Home Loan Tax Saver – How much can you save in your mortgage tax?

Deductions can be made from income taxes when interests for a home loan is already paid. You can also calculate the amount you can save from your taxes by using this calculator.

Payroll Withholding Tax for Employers Calculator

Paychecks of your employees can be instantly made using this calculator. Along with this, you can also get instant calculations of your federal and state taxes. Then, you can pay your workers with a free direct,deposit. In addition, you can use your printer to get hard copies of checks and stubs using the Quickbooks system. The calculator for Quickbooks Online Payroll is free to try.

Calculator for Tax Withholding (Paycheck) – How much can you get from your withholding tax?

If you feel that you are in need of help in calculating your withholding tax, then you should try this item. It can easily get an overview of your tax issues and pinpoint others matters such as expenses and your income. It can also give you an assessment on what amount you need to prepare for your tax. Then, this calculator can give you an estimated amount that you should withhold.

Deduction Finder – Do you get all the deductions I truly deserve?

Do you think you are not getting all the deductions you should claim? You should use this tax credits calculator because it can help you find the available tax credits and all the deductions which will be suitable for you.