Posts Tagged ‘income tax’

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (December 12 edition)

Posted by William Byrnes on December 12, 2019

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IRS Provides New ACA Transition Relief for Employer Reporting

As usual, the IRS has released transition relief to extend the deadline for providing Form 1095-C to individuals from January 31, 2020 to March 2, 2020. However, unlike other years, the March 2 deadline is now a firm deadline and the IRS has indicated that it will no longer respond to requests for extension beyond that deadline. Form 1094-C and Form 1095-C that must be provided to the IRS are not subject to the extension. The employer must furnish these filings to the IRS by February 28, 2020 if the filing is on paper and March 31, 2020 if the employer is filing electronically. For 2019 forms, the IRS has extended the relief that may allow employers to escape liability if they make a good faith effort to comply with all filing requirements. Because the individual mandate has been reduced to $0, the IRS will also not impose a penalty under IRC Section 6722 upon employers who fail to provide Form 1095-B if certain requirements are satisfied. For more information, visit Tax Facts Online. Read More

December 31 Deadline to Take Full Advantage of Opportunity Zone Deferral is Fast Approaching

The Tax Cuts and Jobs Act introduced opportunity zones into the tax code, which allow taxpayers to defer certain gains if certain deadlines and requirements are satisfied. However, the law only gives taxpayers a limited amount of time to take full advantage of the deferral provisions. Specifically, December 31, 2019, is the deadline for taxpayers who wish to make opportunity zone investments and take full advantage of the 15% step-up in the deferred gains. Taxpayers who invest after this deadline (but before December 31, 2020) and hold the opportunity zone investment through 2026 will be entitled to take 10% step-up in basis (10% of the amount deferred) on the deferred tax. For more information on the opportunity zone rules, including the gain deferral provision, visit Tax Facts Online. Read More

Unpacking the New Section 6050Y Reporting Requirements for Life Insurance Reportable Policy Sales

The new 6050Y regulations create new reporting obligations for many who issue, acquire or sell life insurance policies in a reportable policy sale post-tax reform. An “issuer” under the new regulations is anyone that bears any part of the risk associated with the life insurance contract, including those collecting premiums and paying death benefits. However, where there are multiple issuers, the reporting obligations are satisfied if only one issuer or designee reports on a timely basis. New forms released by the IRS to complete the reporting obligations include Form 1099-LS, Reportable Life Insurance Sale and Form 1099-SB, Seller’s Investment in Life Insurance Contract. While some reporting requirements have been delayed, it’s important to understand the basics of these forms now. Form 1099-LS must be filed by anyone who acquires a life insurance policy (or interest therein) in a reportable policy sale. Basic information about the sale, policy, acquirer and seller must be included. Form 1099-SB must be filed by the issuer of the life insurance policy to report both the seller’s investment in the contract and the surrender amount if the sale is a reportable policy sale (or transferred to a foreign person). For more information on the new 6050Y reporting requirements, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Reducing complicated tax questions to understandable answers that can be immediately put into real-life practice, Tax Facts works when and where you need it….on your desktop, at home on your laptop, and on the go through your tablet or smartphone. Questions? Contact customer service: TaxFactsHelp@alm.com| 800-543-0874

Posted in Retirement Planning, Taxation | Tagged: ACA, income tax, Retirement planning, tax facts | Leave a Comment »

Byrnes & Bloink’s TaxFacts Intelligence Weekly for Financial Advisors (December 5 edition)

Posted by William Byrnes on December 6, 2019

Final Regulations Confirm: No “Clawback” for Gifts Made Under Expanded Transfer Tax Exemption

The 2017 tax reform legislation significantly expanded the transfer tax exemption, which applies to exempt both lifetime and postmortem gifts from transfer taxes. However, the new provision is set to sunset after 2025, leading many taxpayers to question whether large gifts made while the provision is effective would be exempt once the exemption reverts to the much lower $5 million (as adjusted for inflation) limit. In general, the exemption applies first to gifts made during life and then to the individual’s remaining estate. Under the final regulations, estates are allowed to compute the available estate tax credit using the higher of the basic exclusion amount that applied to gifts made during life or the basic exclusion amount applicable on the date of death. Essentially, this rule provides certainty that taxpayers can make large gifts now (i.e., gifts that exceed the $5 million exemption) without generating transfer tax liability if the exemption amount is reduced in the future. For more information on the estate tax, visit Tax Facts Online. Read More

Court Finds Prudent Process Sufficient to Overcome DOL Fiduciary Liability

Many retirement plan sponsors and advisors have been left in uncertainty since the DOL fiduciary rule was vacated. A September 2019 case involving a DOL fiduciary enforcement action may shed light on resolution of fiduciary issues in the retirement plan context. In this case, the court found that retirement committee members were not liable under ERIA for a failure to monitor the committee’s investment manager more closely. The committee here had implemented processes and procedures, including regular meetings and reports, and acted in accordance with those procedures. After the DOL initiated action, the court agreed that the committee was entitled to rely upon those procedures. Once an error or problem arose and the committee became aware—or reasonably should have become aware—of the issue, the committee correctly increased its oversight until the issue was resolved. Here, that issue was that the committee’s instructions with respect to investments were not being followed. Once the committee noticed, they stepped up oversight. Importantly, this ruling shows that a prudent process is often sufficient to avoid fiduciary liability even if a decision results in investment losses. For more information on the fiduciary standard, visit Tax Facts Online. Read More

IRS Cracking Down on Syndicated Conservation Easements

In recently released IR-2019-182, the IRS announced that it has substantially increased resources to crack down on syndicated conservation easements. Under the IRC, a special rule allows taxpayers to take a deduction for donations of qualified conservation easements (an exception to the general rule prohibiting deductions for donations of less than an entire interest in property). A qualified conservation easement is a contribution of real property including a restriction (granted in perpetuity) for the use of the property, which must be used for conservation purposes. Syndications are often set up to purchase real property for conservation easements. Most syndications involve tiers of pass-through entities so that investors in the entities can more fully use the charitable deduction (which is subject to an adjusted gross income cap like any other charitable deduction). Often, the actual deduction will far exceed the amounts invested—sometimes because inflated property values are used. These and substantially similar arrangements are now classified as listed transactions, which must be disclosed to the IRS. Clients should be made aware of this increased potential for enforcement across several IRS divisions. For more information on the requirements for claiming a conservation easement deduction, visit Tax Facts Online. Read More

2020’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Posted in Retirement Planning, Taxation | Tagged: CFP, financial planning, income tax, Retirement, tax facts | Leave a Comment »

TaxFacts Intelligence Weekly of July 11

Posted by William Byrnes on July 11, 2019

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Prof. William H. Byrnes, Esq. and Robert Bloink, Esq. of

Texas A&M University Law Wealth Management programs

Jul 11, 2019

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IRS Snapshot Guidance Provides Insight into Post-2018 Plan Hardship Distribution Requirements

The Bipartisan Budget Act of 2018 made substantial changes to the rules governing hardship distributions from qualified plans beginning in 2019. These changes have left many employers wondering how to adequately comply with the new rules. The IRS has directed its agents to review the language in the plan document, as well as any written statement provided by the participant to ensure all documents are properly executed and signed. Further, agents are directed to examine any records that the employer used to verify that a true hardship did exist, as well as the amount of that hardship. These records can include bills, eviction notices, closing documents for purchase of a home, etc. The employee should also provide documentation to establish that no other readily available source of funds existed, which can be as simple as an employee attestation. For more information on post-2018 hardship distributions, visit Tax Facts Online. Read More

IRS Clarifies Treatment of Transportation Benefits Upon Termination of Employment

An IRS information letter has clarified that a taxpayer forfeits any unused transportation benefits upon termination of employment. Because employers have only been permitted to provide tax-preferred transportation benefits to current employees, those benefits must be lost once the individual is no longer an employee. This is the case even if the benefits were provided through pre-tax employee contributions, and even if the employee is fired (i.e., compensation reductions cannot be reimbursed if the employee had not fully used them). Importantly, employees can change their elections regarding transportation benefits monthly without the need for a change in status event. For more information on employer-provided transportation benefits, visit Tax Facts Online. Read More

Ninth Circuit Affirms Termination of Pension Benefits for Working Retiree

The Ninth Circuit recently confirmed that a pension plan was within its rights to terminate pension benefits to a participant who retired early, but then returned to work in the same industry. This was the case even though the plan itself had initially approved the taxpayer’s post-retirement work in the same industry in which he worked prior to retirement. Although Supreme Court precedent prohibits a pension from adding additional requirements to a participant’s benefit eligibility after that participant has retired, the court here found that the precedent did not apply because the plan in question had always required participants to withdraw from the industry in order to be eligible for benefits. The plan had begun enforcing the rule pursuant to a voluntary corrective action with the IRS that was entered in order to maintain the plan’s tax-qualified status. For more information on situations where a pension plan may reduce a participant’s benefits, visit Tax Facts Online. Read More

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Posted in Taxation | Tagged: income tax, tax facts | Leave a Comment »

TaxFacts Intelligence (Week of March 14, 2019)

Posted by William Byrnes on March 14, 2019

William H. Byrnes, J.D., LL.M. and Robert Bloink, J.D., LL.M.

Mar 14, 2019

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IRS: Employers Must Exercise Caution in Providing “Free Lunch” for Employees

The IRS has released a technical advice memorandum (TAM) that sheds light on the potential tax implications when employers provide employees with free meals in the office. Post-tax reform, meals provided “for the convenience of the employer” may receive favorable tax treatment. In the TAM, the IRS denied exclusion of the meals’ value from employee compensation. Here, the employer provided free meals to all employees in snack areas, at their desks and in the cafeteria, justifying provision of these meals by citing need for a secure business environment for confidential discussions, employee protection, improvement of employee health and a shortened meal period policy. The IRS rejected these rationales, stating that the employer was required to show that the policies existed in practice, not just in form, and that they were enforced upon specific employees. In this case, the employer had no policies relating to employee discussion of confidential information and provided no factual support for its other claims. General goals of improving employee health were found to be insufficient. The IRS also considered the availability of meal delivery services a factor in denying the exclusion, but indicated that if the employees were provided meals because they had to remain on the premises to respond to emergencies, that would be a factor indicating that the exclusion should be granted. For more information on “de minimis” type fringe benefits, visit Tax Facts Online. Read More

Common Scenarios in Client Retirement Planning: Account Consolidation and the Rules of the Road

Most clients will change jobs a few times in their lives, which often means they wind up with multiple 401(k) and other types of retirement plans. Consolidating can produce many benefits–namely, making it easier to manage retirement assets and easing RMD calculations, but there are rules to consolidating and clients also need to be aware of benefits that may be unique to any one type of plan. Clients should evaluate their goals with respect to eventual withdrawals, as the rules for penalty-free withdrawals–for example, via using an IRA to establish a series of substantially equal periodic payments to provide penalty-free withdrawals prior to age 591/2. For more information on the rollover rules and how they may impact clients considering retirement account consolidation, visit Tax Facts Online. Read More

April 1 is Fast Approaching: Important Deadline for Clients With First-Time RMD Obligations

While April 15 is a well-known and understood deadline, most clients don’t associate April 1 with any important tax-related deadlines—but April 1 is, in fact, one of the most important deadlines for clients who turned 701/2 years old in the previous year. For those clients who maintain traditional retirement accounts, such as 401(k)s and IRAs, April 1 is the date by which they must take their first required minimum distribution (RMD) from the account if they turned 701/2 in the previous year. For example, a client who turned 701/2 in 2018 must take their first RMD by April 1, 2019. This April 1 deadline is a special rule that applies only to first-time RMDs–a client’s 2019 RMD will be due by December 31, 2019. This means that clients who choose to wait until the April 1 deadline will be required to take two RMDs in 2019. For each subsequent year, the generally applicable December 31 deadline is the relevant date for RMDs. For more information on lifetime RMD requirements, visit Tax Facts Online. Read More

2019’s Tax Facts Offers a Complete Web, App-Based, and Print Experience

Posted in Taxation | Tagged: income tax, tax, taxfacts | Leave a Comment »

Tax Facts about Taxable and Non-Taxable Income

Posted by William Byrnes on February 16, 2016

All income is taxable unless a law specifically says it isn’t. Here are some basic rules you should know to help you file the 2015 – 1040 tax return due April 15, 2016.

Taxable income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is normally taxable.

Some types of income are not taxable except under certain conditions, including:

Life insurance. Proceeds paid to you upon the death of an insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount you get that is more than the cost of the policy is taxable.
Qualified scholarship. In most cases, income from a scholarship is not taxable. This includes amounts used for certain costs, such as tuition and required books. On the other hand, amounts you use for room and board are taxable.
Other income tax refunds. State or local income tax refunds may be taxable. You should receive a Form 1099-G from the agency that paid you. They may have sent the form by mail or electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.

Here are some items that are usually not taxable:

Gifts and inheritances
Child support payments
Welfare benefits
Damage awards for physical injury or sickness
Cash rebates from a dealer or manufacturer for an item you buy
Reimbursements for qualified adoption expenses

Tax Facts Online is the premier practical, useful, actionable, and affordable reference on the taxation of insurance, employee benefits, investments, small
business and individuals. This advisory service provides expert guidance on hundreds of the most frequently asked client questions concerning their most important tax issues.

Many ongoing, significant developments have affected tax law and, consequently, tax advice and strategies. Tax Facts Online is the only source that is reviewed daily and updated regularly by our expert editors.

In addition to completely current content not available anywhere else, Tax Facts Online gives you exclusive access to:

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Tax Facts on Insurance provides definitive answers to your clients’ most important tax-related insurance questions, while offering insightful analysis and illustrative examples. Numerous planning points direct you to the most recent and important insurance solutions.

Tax Facts on Employee Benefits provides current in-depth coverage of important client-related employee benefits questions. Employee benefits affect most everyone, and your clients must know how to deal with often complex issues and problems. Tax Facts on Employee Benefits provides the answers in a direct, concise, and practical manner.

Tax Facts on Investments provides clear, detailed answers to your difficult tax questions concerning investments. You must know what investments best suit your clients from a tax standpoint. You will discover questions that directly provide insightful answers, comparison of investment choices, as well as how investments have changed in recent years.

Tax Facts on Individuals & Small Business focuses exclusively on what individuals and small buisnesses need to know to maximize opportunities under today’s often complex tax rules. It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals.

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Posted in Taxation, Uncategorized | Tagged: 1040, income tax, income tax return | 2 Comments »

Taxable or Not?

Posted by William Byrnes on March 16, 2015

All income is taxable unless the law excludes it. Here are some basic rules you should know to help you file an accurate tax return:

Taxed income. Taxable income includes money you earn, like wages and tips. It also includes bartering, an exchange of property or services. The fair market value of property or services received is taxable.

Some types of income are not taxable except under certain conditions, including:

Life insurance. Proceeds paid to you because of the death of the insured person are usually not taxable. However, if you redeem a life insurance policy for cash, any amount that you get that is more than the cost of the policy is taxable.
Qualified scholarship. In most cases, income from this type of scholarship is not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. On the other hand, amounts you use for room and board are taxable.
State income tax refund. If you got a state or local income tax refund, the amount may be taxable. You should have received a 2014 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.

Here are some types of income that are usually not taxable:

Gifts and inheritances
Child support payments
Welfare benefits
Damage awards for physical injury or sickness
Cash rebates from a dealer or manufacturer for an item you buy
Reimbursements for qualified adoption expenses

Tax Facts on Individuals & Small Business

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for competitive information to help them provide the best answers for their clients and to obtain new clients. National Underwriter’s Tax Facts series is the only resource written specifically for the financial advisor and producer providing fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts has been famous over 50 years.

Anyone interested can try Tax Facts Online risk-free for 30 days, with a 100% guarantee of complete satisfaction. Call 1-800-543-0874.

Posted in Taxation | Tagged: income tax, IRS | 1 Comment »

What are Five Tax Credits That May Reduce Your Taxes?

Posted by William Byrnes on April 16, 2014

In Tax Tip 2014-33, the IRS revealed five tax credits that may reduce a taxpayers taxes. Some tax credits are refundable regardless of whether the taxpayer owes any tax for the year, the IRS pointed out.

1. The Earned Income Tax Credit is a refundable credit for taxpayers who work but do not earn a lot of money. For 2013, the EITC may have increased the tax refund by as much as $6,044.

2. The Child and Dependent Care Credit can help a taxpayer offset the cost of daycare or day camp for children under age 13, and even the costs paid to care for a disabled spouse or dependent.

3. The Child Tax Credit can reduce a taxpayer’s taxes by as much as $1,000 for each qualified child claimed on the tax return.

4. The Saver’s Credit helps workers save for retirement. For 2013, a taxpayer may have qualified if income was $59,000 or less and the taxpayer contributed to an IRA or a retirement plan at work.

5. The American Opportunity Tax Credit can offset college costs. The credit is available for four years of post-secondary education. It’s worth up to $2,500 per eligible student enrolled at least half time for at least one academic period.

“Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.”

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Posted in Taxation | Tagged: income tax, IRS, tax credits, Tax refund | Leave a Comment »

11 more annuity tax facts you need to know

Posted by William Byrnes on April 14, 2014

An annuity is a complicated beast — and during tax season, your clients’ questions can pile up faster than hospitality complaints from the crowds at Sochi. How are payments under a variable immediate annuity taxed? When is the exchange of one annuity contract for another a nontaxable exchange? Read on to find answers to these and other queries.

1. What general rules govern the income taxation of payments received under annuity contracts?

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LifeHealthPro.com is the vital online destination for life & health insurance advisors, designed to provide them with the essential elements they need to run their practice and increase their bottom line including breaking news, market trends, practice tips and more.

Posted in Estate Tax, Retirement Planning | Tagged: Annuity, estate planning, estate tax, income tax | Leave a Comment »

4 Tax Facts for Trading Services With Other Persons Taxable?

Posted by William Byrnes on April 9, 2014

The IRS published Tax Tip 2014-26: Four Things You Should Know About “Barter”

“Bartering” is the trading of one product or service for another. Often there is no exchange of cash. Small businesses sometimes barter to get products or services they need. For example, a plumber might trade plumbing work with a dentist for dental services.

If a taxpayer trade services with another person, “bartering”, then the value of the products or the services received by the taxpayer is taxable income.

Here are four facts that the IRS has alerted taxpayers to about bartering:

1. Barter exchanges. A barter exchange is an organized marketplace where members barter products or services. Some exchanges operate out of an office and others over the Internet. All barter exchanges are required to issue Form 1099-B, Proceeds from Broker and Barter Exchange Transactions. The exchange must give a copy of the form to its members who barter and file a copy with the IRS.

2. Bartering income. Barter and trade dollars are the same as real dollars for tax purposes and must be reported on a tax return. Both parties must report as income the fair market value of the product or service each received.

3. Tax implications. Bartering is taxable in the year it occurs. The tax rules may vary based on the type of bartering that takes place. Barterers may owe income taxes, self-employment taxes, employment taxes or excise taxes on their bartering income.

4. Reporting rules. How you report bartering on a tax return varies. If the taxpayer has a trade or business, then normally the taxpayer reports it on Form 1040,Schedule C, Profit or Loss from Business.

For more information, see the Bartering Tax Center.

Posted in Taxation | Tagged: barter, income tax, IRS, tax tip, trading services | Leave a Comment »

Ten Tax Facts about Capital Gains and Losses

Posted by William Byrnes on April 4, 2014

In Tax Tip 2014-27, the IRS discussed capital gains and losses. The IRS stated that when a taxpayer sells a ’capital asset,’ the sale usually results in a capital gain or loss. A ‘capital asset’ includes most property owned and used for personal or investment purposes.

10 tax facts about capital gains and losses:

1. Capital assets include property such as a home or a car. They also include investment property such as stocks and bonds.

2. A capital gain or loss is the difference between the “basis” and the amount earned upon the sale of the asset. The basis is usually what the taxpayer paid for the asset.

3. A taxpayer must include all capital gains in income. Beginning in 2013, a taxpayer may be subject to the Obama Care “Net Investment Income Tax”. The NIIT applies at a rate of 3.8% to certain net investment income of individuals, estates, and trusts that have income above statutory threshold amounts.

4. A taxpayer can deduct capital losses on the sale of investment property (such as an apartment building) but can not deduct losses on the sale of personal-use property (such as the family home).

5. Capital gains and losses are either long-term or short-term, depending on how long the property is owned. If a taxpayer owns the property for more than one year, the gain or loss is long-term. If owned one year or less, the gain or loss is short-term.

6. If long-term gains are more than long-term losses, the difference between the two is a “net long-term capital gain”. If net long-term capital gain is more than net short-term capital loss, then the taxpayer has a ‘net capital gain.’

7. The tax rates that apply to net capital gains will usually depend on a taxpayer’s income. For lower-income individuals, the rate may be zero percent on some or all of their net capital gains. In 2013, the maximum net capital gain tax rate increased from 15 to 20 percent. A 25 or 28 percent tax rate can also apply to special types of net capital gains.

8. If capital losses are more than capital gains, the taxpayer can deduct the difference as a loss on the tax return. This loss is limited to $3,000 per year, or $1,500 if filing married but separate returns.

9. If total net capital loss is more than the deduction limit above, the losses above the allowable deduction can be carried over to next year’s tax return. The carried over losses will be treated as if they happened next year.

10. File Form 8949, Sales and Other Dispositions of Capital Assets, with the federal tax return to report your gains and losses. Also file Schedule D, Capital Gains and Losses with the federal tax return.

2014 Tax Facts on Investments provides clear, concise answers to often complex tax questions concerning investments. Pertinent planning points are provided throughout.

Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Investments delivers the latest guidance on:

Mutual Funds, Unit Trusts, REITs
Incentive Stock Options
Options & Futures
Real Estate
Stocks, Bonds
Oil & Gas
Precious Metals & Collectibles
And much more!

Key updates for 2014:

Important federal income and estate tax developments impacting investments, including changes from the American Taxpayer Relief Act of 2012
Expanded coverage of Reverse Mortgages
Expanded coverage of Real Estate Investment Trusts (REITs)
More than 30 new Planning Points, written by practitioners for practitioners, in the following areas:
- Limitations on Loss Deductions
- Charitable Gifts
- Reverse Mortgages
- Deduction of Interest and Expenses
- REITs

Plus, you’re kept up-to-date with online supplements for critical developments. Written and reviewed by practicing professionals who are subject matter experts in their respective topics, Tax Facts is the practical resource you can rely on.

Posted in Taxation | Tagged: capital gains, capital losses, carry forward, income tax, IRS, Schedule D | Leave a Comment »

Six Tax Tips When Deciding to Itemize or Take the Standard Deduction

Posted by William Byrnes on April 1, 2014

The IRS published Tax Tip 2014-29 with 6 helpful tips for deciding whether to itemize deductions or to rely upon the standard deduction. The IRS stated that a taxpayer should calculate the available deduction using both methods and then choose the deduction method that produces the greater deduction (thus lower amount of tax).

1. Figure the itemized deductions. Add up deductible expenses paid during the year. These may include expenses such as:

Home mortgage interest
State and local income taxes or sales taxes (but not both)
Real estate and personal property taxes
Gifts to charities
Casualty or theft losses
Unreimbursed medical expenses
Unreimbursed employee business expenses

2. Know the standard deduction. If a taxpayer does not itemize, the basic standard deduction for 2013 depends on your filing status:

Single $6,100
Married Filing Jointly $12,200
Head of Household $8,950
Married Filing Separately $6,100
Qualifying Widow(er) $12,200

The standard deduction is higher for persons when 65 or older or blind.

3. Check the exceptions. Some taxpayers do not qualify for the standard deduction and therefore should itemize. This includes married couples who file separate returns and one spouse itemizes.

4. Use the IRS’s ITA tool: Interactive Tax Assistant tool to help determine your standard deduction.

5. File the right forms. To itemize deductions, use Form 1040 and Schedule A, Itemized Deductions. Standard deduction is on Forms 1040, 1040A or 1040EZ.

6. File Electronically. Some taxpayers are eligible for free, brand-name software to prepare and e-file the tax return. IRS Free File will do the work for you.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries. For over 110 years, National Underwriter has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions.

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

Posted in Taxation, Uncategorized | Tagged: Deductions, income tax, IRS, Itemized deduction | Leave a Comment »

Simplified Option for Claiming Home Office Deduction Now Available – May Deduct up to $1,500!

Posted by William Byrnes on March 29, 2014

The IRS reported in Newswire (IR-2014-24) that people with home-based businesses that this year for the first time they can choose a new simplified option for claiming the deduction for business use of a home.

In tax year 2011, the most recent year for which figures are available, some 3.3 million taxpayers claimed deductions for business use of a home (commonly referred to as the home office deduction) totaling nearly $10 billion. The new optional deduction, capped at $1,500 per year based on $5 a square foot for up to 300 square feet, will reduce the paperwork and record keeping burden on small businesses by an estimated 1.6 million hours annually.

The new option is available starting with the 2013 return taxpayers are filing now. Normally, home-based businesses are required to fill out a 43-line form (Form 8829) often with complex calculations of allocated expenses, depreciation and carryovers of unused deductions. Instead, taxpayers claiming the optional deduction need only complete a short worksheet in the tax instructions and enter the result on their return. Self-employed individuals claim the home office deduction on Schedule C Line 30, farmers claim it on Schedule F Line 32 and eligible employees claim it on Schedule A Line 21.

Though homeowners using the new option cannot depreciate the portion of their home used in a trade or business, they can claim allowable mortgage interest, real estate taxes and casualty losses on the home as itemized deductions on Schedule A. These deductions need not be allocated between personal and business use, as is required under the regular method.

Business expenses unrelated to the home, such as advertising, supplies and wages paid to employees, are still fully deductible. Long-standing restrictions on the home office deduction, such as the requirement that a home office be used regularly and exclusively for business and the limit tied to the income derived from the particular business, still apply under the new option.

IRS YouTube Video:
Simplified Home Office Deduction: English / Spanish / ASL

Posted in Taxation | Tagged: home office deduction, income tax, IRS | Leave a Comment »

IRS Reminds Individuals of Health Care Choices for 2014

Posted by William Byrnes on March 28, 2014

In Issue Number HC-TT- 2014-01, the IRS released reminders for Individuals about the 2014 Health Care Choices. In 3 days, on March 31, the Heath Care Market Exchange enrollment period will close.

Starting in 2014, each person must choose to either have basic health insurance coverage (known as minimum essential coverage) for everyone in the family for each month or go without health care coverage for some or all of the year.

If a person don’t maintain health insurance coverage, then that person will need to either seek an exemption or pay a penalty (called an “individual shared responsibility payment”) with the 2014 income tax return filed in 2015.

What Qualifies as Health Insurance to Avoid the Penalty?

Qualifying coverage includes:

health insurance coverage provided by your employer (including COBRA and retiree coverage),
health insurance coverage purchase through a health care exchange Marketplace,
Medicare, Medicaid or other government-sponsored health coverage including programs for veterans, or
coverage you buy directly from an insurance company.

Qualifying coverage does not include certain coverage that may provide limited benefits, such as coverage only for vision care or dental care, workers’ compensation, or coverage only for a specific disease or condition.

Premium Tax Credit May Help Pay for Health Insurance

If purchasing health insurance coverage through the Marketplace, the person may be eligible for financial assistance including the premium tax credit, which will help lower the out-of-pocket cost of your monthly insurance premiums (see yesterday’s blog article).

Exemptions

If a person chooses to go without coverage or experiences a gap in coverage, the person may still qualify for an exemption based upon (1) not having access to affordable coverage, (2) the gap is less than three consecutive months without coverage, or (3) qualifying for one of several other exemptions. A special hardship exemption applies to individuals who purchase their insurance through the Marketplace during the initial enrollment period but due to the enrollment process have a coverage gap at the beginning of 2014.

Penalty for Not Having Health Insurance

If a person (or any of dependents) do not maintain coverage and do not qualify for an exemption, then the person will owe a penalty, called a “individual shared responsibility payment”, paid when filing the tax return in 2015. In general, the payment amount is either a percentage of household income or a flat dollar amount, whichever is greater.

The person will owe 1/12th of the annual payment for each month you (or your dependents) do not have coverage and are not exempt. The annual payment amount for 2014 is the greater of:

1 percent of household income that is above the tax return filing threshold for the filing status, such as Married Filing Jointly or single, or
A family’s flat dollar amount, which is $95 per adult and $47.50 per child, limited to a maximum of $285.

The penalty is capped at the cost of the national average premium for the bronze level health plan available through the Marketplace in 2014.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

“Our brand-new Tax Facts title is exciting in many ways,” says Rick Kravitz, Vice President & Managing Director of Summit Professional Network’s Professional Publishing Division. “First of all, it fills a huge gap in the resources available to today’s advisors. Small business is a big market, and this book enables advisors to get up-and-running right away, with proven guidance that will help them serve their clients’ needs. Secondly, it addresses the biggest questions facing all taxpayers and provides absolutely reliable answers that help advisors solve today’s biggest problems with confidence.”

tax-facts-online_medium The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

“The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.

Posted in Taxation | Tagged: ACA, Health care, Health Care Marketplace, income tax, Obama Care | Leave a Comment »

Four Tax Facts about the Health Care Law for Individuals

Posted by William Byrnes on March 26, 2014

In Health Care Tax Tip 2014-06, the IRS alerted taxpayers to four basic tax tips about the new health care law. The IRS stated that health insurance choices made now may affect the income tax return filed next year (2015).

1. Most people already have qualified health insurance coverage and will not need to do anything more than maintain qualified coverage throughout 2014.

2. If a taxpayer does not have health insurance through a job or a government plan, the taxpayer may be able to buy it through the Health Insurance Marketplace. The open enrollment period to purchase health insurance coverage for 2014 through the Health Insurance Marketplace ENDS in 5 days on March 31, 2014!

3. If a taxpayer buy health insurance through the Marketplace, the taxpayer may be eligible for an advance premium tax credit to lower your out-of-pocket monthly premiums. (Tomorrow’s blog article will provide information about this advance premium tax credit.)

4. The 2014 tax return to be filed in 2015 will have a new tax question: did you have insurance coverage or did you qualify for an exemption? If not, the taxpayer may owe a shared responsibility payment.

What should you do now?

If a taxpayer or the family does not have health insurance, then talk to the employer about the employer’s health coverage offered, or visit the Marketplace online.

Find out more about the health care law and the Marketplace at www.HealthCare.gov.

Find out more about the premium tax credit and the shared responsibility payment at www.IRS.gov/aca.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

tax-facts-online_medium

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

“The authors’ knowledge and experience in tax law and practice provides the expert guidance for National Underwriter to once again deliver a valuable resource for the financial advising community,” added Kravitz.

Posted in Taxation | Tagged: ACA, income tax, IRS, Obama Care, Premium Tax Credit | Leave a Comment »

Three Tax Tips about Obama Care

Posted by William Byrnes on March 12, 2014

Here are three tips about how the law may affect you:

The IRS published tax tip HC-TT- 2014-05 alerting taxpayers that Obama Care has provisions that may affect personal income taxes. How Obama Care affects a taxpayer depends on employment status, whether the taxpayer participates in a tax favored health plan, and the taxpayer’s age.

1. Employment Status

If a taxpayer is employed then the employer may report the value of the health insurance provided on the W-2 in Box 12 with a Code “DD”. However, this amount is not taxable.
If a taxpayer is self-employed, then the taxpayer may deduct the cost of health insurance premiums, within limits.

2. Tax Favored Health Plans

If a taxpayer has a health flexible spending arrangement (FSA) at work, money added to it normally reduces taxable income.
If a taxpayer has a health savings account (HSA) at work, money the employer adds to it, within limits, is not taxable.
Money added to an HSA usually counts as a deduction.
Money used from an HSA for “qualified medical expenses” is not taxable income; however, withdrawals for other purposes are taxable and can even be subject to an additional tax.
If a taxpayer has a health reimbursement arrangement (HRA) at work, money received from it is generally not taxable.

3. Age

If a taxpayer is age 65 or older, the threshold for itemized medical deductions remains at 7.5 percent of Adjusted Gross Income (AGI) until 2017; for others the threshold increased to 10 percent of AGI in 2013. AGI is shown on Form 1040 tax form.

Posted in Taxation | Tagged: ACA, income tax, medical expenses, Obama Care, tax | Leave a Comment »

IRS Offers Obama Care Tax Tips for 2013 and 2014

Posted by William Byrnes on March 11, 2014

The IRS has set up a webpage >Health Care Tax Tips< to help people understand what they need to know for the 2013 federal individual income tax returns they are filing by April 15th, as well as for future tax returns. This includes information on the new Premium Tax Credit and making health care coverage choices.

Because many of the new Obama Care tax rules only went into effect on Jan. 1, 2014, most of these Obama Care changes do not affect the 2013 tax return.

What do I need to know for my 2013 tax return?

For most people, the Affordable Care Act has no effect on their 2013 federal income tax return.
The individual shared responsibility provision and the premium tax credit do not affect your 2013 federal income tax return.
However, for some people, a few provisions could affect their tax returns, such as increases in the itemized medical deduction threshold, the additional Medicare tax and the net investment income tax.

Considerations for 2014 tax year?

Open Enrollment for the Health Insurance Marketplace: The open enrollment period to purchase health care coverage through the Health Insurance Marketplace for 2014 began Oct. 1, 2013 and runs through March 31, 2014. When you get health insurance through the marketplace, you may be able to get advance payments of the premium tax credit that will immediately help lower your monthly premium. Learn more at HealthCare.gov.
Premium Tax Credit: If you get insurance through the Marketplace, you may be eligible to claim the premium tax credit. You can elect to have advance payments of the tax credit sent directly to your insurer during 2014, or wait to claim the credit when you file your tax return in 2015. If you choose to have advance payments sent to your insurer, you will have to reconcile the payments on your 2014 tax return, which will be filed in 2015. If you’re already receiving advance payments of the credit, you need do nothing at this time unless you have a change in circumstance. Learn More.
Change in Circumstances: If you’re receiving advance payments of the premium tax credit to help pay for your insurance coverage, you should report life changes, such as income, marital status or family size changes, to your marketplace. Reporting changes will help to make sure you are getting the proper amount of advance payments.
Individual Shared Responsibility Payment: Starting January 2014, you and your family must have health care coverage, have an exemption from coverage, or make a payment when you file your 2014 tax return in 2015. Most people already have qualifying health care coverage and will not need to do anything more than maintain that coverage throughout 2014. Learn More.

The Health Care Tax Tips available at >IRS ACA website< include:

IRS Reminds Individuals of Health Care Choices for 2014 ─ Find out what you need to know about how health care choices you make for 2014 may affect your taxes.
The Health Insurance Marketplace – Learn about Your Health Insurance Coverage Options – Find out about getting health care coverage through the Health Insurance Marketplace.
The Premium Tax Credit ─ Learn the basics of the Premium Tax Credit, including who might be eligible and how to get the credit.
The Individual Shared Responsibility Payment – An Overview ─ Provides information about types of qualifying coverage, exemptions from having coverage, and making a payment if you do not have qualifying coverage or an exemption.
Three Timely Tips about Taxes and the Health Care Law ─ Provides tips that help with filing the 2013 tax return, including information about employment status, tax favored health plans and itemized deductions.
Four Tax Facts about the Health Care Law for Individuals ─Offers basic tips to help people determine if the Affordable Care Act affects them and their families, and where to find more information.
Changes in Circumstances can Affect your Premium Tax Credit ─ Learn the importance of reporting any changes in circumstances that involve family size or income when advance payments of the Premium Tax Credit are involved.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

Posted in Taxation | Tagged: Affordable Care Act, Health care, income tax, IRS, Obama Care | 1 Comment »

Taxable and Nontaxable Income

Posted by William Byrnes on March 5, 2014

The IRS published another tax tip (2014-12) to assist tax filers this tax season addressing when income is taxable, and when it is not.

With individual tax returns due at the post office within 6 weeks, the IRS is stepping up efforts to help guide taxpayers with basic income tax questions and filing requirements. Excerpted below, in its Tax Tip, the IRS states:

Taxable income includes money you receive, such as wages and tips. It can also include noncash income from property or services. For example, both parties in a barter exchange must include the fair market value of goods or services received as income on their tax return.

Some types of income are not taxable except under certain conditions, including:

Life insurance proceeds paid to you are usually not taxable. But if you redeem a life insurance policy for cash, any amount that is more than the cost of the policy is taxable.
Income from a qualified scholarship is normally not taxable. This means that amounts you use for certain costs, such as tuition and required books, are not taxable. However, amounts you use for room and board are taxable.
If you got a state or local income tax refund, the amount may be taxable. You should have received a 2013 Form 1099-G from the agency that made the payment to you. If you didn’t get it by mail, the agency may have provided the form electronically. Contact them to find out how to get the form. Report any taxable refund you got even if you did not receive Form 1099-G.

Here are some types of income that are usually not taxable:

Gifts and inheritances
Child support payments
Welfare benefits
Damage awards for physical injury or sickness
Cash rebates from a dealer or manufacturer for an item you buy
Reimbursements for qualified adoption expenses

For more on this topic see Publication 525, Taxable and Nontaxable Income.

IRS YouTube Videos:

Taxable and Nontaxable Income – English | Spanish | ASL

Posted in Taxation | Tagged: income tax, IRS, tax return, Taxable income | 1 Comment »

Seven Facts about Dependents and Exemptions

Posted by William Byrnes on March 2, 2014

The IRS Tax Tip 2014-22 released this past week included a synopsis of the tax rules for rules for exemptions and dependents – these generally affecting every taxpayer who files a federal income tax return.

Seven facts about these rules:

1. Exemptions cut income. There are two types of exemptions: personal exemptions and exemptions for dependents. A taxpayer can usually deduct $3,900 for each exemption claimed on the 2013 tax return.

2. Personal exemptions. A taxpayer can usually claim an exemption for him or herself. If married and filing a joint return, the taxpayers can also claim another exemption for the spouse. Filing a joint return and claiming two exemptions will lead to a $7,800 deduction from the couple’s reported income.

However, if a taxpayer files a separate return, then he / she can claim an exemption for the spouse only if your spouse had no gross income, is not filing a return, and was not the dependent of another taxpayer.

3. Exemptions for dependents. A taxpayer can usually claim an exemption for each of his/her dependents. A dependent is either the taxpayer’s child or a relative that meets certain tests. The taxpayer can claim a spouse as a dependent. The taxpayer must list the Social Security number of each dependent claimed.

4. Some people don’t qualify. A taxpayer generally may not claim married persons as dependents if they file a joint return with their spouse. There are some exceptions to this rule.

5. Dependents may have to file. People that are claimed as a dependent may have to file their own federal tax return. This depends on many things, including the amount of their income, their marital status and if they owe certain taxes.

6. No exemption on dependent’s return. If a person is claimed as a dependent, then that person can’t claim a personal exemption on his or her own tax return. This is true even if the taxpayer chooses not to actually claim that person as a dependent on the tax return. The rule applies because the taxpayer has the right to claim that person as a dependent.

7. Exemption phase-out. The $3,900 per exemption is subject to income limits (high income earners). This rule may reduce or eliminate the amount depending on a taxpayer’s income.

The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

Posted in Taxation | Tagged: dependents, exemptions, income tax, Personal exemptions | Leave a Comment »

The National Underwriter Company Publishes Tax Facts on Individuals & Small Business

Posted by William Byrnes on February 4, 2014

Tax and financial advisors will now have a new tool for helping individuals and small businesses navigate today’s toughest tax questions …

NEW YORK, /PRNewswire/ — In order to aid professionals faced with complicated, confusing tax questions, National Underwriter has released the newest addition to its highly popular Tax Facts library, Tax Facts on Individuals & Small Business, an essential tax reference for financial advisors & planners, insurance professionals, CPAs, attorneys, and other practitioners advising small businesses and individuals.

For more than half a century, Tax Facts has been an essential resource designed to meet the real-world tax-guidance needs of professionals in both the insurance and investment industries.

Due to a number of recent changes in the law, taxpayers are currently facing many questions connected to important issues such as healthcare, home office use, capital gains, investments, and whether an individual is considered an employee or a contractor. Financial advisors are continually looking for updated tax information that can help them provide the right answers to the right people at the right time. This brand-new resource provides fast, clear, and authoritative answers to pressing questions, and it does so in the convenient, timesaving, Q&A format for which Tax Facts is famous.

The company also points out that the expert authors—Robert Bloink, Esq., LL.M., and William H. Byrnes, Esq., LL.M., CWM®—are delivering real-life guidance based on decades of experience.

ABOUT NATIONAL UNDERWRITER
For over 110 years, National Underwriter has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions. With respected resources available in print, online, and in eBook formats, National Underwriter remains at the forefront of the evolving insurance industry, delivering the thorough and easy-to-use resources you rely on for success. National Underwriter is a Summit Professional Network.

ABOUT SUMMIT PROFESSIONAL NETWORKS
Summit Professional Networks supports the growth and vitality of the insurance, financial services and legalcommunities by arming professionals with the knowledge and education they need to succeed at every stage of their careers. We provide face-to-face and digital events, websites, mobile sites and apps, online information services, and magazines giving professionals multi-platform access to our critical resources, including Professional Development; Education & Certification; Prospecting & Data Tools; Industry News & Analysis; Reference Tools and Services; and Community Networking Opportunities.

Using all of our resources across each community we serve, we deliver measurable ROI for our sponsors through a range of turnkey services, including Research, Content Development, Integrated Media, Creative & Design, and Lead Generation.

For more information, go to http://www.summitprofessionalnetworks.com/.

Press Contact:
Marcia Mermelstein
Summit Professional Networks
201-526-2340
mmermelstein@SummitProNets.com

Posted in book | Tagged: income tax, national underwriter, summit, tax facts, William Byrnes | Leave a Comment »

Can Your Business Help its Employees Save in 2014 Via an Automatic Payroll Deduction IRA?

Posted by William Byrnes on February 3, 2014

This artticle discusses one avenue for retirement planning solutions for small businesses. Financial Planners who have small business clients may consider a discussion on the automatic payroll deduction IRAs as one simple way to help employees save for retirement.

A payroll deduction individual retirement account (IRA) is one simple way for businesses to give employees an opportunity to save for retirement. The program is easy to implement; the employer sets up the payroll deduction IRA program with a bank, insurance company or other financial institution, and then the employees choose whether and how much they want deducted from their paychecks and deposited into the IRA. Depending on the IRA service provider, some employees may also have a choice of investments depending on the IRA provider. Wealth managers can add value to employees and employers by, not only establishing a plan, but by also working with employees to help them manage their IRAs.

Under a payroll deduction IRA, the employee makes all of the contributions, thus there are no employer contributions. By making regular payroll deductions, employees are able to contribute smaller amounts each pay period to their IRAs, rather than having to come up with a larger amount all at once.

One advantage of these accounts is that there is little administrative cost and no annual filings with the government. Moreover, businesses of any size can participate as there is no requirement that an employer have a certain number of employees to set up a payroll deduction IRA.

Another element that makes the program attractive to some small businesses is that the program will not be considered an employer retirement plan subject to Federal requirements for reporting and fiduciary responsibilities as long as the employer keeps its involvement to a minimum.

Here’s how the IRAs generally work: The employer sets up the payroll deduction IRA program with a financial institution, such as a bank, mutual fund or insurance company. The employee establishes either a traditional or a Roth IRA (based on the employee’s eligibility and personal choice) with the financial institution and authorizes the payroll deductions. The employer withholds the payroll deduction amounts that the employee has authorized and promptly transmits the funds to the financial institution. After doing so, the employee and the financial institution are responsible for the amounts contributed.

Generally however, the employer needs to remain neutral with respect to the IRA provider. It cannot negotiate with an IRA provider to obtain special terms for its employees, exercise any influence over the investments made or permitted by the IRA provider, or receive any compensation in connection with the IRA program except reimbursement for the actual cost of forwarding the payroll deductions.

Commonly, any employee who performs services for the business (or “employer”) can be eligible to participate. The decision to participate is left exclusively up to the employee. The employees should understand that they have the same opportunity to contribute to an IRA outside the payroll deduction program and that the employer is not providing any additional benefit to employees who participate.

Employees’ tax-deferred contributions are generally limited to a maximum annual calendar year contribution, for 2014 that maximum is $5,500.00. Additional “catch-up” contributions of currently $1,000.00 a year are permitted for employees age 50 or over, thus a total of $6,500.00 a year for 2014.

Example of time value of money

Saving $500.00 per month, for 20 years, at 6% annual return over that time will provide you $232,176.00 for retirement. See the US government’s Tools and Calculators for Investors

The new Presidential myRA to be established by Treasury in 2014

The new myRA, to be established by Treasury under request of President Obama, is covered previously in this blog at > myRA < Several blog subscribers have emailed me with policy and operational questions about the “myRA“. A vein of questions that I find particularly interesting is whether tax policy rests with the executive instead of Congress? The myRA has a tax benefit (tax exemption during the earnings period) and a cost (no fees to be passed onto the employee, but as the adage goes: “there is no free lunch”). Tax Policy (tax imposition and tax benefit) should be established by Congress as part of the democratic process of establishing a fiscal budget. Yet, this norm is not absolute because Congress handed over of both establishing and enforcing regulation to the Executive (Treasury in this case). Establishing and enforcing the regulations also impacts policy. If you care to comment directly in the blog, do so below or feel free to continue sending me your comments directly.

Authoritative and easy-to-use, 2014 Tax Facts on Insurance & Employee Benefits shows you how the tax law and regulations are relevant to your insurance, employee benefits, and financial planning practices. Often complex tax law and regulations are explained in clear, understandable language. Pertinent planning points are provided throughout.

Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:

Estate & Gift Tax Planning
Roth IRAs
HSAs
Capital Gains, Qualifying Dividends
Non-qualified Deferred Compensation Under IRC Section 409A
And much more!

Key updates for 2014:

Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
Expanded coverage of Annuities
New section on Structured Settlements
New section on International Tax
More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans

Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, IRA, payroll deduction, Retirement, Retirement planning | Leave a Comment »

Five Great Reasons to E-file Your Tax Return

Posted by William Byrnes on February 3, 2014

The IRS has published IRS Tax Tip 2014-04 addressing “E-Filing”.

The IRS reports that 122 million taxpayers e-filed in 2013 for the 2012 tax year: IRS e-file. The IRS provides five reasons why a taxpayer should e-file your tax return:

1. Accurate and complete. E-file is the best way to file an accurate and complete tax return. The tax software does the math for you, and it helps you avoid mistakes.

2. Safe and secure. IRS e-file meets strict guidelines and uses the best encryption technology. The IRS has safely and securely processed more than 1.2 billion e-filed individual tax returns since the program began.

3. Faster refunds. E-filing usually brings a faster refund because there is nothing to mail and your return is less likely to have errors, which take longer to process. The IRS issues most refunds in less than 21 days. The fastest way to get your refund is to combine e-file with direct deposit into your bank account.

4. Payment options. If you owe taxes, you can e-file early and set an automatic payment date anytime on or before the April 15 due date. You can pay by check or money order, or by debit or credit card. You can also transfer funds electronically from your bank account.

5. E-file’s easy. You can e-file your federal return through IRS Free File, the free tax preparation program available only at IRS.gov. You can also use commercial tax software or ask your tax preparer to e-file your return. If you qualify, IRS Volunteer Income Tax Assistance and Tax Counseling for the Elderly will e-file your return for free.

IRS YouTube Videos:

Welcome to Free File – English
Do It Yourself Free Tax Preparation – English | Spanish | ASL

The newest addition to the Tax Facts Library, Tax Facts on Individuals & Small Business focuses exclusively on what individuals and small businesses need to know to maximize opportunities under today’s often complex tax rules. It is the essential tax reference for financial advisors, & planners; insurance professionals; CPAs; attorneys; and other practitioners advising small businesses and individuals. See http://www.nationalunderwriter.com/tax-facts-on-individuals-small-business.html

Organized in a convenient Q&A format to speed you to the information you need, Tax Facts on Individuals & Small Business delivers the latest guidance on:
» Healthcare
» Home Office
» Contractor vs. Employee — clarified!
» Business Deductions and Losses
» Business Life Insurance
» Small Business Valuation
» Small Business Entity Choices
» Accounting — including guidance on how standards change as the business grows
» Capital Gains
» Investor Losses
» New Medicare Tax and Net Investment Income tax
» Individual Income Taxation

Posted in Taxation | Tagged: 1040, e-file, income tax, IRS, tax filing | Leave a Comment »

Can an individual roll over or convert a traditional IRA or other eligible retirement plan into a Roth IRA?

Posted by William Byrnes on January 30, 2014

A “qualified rollover contribution” can be made from a traditional IRA or any eligible retirement plan to a Roth IRA. Amounts that are held in a SEP or a SIMPLE IRA that have been held in the account for two or more years also may be converted to a Roth IRA.

Read the three page of planning tips from William Byrnes and Robert Bloink’s Tax Facts Online analysis at > Think Advisor <

Organized in a convenient Q&A format to speed you to the information you need, 2014 Tax Facts on Insurance & Employee Benefits delivers the latest guidance on:

Estate & Gift Tax Planning
Roth IRAs
HSAs
Capital Gains, Qualifying Dividends
Non-qualified Deferred Compensation Under IRC Section 409A
And much more!

Key updates for 2014:

Important federal income and estate tax developments impacting insurance and employee benefits including changes from the American Taxpayer Relief Act of 2012
Concise updated explanation and highlights of the Patient Protection and Affordable Care Act (PPACA)
Expanded coverage of Annuities
New section on Structured Settlements
New section on International Tax
More than thirty new Planning Points, written by practitioners for practitioners, in the following areas:
- Life Insurance
- Health Insurance
- Estate and Gift Tax
- Deferred Compensation
- Individual Retirement Plans

Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, Individual Retirement Account, IRA, Retirement, Roth IRA, Traditional IRA | Leave a Comment »

When Are IRA Funds Taxed?

Posted by William Byrnes on January 27, 2014

Q. When are funds in an IRA taxed?

Funds accumulated in a traditional IRA generally are not taxable until they actually are distributed. Funds accumulated in a Roth IRA may or may not be taxable on actual distribution. Special rules may treat funds accumulated in an IRA as a “deemed distribution” and, thus, includable in income.

Read the three page planning tips and analysis of William Byrnes and Robert Bloink at Tax Facts Online > Think Advisor <

Posted in Retirement Planning, Wealth Management | Tagged: Byrnes, income tax, Individual Retirement Account, IRA, Retirement | Leave a Comment »

The IRS Median Offshore Penalty 580% of Tax Due For Those Who Make Honest Mistakes

Posted by William Byrnes on January 16, 2014

Published via the IRS Newswire (IR-2014-3) and on the Taxpayer Advocate website of the IRS on January 9, 2014, National Taxpayer Advocate Nina E. Olson released her 2013 annual report to Congress. The Taxpayer Advocate, replying on State Department statistics, cited that “7.6 million U.S. citizens reside abroad and many more U.S. residents have FBAR filing requirements, the IRS received only 807,040 FBAR submissions in 2012.”{1} The Taxpayer Advocate noted that “more than one million U.S. citizens reside in Mexico and many Mexican citizens reside in the U.S.” The Report pointed out that most persons that worked in Mexico had to pay into a government mandated retirement account (known as a AFORES), and that this retirement account may be reportable to the IRS as a foreign trust.

Regarding individual international tax compliance initiatives, the IRS Newswire reported that “Analyzing results from the IRS’s 2009 OVD program, the Advocate found the median offshore penalty was about 381% of the additional tax assessed for taxpayers with median-sized account balances, and 580% of the tax assessed for taxpayers with the smallest account balances (i.e., the bottom 10%, with an average $44,855 account balance). Taxpayers who “opted out” of the OVD program and agreed to subject themselves to audits fared better but still faced penalties of nearly 70% of the tax and interest.”

The Report stated: “Since 2009, the IRS has generally required those who failed to report offshore income and file one or more related information returns (e.g., the Report of Foreign Bank and Financial Accounts (FBAR)) to enter into successively more punitive offshore voluntary disclosure (OVD) programs. … The programs were punitive, charging average penalties of more than double the unpaid tax and interest associated with the unreported accounts. … On average, the IRS assessed penalties of nearly 70% of the unpaid tax and interest in the audits of those who opted out.” The FBAR penalty of 50% of the account balance, for up to six years of non-compliance, equals a potential maximum FBAR penalty of 300% of the account itself, without regard to the actual tax due, interest thereupon, and tax penalties.

The finding that small account holding benign taxpayers paid penalties of nearly 600% of the actual tax due appears to be a miscarriage of the intent of policy makers. This situation has also led the Taxpayer Advocate to conclude that benign actors, in particular those with small non-reported accounts, made either soft disclosures or prospectively began to comply “… without subjecting themselves to the lengthy and seemingly-unfair OVD process.”

Regarding the 2012 IRS Streamlined OVD program, the taxpayer Advocate found that as of September 2013 2,990 taxpayers had submitted returns reporting an additional $3.8 million in taxes.

{1} Report Volume 1, Page 229.

Posted in FATCA, Tax Policy | Tagged: Byrnes, income tax, IRS, offshore, OVD, Taxpayer Advocate | 6 Comments »

IRS Gives High-Income Taxpayers a Break on New 3.8% Tax

Posted by William Byrnes on January 2, 2014

The IRS has finally given high-income taxpayers a break with the release of the final regulations governing the new 3.8% tax on net investment income.

These final rules mark a dramatic shift from the IRS’s previous position. By adding flexibility to the rules, the IRS’s unanticipated amendments ease the sting of the investment income tax.

Read Professor Robert Bloink and William Byrnes’ analysis of the shift in the IRS’ position at > Think Advisor <

tax planning case studies for individuals and small business available on Tax Facts online

Posted in Taxation, Wealth Management | Tagged: accounting, income tax, Internal Revenue Service, IRS, IRS tax forms, Patient Protection and Affordable Care Act, Taxation, United States | 3 Comments »

NationalUnderwriter.com is celebrating throughout the month of December with two FREE Shipping offers! (No coupon necessary)

Posted by William Byrnes on December 12, 2013

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Posted in book | Tagged: Business, Financial plan, financial planning, Financial services, income tax, national underwriter, risk management, Stock-keeping unit, Underwriting | Leave a Comment »

2 New Tax Facts Books Released

Posted by William Byrnes on August 23, 2013

National Underwriters published 2014 editions of Tax Facts books authored by William Byrnes and Robert Bloink of the graduate tax program.

2014 Tax Facts on Investments

2014 Tax Facts on Insurance & Employee Benefits

“We have included a new section on cross border employment and estate tax issues, captive insurance and alternative risk transfer, reverse mortgages, DOMA, as well as the previously expanding sections on ETFs and on precious metals & collectibles,” William Byrnes said. “Moreover, we hope to soon announce the newest title of Tax Facts addressing entrepreneurs and their small business tax issues.”

“Tax Facts Books and the Tax Facts Online portal have built strong following of many thousand of financial planning professionals. I think financial planning professionals relate to National Underwriter’s approach of contextualizing client problems in a Question – Answer format.”

Both publications are now available as e-books, as an alternative or in combination with print.

Posted in book, Retirement Planning, Taxation, Wealth Management | Tagged: Business, Captive insurance, Corporate tax, estate tax, Graduate tax, income tax, Inheritance tax, insurance, Internal Revenue Service, tax | Leave a Comment »

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Posted by William Byrnes on June 24, 2013

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Posted in book, Estate Tax, Taxation | Tagged: income tax, IRS, national underwriter, tax facts | Leave a Comment »

The Fiscal Cliff Conclusion: Compromise Continues Tax Cuts for Many, But Not All

Posted by William Byrnes on January 2, 2013

In the first moments of 2013, Congress eased the fiscal cliff tax increases for taxpayers earning less than $450,000 by enacting the American Taxpayer Relief Act (Act), permanently extending the Bush-era income tax cuts for this group. … While the legislation extends the current income tax rates for taxpayers earning less than $450,000 ($400,000 for single filers) per year, it allowed the Bush-era tax cuts to expire for all higher-income taxpayers. Similarly, taxes on capital gains, dividends, and estates were increased for the wealthiest taxpayers.

How Were Income Taxes Increased by the Fiscal Cliff Compromise?

How Does the Act Impact the Current System for Tax Deductions and Exemptions?

Were Capital Gains and Dividend Rates Impacted by the Act?

How Are Estate and Gift Tax Rates Affected?

What Other Changes Were Made?

Beyond the Act: What is the “Investment Income Tax”?

Planning Under the Act: How Should Clients Plan for Higher Taxes in 2013?

Read the analysis at National Underwriters’ Advanced Markets – http://nationalunderwriteradvancedmarkets.com/articles/fc010113-a.aspx?action=16

Posted in Estate Tax, Retirement Planning, Tax Policy, Taxation, Wealth Management | Tagged: Bush Tax Cuts, Capital gain, fiscal cliff, Fiscal conservatism, income tax, tax, Tax rate, United States, United States Congress | Leave a Comment »

When are policy loans taxable?

Posted by William Byrnes on November 23, 2011

Generally, life insurance policies be withdrawn without income tax consequences. However, there are circumstances where a “loan” is immediately taxable. We have covered situations where a policy is surrendered with a loan outstanding, resulting in taxable income. This article discusses another case where a policy “loan” will be treated as taxable income.

In Frederick D. Todd II et ux. v. Commissioner (T.C. Memo. 2011-123), the Tax Court considered whether a distribution from a welfare benefit fund to a fund participant was a policy loan or a taxable distribution.

For previous coverage of life insurance policies held by welfare benefit funds in Advisor’s Journal, see Deductions for Life Insurance Premium Payments to Welfare Benefit Plan Denied (CC 10-29).

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For in-depth analysis of welfare benefit funds, see Advisor’s Main Library: B—Welfare Benefit Funds.

Posted in Wealth Management | Tagged: income tax, insurance, Insurance policy, Loan, Payment, tax, Taxable income, Welfare | Leave a Comment »

How to Lose a Charitable Deduction

Posted by William Byrnes on October 21, 2011

As an advisor, your clients look to you for competent advice in planning their charitable giving. It would be terrible to find out that the gift you thoughtful suggest cannot be deducted due to an avoidable paperwork mistake. Although the IRS sometimes forgives these minor errors, others are unforgivable, as illustrated in recent IRS email advice.

The IRS was not so forgiving with a taxpayer, who made what would otherwise qualify as a tax-deductible charitable gift. The problem was that the taxpayer “failed to get a contemporaneous written acknowledgment” from the charitable organization. In its advice the IRS said it will deny the taxpayer’s charitable deduction even if the taxpayer takes remedial measures and the charity amends its Form 990 (Return of Organization Exempt from Income Tax) to acknowledge the donation and include the information required by the Code.

Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of charitable deductions in Advisor’s Journal, see Qualified Charitable Distributions from an IRA (CC 11-03) & IRS Takes Qualified IRA Charitable Distributions off the Table for 2010 (CC 11-15).

For in-depth analysis of the charitable deduction under Section 170, see Advisor’s Main Library: B6—The Income Tax Charitable Deduction—I.R.C. §170.

Posted in Tax Policy, Taxation, Wealth Management | Tagged: Charitable organization, income tax, Internal Revenue Code, Internal Revenue Service, IRS, IRS tax forms, Standard deduction, tax | Leave a Comment »

Could 2011 & 2012 Gifts Come Back to Bite the Grantor

Posted by William Byrnes on August 8, 2011

Whether or not to give substantial lifetime gifts in 2011 and 2012 is going to be a hot topic between now and the end of 2012. But deciding whether to take advantage of the record high ($5 million) gift, estate and GST tax exclusion amount and low (35%) transfer tax rate isn’t a trivial matter.

Even your most tax savvy clients are going to need help deciding whether to take advantage of the new law.

The problem is that the new law—which was put into place by the Tax Reform Act of 2010—is scheduled to lapse on January 1, 2013. So is it worth taking the risk that Congress will radically change transfer tax laws for years post-2012? And what will happen to your clients’ transfer tax liability if Congress does change the law?

Posted in Wealth Management | Tagged: Congress, Goods and Services Tax (Canada), GST, income tax, law, tax, Transfer tax, United States Congress | Leave a Comment »

National Underwriter Offers Tax Advisors Expert Analysis

Posted by William Byrnes on March 22, 2011

Tax and insurance advisors looking for answers on how the new Tax Relief Act of 2010 will impact their clients are finding them in The National Underwriter Company’s just-published Selected Provisions and Analysis of the Tax Relief Act of 2010. The proprietary analysis is the only practitioners’ guide in Q&A format that answers the most critical questions asked by clients on insurance, estate and gift tax law changes.

Copies of the 64-page report are available for only $12.95 plus shipping and handling here. Producers and their companies can also license use of their logos and contact information directly on the cover of the guide for a marketing and client-management tool.

National Underwriter’s wealth management experts and report authors, Professor William H. Byrnes, Esq., LL.M, CWM and Robert Bloink, Esq., LL.M., noted, “While most media attention has focused on the Act’s retention of existing tax rates on the highest-earning Americans, tax, insurance and investment advisors are finding that the most important changes, from their perspective, are likely to be found in insurance, estate and gift tax provisions that will drive client decisions on investment strategy and wealth management priorities in 2011 and beyond.”

Rick Kravitz, Vice President & Managing Director of Summit Business Media’s Reference Division, said, “This proprietary analysis – compiled by leading experts in the field – demonstrates National Underwriter’s commitment to bringing timely and critical updates to advisors and financial planners so that they can successfully build their practices and better serve their clients.”

Prof. Byrnes, a former Coopers & Lybrand associate director in international tax and now Dean of the wealth management graduate program at Thomas Jefferson School of Law, noted that the 64-page analysis has answers to more than 100 important questions in these areas:

Income Tax
Estate and Gift Tax
Generation Skipping Transfer Tax
Deduction for State and Local Sales Taxes
Alternative Minimum Tax
Tax Credits
Payroll Tax Holiday
Wage Credit for Employees Who Are Active Duty Members of the Military
Charitable Distributions from Retirement Accounts
Bonus Depreciation and Section 179 Expensing
Basis Reporting Requirements for Brokers and Mutual Funds
Regulated Investment Company Modernization Act of 2010
Health Care Act
Form 1099 Reporting Requirement for Businesses
American Jobs and Closing Tax Loopholes Act of 2010
Requirements for Tax Return Preparers

“This is the only guide available on the market today that gives financial planners and producers issue-specific, time-critical information in Q&A format that addresses their most important technical questions with content that can also be used directly in client presentations,” Prof. Byrnes added. “The unique combination of The National Underwriter Company’s editorial staff and the resources and professional experience of the wealth management faculty at Thomas Jefferson School of Law provides assurance that these are answers that can be counted on.”

About The National Underwriter Company

For over 110 years, The National Underwriter Company has been the first in line with the targeted tax, insurance, and financial planning information you need to make critical business decisions. With respected resources available in print, on CD, and online, National Underwriter remains at the forefront of the evolving insurance industry, delivering the thorough and easy-to-use resources you rely on for success. National Underwriter is a Summit Business Media company.

About Summit Business Media

Summit Business Media is the leading B2B media and information company serving the insurance, investment advisory, professional services and mining investment markets through a variety of channels, including print, online and live events. Summit provides breaking news and analysis, in-depth practice management strategies, business-building techniques and actionable data to the markets it serves. Through its Media and Reference Divisions, Summit publishes 16 magazines, 20 websites and 150 reference titles. Summit’s Event Division hosts a dozen conferences across the spectrum of markets the company services. Summit’s Data Division is the leading data provider of financial, marketing and benefits information on corporations, insurance companies and life, benefits and property-casualty agents.

Summit employs nearly 400 employees in ten offices across the United States. For more information, please visitsummitbusinessmedia.com.

Posted in Taxation | Tagged: Employment, income tax, insurance, Summit Business Media, Tax credit, Tax law, Thomas Jefferson School of Law, United States | Leave a Comment »

National Underwriter Offers Tax Advisors Expert Analysis

Posted by William Byrnes on March 14, 2011

Copies of the 64-page book are available for only $12.95 plus shipping and handling here. Producers and their companies can also license use of their logos and contact information directly on the cover of the guide for a marketing and client-management tool.

Income Tax
Estate and Gift Tax
Generation Skipping Transfer Tax
Deduction for State and Local Sales Taxes
Alternative Minimum Tax
Tax Credits
Payroll Tax Holiday
Wage Credit for Employees Who Are Active Duty Members of the Military
Charitable Distributions from Retirement Accounts
Bonus Depreciation and Section 179 Expensing
Basis Reporting Requirements for Brokers and Mutual Funds
Regulated Investment Company Modernization Act of 2010
Health Care Act
Form 1099 Reporting Requirement for Businesses
American Jobs and Closing Tax Loopholes Act of 2010
Requirements for Tax Return Preparers

About The National Underwriter Company

About Summit Business Media

Summit employs nearly 400 employees in ten offices across the United States. For more information, please visitsummitbusinessmedia.com.

Posted in Taxation | Tagged: Employment, income tax, insurance, Summit Business Media, Tax credit, Tax law, Thomas Jefferson School of Law, United States | Leave a Comment »

Court Nixes Carrier’s 300% Premium Increase

Posted by William Byrnes on March 7, 2011

Although supervising the cost of insurance embedded in life insurance premiums has historically been the domain of state insurance commissioners, the U.S. District Court for the Central District of California has intervened in one recent case, ruling on January 19 that Conseco Life Insurance Co. cannot increase the premiums it charges 50,000 of its existing policyholders.

The premium increase was part of a plan by Conseco to reduce its long-term losses. Rather than post reserves, Conseco looked for a way to reduce its future liabilities by $173 million. They targeted two blocks of universal life policies that had lower than expected lapse rates, using a pricing formula that would explode the cost of insurance charged in the policies’ 21^st year after issuance. Customers who’d held the affected policies longest would have seen their premiums increase in 2010 or 2011. Read this complete analysis of the impact at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber).

For previous coverage of another carrier lawsuit in Advisor’s Journal, see Carriers Targeted by Suit Over Losses on Madoff Investments (CC 11-06).

For in-depth analysis of the income taxation of life insurance, see Advisor’s Main Library: A—Definition of “Life Insurance” For Income Tax Purposes.

Posted in Insurance | Tagged: Business, Conseco, Financial services, income tax, insurance, life insurance, United States, Universal life insurance | Leave a Comment »

Higher Filing Thresholds Doubles for Non-Profits

Posted by William Byrnes on February 16, 2011

Why is this Topic Important to Wealth Managers? Discusses the new income reporting threshold for non-profit organizations. Provides details on the new level of reporting required on Form 990 for 501(c) organizations.

Generally the Internal Revenue Code requires the filing of an annual return by exempt organizations. [1] However, there are certain mandatory exceptions to the annual filing requirement for exempt organizations provided by the Code. [2]

Further, the tax law provides that the Secretary of the Treasury, through the Commissioner of the Internal Revenue Service may relieve exempt organizations from the annual filing requirement if the Secretary determines that such filings are not necessary to the efficient administration of the internal revenue laws. [3]

Before, exempt organizations were relieved from the Form 990 (Return of Organization Exempt from Income Tax) filing requirement for organizations described in § 501(c) (other than private foundations) whose annual gross receipts are normally not more than $25,000. [4]

Read the full analysis and on similar issues – AdvisorFYI

Posted in Tax Exempt Orgs | Tagged: 501(c), income tax, Internal Revenue Code, Internal Revenue Service, IRS tax forms, Non-profit organization, tax, Tax exemption | Leave a Comment »

Foreign Trust Disclosure

Posted by William Byrnes on February 9, 2011

Although trusts can be taxpayers, Sections 671 to 679 of the Internal Revenue Code contain the so-called ‘grantor trust rules’, which treat certain trust settlors (and sometimes persons other than the settlor) as the owner of a portion or all of a trust’s income, deductions and credits for US tax purposes. A trust where the settlor (or other person) is treated as the owner of the trust assets for US tax purposes is referred to as a ‘grantor trust’. The grantor trust rules apply to both foreign and domestic trusts, but in different ways.

Under the grantor trust rules, a US person who transfers property to a foreign trust is generally treated for income tax purposes as the owner of that portion of the trust attributable to the transferred property, even if the trust would not have been a grantor trust had it been domestic.

This is the result for any tax year in which any portion of the foreign trust has a US beneficiary. A foreign trust is treated as having a US beneficiary for a tax year unless (i) under the terms of the trust, no part of the trust’s income or corpus may be paid or accumulated during the tax year to or for the benefit of a US person, and (ii) if the trust is terminated at any time during the tax year, no part of the income or corpus could be paid to or for the benefit of a US person. The Internal Revenue Service (IRS) regulations under Section 679 of the Internal Revenue Code generally treat a foreign trust as having a US beneficiary if any current, future or contingent beneficiary of the trust is a US person. To read this article excerpted above, please access AdvisorFYI.

Posted in Taxation | Tagged: Fiscal year, income tax, Internal Revenue Code, Internal Revenue Service, IRS tax forms, tax, Taxation, United States | Leave a Comment »

National Underwriter Offers Tax Advisors Expert Analysis of the Impact of the Tax Relief Act on Their Clients

Posted by William Byrnes on February 7, 2011

NEW YORK, Feb. 4, 2011 /PRNewswire/ — Tax and insurance advisors looking for answers on how the new Tax Relief Act of 2010 will impact their clients are finding them in The National Underwriter Company’s just-published Selected Provisions and Analysis of the Tax Relief Act of 2010. The proprietary analysis is the only practitioners’ guide in Q&A format that answers the most critical questions asked by clients on insurance, estate and gift tax law changes.

Rick Kravitz, Vice President & Managing Director of Summit Business Media’s Reference Division, said, “This proprietary analysis — compiled by leading experts in the field — demonstrates National Underwriter’s commitment to bringing timely and critical updates to advisors and financial planners so that they can successfully build their practices and better serve their clients.”

Income Tax
Estate and Gift Tax
Generation Skipping Transfer Tax
Deduction for State and Local Sales Taxes
Alternative Minimum Tax
Tax Credits
Payroll Tax Holiday
Wage Credit for Employees Who Are Active Duty Members of the Military
Charitable Distributions from Retirement Accounts
Bonus Depreciation and Section 179 Expensing
Basis Reporting Requirements for Brokers and Mutual Funds
Regulated Investment Company Modernization Act of 2010
Health Care Act
Form 1099 Reporting Requirement for Businesses
American Jobs and Closing Tax Loopholes Act of 2010
Requirements for Tax Return Preparers

About The National Underwriter Company

About Summit Business Media

Summit employs nearly 400 employees in ten offices across the United States. For more information, please visit summitbusinessmedia.com.

Posted in Taxation | Tagged: Employment, income tax, PR Newswire, Summit Business Media, Tax credit, Tax law, Thomas Jefferson School of Law | Leave a Comment »

Selected Provisions and Analysis of the Tax Relief Act of 2010

Posted by William Byrnes on January 18, 2011

Written by the foremost experts in the field, Robert Bloink, Esq., LL.M and Professor William H. Byrnes, Esq., LL.M, CWM

Understand the Act’s Implications for You and Your Clients

Analyzes important insurance, estate, gift, and other elements of the Act
Provides pertinent information on other important 2010 tax developments
Convenient Q&A format speeds you to the information you need – with answers to over 100 important questions

Summary Table of Contents

Analysis of the Tax Relief Act of 2010
- Income Tax Provisions
- Estate Tax Provisions
- Generation Skipping Transfer Tax
- Deduction for State and Local Sales Taxes
- Alternative Minimum Tax
- Tax Credits
- Payroll Tax Holiday
- Wage Credit for Employees who are Active Duty Members of the Military
- Charitable Distributions from Retirement Accounts
- Bonus Depreciation and Section 179 Expensing
- Basis Reporting Requirements for Brokers and Mutual Funds
- Regulated Investment Company Modernization Act of 2010
- Health Care Act
- Form 1099 Reporting Requirement for Businesses
- American Jobs and Closing Tax Loopholes Act of 2010
- Requirements for Tax Return Preparers

Product Information:

Softcover/64 pages total; 42 pages of questions and answers

Publication Date: January 2011

Publication Number: 1350011

Price: $12.95 + shipping & handling and applicable sales tax

To order:

Call 1-800-543-0874
Visit http://www.nuco.com/tax

With our Custom Imprint program, you can place your company’s logo on the cover of this analysis and you’ll leave a lasting impression. Call 1-800-543-0874 for additional information.

Posted in Taxation | Tagged: accounting, Alternative Minimum Tax, income tax, IRS tax forms, Section 179 depreciation deduction, tax, Taxation, United States | Leave a Comment »

Obama Tax Cuts Alternative Minimum Tax Exemption Extensions

Posted by William Byrnes on January 15, 2011

“For more than three decades, the individual income tax has consisted of two parallel tax systems: the regular tax and an alternative tax that was originally intended to impose taxes on high-income individuals who have no liability under the regular income tax.” [1]

Current law imposes an alternative minimum tax (AMT) only on individuals. “The stated purpose of the alternative minimum tax (AMT) is to keep taxpayers with high incomes from paying little or no income tax by taking advantage of various preferences in the tax code.” [2]

The parallel tax structure to the regular income tax law requires individuals “to recalculate their taxes under alternative rules that include certain forms of income exempt from regular tax and that do not allow specific exemptions, deductions, and other preferences.” [3]

Generally, the AMT is an amount that is the excess of the “tentative minimum tax” over the regular income tax.

Tentative minimum tax is equal to the sum of (1) 26 percent of so much of the taxable excess as does not exceed $175,000 ($87,500 in the case of a married individual filing a separate return) and (2) 28 percent of the remaining taxable excess, which is essentially an individual’s taxable income adjusted to take into account certain specified preferences and adjustments (also known as alternative minimum taxable income (“AMTI”)) minus the exemption amount. To read this article excerpted above, please access http://www.advisorfyi.com/2010/12/obama-tax-cuts-alternative-minimum-tax-exemption-extensions/

Posted in Taxation | Tagged: Alternative Minimum Tax, AMT, Incentive stock option, Income, income tax, Itemized deduction, tax, Taxable income | Leave a Comment »

New Tax Brackets under the Obama Tax Cuts

Posted by William Byrnes on January 14, 2011

Image via Wikipedia

In 2001, the Economic Growth and Tax Relief Reconciliation Act first created a new 10-percent regular income tax bracket for a portion of taxable income that was previously taxed at 15 percent. That law also reduced the other regular income tax rates. The otherwise applicable regular income tax rates of 28 percent, 31 percent, 36 percent and 39.6 percent were reduced to 25 percent, 28 percent, 33 percent, and 35 percent, respectively.

Under Section 101 of the new Tax Relief, Unemployment Insurance Reauthorization, And Job Creation Act of 2010, the law creates an extension of the taxable income brackets created almost a decade ago.

Generally, a taxpayer determines his or her tax liability by applying the tax rate schedules (or the tax tables) to his or her taxable income. The rate schedules are broken into several ranges of income, known as income brackets, and the marginal tax rate increases as a taxpayer’s income increases. Separate rate schedules apply based on an individual’s filing status.

Below are the new tax rate tables for those filing as single taxpayers, married filing jointly, as well as head of household.

To read this article excerpted above, please access http://www.advisorfyi.com/2010/12/new-tax-brackets-under-the-obama-tax-cuts/

Posted in Taxation | Tagged: income tax, Inflation, Rate schedule (federal income tax), tax, Tax bracket, Tax rate, Taxable income, United States | Leave a Comment »

How are business expenses reported for income tax purposes?

Posted by William Byrnes on December 27, 2010

Why is this Topic Important to Wealth Managers? As the end of the calendar and personal tax year approaches, Advanced Market Intelligence will focus on end-of-the-tax-year issues that every wealth manager may relay as helpful information to his and her clients.

“How are business expenses reported for income tax purposes?” may initially seem like an easy question for many wealth managers. But normally, the easiness of answering this question is a result of referring to an information pamphlet by a service provider or perhaps a newspaper article. Unfortunately, these public sources of information are not always accurate. Also, because they are trying to present very complex information in understandable terms, these types of sources gloss over finer, yet very important elements, that if known, would impact a decision.

Seldom does the wealth manager take the initiative to undertake his own initial research of the actual rules and how the rules may be applied. Advanced Market Intelligence has been committed to empowering the wealth manager with the necessary information to efficiently find the important rules and provide examples of how the rules are applied to various example scenarios. Thus, let us first turn to the legislative rule applying to business expenses.

The Internal Revenue Code (the “Code”), legislated by Congress, establishes rules regarding ‘if and when’ a taxpayer may choose to deduct certain expenses from income. Congress grants the authority to the Treasury department to write corresponding “Regulations” to address the administration and enforcement surrounding the ability of taxpayers to take such deductions allowed by the Code. Business expenses are one type of such expense Congress has established for a taxpayer to reduce his gross income.

The Code section establishing the ability of a taxpayer to deduct a business expense is Section 162. The first part of the first paragraph of Section 162 reads:

(a) In general

There shall be allowed as a deduction all the ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business, including— …

To read this article excerpted above, please access www.AdvisorFX.com

Read the key information you need to know and relate to your client at AdvisorFX (sign up for a free trial subscription with full access to all of the planning libraries and client presentations if you are not already a subscriber):

Tax Facts 7537. How are business expenses reported for income tax purposes?

Main Library – Section 19. Income Taxes B4—Business Income And Deductions

Posted in Taxation | Tagged: Business, Expense, Fiscal year, income tax, Internal Revenue Code, tax, Tax deduction | Leave a Comment »

Brazilian Taxation and Investment (in-depth video-conference course) January 24th – March 31st

Posted by William Byrnes on December 21, 2010

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This 10 week live video conference course on Brazil will be taught in English (but all attendants may use Portuguese to ask and respond to questions) by several renown Brazilian specialists who have extensive out-of-country experience, working as international counsel for large multinational companies, big 4 firms, and government, by concentrate on the Brazilian corporate structures, tax & financial systems, regulations and compliance, focusing on the practical aspects of doing business in Brazil. We will also discuss the impact of the recent changes in tax/corporate laws and regulations.

Please contact Associate Dean Prof. William Byrnes if you are interested in enrolling in this executive education course. wbyrnes@tjsl.edu (or my gmail williambyrnes@gmail.com) or skype: professorbyrnes or telephone + 1 619 374 6955

Tax System:

Overview – Main taxes;
Corporate Taxation: Corporate Income tax and Social Contribution;
Simplified tax regime;
Accounting Rules (IFRS and SPED);
Investment incentives;
Developing a Tax Strategy in Brazil;
Tax avoidance versus Tax Evasion

General Overview of Brazilian Indirect Taxes

VAT;
Other Indirect Taxes;

Foreign Investments:

Brazilian Central Bank (Regulations, Registrations and forms);
Dividends, Royalties, Loans, etc;
Capital Gains;
Foreign Trade Rules (Import and Export transactions);

Mergers & Acquisitions;

Corporate aspects;
Tax implications;

Financial System:

Organization,
Newcomers,
Competition,

Foreign Companies:

Tax credit
Withholding Tax;
Financing issues;
Permanent Establishment;
Low-tax Jurisdictions (Tax Haven Countries);
Tax treaties

Transfer Pricing

Industrial Property Rights

Posted in Courses | Tagged: Brazil, Corporate tax, income tax, tax, Tax rate, Taxation, United States | 2 Comments »

Dissecting the Obama Tax Cuts: Qualified Dividends and Capital Gains

Posted by William Byrnes on December 21, 2010

Why is this Topic Important to Wealth Managers? Yesterday we presented an overview of the Obama Tax Cut provisions that are relevant to wealth managers. Today we begin by taking a closer look at some of the details of those provisions and how they relate to wealth managers and their clients.

Section 102 of The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (HR. 4853)provides for an extension of the regular and minimum tax rates for qualified dividend income and capital gains as were in effect before 2011. The extension will continue for an additional two years.

To understand the impact of this provision of the new bill, it will serve the reader to understand what the regular and minimum tax rates in relation to qualified dividend income as well as capital gains means. Read this complete article at AdvisorFYI

Posted in Taxation | Tagged: Alternative Minimum Tax, Capital gain, income tax, Qualified dividend, Social Security, tax, Tax cut, Tax rate | Leave a Comment »

Obama Compromises and Extends All Bush Tax Cuts (and then some…)

Posted by William Byrnes on December 20, 2010

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On Friday, President Obama signed into legislation, what is quickly becoming known as the Obama Tax Cuts, which extend tax breaks initially created by the George Bush Administration about a decade ago. For the previous discussions and various versions of this “long and winding road” of the passage of this new tax law – see Tax Deal Reached

The new tax law “The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (HR. 4853)” provides an extension for two years (unless otherwise noted), of generally the following (not all inclusive):

The full free article and links to all the relevant legislation and Congressional explanations of the legislation may be read at http://www.advisorFYI.com

Posted in Taxation | Tagged: income tax, tax, Tax cut, Tax law, tax relief, Unemployment benefits | Leave a Comment »

Life Insurance in Qualified Pension Plans

Posted by William Byrnes on November 17, 2010

Why is this Topic Important to Wealth Managers? Presents the general treatment of life insurance purchased through qualified pension plans. Discusses a common scenario where life insurance premiums may be deductible by an employer aw well as the consequential income tax effect on plan participants.

Suppose your client is the sole shareholder and president of a closely held corporation. The business generates significant positive income and cash-flow on a steady basis. Assume the client himself may have an insurance need without the funds personally to cover the obligation. Assuming further the business has a qualified pension (defined contribution or defined benefit) plan, one consideration may be to purchase life insurance through the qualified pension plan. [1] Assume this option, up to an insurable interest limit, was also offered to all employees participating in the qualified plan.

Since employer contributions to qualified plans are sometimes deductible, amount used to purchase life insurance may be also, subject to the incidental limitation. [2] First though, “[t]o qualify for deduction as a contribution to a qualified plan, the employer’s contribution must first qualify as an ordinary and necessary business expense within the limits of reasonable compensation.” [3] As a general rule, so long as the amount of the insurance is no more than 25% of the total cost of the plan the amount may be deducted as an incidental benefit to the plan.

Read the entire blogticle at AdvisorFYI.

Posted in Insurance, Uncategorized | Tagged: Business, Cash flow, Corporation, Employment, income tax, insurance, life insurance, Pension | Leave a Comment »

Offshore Planning’s Impact on Calculation of U.S. Income Tax Liability

Posted by William Byrnes on October 5, 2010

Why is this Topic Important to Wealth Managers? Discusses how international planning can impact clients’ tax position domestically. Provides discussion on a number of common international tax concepts as they relate to U.S. taxpayers.

In previous blog this week, it has been briefly discussed that there may be a number of reasons a client may consider offshore planning, generally. Today we will focus on one major component of offshore considerations, the impact of world-wide income on U.S. taxpayers. It is generally accepted that U.S. taxpayers are expected to pay income taxes on income earned from sources worldwide. This concept is commonly referred to as “outbound” taxation.

It is the case that many sovereign nations will also have taxes on personal and/or corporate income that an individual or corporation could become subject to, creating in effect “double taxation.” And some foreign nations choose to have very low or no tax rate on certain types of income, or on corporations in general, thus allowing foreign income to potentially escape foreign taxation (and current U.S. taxation in the year that it is earned).

What are some rules that that Congress has attempted to avoid double taxation or subject foreign income to U.S. taxation?

Check out the full blogticle at AdvisorFYI.

The Send Jobs Overseas Act (online.wsj.com)

Posted in Uncategorized | Tagged: Congress, Corporation, income tax, law, tax, Taxation, United States, United States Congress | Leave a Comment »

What’s the Correlation Between Capital Gains Rates and GDP?

Posted by William Byrnes on September 15, 2010

Although, Reagan’s administration saw higher growth in total, and annually, on average, than that of the previous and post 8 years of his term, his administration’s numbers are still below the 50 year trend, as well as the terms of some other Presidents, notwithstanding the unsupportive data on the short term effects of the tax cuts. However, there is a lack of conclusive evidence, therefore, to determine that a decrease in capital gains tax rates will have the short or long term affect of increasing total GDP. Yet, neither will an increase in the rate increase tax revenues.

We invite you to read the study and analysis at AdvisorFYI

Posted in Tax Policy | Tagged: Business, Capital gains tax, Gross domestic product, income tax, Politics, tax, Taxation, United States | Leave a Comment »

CBO Analysis Supports Extending Tax Cuts

Posted by William Byrnes on September 11, 2010

In the face of opposition by the Obama administration to extending the Bush tax cuts, analysis recently released by the Congressional Budget Office (CBO) supports extending the breaks for another few years. Douglas Elmendorf, director of the CBO, believes that eliminating the tax cuts in a stagnant economy may hamper growth, and that continuing the cuts beyond December 31st sets the stage for some economic recovery next year: “Under that … scenario, economic growth would be stronger next year; unemployment would be lower next year.”

Today’s analysis by our Experts Robert Bloink and William Byrnes is located at AdvisorFX Journal CBO Analysis Supports Extending Tax Cuts

Posted in Tax Policy, Uncategorized | Tagged: income tax, tax policy | 1 Comment »

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1. What general rules govern the income taxation of payments received under annuity contracts?

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