In my blogs, I have been warning that inflation seems inevitable even though Washington tries to tell us that they have everything under control. Well, maybe they don’t. It's time to prepare yourself for higher interest rates and higher costs.
U.S. core inflation, which excludes food and fuel prices, rose 0.3% in May, the biggest one-month increase in the past five years. The annual core inflation rate for the first five months of this year is 2.4%. The accelerating rate is likely to trigger interest-rate increases, experts said. See the full article below.
http://www.thefiscaltimes.com/Columns/2011/06/27/Core-Inflation-Rises-Interest-Rates-May-Follow.aspx
Thursday, June 30, 2011
FOURTH OF JULY WEEKEND - BEER, BBQ AND THE TAX ON BEER
The 4th of July is fast-approaching and soon, it will be time for sitting back with some beer and BBQ in the back yard. So, get ready to fire up the grill and pack plenty of ice on the brewskis!
You know the government will never pass up a chance to tax us. There is a so-called “sin tax” on beer. So when you stop and pick up the pack of beer you are paying a hidden alcohol tax and most likely sales tax.
I thought you might want to see what your state beer tax is. The link below will show you the excise tax rates of beer sales for off-premises consumption, as of January 1, 2011.
http://www.taxfoundation.org/blog/show/27160.html
You know the government will never pass up a chance to tax us. There is a so-called “sin tax” on beer. So when you stop and pick up the pack of beer you are paying a hidden alcohol tax and most likely sales tax.
I thought you might want to see what your state beer tax is. The link below will show you the excise tax rates of beer sales for off-premises consumption, as of January 1, 2011.
http://www.taxfoundation.org/blog/show/27160.html
Tuesday, June 28, 2011
STRESS MANAGEMENT
I received this from my good friend, Ken Cassidy. I thought it was too good not to pass on.
A young lady confidently walked around the room while leading and explaining stress management to an audience; with a raised glass of water, and everyone knew she was going to ask the ultimate question, 'half empty or half full?'..... she fooled them all... "How heavy is this glass of water?", she inquired with a smile.
Answers called out ranged from 8 oz. to 20 oz.
She replied, "The absolute weight doesn't matter. It depends on how long I hold it. If I hold it for a minute, that's not a problem. If I hold it for an hour, I'll have an ache in my right arm. If I hold it for a day, you'll have to call an ambulance. In each case it's the same weight, but the longer I hold it, the heavier it becomes." She continued, "and that's the way it is with stress. If we carry our
burdens all the time, sooner or later, as the burden becomes increasingly heavy, we won't be able to carry on."
"As with the glass of water, you have to put it down for a while and rest before holding it again. When we're refreshed, we can carry on with the burden - holding stress longer and better each time practiced. So, as early in the evening as you can, put all your burdens down. Don't carry them through the evening and into the night... pick them up tomorrow.
Whatever burdens you're carrying now, let them down for a moment. Relax, pick them up later after you've rested. Life is short. Enjoy it and the now 'supposed' stress that you've conquered!"
1. Accept the fact that some days you're the pigeon, and some days you're the statue!
2. Always keep your words soft and sweet, just in case you have to eat them.
3. Drive carefully...it's not only cars that can be recalled by their Maker.
4. If you can't be kind, at least have the decency to be vague.
5. If you lend someone $20 and never see that person again, it was probably worth it.
6. Never put both feet in your mouth at the same time, because then you won't have a leg to stand on.
7. Nobody cares if you can't dance well. Just get up and dance!
8. Birthdays are good for you. The more you have, the longer you live.
9. You may be only one person in the world, but you may also be the world to one person.
10. A truly happy person is one who can enjoy the scenery on a detour.
***Save the earth...it's the only planet with chocolate!
A young lady confidently walked around the room while leading and explaining stress management to an audience; with a raised glass of water, and everyone knew she was going to ask the ultimate question, 'half empty or half full?'..... she fooled them all... "How heavy is this glass of water?", she inquired with a smile.
Answers called out ranged from 8 oz. to 20 oz.
She replied, "The absolute weight doesn't matter. It depends on how long I hold it. If I hold it for a minute, that's not a problem. If I hold it for an hour, I'll have an ache in my right arm. If I hold it for a day, you'll have to call an ambulance. In each case it's the same weight, but the longer I hold it, the heavier it becomes." She continued, "and that's the way it is with stress. If we carry our
burdens all the time, sooner or later, as the burden becomes increasingly heavy, we won't be able to carry on."
"As with the glass of water, you have to put it down for a while and rest before holding it again. When we're refreshed, we can carry on with the burden - holding stress longer and better each time practiced. So, as early in the evening as you can, put all your burdens down. Don't carry them through the evening and into the night... pick them up tomorrow.
Whatever burdens you're carrying now, let them down for a moment. Relax, pick them up later after you've rested. Life is short. Enjoy it and the now 'supposed' stress that you've conquered!"
1. Accept the fact that some days you're the pigeon, and some days you're the statue!
2. Always keep your words soft and sweet, just in case you have to eat them.
3. Drive carefully...it's not only cars that can be recalled by their Maker.
4. If you can't be kind, at least have the decency to be vague.
5. If you lend someone $20 and never see that person again, it was probably worth it.
6. Never put both feet in your mouth at the same time, because then you won't have a leg to stand on.
7. Nobody cares if you can't dance well. Just get up and dance!
8. Birthdays are good for you. The more you have, the longer you live.
9. You may be only one person in the world, but you may also be the world to one person.
10. A truly happy person is one who can enjoy the scenery on a detour.
***Save the earth...it's the only planet with chocolate!
IMPORTANT IF YOU HAVE A FOREIGN ACCOUNT
IRS Issues Warning on FBAR Filing Deadline
The Internal Revenue Service is reminding anyone who has a bank account or other financial account in a foreign country, or who has signature authority over such an account, that they may be required to report the account to the U.S. Department of the Treasury by June 30 each year.
The IRS has recently been extending the filing deadline for the Report of Foreign Bank and Financial Accounts, also known as an FBAR, under certain circumstances (see IRS Offers Another FBAR Filing Extension and IRS Extends FBAR Filing Deadline for Some Finance Pros). However, the FBAR filing deadline is June 30 each year. Many people in the U.S. have foreign financial accounts, the IRS noted in its announcement last Friday. While there is nothing improper about setting up or maintaining such accounts, many people may mistakenly believe their accounts are not large enough on a combined basis to trigger reporting obligations. Foreign account owners may have to report their accounts to the government, even if the accounts do not generate any taxable income.
U.S. persons are required to file a Report of Foreign Bank and Financial Accounts , or Treasury Department Form TD F 90-22.1, each year if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. For 2010, the due date for filing the FBAR is Thursday, June 30, 2011. Unlike with federal income tax returns, requests for an extension of time to file an FBAR cannot be granted.
The FBAR is not an income tax return and should not be mailed with any income tax returns, the IRS noted. It is due by June 30 of the year following the calendar year in which the aggregate value of the foreign accounts, on any one day, exceeds $10,000. But for 2009 and earlier years, the due date is generally Nov. 1, 2011 for individuals whose filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23, and have no financial interest in a foreign financial account but with signature or other authority over that account.
FBARs are filed with the U.S. Department of the Treasury, P.O. Box 32621, Detroit, Mich. 48232-0621. Civil and criminal penalties for non-compliance with the FBAR filing requirements are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Civil and criminal penalties may be imposed together.
The address for delivery of an FBAR by a method other than U.S. mail is: U.S. Department of the Treasury, Currency Transaction Reporting, 985 Michigan Avenue, Detroit, Mich., 48226.
The Internal Revenue Service is reminding anyone who has a bank account or other financial account in a foreign country, or who has signature authority over such an account, that they may be required to report the account to the U.S. Department of the Treasury by June 30 each year.
The IRS has recently been extending the filing deadline for the Report of Foreign Bank and Financial Accounts, also known as an FBAR, under certain circumstances (see IRS Offers Another FBAR Filing Extension and IRS Extends FBAR Filing Deadline for Some Finance Pros). However, the FBAR filing deadline is June 30 each year. Many people in the U.S. have foreign financial accounts, the IRS noted in its announcement last Friday. While there is nothing improper about setting up or maintaining such accounts, many people may mistakenly believe their accounts are not large enough on a combined basis to trigger reporting obligations. Foreign account owners may have to report their accounts to the government, even if the accounts do not generate any taxable income.
U.S. persons are required to file a Report of Foreign Bank and Financial Accounts , or Treasury Department Form TD F 90-22.1, each year if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year. For 2010, the due date for filing the FBAR is Thursday, June 30, 2011. Unlike with federal income tax returns, requests for an extension of time to file an FBAR cannot be granted.
The FBAR is not an income tax return and should not be mailed with any income tax returns, the IRS noted. It is due by June 30 of the year following the calendar year in which the aggregate value of the foreign accounts, on any one day, exceeds $10,000. But for 2009 and earlier years, the due date is generally Nov. 1, 2011 for individuals whose filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23, and have no financial interest in a foreign financial account but with signature or other authority over that account.
FBARs are filed with the U.S. Department of the Treasury, P.O. Box 32621, Detroit, Mich. 48232-0621. Civil and criminal penalties for non-compliance with the FBAR filing requirements are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Civil and criminal penalties may be imposed together.
The address for delivery of an FBAR by a method other than U.S. mail is: U.S. Department of the Treasury, Currency Transaction Reporting, 985 Michigan Avenue, Detroit, Mich., 48226.
Monday, June 27, 2011
SAVE TAXES BY HIRING YOUR CHILDREN (PART 3)
The Impact of Wages on the Kiddie Tax
Over the last few weeks I have talked about hiring your children. Here is additional information that you need to be aware of.
Keep in mind that bracket-shifting works even if the child is subject to the kiddie tax. The kiddie tax only causes a child’s investment income in excess of $1,900 for 2011 to be taxed at the parent's marginal rate. It has no impact on the child’s wages and other earned income, which can be sheltered by the child’s standard deduction.
As a refresher, the kiddie tax applies to a child who is age 18 or a full-time student age 19 through 23, if the child’s earned income for the year doesn't exceed one-half of his or her support. Thus, employing a child age 18 or a full-time student age 19–23 could also help to avoid the kiddie tax on his or her unearned income.
Over the last few weeks I have talked about hiring your children. Here is additional information that you need to be aware of.
Keep in mind that bracket-shifting works even if the child is subject to the kiddie tax. The kiddie tax only causes a child’s investment income in excess of $1,900 for 2011 to be taxed at the parent's marginal rate. It has no impact on the child’s wages and other earned income, which can be sheltered by the child’s standard deduction.
As a refresher, the kiddie tax applies to a child who is age 18 or a full-time student age 19 through 23, if the child’s earned income for the year doesn't exceed one-half of his or her support. Thus, employing a child age 18 or a full-time student age 19–23 could also help to avoid the kiddie tax on his or her unearned income.
Sunday, June 26, 2011
CELEBRITY TAX PROBLEM OF THE WEEK
Michael Jackson’s Former Manager Pleads Guilty to Tax Charges
Raymone Bain, a public relations specialist and the former general manager of the late pop star Michael Jackson, has pleaded guilty in federal court in Washington, D.C., to charges that she failed to file federal and District of Columbia income tax returns.
Bain, a resident of Washington, D.C., pleaded guilty Wednesday to two counts of failure to file federal income tax returns (Forms 1040) and District of Columbia income tax returns (Forms D-40). U.S. Magistrate Alan Kay scheduled sentencing for Aug. 31, 2011. The federal criminal violation carries a maximum penalty of 12 months in prison and a $100,000 fine. The District of Columbia criminal violation carries a maximum penalty of six months in prison and $5,000 fine.
Bain, a resident of Washington, D.C., pleaded guilty Wednesday to two counts of failure to file federal income tax returns (Forms 1040) and District of Columbia income tax returns (Forms D-40). U.S. Magistrate Alan Kay scheduled sentencing for Aug. 31, 2011. The federal criminal violation carries a maximum penalty of 12 months in prison and a $100,000 fine. The District of Columbia criminal violation carries a maximum penalty of six months in prison and $5,000 fine.
According to the evidence presented in court, Bain worked in the sports and entertainment industry in the District of Columbia and founded her public relations firm, Davis, Bain & Associates. Beginning in 2006, Bain became personal general manager for the performer Michael Jackson and president of the Michael Jackson Company. In that capacity, she was responsible for daily operations of the Michael Jackson Company, including financial, public relations and marketing tasks. Bain was compensated for her services.
Despite earning substantial income, Bain knowingly failed to file her federal her District of Columbia income tax returns, and she failed to pay income taxes owed during 2006 through 2008.
According to the plea documents filed in court, the tax loss is between $200,000 and $400,000.
Saturday, June 25, 2011
CELEBRITY TAX PROBLEM OF THE WEEK
The U.S. Tax Court ruled against South African golfer, Retief Goosen in a case last week involving the two-time U.S. Open champion’s royalty income, disagreeing with his claim that only 7 percent of it came from U.S. sources.
Goosen had endorsement agreements with a variety of sponsors, including Acushnet, TaylorMade, Izod, Upper Deck, Electronic Arts and Rolex. They were allowed to use his name, face and likeness in advertising and marketing campaigns worldwide, and he was paid a base endorsement fee by all the sponsors.
Acushnet, TaylorMade and Izod also pro-rated the base endorsement fee if he did not annually play in a specific number of golf tournaments, the court noted. The three companies also paid him a bonus if he achieved a specific finish in a PGA or European Tour tournament, or reached a specific spot on the World Golf Rankings.
Goosen characterized the endorsement fees and bonuses from Acushnet, TaylorMade and Izod as 50 percent services income and 50 percent royalty income on his nonresident federal income tax returns for 2002 and 2003. The endorsement fees from Upper Deck, Electronic Arts and Rolex were characterized as 100 percent royalty income.
The golfer reported approximately 7 percent of the total endorsement income as U.S. source income. The IRS, however, determined that he should have characterized the endorsement fees and bonuses from Acushnet, TaylorMade and IZod as 100 percent personal services income. The IRS also re-allocated a larger percentage of his endorsement fees as U.S. source income. The Tax Court ruled on June 9th that the endorsement fees and bonuses Goosen had received from Acushnet, TaylorMade and Izod should be allocated 50 percent to personal services income and 50 percent to royalty income, and that the royalty income he had received from Acushnet, TaylorMade and Izod was 50 percent U.S.-source income effectively connected with a U.S. trade or business. The court also held that the royalty income he had received from Rolex was 50 percent U.S.-source income not effectively connected with a U.S. trade or business.
However, the royalty income he had received from the Upper Deck was considered by the court to be 92 percent U.S.-source income not effectively connected with a U.S. trade or business. In addition, the royalty he received from Electronic Arts was deemed 70 percent U.S.-source income not effectively connected with a U.S. trade or business. On top of that, the court ruled that Goosen should not benefit from any provision under either the 1975 or the 2001 income tax treaty between the United States and the United Kingdom.
Goosen had endorsement agreements with a variety of sponsors, including Acushnet, TaylorMade, Izod, Upper Deck, Electronic Arts and Rolex. They were allowed to use his name, face and likeness in advertising and marketing campaigns worldwide, and he was paid a base endorsement fee by all the sponsors.
Acushnet, TaylorMade and Izod also pro-rated the base endorsement fee if he did not annually play in a specific number of golf tournaments, the court noted. The three companies also paid him a bonus if he achieved a specific finish in a PGA or European Tour tournament, or reached a specific spot on the World Golf Rankings.
Goosen characterized the endorsement fees and bonuses from Acushnet, TaylorMade and Izod as 50 percent services income and 50 percent royalty income on his nonresident federal income tax returns for 2002 and 2003. The endorsement fees from Upper Deck, Electronic Arts and Rolex were characterized as 100 percent royalty income.
The golfer reported approximately 7 percent of the total endorsement income as U.S. source income. The IRS, however, determined that he should have characterized the endorsement fees and bonuses from Acushnet, TaylorMade and IZod as 100 percent personal services income. The IRS also re-allocated a larger percentage of his endorsement fees as U.S. source income. The Tax Court ruled on June 9th that the endorsement fees and bonuses Goosen had received from Acushnet, TaylorMade and Izod should be allocated 50 percent to personal services income and 50 percent to royalty income, and that the royalty income he had received from Acushnet, TaylorMade and Izod was 50 percent U.S.-source income effectively connected with a U.S. trade or business. The court also held that the royalty income he had received from Rolex was 50 percent U.S.-source income not effectively connected with a U.S. trade or business.
However, the royalty income he had received from the Upper Deck was considered by the court to be 92 percent U.S.-source income not effectively connected with a U.S. trade or business. In addition, the royalty he received from Electronic Arts was deemed 70 percent U.S.-source income not effectively connected with a U.S. trade or business. On top of that, the court ruled that Goosen should not benefit from any provision under either the 1975 or the 2001 income tax treaty between the United States and the United Kingdom.
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