From the Wall Street Journal online news about the chairman of the House Ways and Means Committee Chaiman Charlie Rengel and the really big problems he has had with financial disclosure statements:
When you're a powerful Congressman and working diligently to increase tax rates to pay for President Obama's health-care plan, we suppose it's easy to lose track of one of your checking accounts. That would be the one at the federal credit union with a balance somewhere between $250,001 and maybe as high as $500,000. And when you're crunched for time and pulling together bills to pass in a rush, we guess, too, that you might overlook several other investment accounts, even if some of them are sizable, such as the ones Mr. Rangel missed at JP Morgan, Merrill Lynch, Oppenheimer and BlackRock.
Among other issues, Mr. Rangel is currently under investigation regarding his use of four rent-stabilized apartments at New York City's tony Lenox Terrace and soliciting donations with his official letterhead for the Charles B. Rangel Center for Public Service at City College of New York, which was itself built with a $1.9 million earmark. Yet another part of the probe is his failure to report $75,000 in income from a rental villa at the beachfront Punta Cana Yacht Club, in the Dominican Republic.
Mr. Rangel blamed that last one on the language barrier because he doesn't speak Spanish.
Click the above link to read more about Charlie Rangel's hidden assets and income and discover why term limits that are good enough for the President should be good enough for Congress.
Friday, August 28, 2009
Coffee, tea or candy? You'll pay more when higher sales tax kicks in
From the Belvidere News Daily
Candy no longer will be taxed at the lower food rate, but at the higher general merchandise rate. It is defined as any food for human consumption sold that has sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops or pieces. It does not include any food that contains flour or requires refrigeration.
"You have to be careful to look at the ingredient label," Hofer said. "If it contains flour, it's a food."
Some grooming and personal hygiene products also will be taxed at the higher rate, and the inequitable taxing of similar items will be addressed. These items include but are not limited to body soap, cleansers, shampoo, toothpaste, mouthwash, antiperspirant, suntan lotions and sun screens. The change comes to those products that claim a medicinal value, which had been taxed at the lower rate.
Click the above link to read more.
How does the retailer know which rate to charge?
The answer is flour or refrigeration.
From the Illinois Department of Revenue Information Bulletin issued 30 days before the new rates take affect:
If you are wrong about the ingredients or perhaps the candy doesn't have sugar in it?
I guess you punt. Based on the poor job Revenue has done enforcing the soft drink rate changes from several years ago, you can't really worry about it.
rate)
Candy no longer will be taxed at the lower food rate, but at the higher general merchandise rate. It is defined as any food for human consumption sold that has sugar, honey, or other natural or artificial sweeteners in combination with chocolate, fruits, nuts or other ingredients or flavorings in the form of bars, drops or pieces. It does not include any food that contains flour or requires refrigeration.
"You have to be careful to look at the ingredient label," Hofer said. "If it contains flour, it's a food."
Some grooming and personal hygiene products also will be taxed at the higher rate, and the inequitable taxing of similar items will be addressed. These items include but are not limited to body soap, cleansers, shampoo, toothpaste, mouthwash, antiperspirant, suntan lotions and sun screens. The change comes to those products that claim a medicinal value, which had been taxed at the lower rate.
Click the above link to read more.
How does the retailer know which rate to charge?
The answer is flour or refrigeration.
From the Illinois Department of Revenue Information Bulletin issued 30 days before the new rates take affect:
If you are wrong about the ingredients or perhaps the candy doesn't have sugar in it?
I guess you punt. Based on the poor job Revenue has done enforcing the soft drink rate changes from several years ago, you can't really worry about it.
Thursday, August 27, 2009
Health Care Strategies for SELF-EMPLOYEDS
Health care reform is in the news. And for good reason.
Today’s soaring health care costs continue to be a consistent financial threat to all self-employed individuals. The National Coalition on Health Care reports that in 2006, the average family health insurance premium topped $1,200 per month. That’s more than the average family’s mortgage—and health care costs are rising faster than interest rates!
Raising your health insurance deductible just a few thousand dollars can cut your premium by up to half. But that leaves you responsible for out-of-pocket costs. And even if you itemize, those are deductible only to the extent they exceed 7.5% of your adjusted gross income. Is there a way to capture premium savings from high-deductible insurance and tax savings for out-of-pocket expenses? Fortunately, there are two.
Medical Expense Reimbursement Plan
If you have self-employment income, even from a startup or sideline business, you can take advantage of a little-known tax break to save a bundle on your family’s health care costs. Medical expense reimbursement plans (“MERPs”) let you reimburse your employees, their spouses, and their dependents for uninsured medical costs. Plan benefits are deductible by the business, and nontaxable to the employee. Here’s how they work:
You have to establish the plan for employees. If you operate as a proprietorship, partnership, LLC, or “S” corporation, you're considered “self-employed,” and not eligible. If you’re single, you can establish a C corporation and pay benefits to yourself as an employee. If you’re married, you can hire your spouse and pay benefits to them. (If you operate as an S corporation, you and your spouse are both considered self-employed. In that case, segregate part of your income through a proprietorship or C corporation and pay benefits through that entity.)
You have to offer benefits to all employees. However, you can exclude those under age 25; those who regularly work less than 35 hours per week; those who work less than nine months out of the year; and those who have worked for you for less than three years.
You’ll need a written plan document. No special IRS filings are required for plans with less than 100 employees. You’ll deduct benefits as “employee benefits” on your business return, which may also lower self-employment tax bill.
Example: You’re self-employed as a real estate agent. You hire your spouse to provide marketing support, and establish a MERP for his or her benefit. The plan covers your employee, their spouse (meaning you!) and your dependents.
Once you’ve established the plan, you can still deduct 100% of your health insurance costs. This includes major medical and supplemental coverage, Medicare Parts A and B coverage, qualified long-term care, and “Medigap” coverage. You can even reimburse your spouse for any after-tax premiums they pay through their employer.
You can also write off 100% of your out-of-pocket costs and bypass the 7.5% floor for itemized deductions. This includes routine expenses such as co-pays, deductibles, and prescriptions; occasional expenses such as eyeglasses, teeth cleaning, and chiropractic care; and big-ticket items like orthodontics, fertility treatments, and schools for learning-disabled children. It also includes nonprescription medicines and health-care supplies. You can reimburse your employee, or you can use business dollars to pay health-care providers directly.
For more information, see our office.
Health Savings Accounts
Health Savings Accounts (“HSAs”) let you buy high-deductible health insurance to cut monthly premiums, then establish deductible savings accounts for routine medical costs. You (and your employees, if any) can establish HSAs if you meet four tests:
You’re covered by a high deductible health plan (“HDHP”) with deductibles of at least $1,000 (singles) or $2,000 (families) and out-of-pocket limits up to $5,100 (singles) or $10,200 (families). The plan can’t provide any benefit, other than certain preventive care benefits, until the deductible for that year is satisfied. This means no drug card—you’re not eligible if you’re covered by a separate plan or rider offering prescription drug benefits before satisfying your policy deductible.)
You’re not covered by any plan that isn’t an HDHP, either individually, as a spouse, or as a dependent.
You’re not eligible for Medicare.
You can’t be claimed as a dependent on anyone else’s return.
If you qualify to open an HSA, you can contribute 100% of the insurance deductible up to $2,650 (singles) or $5,250 (families). If you or your spouse is age 55 or older, you can make extra “catch up” contributions up to $600 in 2005. (This amount climbs $100 annually to $1,000 in 2009.) If you and your spouses are covered by different HDHPs, you can contribute up to the lower deductible.
Withdrawals for “qualified medical costs” are tax-free. These include any deductible medical expense or nonprescription drug that isn’t reimbursed by insurance. You can use your HSA to pay for qualified long-term care premiums, COBRA continuation coverage, health insurance while you receive unemployment compensation, and Medicare premiums (but not “medigap” coverage). Withdrawals for any other purpose are taxed as ordinary income plus a 10% penalty.
MERPs and HSAs won’t make your visit to the doctor less painful. But they may be the best kind of tax strategies because they give you new deductions for money you’re already spending.
Enjoy them in good health!
Today’s soaring health care costs continue to be a consistent financial threat to all self-employed individuals. The National Coalition on Health Care reports that in 2006, the average family health insurance premium topped $1,200 per month. That’s more than the average family’s mortgage—and health care costs are rising faster than interest rates!
Raising your health insurance deductible just a few thousand dollars can cut your premium by up to half. But that leaves you responsible for out-of-pocket costs. And even if you itemize, those are deductible only to the extent they exceed 7.5% of your adjusted gross income. Is there a way to capture premium savings from high-deductible insurance and tax savings for out-of-pocket expenses? Fortunately, there are two.
Medical Expense Reimbursement Plan
If you have self-employment income, even from a startup or sideline business, you can take advantage of a little-known tax break to save a bundle on your family’s health care costs. Medical expense reimbursement plans (“MERPs”) let you reimburse your employees, their spouses, and their dependents for uninsured medical costs. Plan benefits are deductible by the business, and nontaxable to the employee. Here’s how they work:
You have to establish the plan for employees. If you operate as a proprietorship, partnership, LLC, or “S” corporation, you're considered “self-employed,” and not eligible. If you’re single, you can establish a C corporation and pay benefits to yourself as an employee. If you’re married, you can hire your spouse and pay benefits to them. (If you operate as an S corporation, you and your spouse are both considered self-employed. In that case, segregate part of your income through a proprietorship or C corporation and pay benefits through that entity.)
You have to offer benefits to all employees. However, you can exclude those under age 25; those who regularly work less than 35 hours per week; those who work less than nine months out of the year; and those who have worked for you for less than three years.
You’ll need a written plan document. No special IRS filings are required for plans with less than 100 employees. You’ll deduct benefits as “employee benefits” on your business return, which may also lower self-employment tax bill.
Example: You’re self-employed as a real estate agent. You hire your spouse to provide marketing support, and establish a MERP for his or her benefit. The plan covers your employee, their spouse (meaning you!) and your dependents.
Once you’ve established the plan, you can still deduct 100% of your health insurance costs. This includes major medical and supplemental coverage, Medicare Parts A and B coverage, qualified long-term care, and “Medigap” coverage. You can even reimburse your spouse for any after-tax premiums they pay through their employer.
You can also write off 100% of your out-of-pocket costs and bypass the 7.5% floor for itemized deductions. This includes routine expenses such as co-pays, deductibles, and prescriptions; occasional expenses such as eyeglasses, teeth cleaning, and chiropractic care; and big-ticket items like orthodontics, fertility treatments, and schools for learning-disabled children. It also includes nonprescription medicines and health-care supplies. You can reimburse your employee, or you can use business dollars to pay health-care providers directly.
For more information, see our office.
Health Savings Accounts
Health Savings Accounts (“HSAs”) let you buy high-deductible health insurance to cut monthly premiums, then establish deductible savings accounts for routine medical costs. You (and your employees, if any) can establish HSAs if you meet four tests:
You’re covered by a high deductible health plan (“HDHP”) with deductibles of at least $1,000 (singles) or $2,000 (families) and out-of-pocket limits up to $5,100 (singles) or $10,200 (families). The plan can’t provide any benefit, other than certain preventive care benefits, until the deductible for that year is satisfied. This means no drug card—you’re not eligible if you’re covered by a separate plan or rider offering prescription drug benefits before satisfying your policy deductible.)
You’re not covered by any plan that isn’t an HDHP, either individually, as a spouse, or as a dependent.
You’re not eligible for Medicare.
You can’t be claimed as a dependent on anyone else’s return.
If you qualify to open an HSA, you can contribute 100% of the insurance deductible up to $2,650 (singles) or $5,250 (families). If you or your spouse is age 55 or older, you can make extra “catch up” contributions up to $600 in 2005. (This amount climbs $100 annually to $1,000 in 2009.) If you and your spouses are covered by different HDHPs, you can contribute up to the lower deductible.
Withdrawals for “qualified medical costs” are tax-free. These include any deductible medical expense or nonprescription drug that isn’t reimbursed by insurance. You can use your HSA to pay for qualified long-term care premiums, COBRA continuation coverage, health insurance while you receive unemployment compensation, and Medicare premiums (but not “medigap” coverage). Withdrawals for any other purpose are taxed as ordinary income plus a 10% penalty.
MERPs and HSAs won’t make your visit to the doctor less painful. But they may be the best kind of tax strategies because they give you new deductions for money you’re already spending.
Enjoy them in good health!
What Does Washington Have in Store for Your Taxes?
As you already know, the new administration has spent billions of dollars bailing out banks, insurers, and automakers. Congress and the White House are proposing billions more in new spending to reform health care. The federal budget deficit is now over a trillion dollars. And all that money has to come from somewhere.
Where do you think it will come from? That’s right – your taxes!
If you’re like most successful Americans, you’re already asking yourself questions like these:
How high will tax rates climb?
What will happen to dividends and capital gains?
Will you owe new taxes for Social Security?
Will you owe new taxes on health care benefits?
What should you do today to prepare yourself for higher taxes tomorrow?
If you want to keep the most of what you make, you can’t wait for answers. You need to act now. Putting tax-wise ideas and strategies in place today could help avoid an ugly surprise come next April 15!
Call me today at (217) 241-4597 for your free Tax Analysis. We’ll find the mistakes and missed opportunities that may be costing you thousands today, and discover where you may be vulnerable to higher taxes tomorrow. We guarantee you’ll leave with new information, or we’ll donate $50 to your favorite charity. So call now to schedule your Tax Analysis, and be ready for whatever Washington throws your way!
Where do you think it will come from? That’s right – your taxes!
If you’re like most successful Americans, you’re already asking yourself questions like these:
How high will tax rates climb?
What will happen to dividends and capital gains?
Will you owe new taxes for Social Security?
Will you owe new taxes on health care benefits?
What should you do today to prepare yourself for higher taxes tomorrow?
If you want to keep the most of what you make, you can’t wait for answers. You need to act now. Putting tax-wise ideas and strategies in place today could help avoid an ugly surprise come next April 15!
Call me today at (217) 241-4597 for your free Tax Analysis. We’ll find the mistakes and missed opportunities that may be costing you thousands today, and discover where you may be vulnerable to higher taxes tomorrow. We guarantee you’ll leave with new information, or we’ll donate $50 to your favorite charity. So call now to schedule your Tax Analysis, and be ready for whatever Washington throws your way!
Ex IRS worker pleads guilty for bribe to "fudge numbers."
From the Las Vegas Sun:
A former IRS compliance officer in Las Vegas has pleaded guilty to accepting a bribe in exchange for preparing a false audit report for a taxpayer.
Fernando Cruz, 43, now of Shady Grove, Ore., pleaded guilty Wednesday to one count of a public official accepting a gratuity. He is scheduled for sentencing at 10 a.m. Nov. 24, said U.S. Attorney Greg Brower of Nevada.
In 2008, Cruz was working as a tax compliance officer for the IRS in Las Vegas. IRS employees are prohibited from preparing tax returns for compensation, gifts or favors and are required to report any attempted bribes to the IRS, Brower said.
In May 2008, Cruz was assigned to audit the individual joint tax return of a Las Vegas couple. At the first meeting with the couple at the IRS office, Cruz provided his personal cell phone number to the woman and told her to call him if she ever had tax questions or wanted him to prepare their taxes.
The couple told their accountant about Cruz's offer, and then reported it to the Tax Inspector General for Tax Administration. The couple also agreed to work with investigators and to have monitored calls and meetings with Cruz.
Cruz went to the couple's home on June 14, 2008 and reviewed the couple's tax records. He told the woman he could "fudge" their tax records so they would have less tax liability.
Cruz coaxed the woman on how to answer questions during an upcoming audit appointment she had with him on June 24, 2008, specifically instructing her to say that she did not have receipts to verify expenses.
Cruz also accepted $500 in cash from the woman and was told that he would receive another $500 if he could make their tax liability go away.
The woman met with Cruz as scheduled at his IRS office. Cruz prepared an IRS income form with the false information she provided. Cruz also mentioned that the woman could help him find an apartment in exchange for his help to the couple on their audit.
Both meetings were electronically monitored.
The maximum sentence that could be imposed against Cruz is two years of imprisonment and a fine of $250,000. He has been released on a personal recognizance bond.
The case is being prosecuted by Assistant U.S. Attorney Nicholas D. Dickinson.
By the way the Treasury Department has just announced a new program to detect IRS employee corruption. We believe that this is a larger problem then the service has been willing to admit. I will never forget the time a client was approached, some 20 years ago, during an audit for essentially the same thing. The auditor offered to prepare my client's tax return in exchange for a better result for his audit. My client was too intimidated to turn her in, but we found out later she was eventually fired by the IRS, but never prosecuted. This attitude of arrogance and invincibility is a tough nut to crack.Monday, August 17, 2009
Yet another reason government should not run health care
From the Chicago Suntimes the seemingly never ending problems with the "Cash for Clunkers" program continues.
Apple Chevrolet in Tinley Park has pulled back on its marketing for the "cash for clunkers" program.
Why is a car dealership -- in a business known for boisterous ballyhoo -- turning down the volume? Because the government hasn't paid it yet for the deals already made.
"There's a lot of money on the line right now," said dealer John Alfirevich, who added that the government owes Apple $385,000 on 89 deals.
"It makes me very nervous."
Read more by clicking the above link.
Thursday, August 13, 2009
I'm from the government and I am here to help you.
Two posts from the Independent Street Blog from the Wall Street Journal dealing with the SBA. The so called ARC emergency loan program is up and running.
Here is a link to WSJ Friday Memos.
Second post reports that banks are finally making SBA Loans again.
Here is a link to WSJ SBA Loan Programs getting back on track.
Here is a link to WSJ Friday Memos.
Second post reports that banks are finally making SBA Loans again.
Here is a link to WSJ SBA Loan Programs getting back on track.
Sunday, August 9, 2009
5 Secrets your bank doesn't want you to know
From Yahoo finance:
Secret #1: For many banks, the most profitable customers aren't the mass affluent -- they're "Joe Lunchbox."
In 1999, the Gramm-Leach-Bliley Act allowed banks, insurers and securities firms to merge, breaking down barriers that had been in place since the 1930s. Following the new law, "if you took all the (deposit) checks written for $10,000 and above, most were written to institutions such as Charles Schwab, Fidelity or Merrill Lynch," says Preuninger. "They took the best customers. The banks were becoming more like Laundromats, where you put money in for a short period because you still needed to pay with a check or (get cash)."
At the same time, loans provided little profit as interest rates remained relatively low, prompting banks to seek consistent, non-interest income. "The focus was on how banks could not only identify fees they could charge, it was how to do a better job of collecting their fees," says Preuninger.
Middle-income customers presented the greatest potential to harvest fees. "There's certainly a customer segment that could be called 'Joe Lunchbox,' who expect to be nickeled and dimed," says Preuninger. "They are managing money from paycheck to paycheck. It's someone who would prefer to pay an overdraft fee to get their mortgage covered rather than get hit by a mortgage provider with a late fee and a ding on their credit score."
Last year, overdraft and insufficient-funds charges totaled nearly $35 billion and comprised about 90 percent of banks' consumer-fee income, according to a study by the consulting firm Bretton Woods Inc. Three-quarters of banks automatically enroll consumers in their "overdraft protection" programs without formal permission, and more than half of banks manipulate the order in which checks are cleared to trigger multiple overdraft fees, according to a Federal Deposit Insurance Corporation study.
"They are going to try to turn the best profit they can, which is why they post in the most attractive way they can while avoiding and minimizing legal exposure," says Preuninger. Someone who overdraws a checking account a few times a year should choose a bank with a program that makes it easy (and free) to shift funds from savings to checking to protect against overdrafts.
Read more by clicking the above link.
Secret #1: For many banks, the most profitable customers aren't the mass affluent -- they're "Joe Lunchbox."
In 1999, the Gramm-Leach-Bliley Act allowed banks, insurers and securities firms to merge, breaking down barriers that had been in place since the 1930s. Following the new law, "if you took all the (deposit) checks written for $10,000 and above, most were written to institutions such as Charles Schwab, Fidelity or Merrill Lynch," says Preuninger. "They took the best customers. The banks were becoming more like Laundromats, where you put money in for a short period because you still needed to pay with a check or (get cash)."
At the same time, loans provided little profit as interest rates remained relatively low, prompting banks to seek consistent, non-interest income. "The focus was on how banks could not only identify fees they could charge, it was how to do a better job of collecting their fees," says Preuninger.
Middle-income customers presented the greatest potential to harvest fees. "There's certainly a customer segment that could be called 'Joe Lunchbox,' who expect to be nickeled and dimed," says Preuninger. "They are managing money from paycheck to paycheck. It's someone who would prefer to pay an overdraft fee to get their mortgage covered rather than get hit by a mortgage provider with a late fee and a ding on their credit score."
Last year, overdraft and insufficient-funds charges totaled nearly $35 billion and comprised about 90 percent of banks' consumer-fee income, according to a study by the consulting firm Bretton Woods Inc. Three-quarters of banks automatically enroll consumers in their "overdraft protection" programs without formal permission, and more than half of banks manipulate the order in which checks are cleared to trigger multiple overdraft fees, according to a Federal Deposit Insurance Corporation study.
"They are going to try to turn the best profit they can, which is why they post in the most attractive way they can while avoiding and minimizing legal exposure," says Preuninger. Someone who overdraws a checking account a few times a year should choose a bank with a program that makes it easy (and free) to shift funds from savings to checking to protect against overdrafts.
Read more by clicking the above link.
Wednesday, August 5, 2009
New home owner's credit. Don't wait for your refund. All returns prepared for just $88.00
Yes we are open. And yes we do prepare amended 2008 returns so that first time home buyers can get their credit now (up to $8,000.00) and not wait until next year. Your fee>>> $88.00. Regardless of whether we filed your 2008 income tax return previously or not. Call our office to make an appointment.
Click here for more information from the IRS about the first time home buyer's credit.
Our office phone number is 217-241-4597.
Click here for more information from the IRS about the first time home buyer's credit.
Our office phone number is 217-241-4597.
Saturday, August 1, 2009
Why government should never run healtcare part two
From the New York Times;
Read more click on the above link
“There is absolute frustration across the board,” Alex Kurkin, a lawyer based in Miami who represents several car dealerships, tells The Lede today. “As of this morning, they’re not really confident about any deals, and no one can give them advice about what they should be telling their customers.”
One thing still not clear is how many older cars have actually been sold and scrapped with the original $1 billion, and how many more the new $2 billion will be able to cover. Mr. Kurkin tells us that the government Web site where dealers are supposed to register their deals has been crashing, and the dealers haven’t been able to plug in their information. "Read more click on the above link
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