4897 Buford Hwy, Ste 222 ......................... Làm thuê hay triệu phú

Atlanta, GA 30341-3669.............................. Đời đối xử công bình

Tel (770) 696-1189 .................................... Muốn được đời tưởng thưởng

Fax (770) 696-1587 ................................... Hãy đòi hỏi chính mình ..............(someone wrote this)

http://www.LocThaiCPA.com ....................Email: LocThaiCPA@gmail.com

Sunday, July 31, 2011



Abusive Return Preparer (irs.gov)

Taxpayers should be very careful when choosing a tax preparer. While most preparers provide excellent service to their clients, a few unscrupulous return preparers file false and fraudulent tax returns and ultimately defraud their clients. It is important to know that even if someone else prepares your return, you are ultimately responsible for all the information on the tax return.

Tax fraud investigation includes:

- Substantial amounts of personal expenditures claimed as business expenses
- Omissions of income, or knowingly changing your income
- Unexplained increases in net worth substantially, especially over a period of years.
- Assets placed in others' names
- Amounts on return not agreeable with amounts in books.
- Deductions were falsely claimed.
- Keeping two sets of books, or no book at all.
- Cooking the books, commonly known as falsifying the amounts in books and records.



0. Buy land, they're not making it any more. - Mark Twain

1. The harder you work, the luckier you become. - Barry Ritholtz

2. Five Money Ratios to Live By - WC Porter in Personal Finance, Career and Income, Budgeting

         a/ Spend 30% of Your Income on Housing

         b/ Save 10% of Your Paycheck

         c/ Spend Three Months Salary on an Engagement Ring

         d/ Don't Spend More than 4% of Your Nest Egg

         e/ 120 - Your Age = How Much You Should Invest in Stocks

3. We will never become dependent on the kindness of strangers - Warren E. Buffett

4. One must choose, in life, between making money and spending it. There's no time to do both. (Edouard Bourdet)

5. If a man has money, it is usually a sign, too, that he knows how to take care of it; don't imagine his money is easy to get simply because he has plenty of it. - Edgar Watson Howe

6. The safest way to double your money is to fold it over once and put it in your pocket. - Kin Hubbard

7. If money is your ONLY hope for independence, you will never have it. The only real security that a person can have in this world is a reserve of knowledge, experience, and ability. Without these qualities, money is practically useless. - Henry Ford

8. If you want to feel rich, just count all of the things you have that money can't buy. - Unknown

9. Prosperity is a way of living and thinking, and not just money or things. Poverty is a way of living and thinking, and not just a lack of money or things. - Eric Butterworth

10. Property may be destroyed and money may lose its purchasing power; but, character, health, knowledge and good judgment will always be in demand under all conditions. - Roger Babson

11. If you owe the bank $100 that's your problem. If you owe the bank $100 million, that's the bank's problem. - JP Getty

12. If a man runs after money, he's money-mad; if he keeps it, he's a capitalist; if he spends it, he's a playboy; if he doesn't get it, he's a ne'er-do-well; if he doesn't try to get it, he lacks ambition. If he gets it without working for it, he's a parasite; and if he accumulates it after a lifetime of hard work, people call him a fool who never got anything out of life. - Vic Oliver (1898-1964)

13. Money can't buy friends. But you can afford a better class of enemy. - Lord Mancroft

14. Focusing your life solely on making a buck shows a poverty of ambition. It asks too little of yourself. And it will leave you unfulfilled. - Barack Obama

15. Happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort. - Franklin D. Roosevelt

16. Someone asked me why women don't gamble as much as men do, and I gave the commonsensical reply that we don't have as much money. That was a true and incomplete answer. In fact, women's total instinct for gambling is satisfied by marriage. - Gloria Steinem

17. God is on everyone's side … and in the last analysis, he is on the side with plenty of money and large armies. - Jean Anouilh

18. The rule is not to talk about money with people who have much more or much less than you. - Katherine Whitehorn

19. Money often costs too much. - Ralph Waldo Emerson

20. Success is not final, failure is not fatal: It is the courage to continue that counts. - Winston Churchill

21. Chinese Wisdom about money:

            - With money you can buy a house, but not a home.

            - With money you can buy a clock, but not time.

            - With money you can buy a bed, but not sleep.

            - With money you can buy a book, but not knowledge.

            - With money you can buy a doctor, but not good health.

            - With money you can buy a position, but not respect.

            - With money you can buy blood, but not life.

            - With money you can buy sex, but not love.

22. 21 Secrets for Your Business Success from Self-Made Millionaires - Brian Tracy

           - Dream Big Dreams

           - Develop a Clear Sense of Direction

           - See Yourself As Self-Employed

           - Do What You Love To Do

           - Commit to Excellence

           - Work Longer and Harder

           - Dedicate Yourself to Lifelong Learning

           - Pay Yourself First

           - Learn Every Detail of the Business

           - Dedicate Yourself to Serving Others

           - Be Absolutely Honest With Yourself and Others

           - Set Priorities and Concentrate Single-mindedly

           - Develop a Reputation for Speed and Dependability

           - Be Prepared to Climb From Peak to Peak

           - Practice Self-Discipline In All Things

           - Unlock Your Inborn Creativity

           - Get Around The Right People

           - Take Excellent Care of Your Physical Health

           - Be Decisive and Action Oriented

           - Never Allow Failure To Be An Option

           - Never Give Up

23. King Solomon: Trust God not gold

           - He who loves money will not be satisfied with money.

           - Lazy people will never be prosperous.

           - Diligent, honest and consistent hard-working people who are wise will prosper.

           - If you borrow, you are a SLAVE to that person or company.

           - Learning what to say or not to say and when to say it will impact your pocketbook.

           - Giving people get back more and stingy people lack.

           - People who are greedy to gain – it takes away their life.

           - Consider the ant, how they work without a master and they work to provide food for the winter.

24. Warren Buffett said. "Gold gets dug out of the ground in Africa, or someplace. Then we melt it down, dig another hole, bury it again and pay people to stand around guarding it. It has no utility. Anyone watching from Mars would be scratching their head."

25. Warren Buffett - "Diversification is for people who don't know what they're doing."
Robert Kiyosaki - "Diversifying is like going to a horse race and betting on every horse."

26. Basic rule: Good investments generate income, not expenses. Therefore, owning a house is not necessary a good investment because it has to pay expenses like maintenance, insurance, and taxes. Unless, the house is so special and it appreciates its value more than the inflation rate.

27. Big successful businesses did not start with big money. They started with big idea.

28. Do not worry how much money you will earn for your effort. Anything you do, try to do it best and money will flow in eventually.

29. Home you can afford: 30% of your income. (From Manisha Thakor)
               - Car that drives you to trouble: Total transportation costs should be 10% of your income
               - How much will you need to retire? 25 x you current income

30. Top 5 tips to build wealth & success - Peter Gorensten & Farnoosh Tarabi

            - Live Below Your Means
            - Bounce Back From Defeat
            - Self-Promote (Having strong sense of self-worth)
            - Have Street Smart
            - Buy Cheap

31. Get your problem helped by saying this to customer service:
                                  - "What would you do if you were in my situation?"

32. Retire your debt before you retire. - Jane Bryant Quinn

33. "It All Starts With Saving." If you don't put money aside now, you won't have money later on. (Burton Malkiel)

34. Your bond position should be commensurate with your age. Someone in their fifties should consider 50% in bonds. The value of the bond position is not just that it provides you some protection in a down market -- it does, of course. But its value is that it keeps you from making behavioral errors such as selling stocks during a panic. (Jack Bogle)

35. "What's our budget look like?" I'd say, "Tell me what your revenues are. Okay, that's your revenues --then your costs are like 30% below that." Revenues always dictate costs. (Robert L. Johnson)

36. Focus on your needs, not wants (Liz Claman)

37. Check your Finance's health: (Source: money.cnn.com)

              - Your mortgage payment should not exceed 28% of gross income
              - Your total debt payment should not exceed 36% of gross income
              - Your emergency fund should be 6 months of living expenses in liquid assets
              - What percentage of your portfolio should be in stocks: Subtract your age from 110
              - How much should you be invested in your employer's stock: Keep it below 10%
              - Your life insurance should be enough to replace at least 5 to 10 years of your salary

38. Wealth Is What You Save, Not What You Spend (Jennifer Waters)

39. Anyone in the real world of business and finance knows that lasting success doesn’t just happen—it requires a precise combination of three things: (1) a burning desire and to create wealth (2) the capacity to act quickly when opportunity knocks and (3) the commitment to work hard and master the strategies necessary to take advantage of it when it does. (Jordan Belfort)

xx. You send me your money tips, and I will post them here. 

Take advantage of this useful Free piece of software, which helps you make better spending and investing decisions:   MoneyWiz

Thursday, July 28, 2011

Basics of Sales and Use Tax

Sales tax is an excise levied on the exchange of tangible personal property and selected services sold at retail. Most people would describe it as the tax we pay when we buy stuff. 

The golden rules in approaching any sales tax include the following: 
  1. Is the transaction a sale?  To determine whether the exchange or transfer constitutes a sale.  Most definitions of a "sale" say that it is an exchange of property for consideration involving any transfer of title or possession or both by any means whatsoever. A sale is the act of selling a product or service in return for money or other compensation.  
  2. What is the subject of the sale?  To evaluate of whether the subject of the sale (tangible personal property, service, etc.) is taxable or not.  If the item sold is tangible personal property, it is, by definition, subject to sales tax. However, if a taxpayer claims that the sale is exempt from tax, the taxpayer bears the burden of proof for the exemption or exclusion. Most state statutes with respect to service sales; however, states can distinguish specific services which are taxable.
  3. What is the sales price?   This step requires determining the sales price. The variables in defining sales price include trade-ins, discounts, rebates, finance charges, delivery, freight, handling, returns and allowances, and installation costs to name only a few. Whether and when these items are included or excluded from the taxable sales price can vary not only from state to state, but from transaction to transaction. Freight and delivery charges, for example, are often thought of as nontaxable service sales. However, most states tax freight if the freight or delivery charges are necessary to consummate the sale. If a sale is made FOB destination (indicating that title passes after delivery) it is likely that sales tax is due on the total price of the property including shipping. A sale made FOB shipping point (indicating that title passes before delivery), however, may allow the freight charges to be excluded from the tax base. 
  4. Whose tax do I have to collect?  Assuming the sale is taxable, what jurisdiction, if any, has the right to require collection and remittance by the seller? The location of a transaction for sales and use tax purposes is generally the location where the property is delivered to the buyer. This issue is not only pertinent to businesses but comes up frequently for individuals.  Any items purchased by an individual through mail order, assuming the article is subject to tax and no other exemptions apply, should be taxed. If the seller is not licensed to collect the sales tax, the item is typically acquired free of sales tax. The tax charged is generally that imposed by the jurisdiction where the property is delivered. The jurisdiction where the property is delivered may not be a jurisdiction where the seller has any property, employees, or other business contacts. Accordingly, the seller may not be required to license herself for collecting the sales tax. Therefore, the transaction very likely may not be taxed by the seller. However, the purchaser would have an obligation to pay the equivalent use tax.  
  5. Do I have a legal responsibility to file a return?  When business obtains sales and use tax permit, it will be instructed to file its tax return on a monthly, quarterly, or yearly basis (the determination is based on the volume of sales expected for your business). This filing requirement will be adjusted based on the amount of taxes that you actually collect. Most businesses will file monthly returns, but depending on how much tax your business collects, you might qualify to file quarterly or yearly returns.  
  6. Interstate Sales Info:  If the business does not have any physical presence in the state, it does not have a collection obligation. So, if the only activity your business has in a state is through mail order, either by catalog or over the Internet, you do not have a filing obligation with that state. 
 Use Tax Is The Complement to Sales Tax:   Every state that has a sales tax has a complementary use tax. While the sales tax is assessed on retail sales, the use tax is assessed on the storage, use, or consumption of tangible personal property purchased at retail and upon which no sales tax was paid. The effect is to create a level-playing field between in-state and out-of-state retailers. Without a use tax, sales tax could be circumvented by purchasing articles outside of a taxing jurisdiction.

 Registration and Filing Requirements:   Most states require the seller to collect the sales tax from the purchaser. Failure to do so can result in the seller being held liable for the tax it failed to collect. Assuming a business has sufficient contacts in a state so that it must register to collect sales and use tax, the company must abide by that jurisdiction's rules with respect to collection, accounting methods to be used, filing and deposit requirements, and other pertinent rules.   

Items Subject to Tax:  The general rule for most states is that sales of tangible personal property are taxed and services are not taxed unless specifically included. Unless a taxpayer can point to a specific exclusion or exemption. A sale of tangible personal property is presumed to be taxable. Services, however, are presumed nontaxable unless specifically identified by statute.

Exclusions and Exemptions:  There are numerous exclusions and exemptions to the imposition of a sales or use tax. Generally speaking, exclusions are those items that by definition are not subject to tax. Exemptions on the other hand, are specific statutory exceptions that exist as a matter of legislative grace. For example, prosthetic medical devices are often specifically exempted from sales and use tax. Exclusions and exemptions have been categorized into four areas:
  1. Nature of the purchaser
  2. Nature of the seller
  3. Nature of the product being sold
  4. Purchaser's intended use of the property
Georgia definition Tangible Personal Property in the sales tax statutes.
Code of Georgia 48-8-2
"Tangible personal property" means personal property which may be seen, weighed, measured, felt, or touched or is in any other manner perceptible to the senses. "Tangible personal property" does not mean stocks, bonds, notes, insurance, or other obligations or securities.


Wednesday, July 27, 2011

Changes Affecting Businesses - Update

Liberalized Section 179 Rules for 2012

The new law increases the maximum Section 179 deduction to $125,000 (adjusted for inflation) for assets placed in service in tax years beginning in 2012. Without this change, the maximum 2012 allowance would have been only $25,000. The new law also increases the phase-out threshold for reduced Section 179 deductions to $500,000 (adjusted for inflation) for tax years beginning in 2012. Without this change, the 2012 threshold would have been only $200,000. The new law also extends the other liberalized Section 179 rules we have become accustomed to: most purchased software costs will continue to be eligible for the Section 179 deduction for tax years beginning in 2012, and Section 179 elections can still be revoked for tax years beginning in 2012. (See IRC Sec. 179.)

Fifteen-Year Depreciation for Leasehold Improvements, Restaurant Property, and Retail Space Improvements Extended through 2011

The new law retroactively restores the 15-year straight-line depreciation privilege for qualified leasehold improvements, qualified restaurant buildings and improvements, and qualified retail space improvements to cover property placed in service in 2010 and extends it to cover property placed in service through 2011. [See IRC Sec. 168(e)(3)(E).] Note that restaurant buildings and improvements and retail improvements that are eligible for 15-year depreciation are ineligible for first-year bonus depreciation. [See IRC Sec. 168(e)(7)(B) and (e)(8)(d).]

Work Opportunity Credit Hiring Deadline Extended through 2011

The new law extends the general deadline for employing eligible individuals for purposes of claiming the Work Opportunity Tax Credit by four months, to cover employees hired through December 31, 2011. [See IRC Sec. 51(c)(4).]

Credit for Employer-Provided Child Care Extended through 2012

The new law extends the employer credit for costs to provide child care for employees for two years, to cover tax years beginning through 2012. Certain costs to acquire, construct, rehabilitate, or expand child care facilities can qualify for the credit. (See IRC Sec. 45F.)

2011 Inflation-Adjusted Retirement Plan Parameters

In News Release IR-2010-108, the IRS announced the 2011 inflation adjusted parameters for tax-advantaged retirement accounts and plans. Many are unchanged from 2010.

   - The maximum contribution to a traditional or Roth IRA (or any combination of the two) is $5,000 or $6,000 if the account owner is age 50 or older on December 31, 2011 (unchanged from 2010).

   - The maximum employee elective deferral (salary reduction) contribution to a 401(k) plan account remains at $16,500 or $22,000 if the participant is age 50 or older on December 31, 2011 (unchanged from 2010).

   - The maximum combined employee elective deferral and employer contribution to a 401(k) plan account remains at $49,000 or $54,500 if the participant is 50 or older on December 31, 2011 (unchanged from 2010).

   - The maximum employee elective deferral contribution to a SIMPLE plan account remains at $11,500 or $14,000 if the participant is 50 or older on December 31, 2011 (unchanged from 2010).

   - The maximum contribution to a SEP or garden-variety defined contribution plan account remains at $49,000 (unchanged from 2010).

2011 Social Security Tax Ceiling Is Unchanged

The Social Security Administration announced that the 2011 Social Security tax ceiling on wages and self-employment income will remain at $106,800 (unchanged from 2010 and 2009). Remember: the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduces the 2011 Social Security tax withholding rate on employee wages by 2% and the 2011 Social Security tax component of the self-employment tax by 2%.

2011 Standard Mileage Rates

In Rev. Proc. 2010-51, the IRS announced that the standard mileage deduction allowances listed below will apply for 2011.

   - Fifty-one cents per mile for business driving (up from 50 cents per mile for 2010). The 51 cents per mile allowance includes 22 cents per mile for depreciation.

   - Nineteen cents per mile for driving for medical or moving purposes (up from 16.5 cents per mile for 2010).

   - Fourteen cents per mile for charitable driving (this amount is fixed by statute and does not change from year to year).

IRS Issues Forms to Claim Small Employer Health Insurance Credit Along with Guidance
The 2010 healthcare legislation established a new tax credit for qualifying small employers. The credit can cover up to 35% of employee health insurance costs (25% for tax-exempt employers). It is available for tax years beginning in 2010, and it can be claimed for eligible costs that were incurred in 2010 before the healthcare legislation became law. A qualifying small employer is one that (1) has no more than 24 full-time-equivalent (FTE) employees, (2) pays an average FTE wage of under $50,000, and (3) has a qualifying healthcare arrangement in place. The credit is quickly phased out when the number of FTE employees exceeds 10 and when the average FTE wage exceeds $25,000. Phase-out is complete when the number of FTE employees hits 25 or when the average FTE wage hits $50,000. (See IRC Sec. 45R.)

   - The IRS has released new Form 8941 (Credit for Small Employer Health Insurance Premiums) which will be used by for-profit employers to claim the credit and an updated version of Form 990-T which will be used by tax-exempt employers to claim the credit (whether they owe unrelated business income tax or not).

   - In Notice 2010-82, the IRS released additional guidance on how the credit rules work, including guidance for household employers and employers that subsidize employee healthcare costs through various contribution arrangements.

2011 Parameters for Optional Self-Employment Tax Methods Are Unchanged

Individuals with negative or very low net income from farming or other self-employment activities can elect to use optional methods to calculate their SE tax liabilities. In effect, these optional methods allow qualifying individuals to claim earnings credits for future Social Security benefit eligibility purposes by paying modest amounts of SE tax on deemed (not actual) amounts of SE income. [See IRC Sec. 1402(a)(17) and 1402(l).

2011 Nanny Tax Threshold Is Unchanged

The Social Security Administration announced that the 2011 threshold for paying Social Security and Medicare taxes on a domestic employee's wages (the so-called Nanny Tax threshold) will remain at $1,700 (unchanged from 2010 and 2009). Remember, the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced the 2011 Social Security tax withholding rate on employee wages by 2%.

Monday, July 25, 2011

Tax Relief Act of 2010 for Individuals - Update


Reduced Rates on Ordinary Income Extended through 2012

The new law extends through 2012 the now-familiar 10%, 15%, 25%, 28%, 33%, and 35% federal income tax rates on ordinary income. Without this change, the rates for 2011 and beyond would have been 15%, 28%, 31%, 36%, and 39.6%. [See IRC Sec. 1(i).]

Reduced Rates on Long-Term Gains and Dividends Extended through 2012

The new law also extends through 2012 the now-familiar 0% and 15% federal income tax rates on most long-term capital gains and dividends. Without this change, the rates in 2011 and beyond on most long-term capital gains would have been 10% or 20%, and dividends would have been taxed at ordinary income rates of up to 39.6%. [See IRC Sec. 1(h).]

One-Year Social Security Tax Cut for 2011 Only

For 2011, the new law reduces the 6.2% Social Security tax withholding rate on employee salaries from 6.2% to 4.2%. This temporary change affects 2011 wages up to the $106,800 Social Security tax ceiling. Therefore, an unmarried individual can save up to $2,136 (2% × $106,800) and a married couple can save up to $4,272 (2% × $106,800 × 2). The IRS has released revised 2011 payroll tax withholding tables to reflect this change. Similarly, the Social Security tax component of the self-employment tax for 2011 is reduced from 12.4% to 10.4%. [See IRC Secs. 3101(a), 3201(a), 3211(a), and 1401(a).]

Favorable Child Credit Rules Extended through 2012

The new law extends the $1,000 maximum credit amount through 2012. Otherwise, it would have dropped to only $500 for 2011 and beyond.

American Opportunity Education Credit Extended through 2012

The Economic Recovery and Reinvestment Act of 2009 (better known as the Stimulus Act) created the American Opportunity credit which can be worth up to $2,500, can be claimed for up to four years of undergraduate study, and is 40% refundable. The credit was scheduled to expire at the end of 2010 and be replaced by the Hope Scholarship credit which is smaller, can only be claimed for the first two years of undergraduate study, is subject to phase-out at lower income levels, and is 100% nonrefundable. The new law extends the more-generous American Opportunity credit through 2012. [See IRC Sec. 25A(i).]

College Tuition Write-off Extended through 2011

This deduction can be up to $4,000 annually at lower income levels or up to $2,000 at higher income levels. It expired at the end of 2009. The new law retroactively restores it for 2010 and extends it through 2011. (See IRC Sec. 222.)

Favorable Student Loan Interest Rules Extended through 2012

This deduction can be up to $2,500 annually, whether the taxpayer itemizes or not. Less-favorable rules were scheduled to kick in for 2011 and beyond. Specifically, a 60-month limit on deductible interest would have applied, and stricter phase-out rules would have reduced or eliminated write-offs for many middle-income households. The new law extends through 2012 the more-favorable rules established by the 2001 Bush tax cut legislation. (See IRC Sec. 221.)

Favorable Coverdell Education Savings Account Contribution Rules Extended through 2012

Before the new law, the maximum contribution to federal-income-tax-free Coverdell education savings accounts (CESAs) was scheduled to drop to only $500 for 2011 and beyond (down from $2,000). In addition, the stricter phase-out rule would have reduced or eliminated contributions for many married joint-filing couples. The new law extends through 2012 the more-generous CESA contribution rules established by the 2001 Bush tax cut legislation. (See IRC Sec. 530.)

Section 127 Educational Assistance Plans Extended through 2012

For the last few years, employers have been allowed to provide up to $5,250 in annual federal-income-tax-free educational assistance to each eligible employee under Section 127 plans. Both undergraduate and graduate school costs can be covered by Section 127 plans, and the education need not be job-related. Employers can deduct the cost of running their plans as an employee benefit expense. Section 127 plans were scheduled to expire at the end of 2010, but the new law extends them through 2012. (See IRC Sec. 127.)

Itemized Write-off for State and Local General Sales Taxes Extended through 2011

For the last few years, individuals who paid little or no state income taxes were given the option of claiming an alternative itemized deduction for state and local general sales taxes. The option expired at the end of 2009, but the new law retroactively restores it for 2010 and extends it through 2011. [See IRC Sec. 164(b)(5)(I).]

Liberalized Earned Income Credit Rules Extended through 2012

The Economic Recovery and Reinvestment Act of 2009 (better known as the Stimulus Act) increased the earned income credit (EIC) percentage for families with three or more qualifying children from 40% to 45% for 2009 and 2010. The Stimulus Act also increased the income threshold for the phase-out rule that can reduce or eliminate EICs for married joint-filing couples for 2009 and 2010 (the threshold was made $5,000 higher than the threshold for singles). These changes resulted in larger EICs for affected families, but they were scheduled to expire at the end of 2010. The new law extends the changes through 2012. [See IRC Sec. 32(b)(3).]

Favorable Dependent Care Credit Rules Extended through 2012

For the last few years, parents could claim a credit of up to $600 for costs to care for one under-age-13 child or up to $1,200 for costs to care for two or more under-age-13 kids so both parents can work. Lower-income parents could claim larger credits of up to $1,050 and $2,100, respectively. For 2011 and beyond, the maximum credit amounts were scheduled to drop to only $480 and $960, respectively, or $720 and $1,440 for lower-income parents. The new law extends the larger maximum credit amounts through 2012. (See IRC Sec. 21.)

Smaller Credit for Energy-Efficient Home Improvements Extended through 2011

The Economic Recovery and Reinvestment Act of 2009 (better known as the Stimulus Act) expanded the Section 25C credit to cover up to 30% of 2009 and 2010 expenditures for energy-efficient insulation, windows, doors, roofs, and heating and cooling equipment in U.S. residences. The maximum credit for 2009 and 2010 combined was $1,500. The new law extends the Section 25C credit through 2011, but it dials back the credit percentage to only 10% and the maximum credit amount to only $500. The $500 credit limit is further reduced by any Section 25C credits claimed in 2006-2010. Therefore, many taxpayers who claimed credits in those years will be ineligible for 2011 credits. Finally, the new law imposes dollar limits on credits for certain types of improvements. For example, there is a $200 credit limit for windows. (See IRC Sec. 25C.)

$250 Write-off for K-12 Educators Extended through 2011

For the last few years, teachers and other eligible education personnel at K-12 schools have been allowed to deduct up to $250 of school-related expenses paid out of their own pockets - whether they itemized or not. The deduction expired at the end of 2009, but the new law retroactively restores it for 2010 and extends it through 2011. [See IRC Sec. 62(a)(2)(D).]

Mortgage Insurance Write-off Extended through 2011

Premiums for qualified mortgage insurance on debt to acquire, construct, or improve a first or second residence can potentially be treated as deductible qualified residence interest. This break was scheduled to expire at the end of 2010, but the new law extends it for one year to cover premiums paid through 2011. [See IRC Sec. 163(h)(3)(E).]

DC Homebuyer Credit Extended through 2011

This credit expired at the end of 2009, but the new law retroactively restores it for 2010 and extends it through 2011. (See IRC Sec. 1400C.)

2011 Inflation-Adjusted Individual Tax Parameters

In Rev. Procs. 2010-40 and 2011-12, the IRS announced many of the inflation adjusted tax figures that will apply for 2011. Here are some highlights.

   - The 2011 individual tax bracket breaks points are higher than for 2010, but only by modest amounts. For example, the beginning of the 25% bracket for married joint-filing couples in 2011 is $69,001 (up from $68,001 in 2010).

   - The 2011 personal exemption deduction is $3,700 (up from $3,650 in 2010).

   - The 2011 standard deduction amounts are $5,800 for singles and married individuals who use married filing separate status (up from $5,700 in 2010); $11,600 for joint-filing married couples (up from $11,400); and $8,500 for heads of households (up from $8,400).

   - The 2011 MAGI phase-out ranges for the Lifetime Learning higher education tax credit are $51,000-$61,000 for unmarried individuals (up from $50,000-$60,000 in 2010), and $102,000-$122,000 for married joint-filing couples (up from $100,000-$120,000).

   - The 2011 phase-out ranges for the American Opportunity higher education credit are fixed by statute at $80,000-$90,000 and $160,000-$180,000, respectively (unchanged from 2010).

   - The 2011 unearned income threshold for the Kiddie Tax is $1,900 (unchanged from 2010).

   - The 2011 annual gift tax exclusion is $13,000 (unchanged from 2010).

Tuesday, July 19, 2011

FHA vs Conventional Loan

Click on the image to see its full size

Traditional IRA vs. Roth IRA

Click on the image to see its full size

Required Minimum Distribution

The year the owner of an IRA turns 70½, they are required to take a required minimum distribution (RMD) no later than April 1 of the next year and then by December 31 for every subsequent year. Failing to do so, subjects the taxpayer to a 50% excise tax on any amount of the RMD not taken timely from the IRA.


Wednesday, July 13, 2011


Albert Einstein [on filing for tax returns]
This is too difficult for a mathematician. It takes a philosopher.

From Tom Antion & Associates:

1. America is the land of opportunity. Everybody can become a taxpayer.
2. Drive carefully. Uncle Sam needs every taxpayer he can get.
3. The rich and the poor are alike. They both complain about taxes.
4. The honeymoon is over when the bride begins to feel like she was never anything but a tax deduction to him.
5. After a man pays his income tax, he knows how a cow feels after she's been milked.

From others:

1. There is always death & taxes. However, death doesn't get worse each year
2. Why is it called a form 1040? Because for every $50 you make you get $10 and the IRS gets $40
3. Life is an education, but you cannot take tax credit for it. Plus, if you fail, you cannot take it over
4. Income tax is Uncle Sam's version of "Truth or Consequences."
5. Just let 'em feel that you can save 'em something on taxes and nobody will keep you out. -- Warren Buffett

The Oldest Profession - Courtesy of Blake Sanford, EA in San Diego
A surgeon, an accountant and a lawyer were arguing about which of them was practicing the oldest profession. The surgeon said, "God created Eve from Adam's rib. Obviously, God is a surgeon, so medicine is the oldest profession."

The accountant protested, "Before God created Eve from Adam's rib, he created an orderly universe from chaos. That clearly shows that God was an accountant before he was a surgeon. Accounting, then has to be the oldest profession."

The lawyer sat for a moment smiling, looking at the surgeon and the accountant. "That may be true," the lawyer said shrugging his shoulders, "but who created the chaos?"

Immigration - Contributed by Betty Briggs, EA in Arizona
Mujibar was trying to get into America legally through Immigration.

The Immigration Officer said, "Mujibar, you have passed all the tests, except there is one more test. Unless you pass it you cannot enter America."

Mujibar said, "I am ready."

The officer said, "Make a sentence using the words Yellow, Pink and Green."

Mujibar thought for a few minutes and said, "Mister Officer, I am ready."

The Officer said, "Go ahead."

Mujibar said, "The telephone, she goes green, green, green and I pink it up, and I say, 'Yellow, this is Mr. Mujibar.'"

Mujibar now lives in a neighborhood near you, and works at your computer company's Help Desk.

Grandpa and the IRS - from unknown author
The IRS decides to audit Grandpa, and summons him to the IRS office.

The IRS auditor was not surprised when Grandpa showed up with his attorney.

The auditor said, 'Well, sir, you have an extravagant lifestyle and no full-time employment, Which you explain by saying that you win money gambling. I'm not sure the IRS finds that believable.'

I'm a great gambler, and I can prove it,' says Grandpa. 'How about a demonstration? '

The auditor thinks for a moment and said, 'Okay. Go ahead.'

Grandpa says, 'I'll bet you a thousand dollars that I can bite my own eye.'

The auditor thinks a moment and says, 'It's a bet.'

Grandpa removes his glass eye and bites it. The auditor's jaw drops.

Grandpa says, 'Now, I'll bet you two thousand dollars that I can bite my other eye.'

Now the auditor can tell Grandpa isn't blind, so he takes the bet.

Grandpa removes his dentures and bites his good eye.

The stunned auditor now realizes he has wagered and lost three grand, with Grandpa's attorney as a witness. He starts to get nervous.

'Want to go double or nothing?' Grandpa asks 'I'll bet you six thousand dollars that I can stand on one side of your desk, and pee into that wastebasket on the other side, and never get a drop anywhere in between.'

The auditor, twice burned, is cautious now, but he looks carefully and decides there's no way this old guy could possibly manage that stunt, so he agrees again.

Grandpa stands beside the desk and unzips his pants, but although he strains mightily, he can't make the stream reach the wastebasket on the other side, so he pretty much urinates all over the auditor's desk.

The auditor leaps with joy, realizing that he has just turned a major loss into a huge win.

But Grandpa's own attorney moans and puts his head in his hands.

'Are you okay?' the auditor asks the attorney.

'Not really,' says the attorney. 'This morning, when Grandpa told me he'd been summoned for an audit, he bet me twenty-five thousand dollars that he could come in here and piss all over your desk and that you'd be happy about it!'

A Lesson In Taxation - Unknown Author

Sometimes Politicians can exclaim; "It's just a tax cut for the rich!!", and it is just accepted to be fact. But what does that really mean?

Just in case you are not completely clear on this issue, we hope the following will help:

Tax Cuts - A Simple Lesson in Economics.

This is how the cookie crumbles. Please read it carefully.

Let's put tax cuts in terms everyone can understand. Suppose that every day, ten men go out for dinner. The bill for all ten comes to $100.00. If they paid their bill the way we pay our taxes, it would go something like this:

The first four men (the poorest) would pay nothing.
The fifth would pay $1.00
The sixth would pay $3.00
The seventh $7.00
The eighth $12.00
The ninth $18.00
The tenth man (the richest) would pay $59.00

So, that's what they decided to do

The ten men ate dinner in the restaurant every day, and seemed quite happy with the arrangement, until one day, the owner threw them a curve.

"Since you are all such good customers," he said, "I'm going to reduce the cost of your daily meal by $20.00"

So, now dinner for the ten only cost $80.00. The group still wanted to pay their bill the way we pay our taxes. So, the first four men were unaffected. They would still eat for free. But what about the other six, the paying customers? How could they divvy up the $20.00 windfall so that everyone would get his "fair share"?

The six men realized that $20.00 divided by six is $3.33. But if they subtracted that from everybody's share, then the fifth man and the sixth man would each end up being "PAID" to eat their meal.

So, the restaurant owner suggested that it would be fair to reduce each man's bill by roughly the same amount, and he proceeded to work out the amounts each should pay. And so:

The fifth man, like the first four, now paid nothing (100% savings)
The sixth now paid $2.00 instead of $3.00 (33% savings)
The seventh now paid $5.00 instead of $7.00(28% savings)
The eight now paid $9.00 instead of $12.00 (25% savings)
The ninth now paid $14.00 instead of $18.00 (22% savings)
The tenth now paid $49.00 instead of $59.00 (16% savings)

Each of the six was better off than before. And the first four continued to eat for free. But once outside the restaurant, the men began to compare their savings. "I only got a dollar out of the $20.00", declared the sixth man. He pointed to the tenth man "but he got $10.00!"

"Yeah, that's right", exclaimed the firth man. "I only saved a dollar, too. It's unfair that he got ten times more than me!"

That's true"! shouted the seventh man. "Why should he get $10.00 back when I got only $2.00?? The wealthy get all the breaks"!!

"Wait a minute", yelled the first four men in unison. "We didn't get anything at all. The system exploits the poor"!!

The nine men surrounded the tenth and beat him up. The next night the tenth man didn't show up for dinner, so the nine sat down and ate without him. But when it came time to pay the bill, they discovered something important. They didn't have enough money between all of them for even half of the bill!!

And that, boys and girls, journalists and college professors, is how our tax system works. The people who pay the highest taxes are perceived to get the most benefit from a tax reduction. Tax them too much, attack them for being wealthy, and they just may not show up at the table anymore. There are lots of good restaurants in Europe and the Caribbean.

How much is Two plus Two? [unknown source]
That will depend on who you are talking to.

1. An engineer would say: 2 + 2 = 4.000000

2. A politician would say: 2 + 2 = 4 BUT if we try harder, we can get it to 4.01

3. A lawyer would say: Rounding up 3.98 to 4, or rounding down 4.02 to 4 is equal = 2 + 2

4. An accountant would ask: "How much do you want it to be?". That is because he could use LIFO, FIFO or other accounting methods to shift income and expenses to later fiscal year.

If you send me your Tax Humor, I will add it here.