Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

Archive for October, 2009

Official IRS 2010 Inflation Adjustments

Posted by taxguru on October 16, 2009

For those folks not satisfied with the CCH calculations of the 2010 inflation adjustments that I posted a month ago, IRS has officially released their figures.

Summary

21 page pdf file with all details

 

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Posted by taxguru on October 14, 2009

Tax Hike in a Lab Coat… Dare to say no to Baucus-care.

The Baucus Bill Is a Tax Bill Middle-class families would get hit with a double-digit increase in their marginal tax rate.

– And anyone opposing this socialist takeover of the medical profession is going to be portrayed as racist, evil and cold-hearted.

 

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Posted by taxguru on October 14, 2009

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Posted by taxguru on October 13, 2009

Eight Year-End Moves That Can Cut Clients Tax Bills for 2009 and 2010 – Some good ideas from the most recent issue of the Intuit ProConnection Newsletter

These are obviously not the only ways by which to reduce taxes.  For example, they don’t mention the huge potential savings from setting up a C corp before year-end to move income off of a 1040 (aka Income Shifting), a subject that I hope to be able to cover in more detail in a webinar in the near future.. 

 

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Posted by taxguru on October 13, 2009

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Posted by taxguru on October 8, 2009

Tax the Rich? How’s That Working? – Idiotic politicians always assume that they can just continue to financially rape the people with the money and they will just stand still and allow it to happen. While that worked for Roman Polanski, who was able to prevent his 13 year old victim from leaving by drugging her up, more and more wealthy people are taking actions to stop it, such as leaving the high tax states. How hard is it for the mental midgets in power to understand the concept that five percent of billions of dollars will result in a lot more revenue than ten percent of nothing?

Mrs. Pelosi’s VAT. The Speaker floats a middle-class tax hike. – It looks like we may have missed our opportunity to enact something like the FairTax national sales tax to replace the current income and payroll taxes. Our rulers in DC want to have it in addition to all of the taxes we currently have and the hundreds of new ones the insatiable spendaholics in DC are cooking up. The analogy of Queen Nancy’s vat as a witch’s cauldron of poison does seem to fit on several levels.

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New IRS Phone Scam

Posted by taxguru on October 8, 2009

It appears that our friends at the real IRS have even more competition in separating people from their money from imposters.

Earlier this morning, a client called and said that there was a voice mail message on her husband’s cell phone, claiming to be from the IRS and that they needed to call back by the end of business today.  I didn’t recognize the 800 number given as being one of the regular ones that IRS uses.

Instead of calling that number back, we decided that it would be best for her to call the main IRS info line at 1–800–829–1040 and ask them to pull up her account. 

She just called us back and said that when she called the main IRS switchboard, they had no pending actions against them or anything else that would have warranted any contact from an IRS agent.  They also told her that they didn’t even have any of their cell phone numbers in their database.

So, this was obviously another scam from some scumbag looking to trick people into revealing their personal identification, credit card and bank info, much like the email version that I mentioned last month

 

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Posted by taxguru on October 5, 2009

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Posted by taxguru on October 5, 2009

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Gifts From Parents

Posted by taxguru on October 3, 2009

Q:

Subject:  gifts of 13,000

Good Afternoon,
 
If I am reading it correctly, it states that a married couple  can receive up to $52,000 a year.
Would it be done like this, My mother writing a check out for 13,000 to both my husband and I and then my dad writing a check for $13,000 to both my husband and I. Now the money would be out of the same account with both their names on the check. One signing 2 checks and the other signing the other 2 checks.  We are in Ct and they are in North Carolina. We are trying to buy a house and they want to give us money. Thank you.

A:

Gifting strategies are the kinds of things you and your parents should be discussing with your own personal professional tax advisors because there are several different ways in which they can be structured.

I noticed some aspects of gifting that you appear to be confused about.

First, there is no maximum amount of gifts that can be received.  For the recipients, gifts are exempt from income tax.  However, if you were to be given non-cash items, such as stocks or real estate, that have appreciated in value since your parents purchased them, there could be tax consequences when you sell them because you are required to maintain your parents’ cost basis.

From the givers’ (your parents) perspective, there is also no maximum that they can give away in a year.  However, if either of them were to give any person more than $13,000 during a single calendar year, they would be required to file a Gift Tax return (Form 709) to report that to IRS.  There is also a lifetime exemption of one million dollars of gifts per giver, so even if they exceed the annual $13,000 limit, they wouldn’t have to actually pay any gift tax until they have used up the million dollars.

There is a provision in the tax law allowing for married couples to split their gifts if they are made by only one spouse from his/her separate money.  This enables both spouses to use their $13,000 annual exemption.

In the proposed plan that you mentioned, it sounds as if the bank account is jointly owned, so each could give you $13,000 and your husband another $13,000 without the need for any gift tax returns or gift splitting.  Added all together, that would be $52,000.

This was a rather lengthy way to say that your plan appears valid. However, there are ways to transfer even larger amounts of money without exceeding the annual limits that should be discussed with your own personal professional tax advisor.

For example, if you needed $200,000 right now, your parents could gift you the $52,000 in 2009 and loan you the additional $148,000.  In future years the principal of the loan could be forgiven as gifts in those years in increments of $13,000 or whatever the annual limit is in those years.

I hope this helps.

Good luck.

Kerry Kerstetter

Follow-Up:

thank you so much for getting back to me.

  

 

 

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