Enjoy Tax Deduction on Car Donations

You can prefer to donate a car, when it grows old, rather than selling it in the market. One good reason for doing so is that car donation can help you enjoy a significant tax deduction advantage while filing your annual tax return. With this tax advantage, you can plan your budget for the upcoming year in a smooth manner. But, to have all these advantages, it is important for you to make some good preparations while donating your vehicle. Here are some tips to help you in these preparations.

Learn about the Federal Laws

Few years ago, the tax laws for car donation were more liberal and as a result, the vehicle owners were able to save more than $600 millions per years by making car donations. However, the scene changed after 2005, after which limits were raised on tax deductible amounts. Still, one can enjoy the tax benefit of donating cars and other vehicles like boats.

Who Can Help?

A charity organization that holds the status of 501(c)(3) with IRS can help you enjoy the tax deduction advantages through car donation. You can easily find these charitable organizations in the form of churches, temples and other government approved charities. Else, you can take advantage of car donation centers to find one of these charities.

Obtain the Car's Market Value

Before you actually donate car to the charitable organization or car donation centre, it is mandatory to obtain the market value of your vehicle. It is important information that would be required to be mentioned while preparing the documents for tax deduction advantage. Also, it is an important preparation to make, as it will let IRS to decide the tax advantage you are eligible for.

Filling Different Forms

Another important preparation in this direction is to learn about various forms that you would be required to fill. The brief information about these forms can be learned from the following points:

• Schedule A of Form 1040 is the most important form that one needs to fill while claiming for tax deduction advantage. The information provided in this form will be related to the charity and also, the car donated by you.

• Tax Deduction Claim between $250 and $500 - As per the prevailing tax laws, the car donation tax deduction between $250 and $500 requires one to provide information like charity name, details of the car donated and statement issued by the charity for donation made by you.

• Tax Deduction for Claim Above $500 - Copy B of Form 1098-C is required to be filled in case you want to claim tax deductions of more than $500. Apart from that a signed acknowledgment from the charity officer must be attached with the documents.

• Tax Deduction for Claim Above $5000 - Form 8283, Section B must be filled in case the tax deduction claim exceeds $5000. Again, you are required to attach the signed acknowledgment from the charity officer.

Date of donation and vehicle identification number are other important parts of information that you need to provide to IRS. You can take assistance form financial experts to make all these preparations in a better way and enjoy the desired tax advantage.

How can a car donation centre assist you if you wish to donate car to a charitable organizations. The related information can be found at carshelpingamerica.org, an informative resource for car donors.

Income Tax - Benefits and Tips You Need To Know

Income tax. Each country has its own tax system, and be aware of your country, the tax is very important. You must be aware of the different taxes you pay that is actually used by the Government to provide public services.

You must file a tax return if you have taxable income the amount of money. If your business in the United States during the year, or if you have assured the United States (as part of your work), May you be required to file tax returns in the United States even if you live in India today. It is very important to file taxes on time and accurately to avoid any control. And for taxes on the file, it is important that you are fully aware of the filing fee and tax saving procedure.

But equally important is to know about taxes, it is also important to know about tax savings tips and tricks. You know that many countries offer various tax benefits as tax credits.

Speaking of tax saving tips, different countries have different tax cuts. For example, the India government offers to pay less tax under section 80C. You can invest up to Rs 1 lakh and save tax up to Rs 30,000. Similarly, for other countries, you can put it just after simple investment and tax advice tax savings.

Regarding tax credits from Canada, the United States, Singapore government offers various tax credits and benefits. One of the last being "Health in Pregnancy Grant tax", under this new tax credit from April 2009, May you be able to get at once, without paying for tax if you are a mom to be. If you are a mom, you can apply for health care during pregnancy from 1 January, if you are supposed to give birth to a baby or after 6th April 2009. Similarly, if you have a family and you must raise your children, then you are eligible for child tax benefits.

Thus, it is very important to know about tax and benefits that this will help you save and get a lot of money. Remember at this time of recession, every penny saved is to turn the money earned.

www.incometaxreturnrebatetips.com

Financial Arbitrage Opportunities

What is Arbitrage? Simply put, simultaneous purchase and sale of an asset in order to profit from the difference in price. That definition can be extended to a number of areas with several scenarios.

Arbitrage transactions have been and are happening round the clock around the world. Knowledgeable ones end up on the positive end of the deals of all kinds.

If you pick up the phone and talk to 5 people at, IRS, Govt. agencies, commercial banks, big wire houses, institutions, politicians, economists and others you will get 5 different opinions and answers every time!! All the five agreeing even once would be nothing short of a miracle. This is Arbitrage of opinions at functioning on all cylinders.

In the financial world the classic example would be how the banks operate as they are masters of Arbitrage technology (manipulations?). Let us look at a simple example. Two consumers walk into a local bank. Two officers at the bank are sitting next to each other, one a CD specialist and the other a loan officer. One consumer hands over $100,000 to the CD specialist for deposit. In turn the consumer receives a CD, certificate of deposit (certificate of disappointment?) guaranteeing 2.5% annual interest. Big deal right?

The other consumer meets the loan officer trying to raise a loan for $100,000. The officer takes the $100,000 just received at the next desk and passes on the customer a bank check for $100,000 and charges an interest of 9%. The bank locked in a gain of 6.5% on $100,000 in just a few minutes. That is a positive arbitrage of 6.5%. Banks do this the whole day, the whole week, and the whole year. If the credit of the customer is less than perfect they are going to charge him a lot higher interest widening their gains. You see why the banks own multi storey buildings?

The gains do not stop there as the banks will leverage that $100,000 multiple times. Their credit card operations are mind boggling and stunning from the standpoint of consumer fairness. That is a different subject and we are not going there. What most investors do not know is they can be their own bankers and play the same game for gains for themselves if they paid attention and learnt the tricks of the trade.

The focus of this article is, how arbitrage works in enhancing, GUARANTEED INCOME and the ESTATE in a tax advantaged way for a senior. Here is a hypothetical example:

John Doe 75, a diabetic with cardiac issues.
Has a million dollars to invest. He needs $45,000 income year. Could use more if possible.
He meets with two financial advisors.

ADVISOR 1: Recommends investing in high quality bonds offering 4.5% ie $45,000 pre tax. John is satisfied. John will receive income for life and his $1m principal will be part of his estate subject to estate taxes when he passes away (could be 50% in taxes). Heirs may net $500,000. This depends on John's gross estate.

ADVISOR 2 (Arbitrage specialist):
From her past experience this advisor knows looking at John's medical history, she can do much better than Advisor 1. Advisor 2 conveys that to him and asks for three weeks time to offer a plan. John agrees.
Following is the two parts recommendation from Advisor 2 after three weeks:

1. John will give to the investment company $1m in exchange for pretax $120,000 in tax advantaged guaranteed income per year for life.
2. John will use $60,000 for him as income and invest $60,000 in a wealth replacement contract which will deliver $1m to John's heirs, income and estate tax free if properly structured, thus replacing the asset for the beneficiaries.

ARBITRAGE AT WORK
Enormous good as well as bad have come out of the individual differences and opinions between human beings. Kingdoms have been gained and lost on this opinions and differences battle. Positive or negative arbitrage for better or worse is created when opinions differ amongst two or more decision making people in power in the financial world.

The underlying investment used here to generate substantially enhanced in come is MEDICALLY UNDERWRITTEN SINGLE PREMIUM IMMEDIATE ANNUITY (SPIA). This SPIA contract is generally issued by financially sound life insurance companies. Though there are over 10,000 life insurance companies in the US, under 25 specialize in SPIAs. Advisor 2 knows that. She shopped around with 10 of the top rated, financially sound life insurance companies, provided them John's medical records to get the best guaranteed income offer for life. As is the case most of the times, she got 10 different offers. That is because 10 underwriters from 10 insurance companies looked at John's medical records through difference lenses and came to different conclusions. They have different opinions.

The life time guaranteed income range offered by these 10 companies was $60,000 per year from company 10 to all the way to $120,000 per year from company 1. It was no brainer for Advisor 2 to choose the best offer. The underwriter from company 10 who came up with an offer of $60,000 evaluated that John's health condition was not bad and with proper medical treatment has a better than normal life expectancy, may be 17 years. In this case the company has to pay guaranteed income for longer periods and hence the income offer was low.

The underwriter from company 1 who offered $120,000 income concluded that John's condition is bad and he has much less life expectancy than normal and may have 8 years or less of life left. In his opinion John's age for this purpose is 83 and not 75. The company has to pay the income for a much shorter duration and hence $120,000 per year is fair.

The other 8 underwiters had evaluations and offers in between $60,000 to $120,000. In fairness to John's heirs, Advisor 2 had the challenge on her hand to replace the $1m lost asset at a reasonable cost. Advisor 2 being a pro in her field goes to the underwriter of company 10 who felt John's health is good and gets the $1m wealth replacement contract for a cost of $60,000 per year. Company 1 was not a choice as the underwriter wanted $150,000 per year for the wealth replacement contract.

Do you see how all these works out. It is all a play of opinions. If you know how to take advantage of it you will do well for yourself.

Why Tax Advantaged income and death proceeds?
If you compare the two offers from the two advisors, you will notice, bond offer from Advisor 1 was pre tax $45,000. Assuming the client is in a 30% bracket, he would net $31,500 after tax.

Offer from Advisor 2 is $120,000 pre tax income. Under current tax laws, SPIA has certain special tax treatment called EXCLUSION RATIO. What that means is $120,000 income is treated as return of the principal for most part. Generally, depending on a number of factors 75% to 95% of the income could be tax exempt. This 75 years old client is likely to be taxed on may be 15% of the $120,000. That would be a taxable income of $18,000. At 30% tax rate, the tax liablity could be $5,400.

Client keeps $114,500 after tax income. If he committed $60,000 per year as long as he is alive to the wealth replacement contract he gets to keep $54,500 spendable income. That is $20,000 more than the spendable income of $31,500 from Advisor 1. John would love this. Wont't he?

When John passes away his heirs will receive $1m income and estate tax free if properly structured.
Results could widely vary depending on a number of crucial factors. But wonderful opportunities do exist to be tapped into and consumers use it all the time.

GOD ALMIGHTY (GA)
Long long ago, very long ago, once upon a time GOD ALMIGHTY (GA) appeared before Adam and Eve. This is what happened:

GA: Each of you have 30 seconds to ask me three wishes. Go ahead and ask me, quick- come on 10 seconds gone, hurry up!

One Spouse: Wine, Women and War!
Oher Spouse: Arbitrage, Leverage, Compound Interest
GA: Granted.

Which spouse asked what? You guessed it right. I agree.

There you have it, the 1st, 2nd, 3rd or the 9th, 10th, 11th wonders of the world.

Good luck with your Arbitrage investing.

http://www.wealthandtaxplanning.com

UK Resident Non Dom and How the New Tax Laws Affect You

Domicile and residence are complex issues. Normally a person will acquire the domicile of their father. This is known as a domicile of origin and may be different from a person's country of birth.

It is possible to obtain a domicile of choice. In simple terms this is brought about as a result of changing the country considered to be their permanent home. Despite the changes to the tax law from 6 April 2008 most people who are resident in the UK are likely to benefit if they can persuade HMRC that they are non UK domicile.

Even where a person is non UK domicile they are deemed for inheritance tax (IHT) to be UK domiciled if they have been resident for 17 out of the last 20 years.

In very simple terms HMRC will regard a visitor to the UK as UK resident if they come to the UK with the intention of settling permanently or for a considerable time. Certainly if they spend more than 182 days in a tax year or failing that make frequent and substantial visits they will be treated as UK resident. What are considered frequent and substantial is normally considered to be an average of 90 days or more per year over a 4 year period.

The tax consequences

A UK resident and UK domicile is subject to UK tax on income and gains wherever they arise in the world.

As far as IHT is concerned a UK domicile pays IHT on worldwide assets. A non UK domicile is subject only to IHT on assets located within the UK. Where one spouse has a UK domicile, the other a foreign domicile there is a particularly nasty tax trap in that the normal spouse exemption is restricted.

Up until 6 April 2008 a UK resident non domicile individual had a favorable treatment in that they had to pay UK tax on overseas income and gains only to the extent that they were remitted to the UK.

From 6 April 2008 where a non domicile has been resident for 7 of the last 10 tax years they can keep this favorable treatment only by paying a £30,000 annual charge. In other words if they don't pay the £30,000 they have to pay tax on all income and gains wherever in the world they arise. If resident for less than this time they can adopt this remittance basis only by sacrificing their UK personal allowances. This is subject to a £2,000 de minims limit.

It must be borne in mind that in any case any amounts actually remitted are subject to tax.

SOURCE
paulguilfoyleaca.com

Different Tax Treatments Suggest an Order For Tapping Your Sources of Income

By the time you hit retirement, you've probably acquired a variety of savings and income assets. From these you'll withdraw income to live on and enjoy your retirement years.

But because the tax treatment of your various assets differs, you should know that ordering how you withdraw from them can help preserve them longer. In this article I suggest a sequential order you should withdraw from the six common assets categories and why.

The idea, here, is to arrange your withdrawals to maintain your wealth as long as possible by maximizing annual investment growth while minimizing annual taxation of income.

You draw income from three types of assets classes:

* income assets - pension and/or social security benefits,
* savings assets - government regulated retirement accounts or normal taxable investments
* home equity - and related real estate

Each of these asset types may include asset categories with different tax treatments. So I'll comment on each category and when to consider withdrawing from them.

Income assets:

Both your pension and social security represent a stream of income that begins at your retirement. If both these income assets together easily cover all your living and enjoyment expenses, you needn't worry about the order you tap into other assets for special occasions.

Your pension is taxed as ordinary income. This leaves no wiggle room for offsetting this tax. Social Security (SS) income, on the other hand, has some tax advantages.

SS is free of income tax if with your other income you stay under certain threshold amounts depending on your filing status. Above that only 50% of it is taxed. A higher threshold will subject 85% of your Social Security to income tax. So watch out.

If you have a lot of investments, try to minimize the amount of income (like taxable and tax free interest) they generate that pushes you into higher Social Security taxation.

You can also hold off receiving your SS benefits until your full retirement age - probably 66 for most of you. You take a cut in SS benefits when you begin receiving them before then - as much as a 30% cut at 62. But waiting beyond your full retirement age will increase them - as much as ~30% more if you wait 'til you're 70.

Savings Assets:

Government-regulated retirement accounts have helped many save at work and at home. They include 401(k)s, 403(b)s, IRAs, and Roth versions. They come in two basic tax-advantaged flavors: traditional IRA-type and Roth Versions.

Your IRA-type investments grow tax-deferred. This allows their full annual investment return to compound - a key advantage. Anything you withdraw from them is taxed at ordinary income rates since you contributed to them with tax-deductible contributions.

Since they compound so well, let them ride and don't touch them 'til last. If you turn 701/2, withdraw only the minimum required distribution (MRD) and let the rest grow.

Roth type investments contributions come from after-tax contributions. The key advantage is that they grow tax free - never to be taxed even when you withdraw money from them. So they also will compound at their annual investment return rate.

Since Roth IRAs have no MRD requirements you never have to touch them. They're also the best form of IRA to leave to your beneficiary - since they'll remain tax free forever. Be sure to convert any Roth 401(k) - which has MRDs - to a Roth IRA which doesn't.

Regular taxable investment accounts are just those that aren't government-regulated. The type of investment in them determines the character of taxation. Any earnings such as dividends or interest earnings are taxed yearly. So there's not protecting taxation here. Withdraw from these first.

Most anything withdrawn from them beyond their earning will probably be untaxed or taxed at low capital gains rates. Take advantages of any capital losses to offset taxes too. Because of these tax effects, these investments will deplete slower than withdrawing from tax-deferred investments.

So in summary, investments that are tax-deferred or tax-free - under an equal investment growth scenario - will compound faster than those annually taxable investments that must forfeit some of their annual earnings to taxes. Withdraw from the latter first.

Home and real estate investments:

Home and other real estate investments generally offer their own tax-advantages. The tax-advantage of owning your home or those subject to capital gains can often present little or no taxation to you.

Use can access your home equity easily. As a tax-advantaged investment, you can sell it and buy down to get at the excess equity at little or no tax since the home sale tax exclusions is $500,000 for a married couple.

SOURCE
www.easyretirementknowhow.com

How a Tax Consultant Can Help You

With the nose dived economic conditions and the rock bottomed Global markets; the need for getting help with taxes is indispensable. If you are unaware of Tax consultants, here is who they are: A tax consultant, commonly referred as the tax advisor is a person trained in Law who will be assisting the businesses and individuals to manage their taxes. Their services are indispensable to avoid the tax burden from ones life.

Before getting into the tips to find the best consultant, let's discuss about the need of one for managing your taxes. You will be well aware of the fact that paying tax is every citizen's duty. However, paying a dime more than what you actually have to pay is totally unacceptable. This is where their assistance comes into play. They will ensure that you are paying the right amount of tax in right time. Now coming back to the tips, the following are the factors to be considered while choosing the right consultant:

1. Experience matters more than anything else

As already said, with the demand for consultants, fresh candidates owning a degree in managing the taxes have started to offer tax consultancy services. Due to the lack of experience of these fresh candidates you will often get poor tax advice. Their advice will be very much misleading and you will finally end up in legal disputes. Hence it is very much important to check the experience of the tax consultant before signing up.

2. Let the advisor review the situation

You should always remember the fact that not all the tax advisors will be able to handle any financial situation. Hence it is always good to let your new tax consultants analyse your present financial condition and ensure that he can provide the best service. Though the tax consultants charge a nominal fee for analysing the financial condition, it is really worth the money you pay them and you will find its benefits in a long run.

3. The "Licence to advice"

It has to be noted that not just anyone can provide tax advice in any area. The tax consultant must hold a licence to operate in the particular area. For example, a Dublin Accountant can operate only in Dublin and not anywhere else. Hence you should make sure that the tax consultant o your choice is licensed to operate in your area.

Keeping the above said factors in mind will ease the search for the best TAX consultant to manage your taxes.

SOURCE
www.personaleconomy.ie

Get Your IRS Tax Problems Solved and Relax

Do not lose sleep over your mounting tax debt - Internal Revenue Service (IRS) has designed a program to enable willing taxpayers to get some relief from the amount of tax owed by accepting less than their tax debt liabilities or allowing them installment payments or a holiday period from tax. This is known as the tax relief program and is implemented by offer in compromise/tax settlement with the individual who owes large sum of tax and is willing to pay.

If you qualify to pay less than the mounting tax debt you owe, you can settle your outstanding tax debt dues, the best way out for you is to hire a qualified and licensed tax professional who have experience in effectuating tax relief, IRS tax audit representation and or State tax audit representation. With the help of highly specialized and trained tax relief expert who will represent your case, you have a very good chance to get IRS tax relief and or State Tax relief.

As tax experts know the right way to represent your case, you stand a very good chance of getting Tax Relief and beneficial tax settlement. The tax consultants are familiar with all the tax laws and are updated with changes in tax laws and codes that happen regularly. Their negotiation tactics are powered by their knowledge and experience and are sure to clinch a better deal for you.

You can get tax settlement by allowing you to pay your taxes in installments. Tax professionals can also help you avoid and stop wage garnishment / wage levy. This is am IRS tax levy program under which your tax will be automatically deducted from your monthly wage earnings. Even if you want to get rid of a wage garnishment program earlier levied on you, tax professionals can help you out. Once you receive a wage levy notice, you should take action immediately by consulting a reputable tax consultant so as to avoid getting your paychecks garnished and or levied by your employer under the instruction of the government.

Always get help of a licensed tax professional who can resolve your outstanding tax related matters, you can also seek professional help in matters related to back taxes / delinquent tax returns/unfiled tax returns etc. from a tax attorney or tax professional. You can avail of a payment plan for your back taxes and get all your penalties eliminated with professional help. Handling your tax problems yourselves may result in frustration or negative results.

SOURCE
www.myirstaxrelief.com

Can a 2006 Income Tax Calculator Save You Money?

How can you save money, and possibly even get money back, when you're in the hock to the IRS? It's easier than you'd think. Every year, taxpayers miss critical deductions that could save them hundreds or thousands of dollars -- and studies show that late tax filers are actually more likely to get a refund than average. Even better, their refunds are much larger than those owed to typical filers.

If you plan on filing your 2006 taxes, a 2006 income tax calculator is crucial. You'll want a program that doesn't just take into account your wages and tax brackets -- it also needs to evaluate critical deductions-related information like the number of dependants you have, your mortgage situation, your state taxes, and any special tax credits you might be eligible for.

It's easy for someone slap together a 2006 income tax calculator just by running the basic numbers with brackets. But that could lead to taxpayers wildly overpaying the IRS. The IRS has designed the tax system so it's easy to calculate a worst-case scenario, and much more time-consuming to figure out all the deductions, credits, and other goodies that ease the pain.

Relying on the simple answers can make things go faster, but it's not the best way to maximize taxpayer benefits. A great 2006 income tax calculator will cover all the basis, ask probing questions that get at exactly how you can save money, and will set up your return in a way that maximizes deductions and minimizes hassle.

When you're picking a 2006 income tax calculator, don't skimp on those extras. It's easy to develop a 2006 income tax calculator that ends up costing you money, and a lot harder to make one that gets things exactly right. Because of this, the price tag for a good income tax calculator is a bit higher than that of a bad one. But when you consider the numbers, it's rare to find a tax deduction that won't cause the better income tax calculator to pay for itself.

This is part of why big companies pay millions of dollars for specialists to go over their taxes with a fine-toothed comb. Investing in good tax preparation is a great bargain, and thanks to tax preparation software, it's now easier than ever.

Byrne Hobart is a New Yorker with widely, perhaps even bizarrely varied interests. He's always interested in how small businesses can help people interact with government, as exemplified by how taxpayers can use a 2006 income tax calculator to save money.

SOURCE
www.priortax.com

Tax Planning Strategies

The UK Personal Pension (Inc SIPP)

In the UK, under the new rules introduced with effect of April 29th 2009, there is still scope for an individual to contribute an amount up to the level of their earnings and get tax relief on their contributions, (as long as their income is not in excess of £150,000). For those who are or have relevant income above that amount, see the document 'Pensions: Limiting Tax Relief for High Income Individuals' on the HMRC website or click on the link below. This will entitle a member who makes contributions to tax relief at either 20% or 40% depending on their earnings. If you are a business owner and your company makes the contribution on your behalf, then your company has saved both the Corporation Tax on the contribution and neither is it subject to National Insurance. Tax Relief on member contributions are an immediate boost to the value of the fund and in the case of a company contribution, it is a very tax efficient manner of securing long term benefits of the company's wealth for the member. Additionally, if set up correctly, should the member die before drawing the benefits, the value of the funds can pass free of Inheritance Tax IHT) to the chosen beneficiaries. This can be another 40% tax saving.

The downside of the tax relief on contributions and the largely free of tax growth on the funds, is the restrictions placed upon access to the funds. Essentially, you no longer have access to all of the capital. When you do take the benefits, (which from 2010/11 will be from age 55+) you can have up to 25% of the value of the fund as Tax Free Cash, (TFC). The remainder must be used to provide member benefits. Any benefits over and above the TFC are subject to Income Tax at the prevailing rates. In the interim, as a member you can exercise some control by way of what the funds are invested in. This can be normal pooled investments, directly into equities or even the purchase of commercial property.

The Offshore Unapproved Pension

On the downside, due to the much higher costs associated with the initial set up and operation of such schemes, they are generally only attractive to those considering investing typically £150,000 +. Also, although such schemes may let the member contribute unlimited amounts into the scheme. There is NO entitlement to Income Tax relief on the contributions either for the member or for any employer contributions.

At this stage it does not look too attractive, yet for the right individuals they are popular. Their attraction lays in the longer term tax planning and the choice and control the afford the member.

Once monies are in the scheme, the internal returns are also free of tax.

The scheme can make loans to the member, who can then use the money to spend, (though there may be need to provision repayment at a later date). The member can invest the proceeds and even where appropriate to make a Directors loan back into the members own company. It may be attractive to secure such loans against agreed member assets, thus protecting the wealth against unforeseen future solvency problems a member or his/her business may face.

In addition to the usual investments, the scheme can purchase land, residential and commercial property, even in the UK, it can operate businesses and developments even go into joint business ventures in the UK and the returns it makes on its investments can be tax free. Clearly there is much more choice and control for the member than with the UK 'approved pension'.

In terms of the member ultimately drawing pension benefits from the scheme, there is far more flexibility and consequently more scope to mitigate income tax.

Again, if set up correctly, upon the members death prior to drawing pension benefits, the assets of the scheme can pass free of IHT to chosen beneficiaries.

Clearly there are other issues to consider when deciding on what avenue one should take but this should serve to notify you the reader, there may be ideal opportunities out there which you are probably not aware of and the importance of looking at the bigger picture when making your decisions.

www.karl-lavery.co.uk