Fresh from MSN Money.
The feds urge mortgage lenders to cut homeowners some slack during crises, but there's no guarantee.
Two keys: act quickly and stay in touch with your lender.
The storm is over. You're safe. So is your family. But your life will never be the same.
And for many people, unless they take the difficult step of dealing with what previously seemed like mundane day-to-day financial realities, things could get worse.
This is certainly the case for hurricane-stricken homeowners with mortgages. These Gulf Coast residents must continue to make monthly payments on badly damaged, perhaps destroyed, residences.
Homeowners who don't make their expected payments could, at best, face added costs from late-payment fees and see their credit ratings damaged. At worst, they could lose their homes before repairs or rebuilding even starts.
But you can forestall such financial fallout. The key: You've got to initiate the process and stay in close touch with your mortgage lender.
Leniency recommended
"It's not realistic to expect people to think about sending a check when they're sitting in a damaged home with no electricity," says Terry W. Claus Jr., president of Miami-based Home Financing Center
That's especially true in cases as extreme as Hurricane Katrina, where many homeowners also are facing the loss of regular income because their employers are gone.
Federal banking and housing agencies are aware of the challenges and have put out the word to lenders that accommodations should be made.
The Federal Deposit Insurance Corp. notified institutions under its supervision that it will grant leeway for "prudent efforts to adjust or alter terms on existing loans in areas affected by the hurricane and storms.
Read the whole story here on MSN Money.
Please pass this on to anyone with friends or family.
Smokey says - keep safe.
Friday, September 23, 2005
Thursday, September 22, 2005
The IRS are coming - run for the Hills!
Or maybe not.
According to Diane Kennedy the IRS has started a pilot program to examine compensation taken by shareholders of S Corporations. The problem is that too many S Corporation owners don’t take any salary at all. That way all profits run through to them in the form of a distribution and they are able to avoid payroll taxes.
Seemed like a good idea at the time, right? Well, the IRS is on to it!
In fact, if you don’t take any payroll from your S Corporation, they are now changing all of the distribution into payroll – and charging penalty and interest.
The best defense is (1) pay yourself some kind of salary. In this case, it is much more unlikely that the IRS will attempt to change all of the distribution into salary. And, (2) draw a reasonable salary from your S Corporation.
What is a reasonable salary? It’s the amount you’d pay someone else for the work you currently perform.
There is one more strategy to calculate the amount of salary – it’s to first calculate how much a reasonable return from your investment in the S Corporation should be. The difference between taxable income and the reasonable return on investment would be your salary amount. Generally, the return method of calculation means a much higher distribution and lower salary. And, that means less tax.
Read more about the details here.
so... as I always say, pigs get fat and hogs get slaughtered - don't be greedy and you'll do just fine.
Oh oh, here comes that dog again - gotta run
According to Diane Kennedy the IRS has started a pilot program to examine compensation taken by shareholders of S Corporations. The problem is that too many S Corporation owners don’t take any salary at all. That way all profits run through to them in the form of a distribution and they are able to avoid payroll taxes.
Seemed like a good idea at the time, right? Well, the IRS is on to it!
In fact, if you don’t take any payroll from your S Corporation, they are now changing all of the distribution into payroll – and charging penalty and interest.
The best defense is (1) pay yourself some kind of salary. In this case, it is much more unlikely that the IRS will attempt to change all of the distribution into salary. And, (2) draw a reasonable salary from your S Corporation.
What is a reasonable salary? It’s the amount you’d pay someone else for the work you currently perform.
There is one more strategy to calculate the amount of salary – it’s to first calculate how much a reasonable return from your investment in the S Corporation should be. The difference between taxable income and the reasonable return on investment would be your salary amount. Generally, the return method of calculation means a much higher distribution and lower salary. And, that means less tax.
Read more about the details here.
so... as I always say, pigs get fat and hogs get slaughtered - don't be greedy and you'll do just fine.
Oh oh, here comes that dog again - gotta run
The ultimate tax shelter: Owning your own business
Jeff Schnepper was just telling me that the surest way to reduce your taxes is to convert personal expenditures into allowable deductions. Turn even a hobby into a business and you'll cut your tax bill.
The No. 1 way to reduce your taxes with a smile is to convert your personal expenditures into allowable deductions. Turn yourself into a business owner and cut your taxes.
It’s almost that simple.
Moreover, even if you’re employed full time elsewhere, that doesn’t prevent you from having another vocation on the side. This technique works whether your business is your primary source of income or it’s a sideline.
Your hobby can be a business. That means your hobby could qualify as a business. In the process, you’ll cut your tax bill.
Here’s the best part: Your business doesn’t have to make a profit for your expenses to be deductible. All you have to do is establish a “profit motive.” Under the Internal Revenue Code, a “profit motive” is presumed if you earn any net income in any three out of five business years.
Read the full story here
Well, that was exciting! I think I'll just stretch out here on the keyboard eif4[cw948955j49tp9m oops. 'Bye for now
The No. 1 way to reduce your taxes with a smile is to convert your personal expenditures into allowable deductions. Turn yourself into a business owner and cut your taxes.
It’s almost that simple.
Moreover, even if you’re employed full time elsewhere, that doesn’t prevent you from having another vocation on the side. This technique works whether your business is your primary source of income or it’s a sideline.
Your hobby can be a business. That means your hobby could qualify as a business. In the process, you’ll cut your tax bill.
Here’s the best part: Your business doesn’t have to make a profit for your expenses to be deductible. All you have to do is establish a “profit motive.” Under the Internal Revenue Code, a “profit motive” is presumed if you earn any net income in any three out of five business years.
Read the full story here
Well, that was exciting! I think I'll just stretch out here on the keyboard eif4[cw948955j49tp9m oops. 'Bye for now
Income Splitting
This tactic is a great way to eliminate self employment taxes (currently 15.3%).
Scenario: You are a self-employed person (plumber, realtor, chiropractor, etc.) operating as a sole proprietor.
Situation: You declare your income (say $60,000 after business deductions) as 1099 (as opposed to a wage earner's W2), and then pay self-employment taxes of $9,180 in addition to the state and federal income taxes levied.
Solution: Set up a Company or Corporation with an "S" tax election. This allows you to become a W2 employee of your Company or Corporation and take part of your income as W2 and part of your income as a Distribution.
So what? Well, you don't pay any employment taxes on Distributions! Lets say you pay yourself in wages what you would pay someone else to do your job, and that works out to be about 50% of your total income, and you withdraw the balance (50%) as a distribution. That means that you don't pay employment taxes on $30,000 or in other words, you save $4,590 in taxes!
oops, there goes a dragonfly by the window - got to run
Scenario: You are a self-employed person (plumber, realtor, chiropractor, etc.) operating as a sole proprietor.
Situation: You declare your income (say $60,000 after business deductions) as 1099 (as opposed to a wage earner's W2), and then pay self-employment taxes of $9,180 in addition to the state and federal income taxes levied.
Solution: Set up a Company or Corporation with an "S" tax election. This allows you to become a W2 employee of your Company or Corporation and take part of your income as W2 and part of your income as a Distribution.
So what? Well, you don't pay any employment taxes on Distributions! Lets say you pay yourself in wages what you would pay someone else to do your job, and that works out to be about 50% of your total income, and you withdraw the balance (50%) as a distribution. That means that you don't pay employment taxes on $30,000 or in other words, you save $4,590 in taxes!
oops, there goes a dragonfly by the window - got to run
Tuesday, September 20, 2005
Good thing I already work in Nevada
Good thing I already work in Nevada!
According to a recent article in the LA Times, California businesses are incorporating in Nevada, where there is no income tax. State officials call it fraud and vow a crackdown.
“Forget complicated wire transfers to the Cayman Islands or secret Swiss deposit boxes. Californians who want to hide their money from tax authorities are increasingly opting for a simpler alternative: socking it away just over the state line.
No need for savvy accountants or high-priced lawyers. Seminars, web casts and radio advertisements bray that it's easy to slash a California tax bill — or eliminate it altogether — by creating a corporation in Nevada, where there is no income tax on businesses or individuals. Set one up online with a few keystrokes and a $395 credit card payment! For a little extra, a Nevada mailing address, telephone number and bank account can be added.
Promoters peddling the packages call it good tax planning.
California officials call it something else: tax fraud.
They say the cash-strapped state's coffers are being drained as even some of the smallest California businesses shift their profits into hastily created corporate shells in the Silver State.”“We want to catch this scam before it gets out of hand," said state Controller Steve Westly. "We think it will cost the state tens of millions of dollars if this continues.”
Here is the full story.
At Your Entity Solution, we don’t think that a Nevada Corporation is necessarily the only, or even the best answer to setting up a legitimate company structure that addresses your need to manage your tax burden and protect your assets from unwanted liability.
Don’t forget – if it seems too good to be true, it usually is.
Bye for now, time for a nap.
Smokey Says - don’t take any rancid tuna.
According to a recent article in the LA Times, California businesses are incorporating in Nevada, where there is no income tax. State officials call it fraud and vow a crackdown.
“Forget complicated wire transfers to the Cayman Islands or secret Swiss deposit boxes. Californians who want to hide their money from tax authorities are increasingly opting for a simpler alternative: socking it away just over the state line.
No need for savvy accountants or high-priced lawyers. Seminars, web casts and radio advertisements bray that it's easy to slash a California tax bill — or eliminate it altogether — by creating a corporation in Nevada, where there is no income tax on businesses or individuals. Set one up online with a few keystrokes and a $395 credit card payment! For a little extra, a Nevada mailing address, telephone number and bank account can be added.
Promoters peddling the packages call it good tax planning.
California officials call it something else: tax fraud.
They say the cash-strapped state's coffers are being drained as even some of the smallest California businesses shift their profits into hastily created corporate shells in the Silver State.”“We want to catch this scam before it gets out of hand," said state Controller Steve Westly. "We think it will cost the state tens of millions of dollars if this continues.”
Here is the full story.
At Your Entity Solution, we don’t think that a Nevada Corporation is necessarily the only, or even the best answer to setting up a legitimate company structure that addresses your need to manage your tax burden and protect your assets from unwanted liability.
Don’t forget – if it seems too good to be true, it usually is.
Bye for now, time for a nap.
Smokey Says - don’t take any rancid tuna.
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