The Tax Preparation Blog

Archive for January, 2008

Question: How do you figure in a German claim/award on your income tax?

My husband’s grandfather passed away many years ago, and we recently got some $ from German Claims program @ the US Treasury. His grandfather lived in Germany and was a schoolteacher there. I figured we would have to report this on our taxes. But I started doing our taxes today online and really couldn’t find a place for it. I know I should probably ask an expert (like a CPA) but I was wondering if anyone knew.

Answer: If this payment was considered a reparation for victims of the Holocaust, they are not taxable.

See IRS Pub 525, page 30. Here’s a link: http://www.irs.gov/pub/irs-pdf/p525.pdf

Jump online to claim pay

MORE families are choosing to claim family payments over the internet, with about half of all family assistance claims now being made using convenient and improved online services.

Does a company have to pay tax to claim R&D tax relief?

Question: If i have a W-2 form do i fill out a 1040 tax form?

I went on a website for California Taxes and there are so many forms to choose from. How do i know which one to use?

Answer: Yes, a 1040 is all you need if a W-2 is all you have. Unless you plan on itemizing or have childern that you can claim as a dependant

New Year but No Relief for Strapped States

Governors and legislators in dozens of states are facing a range of choices to fill their budget gaps, nearly all of them unpopular with voters.

The 2003 Recall of California Governor Davis – Part 1

Question: public finance help!?

I was wondering if someone can help me with a homework:

1) A corporation has $7 mil. in equity. During the tax year it takes in $4 mil. in receipts and earns $ 2 million in capital gains from sale of subsidiary. It incurs labor costs of $1 mil., interest costs of $250,000, material costs of $500,000, and pays rent for structure of $250,000.

Calculate the corporation’s total accounting profit and assuming that the profit is fully taxable, calculate its tax liability using the tax rates in this table:

Taxable income /ATR beg. of bracket /MTR
less than 50,000 / 0% / 15%
more than 50,000 but less than 75,00/ 15% / 25%
more than 75,000 but less than 10 million/ 18% / 34%
more than 10 mil. / 34% / 35%

Calculate the ATR (annual tax rate) of the corporation as a percentage of its economic profit, assuming that the opportunity cost of capital is 8%

I hope someone can answer this, thank you!

Answer: sorry i cant answer ur question.
even i m need of some help.
can u email me ur public fnance lectures or some helping material.
thanx ANYWAYS

Time to leave the country?

It’s January. The weather’s miserable. And come April, the government is going to tax high earners until they bleed. The answer? Leave the country. Relocating to a tax haven in the Channel Islands is no longer an idle threat.

How Tax Brackets Work

Offshore business as a method of tax evasion took the forefront in March this year when UBS handed over the names of 250 account holders who had withheld income information from their tax accounts. The effect has been a snowball of TIEAs, better known as Tax Information Exchange Agreements, predominantly between the classic tax havens and the larger nations who suspect tax evasion.

So how can offshore business still be useful in the face of such risks?

The important thing to note in these cases is that information was withheld by the account holders, which is automatically considered illegal. However, it is still possible to conduct offshore business in tax friendly jurisdictions, in compliance with the law. The key is to identify and choose the best jurisdiction for your business type and structure your company accordingly. This is obviously more tedious than most entrepreneurs initially imagine, and for that reason the use of consultancy firms and offshore specialists is both a logical and common practice.

Still, offshore may not be right for everybody.

Who conducts offshore business?

Offshore business is popular with the following professionals: successful, independent contractors, consultants –especially in IT and global financial services- and traders -especially global commodity traders-.

The following types of business can also make use of an offshore company: import/export companies, international trading companies, asset holding companies, property investment/intellectual property holdings.

Companies that are located in unstable jurisdictions or economies can benefit from an offshore business in a secure jurisdiction or economy. Similarly, expatriates who would like to protect their assets from home country taxes and inheritance laws can do so through offshore business.

If that is you…

What advantages does offshore business provide?

Offshore business is a way to potentially achieve the following: (i) minimize international taxation legally (e.g. Singapore has legally low tax rates), (ii) provide a reputable image for business (e.g. if the original country of business is untrustworthy or unpopular in a specific industry), (iii) protect global assets (e.g. if in original country asset protection laws are inadequate or badly implemented), (iv) facility company incorporation procedures (e.g. offshore business set up procedures are often simpler, faster and cheaper for entrepreneurs than their home jurisdiction),(v) provide confidentiality (e.g. some offshore jurisdictions do not publish shareholder/owner information to the public), (vi) fee exemption (e.g. business license fees, stamp duties and various taxes), (vii) no exchange controls (often the case in offshore jurisdictions), (viii) no accounting/audit requirements (some jurisdictions do not require financial statements or annual audits).

What are the risks to be aware of?

If you decide these advantages are relevant to you and you choose to incorporate a business offshore, be aware of the following: (i) OECD pressure on certain offshore jurisdictions – many popular jurisdiction are bigger targets of OECD pressures for TIEA (ii) certain offshore jurisdictions have a negative reputation that affects business image (iii) concealing information about offshore investments is illegal in most countries.

What exactly can an offshore business do?

Offshore businesses can do a variety of things dependent on the offshore jurisdiction it is incorporated under. A few examples to note are:

(i) Have limited liability status, thereby limiting director and shareholder liability to the amount of money invested i.e. share capitalization, and separating the company as a legal entity from its owners.

(ii) Conduct business in any country, just like a local company. Note: like a local company it is also subject to each of the rules and regulation of the jurisdiction in which business is conducted.

(iii) Buy, sell, hold securities, certificates of deposit, open savings and other bank accounts, transact in multiple currencies, stocks, bonds, mutual funds, other banking instruments, real estate and valuables.

(iv) Open a bank account in an international or local bank and borrow or lend money.

(v) Hold international meetings of directors and shareholders via telephone, fax or any other electronic or virtual means of communication.

(vi) Trade its own shares, hold treasury shares, and conduct mergers, acquisitions and/or joint ventures.

(vii) Transfer assets to a trust or foundation.

(viii) Trade licenses and royalty rights without paying taxes on royalty income.

Many businesses miss out on legally available tax efficiencies that can be achieved through incorporating an offshore business. It is important for any entrepreneur or director to properly research the practices that exist and that are legally viable, in order to conduct business in the smartest way possible. If offshore business sounds like a relevant practice for your business, consider your options and seek advice and approval from a well-informed reliable source, in order to take full advantage of what the globalized business world provides, and avoid becoming another news headline for tax evasion.

Melissa Glotzer is a Marketing Assistant at Healy Consultants. She is a graduate of the University of Manchester Business School with a BSc (Honours) in Management with Accounting and Finance.

Tax changes ease conversion to Roth IRA

The start of a new year is a time for starting over in many aspects of our life, including financially. There are the usual money tasks, such as forming a yearly budget. But this year brings new tasks that could bring big benefits in the years ahead.

‘A look at the income tax rates needed’

1. Once the Singapore company has been incorporated, what are the post incorporation issues I need to consider before I can start my company business activities?

After your Singapore company has been setup, you can start your business activities immediately. However, you may need to do the following if it is applicable to you.

A. Open bank accounts. You may want to choose a bank that serves your corporate banking needs. i.e. Letter of credit, multi currency, location of the bank, banking hours, and check the other services they can offer you, etc.

B. If your business requires one or more licenses, you may need to obtain the relevant licences first before you can commence your business activities.

C. Register for Goods & Services Tax (GST) if necessary. The registration of GST is not mandatory unless your annual turnover exceeds S$1 million. We can help to register for GST, if you so require.

D. If your company activities involves import and exports of goods, you will need to register and obtain a Central Registration (CR) number. The CR number is used in all import, export and transhipment permits, certificates and any other documents issued by the Singapore Customs. We can help obtain a CR number for your company if required.

E. If you plan to hire any foreign employee including yourself, your conpany will need to apply for employment pass (EP) for that person. We can assist you with EP applications.

F. If you intend to hire local employees (Singapore Citizens and Permanent Residents) you will need to open a CPF account with the Central Provident Fund (CPF) Board and a percentage of the local employees’ salaries will be contributed to this Board on a monthly basis as part of their retirement fund. For more details, please visit www.cpf.gov.sg. We can help you register your Company CPF account and manage your staff payroll, if required.

G. You will need to decide on your company’s financial year end which can be any date within 18 months from the date of incorporation of your company.

H. You will need to keep track of your income and expenses (bookkeeping) according to Singapore accounting standards. Depending upon the volume of transactions, we can provide bookkeeping services either on a weekly, monthly, quarterly or yearly accounting basis

2. Are there any CPF contributions For Foreign Employees?

For foreign employees, CPF contributions are not required. You just need to pay the agreed upon salary to your foreign employees and that’s all.

3. Are we responsible for the personal tax of foreign employees?

No tax deductions are required either for local or foreign employees’ personal salary. The employees are directly responsible for their personal taxes.

4. What are the Documents Needed for Singapore Company Registration?

For a successful Singapore business incorporation you will need the following information and documents:

For non-English documents, an officially-endorsed translated version is required.

5. What are the Requirements for Registering a Singapore Company?
To proceed with your Singapore company formation, you need the following:
A. Company Name – For your Singapore registered company, you must avoid choosing a company name that is:

B. Paid-Up Capital – The minimum paid-up capital for setting up a Singapore company is S$1.
C. Registered Address – A local Singapore address is a requisite to incorporating your Singapore company. The registered address can be either a residential or commercial address, but not a PO Box.
D. Directors – For setting up your Singapore company, a minimum of one (1) local director is mandatory. The local director must either be a Singapore Citizen, a Singapore Permanent Resident, or an EntrePass, Employment Pass, or Dependent Pass holder.
E. Shareholders – The Singapore private limited company set-up requires a minimum of one (1) shareholder and a maximum of 50 shareholders. Foreign corporate and individual shareholders are allowed to own 100% of the shares.
F. Company Secretary – The Singapore Companies Act requires every Singapore incorporated company to have a company secretary within 6 months of its incorporation.

iShares Launches a Series of Municipal Bond ETFs that Transform Fixed Income and ETF Investing

SAN FRANCISCO—-iShares, a global leader in Exchange Traded Funds , announced today that the first-of-its-kind suite of municipal bond ETFs with a planned end-date began trading on the NYSE Arca.

Spratt Opening Statement at Conference Committee