Tax Breaks: Same-Sex Marriages will Receive Equality Across the Entire Nation

Posted on September 4, 2013 by Kursti Nakagawa

Tax Breaks for Same Sex Marriages Across the Nation

A new ruling has declared tax breaks for same sex marriages since they will now receive equality across the entire nation.The Defense of Marriage Act (DOMA), enacted by Bill Clinton in 1996, was terminated this summer. This act, which allowed same-sex couples to receive the same tax benefits as heterosexual couples, was recently repealed by a 5-4 majority vote of the Supreme Court. While this vote may demonstrate a shift in the opinion of the American people, it also provides certain fiscal advantages for gay couples. Previously, only states that recognized gay marriage allowed same-sex couples to file federal tax returns as married couples. Now, however, gay partners are permitted by law to file federal returns as married couples in any state regardless of whether that state recognizes same-sex marriage.

The repealing of the Defense of Marriage Act raises questions as to how states will treat same-sex marriage. While some states may not acknowledge these unions, they are now forced to give gay couples the same federal tax benefits as straight couples. Same-sex couples are now able to file their federal returns, either jointly or separately, as married couples and are therefore entitled to the same tax benefits. However, if their state of residence does not recognize gay marriage, then the couple will be unable to file their state return as a married couple. Currently, only Washington D.C. and 13 states recognize gay marriage.

These new tax advantages extend beyond this year’s return. Same-sex couples can go all the way back to the year 2010 to receive their new-found benefits. To file one of these refund claims, taxpayers are instructed to use Form 1040. In addition the tax benefits already described, gay couples no longer have to pay federal income tax on the health insurance benefits received by one spouse when that spouse is claimed as a dependent on their partner’s plan.

Besides the obvious tax savings that are now available to gay couples, there are other small bonuses that come with the IRS acknowledgement of same-sex couples. Such couples can now transfer unlimited funds between one another whereas the allowable amount was previously restricted. In addition, they can now “gift split” which means that each spouse can gift up to $14,000 to a particular recipient for a total of $28,000. Lastly, gay couples are able to make use of “portability.” This enables widows and widowers to add their spouse’s unused estate tax exclusion to their exclusion. However, in order to use the “portability” benefit, estate tax returns must be filed within nine months of a decedent’s death.

If you have tax questions or a tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances

Small Businesses May Owe Back Taxes In California

Posted on August 26, 2013 by Kursti Nakagawa

Small Business Owners May Owe Back Taxes In California

A court ruling from December of 2012 could result in many small business investors in California owing large sums of money in back taxes from a practice now deemed unconstitutional. Five years ago many small business investors in California were promised a tax break. The investors were told that if they invested in specific types of businesses, they would receive a large tax deduction. Now these same investors are being told that they could receive tax bills that for up to $250,000 for deductions that were granted under tax laws that were on the books at the time the investments were made.

Of course there is an enormous uproar and battle over this ruling! Senator Ted Lieu (a Redondo Beach Democrat) said, “When we make a promise, we have to uphold it.” He went on to say that these people relied on the law the way it was written, which was they would receive a tax break if they invested in certain types of businesses. Unfortunately, now the Franchise Tax Board feels that they are due the money that was previously granted in tax deductions. Senator Lieu is in favor of passing a bill that will defend these small business investors.

Some feel that this new court ruling is potentially very damaging to small businesses. Ken DeVore, with the Federation of Independent Businesses, believes that people will naturally become skeptical of government if they comply with existing laws only to be penalized down the road. If this new ruling is upheld, it is calculated that 2,000 small business investors will have to pay back taxes totaling more than $120 million. The saving grace will be if Senator Lieu’s bill passes. As of this date, the Franchise Tax Board has had no comment on the matter.

Top Earners Not to Retire?

Posted on August 19, 2013 by Kursti Nakagawa

Retirement May Not Be Ahead....

The American dream used to be to get rich young and retire by the age of 40. However, the results of a recent survey by the Spectrem Group indicate that the current goal for many wealthy Americans is to work past the age of 70. This survey revealed that America’s uppermost wage earners do not plan on retiring until they are at least this old. A third of those surveyed who have annual earnings of $750,000 or more, claim they will not retire until after they turn 70. Of that group, 15% say they never plan to step down. On the other hand, the same survey showed that only 6% of those making under $100,000 a year say they plan to work that long.

Another study from Barclays done in 2010 found that more than half of millionaires say they want to continue to work past the traditional age for retirement. Internationally, 60% of those with a net worth of $15 million or more say they plan to stay involved with work indefinitely. These results diverge from the popular idea that Americans retire later primarily because they cannot afford to stop working. On the contrary, the Barclays survey showed that those who are working the longest are the highest earners or the ones who can best afford to retire.

Many of the high wage earners surveyed by both Spectrem and Barclays are business owners and entrepreneurs. As a group, these individuals are far more likely to take risks in their finances and their life, and they are more likely to credit hard work for their success. It may be this mind-set that makes them want to keep working longer.

George Walper, President of the Spectrem Group, attributes two reasons to the late retirement of the rich. First, he believes that business owners feel they simply cannot leave their businesses for fear that their companies with fail without them. However, his research has shown that the main reason these entrepreneurs keep working is that they love their work and cannot imagine life without it. Walper added that even those top earners who say they are retired still contribute by serving on boards, giving advice to their companies or consulting by phone several hours a day. In addition, instead of working at the office, they may be doing business from a more comfortable spot like the beach.

If you have tax questions or tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit our website at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have the knowledge and experience necessary to know which tax settlement option will be the best fit for your specific set of circumstances.

Celebrity Back Tax Problems and Other Summer Tax Fun!

Posted on July 24, 2013 by Kursti Nakagawa

Back Taxes? Fraud? Summer Reading......

It is very common to read about a celebrity or affluent person who owes the IRS a large amount of money in back taxes. Believe it or not, some people have even taunted the IRS on social media pages in regards to stealing and defrauding the government. Here are some hot stories in the news media this summer that are a good read:

First off, it seems Courtney Love has landed herself in the news again. It is not good publicity either! The singer reportedly owes the Internal Revenue Service more than $260,000 in unpaid back taxes. It has been reported that the IRS filed a tax lien on Courtney Love claiming that she needs to settle an outstanding balance of back taxes from 2009 to 2011. This is not the singer’s first time owing back taxes either. In 2009, she had to pay over $320,000 for a back tax bill from 2007. These are some pretty steep tax bills over the years. Luckily, her life has not been dull and she is coming out with her memoir this fall to help finance her back tax tab!

Another hot summer story concerns a Florida lady by the name of Rashia Wilson. Wilson named herself the Queen of IRS Tax Fraud and was recently sentenced to 21 years in prison after stealing millions from the IRS. According to court documents, Rashia Wilson constructed a plan were she used fake ID’s and stolen social security numbers to collect millions in fraudulent tax refunds.

Rashia grew up in poverty, but then after coming up with her plan and implementing it in 2010, she spent the government’s money lavishly. Rashia paid top dollar for high end automobiles, expensive jewelry and designer clothes. She even spent $30,000 on her daughter’s first birthday party. As if this extreme spending from money that was not even hers is not bad enough, she then flaunted the theft on her Facebook page by posting pictures of herself with bundles of stolen money. This was probably not her best move!

After a multi-agency investigation which involved the IRS, the Tampa Police Department, the US Postal Service and the Hillsborough County Sheriff’s Office, Wilson was arrested on numerous counts, including tax fraud. On a side note, Rashia also collected food stamps during this time period. The judge sentenced Rashia to 21 years in prison along with paying a steep restitution fee!

If you have tax questions or tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at https://professionaltaxresolution.com/ or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.

New Tax Laws and Same Sex Marriage Ruling

Posted on July 22, 2013 by Kursti Nakagawa

New Tax Law After Same Sex Ruling

The Supreme Court recently declared the Defense of Marriage Act unconstitutional. This means that, in some states, same-sex couples who are legally married can now receive the same Social Security, retirement and health care benefits that have long been available to heterosexual couples. The ruling could even lead to a check from Uncle Sam for some! This article discusses the financial and tax implications of this new ruling for same-sex couples.

Gift Taxes and Estate Planning

Gift and estate taxes have been a core issue for many same-sex couples. Since there was previously no federal recognition of same- sex couples, members of these unions were not able to pass their assets on to their spouses upon their death without being taxed. Now some same sex couples will be able to share the same spousal estate benefits that straight couples have enjoyed. The new ruling also makes it possible for married same-sex couples to share assets without having to pay gift taxes. This has been a problem in the past when a same sex-couple shared a house and split mortgage payments. Same-sex couples may want to consult with their tax professionals to make sure their estates and trusts are updated to take advantage of any new estate or tax benefits provided by the new laws.

Health Care Benefits

One of the greatest benefits of the new legislation is that a member of a same-sex union can now be recognized on their partner’s health insurance plan without the large fees that were added in previous years. In addition, same-sex couples can now elect a variety of more affordable and flexible health care plans with better rates. Even if a couple is happy with their current health insurance arrangement and chooses not to change plans, they may be eligible to file amended tax returns to collect taxes that have been paid on benefits in prior years.

Income Taxes

Until recently, same-sex couples were not able to file joint tax returns and thus had larger tax bills than heterosexual couples. One couple said they paid an additional $5,000 in taxes because they could not legally marry. As a rule of thumb, married couples pay less in taxes than individuals filing separately. This is especially true when one person in a couple earns significantly more than the other. In addition, married couples filing joint tax returns realize other tax benefits in areas such as capital gains taxes, child care credits and a larger exclusion for the sale of a home. These tax benefits will now be available to some same-sex couples. Although the new Supreme Court ruling potentially offers many tax benefits, same-sex couples may want to consult with a tax professional to see how it affects their specific set of circumstances.

If you have tax questions or tax debt you are unable to pay, our tax settlement professionals are happy to discuss your tax resolution options free of charge. For more information about our services, visit us today at www.professionaltaxresolution.com or call us at 877.889.6527. With over 16 years in the business of resolving tax debt, we have a thorough understanding of tax law together with the experience to know which settlement option will be the best fit for your specific set of circumstances.