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Eight Tax Questions to Ask Before You Get Married

2017-02-20 by Eva Rosenberg

Form 4506T request with the IRS for each of you. Request a copy of Form 1040 on line six, check all the boxes on the form, and enter the last four years on line nine (i.e., 2015, 2014, 2013, 2012).
Or, you can log into the the IRS’s Get Transcript system with your fiance’(e) and get the information on the spot.

When you send the form back to the IRS, the agency will send you the tax forms for the years you requested, and you’ll know if your future spouse has filed tax returns in the last four years. You’ll also learn whether he or she owes the IRS any money. If you fear that your soon-to-be spouse may owe outstanding balances for more than the past four years, you can request the last 10 years’ data.

Each order your own Equifax credit report to share with the other. Consider opting for a report that gives you information from all three nationwide credit reporting agencies. Doing so will alert you to liens, levies, a poor credit history, and more.

Once you have these reports in hand, it will be easier to start the money conversation. Thoroughly read the information in the reports and ask questions about anything you don’t understand, but don’t be hostile or accusing.

Ask the right questions. It’s important to be on the same page with your partner before you tie the knot. If your answers to the following questions differ, discuss your points of view rationally.

  1. What is your attitude towards money? Are you frugal, stingy, wasteful, or balanced?
  2. Do you gamble? How? Do you gamble online or in casinos? Do you make bets with friends?
  3. Do you owe any gambling debts?
  4. Are you willing to live on a budget?
  5. What big purchases are you itching to make in the next few years, and how do you plan to pay for them?
  6. Do you have child or spousal support obligations? Do you meet these obligations on time?
  7. How are your relationships with your ex and your children? How will those relationships impact our lives, financially and emotionally?
  8. Is there any reason why we might have to keep our finances separated, at least in the beginning?


These are just some questions to bring up. Sit and think about things that matter to you and make a list that works for your situation. That way, you’ll be prepared to have a calm and rational conversation. I do hope it works out!

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TaxMama’s TaxQuips Tax Season PotPourri

2017-02-02 by Eva Rosenberg

Today TaxMama® wants to address several issues that are confusing people this year – or important for you to know.

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Dear Friends and Family,
We are getting a great many questions this year. These are some of the important issues we are seeing.

 

ACA Penalties – You probably know that President Trump signed an Executive Order (EO) that appeared to wipe out all the ObamaCare penalties. Well, it doesn’t quite work that way. Congress still has to write changes to the various laws that are affected. And the IRS still has to issue procedures. When all that is done, your tax software will incorporate the changes and make it possible for you to get your penalties canceled. In the meantime, if you face 2016 penalties, put your tax return on extension and wait. Or file your tax return to get your refunds, less your penalties. You might be able to amend later to get a refund for the penalties you paid.

 

Incorporating or setting up LLCs, then not having income – folks, when you set up an entity, please be prepared to use it – or don’t set it up until you’re ready. Once you’ve set up an LLC, partnership, corporation or whatever, you are on the hook to file a tax return each year. Even if you have no income, or no activity. And if your state (like California) requires an annual fee, you must pay that each year, or face increasing penalties. So, please, think before you entitize.

 

Premature deposits into IRAs, HSAs or other tax deferred or retirement accounts – make sure that your income doesn’t disqualify your deposits to these accounts, right away. If you have over-contributed, draw the money out before April 18th or re-characterize them as 2017 deposits. Otherwise, you might face penalties, which start at 6% of the excess contribution – and increase over time.

 

1040NR and other visa and immigrant-related questions. So many of you have questions about these issues. Thank goodness we have folks like Jean Mammen, EA, Mike Reed, EA and “Uncle” Bill Porter, EA to answer these particular questions. While we try to answer them all, I urge you to buy a copy of Jean Mammen’s book, “

1040NR? or 1040? U.S. Income Tax Returns for Visa Holders +: International Organization and Foreign Embassy Employees.” It will guide you through the steps you need to take to prepare your own tax return.

 

Please drop by MarketWatch.com and the TaxWatch columns for more tips.

 

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

 

And remember, you can find answers to all kinds of questions about changes in the tax laws and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the TaxQuips Forum.

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TaxMama's Year-End Tips

2016-12-20 by Eva Rosenberg

Today TaxMama® wants to remind you about last-minute steps to take before 2016 ends.

http://taxmama.com/wp-content/uploads/2015/04/tmreplies.gif

Dear Friends and Family,

 

The Electoral College has confirmed our new president-elect. So we can expect some changes next year. You can view an outline of what to expect next year, here.

 

For now, we still need to take care of some of the routine things. Here are some quick steps:

 

  • Make your charitable contributions before year end. Note: Remember to look up the charity to see what they do with your donations. The Foundation Center is a good source of information. For instance, the president of the Salvation Army receives no compensation (see page 7). While the president of Goodwill Industries is receives over $700,000 in compensation (see page 73).
    • Clean out your closets and make a list of all the things you are taking to your favorite thrift shop.
    • Make your final cash contributions.


  • If you are age 70 ½ or older, remember to draw your Requirement Minimum Distribution (RMD) from your retirement accounts. There are substantial penalties if you don’t draw the money in time.
    • You are entitled to draw up to $100,000 from your retirement account and transfer it directly to your charity.
    • This would make it possible to take your RMD without paying taxes on the amount. But you won’t get a deduction for the contribution.


  • Folks with too much money in their IRAs or retirement plans should consider transferring the funds to their Roth IRAs, or cashing some of the money out. Do some computations to see how much you can transfer at your lowest possible tax rate.
  • Balance out your brokerage accounts. Are there any gains or losses you can harvest?
    • And are you in a low enough tax bracket that your capital gains will be taxed at 0% or 15%?


  • Prepay certain routine bills.
    • Pay your January mortgage payment late in December – so your payment covers most of the month’s accrued interest expense.
    • Pay your full property taxes, not just half.
    • If you owe state taxes, make your 4th quarter payment in December.


  • Folks who are in business or use employee business deductions:
    • Delay your invoicing until January, so you can move income into next year. (No constructive receipt)
    • Make your major equipment purchases before the end of the year.
    • Prepay January’s expenses, dues, etc. before the end of December.


  • SSNs and ITINs – make sure that you have ID numbers for all eligible people in your household BEFORE filing your 2016 tax returns. Without them, you stand to lose tax credits and tax benefits.
  • Health insurance, get insurance in place for all household members for 2016. Penalties are high without coverage. Don’t count on Obamacare to disappear for 2017.


 

For much more detail, tax professionals can sign up for the CPE Link Tax Update workshops – discount still good until December 30. Everyone else, drop by my column at MarketWatch.com and the TaxWatch columns.

 

To make comments and toss in your own ideas, please drop into the TaxQuips Forum.

 

And remember, you can find answers to all kinds of questions about changes in the tax laws and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the TaxQuips Forum .

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TaxMama’s TaxQuips Highlights of Trump Tax Plan

2016-11-09 by Eva Rosenberg

Today TaxMama® wants to give you an advance peek on what you can expect from a Donald Trump tax plan, coming to a Congress near you!

To read the details, please drop by here:
TaxMama.com

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He Who Hesitates is Lost - or - Expired Refunds

2016-08-09 by Eva Rosenberg

busy Today TaxMama® hears from several people in the TaxQuips Forum with questions about expired refunds. Let me summarize. “I faced a hardship and didn’t file tax returns for several years. Now, I learn that I cannot get my refunds for all those years. Can you help?”

http://taxmama.com/wp-content/uploads/2015/04/tmreplies.gif

Dear Friends and Family,

My answers to Dustin and to DParker don’t bring much hope.

They do have heartbreaking stories. And I truly wish I had a solution.

But here’s the problem. Even the IRS doesn’t have discretionary control over this matter. These r[s3audio s3url=”http://taxmama.audioacrobat.com/download/taxmama-Expired_Refunds.mp3” /]efunds that have expired, due to the statute of limitations, are controlled by laws passed by Congress – they folks you vote for. You need to get in touch with your legislators to get them to make the law more sympathetic.

The tax code doesn’t provide a way to get those refunds from closed years. When we talk about a ” statute of limitations,” the word “statute” means LAW – in this case IRC 6511.

For future reference, please don’t put off filing your tax returns – no matter how sick or depressed you are. Family and friends, please keep an eye on those you love and help file their tax returns. They don’t need to be totally accurate. If some information is frustratingly elusive – make good estimates and attached a statement to the tax return that this has been done. After all, you have three years to correct the tax return. In the meantime, you save the refund for that year – which would otherwise be lost forever.

What can you do if it IS lost? There IS one thing I would try. You have nothing to lose.
Contact the Taxpayer Advocate Service and see if there is any way they can help you. Sometimes, in extreme situations, they can pull a rabbit out of a hat. And their service is free. I truly wish you-all luck!

To see the rest of this discussion, please drop into the TaxQuips Forum.

And remember, you can find answers to all kinds of questions about unfiled tax returns and other tax and business issues, free. Where? Where else? At www.TaxMama.com.

[Note: If you were subscribed to the e-mailed version of TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]

Please post all Comments and Replies in the new TaxQuips Forum

Download the MP3 (0:00min, 3MB) or listen now...

Ask TaxMama
Where Taxes are Fun
TaxQuips
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TaxQuips Forum
Where you can you ask your tax questions
TaxQuips Forum
Where you can you can add your comments



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