Moved. . .

Continued post at

tax guy or http://lrtaxprep.com/blog

Federal Hourly Minimum Wage, Last post at wordpress address. . .

            Well as almost everyone knows, the federal minimum wage increased. Was it enough for those who benefit from it? The way fuel is rising across the planet, well in our share of the world I would say, not really.

            Then what of those who were already above the minimum? Did their pay increase by almost 12% too? Well in my little piece of the planet, I asked around, Clients mostly. I wasn’t really surprised by my findings. Those who got the cost of living adjustments were in fact making minimum. Everyone else (in my own “little” study), nothing.

            In my conclusions I have decided that the teenagers of the world are the ones who benefited from this increase. More money to pay for gas I guess. Yet their parents were once again left to the employers discretion. Did they get a raise of any kind? Those who I spoke to who did get a raise, received a “cost of living adjustment” (C.O.L.A.) When I calculated it on average those people who were above minimum already, received an average of four percent increase. Of course, if you are following the C.O.L.A. there are some jumps in when minimum wage didn’t increase in relation to the C.O.L.A.. If not then I hope you enjoy the tables:

History Tables

Month / Year	Years Between Increases	MinimumHourly Wage	Amount of increase	Percentage of increase		Cost-Of-Living Adjustments
Oct-38		$0.25				Jul-75	8.00%
Oct-39	1	$0.30	$0.05	20.00%		Jul-76	6.40%
Oct-45	6	$0.40	$0.10	33.33%		Jul-77	5.90%
Jan-50	5	$0.75	$0.35	87.50%		Jul-78	6.50%
Mar-56	6	$1.00	$0.25	33.33%		Jul-79	9.90%
Sep-61	5	$1.15	$0.15	15.00%		Jul-80	14.30%
Sep-63	2	$1.25	$0.10	8.70%		Jul-81	11.20%
Feb-67	4	$1.40	$0.15	12.00%		Jul-82	7.40%
Feb-68	1	$1.60	$0.20	14.29%		Jan-84	3.50%
May-74	6	$2.00	$0.40	25.00%		Jan-85	3.50%
Jan-75	1	$2.10	$0.10	5.00%		Jan-86	3.10%
Jan-76	1	$2.30	$0.20	9.52%		Jan-87	1.30%
Jan-78	2	$2.65	$0.35	15.22%		Jan-88	4.20%
Jan-79	1	$2.90	$0.25	9.43%		Jan-89	4.00%
Jan-80	1	$3.10	$0.20	6.90%		Jan-90	4.70%
Jan-81	1	$3.35	$0.25	8.06%		Jan-91	5.40%
Apr-90	9	$3.80	$0.45	13.43%		Jan-92	3.70%
Apr-91	1	$4.25	$0.45	11.84%		Jan-93	3.00%
Oct-96	5	$4.75	$0.50	11.76%		Jan-94	2.60%
Sep-97	1	$5.15	$0.40	8.42%		Jan-95	2.80%
24-Jul-07	10	$5.85	$0.70	13.59%		Jan-96	2.60%
24-Jul-08	1	$6.55	$0.70	11.97%		Jan-97	2.90%
Okay as I told on Wednesday this is the last post that is going to be at this web address; http://lrtaxprep.wordpress.com/. All future post will be posted at  http://lrtaxprep.com/blog/.  Please make note as I have a lot to share from around the “blog sphere”. So to see the next passing the week… post you will need to go to the really large link above. Okay once more  http://lrtaxprep.com/blog/. See you all there.						Jan-98	2.10%
						Jan-99	1.30%
						Jan-00	2.50%
						Jan-01	3.50%
						Jan-02	2.60%
						Jan-03	1.40%
						Jan-04	2.10%
						Jan-05	2.70%
						Jan-06	4.10%
						Jan-07	3.30%
						Jan-08	2.30%

                                                                        Bruce              

                                                                        “the tax guy”

This week started off bad. .

So Sunday night was an interesting night. (I am so being polite.) I had done all the research and was ready to take my blog and my web site and join them all together in one place. (Okay this isn’t really about tax stuff but there is a bit at the end) Well things aren’t / weren’t as easy as that and in the processes, where I had my site, they obliterated all the pages.

So now I have to start that over. I have most everything saved as a word .doc from the site so it won’t be that hard a chore. But what a blow to find out everything was just gone. 55 plus pages just, “poof”, gone. This presented an interesting situation for me. When this all happened, or the realization of it, one might say I wasn’t myself. I was aggravated there was no denying that but I was also going “I needed to fix the site anyway”, this just forced my hand. A lot earlier than I might have preferred, but whatever.

Tax Carnival. . .

As promised, the Tax Carnival #39: Dog Days of Summer 2008 came to be. I made it. Very cool. Be sure to read it all, even the links. (duh. . .) Kelly Bell from Don’t mess with Taxes was the host of this carnival. And she did a great job putting it together. Thanks Kelly.

 

Moving blog address. . .

I have started rebuilding the site and should have some of it up by the end of this weekend. At least that is the plan. I am working on it with most every free moment but I am very busy with lessons, clients and life in general. Like Kevin from No Dept Plan, at times there is just a lot you have to do. I was however able to get the web log side of things working correctly and there will be a new address to follow to get there/here. Or is it here there? Let’s see this blog is there or will be. In an effort to let everyone make the adjustments, this Friday will be the last blog post from the here at the wordpress site.

The new web addy is www.lrtaxprep.com/blog. Which comes up with the http://. . . so however you want to deal with it. I have sent out emails to everyone I have an email address for to let them know but that doesn’t reach every one. The new site isn’t perfect and maybe a bit dark, but. . .

It is up and running now. Swing by take a look. Let me know what you think. If you are fellow wordpress bloggers with/thru wordpress.org V 2.6. and you see a page that is better suited for this site/that site, please let me know. Please do so in the comments section as I don’t have my email straightened out yet, unless you got my email please use that as my alternate, for now.

Looking for finance blogger. . .

I am also looking for someone to author for the tax guy blog on the days I don’t (Tuesday, Thursday, Saturday, and a joint round up on Sunday). I know a few of you are interested but I am looking for someone that can/will Personal Finance blog and keep somewhat of an air of tax relation sorta`, maybe, not real sure. (Sounds like I know what I want. NOT!)

 

Tax something. . .

I was reading in something I got from NATP on how a tax professional had filed several fraudulent returns costing (estimated) the IRS over $250.000.00. what was going on was he had hired someone to get names, addresses, and SS numbers for/from people in low income housing area, he then took the information, prepared a return for that person, transmitted to the IRS (If I read the article correctly) then presented the accepted return to the tax payer and (here I am assuming) split the refund with the taxpayer who otherwise wouldn’t have received one or would have received a much smaller refund. On average the refund per return was around $1,800.00.

Now I am not sure what bugs me most about this. And I assure you, there is a lot wrong with it on so many levels.

The big issue I want to point out to you, all of you. No matter who prepares the return, the tax payer is ultimately responsible for the accuracy of the return. And please if some guy walks up to you and says “here is what I have done, sign here and give me half”, run away. I mean, duh.  Luckily he was caught and he isn’t allowed to have anything to do with any tax preparation ever again. However that won’t stop someone else from trying a similar scam.

What the article didn’t mention was, what happened to those tax payers. It was determined that approximately 140 tax returns where filed in this manner. That’s approximately 140 tax payers. I am looking into this, but I am betting, they are in trouble too.

Please remember no matter who prepares your return, you are ultimately responsible. Ask your prepare questions when your return is done. Understand as best you can what they have done in the preparation of your return and why. IF you think he knows what he is doing and follow him blindly, your neck will be on the chopping block too.

Fridays Post. . .

Want to remind everyone that this Friday will be the last post from this address http://lrtaxprep.wordpress.com.

Sundays Passing the week will start my full blogging from the new address.

 

www.lrtaxprep.com/blog

 

 

 

 

WHEN A LOVED ONE DIES. . .

 For this post I am showing one of the responses I received in my cry for help on the 1041 situation I am currently having. (Again now fixed/solved thanks to a college some 1200 miles away.) As a few of you will see this was no help to my situation as I am fully aware of everything that is written here. Despite how irritated I was by this reply I felt this was valuable information for a non tax pro and that it should be out there for you, if and when you need it.                                                                                                          Bruce

“When a loved one dies, somebody must step up to the plate to handle all the resulting tax issues. This person may be identified in the decedent’s will as executor of the estate. If there isn’t a will, however, the probate court will appoint someone to be the administrator. In either case, it’s often the surviving spouse or another family member who takes on this responsibility.

Regardless of which route you take to get there, your duties as executor are essentially the same. The executor’s job is to identify the estate’s assets, pay off its debts and then distribute whatever is left to the rightful heirs and beneficiaries. He or she is also required to file any necessary tax returns and pay any taxes. Should this not be handled properly, the IRS can come after the executor personally for tax underpayments (plus penalties and interest) — even if he or she has hired a professional to deal with the paperwork. So if you find yourself in this role, you need to take the responsibility seriously.

Here’s an overview of four major steps you need to consider:

1.      Filing the Final 1040

Step No. 1 is to file the decedent’s taxes for the year of his or her death. This final 1040 covers the period from Jan. 1 though through the date of death. The return is due on the standard date, meaning April 15, 2008, for someone who dies in 2007. If the decedent was unmarried, the final 1040 is prepared in the usual fashion. When there’s a surviving spouse, the final 1040 can be a joint return filed as if the decedent were still alive as of year’s end. The final joint return includes the decedent’s income and deductions up to the time of death plus the surviving spouse’s income and deductions for the entire year.

Be sure to keep a careful eye on medical expenses. If large uninsured medical expenses were accrued but not paid before death, you — as the executor — must make an important choice about how they’re treated for tax purposes. Along with any medical expenses paid before death, you can choose to deduct the as-yet-unpaid expenses on the decedent’s final 1040 to the extent they exceed 7.5% of adjusted gross income. (Final medical expenses can easily exceed 7.5% of AGI, especially when death occurs early in the year before much income has been earned.) This is an exception to the general rule that expenses must be paid in cash before they can be deducted.

Alternatively, if the estate is subject to the federal estate tax (which is only the case if it’s worth more than $2 million for someone who dies in 2007) you can choose to deduct the accrued medical expenses on the decedent’s federal estate-tax return (more on that below), rather than the decedent’s income-tax return. Obviously, if no federal estate tax is owed, this isn’t an option. But when estate tax is due, deducting accrued medical expenses on the estate-tax return is usually the tax-smart option. Why? Because the minimum estate-tax rate is a whopping 45%, while the decedent’s final federal income-tax rate could be as low as 10%. Plus the full amount of the accrued medical expenses can be deducted on the estate-tax return (not just the excess over 7.5% of AGI).

2.      Filing the Estate’s Income-Tax Return

In addition to filing the decedent’s final income taxes, you may have to file the estate’s income tax as well. (Understand: This is entirely different from the federal estate tax, addressed below.) Essentially, what happens here is that once the individual has died, any income generated by his or her holdings after death is now part of the estate. And that income doesn’t escape the reach of Uncle Sam.

The estate’s first income-tax year begins immediately after death. The year-end can be Dec. 31 or the end of any other month that results in an initial tax period of 12 months or less. You must file Form 1041 (U.S. Income Tax Return for Estates and Trusts) by the 15th day of the fourth month after the year-end. So for a person who dies in 2007, the deadline will be April 15, 2008, when the “standard” Dec. 31 year-end is chosen.

If you’re dealing with an estate with annual gross income below $600, you don’t need to worry about Form 1041. So tiny estates are off the hook, as are those that can be wrapped up very quickly, before $600 worth of income accumulates. There’s also no need to file Form 1041 when all the decedent’s income-producing assets bypass probate and go straight to the surviving spouse or other heirs by contract or operation of law. This is what happens, for example, with real estate owned jointly with right of survivorship, with retirement accounts and IRAs that have designated account beneficiaries and with life-insurance proceeds paid directly to designated policy beneficiaries.

If the estate you’re in charge of is required to file Form 1041, I recommend hiring a tax professional with plenty of experience in this arcane area of the tax law.

3.      Filing the Estate’s Estate-Tax Return

The federal estate-tax return is filed on Form 706 (United States Estate Tax Return). Assuming the decedent didn’t make any sizable gifts before dying, no estate tax is due, and no Form 706 is required, unless the estate is worth over $2 million for a person who dies in 2007. Sizable gifts are those in excess of $12,000 to a single gift recipient in a single year ($11,000 for gifts in 2002-2005; $10,000 for gifts during 2001 and earlier). If sizable gifts were made, the excess over the $12,000 (or $11,000 or $10,000) threshold is added back to the estate to see if the $2 million threshold is surpassed.

Form 706 is due nine months after death, but the deadline can be extended up to six months. Remember: While life-insurance proceeds are generally free of any income tax, they are usually included in the decedent’s estate for estate-tax purposes — even though the money may go directly to policy beneficiaries. In fact, life-insurance proceeds are the most common cause of unexpected estate-tax bills. An exception to this rule though is if the beneficiary is the surviving spouse: Assets inherited by a surviving spouse (including life-insurance payouts) aren’t included in the decedent’s estate, as long as the surviving spouse is a U.S. citizen. This is the so-called unlimited marital-deduction privilege, and it’s the most common reason why many large estates don’t owe any federal estate tax.

If you’re the executor of a substantial estate, you probably should hire a tax pro even if you’re fairly certain no estate tax is actually due. If you’re correct, the cost to confirm your conclusion will be minimal. If you’re wrong, filing Form 706 isn’t for amateurs. Also, a good estate-tax pro may be able to find some perfectly legal ways to substantially reduce the tax bite or even make it disappear completely.

4.      The Miscellaneous Details

If you’ll be filing Form 1041 and/or Form 706, you need to get the estate a federal employer identification number (EIN). This is analogous to an individual’s Social Security number. Apply for the EIN by filling out Form SS-4 (Application for Employer Identification Number). (It can be downloaded from the link.)

Next, you should file Form 56 (Notice Concerning Fiduciary Relationship), which notifies the IRS that you’ll be acting on behalf of the estate regarding tax matters. This form can also be downloaded from the Web (but wait until you have the EIN in hand). It ensures you’ll receive any notices shipped out by the IRS (lucky you).

Then it’s time to open a checking account in the name of the estate with some funds transferred from the decedent’s accounts. As the executor, you have the legal power to do this. But make sure you have the estate’s EIN, because the bank will ask for it. Use the new account to accept deposits from income earned by the estate and to pay expenses — such as outstanding bills, funeral and medical expenses and of course those darned taxes.

Unfortunately, once you’ve done all this, your work might not be finished. You may also have to file state income-tax returns and perhaps a state estate-tax return as well. Sorry.”

 

            Though somewhat out dated in the numbers and the years, the information is worthy. As for the source, I will let you know at a later time.