The Tax Questions Blog

Archive for May, 2011

Question: What are the reporting requirements on non-resident alien gifts?

My aunt (who meets the IRS definition of being a non-resident alien) intends to give $50k towards my son's college education. My aunt lives in Switzerland. To ensure that the gift is given and received outside of the US (so as to make it non-taxable) I plan to open an account at a foreign bank into which I will receive the gift, and then wire to funds to the university. Gifts from non-resident aliens over $10k normally requires that the recipient file of IRS form 3250.

My Question: since this gift is being used for tuition, is it exempt from filing form 3250? IRC 6039F(b) (Notice of Large Gifts Received from Foreign Persons) has exepmtion language for tuition and medical expenses, but I find the language a bit vague.

Does someone know if, in the circumstances described above I am exempt from filing Form 3250? And thus, I can receive the gift tax free, spend it on tuition and file nothing with the IRS?

Thanks

Answer: I'm suspicious of the qualifications of the above "tax consultant" poster. I found the answer in the Form 3250 instructions on the IRS website, linked below, and it does NOT agree with what he states. I certainly won't be paying HIM for any advice any time soon!

You don't need to file the 3250 for a couple of reasons. One being the nature of the gift for tuition. The other is that the gift is coming from a foreign person where the reporting limit -- at least as I'm reading it -- is $100,000, not $12,760 (2006 rate, it's adjusted for the cost of living.)

Even if the gift had to be reported, it still would not be taxed. The 3250 filing simply advises the IRS of the transfer so that they can evaluate the taxable status of the transfer. A bona-fide gift is never taxable to the recipient.

Technically the donor would need to file a US Gift Tax return and pay any tax due, however as the donor is not subject to US taxation they cannot be compelled to so do. There might be a tax treaty that addresses that issue but that's a problem for the donor to contend with.

The US recipient of the gift is not taxed. Gift recipients are never taxed. It doesn't matter what the money is used for.

There is no need to set up a foreign account for this gift to pass through. In fact, doing so will significantly complicate matters as you will now have to file additional informational returns since you have authority over a foreign depository account.

CFO establishes benevolence funds for Joplin area employers

The Community Foundation of the Ozarks, with its Joplin-Carthage affiliate, has established a number of benevolence funds requested by Joplin area companies that want to help their employees and families start rebuilding their lives after the tornado.

Question: Why Do We Need The Federal Reserve Banking System?

Created on Christmas eve 1913 by liberal progressive Democrat Woodrow Wilson, the privately-owned and very secret Fed charges us interest on every dollar they print, requiring another Woodrow Wilson creation, the IRS to collect taxes just to pay interest. The Federal Reserve accounts to no one and makes insane money from the interest they charge us to print fiat money that is not Constitutional. The Fed creates inflation that assures our slavery. One dollar today is worth a few cents of the dollar before 1913.

Why do we need the Fed?

Answer: Any educated person can easily realize when researching the Fed Reserve as the biggest theft in history; Its a private bank that refuses to be Audit; Ron Paul is the only patriotic politician that is really asking the real questions behind the money supply of the U.S. Sadly i think the U.S Fed Bank can only be destroyed or abolished through revolution

Check video; although i think the speaker is a racist; but this vid makes me laugh as hell; cuz you get to hear the truth preaching style; http://www.youtube.com/watch?v=f2I8bgEhYQI&NR=1

Kill The Un-American Patriot Act

Congress keeps assaulting our Fourth Amendment liberties to ensure our security, yet liberty and sec

Constitutional Law Class 1 of 43

Question: Should we be taxed on what we earn or on what we spend? Can you explain why?

Also, how does the US system treat this issue ?

Answer: The US does both. Income taxes tax what we earn, and sales taxes tax what we spend. Taxing income is better.

Taxing income allows us to tax people who make more money at higher rates. So someone who makes $150,000 each year pays 33% on the last dollar she earns while someone who makes $15,000 per year pays only 15% of the last dollar she earns (and is eligible to get some back!). Taxing only spending doesn't allow us to tax rich people more, and so their tax burden is put on poor people. That's not fair!

Taxing spending does have some advantages: First, it encourages people to save their money. Second, it is very easy to track, because sellers (like Target) have to have bought from someone, so there is a paper trail for all goods on the market. If there's a step where the tax wasn't paid, the government knows to go audit someone.

But if you tax spending you could end up taxing people before they have the ability to pay. If I am buying a house for $500,000, I'm going to borrow most of that money (say, $450,000). If I'm taxed on spending (at say, 20%), I'm going to owe $100,000 in taxes on my new home, so I'll have to borrow $550,000 to buy the house . . . that's more than the house is worth! Taxing income makes sure we only tax people when they have the money to pay the taxes.

Joseph confirms assessor campaign

L’Observateur LAPLACE – In what he says will be his last run for the office he has held since 2003, Whitney Joseph has announced his candidacy for re-election as St. John the Baptist Parish assessor in the Oct. 22 general election.

ARE WE OVER TAXED

Question: hOw is sOcial security tax determined?

Answer: Depends if you are an employee or self-employed.

Employees pay 6.2% in FICA (or social security tax) of their first $97,500 in salary, commissions, bonuses, vacation pay, cash tips and certain other benefits. Your employer pays another 6.2% on your behalf.

If you are self-employed, you'll pay the full 12.4% in social security yourself...but then will get a 50% deduction on Schedule SE.

Cheers

Govt mulls transitioning pension system to federal Social Security

The Fitial administration is not keen on reducing retirees' benefits “without corresponding offset in other areas,” and has once again raised the possibility of transitioning the NMI Retirement Fund to the Social Security System-at least for some who have yet to invest in the pension system.

How will Social Security payments be calculated under the FairTax?

Question: Is Feminism a conspiracy?

Before passing away, Hollywood producer Aaron Russo said in an interview that his good friend David Rockefeller confessed to him that the second wave of feminism was organized by bankers, government, and media elites with the agenda of breaking up traditional family models, getting women to work, and creating taxable income for women.

Gloria Steinem has even admitted that the CIA was bankrolling her foundation, rallies, festivals, and Ms Magazine.
Sally, feminism came in waves. It has not always been a constant. The first wave of feminism was about rights.... The second wave was about social engineering, and the third is about.... God knows what.

Answer: -No feminism is not a conspiracy.
-Here's another anti-feminist who thinks feminism is a frightening entity taking over the world-I'm sure you two will have amazing stories to tell each other:

Pat Robertson: "Feminism is a socialist, anti-family, political movement that encourages women to leave their husbands, kill their children, practice witchcraft, destroy capitalism and become lesbians."

One World Trade Center lands lease with Conde Nast

Media company Conde Nast on Wednesday signed a lease for about one-third of the One World Trade Center office tower, giving Lower Manhattan a touch of class while strengthening the project's finances.