The Tax Questions Blog

The deadline to apply to the IRS Voluntary Disclosure Program now over; however U.S. taxpayers still can file a voluntary disclosure under the IRS normal procedures.

In 2009, the IRS and U.S. Department of Justice began its highly publicized investigation into Swiss bank UBS AG and U.S. accountholders who hid these assets from the U.S. Government. However, the investigation did not end with UBS. The IRS made it clear that offshore tax evasion is still a top enforcement priority. The Department of Justice has gone after taxpayers regardless of the amount—even taxpayers with assets of $20,000 or less in offshore accounts.

U.S. taxpayers with offshore assets and accounts are legally bound to disclose these interests to the U.S. government on their Form 1040, U.S. Individual Tax Returns, and file a corresponding Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR). If IRS agents uncover that a taxpayer has not reported an interest in an offshore account or income accruing on such accounts during the course of an audit, the IRS may impose excessive penalties including the greater of $100,000 or 50% of the offshore account balance for willful failure to file an FBAR for each account. These penalties, compounded with interest and fraud penalties, can essentially wipe out the taxpayers foreign assets. In addition, taxpayers could be vulnerable to criminal prosecution and jail time for tax evasion.

The IRS announced in March of 2009 the creation of the IRS Voluntary Disclosure Program to motivate taxpayers to come forward and disclose their offshore accounts in exchange for lesser fines and the promise not to refer the case for criminal prosecution. As an outcome of the pressure on UBS and other offshore banks, thousands of U.S. taxpayers with previously undisclosed offshore accounts took advantage of the Voluntary Disclosure Program and applied before the October 15, 2009 drop dead date.

Although it may be too late to apply to the IRS Voluntary Disclosure Program, there is still time to file a voluntary disclosure under the IRS regular guidelines. There are a many positive outcomes to filing a voluntary disclosure as it is far better to disclose to the IRS than to have the IRS discover you. Almost identical with the Voluntary Disclosure Program, a traditional voluntary disclosure also allows taxpayers with previously undisclosed foreign accounts with a way out—potentially dodging the most severe civil fines and criminal prosecution.

Furthermore, those U.S. taxpayers with undisclosed offshore accounts should be aware the voluntary disclosure process is complicated and sensitive. U.S. taxpayers are encouraged to contact a tax attorney who is skilled at resolving disputes with the IRS as soon as possible to determine whether or not to file a voluntary disclosure with the IRS.

For example, if a U.S. taxpayer has already been investigated and contacted by the IRS, it may be too late to file a disclosure. Therefore, time plays a significant factor as the IRS continues its pursuit of undisclosed offshore account holders. The window of opportunity is closing on the ability to receive the reduced penalties and possible incarceration for those who file. Seeking the advice of proper counsel truly is in their best interest.

Strapped for cash? No problem!

Strapped for cash? No problem!

Question: What is the minimum taxable income in India? For a person and for a business, if different?

I am going to start a business and I am bit confused about the tax part. The money involved in my business has three components-

A - my service charge (the real amount paid in return to my service),
B - a deposit which is refundable. I deduct my service charge "A" from this and return the rest to client, and
C - the expenses in running the business/enterprise.

1. Could you please tell me on what amount I am supposed to pay or calculate my eligibility to pay the taxes in India?
2. Is there any other rebate available to businesses, which I need to consider while calculating my eligibility to pay the taxes in India?

Any other suggestions related to the tax or new business part are most welcome, since this is the first time I am going to start a business. It will be an internet based enterprise offering a particular service to its member across the globe, for a fee.

Answer: If you are planing your business as sole proprietor of the business, then the business income and your personal income if any like interest on deposits, salary income, capital gains from shares etc., will be clubbed. You have to file only one income tax return showing all the above said incomes. In this case you have to pay income tax as per slab rates. (after tax free income of Rs.1,10,000/-)

For men <65 years:
Rs............0 to 1,10,000 = Nil (Tax free)
Rs.1,10,001 to 1,50,000 @ 10%
Rs.1,15,001 to 2,50,000 @20%
Rs.2,50,001 & above @30%
Plus 3% Education cess on Tax amount
Plus 10% Surcharge on Tax if the income exceeds 10 lakhs.

If you are planing for a parternership company, then parternership company has no tax free income and it has to pay tax for the entire amount @34% App.

Illinois Leads Municipal Sales With Market Set to Extend Rally

Jan. 4 (Bloomberg) -- Illinois , the second-lowest rated U.S. state after California , will borrow $3.47 billion this week with the municipal bond market poised to extend its biggest rally since 2000.

MeltDown #475 EMERGENCY ECONOMIC STABILIZATION

Question: Is graduate tuition reimbursement paid for by employer considered taxable in Maryland?

Answer: The first $5,250 of educational assistance provided under an employer plan is not taxable, whether the study is undergraduate or graduate. Reimbursement for certain courses may be taxable Reimbursement for the cost of lodging, meals, and transportation is taxable. Amounts in excess of $5,250 are not taxable if you would have been able to deduct the expenses had you paid for them yourself. Your employer will include the taxable part of the reimbursement in Box 1 of your W-2.

New Laws Effective January 1, 2010

The following legislation will take effect beginning Jan. 1, 2010.

Question: When are 4th quarter estimated taxes due?

Answer: 1/15/2010.

The good, the bad and the ugly of 2009

The year 2009 may not be looked fondly upon by many on the Main Line as it acted as a reminder that prosperity is not a constant, even here.

Americans Buying Guns at Record Rate - Glenn Beck goes shooting - Obama gun bans, confiscations

100 pregnancies in just over 100 weeks!

The establishment of an egg donation surrogacy program in South Africa has achieved significant results in successful egg donation and successful surrogacy pregnancies. The egg donation agency grew from a small egg donor agency - tending to donor egg requirements for recipients from a database to a fully fledged egg donor program offering access to egg donor profiles and surrogate profiles facilitating quality egg donation surrogacy treatments.

Recipients of donor eggs are offered the option of reviewing egg donor profiles with pictures. A link below the egg donors allows further information pertaining to the egg donors. Information about the donor screening status is also provided. Alternatively to viewing the egg donor profiles along with information and egg donor pictures, the donor egg agency assists the process by proposing suitable egg donors who would be a good match - depending on preferred criteria, in terms of physical traits, academic, social and spiritual profile.

With a surrogacy program, it is imperative that the commissioning parents and surrogates are well matched and understand the surrogacy relationship. The feasability of a successful relationship has to be ascertained even before proceeding to the medical and psychological screening. baby2mom effectively undertakes to understand the requirements for a surrogate profile of the commissioning parent prior to proceeding to fast track the process of adequately matching surrogate to intending parent. Examples include specific surrogate requirements as indicated by the commissioning parent as well as a preferred parent profile requried by the surrogate. Aspects pertaining to t he profile include location, race and religion.

baby2mom Egg Donation Surrogacy - www.baby2mom.co.za is proud and excited to announce 100 pregnancies in just over 100 weeks. This is as a result of the efforts undertaken to effectively match egg donors to recipients and promptly assist with surrogacy programs.

City budget gets first approval

Two residents took advantage of the opportunity to address the Odessa City Council on its proposed fiscal year 2010-2011 budget Tuesday evening. Former Councilman Javier Joven, the first speaker at the public hearing, said that many residents would...