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Friday, March 30, 2012

Guide to Social Security Planning

General Statistics

According to a report by the Trustees of the Social Security program issued in 2011, 54 million people 
received some type of Social Security benefit in 2010, totaling $706 billion.

According to the Employee Benefit Research Institute, Social Security represents 40% of the income of 
all elderly people in the United States.

The poverty rate for those age 65 and older was 35% in 1960 and was 9% in 2010.  Without Social 
Security, the poverty rate for people age 65 and older in 2010 would have been 45%, according to the 
AARP Public Policy Institute.

Obviously, Social Security has become an integral financial consideration for most Americans. To counsel 
them effectively, advisors must be aware of what the program can and can’t do. We’ll begin here with 
some basic background information that will come in handy as you move into subsequent chapters on 
client planning concerns. Beginning in this chapter and throughout the book, we’ll frame many sections
around questions that a client might ask a CPA so that practitioners can easily find the answers to 
common concerns

Tuesday, March 27, 2012

IRS Issues Annual Dirty Dozen List of Tax Scams

IRS Issues Annual Dirty Dozen List of Tax Scams (From CCH Practical Tax Bulletin)

The Internal Revenue Service issued its annual “Dirty Dozen” list of tax scams, advising taxpayers to use caution to protect themselves from being victims in a variety of schemes ranging from identity theft to return preparer fraud (IRS News Release IR-2012-23). The schemes peak during the filing season and they can be used in person, online, and by e-mail to mislead individuals with promises of refunds and free money. The IRS Criminal Investigation Division and the Department of Justice work closely to identify the scams and prosecute the criminals who commit them.
The following are the dirty dozen scams for the 2012: identity theft, phishing, return preparer fraud, hiding income offshore, offering free money from the IRS involving Social Security, false or inflated income and expenses, using false Forms 1099 for refund claims, frivolous arguments, falsely claiming zero wages, the abuse of charitable organizations and deductions, the use of disguised corporate ownership and the misuse of trust entities. The top scam is identity theft, and the IRS has stepped up its internal reviews to spot false tax returns before refunds are issued, as well as working with the taxpayers whose identity has been stolen.
The IRS has collected $3.4 billion from people who have participated in two voluntary disclosure programs to report income from offshore banks, brokerage accounts, and other foreign financial accounts. Taxpayers are advised that, if they are a party to scams that use a Form 1099 to create fake refund claims or falsify income, deductions or credits, they could be liable for financial penalties or even face criminal prosecution.
IRS examiners have uncovered intentional abuse by exempt organizations that shield income or assets from taxation and attempts made by donors to maintain control over donated assets or income from donated property. The IRS is working with state authorities to identify disguised corporate ownership that is being used to underreport income, claim fictitious deductions, avoid filing tax returns, and facilitate money laundering and other financial crimes. IRS personnel have also seen an increase in the improper use of private annuity trusts and foreign trusts to shift income and deduct personal expenses; individuals should seek the advice of a trusted tax professional before entering into a trust arrangement.

Monday, March 26, 2012

20-fold (60 terabytes) increase in disk space

How Seagate’s terabit-per-square-inch hard drive works

March 26, 2012

Significant Increase in IRS Audits of Wealthy



Last year, the IRS examined 29.93 percent of individual income tax returns, compared to about 18 percent the previous year, according to CNN Money. Taxpayers with incomes between $5 million and $10 million were examined at a rate of 20.75 percent, compared to about 12 percent in fiscal year 2010. Those with incomes between $1 million and $5 million were audited at a rate of 11.8 percent, compared to about 7 percent a year earlier. Overall, about 1.1 percent of taxpayers were audited in FY 2011, about the same rate as in FY 2010.

Tuesday, March 20, 2012

Abundance - The Future Is Better Than You Think

This just released book by Perter H. Diamandis and Steven Kotler, addresses future human needs by category - water, food, energy, health care and education.  Learn about Dean Kamen's Slingshot technology that can transform polluted water, salt water, or even raw sewage into high-quality drinking water for less than one cent per liter.  Also the Qualcomm Tricorder X PRIZE which promises a low-cost, handheld medical device that allows anyone to diagnose themselves better than a board ceretfied-doctor.  Lots of charts and graphs.

Thursday, March 15, 2012

Ten Common Tax-Filing Errors

March 14, 2012, 7:30 AM

Tax laws change with alarming frequency, but some taxpayer errors are perennial. Here are 10 common filing errors that often trip up taxpayers, according to Greg Rosica, a tax partner at Ernst & Young and the firm’s lead author of the Ernst & Young Tax Guide, now in its 27th year.

Thursday, March 08, 2012

IRS Expands Help to Struggling Taxpayers


The Internal Revenue Service is expanding its “Fresh Start” initiative to help more unemployed and financially stressed taxpayers with installment agreements and relief from failure-to-file penalties.

Wednesday, March 07, 2012

Mixed Economic/Employment News

ADP's estimate of February private sector job gains came in about as expected, but they also issued revisions to past data that had the effect of increasing prior estimates to bring them more into line with BLS data. As the chart above suggests, ADP's estimate doesn't point to any surprising strength in the BLS number to be released tomorrow, so the market's current guess of 225K is probably reasonable. A number like that would be similar to what we have been seeing in recent months, and is neither impressive nor disappointing.

Monday, March 05, 2012

Canceled credit card debts come back to haunt taxpayers

Billions of dollars in credit card debt that was charged off during the Great Recession— some of it decades old — is coming back to haunt borrowers in the form of unexpected tax bills.

IRS Warns of New Emerging Tax Scam

The scheme promises refunds to people who have little or no income and normally don’t have a tax filing requirement. The scam promoters informs victims about a tax refund or nonexistent stimulus payment based on the American Opportunity Tax Credit, even if the victim was not enrolled in or paying for college.