Wednesday, November 25, 2009

HAPPY THANKSGIVING!!
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HAPPY THANKSGIVING

Today, we all move pretty fast and sometimes we rush right by the simple things in life, like thanking our colleagues, customers and friends for all that they do. We’d like to “slow down” for a minute, during a very challenging year, as we approach one of America’s great traditions of “taking stock and giving thanks.” For almost 400 years, our country has celebrated Thanksgiving Day to give thanks for what we have and express gratitude to each other. Your friends at Northeast Financial Strategies want you to know how much your loyalty and friendship are appreciated this year and in all years past. To you and your family, from all of us here at NFS, a very Happy Thanksgiving!

Monday, November 23, 2009

Estimate: Millions Could Owe Taxes Due to Making Work Pay Underwithholding

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Estimate: Millions Could Owe Taxes Due to Making Work Pay Underwithholding

The Treasury Inspector General for Tax Administration estimated in a report released Nov. 16 that more than 15.4 million taxpayers could unexpectedly owe taxes for tax year 2009 as a result of having their taxes underwithheld for the Making Work Pay credit.

The credit, created by the American Recovery and Reinvestment Act of 2009, is in effect for tax years 2009 and 2010. The credit is advanced to taxpayers through their wages by modified income tax withholding tables, TIGTA said. This decreased federal withholding “creates the vulnerability that some taxpayers may have their taxes underwithheld at the end of Tax Years 2009 and 2010,” it said.

TIGTA's analysis of the new withholding tables and the credit amount taxpayers are supposed to receive identified individuals who would receive more of the credit than they were entitled to get, TIGTA said. The modifications to the withholding tables do not take into account situations such as:

• dependents who receive wages,
• single taxpayers holding more than one job,
• taxpayers who receive pension payments, and
• Social Security recipients who receive wages, among others.

More than 1.2 million taxpayers who fall in these categories may have to repay some or all of the tax credit and may be assessed the estimated tax penalty or an increased tax penalty as a result of the credit, TIGTA said.

IRS is going to notify taxpayers that they can request a waiver if they are assessed the penalty or if they believe it will affect them, according to an IRS spokesman, but it is not sure what form such guidance will take.

The full text of the TIGTA report, Millions of Taxpayers May Be Negatively Affected by the Reduced Withholding Associated With the Making Work Pay Credit, No. 2010-41-002, is available at: http://www.treas.gov/tigta/auditreports/2010reports/201041002fr.pdf.

Thursday, November 19, 2009

IRS settles with 14,700 over foreign accounts

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IRS settles with 14,700 over foreign accounts


MIAMI (AP) -- More than 14,700 U.S. taxpayers came forward to disclose billions in offshore bank accounts in 70 countries under a voluntary Internal Revenue Service program allowing most to avoid criminal prosecution as long as they pay what they owe, IRS officials said Tuesday.

A flood of people came forward in the last days before the amnesty program expired Oct. 15, IRS Commissioner Doug Shulman said. The final total far surpasses the number who disclose offshore accounts in a typical year -- about 100 -- and comes amid a broad U.S. crackdown on international tax evasion at Swiss bank UBS AG and other institutions.

"To put it simply, this is a historic milestone for the nation's hardworking taxpayers," Shulman said in a conference call from Washington.

The total in taxes, interest and penalties collected from those in the voluntary disclosure program will be in the "billions of dollars," Shulman said. The disclosures involved accounts on every continent but Antarctica.

Taxpayers flocked to the amnesty program after the U.S. reached an agreement in August with the Swiss government and UBS to obtain names of 4,450 U.S. taxpayers believed to be hiding assets in secret bank accounts. Earlier this year, UBS paid a $780 million penalty under a deferred prosecution agreement filed in a Florida federal court that included disclosure of an additional 150 names.

Seven of those people have been charged criminally, with at least two getting sentenced to prison time.

Shulman said the combination of the UBS disclosures and the amnesty program have fundamentally changed the offshore tax landscape, particularly in Switzerland where bank secrecy was the tradition for centuries.

"It shows we are serious about piercing the veil of bank secrecy," he said. "The whole game has changed."

Also Tuesday, the IRS and Swiss unveiled the criteria being used to determine which American UBS accounts will be disclosed under the August agreement.

Accounts being targeted include those that contained 1 million or more Swiss francs at any time between 2001 and 2008; instances in which there was clear fraudulent actions, such as false documents; and accounts that earned an average of 100,000 francs a year for at least three years.

The equivalent amounts in U.S. dollars vary widely depending on the year, as the dollar lost over a third of its value against the Swiss franc during that period. One million francs was worth about $600,000 in 2001, compared with about $900,000 seven years later.

U.S. Sen. Carl Levin, who chairs Senate Permanent Subcommittee on Investigations, called the criteria "disappointing" because it means some of Switzerland's bank secrecy will remain intact.
"It complicates and muddies what should have been a straightforward agreement by UBS and the Swiss government to disclose Swiss accounts hidden from the United States by U.S. account holders," said Levin, D-Mich.

The Swiss have until the end of August to hand over the names. Swiss officials said the first 400 names will be chosen by the end of this week, with another 100 expected to be ready by the end of the month. Those taxpayers who are picked for disclosure can appeal to Switzerland's top administrative court.


By Curt Anderson, AP Legal Affairs Writer On 1:16 pm EST, Tuesday November 17, 2009

Monday, November 16, 2009

Market Update - Will The Bull Keep Up?
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Market Update - Will The Bull Keep Up?

LARGE CAPS BACK

The stock market's huge rally since March was initially led by smaller stocks, because small caps were hit the hardest on the way down. But small caps aren't looking that cheap anymore, and in October, the Russell 2000 index of small-capitalization stocks sank 6.9%, snapping a seven-month winning streak, while the Dow closed at its highest level in 2009.

CAN THE BULL OF 2009 LAST?

Since March, the Dow has jumped 57% and the S&P 500 has gained 62%, but there is a problem. What will the markets do when the very thing that has boosted the market dries up? The U.S. government has spent nearly $1 trillion to stimulate the economy and the Federal Reserve has maintained a policy of keeping interest rates near zero. Those will disappear as the economy's health improves, potentially halting the bull market by taking away what has been its crutch...cheap and plentiful money.

Wednesday, November 11, 2009

HAPPY VETERANS DAY!
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FREEDOM IS NOT FREE - THANK A VET!!


"And I'm proud to be an American, where at least I know I'm free. And I won't forget the men who died, who gave that right to me." ~Lee Greenwood

Monday, November 9, 2009

Cash for Refrigerators program might not be ready by Christmas

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Cash for Refrigerators program might not be ready by Christmas

If the federal government has its way, they will soon roll out a program that is unofficially being dubbed "Cash for Refrigerators." It's kind of a redo of the Cash for Clunkers program, designed to boost the appliance manufacturing industry and increase the nation's energy efficiency.


Originally it was hoped that the plan would roll out by November 30th, just in time for the naughty-and-nice list. But federal wheels grind slowly and since the details have been slow in coming out, many people who might have found the new washing machine or other appliance under the Christmas tree, complete with a big red bow, may instead find a box with a promise inside.


Unlike the Cash for Clunkers program which rolled out before the guidelines were in place, this time the federal government is being a bit more deliberative in setting the standards. That may be partly due to the fact that, although it is a federal program, each state will have a say in the details. A key reason for having states take the lead is because they are in the best position to know what appliances are most needed, given the local climate. Obviously air conditioners aren't pumping overtime in Alaska and heating units get less use in Arizona than Indiana.


Twenty-five states already have some sort of appliance rebate, often through utility providers. You may have seen commercials offering $75 cash when you buy a new refrigerator. These rebates themselves have not spurred a great deal of new demand, but the government hopes the new plan in some combination with the old plan and the arrival at holiday time will build a fire under consumers.


Where will the money come from to fund this plan?


The funding for Cash for Refrigerators is already scheduled as part of the American Recovery and Reinvestment Act and totals $300 million. States had until October 15 to submit their plans to the Department of Energy. Once approved, each state should get $1 in rebate money for every state resident. So, the most populous states will get a bigger chunk than those with smaller populations. If history is any yardstick, 10 to 25 percent of the funds will be spent on administrative tasks.


Though most sectors of the economy have suffered recently, the appliance manufacturing industry took a serious double hit. First, as the new home market tanked, so did the demand for new appliances to fill those homes. Then the general economic slowdown caused a drop in appliance replacement as consumers opted to make do with or repair their old models. That translated to serious job losses among manufacturers.


The Obama Administration may have learned a few lessons from the Cash for Clunkers program. It was reasonably successful but poorly run. If you remember, there was a lot of confusion because the credits for new car purchases were made available before the rules for getting and using the credits were even conceived. In the end, the Clunkers program did help boost the auto manufacturing industry, at least in the short term, and the Cash for Refrigerators plan is expected to do the same


How much is the rebate worth?


The estimated amount you may be able to get is between $50 and $200, though with the combination of existing state plans with federal incentives, it could be much more. As states worked out their own programs to meet the October 15th deadline, they had to decide which appliances would qualify, the size of the rebates, and whether or not old appliances must be surrendered.


Critics point out that since there is no overarching requirement that old appliances be surrendered, the desired effect of improving energy use may not happen. Old appliances - which tend to use 10 percent to 30 percent more power -- may still be used as backups, like garage refrigerators, or sold second hand.


"If you buy a new refrigerator, where does the old one go? In the garage, for the beer," Eric Burch told reporters. Burch is the spokesman for the Indiana Office of Energy and Defense Development. "You have not reduced anyone's energy efficiency. The old appliance is still on the grid."


Another criticism of the program is fueled by the question of how many appliances would have been purchased anyway. Case in point, one New York newspaper publicized the state's upcoming Cash for Refrigerators program with this line: "If you need a new appliance for your home, try and hold off until next month."


Here's a quick look at some of the plans that have been proposed.
New York will limit its appliance rebates to washers, refrigerators, freezers, coolers, and dishwashers. Old appliances need not be turned in to receive the rebate. You obtain your rebate by sending the receipt and application to New York State Energy Research and Development Authority. For New York the program will run for one week in February 2010.


  • $75 rebate for refrigerators

  • $75 for clothes washers

  • $50 for freezers

  • $500 for a three-appliance package, which includes dishwashers as eligible appliances

Indiana is hoping to roll out its program to begin on January 1, 2010. The state is wrestling with whether or not to require old appliances to be surrendered and recycled. Adding recycling will significantly boost the cost of plan administration and lower the number of rebates possible. But, recycling will maximize the effect on energy efficiency.

Kentucky's rebate program will be put off until spring, 2010, which, say state officials, is the time when most people begin to think about fixing up their homes anyway.

And in North Carolina, state officials are developing an application that will allow customers to walk away from the cash register with money-in-hand, according to Seth Effron, a spokesman for the State Energy Office. The idea, of course, is to maximize participation by not requiring people to wait for the check in the mail.


Posted by AccountingWEB on 10/21/2009 - 17:37

Friday, November 6, 2009

UPDATED FIRST TIME HOMEBUYER CREDIT - Obama Signs Home Buyer Tax Credit Extension.

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UPDATED FIRST TIME HOMEBUYER CREDIT - Obama Signs Home Buyer Tax Credit Extension.


It is finally official. The homebuyers' tax credit has been extended to April 30, 2010.


President Barack Obama approved the extension as part of a $24 billion economic stimulus bill signed Friday. The bill also includes an extension of unemployment benefits to the longtime jobless and tax credits for some businesses.


The housing tax credit portion of the bill extends the $8,000 tax credit for home buyers who are purchasing their first home from the current November 30 deadline and expands the program to offer a credit of $6,500 to other homeowners who have lived in their current home for at least five years and are seeking to relocate.


Another modification to the original legislation raises the income limits for program participation from $75,000 for a single purchaser to $125,000 and from $125,000 to $225,000 for a couple. There are also credits available on a diminishing basis above those income limits.


The bill was passed by the Senate on Wednesday evening and by the House on Thursday. Both bodies acted in a bipartisan manner which has seldom been seen this year. The Senate passage was unanimous; the House voted 403 to 12 for the bill.


HOWEVER, we need to discuss the "in-between the lines" type of things in this extension. For instance, the increased AGI limitations (from $75,000 to $125,000) take effect as of the DATE OF ENACTMENT and are NOT retroactive to January 1.


If you have purchased, or are looking to purchase, we need to get together to talk about the credit and your tax situation.

Thursday, November 5, 2009

IRS Seeks to Return $123.5 Million in Undeliverable Refunds to Taxpayers IRS Reminds Taxpayers to Use E-file and Direct Deposit

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IRS Seeks to Return $123.5 Million in Undeliverable Refunds to Taxpayers IRS Reminds Taxpayers to Use E-file and Direct Deposit

WASHINGTON — The Internal Revenue Service is looking for taxpayers who are due to receive a combined $123.5 million in the form of 107,831 refund checks that were returned to the IRS by the U.S. Postal Service due to mailing address errors.

“We are eager to get this money into the hands of taxpayers, so don’t delay if you think you are missing a refund,” said IRS Commissioner Doug Shulman. “The sooner you update your address information, the quicker you can get your refund.”

All a taxpayer has to do is update his or her address once. The IRS will then send out all checks due. Undeliverable refund checks average $1,148 this year, compared to $990 last year. Some taxpayers are due more than one check.

Average undeliverable refunds rose by 16 percent this year, which is in line with the 16 percent rise in average refunds for all tax returns in the latest filing season. Several changes in tax law likely played a role in boosting refunds, including the First-Time Homebuyer’s Credit and the Recovery Rebate Credit, among others.

The vast majority of checks mailed out by the IRS each year reach their rightful owner. Only a very small percent are returned by the U.S. Postal Service as undeliverable.

If a refund check is returned to the IRS as undeliverable, taxpayers can generally update their addresses with the “Where’s My Refund?” tool on IRS.gov. The tool enables taxpayers to check the status of their refunds. A taxpayer must submit his or her social security number, filing status and amount of refund shown on their 2008 return. The tool will provide the status of their refund and in some cases provide instructions on how to resolve delivery problems.

Taxpayers checking on a refund over the phone will be given instructions on how to update their addresses. Taxpayers can access a telephone version of “Where’s My Refund?” by calling 1-800-829-1954.

The IRS encourages taxpayers to choose direct deposit when they file their returns because it puts an end to lost, stolen or undeliverable checks. Taxpayers can receive refunds directly into personal checking or savings accounts. Direct deposit is available for filers of both paper and electronic returns.

The IRS also encourages taxpayers to file their tax returns electronically because e-file eliminates the risk of lost paper returns. E-file also reduces errors on tax returns and speeds up refunds.

E-file coupled with direct deposit is your best option; it’s easy, fast and safe. Please contact my office for more information or to help with filing your return...800-560-4NFS.