A SIMPLE IRA must be established by an employer with fewer than 100 employees. An employer can establish a SIMPLE IRA if they have no more than 100 employees who earned $5,000 or more during the preceding calendar year. The employer cannot have any other type of qualified retirement plan going while a SIMPLE IRA is in effect. SIMPLEs should be established between Jan 1 and October 1 of the first year of the plan, unless the business started after that. Plans can be set up relatively quickly and can even use automatic enrollment if employees are given the ability to opt-out. Continue reading...
Investing in a private placement opportunity is done off-exchange, and usually involves a small number of investors who are either institutions or accredited private investors. There are many possibilities when it comes to the types of private placement investments that can be made, but the nature of the offering is that it is not public, it is made to a small number of institutional level or individual accredited investors (see Regulation D, Rule 505 and 506), and the offering is not registered with the SEC. Continue reading...
IRS Link to Form — Found Here Form 8891 was previously used by individuals with retirement plans held in Canada when they were living in America, each time they took distributions. The process proved to be cumbersome for many good-natured Canadians, and caused the IRS a lot of trouble as well. This form has been retired in favor of an acknowledgement on the IRS Form 1040. Form 8891 is no longer used, which came as a relief to many Canadian-Americans who had retirement plans from work they did in Canada. Certain filing requirements still exist, such as a new form replacing the FBAR, for foreign bank accounts, now called the FinCEN Form 114. Continue reading...
IRS Link to Form — Found Here Form 1045 can be used to apply for a refund that might carry-back of up to 5 years, if an individual or trust has overpaid on their taxes, finds Net Operating Losses (NOL), or has section 1256 losses to carry-back. The 1045 is meant to be the quickest way to get a carry-back refund. Net Operating Losses from a pass-through entity or business can be carried back up to 5 years now, according to updates to IRC 172(h). Section 1256, which applies to futures contract investing, will allow a carry-back of losses in a 3-year time frame. For such carry-backs, the standard filing is IRS Form 1045. Continue reading...
IRS Link to Publication — Found Here There are many tax questions when it comes to home ownership, mortgages, equity, federal loan programs, selling a home, and so forth. Publication 530 seeks to address all relevant tax information for this large and important financial asset, which is often the largest purchase they will ever make. Homeowners incur expenses for home equity, mortgage interest, private mortgage insurance, improvements and maintenance, and taxes. Much of this can be deducted. Continue reading...
A 457 is only slightly different than a 401(k), but the differences can be important. Although the two plans are similar in practice, there are some very important differences. Former employees can withdraw from their accounts penalty-free after they have separated from service, even if they are under 59 ½. 457 plans must also be offered to independent contractors, which 401(k)s do not. 457 plans are offered to state and local public workers and employees of certain nonprofits.Top-hat 457 plans can also be offered to highly compensated employees without being offered to other employees, at both non-profit and for-profit businesses. Continue reading...
IRS Link to Form — Found Here An individual can automatically have their tax return due date extended by 6 months by filing a Form 4868. Tax returns are generally due by April 15, so this gives a person until October 15 to have the 1040 return submitted. This also goes for other tax return forms such as 1040-A and 1040-EZ. Please note that the IRS expects your taxes to be paid by April 18th, using your best-guess at what you owe, in order to avoid additional charges. People often do not have their tax returns completed by April 15, for various reasons. Continue reading...
IRS Link to Form — Found Here Non-cash contributions to a charity which are valued at over $5,000 must be reported on a Form 8282 by the organization receiving the donation. The organization does not have to include publicly traded securities on this form, or items used in the course of the organization’s mission, such as medical supplies. Non-profit organizations must report non-cash contributions that they receive from donors if the value of the item is over $5,000. These items will also need to be reported by the donor or form 8283, Section B. Continue reading...
IRS Link to Form — Found Here If a person moves from his first-purchased home, or it is destroyed, and he took the first-time homebuyer credit at purchase, he may have to repay the credited amount if the home was sold or destroyed within 36 months. He must file a 5405 and begin making payments in the form of additional taxes going forward. Form 5405 is the filing for those who sell their home or see it destroyed within 36 months of receiving the first-time homebuyer tax credit. The First Time Homebuyer Look-Up Tool is an IRS database allowing consumers to see all relevant information about when they took the FTHBC and how much they might owe back if they no longer used it as a primary residence within 36 months. Continue reading...
Pro Forma is a term used frequently in the context of a company’s financial statement, and refers to the manner in which figures are presented. In Latin the term “Pro Forma” means “as a matter of form,” and in the case of a financial statement refers to how figures are presented either in present form or as projections. For publicly traded corporations, statements prepared with the pro forma method are generally made ready ahead of a planned transaction such as an acquisition, merger, or some change in corporate structure based on new investment or capital changes. Continue reading...
The code for most cryptocurrencies is open-source, and the community operates by consensus, so sometimes newly modified code is released that is adopted by some, creating what’s called a fork. A Bitcoin Fork is when the blockchain, made up of interconnected computers holding a distributed and permanent record of all bitcoin transactions up to that point, is offered a modified currency protocol that is adopted by some of the Bitcoin community, which creates a “fork” in the previously longitudinal history of the ledger (i.e. “a fork in the road”), where one ledger continues to grow based on the changed protocol, and one ledger continues to grow with the old protocol still intact. Continue reading...
The short answer is, you can’t. Private placements have no reporting or registration requirements with the SEC or other entities. Sometimes this can be good for investors who enjoy the discretion. But it can also be a shield for unethical business people who prefer to avoid regulatory oversight. There is no source for detailed information about private placements unless you personally know a general partner who can describe to you his project, or who comes highly recommended with a lot of references. If an offering seeks to raise over $2 million in the capital in a year’s time, they are obligated under Regulation D to provide audited financial statements to the investors. Continue reading...
IRS Link to Publication — Found Here This publication contains both Form 4070A – Employee’s Daily Record of Tips, and Form 4070 – Employee’s report of Tips to Employer. It also gives detailed instructions for how to report tips, which generally includes any cash or credit card tips over $20 in a month. Publication 531 gives additional details about reporting tip income. Employees who earn tips over $20 a month must report them on Form 4070. At the end of the year, all tips, even those not reported due to being under $20, are to be reported on the individual’s 1040 for income tax. Continue reading...
IRS Link to Publication — Found Here Owning multiple properties and receiving rent or lease income from those which are not personally used is a common way to increase wealth. Some individuals also own a vacation home which they use some of the time and rent out the rest of the year. Both of these sources of income addressed in Publication 527. Publication 527 describes how to report income from residential property, as well as how to depreciate it, what forms are needed for different situations, and categorizes different types of arrangements where individuals might own or rent only part of a property or only for certain times of the year, as well as not-for-profit rental. Continue reading...
Cash balance plans are a type of pension in which the benefit is stated as a future account balance rather than an income stream. A Cash-Balance Plan is very similar to a normal Pension Plan. You do not technically contribute anything to the plan (unless you are an owner-employee), and you don’t have any control over the assets which are managed on your behalf. In a normal pension, the benefit waiting for you in retirement is a monthly income stream, but in a Cash Balance plan, your future benefit is stated as an account balance, which you will be able to take as either a lump sum or an income stream. Continue reading...
IRS Link to Publication — Found Here Publication 521 details the methods and requirements for tax deductions related to moving expenses, where the move is necessary to start a new job or maintain a job that requires relocation. The IRS requires that the situation passes tests regarding the distance of the residence to the new job and the time spent at the new job. If an individual moves in order to take a new employment opportunity, he or she may re Moving expenses include travel expenses as well as storage, transportation, and labor costs connected with moving furniture and whatnot. Continue reading...
The Investment Advisers Supervision Coordination Act of 1996 sought to delegate the responsibility of monitoring investment advisors between the states and the federal government. It amended the Investment Advisors Act of 1940, which required all advisors to register with the SEC. The Dodd-Frank Act further amended the IAA, such that only advisors with assets under management exceeding $100 million had to register with the SEC. The IASC was part of the NSMIA legislation passed in 1996. Up until that point, all advisors were regulated and monitored by the SEC. Continue reading...
Like other qualified plans, these need a written plan document and investments to fund. A written plan document must be established and distributed to all employees notifying them of the plan and of all pertinent details, in language they can understand. Plans must be established by December 31 of the year for which contributions will be made, and, since the contributions come from the employer for both of these, the employer has at least 8 months of the following year to meet funding requirements. Continue reading...
IIE is deductible from taxes, and is usually used to deduct the interest paid on a margin loan used to buy taxable securities, when there is a gain to offset. Investment interest expense is the term for interest which has been paid in order to hold an investment position. It comes into play when filing taxes. An individual can list interest expenses on a Form 1040. The most common place to incur an interest expense when investing is through the use of margin in an investment account. Continue reading...
Cash Balance plans are Defined Benefit plans, but are not much like Pensions as you may know them, or other types of retirement plans, for that matter. On one side of the retirement isle you have defined contribution plans, such as 401(k)s and SEPs and so on, where the contributions are certain, or at least ascertainable, while the ending balance or benefit of each employee’s account is unknown, or at least does not have to be (and in most cases isn’t). Continue reading...