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Tag Archives: Illinois Tax
Foreign Bank Accounts IRS Reporting Requirements

As an US citizen you are required to report on your income tax return interest earned on foreign bank accounts.  The interest income is reported in US dollars and is included on our income tax return.  If you pay foreign income taxes on this interest income a foreign income tax credit maybe available to relieve double taxation.

Reporting requirement for foreign bank accounts is now a focus of increased IRS enforcement.  All foreign bank accounts that exceed $10,000 in value at anytime during the year are required to be disclosed to the IRS.  The IRS states each US person who has a financial interest in or signature or other authority over any foreign financial accounts, including banks, securities or other type of financial accounts in a foreign country must disclose the relationship.

The foreign bank account is reported each year using the “Foreign Bank and Financial Accounts” or “FBAR” electronic filing system of FinCen.  The due date is June 30th of each year.

Qualified Personal Residence Trusts

A special kind of irrevocable trust can be used to transfer your residence to your children at a significantly reduced gift tax cost and with no estate tax, yet allow you to continue to live in the residence for as long as you wish. This special type of trust is known as a qualified personal residence trust (QPRT). (QPRTs are sometimes also referred to as “residence GRITs” or “house GRITs”.) Here’s how it works.

During your lifetime, you transfer your residence to the trustee, who (if state law permits) can be yourself. The trustee must allow you to continue to use the residence rent-free for a fixed number of years specified in the trust instrument (the “fixed term”), which should be a term you are likely to survive. During the fixed term, you will continue to pay mortgage expenses, real estate taxes, insurance, and expenses for maintenance and repairs, and will continue to deduct mortgage interest and real estate taxes on your individual income tax return. When the fixed term ends, the residence is distributed to your children, or remains in further trust for them. (more…)

Is Long- Term Care insurance a Tax Deductible Medical Expense?

Nursing-home care can be very expensive. As a result, insurance for such care is growing in popularity. Fortunately, there is some tax relief for these expenses. Both the cost of qualified long-term care and insurance coverage for such care qualify as deductible medical expenses.

“Qualified long-term care” services are necessary diagnostic, preventive, therapeutic, curing, treating, mitigating, and rehabilitative services, and maintenance or personal-care services required by a chronically ill individual. The services must be provided under a plan of care presented by a licensed health care practitioner. (more…)

Scholarships are Tax-Free Except for:

Scholarships are generally tax-free, whether for elementary or high school students, for college or graduate students, or for students at accredited vocational schools. It makes no difference whether the scholarship takes the form of a direct payment to the individual or a tuition reduction.

For the scholarship to be tax-free, certain conditions must be satisfied. The most important are that the award must be used for tuition and related expenses (and not for room and board) and that it must not be compensation for services. (more…)

Time to Look at Your Paycheck

We are in the second half of year and it is time to look at your current year income tax withholding from your paycheck.  If you receive a large refund from IRS after you file your income tax return, or you owe the IRS money when you file your return, you should consider adjusting your income tax withholding.

Tax withholding from your paycheck is based on the number of withholding allowances you claim on Form W-4, Employee’s Withholding Allowance Certificate.

If your tax or family situation change, it’s up to you to give your employer a new W-4. Many people neglect to take this step, resulting in withholding that is either too high or too low. (more…)

Charitable Donation Documentation

It is now more important than ever to have proper documentation of your charitable contributions, the IRS may ask for you to produce your documentation. The IRS may do this by sending you a letter asking you to forward a copy of documentation.  While all contributions must be substantiated, contributions of $250 or more require a written receipt from the charity. If you donate property valued at more than $500, additional requirements apply.

For a contribution of cash, check, or other monetary gift, regardless of amount, you must maintain a bank record or a written communication from the donee organization showing its name, plus the date and amount of the contribution. It’s not sufficient to maintain other written records, such as a log of contributions.

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Illinois Corporations – Watch Out for Scam

In the last month Illinois corporations have received a mailing from “Corporate Records Service” stating all Illinois corporations are required to complete this form and pay $125.  This is a scam to take $125 of your money.  See the Secretary of State link for information regarding the scam

http://www.cyberdriveillinois.com/departments/business_services/business_not-for-profit/home.html

 

Chicago Southland Chamber RCL Speaker Howard Tullman

On July 12th the Chicago Southland Chamber RCL monthly speaker is Howard Tullman of  Tribeca Flashpoint Academy.  This an example of another excellent Chamber program.  Your business and family will improve after attending this program.

 ILLINOIS INNOVATION NETWORK INTERVIEW WITH TRIBECA FLASHPOINT ACADEMY CEO HOWARD TULLMAN


Howard A. Tullman

Tribeca Flashpoint

Success: “We act as though comfort and luxury were the chief requirements of life when all we really need to make us happy is something to be enthusiastic about.”

The president and CEO of Tribeca Flashpoint Media Arts Academy and a pioneer in digital and social media, electronic arts and immersive education shares his insights on what it takes to succeed as an entrepreneur. The Art of Business I think of my businesses as art projects: they’re done with a certain style, a certain voice, and there’s a consistent way you approach the process – every single time. You do it with a vengeance – no prisoners, no retreat and no surrender. “Artistic” doesn’t mean soft or passive to me. This is an aggressive process – you’re ruthlessly trying to get down to the most basic answer to the fundamental questions, the leanest solutions possible – how do I save my customers time or money or make them more productive. Nothing else really matters. You’re always trying to make your products and services (and your internal systems as well) faster, easier, and simpler. It’s an ongoing and constant work of creation, evaluation and iteration. Always raising the bar. You never actually get there – you just get a little closer and a little better every day. I call it “successive approximation.” And there’s another important analogy to the artistic process. A new business really is like a blank canvas or an empty piece of paper. It’s critically important for the entrepreneur to have a very clear vision of where he or she is headed. When I think of something, I think of it as shockingly fully realized – down to an amazingly precise level of detail. I can answer questions with a frightening amount of specificity and certainty. Not that this will be how things ultimately turn out – but it’s the confidence that’s the crucial element.

We always say: “Sometimes wrong, but never in doubt.” Or, as they say in Hollywood: “The screenplay isn’t the movie that ultimately gets made, but it’s what gets the movie made.” You’ve got to have a plan and you’ve got to get the process started. Everything else will fall in place along the way. And finally, although many artists think of their work as asocial and solitary, the great thing about innovation and building a team to build a business is the amazing and exciting way that the collaborative process becomes contagious and additive and you get to sit there together and just watch the magic happen as your dreams and ideas become concrete realities and just get better and better as time goes on.

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Work from Home, What do you do?

Can You Claim a Home Office Deduction?

Answer the following questions to determine if you qualify for the home office deduction:

  1. Is your home office used in a trade or business?
    1. You can only take a home office deduction if you are involved in a trade or business.   No deduction can be claimed for non- trade or business activities, for example personal investments
  2. Do you regularly use your home office exclusively for business?
    1. You must use a room or separately identifiable area of your home only for business.  Any personal use of the separately identifiable area will disqualify that area for any home office deduction. (more…)
The IRS is Requiring more Reporting of Foreign Financial Assets

If you have certain foreign financial assets you maybe required to disclose those assets using the new IRS Form 8938.  The reporting of foreign assets is part of the IRS’s initiative to increase tax compliance with regard to foreign financial assets.

Some of the foreign financial assets that must be reported on the new Form 8938 include:

(more…)

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