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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…)

Affordable Care Act Notice Letter

You may have wondered how the Affordable Care Act (ACA) will affect your current health insurance plan, or whether you might be able to afford a plan for the first time through a new financial assistance program created under the law.  There is a mountain of information available from a variety of sources, but who has time to sift through all of the publications, and which ones provide the most accurate and up-to-date information?  You might think that you don’t have to do anything until January 2014 when the ACA goes into full force, but there are several steps you need to take now to prepare for life under the Affordable Care Act.

I’ve compiled some information for you after reading articles, technical releases, state guides, insurance company publications, etc.    This information and the noted web sites contained herein may help answer some of your questions about the ACA.  The ACA aims to expand health care coverage through a series of provisions that generally go into effect on January 1, 2014: (more…)

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

 

Payroll Tax Cut will Expire and Probably not Renewed

According to this news report and other sources it appears that the 2% employee social security payroll tax cut will not be extended to 2013.  This means everyone will have a 2% net pay decrease.

Follow the link for more information.

http://www.nytimes.com/2012/10/01/business/economy/payroll-tax-cut-unlikely-to-survive-into-next-year.html?_r=0

Tax Cliff Uncertainty is Hurting Business

The uncertainty of the tax law for 2013 is creating uncertainty and lack of planning for future business expansion.  Congress needs to resolve the issue as soon as possible so that the economy can grow for 2013.  See the link discussing the issue.

http://www.journalofaccountancy.com/News/20126434.htm

 

Wealth Essentials Radio AM560

On Sunday September 16th I will be the featured guest on AM560 Wealth Essentials Radio.  The show is on from 5:30 pm to 7:00pm.  I will be talking about the Chicago Southland Chamber and tax and business information.

http://campaign.r20.constantcontact.com/render?llr=hjbatrjab&v=001IgkAmL3YG5uxNzXhH2_l4XqVx9AAKxmSSekphHD7fmku0wrKl8uKMEoc7iPdddc4XKbIwjePci0y9cgBnh5dm2mcIzKmANJMBUcXHM_fCxc%3D

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