The Tax Goddess Blog

Economic Stimulus Package -

So, everyone is very excited about receiving their stimulus checks ($600 per person - depending on income and $300 for a dependent)

Of course, the government is giving this to us to help booster the economy.  Most of the people I've spoken to are using it to pay their mortgages, now isn't that a big suprise!

Anyway - I have been getting a lot of questions as to "where is my stimulus payment?"  The best place to check for it is here on the IRS's website (they really are a wealth of knowledge!  Go IRS!)

Anyway - Leave me a comment- what are you doing with your $?

Always yours,

Your Tax Goddess!

Foreign Income Exclusion Rules -

There are 3 kinds of foreign income exclusions that the IRS allows for income earned in a foreign country:

The foreign earned income exclusion, the foreign housing exclusion, or the foreign housing deduction.

In order to claim any of these deductions you must have:

-foreign earned income

-your tax home must be in a foreign country

-and you must be one of the following:

• A U.S. citizen who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year,
• A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty with a nondiscrimination article in effect and who is a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or
• A U.S. citizen or a U.S. resident alien who is physically present in a foreign country or countries for at least 330 full days during any period of 12 consecutive months.

The last one is the one most people qualify for (or under).  Normally this allows you to exclude up to $85,700 (in 2007). 

Remember, you also have a foreign tax credit (which can be equally as helpful!)  This allows for a dollar for dollar credit back to your taxes for any taxes paid to a foreign country (converted to U.S. Dollars).

This is not an easy subject - so if you have any questions, please don't hesitate to ask!

Always Yours,

Your Tax Goddess!

Getting a New EIN # - When do I need one?

According to the IRS you need a NEW EIN if:

Sole Proprietors

You will be required to obtain a new EIN if any of the following statements are true.

• You are subject to a bankruptcy proceeding.
• You incorporate.
• You take in partners and operate as a partnership.
• You purchase or inherit an existing business that you operate as a sole proprietorship.

You will not be required to obtain a new EIN if any of the following statements are true.

• You change the name of your business.
• You change your location and/or add other locations.
• You operate multiple businesses.

Corporations

You will be required to obtain a new EIN if any of the following statements are true.

• A corporation receives a new charter from the secretary of state.
• You are a subsidiary of a corporation using the parent's EIN or you become a subsidiary of a corporation.
• You change to a partnership or a sole proprietorship.
• A new corporation is created after a statutory merger.

You will not be required to obtain a new EIN if any of the following statements are true.

• You are a division of a corporation.
• The surviving corporation uses the existing EIN after a corporate merger.
• A corporation declares bankruptcy.
• The corporate name or location changes.
• A corporation chooses to be taxed as an S corporation.
• Reorganization of a corporation changes only the identity or place.

Partnerships

You will be required to obtain a new EIN if any of the following statements are true.

• You incorporate.
• Your partnership is taken over by one of the partners and is operated as a sole proprietorship.
• You end an old partnership and begin a new one.  

You will not be required to obtain a new EIN if any of the following statements are true.

• The partnership declares bankruptcy.
• The partnership name changes.
• You change the location of the partnership or add other locations.
• A new partnership is formed as a result of the termination of a partnership under IRC section 708(b)(1)(B).
• 50 percent or more of the ownership of the partnership (measured by interests in capital and profits) changes hands within a twelve-month period (terminated partnerships under Reg. 301.6109-1).

Limited Liability Company (LLC)

An LLC is a new entity created by state statute. The IRS did not create a new tax classification for the LLC when it was created by the states; instead IRS uses the tax entity classifications it has always had for business taxpayers: corporation, partnership, or sole proprietor. An LLC is always classified by the IRS as one of these types of taxable entities. - So ASK YOUR TAX GODDESS!!!

Entity Formation and Changes can be one of the most confusing tasks when dealing with the IRS -

So, if you have any questions - Don't hesitate to ask!

As Always,

Your Tax Goddess!

Our First Video! How exciting!

Now you get to see the tax goddess in Person!

Just an opening video to say hello!

What is the debt forgiveness act?

OK - I've been asked too many times on this, so I wanted to get you all the information on the debt forgiveness act according to the IRS:

Here are the basics from the IRS website and what it means for you:

Update Feb. 4, 2008 — The Mortgage Forgiveness Debt Relief Act of 2007

allows taxpayers to exclude income [ MEANING - YOU DON'T HAVE TO PAY TAX ON THE DEBT RELIEF]

from the discharge of debt (Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualify for this relief) [MEANING ON DEBT THAT TIES TO ANY KIND OF RESTRUCTURING OR FORECLOSURE]

on their principal residence.

This provision applies to debt forgiven in 2007, 2008 or 2009.

Up to $2 million of forgiven debt is eligible for this exclusion ($1 million if married filing separately).

The exclusion doesn’t apply if the discharge is due to services performed for the lender or any other reason not directly related to a decline in the home’s value or the taxpayer’s financial condition.  [MEANING YOUR HOMES VALUE OR YOUR FINANCIAL LIFE NEED TO HAVE BEEN HURT]

==========================

NOTE:  FORECLOSURES ARE TREATED AS A SALE OF THE PROPERTY -

MEANING:  If you have debt cancellation, and that decreases your basis in the property (ask your CPA) and then you have a gain of more than the $250/$500k limits allowed for non-taxation (title §121) you WILL pay tax on the property - BE CAREFUL!!!

also note: NO, YOU CANNOT DEDUCT A LOSS TAKEN ON YOUR HOME - don't we all wish!
=============================

There are a lot of tough things happening in the economy right now, but you need to make sure that you aren't going to get caught in a trap.

As far as the information is provided, this new debt relief act DOES NOT apply to investments or rental properties,..  solely to your primary home.

Keeping you on top the tax world!

Always,

Your Tax Goddess.
PS - I just got a video camera - so I will try and do more youtube videos relating to these subjects and post them to our Blog!

Networking, and the power Thereof -

Yesterday I attended the WLE conference in Phoenix, AZ.  I met tons of very interesting women, with various types of businesses.  I heard fabulous speakers such as Poppy King (The Lipstick Queen), and met some fabulous connections with regards to helping not only my own business but theirs as well.

The one thing that always amazes me about networking:  If you start out a conversation by helping someone else, they are instantly a huge fan of yours.  No doubt, no fail, as BNI's Ivan Meisner always says "Givers Gain."

Just a thought next time you are out and about - HELP OTHERS!  You never know where it might take you!

As always,

Your Tax Goddess

Do you want to repay the banking industries failures?

I received an email from someone I trust this morning with the following text:
--------------------

Once again I ask you to indulge me in my belief that as Americans we can get good government, we can have a say in how our tax dollars are spent, and we can if we act get representation that works for us, not just a connected few. I truly believe we are on the precipice of a financial melt down, caused by reckless lending (look at the stock price of any bank and the proof is there) and lack of leadership. 

Please read the attachment, if you agree, please sign it and pass it on to others that will tell our representatives that we have had enough of their lies and incompetence.

 

http://market-ticker.denninger.net/archives/520-Weekend-Ticker-Update-Petition-Time.html

--------------------

We'll put it this way, I signed the petition. 

I don't really feel that it is fair that the U.S. people repay the bad decisions of the government and the banks. 

This is one of the few times I will speak up, but I thought I should at least share the petition, if anyone else cares to read it.

And down the spiral we go,.. $300,000,000,000 package passed

Well, and so begins the bail out. 

Here are some fabulous links to a Mortgage Guru that I trust and have a deep respect for his opinions:

http://www.azmortgageguru.com/30000000000000-rescue-package-passed/
http://www.azmortgageguru.com/indymac-goes-down/
http://www.azmortgageguru.com/am-i-crazy-or-are-we-headed-for-a-catastrophic-financial-meltdown/

The scary part is - we've seen this coming for MONTHS!  (the last article link was written in Feb 08) and only now do we see any action?

Just wanted to link my readers to even more detail,..  I am flat out amazed that this bill passed this morning, and no one put up a fuss (big surprise, no one knew,....)

Debt - What do I do?

Today I was asked how to get out of debt.

There are a lot of books out there, programs, people wanting you to pay them money to get out of debt.

My personal opinion?  STOP USING THE DEBT METHODS!

Put down the credit cards,...  I know that you really want that new _____, but you should be asking yourself, do I NEED __________?

Debt can be an addiction, and can also be a deep pit once you are in to it,....

If you need help getting out of debt, please ASK!  I would be happy to help anyone build a budget, based on the cash that you ACTUALLY have :)

You CAN get out of debt, people are out there that can help you!

Just wanted to give a Tax Goddess shout out to those who need help!

Shauna~
your Tax Goddess

How can I track a new line of Business in Quickbooks?

QuickBooks has a great feature called class tracking.  It allows you to track every item in quickbooks assigned to a specific category (such as product sales, service sales, or even more detailed like bedroom furniture vs. office furniture (for a furniture company)).  This includes all income and all expenses. 

The best part about this feature is that you can then pull profit and loss statements by each class,...  Making knowing if a specific line of business is worth your money to carry it (for example, is the cost of paying your employees to do a specific job worth having the income from that specific job?).

The bad part about this feature is that it does take some "good eyes" to capture every transaction to the right class.  Sometimes, and easily, some transactions can slip thru the lines (which later can be reclassified, it just takes time!)

So, depending on what you need, the class feature in quickbooks can be very helpful if set up correctly!  So, as usual, if you need help, CALL for your tax goddess, and we can get you straight (even in remote locations!  Gotta Love the internet!)

Yours Always,

Your Tax Goddess!