Dodgers Bankruptcy

Posted by Wetenkamp on with 0 Comment

The Los Angeles Dodgers filed for Chapter 11 Bankruptcy protection today.  MLB Commissioner recently rejected a $3 billion deal with Fox that may have helped pull the club out of its $630 million in debt. The Commissioner did not approve the deal, saying it was self-serving for the Dodger’s owner and not in the best interest of the Dodgers or its fans. Some of the unsecured creditors are actually former players, including Manny Ramirez whom they owe nearly $21 million. According to Forbes, the Dodgers franchise is MLB’s third most valuable franchise, worth an estimated $800 million.

Even though the team insists that the bankruptcy will in no way affect the salaries and benefits of their players, it is hard to imagine that this won’t get in their heads and in some way affect their play. It certainly can’t help as they find themselves struggling with a winning percentage of .443 and 9.5 games behind the leading team in the NL West. By the way, who is that leading team?

IRS Interactive Tools

Posted by Wetenkamp on with 0 Comment

IRS.gov offers a couple different interactive tools designed to help with basic tax questions. One is called the “Interactive Tax Assistant” (ITA) and the other is called “Tax Trails.”

The ITA covers a limited range of topics:

  • Do I Need to File a Tax Return?
  • Who Can I Claim as a Dependent?
  • How Much Can I Deduct for Each Exemption I Claim?
  • What is My Filing Status?
  • How Much is My Standard Deduction?
  • Am I Eligible for the Child Tax Credit?
  • Am I Eligible for the Making Work Pay Credit or Government Retiree Credit?
  • Is My Pension or Annuity Payment Taxable?
  • Are My Social Security or Railroad Retirement Tier I Benefits Taxable?
  • Do I Have Cancellation of Debt Income on My Personal Residence?

The ITA topics are interactive in that they take the user through a series of questions, and the answer varies depending on the information furnished.  The user is never required to enter a social security number.  There is an ITA search box too, but I have not found that it generates good results.  Most of the time it either takes the user to the Tax Trails tool or it reverts to the general IRS search box that opens up the search to the entire IRS website.  Tax Trails has about twice as many topics as ITA.

Summer School

Posted by Wetenkamp on with 0 Comment

If you’re worried about your kid’s brain turning to mush over summer vacation, how about a free online tax course?  The IRS’ Understanding Taxes program is perfect for high school or college aged youngsters.  The course offers 24 lessons divided into 6 themes dealing with tax history and tax theory (the “Hows” of taxes).  And there is a separate set of 14 lessons dealing with the application of tax principles (the “Whys” of taxes).  The Understanding Taxes program includes activities, tutorials, fact sheets, simulations, and of course, every kid’s favorite: assessments.  This is one way to keep them on their toes until they return to school in the fall.

U2 Scorned for Tax Dodging

Posted by Wetenkamp on with 0 Comment

Activist group, Art Uncut, has planned a protest during U2′s performance at this weekend’s Glastonbury Festival in England.   The group has not said exactly what actions they will take to make their point.

Most people looking for tax relief don’t have the liberty of selecting which country they want to pay taxes in.  But in 1996 U2 went shopping around with the intention of moving their business affairs to a country with lower taxes, and they landed in the Netherlands.   Art Uncut’s position is that this “tax dodging,” (by U2 and others) although not illegal, is causing poor countries like the band’s native Ireland to grow even poorer.  Furthermore, it is their view that this move really undermines frontman Bono’s highly publicized campaigns aimed at reducing poverty in developing nations.

Interestingly, Forbes recently placed U2 at the very top of their list of highest paid musicians, earning $195 million over the relevant 12 month period.

IRS Optional Standard Mileage Rate Increased to 55.5 Cents

Posted by Wetenkamp on with 0 Comment

The IRS optional standard mileage rate is being increased from 51 cents per mile to 55.5 cents per mile starting July 1, 2011.  The IRS normally adjusts the mileage rate each fall for the following calendar year.  However, this year, due to high fuel prices, the IRS is making an additional adjustment to the rate halfway through the year.  The 55.5 cents per mile rate will be effective until December 31, 2011.

Looking back, the IRS adjusted the rate part-way through the year in 2005 and in 2008 as well.  It peaked at 58.5 cents per mile back in the second half of 2008.

The standard mileage rate is used to compute the deductible costs of operating an automobile for business use.  It is ”optional” because taxpayers may choose to track their actual vehicle operating costs instead.  This rate is also used as a benchmark by the federal government and many businesses to reimburse their employees for mileage.  California employers are not required to use the IRS standard rate, but it is presumed to be reasonable.  If your employer reimburses you for mileage and is paying you less than 55.5 cents per mile after July 1st, you may want to point out the standard rate increase.

Do You Need to Adjust Your Withholding?

Posted by Wetenkamp on with 0 Comment

It’s nice getting a couple thousand bucks back from the IRS each April, right?  Of course it is, but its nicer to not hand it over to them in the first place if its just going to be coming back to you in a refund.  When you allow your employer to withhold too much, you are essentially loaning your money to the government all year.  Your goal should be to have your employer withhold only enough to cover the taxes you actually owe.  The IRS Withholding Calculator can help you determine how many exemptions you should claim on your W-4.  You may need to go back to the IRS Withholding Calculator when you experience major changes in your life, such as marriage, divorce, death of a dependent, birth of a child, other personal financial changes, or changes in the law.

However, take care that you don’t underwithhold either because if your employer does not withhold enough, then you will find yourself owing the IRS.

IRS-impersonation Scam Emails

Posted by Wetenkamp on with 0 Comment

The IRS has emphatically stated that they do not send out unsolicited emails. So, if you receive an email that appears to be from the IRS, but requests personal / financial information, then chances are it is a scam. People who fall prey to these emails may become victims of identity theft if they give up the requested information to the scammer or if they unknowingly open up their computers to malicious software.

If you receive an email requesting personal information that appears to be from the IRS, do not open it and do not click on any links. You should immediately forward the email to phishing@irs.gov, then delete the email. If you believe you have become a victim of identity theft, contact our tax relief firm and we may be able to help you.

Smooth Criminal

Posted by Wetenkamp on with 0 Comment

Raymone Bain, former general manager of Michael Jackson, pleaded guilty for failing to file her 2008 tax return. She faces possible 1 year in prison and $100k fine. As part of the plea agreement, she will also have to pay back up to $400k that she owes for tax years 2006-2008.

IRS “Fresh Start” Program

Posted by Wetenkamp on with 0 Comment

On February 24, 2011, the IRS announced they would be rolling out a series of changes to current collection procedures that would prove to the world that they are just a bunch of softies.  Ok, they didn’t go that far.  But they did say that they would be filing fewer liens, simplifying the procedure for removal of a lien, and streamlining the Offer in Compromise program for certain taxpayers.

Here we are in June and there are still more questions than answers.  For example, the IRS claims that the new dollar threshold for filing a federal tax lien is now $10,000 instead of $5,000, but liens may be filed on balances less than $10,000 when circumstances warrant.  What circumstances might warrant a deviation from this new rule?  We don’t know.  The IRS also claims that they will be expanding the Streamlined Offer in Compromise process.  What are the details of this procedure?  And does it really benefit the taxpayer?  From what I have seen, “streamlining” a procedure can be a double-edged sword.  On one hand, the process is shortened so the taxpayer finds tax relief sooner if the offer is accepted.  On the other hand, if streamlining skips important steps or moves the process along so quickly that it prejudices the taxpayer, then only the government benefits.