Trump’s tariffs prompting some US fund managers to look overseas

NEW YORK – President Donald Trump’s announcement of import tariffs, and the prospect of retaliation by other countries, is prompting some fund managers to pare their holdings of US stocks and look for opportunities overseas.

The high turnover of key staff in the White House, including the exit of Gary Cohn, the director of the National Economic Council this week is undermining confidence in policy making also.

President Trump said Thursday that he would begin imposing import tariffs of 25 percent on steel and 10 percent on aluminum in 15 days, sparking fears of a global trade war.

Gary Cohn, the chief economic adviser to Trump, who argued against trade protectionism, resigned late Tuesday after
Trump first announced the tariff plan and his successor has yet to be named.

Fund managers from Oppenheimer, Federated, and Wells Fargo are among those that now see international and emerging market equities as more attractive than the US, where the prospect of higher interest rates contributed to a slump in stocks in February, leaving the benchmark S&P 500 stock index up about 2.0 percent for the year-to-date, after turning in a 7.0 percent gain in January.


Overseas stocks, by comparison, are benefiting from synchronized economic growth in both Europe, Asia and the Americas, but offer lower valuations.

The gross domestic product of countries in the eurozone, for example, expanded at a 2.7 percent annual rate in the fourth quarter, outpacing the 2.5 percent gain in the U.S. economy over the same time. The Stoxx 600, an index of companies in the eurozone, trades at a trailing price to earnings ratio of 14.9, compared with a 22.7 P/E ratio for the S&P 500, according to Thomson Reuters data.

“You’re still seeing an earlier stage of an expansion cycle overseas versus the United States, which is likely to bounce between expansion and slowdown in the year ahead,” said Brian Levitt, senior investment strategist at OppenheimerFunds.

Emerging markets such as China and Russia also look attractive given their prospects for economic growth and low equity valuations, he said.

In the US, meanwhile, a Democratic party takeover of at least one branch of Congress in elections in November would bring more stability to Washington by curbing President Trump’s ability to expand protectionist policies, he said.

“History suggests markets do better with divided government because there is less uncertainty with policy because it becomes harder to get anything enacted,” he said.

WHY TARIFFS HURT

The prospect of import tariffs could damage the U.S. economy by raising costs for US. manufacturers and consumers, while prompting its trading partners to impose their own levies on U.S. exporters, increasing their costs also and sapping overseas demand.

Daniel Pinto, a co-president at JPMorgan Chase & Co, said in an interview with Bloomberg on Thursday that the US equities could fall by between 20 and 40 percent over the next three years if a global trade war breaks out.

Brian Jacobsen, multi-asset strategist at Wells Fargo Asset Management, said that the risks of retaliatory tariffs is prompting him to add to emerging markets and international stocks but at a slow pace, despite the fact that they look more attractive on a fundamental basis.

“Strategically, we still really like international and emerging markets, but when you have asymmetric risks, that makes us a little cautious on non-U.S. assets for now”, given that markets have not yet priced in the possibility of more protectionist policies, he said.

Overall, US fund managers have been reducing their stake in domestic stocks as interest rates rise, making bonds more attractive.

US balanced funds, which hold both equities and bonds, now have an average of 55 percent of their assets in stocks, a 4.0 percent decline from 2014, and nearly 41 percent of their assets in bonds, according to Lipper data.

Yet Ashwin Alankar, head of global asset allocation at Janus Henderson Investors, said that he remains a fan of large-capitalization US stocks despite the likelihood of higher trade costs and inflation.

The recently-passed US corporate tax cuts provide on-going fiscal stimulus that should balance out higher interest rates, he said, a boost to stock prices that is not found in other markets.

As a result, he is moving more of his portfolio in large-cap US stocks, he said.

“Europe isn’t talking about fiscal spending, Japan isn’t,” he said. “The US is the only market in the world right now that could have the tailwind of fiscal spending.”

source: interaksyon.com

Trump's 1995 tax records suggest no federal taxes for years: New York Times

NEW YORK - Republican presidential nominee Donald Trump declared a $916-million loss on his 1995 income tax returns and the large tax deduction may have allowed him to avoid paying federal income taxes for up to 18 years, the New York Times reported on Saturday.

The Trump campaign, in a statement responding to the Times report, said that the tax document was obtained illegally and that the New York Times is operating as an extension of the presidential campaign of Democratic rival Hillary Clinton.

The Times said it had obtained Trump's 1995 tax records and that they showed he received the large tax benefits from financial deals that went bad in the early 1990s.

The newspaper quoted tax experts it hired to analyze Trump's records as saying that tax rules which are especially advantageous to wealthy filers would have let Trump use his $916-million loss to cancel out an equivalent amount of taxable income over an 18-year period.

The Times said that although Trump's taxable income in subsequent years is as yet unknown, a $916-million loss in 1995 would have been large enough to wipe out more than $50 million a year in taxable income over 18 years.

Trump has declined to release his tax records, unlike previous presidential nominees in modern history, saying his taxes are under a federal audit. Experts say he could still release them publicly if he wished.

"Mr. Trump is a highly-skilled businessman who has a fiduciary responsibility to his business, his family and his employees to pay no more tax than legally required," the Trump campaign statement said.

"That being said, Mr. Trump has paid hundreds of millions of dollars in property taxes, sales and excise taxes, real estate taxes, city taxes, state taxes, employee taxes and federal taxes, along with very substantial charitable contributions," it said.

source: interaksyon.com

Record US lottery jackpot hits $950 million

NEW YORK - Americans with dreams of life-changing riches flocked Saturday to buy lottery tickets and a chance at winning the record $948.9 million jackpot, the largest in US history.

The winning numbers, announced just before 0400 GMT, are 32-16-19-57-34 and the Powerball is 13, organizers said.

No winner has yet been announced, but one person could take home a lump sum of $558 million before taxes, they said.

The jackpot began on November 7, but rolled over a surprising 19 times before Saturday.

The Powerball prize skyrocketed from $800 million on Friday, fueling excitement across the US.

Saturday's prize shatters the previous record for a US lottery jackpot of $656 million, scooped up by three winning tickets in North Carolina, Puerto Rico, and Texas in March 2012.

In the Powerball lottery, which takes place each Wednesday and Saturday at 10:59 p.m. (0359 GMT), five white balls are drawn from a drum containing 69 balls. One red one is pulled from a drum with 26.

To win the jackpot, a ticket holder has to match all the numbers on the six balls selected.

The winner can choose to be paid the full jackpot in annual installments over 29 years -- or take a lower one-off payment in cash.

source: interaksyon.com

Big US firms, led by Apple, hold $2.1 trillion overseas to avoid taxes: study

WASHINGTON - The 500 largest American companies hold more than $2.1 trillion in accumulated profits offshore to avoid US taxes and would collectively owe an estimated $620 billion in US taxes if they repatriated the funds, according to a study released on Tuesday.

The study, by two left-leaning non-profit groups, found that nearly three-quarters of the firms on the Fortune 500 list of biggest American companies by gross revenue operate tax haven subsidiaries in countries like Bermuda, Ireland, Luxembourg and the Netherlands.

The Center for Tax Justice and the US Public Interest Research Group Education Fund used the companies' own financial filings with the Securities and Exchange Commission to reach their conclusions.

Technology firm Apple was holding $181.1 billion offshore, more than any other US company, and would owe an estimated $59.2 billion in US taxes if it tried to bring the money back to the United States from its three overseas tax havens, the study said.

The conglomerate General Electric has booked $119 billion offshore in 18 tax havens, software firm Microsoft holding $108.3 billion in five tax haven subsidiaries and drug company Pfizer is holding $74 billion in 151 subsidiaries, the study said.

"At least 358 companies, nearly 72 percent of the Fortune 500, operate subsidiaries in tax haven jurisdictions as of the end of 2014," the study said. "All told these 358 companies maintain at least 7,622 tax haven subsidiaries."

Fortune 500 companies hold more than $2.1 trillion in accumulated profits offshore to avoid taxes, with just 30 of the firms accounting for $1.4 trillion of that amount, or 65 percent, the study found.

Fifty-seven of the companies disclosed that they would expect to pay a combined $184.4 billion in additional US taxes if their profits were not held offshore. Their filings indicated they were paying about 6 percent in taxes overseas, compared to a 35 percent US corporate tax rate, it said.

"Congress can and should take strong action to prevent corporations from using offshore tax havens, which in turn would restore basic fairness to the tax system, reduce the deficit and improve the functioning of markets," the study concluded.

source: interaksyon.com

What Is Marginal Tax Rate and How Does It Work?

We hear a lot about tax rates. Often, what we pay in taxes is expressed as a percentage of income. However, it’s important to understand that the tax rate you pay doesn’t apply to your entire income. Instead, you will pay taxes based on a formula that looks at was is called the marginal tax rate.

What is Your Marginal Tax Rate?

Your marginal tax rate is the tax you pay on your last dollar of income. However, and more importantly for tax planning, your marginal tax rate is also what you’ll likely pay on your next dollar earned.

Since Canada operates on tax brackets, you will pay more tax when you earn more. However, it’s worth noting that you pay a rate based on the income in each bracket. So your marginal tax rate doesn’t reflect the total that you pay on your income. In fact, what you actually end up paying, in terms of a percentage of your income, is probably going to be lower than your marginal tax rate.

Even with the reality that your taxes will go up the more you earn, it’s possible to use the marginal tax rate to your advantage by planning ahead with RRSPs and other steps to reduce your taxes. Marginal tax rate should not be confused with your average tax rate, which is simply the amount of tax you pay divided by your income.

How Does Marginal Tax Rate Work?

To show how these tax rates work, I’m using the combined federal and Alberta rates for 2015. While your province may have different tax brackets and tax rates, Alberta has a flat provincial tax of 10%, and this will give you an idea of how marginal tax rates work. For the tax rates in your province, you can find all marginal tax rates at TaxTips.ca.

Technically the first tax bracket is $0 to $44,701, but I’ve included the effect on marginal tax rate from the federal basic personal amount of $11,327 and the Alberta basic personal amount of $18,214.

• Up to $11,327 – tax rate of 0%
• $11,327 to $18,214 – tax rate of 15%
• $18,214 to $44,701 – tax rate of 25%
• $44,701 to $89,401 – tax rate of 32%
• $89,401 to $138,586 – tax rate of 36%
• above $138,586 – tax rate of 39%
•  

So if you lived in Alberta and made $44,000, your marginal tax rate would be 25%. But what if you were to get a $5,000 raise? Then you would be in the next tax bracket and paying 32% on that final $4,299. So, as you can see, you aren’t paying the entire 32% on all of your income. You pay the percentage reflected in each bracket, so the first $11,327 isn’t taxed at all. That immediately brings down your effective tax rate. Additionally, as you can see, you only pay the 32% on any income that takes you above the threshold. In this case, you are making $49,000 a year after your raise, but you aren’t paying 32% in taxes on that entire amount.

Knowing this is how you can best work towards reducing your taxes.

Investing In RRSPs Based On Marginal Tax Rate

Sticking with the example above, it might make sense to put the $4,299 into an RRSP since you would get $1,376 back on your tax refund. However, putting any more into an RRSP that year may not be best since you would only get 25% back, not 32%. While getting a 25% tax deduction might sound better than nothing, you need to look at what you expect to earn in retirement. Tax planning requires that you step back and look to the future. Now, if you have more money to save, this is where your TFSA can come in. Make use of your RRSP within your highest tax bracket, but also look to use your TFSAs contribution room as well.

While you would be making $49,000 a year in this example, and will likely make more in future years, you would likely need less money in retirement. With the house paid off, children moved out, and since you no longer need to put money money away for retirement, you may be able to withdraw less than $44,701 (or its equivalent whenever your retire). This is when an RRSP works best, when you can get a a larger tax deduction from contributing and then pay a lower income tax in retirement. It’s important to understand this, since the money you withdraw from your RRSP is considered “regular” income.

Knowing and understanding your marginal tax rate, and how it works, is a key part of long-term financial and tax planning. Take the time to understand, and you will be able to get the most from your RRSP, now and in retirement.

source: canadianfinanceblog.com

India seeks possible US tax violations as row over diplomat's arrest worsens

NEW DELHI -- India has sought details about staff in American schools in the country for possible tax violations and revoked ID cards of US consular officials and their families, retaliatory steps for the arrest of an Indian diplomat in New York.

The measures suggest that the two countries are no closer to a resolution of a diplomatic dispute over the treatment of Deputy Consul General Devyani Khobragade this month on charges of visa fraud and underpayment of her housekeeper.

Khobragade, who has denied the charges, was handcuffed and strip-searched while in custody, sparking outrage in India.

An Indian government official said on Friday that New Delhi had asked the US embassy to provide details about people working in American schools and other US government facilities to determine if they had permission to do so and if they were paying taxes that are mandatory under Indian law.

Diplomats' spouses who take up work in schools or other embassy facilities are supposed to inform the host country.

Violations of this kind had often been ignored, but now India would not turn a blind eye, the official said, speaking on condition of anonymity.

The US embassy declined to comment on the latest steps.

India had also withdrawn some privileges that US diplomats and their families enjoy and would treat them as Indian officials are treated in the United States, the Indian official said.

US Ambassador Nancy Powell has been refused special privileges at New Delhi airport.

"We have said all access is on a reciprocal basis," the government official said. "She is not going to get the benefits that the Indian ambassador in the US doesn't get."

US consular officials and their families have been asked to surrender identity cards that gave them a degree of immunity. Under a new regime, consular officials -- but not their families -- will be given identity cards with fewer privileges.

"Spouses and children have no more immunity. So if there is a parking offence or ... something else happening in Bangalore etcetera, they would be held liable," the Indian official said.

Khobragade was released in New York on $250,000 bail after giving up her passport and pleading not guilty to visa fraud and making false statements about how much she paid her Indian housekeeper. She faces a maximum of 15 years in prison if convicted on both counts.

US Secretary of State John Kerry expressed regret over the case in a phone call to India's national security adviser last week, but India is still demanding that the charges be dropped and that the United States apologize. US prosecutors have defended the investigation against Khobragade and her treatment. Before this diplomatic blowup, US-Indian relations were seen as cordial and improving.

UN accreditation

In a new twist, India now argues that Khobragade was accredited to the United Nations at the time of her detention, giving her immunity from arrest.

She was temporarily moved to India's UN mission in August to help with the workload ahead of the General Assembly session and a visit by the prime minister. A copy of her accreditation, made available to Reuters, lists her as an adviser for a period from August 26 until December 31.

"At no stage we were told by the US side what was going on. We were kept in the dark. A lot of these things could have come out had we been informed then," the official said, explaining that India had not been warned she might be arrested.

According to the UN Manual of Protocol website (www.un.int/protocol/3_6.html), UN accreditation alone does not appear to grant diplomatic immunity, it simply gives Khobragade access to UN headquarters in New York.

The manual says a country's UN ambassador must write to the UN secretary-general to request privileges and immunities for individual diplomats. The United Nations then submits this to the US mission to the United Nations for approval.

Separately, India did ask the United Nations earlier this month for Khobragade to be officially registered as a member of the country's UN mission in the hope she would be granted more sweeping immunity than she was entitled to as India's deputy consul general in New York.

That request has been approved by the United Nations, a UN source said on Monday. A State Department official confirmed that the United States had received paperwork from the United Nations and was reviewing the application.

source: interaksyon.com

New Aussie PM Abbott moves to repeal climate tax

SYDNEY -- Australia's new conservative Prime Minister Tony Abbott Wednesday moved to abolish a carbon tax designed to combat climate change as his first major economic reform since taking office.

Abbott said the September 7 election that he won decisively had been a referendum on the future of the tax, which was imposed by the former Labor government on major polluters from 2012 in a bid to reduce carbon emissions.

"No one should be in any doubt -- the government is repealing the carbon tax in full," he said as he introduced a bill to repeal the tax into parliament. "We are doing what we were elected to do. We have said what we mean and we will do what we say -- the carbon tax goes. It goes."

Scrapping the divisive tax was a central election promise of Abbott who had argued the cost of the levy was passed on to consumers, resulting in higher utility bills and day-to-day costs.

"The intention of the new government is to put power prices down by axing this toxic tax and by using other means to reduce emissions," he said.

"This is our bill to reduce your bills, to reduce the bills of the people of Australia."

Abbott also said the removal of the tax would strengthen the economy of Australia, which is among the world's worst per capita polluters due to its reliance on coal-fired power and mining exports.

The carbon tax had charged the country's biggest polluters for their emissions at a fixed price and was due to transition to an emissions trading scheme.

The new government instead favors a "direct action" plan that includes an incentive fund to pay companies to increase their energy efficiency, a controversial sequestration of carbon in soil scheme, and the planting 20 million trees.

Abbott had earlier been forced to wait for about an hour to move the legislation after Labor, which opposes the dismantling of the tax, stalled proceedings with debate about the government's nickname for opposition leader Bill Shorten.

The prime minister had referred to his opposition counterpart as "Electricity" Bill Shorten during a media interview earlier in the day, a moniker attacked by Labor as "name-calling."

Then as he began to move the bill, Abbott was interrupted by yelling protesters in the public gallery.

"Inaction (on climate) is simply not good enough," shouted one protester, one of more than a dozen removed from the chamber.

The government also introduced a bill to repeal the mining tax -- a levy once proposed as a 40 percent tax on "super profits" within the industry but which was ultimately greatly reduced in size and scope after a backlash from the mining sector.

source: interaksyon.com

US tax probe leaves Swiss bankers afraid to travel: report

GENEVA - As a United States hunt for tax evaders and their accomplices gains momentum, many Swiss bankers are afraid to go abroad for fear of arrest, one business leader said in an interview published Sunday.

"In my opinion, some 1,000 Swiss bankers no longer dare to go to the United States, or even travel abroad," Martin Naville, the head of the Swiss-American Chamber of Commerce, was quoted as saying by Le Matin Dimanche weekly.

Swiss banks and industry representatives are increasingly cautioning bankers who have worked with US clients to refrain from travelling outside Switzerland, the paper reported.

Swiss banks are believed to have accepted tens of billions of undeclared dollars from US citizens, though they now refuse such money, and a number of banks are under US investigation.

The US has not made public which individual bankers it is probing, but according to Le Matin Dimanche, about 30 names are on the list.

Recently however, "the United States has proven it can strike where and when it likes, and now with the help of European countries", the paper wrote, describing widespread paranoia throughout the banking industry.

The report comes just over a week after the arrest in Italy of a former high-ranking UBS executive alleged to have helped US customers conceal their assets.

Raoul Weil, the 54-year-old ex-chairman of UBS's global wealth management service, was indicted by a US federal grand jury in 2008 for his alleged role in overseeing the US cross-border business.

The indictment alleges that Weil and co-conspirators helped US customers hide around $20 billion (15 billion euros) in assets from tax authorities.

The Swiss national, who left UBS after the 2008 indictment, has always denied the charges and is reportedly fighting his extradition from Italy to the US.

The Swiss Bank Employees Association told Le Matin Dimanche it was advising all bankers who have regularly visited clients in the US "to abstain from travelling".

And some Geneva banks are urging employees living on the French side of the border to settle in Switzerland instead to avoid problems, one banker who wished to remain anonymous told the paper.

"I don't even dare leave Zurich anymore," said another unnamed banker, who recently found out his name had been handed to US authorities.

source: interaksyon.com

Huffington Post, international press, fall for hoax Jeane Napoles bathtub pic

MANILA, Philippines - When they ran out of floor space in the bedroom, she said, “we would place it in the bathtub.” Remember that statement made by government witness Gertrudes Luy? She recalled to the Senate Blue Ribbon committee in a recent hearing how employees of JLN Corp., the firm owned by alleged pork barrel queen Janet Lim-Napoles, how they would stash huge sums of money in their boss’s residence at a posh Bonifacio Global City residential tower.

The elder Luy, mother of chief whistleblower Benhur Luy, earlier also gave affidavits to the National Bureau of Investigation team looking into the P10-billion pork barrel scam.

While an earlier video posted by Napoles' daughter Jeane showing off her luxurious surroundings and possessions had already enraged social media weeks before her mother surrendered and was charged, the statement given at the Senate hearing about "bathtubs filled with cash" alone was enough to make people’s imagination run wild.

Apparently, even veterans in the news business were so obsessed with the imagery that even two international websites uploaded a photo of a woman bathing in money. The woman was identified as the controversial young socialite Jeane Lim-Napoles.

U.S.-based online news aggregator Huffington Post, and Australia-based
news website news.com.au ran the story about the young Napoles, but the girl in the photo was not Jeane at all.

The whereabouts of the young woman remain unclear, even though a luxury apartment in LA in her name was placed on the market over a week ago. Last week, the Bureau of Internal Revenue weighed in and filed a case accusing her of evading taxes.

source: interaksyon.com

Lauryn Hill pays tax debt ahead of Monday sentencing, attorney says

NEWARK, New Jersey – Hip hop artist Lauryn Hill, on the eve of her scheduled sentencing on federal tax evasion charges, has paid off the balance of more than $900,000 she owed in back taxes and penalties, her attorney said on Sunday.

The Grammy-winning musician is scheduled for sentencing on Monday in U.S. District Court in Newark, New Jersey on three charges she failed to file tax returns on more than $1.8 million between 2005 and 2007.

She faces up to a year in jail for each charge, but the final sentence is expected to be adjusted based on her repayment of the money, her attorney said.

She owed at least $504,000 in federal back taxes as well as state taxes and penalties that brought the estimated total to more than $900,000.

“Ms Hill has not only now fully paid prior to sentencing her taxes, which are part of her criminal restitution, but she has additionally fully paid her federal and state personal taxes for the entire period under examination through 2009,” her attorney, Nathan Hochman, said in an email.

In April, Hill was admonished by U.S. Magistrate Judge Madeline Cox Arleo for failing to make promised payments on her unpaid taxes ahead of her sentencing.

She had expected to raise the money from a new recording contract last fall but only paid $50,000 when she did not complete the expected tracks, her attorney said.

Her attorney said last month that Hill lined up a loan secured by two pieces of real estate. He said on Sunday that the tax repayment came from a combination of sources but did not include funds from any new record sales.

A new single by Hill, her first in several years, called “Neurotic Society,” was posted on iTunes on Friday.

She posted a link to the song on the social media site Tumblr on Saturday, writing, “Here is a link to a piece that I was ‘required’ to release immediately, by virtue of the impending legal deadline.

“I love being able to reach people directly, but in an ideal scenario, I would not have to rush the release of new music… But the message is still there,” she wrote.

Hill’s 1998 solo album “The Miseducation of Lauryn Hill” won the singer, a former member of the Fugees, five Grammy awards.

Hill is from South Orange, New Jersey.

A spokeswoman for U.S. Attorney Paul Fishman declined to comment on the case, as did a spokesman for the Internal Revenue Service.

source: interaksyon.com

10 Ways to Use Your Tax Refund

In 2012, the average federal tax refund for Americans was $2,800. If you have a big family or a low income, your refund was likely even more than that. Even though you should know about what to expect with your refund, most of us treat it as a windfall. Choosing what to do with this big check may be the hardest financial choice you make all year.

A 2012 survey from the National Retail Federation showed that more Americans than ever were intent on saving their refunds. In fact, 43 percent planned to sock that check away, and about 40 percent planned to pay down debt with their 2012 check.



How will you use your tax refund this year? We’ve got a few ideas to consider:

1. Create an emergency fund

 

If you don’t have an emergency fund, your tax refund is a perfect place to start. Emergency fund recommendations range from $1,000 while you’re paying down debt to six months’ worth of income. Your check from the IRS may be nowhere near the upper end, but it could still be a good start on an emergency fund to help you through potentially rocky times in the next year or two.

2. Pay down debt

 

If you have an emergency fund (or access to cash or credit in an emergency) it’s probably time to focus on paying down debt. Since debt typically costs more than investments earn, now is a great time to pay down debt – especially higher-interest debts that are eating away at your monthly income and potentially lowering your credit score.

3. Buy a home

 

Depending on home prices in your area, your tax refund may be enough to cover a down payment – or at least a big chunk of it. With an FHA loan, you only need a 3.5 percent down payment (plus closing costs), so a $3,000 check could be enough to get an FHA loan on a small home in, for instance, the Midwest. Already have a home? Consider using your refund to buy a HUD home as an investment.

4. Fund a retirement account

 

If you haven’t started a retirement account – or if you just need to catch up on your savings – putting your tax check into a 401(k) or IRA is a great idea. The sooner you fund your retirement account, the more easily you’ll save for your eventual retirement.

5. Upgrade your furniture or appliances

 

If you’re wasting energy because of an inefficient washer-dryer set, or your couch is falling apart at the seams, you may want to use your refund check to buy new furniture or appliances. One advantage here is that you can often negotiate for a discount if you pay in cash – or you can buy lightly used furniture from Craigslist for a fraction of the retail price.

6. Renovate your home

 

Whether you’re getting ready to sell your home or you’re settling in for the long haul, your tax refund is a great way to start renovating. There are so many large and small ways to renovate, some of which can increase your home’s value. One Fox News article advises looking for ways to make your home more energy efficient, increase curb appeal, or improve the look of your kitchen or bathroom.

7. Go on vacation

 

You don’t have to spend a fortune to go on a nice vacation, and a relaxing trip can be the perfect way to rejuvenate yourself for new ventures in the rest of 2013. Whether you decide to backpack in Europe or enjoy a luxury cruise, you can use the web to save when booking your vacation so that your tax check stretches further.

8. Start a side venture

 

Whether you want to turn a hobby into a business or leverage your work experience as a side venture, earning a second income from another business is a great idea. You could start a blog, work as a consultant, or mow grass on summer weekends. Whatever your side venture, you’ll probably need a little capital to get started. Your tax refund is just the place to get it.

9. Take a class

 

Whether you want to enrich your life with a new hobby or knowledge or boost your employability, paying for a class with your tax refund is a great idea. In fact, you may be able to pay for an entire year’s worth of classes at a community college, if you want to work toward a new career field.

10. Give to charity

 

Donating to charity is a great way to boost your own sense of well-being. Plus, you can claim charitable giving on next year’s itemized taxes, so you could get an even better tax break next year.

These are just a few ideas for how to use your tax refund. Are you getting a check from the IRS this year? If so, how do you plan to use it?

source: doughroller.net

Cutting smoking saves more in health bills than lost tax: EU

RUSSELS - The cost and health benefits of getting people not to smoke and better still, not to start, more than outweigh the taxes the tobacco industry pays to governments, the European Commission said Monday.

Irish Health Minister James Reilly, presenting the EU's new draft tobacco law in the European parliament, said smokers paid some 20 billion euros ($26.4 billion) annually in tax but health costs associated with smoking came to 23 billion euros.

On top of that were another eight billion euros in lost production and other costs due to smokers' higher rates of sickness, leading to days off and lower efficiency.

It is a "no-brainer, ethically and economically," Reilly told parliament, dismissing out of hand the argument that tobacco is too important economically to be tampered with.

EU Health Commissioner Tonio Borg made the same point, noting that some 700,000 people die prematurely as a result of smoking each year -- equal to a city about the size of Frankfurt in Germany.

The new tobacco directive, which parliament and all 27 member states will have to approve, aims simply to save those lives, Borg said, adding that the legislation needed to be brought up to date as the industry introduces new products, especially those targeting the young.

"Tobacco should look and taste like tobacco," Borg said, holding up new products brightly colored and looking like lipstick or perfume so as to attract younger people.

Accordingly, the directive stipulates that 75 percent of a cigarette package must carry health warnings, and that certain "characterizing" flavors such as vanilla or menthol be banned.

"My aim is that when people look at a tobacco product they realize that it will damage their health," Borg said.

In January, thousands of tobacconists from across Europe marched on European Union headquarters to protest against the planned directive which will take about three years to come into effect once passed.

source: interaksyon.com

BIR slaps ‘It’s Showtime’ host Ryan Bang with P1.8M tax evasion charge

Comedian and TV host Ryan Bang was charged with tax evasion by the Bureau of Internal Revenue on Thursday.

In its complaint, the BIR alleged that the 21-year-old “It’s Showtime” host owes the government P1.8 million in income and percentage taxes for 2011 and 2012.

Bang, a Korean citizen whose real name is Bang Hyun Sung, has been an ABS-CBN talent since he joined the reality show “Pinoy Big Brother” in 2010.

The amount of P1.8 million, which includes surcharge and interest, was based on tax filings by companies that hired Bang over the two-year period during which he is said to have earned a minimum of P3.05 million.

Bang’s legal counsel, Atty. Joji Alonso, told the ABS-CBN news program “TV Patrol” that her client had yet to see a copy of the complaint, but he would fulfill his financial obligations to the Philippine government.

source: interaksyon.com

6 Changes Coming to Social Security Next Year

Every year, about this time, we start looking to the coming year, and what changes will be coming for our finances. Many aspects of our finances are affected by the changes put into place each year. The IRS announces tax brackets, we learn about new contribution limits on tax-advantaged retirement accounts, and we find out about other benefits, including Social Security.

The coming year, 2013, promises to be interesting on a number of levels. Changes are coming in health care as some of the provisions of the Patient Protection and Affordable Care Act come into play, and as contribution limits — including those on IRAs for the first time in a few years — head higher. There are also quite a few changes coming to Social Security in 2013.

Here are some of the items that you can expect to be different, starting next year:

1. Payroll Tax Cut Means Higher FICA/Social Security Taxes

You probably don’t realize it, but you have been enjoying a tax break. For the last couple of years, there has been a payroll tax cut in place. Instead of paying 6.2% in FICA/Social Security taxes with your paycheck, you have been paying 4.2%. That is money that has been in your paycheck, but won’t be, starting in 2013. (Unless Congress does something about it, of course.)

2. Cost of Living Increase

An announcement of a cost of living increase, amounting to 1.7% has been made. The Social Security Administration makes these adjustments when it feels as though inflation is having an impact. On average, a Social Security check is expected to increase by $21 in 2013.

3. No More Paper Checks

Our society is moving toward a greater integration of technology when it comes to money. The government is on board as well, eliminating paper checks along with the rest of us. Starting on March 1, 2013, the U.S. Treasury will no longer mail checks. You need to arrange for direct deposit to your bank account, or you need to get a Direct Express Debit MasterCard. If you haven’t chosen an option by March, you will receive a pre-paid debit card.

4. Increased Amount of Income Subject to Tax

High earners don’t see their entire income subject to Social Security taxes. Instead, you are only taxed on a certain amount of your earnings. In 2012, earners only paid Social Security taxes on the first $110,100 of income. In 2013, that amount goes up to $113,700. That means that you will pay more in taxes, since a greater portion of your income will be taxed.

5. Higher Earnings Limit

One of the complications associated with receiving Social Security benefits goes along with working while collecting benefits. You are limited as to how much you can earn before you start seeing some of that money withheld from your Social Security payments. For 2013, you can earn up to $15,210 when you are under your full retirement age without penalty.

6. Bigger Maximum Possible Benefit

The longer you wait to collect Social Security, the better your monthly benefit. If you wait until your “full retirement age,” rather than collecting as soon as the government will let you, you can see a better benefit. For 2013, that maximum possible benefit increases to $2,533.

In many cases, these changes are relatively small. However, they add up over time. Be aware of the changes coming to Social Security and make your own adjustments to deal with them.

source: bargaineering.com

2013 Child Tax Credit Drops to $500. Better Get that December C-Section or Inducement Scheduled Now!

A close friend of mine is expecting the birth of their first child towards the end of this year. His wife has an estimated due date of Dec. 29. My advice to them? If you were planning on scheduling a December c-section or inducement, better schedule it now before all of the appointment slots get booked!

Why?

The difference between a December 31, 2012 birth and a January 1, 2013 birth could cost them $1,000 of additional tax liability. And since the child tax credit is scheduled to drop from $1,000 to $500 in 2013, they may never see a $1,000 credit again.





Here’s a bit of history on why this is happening.

The Child Tax Credit Drops in 2013

As part of the Obama tax cut deal reached with Republicans, the previous Bush tax cuts that raised the Child Tax Credit to $1,000 from $500 were extended through 2011 and 2012.

Without further extension (an agreement seems unlikely at this point, but you never know), the child tax credit drops back down to $500 in 2013.

  
What is the Child Tax Credit?

 For those looking for a little more background, the Child Tax Credit allows you to claim a maximum $1,000 per qualified child (as noted, that drops in 2013 to $500).

This is a non-refundable income tax credit, meaning that if your credit exceeds your income tax liability, then you won’t get a check for the difference.

Still, non-refundable credits are great, because they represent a subtraction from your actual tax liability, which is much more valuable than a deduction (which is only a subtraction from your taxable income).

However, if your income is below a certain threshold, you can also claim the ‘Additional Child Tax Credit‘, which allows you to get a refund for the difference if your credit exceeds your tax liability.

Can you Claim the Child Tax Credit in the Year the Child was Born?

What if the child was born in the second half of the year, or even the last day? Can you still claim the child tax credit for that year?

In short, yes. Publication 972 lists this as one of the exceptions in which you can claim the credit.

Child Tax Credit Income Levels & Qualifying Criteria

The Child Tax Credit is limited if your MAGI is above a certain amount. The amount at which this phase-out begins varies depending on your filing status. For married taxpayers filing a joint return, the credit phase-out begins at $110,000. For married taxpayers filing a separate return, it’s at $55,000. For all other taxpayers, the phase-out begins at $75,000.

According to the IRS Child Tax Credit FAQ, a qualifying child for this credit is someone who must also meet the qualifying criteria of six tests: age, relationship, support, dependent, citizenship, and residence. So you’ll want to double-check that your child qualifies before filing for the credit.

There are also tax credits for child care you may want to look in to.

Deep Thoughts by G.E. Handy

So, let me first state that I would not recommend anybody schedule an early inducement or c-section for a January estimated due date just to be able to shave off $1,000 in tax liability. But for those due in mid or late December, holding off until January could cost you $1,000! And that’s why I’d expect a near record number of births the last week of this year, moreso than previous years.

And to that point, it got me thinking some crazy thoughts…

You would have to assume those that are aware of this special tax scenario are on top of their finances. And they are probably fairly intelligent, or well educated on top of that. Which makes me wonder:

    

Do babies born in the last week of December have a higher average IQ than those born in other weeks of the year?

What is the average income of the households they are born into vs. other weeks of the year?

Ponder those deep thoughts for a moment…

source: 20somethingfinance.com

Tax Test

NEW YORK, New York, United States — As Filipinos paid their income taxes this April, some employees in the middle-income bracket may have found themselves paying at a higher tax rate than their wealthier bosses, a number of whom derive income not from salaries but from investments in stocks and time deposits, which are levied lower final taxes and are not included in the computation of the taxable income. The labor force also sees how professionals and entrepreneurs are able to take advantage of tax avoidance mechanisms, resulting in the bulk of the government’s income tax collection coming from the salaried workers rather than the obviously richer class despite the heightened and high profile tax collection campaign of the Bureau of Internal Revenue.

This inequity in the tax system is not unique for the Philippines. Here in the United States, the New York Times reports that President Barack Obama and his wife Michelle had adjusted gross income of $789,674 in 2011 and paid just over 20% ($162,074) of it in federal taxes. Mr. Obama’s secretary, Anita Decker Breckenridge paid a slightly higher tax rate than her boss in 2011 on a salary of $95,000.

The presumptive Republican presidential candidate Governor Mitt Romney and his wife have filed with the Internal Revenue Service for a six-month extension to file his 2011 return although in January, upon prodding by his Republican rivals, he did release documents showing an estimated $20.9 million in 2011 income and payment of $3.2 million in taxes for an effective tax rate of 15.4%.

A survey by the New York Times and CBS News Poll conducted April 13-17 based on telephone interviews showed that a majority of voters say upper-income Americans pay less than their fair share of taxes, while half say capital gains and dividends should be taxed at the same rate as income from work. These strong sentiments are giving support to the proposed “Buffet Rule,” a minimum tax for the wealthiest Americans. Mr. Warren Buffet, an American billionaire, had testified in congressional hearings that he is doing well, does not need tax loopholes and could afford to pay more taxes as he assumed others similarly situated as him could also do.

During hard times like what the United States is going through, proposals like the “Buffet Rule” easily get popular support. Many will not accept the concept that a robust stock market helps raise capital for enterprises that then generate jobs and have a multiplier effect on the country’s economy. Others will not easily go with the thinking that saving the US financial institutions and banks with government funds was necessary to stabilize the financial and banking system so essential to trade and business. What the taxpayers see are the still extravagant compensation of the top executives of bank and financial institutions and the still higher incomes these companies have been making since the government bailout.

Before this mindset takes root in the Philippines, the banking and financial industry must launch an information drive to make clear to the public how the Philippine stock market operates to encourage investments and job creation rather than just a convenient pool for rich Filipinos to park funds and earn more income at very low final tax rates. The banks have to show how their low cost deposits are being channeled to productive sectors of Philippine economy which result in increased employment.

Unless the tax system in the Philippines passes the test of fairness and equity, tax reforms could become a major issue in the coming senatorial elections as it has become in the US presidential campaign.

Business Bits. Contrary to popular belief, I am finding out that New Yorkers are most considerate, thoughtful, and friendly, at least the ones I have met so far.

source: mb.com.ph

BIR loses P600M tax case against Petron

BAGUIO CITY -- The Bureau of Internal Revenue (BIR) has lost a P600-million tax case against multinational oil company Petron Corp. (Petron).

In a ruling promulgated on March 21, 2012 but was released to the media on Tuesday, the SC, through Associate Justice Maria Lourdes Sereno, dismissed the appeal filed by the BIR for lack of merit.

The BIR elevated the case to the SC after the Court ofBureau of Internal Revenue (CTA) en banc reversed its Second Division ruling ordering Petron to pay P600,769,353.95 as deficiency excise taxes for 1995 to 1998, including surcharges and interest plus 25 percent surcharge and 20 percent delinquency interest per annum.

In its petition, the BIR said that Tax Credit Certificates (TCCs) from various Board of Investments (BOI) entities assigned to Petron covering taxable years 1995 to 1998, which Petron used in the payment of its excise taxes had been cancelled by the Department of Finance (DOF) pursuant to DOF EXCOM Resolution No. 03-05-99 for having been "fraudulently issued and transferred."

In its 2007 decision, the CTA Second Division directed Petron to pay BIR P600,769,353 in deficiency excise taxes for subject years.

However, the CTA en banc said that Petron was a "transferee in good faith," had no participation in the issuance and transfer of the TCCs, and could not be held accountable for the cancelled TCCs.

In its decision, the SC echoed the CTA en banc's ruling that Petron is a "transferee in good faith and for value of the subject TCCs."

"From the records, we observe that the BIR had no allegation that there was a deviation from the process for the approval of the TCCs, which Petron used as payment to settle its excise tax liabilities for the years 1995 to 1998," the SC said.

"We agree with the pronouncement of CTA en banc that Petron has not been shown or proven to have participated in the alleged fraudulent acts involved in the transfer and utilization of the subject TCCs. Petron had the right to rely on the joint stipulation that absolved it from any participation in the alleged fraud pertaining to the issuance and procurement of the subject TCCs," it said.

"The joint stipulation made by the parties consequently obviated the opportunity of the BIR to present evidence on this matter as no proof is required for an admission made by a party in the course of the proceedings. Thus, the BIR cannot now be allowed to change its stand and renege on that admission," the SC said.

source: interaksyon.com

Noda says he will stake career on consumption tax bill

TOKYO — Prime Minister Yoshihiko Noda said Friday he is staking his political career on doubling the consumption tax to 10% as the cabinet approved a revised bill, overcoming an earlier scare after the head of a coalition partner said it may leave the government over the issue.

The agreement is a step closer to a deal the government says will help rein in Japan’s gigantic public debt, but it is still likely to face a rocky road with opposition to the unpopular tax hike both inside and outside the ruling Democratic Party of Japan (DPJ).

Noda is playing a balancing act between keeping his fragile coalition together and seeing through the bill’s passage.

Noda has warned that the future of the world’s third-largest economy rests on tackling its public debt while financing an increasingly expensive social welfare system.

“We must create a society in which people can be assured that tomorrow will be better than today,” he told a press briefing Friday. “I will stake my political career to achieve the goal.

“We must weigh the sustainability of social security. Everybody has fears about their post-retirement years. We must remove these fears and that is the most important point of this reform.

“Now it is time for the whole Diet to make a decision without any postponement, strictly for the benefit of people.”

The bill was Friday sent to the lower house, which will ultimately pass the legislation or shut it down—a process expected to take several months.

A group of DPJ lawmakers is threatening to vote against it, due mainly to worries that a tax increase would derail Japan’s uncertain economic recovery.

The DPJ’s former head and major political power broker Ichiro Ozawa, who leads the party’s anti-tax group, told local media that he “can’t support a simple tax hike.”

“If Mr Noda pushes for a publicly unpopular tax hike, his party support base will disappear,” Ozawa was quoted as saying.

The opposition, which controls Japan’s upper house, is also unhappy with the bill and could scupper its passage.

The law would see the consumption tax rise from 5% to 10% by 2015.

The expected rise in government revenue is earmarked to cover Japan’s snowballing social welfare costs, including public pensions and a universal health insurance system in a country that boasts one of the world’s highest life expectancy rates.

Only about 40% of what the government currently spends comes from taxes.

The rest is financed by borrowing, leaving Japan’s debt at more than double gross domestic product, dwarfing troubled Greece, with analysts warning that only higher tax revenue or spending cuts can bridge the gap.

source: japantoday.com