Jeffrey B. Kahn, Esq. and Gary Sussman Discusses the Lifetime Estate Gift Annuity, the Building Blocks to Financial Security and the “Victory Tax” On ESPN Radio – Podcast

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Oil Price Impact On Saudi Arabia, Newest IRS Scam and Taxes On ESPN Radio Podcast

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Oil Price Impact On Saudi Arabia, Newest IRS Scam and Taxes On ESPN Radio – June 3, 2016 Show

Topics Covered:

  1. Meet Our Guest Of The Day: Ed Quinlan, Market President of Corporate Alliance.
  2. Oil Change: Affluent Saudi Arabia Goes to Work
  3. IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”
  4. Questions from our listeners:
    a. My spouse passed away last year, and I will be filing a joint return. How should I file, how should I sign, and are there any special notations required to indicate my spouse is deceased?
    b. How do I sign my tax return when I e-file?

****************************************************************************

Jeff states: Good afternoon! Yes sometimes we just have to take the money and run!

Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:

And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: Oil Change: Affluent Saudi Arabia Goes to Work.

Windus states:

Also coming up is:
Segment 3 material: IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”.
And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Windus states: Let’s introduce you to today’s guest:

Ed Quinlan, Market President of Corporate Alliance. Email: eq@corporatealliance.net
Questions:

a. Describe your primary everyday responsibilities as a Market President.
b. What type of background do you look for in a prospect you’re looking to recruit?
c. Would you consider “communication disconnect” the number one deficiency that corporations face?
d. What would your plan of attack be, going in to consult for a business that is lacking highly productive individuals?
e. What are some good examples of creating continuous learning environments for associates?
f. What do you find is the most difficult aspect of customer retention?

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you about how the oil change is making affluent Saudi Arabia go to work.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And be aware of the special offer that Windus has for you: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Oil Change: Affluent Saudi Arabia Goes to Work

http://www.wsj.com/articles/oil-change-affluent-saudi-arabia-goes-to-work-1464716895;
http://www.bloomberg.com/news/articles/2016-06-01/saudis-said-to-seek-restoration-of-opec-unity-after-doha-failure-iowrk295

1. Saudi Arabia’s leadership has taken up the challenge of weaning the kingdom from its dependence on oil
a. Deputy crown prince’s urgent plan to wean kingdom from petroleum will mean deep changes in a conservative society long accustomed to handouts
2. Dismantling the world’s biggest petro-state
a. a key part of the government’s economic strategy is to replace foreign workers with Saudis displaced from down-sizing oil conglomerates
3. Prince Mohammed bin Salman
a. Deputy crown prince, second in line to the throne
b. Runs all economic and domestic policy
c. Runs the country’s military
d. Launched a historic effort to remake the conservative, change-averse kingdom
4. History of a developed kingdom
a. Crude was first discovered there in 1938
b. Developed into one of the quintessential economic constructs of the oil age
c. Billions of barrels of crude oil, pumped and sold to the world, have forged its politics and economy
5. Saudi citizens benefit from oil
a. Citizens have enjoy deeply discounted gasoline, water and electricity
b. Subsidized housing
c. Health care and education(including stints studying abroad) are paid for by the government
d. No taxes
e. Businesses have depended on cheap energy and ready access to cheap foreign labor
6. Demographics are overwhelming the petrostate
a. Social compact is breaking down
b. Declining oil prices
c. By 2030, the number of Saudis over the age of 15 will likely increase by about six million
i. At least 4.5 million new eligible workers into the labor force
ii. Even more if women begin working in larger numbers
iii. Doubling the size of the adult population
d. Stretching the kingdom’s cradle-to-grave system of handouts and subsidies to the breaking point
i. Requires the creation of almost three times as many jobs as the country generated
e. Sales, repair and low-level management jobs have long been filled by foreign workers
i. Inexpensive
ii. Willing to work long hours
7. The Response
a. Government envisions a broad diversification of the economy beyond crude exports
b. Privatize chunks of many government companies
c. Expanding more aggressively into higher-value refined products such as gasoline and petrochemicals
d. Developing a tourist industry
e. Building a manufacturing base
8. Develop tourism
a. An industry the government has struggled with
b. Holy city of Mecca draws tens of millions of visitors annually during the hajj pilgrimage
i. Saudi construction companies have made fortunes building new luxury hotels and shopping malls
ii. Muslim holy cities remain off limits to non-Muslims
c. The kingdom still doesn’t issue tourist visas, but the government says it plans to start a tourist visa program soon
d. Some tourism boosters would like to turn the country into a year-round destination
i. Capitalizing on archeological treasures
ii. Scuba diving
iii. A variety of government-supported efforts to restore historic homes
1. New projects teach restoration
2. Carpentry skills
9. Biggest challenge for the kingdom’s overhaul of the petrostate
a. The flood of oil dollars tends to drive up the price for Saudi labor
b. Exports too costly to compete in foreign markets
c. “about wealth creation” for business owners, not “economic value creation”
i. Neither encourage innovation
10. Ministry of Labor and Social Development
a. The ministry has launched a nationwide media campaign to complete “Saudization” by September
b. Decided to replace all foreigners who work in shops for sales and maintenance of mobile phones with Saudi nationals
c. New ban on foreign workers will create more than 20,000 job opportunities for locals
d. 19,084 men and women have been trained and are ready to take jobs in the sales, customer service and basic maintenance of mobile phones
e. Force most retail outlets to close by 9 p.m. instead of 11 p.m. or midnight, to make retail jobs more attractive to Saudis because it will allow them to finish work early enough to return home to spend time with their families
11. Segments of Saudi society are expressing unease
a. Skeptical that the government will be able to train enough people in time to make the plan work within the deadline
b. The sector has been controlled by foreigners for many years
c. Limits on store hours are impractical
i. Forced to close five times a day for prayer
ii. Temperatures are often blazing hot during the day
iii. Most people prefer to shop and run errands in the evening
d. Government goal = bring more Saudi women into the workforce
e. Kingdom’s arch-conservative clerical class aggravated over the government’s efforts to expand women’s participation in the public workplace
f. Young Saudis have over the years acquired a reputation of looking down on manual work
12. Innovation Center at King Fahd University for Petroleum and Minerals
a. The center has forged tie-ups with multinational companies
i. General Electric Co.
1. Invest at least $1.4 billion
2. Double its workforce in the kingdom to 4,000 by 2020
3. onglomerate plans to team up with two partners, including Aramco, to build a $400 million manufacturing facility for the energy and marine sector
ii. China’s Sinopec
b. Has developed dozens of new patents
c. 90 new products, including a water purification process
d. The university’s business incubator is developing case studies in Arabic
i. tap into the youngest members of some of the kingdom’s prominent merchant families

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Stay tuned because we do not want you to be a victim to the newest IRS scam variation involving a bogus “Federal Student Tax”.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

And be aware of the special Offer that I have for you: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

IRS Warns of Latest Scam Variation Involving Bogus “Federal Student Tax”

Windus states: Scam artists exploiting innocent law-abiding taxpayers has been a big problem for the IRS and despite issuing multiple consumer alerts, the bogus emails, the bogus IRS letters and the bogus telephone calls continue and unfortunately taxpayers are still falling for this.

Jeff states: Every week our office receives about a half-dozen inquiries from taxpayers asking whether the communication they just received is really from the IRS. Scam artists have been coming up with new creative ways to lure victims. I do not want you to become the next victim of any such scam so listen carefully to what we have to say.

Amy states: In the latest scheme taxpayers are receiving bogus phone calls from IRS impersonators demanding payment for a non-existent tax, the “Federal Student Tax.” The scammers look to target students and try to convince them to wire money immediately to the scammer. If the victim does not fall quickly enough for this fake “federal student tax”, the scammer threatens to report the student to the police.

Amy continues: Scam artists frequently masquerade as being from the IRS, a tax company and sometimes even a state revenue department. Many scammers use threats to intimidate and bully people into paying a tax bill. They may even threaten to arrest, deport or revoke the driver’s license of their victim if they don’t get the money.

Jeff states: Some examples of the varied tactics seen this year are:
• Demanding immediate tax payment for taxes owed on an iTunes gift card.
• Soliciting W-2 information from payroll and human resources professionals.
• “Verifying” tax return information over the phone.
• Pretending to be from the tax preparation industry.

Windus states: The communication methods used by the scammers are email, letters and telephone calls. The scammers are still going strong doing this to people who are unsuspecting and don’t know how systems work and could very easily frighten them to turn over money. So with my two top tax attorneys we are going to break down each type of fraudulent communication for you and give you the warning signs and tips that you should be aware of.

Windus asks: Amy please tell us what people should be aware about emails.

Amy states: When identity theft takes place over the Internet, it is called phishing. Phishing (as in “fishing for information” and “hooking” victims) is a scam where Internet fraudsters send e-mail messages to trick unsuspecting victims into revealing personal and financial information that can be used to steal the victims’ identity. Current scams include phony e-mails which claim to come from the IRS and which lure the victims into the scam by telling them that they are due a tax refund.

Jeff states: Remember, too, the IRS does not use unsolicited email, text messages or any social media to discuss your personal tax issue so if this is the form of communication used – avoid it like you would avoid the plague.

Windus asks: Amy please tell us what people should be aware about letters.

Amy states: If you receive a notice regarding your taxes which does not bear the official seal of the Internal Revenue Service and an official verifiable address of an IRS office or Service Center, that is a sign that it really isn’t the IRS sending you a notice.

Jeff states: Another scam that the public has told our office involves a sophisticated fraudulent tax collection notice scam targeting taxpayers for which the IRS has filed a Federal Tax Lien.

Jeff continues: Here is how it works: The scammers will search public records for the filing of a Federal Tax Lien by IRS and with the information gathered from that filing will generate a form letter and mail it to the targeted taxpayer. The letter is designed to mimic an IRS notice but it is really coming from a third party having nothing to do with the IRS. If the recipient of the notice contacts the number listed, the person answering your call will purport to be working for the IRS. The intended victim is told he or she owes money to the IRS and it must be paid promptly through a pre-loaded debit card or wire transfer. If the victim refuses to cooperate, he or she is then threatened with arrest, deportation or suspension of a business or driver’s license. In many cases, the person who answered your call becomes hostile and insulting.

Windus asks: Amy please tell us what people should be aware about the telephone.

Amy states: These callers may demand money or may say you have a refund due and try to trick you into sharing private information. These con artists can sound convincing when they call. Scammers use fake names and IRS badge numbers. They generally use common names and surnames to identify themselves. They may know a lot about you and may be able to recite the last four digits of a victim’s Social Security Number and your place of business. They usually alter the caller ID to make it look like the IRS is calling – many times they will use a Washington, D.C. area code. The area codes for the Washington D.C. area are 202, 301 and 703. They will also background noise of other calls being conducted to mimic a call site. If you don’t answer, they often leave an “urgent” callback request and if they have your email address, will send bogus IRS emails to some victims to support their bogus calls. After threatening victims with jail time or driver’s license revocation, scammers hang up and others soon call back pretending to be from the local police or DMV, and the caller ID supports their claim.

Windus asks: How do you recognize that this call is fake?

Amy states: Here are five things the scammers often do but the IRS will not do. Any one of these five things is a tell-tale sign of a scam. The IRS will never:
1. Call you about taxes you owe without first mailing you an official notice.
2. Demand that you pay taxes without giving you the opportunity to question or appeal the amount they say you owe.
3. Require you to use a specific payment method for your taxes, such as a prepaid debit card.
4. Ask for credit or debit card numbers over the phone.
5. Threaten to bring in local police or other law-enforcement groups to have you arrested for not paying.

Jeff states So what should you do?

Amy states: If you get a phone call from someone claiming to be from the IRS and asking for money, here’s what you should do:
If you know you don’t owe taxes or have no reason to believe that you do, report the incident to the Treasury Inspector General for Tax Administration at 1.800.366.4484.

Jeff states: And if you do owe taxes and you have not already resolved this with the IRS, then that is where we come in.

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Ed since you are today’s guest, we will let you pull this week’s questions for us to answer?

Sharon from Del Mar asks: My spouse passed away last year, and I will be filing a joint return. How should I file, how should I sign, and are there any special notations required to indicate my spouse is deceased?

Answer:
• Across the top of the return – above the area where you enter your address, write “Deceased,” your spouse’s name, and the date of death.
• When you are a surviving spouse filing a joint return and a personal representative has not been appointed, you should sign the return and write “filing as surviving spouse” in the signature area below your signature.
• A tax return for a decedent can also be filed electronically. Follow the specific directions provided by your preparation software for proper signature and notation requirements.
Note: You cannot file a final joint return with your deceased spouse if you as the surviving spouse remarried before the end of the year of death. The filing status of the decedent in this instance is married filing separately.

Cindy from San Diego asks: How do I sign my tax return when I e-file?

Answer:
You can sign your tax return electronically by using a Self-Select PIN, an Electronic Filing PIN, or a Practitioner PIN.
Self-Select PIN – Using the Self-Select PIN method, allows you to electronically sign your individual income tax return by selecting a five-digit personal identification number (PIN). The PIN can be any five numbers (except all zeros) that you choose to enter as your electronic signature PIN.
If you are filing a joint return, each spouse uses his or her own PIN. As part of the authentication process, each taxpayer also enters his or her date of birth and either his or her:
• Original prior year adjusted gross income (AGI)
• Prior year PIN, or
• Temporary PIN obtained using the Get Your Electronic Filing PIN Web tool
If you need to know the eligibility requirements or you cannot locate your prior year AGI or prior year PIN, see Self-Select PIN Method for Forms 1040 and 4868 Modernized e-File (MeF).
Electronic Filing PIN – The Electronic Filing PIN (EFP) is a temporary number issued by the IRS Web application. If you need an EFP, access the Get Your Electronic Filing PIN application or call 866-704-7388. You will have to follow the provided instructions in order to receive your PIN. As a reminder, this number changes every year.
Practitioner PIN – The Practitioner PIN is a method that does not require a prior AGI amount or prior year PIN. When using this method, you must always appropriately sign a completed signature authorization form such as the Form 8879, IRS e-file Signature Authorization. Under this method, you may either enter your own PIN into the return or authorize your Electronic Return Originator to select and enter your PIN. If you use the Practitioner PIN method and enter your own PIN in the electronic return record after reviewing the completed return, you must still appropriately sign the signature authorization form.

Jeff states: Well we are reaching the end of our show. Ed thank you for joining us.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

Where’s My Refund? Filed your tax return and still have not received your refund check from the IRS?

Where’s My Refund?, Discussing Taxes, Human Resource Issues, Investing, and the IRS On ESPN Radio – Podcast

Where’s My Refund? Discussing Taxes, Human Resource Issues, Investing, and the IRS On ESPN Radio – Podcast  & Transcript – May 27, 2016 Show

Topics Covered:

1. Interview with Ms. CJ Westrick, SPHR the Founder and Primary Consultant of HR Jungle – what you need to know about running your human resources.

2. What Would Mom Buy?

3. Where’s My Refund?

4. Questions from our listeners: What does it cost to invest in a fund – and do I need to understand stock, bond or money markets before I invest? What types of mutual funds are available?

*******************************************************************

Windus states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
My co-host, Board Certified Tax Attorney, Jeffrey B. Kahn, is out on assignment and so I will be leading today’s show.

Windus states:

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Windus states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Windus states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Windus states:

For today’s show we have coming up:

Segment 2 material: What Would Mom Buy??

Windus states:

Also coming up is:

Segment 3 material: Where’s My Refund?

And of course towards the end of our show, we will be answering some of your questions.

Windus states: Let’s introduce you to today’s guest:

Ms. CJ Westrick, SPHR the Founder and Primary Consultant of HR Jungle. Questions:

a. How do I apply for a FEIN?
b. What other types of business licenses or paperwork would a first time employer recruiting their initial employees need before hiring?
c. How do I make my business Compliance friendly with Employment laws?
d. What type of training is mandatory to new employees in the state of California?
e. When promoting current employees to Supervisory or Management positions, is there additional mandatory training? Or is their primary employee training enough?
f. How do you motivate employees to work harder without pressuring or over-stressing your staff?
g. An employee just isn’t working out, and you have to let them go. What type of documentation do you need to terminate? Paper trail? How do you terminate properly?
h. What is the minimum hourly wage in California? Is there a minimum exempt salary?
i. What are some examples of the top perks of working for companies that supplement on-the-job happiness factors in lieu of pay increases?
j. What are the updates to the Fair Employment and Housing Act? How does this affect Pregnancy Disability Leave?

Well it’s time for a break but stay tuned because we are going to tell you An Investor’s Credo to Live By: What Would Mom Buy?

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

An Investor’s Credo to Live By: What Would Mom Buy?

http://blogs.wsj.com/moneybeat/2016/05/13/an-investors-credo-to-live-by-what-would-mom-buy/

Windus: Don’t you think its high time individual investors had their own equivalent of a Bill of Rights?

Windus states: Earlier this month in a full page Wall Street Journal ad, eight pension funds requested that asset management firms sign a code of conduct, committing them to treating clients fairly.

This effort is already ten years in the making, but it still has a substantial way to go. First introduced in 2006, and sponsored by the CFA Institute (a not for profit association of financial analysts), the Asset Management Code of Professional Conduct asks investment firms to be ‘prudent, honest and ethical’.

Windus states: Think that’s not a lot to ask for? While 1,300 firms worldwide have adopted the code, tens of thousands more have not.

Probably the biggest reason investment firms tend to opt out of adhering to the voluntary code, is the long list of mandatory disclosures and other requirements already enforced by regulators.

Windus replies: Even still, some of the leading investors in the world are unimpressed with current regulations and believe that standards should be raised.

Michael McCauley is the senior officer for investment programs at the $170 billion Florida State Board of Administration and signatory of the conduct code. He agrees that, “if you have a firm that is adhering to the code, all else being equal, you’re less likely to have ethical missteps and systematic problems there.”

Windus continues: Furthermore, if half of all investors are not confident enough in a firm to recommend them to another, there is a substantial deficiency in ethical standards. A recent survey polling more than 3,800 investors in North America, Europe and Asia shows that only 51% of private investors and 41% of institutional investors were “very” or “extremely” likely to recommend an investment firm to another.

Even Paul Smith, the president of the CFA Institutes feels “the underlying reason is that the person on Main Street does not believe in the pit of their stomach that the industry is set up to benefit them.”

Windus continues: When it comes down to it though, what should this individual investor’s Bill of Rights look like??

To begin with: Asset Managers Shouldn’t Over Charge. These days, asset management companies are reaping net profit margins in excess of 25%. The investment research firm, Morningstar has reported only 7.3% of US stock funds charge 0.5% or less in annual expenses, whereas 56.7% charge more than 1%.

Windus replies: Greater than three-quarters of all stock funds charged no more than 0.5% in annual expenses, back in 1960. Even less than one-tenth charged more than 1%.

More surprising yet, asset-management companies ran an average of 18% net profit margin back then. Don’t you think we can afford to cut fees at today’s level?

Windus replies: The fact is, cutting fees may not only be the responsible thing to do, but may also be a matter of survival for asset managers. Running from high fees, investors continue to pull money from high-cost mutual funds in order to save a buck in cheap, market-tracking index funds.

In addition to cutting fees: Asset Managers Shouldn’t Outgrow Their Capacity to Do a Good Job.

Windus replies: Firms tend to lay focus on funds that are at their hottest returns. The influx of investments in areas such as small stocks, high-yield bonds and emerging-market securities, with high trading costs and hard to find bargain-investments, the sudden jump in activity sometimes makes it impossible for the manager to match past performance.

Then what are you supposed to do? An investment does well, you spread word to promote it and make your clients money, and then the rush of popularity comes too fast for the firms to manage. What are you supposed to do, stop taking new investments?

Windus replies: The best way to put it is, “it’s like running a clothing store and locking the doors as soon as word finally gets out among all the customers in town that your stuff is really good!” Or at least that’s how John Montgomery see it, chairman of Bridgeway Capital Management, a $6 billion investment firm in Houston. He’s had to close several funds to new investors over the years.

Realistically speaking, a firm shouldn’t launch a new portfolio without notification of how much money they can efficiently manage in that strategy, beforehand. Which entails, when they do reach that predesigned level, they need to refrain from taking in any additional business.

Windus states: Number three of four of the investors’ Bill of Rights: Firms Shouldn’t “Backtest” With Abandon.

“Backtesting” is when asset managers try various different strategies to see what would have worked best in the past.

Windus replies: In this case, asset managers would act with this data and introduce said prevailing strategy without any regard to disclosing how many others they tried.

Without this disclosure, a client would have no way of knowing how many other approaches a manager considered before making their decision. In other words, no way of knowing if the strategy was a “statistical fluke”.

Windus states: Plainly speaking, without listing the number of other strategies they’ve considered before rejecting, a firm should never offer backtested portfolios. This includes information regarding which data and time periods they’ve used for running tests.

Finally: Asset Managers Shouldn’t Market Portfolios They Wouldn’t Invest In Themselves.

Windus states: Mom always said, “Treat other’s the way you want to be treated.” Words to live by in my opinion. Now what we’re inferring, runs along the lines of the acronym “WWJD”, but instead reads “WWMB” (what would mom buy?).

The Wall Street Journal put it best with the statement, “If an investment manager wouldn’t want his or her mother to buy a new portfolio, then it has no business being sold to the investing public, either.”

Windus states: Granted, we’re not looking at the investment appeal of the past, just the acting ethically. The investment world is still looking toward the future and its appeal to millennials. Whether it be exchange-traded funds specializing in organic food producers, developers of drone technology or marketers or products with special appeal to the nest generation. What to learn more?? Give me a call and…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Have you been asking where’s my refund? Stay tuned because after the break we are going to tell you how to find the answer.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Licensed Financial Planner, Windus A. Fernandez Brinkkord and Board Certified Tax Attorney, Jeffrey B. Kahn.

Calling into the studio from Walnut Creek is Jeff’s associate attorney, Amy Spivey.

Chit chat with Amy

Windus states: And to remind our listeners of Jeff’s offer: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in downtown San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Where’s My Refund?

Windus states: So you filed your income tax return which showed an overpayment and you requested a refund. Most people knowing that they have money coming back to them have probably figured how they are going to spend that money.

Amy states: The IRS issues more than 9 out of 10 refunds in less than 21 days. However, it’s possible your tax return may require additional review and take longer. The IRS has a tool on its website called Where’s My Refund? This link has the most up to date information available about your refund. The tool is updated no more than once a day so you don’t need to check more often.

Amy continues: You can use Where’s My Refund? to start checking on the status of your return within 24 hours after the IRS has received your e-filed return or 4 weeks after you mail a paper return. Where’s My Refund? has a tracker that displays progress through 3 stages: (1) Return Received, (2) Refund Approved and (3) Refund Sent.

Amy continues: You will get personalized refund information based on the processing of your tax return. The tool will provide an actual refund date as soon as the IRS processes your tax return and approves your refund.
Windus asks: Will calling the IRS help a taxpayer get his refund any faster?

Amy replies: Calling the IRS will not speed up your refund. The IRS phone and walk-in representatives can only research the status of your refund if it has been 21 days or more since you filed electronically, more than 6 weeks since you mailed your paper return, or Where’s My Refund? directs you to contact the IRS. If the IRS needs more information to process your tax return, the IRS will contact you by mail.

Windus asks: Will ordering a transcript help you determine when you’ll get your refund?

Amy replies: No, a tax transcript will not help you determine when you will get your refund. This is among the common myths and misconceptions that are often repeated in social media. The codes listed on tax transcripts do not provide any early insight into when a refund will be issued. The best way to check on your refund is by visiting Where’s My Refund?  While transcripts include a lot of detailed information regarding actions taken on your account, the codes do not mean the same thing for everyone and they do not necessarily reflect how any of these actions do or do not impact the amount or timing of your refund. IRS transcripts are best and most often used to validate past income and tax filing status for mortgage, student and small business loan applications and to help with tax preparation.

Windus asks: What if the refund is different than the amount reflected on the tax return that was filed?

Amy replies: If you owe past-due federal tax, state income tax, state unemployment compensation debts, child support, spousal support, or certain federal nontax debts, such as student loans, all or part of your refund may be used (offset) to pay the past-due amount. Offsets for federal taxes are made by the IRS. All other offsets are made by the Treasury Department’s Bureau of Fiscal Services (BFS). For federal tax offsets, you will receive a notice from the IRS. For all other offsets, you will receive a notice from BFS. To find out if you may have an offset or if you have any questions about it, contact the agency to which you owe the debt. Another reason your refund amount may be different is if the IRS made changes to your tax return that changed your refund amount. In this case you will get a notice in the mail from the IRS explaining the changes.

Windus asks: What if you filed a joint return and you are not responsible for your spouse’s debt, are you entitled to request a portion of the refund back from the IRS.

Amy replies: Yes, you may file a claim for this amount by filing Form 8379 (PDF), Injured Spouse Allocation. The IRS can process your Form 8379 before an offset occurs. If you file Form 8379 with your original return, it may take 11 weeks to process an electronically-filed return or 14 weeks if you filed a paper return. If you file the Form 8379 by itself after a joint return has been processed, then processing will take about 8 weeks.

Amy continues: When filing Form 8379 by itself, you must show both spouses’ social security numbers in the same order as they appeared on your joint income tax return. You, the injured spouse, must sign the form. Follow the instructions on Form 8379 carefully and be sure to attach the required Forms W-2 and 1099 showing federal income tax withholding to avoid delays. Do not attach the previously filed joint tax return to the Form 8379 when filing it by itself. Send Form 8379 to the Service Center where you filed your original return and allow at least 8 weeks for the IRS to process your request. The IRS will compute the injured spouse’s share of the joint refund. If you lived in a community property state during the tax year, the IRS will divide the joint refund based upon state community property law. Not all debts are subject to a tax refund offset. So to determine whether an offset will occur on a debt owed you should check with a tax professional.

Windus asks: What if one is counting on my refund for something important? Can he or she expect to receive it on time?

Amy replies: Be careful not to count on getting your refund by a certain date to make major purchases or pay other financial obligations. Many different factors can affect the timing of your refund after the IRS receives it for processing. Even though the IRS issues most refunds in less than 21 days, it’s possible your tax return may require additional review and take longer. Also, if you are anticipating a refund, take into consideration the time it takes for your financial institution to post the refund to your account, or for mail delivery.

Windus asks: What if my return included a request for a refund of tax withheld on a Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding. When can I expect my refund?

Amy replies: If you requested a refund of tax withheld on a Form 1042-S Foreign Person’s U.S. Source Income Subject to Withholding by filing a Form 1040NR U.S. Nonresident Alien Income Tax Return, we will need additional time to process the return. Please allow up to 6 months from the original due date of the 1040NR return or the date you actually filed the 1040NR, whichever is later to receive any refund due.

Windus asks: Is direct deposit of your refund the best option?

Amy replies: Eight in 10 taxpayers get their refunds faster by using e-file and direct deposit. The IRS claims it is the safest, fastest way to receive your refund and is also easy to use. Just select it as your refund method through your tax software and type in the account number and routing number. Or, tell your tax preparer you want direct deposit. You can even use direct deposit if you are one of the few people still filing by paper. Be sure to double check your entry to avoid errors.

Amy continues: Your refund should only be deposited directly into accounts that are in your own name; your spouse’s name or both if it’s a joint account. No more than three electronic refunds can be deposited into a single financial account or pre-paid debit card. Taxpayers who exceed the limit will receive an IRS notice and a paper refund. Whether you file electronically or on paper, direct deposit gives you access to your refund faster than a paper check.

Windus states: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in downtown San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Thanks Amy for calling into the show. Amy says Thanks for having me.

Windus states: Stay tuned as we will be taking some of your questions. You are listening to Licensed Financial Planner, Windus A. Fernandez Brinkkord and Board Certified Tax Attorney, Jeffrey B. Kahn, on Inside Advantage on ESPN.

BREAK

Windus states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call Jeff’s office to make an appointment to meet with him right here in downtown San Diego or at one of his other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

If you would like to post a question for us to answer, you can go to Jeff’s website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

Sandy from San Diego asks: What does it cost to invest in a fund – and do I need to understand stock, bond or money markets before I invest? What types of mutual funds are available?

Windus responds.

Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

IRS hiring hundreds of new agents

IRS Hiring New Agents, IRS Criminal Investigation Division Discussed on ESPN Radio – Podcast

Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Investing and Taxes and the IRS On ESPN Radio – May 13, 2016 Show

Topics Covered:

  1. IRS Hiring Hundreds Of New Agents Can Spell “Tax Audit” For More U.S. Taxpayers.
  2. Is the Tech Bubble Popping?
  3. What To expect If The IRS Criminal Investigation Division Is Taking A Look At You.
  4. Questions from our listeners:
  • Are mutual fund expense ratios tax deductible?
  • Should I pay attention to all notices I may receive from the IRS?

***********************************************************************

Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:

And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: Is the Tech Bubble Popping?

Windus states:

Also coming up is:
Segment 3 material: What to expect if the IRS Criminal Investigation Division is taking a look at you.
And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

IRS Hiring Hundreds Of New Agents Can Spell “Tax Audit” For More U.S. Taxpayers.

http://www.foxnews.com/politics/2016/05/05/lawmakers-demand-irs-explain-how-it-found-for-hundreds-new-agents.html

http://thehill.com/policy/finance/overnights/278600-overnight-finance-irs-hiring-hundreds-of-new-tax-enforcers

http://www.msn.com/en-us/money/markets/irs-loses-hundreds-of-criminal-agents-as-tax-cheats-take-heart/ar-AAfYwKX

Jeff states: The supposedly cash-strapped IRS is facing tough questions from Congress after claiming it just found the money to hire hundreds more enforcement employees.

Windus states: IRS Commissioner John Koskinen — who previously has cited budget woes to explain the agency’s shaky customer service and other issues — recently announced the IRS found the “resources” to hire between 600 to 700 new tax enforcement employees.

Windus continues: The IRS says those extra “resources” resulted from high attrition rates and worker efficiency, but skeptical lawmakers are demanding answers.

Jeff states: House Oversight Committee Chairman Jason Chaffetz (a Utah Republican) said “It was only weeks ago that they were saying they did not have the money to hire more employees and today they do have the money?”

Jeff continues: In an interview with FoxNews.com, the Utah Republican said he will be sending a letter to IRS Commissioner Koskinen seeking a full accounting of how it was determined the agency now has this extra money for hiring.

Windus states: Congressman Chaffetz you should know is a vocal critic of IRS Commissioner Koskinen who has led the effort to impeach him. The Congressman stated “The IRS is the worst-managed entity in all of government and this is the latest in a long list of examples of poor management. You cannot testify you can’t do something and then just go around hiring people.”

Windus continues: Now Congress did include a $290 million budget boost in the $1.1 trillion omnibus spending bill passed in December 2015 but those funds were earmarked to address problems with IRS customer service. I do not think anyone would think hiring more agents to audit or investigate U.S. taxpayers qualifies as an improvement in customer service.

Jeff states: The Wall Street Journal reported that IRS Commissioner Koskinen said that money indeed was used to hire 1,000 employees for their phone lines, calling “taxpayer service” the first priority. But he said they would also be making their “first significant enforcement hiring” in over five years with additional funds.

Jeff continues: IRS Commissioner Koskinen also added “In previous years, job losses across the agency have helped us absorb the funding cuts we have received, but left us with large gaps in various areas across the agency. This year, the IRS is determined that we have the resources available to hire these employees as a result of the rate of attrition in enforcement and your continuing dedication to find efficiencies to help us with the budget.”

Windus states: So this new funding has been good news for the IRS because the IRS has faced an ongoing staffing crisis as an increasing number of older employees retire. Since 2010, the IRS also has seen its budget decline by $900 million, with the total number of enforcement employees dropping by 24%.

Jeff states: Just last March during a speech at the National Press Club, IRS Commissioner Koskinen said the IRS workforce would “shrink by another 2,000 to 3,000 full-time employees this year,” which has impacted enforcement efforts. He also stated “As you might imagine, these staffing losses have translated into a steady decline in the number of individual audits over the past six years.”

Jeff continues: And just a month earlier than making that speech, in February 2016 IRS Commissioner Koskinen told congressional appropriators that the IRS “will not be able to replace” as many as 1,800 enforcement officials due to budget cuts.

Windus states: In fact the IRS has seen its staff shrink over the past several years as a result of the significant ongoing past budget cuts. Had it not had these additional funding resources available, IRS Commissioner Koskinen expected that by the end of this year, it will have lost more than 17,000 employees since 2010 with more than 5,000 of those workers have been in enforcement areas.

Windus continues: Last year, IRS Commissioner Koskinen also cited a cash crunch in explaining customer service issues. After getting additional funding, he told the House Ways and Means Committee in April that “significant improvements” were made in terms of customer service thanks to that.

Jeff states: So with all of this flip flop by the IRS Commissioner, one can understand why the public and Congress are skeptical of the Commissioner’s woes.

Jeff continues: Sen. Chuck Grassley, Iowa Republican and member of the Senate Finance Committee, questioned the IRS’ latest claims stating to FoxNews.com: “The IRS always seems to be able to find more resources when it wants to. Because of that, and because of non-taxpayer service activities, like union work on the taxpayer’s dime, the IRS deserves skepticism when it continuously seeks more money.”

Windus states: According to IRS Commissioner Koskinen, the new hires will be divided into two so-called waves with the first job announcements in the coming weeks. The second wave will provide “employees with promotional opportunities for higher-level enforcement positions,” and will focus on “high-profile enforcement areas, including international tax issues, refund fraud and identity theft.”

Jeff states: And you can expect that IRS Commissioner Koskinen will still be lobbying Congress with additional requests for budget increases in the coming months as he claims that “While adding 600 to 700 new enforcement hires will not replace those who have left, it will help fill key gaps in our enforcement workforce created by years of attrition.”

Windus states: The 2016 hiring addition that the IRS is starting will be the agency’s first significant enforcement hiring in more than five years. IRS Commissioner Koskinen said in a message to agency employees: “This is a good development for our tax system because when you look at the IRS overall, every dollar invested in the IRS returns at least $4 to the Treasury. The numbers are even higher when it involves enforcement. Each enforcement position typically returns almost $10 to the U.S. Treasury for every dollar spent — and in many instances, much more.”

Jeff states: Of all the agents who work for the IRS, IRS Criminal Investigation agents (known as Special Agents or CI agents) are the elite special forces in the never-ending war on tax evasion. They are feared among criminals for their unmatched ability to follow the money, assess net worth and find fraud in corporate books. They have been at the center of major tax and money-laundering cases involving Swiss banks, FIFA soccer officials, and the Costa Rican digital currency company, Liberty Reserve.

Windus states: Claire Rossini, a former Special Agent who spoke to Bloomberg News said that “As a Special Agent, your job is to find those facts and put criminals in jail. If you know that somebody is getting away with something because you don’t have the manpower, that’s very disheartening.”

Jeff states: CI agents help federal prosecutors build corruption, narcotics and money-laundering cases. Agent attaches are stationed in 10 foreign countries. They work undercover, use wiretaps and rely on informants. They are the only ones authorized to investigate federal tax crimes, including evasion and failing to file returns. It’s painstaking work and cases often take years of work to meet the legal threshold of proving beyond a reasonable doubt the intent to cheat on taxes.

Windus states: CI agents are also involving in fighting fraudulent refunds and identity theft. In 2011, the IRS paid out $3.6 billion in potentially fraudulent refunds, an amount that swelled to $5.8 billion in 2013. The IRS said its own website got hit in June, with thieves stealing information on about 100,000 taxpayers to generate $39 million in refunds. Identity theft rose to 28% of all new investigations in 2013. Though such cases have since been declining nationally, they account for about half of investigators’ time in South Florida.

Jeff states: But now there are more CI agents working today on cybercrimes, and they use analytical software to mine data from the Treasury Department’s Financial Crimes Enforcement Network (known as FinCEN). This is the same network that has been receiving information from foreign governments and foreign financial institutions and matching it up to foreign account information reported directly by U.S. taxpayers or missing from U.S. income tax returns filed by taxpayers.

Jeff continues: So beware with more agents out there, you can bet that there will be more taxpayers now having tax problems with the IRS.

Jeff states: Well it’s time for a break but stay tuned because we are going to find out if the Tech Bubble is ready to pop.

Jeff states: You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: And so before we start with this next segment, Windus would like to remind you of her offer:

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Is the Tech Bubble Popping? Ping Pong Offers an Answer

www.wsj.com/article_email/is-the-tech-bubble-popping-ping-pong-offers-an-answer-1462286089-lMyQjAxMTE2MjAxMzYwOTMyWj

Jeff starts: That’s right folks, of all the possible indicators, we may be getting our best information regarding how the tech industry is fairing based on Ping Pong sales reports.

Windus replies: This coincident comes to light after dismal first quarter reports for Twitter troubled investors. Interestingly enough, if the company would have paid attention to a single key indicator, they could have predicted the downturn.

Jeff continues: Specifically, regular shipments of ping pong tables. You heard right, ping pong tables. As a corner stone of most start-up companies, ping pong tables are a popular way of spending break hours to help employees distress.

Windus states: Twitter had been ordering these tables regularly until late 2014 when their requisitions to Billiard Wholesale stopped. The store’s owner had figured that social media company had either run out of space or worse yet, were having company problems.

Jeff replies: Now analysts are becoming increasingly unsettled by Twitter’s slowing user growth and even more alarming weak revenue growth in the first quarter.

Windus continues: When Twitter spokesperson Jim Prosser was questioned as to why the company had stopped its orders of ping pong tables, he responded with a simple “I guess we bought really sturdy ones.”

Jeff states: An additional spokesperson, Natalie Mikaye, added that they’re “more of a Pop-A-Shot company now”, in reference to an indoor basketball game.

Windus questions: Which leads us back to the original question, is the tech bubble popping? Can ping pong table sales direct us to the general wellness of a tech company’s growth??

Jeff states: Well, Mr. Ng of Billiard Wholesale insists that sales of these tables track the tech economy. In his business “last year, the first quarter was hot.” But now, “there’s a general slowdown.”

Windus replies: His 2016 first quarter sales reflected a drop of about 50% down from the previous quarter. Dow Jones VentureSource, which tracks venture financing, reports that US startup funding in that period fell 25%.

Jeff continues: This “table tennis indicator” is a glimpse into Silicon Valley culture. Chief technology officer, Sunil Rajasekar, of Lithium Technologies explains that, “if you don’t have a ping pong table, you’re not a tech company.”

Windus states: Don’t believe him? Look at the 30-year old head of marketing at the start up that was recently bought by BlackRock Inc. As number 2 in the internal ping pong rankings, Joe Fahr believes that the table is an equalizer that “breaks down the hierarchy”. Joe keeps his $100 Butterfly-brand paddle with him at his desk in a special bag.

Jeff replies: It’s believed that the incorporation of table tennis into the workplace sends a psychological message to the founders and employees that “we’re not your father’s company.” Somewhat equivalent to “we don’t wear suits.”

Windus continues: Now this isn’t all about fun and games nor in the slightest bit, about goofing off at work. It’s more of an activity carefully selected to benefit employees who spend a good portion of their day, sitting at a desk, staring at a screen, for the sake of their corneas. And, it helps build culture.

Jeff states: But when the Nasdaq fell to its lowest in over a year this past February, Mr. Ng sold the fewest tables to companies since he started keeping track in 2014.

Windus replies: Yahoo!, who has been hit hard by weakening revenue, hasn’t purchased new items in a long time. Intel stopped buying new tables over a year ago, and recently announced 12,000 job cuts last month.

Jeff continues: Google just bought a ton of stuff regardless of missing Wall Street estimates. Even still, they did post a healthy increase in profits and revenue in the first quarter.

Windus states: We’re not telling you to start basing all of your investing in the tech industry primarily on ping pong table sales though. Whereas sales may track the tech economy, it far from predicts it.

Jeff replies: In the grand scheme of things, you could probably also track Odwalla juices, as they maintain a similar culture. Or for that matter, substitute table tennis out for foosball tables.

Windus states: During the original dot-com boom, which ended in 2000, pool (or billiards) was the popular table. The transition from pool to ping pong, may suggest growing practicality among entrepreneurs.

Jeff replies: Unlike billiard tables though, ping pong tables have an inferior return when companies hit a downturn and require downsizing and selling assets to raise funds or reimburse their creditors or investors.

Windus continues: In more plain terms, you could purchase a brand new, high-end Butterfly-brand table for $2,300, but you couldn’t sell them back to the wholesaler since nicks in the table make them worthless. Not to mention, used ping pong tables only fetch about $5 or $10 anyway.

Jeff states: Whereas pool tables tend to maintain a higher resale value. Also good to keep in mind when you’re investing in your own recreational equipment.

Windus finishes: On the same topic of investing, if you’re not sure where you’re heading but want to make sure that your future is clearly mapped out for success with regards to market volatility, you can call or email us….

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we want to do what to expect if The IRS Criminal Investigation Division is taking a look at you.
You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Jeff states: But before we start with this next segment, I want to remind our listeners of my offer:

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Is The IRS Criminal Investigation Division Taking A Look At You?

Jeff states: If the motive of the crime is money, chances are the IRS Criminal Investigation (CI) special agents are involved in tracking the money from the crime to the criminal.

Windus states: And with the ever more sophisticated schemes to defraud the government and the American economy occurring now, there is a greater demand for the financial analytical ability of forensic investigators to wade through complex paper and computerized financial records.

Amy states: CI is comprised of nearly 3,500 employees worldwide, approximately 2,500 of whom are special agents whose investigative jurisdiction includes tax, money laundering and Bank Secrecy Act laws. While other federal agencies also have investigative jurisdiction for money laundering and some bank secrecy act violations, IRS is the only federal agency that can investigate potential criminal violations of the Internal Revenue Code.

Jeff states: Compliance with the tax laws in the United States relies heavily on self-assessments of what tax is owed. This is called voluntary compliance. You do this every time you file your income tax return. When individuals and corporations make deliberate decisions to not comply with the law, they face the possibility of a civil audit or criminal investigation which could result in prosecution and possible jail time. Publicity of these convictions provides a deterrent effect that enhances voluntary compliance.

Amy states: As financial investigators, CI special agents are trained to recover computer evidence. Along with their financial investigative skills, special agents use specialized forensic technology to recover financial data that may have been encrypted, password protected, or hidden by other electronic means.

Windus asks: So how is CI organized?

Amy replies: The Criminal Investigation Division is divided into three main programs:
1. Legal Source Tax Crimes;
2. Illegal Source Financial Crimes; and
3. Narcotics Related and Counterterrorism Financial Crimes.

Amy continues: These three programs are mutually supportive and encourage utilization of all statutes within CI’s jurisdiction, the grand jury process and enforcement techniques to combat tax, money laundering and currency crime violations.

Jeff states: And because CI’s investigations tend to be long and thorough, CI typically picks only those significant financial investigations that will generate the maximum deterrent effect, enhance voluntary compliance and promote public confidence in the tax system.

[Windus to reach off each CI program, followed by Amy explanation and Jeff comment.]

Legal Source Tax Crimes. The Legal Source Tax Crimes Program includes those cases that threaten the tax system, such as the Questionable Refund Program (QRP) cases, unscrupulous return preparers and frivolous filers/non-filers who challenge the legality of the filing requirement.

Illegal Source Financial Crimes.

Amy states: The Illegal Source Financial Crimes Program recognizes that money gained through illegal sources, such as dollars obtained through illegal gambling operations, is part of the untaxed underground economy. Remember that under the Internal Revenue Code all income is taxable, from whatever source derived regardless of whether it was legal.

Jeff states: When money is derived through illegal sources, the primary concern for the criminal is to legitimize the dollars. This process of “cleaning” the illegally obtained dollars is termed “money laundering”. Money laundering activity is considered to be “tax evasion in progress”.

Amy states: Historically, money launderers used legitimate businesses to “launder” their illegal proceeds. Now money launderers use various schemes and types of transactions to conceal their income and/or assets. Some of these schemes include the manipulation of numerous currency reporting requirements and the layering of transactions. The schemes are frequently international in scope.

Jeff states: The Illegal Source Financial Crimes Program encompasses all tax and tax-related violations, as well as money laundering and currency violations. In fact, money laundering and currency violations are often intertwined with tax violations. As part of the criminal charges against an individual, Criminal Investigation (CI) makes effective use of the forfeiture statutes. Forfeiture statutes deprive individuals and organizations of their illegally obtained cash and assets.

Narcotics-Related Financial Crimes and Counterterrorism Financing.

Amy states: One look at the daily newspaper is proof enough that crimes dealing with or motivated by money make up the majority of current criminal activity in the nation. Tax evasion, public corruption, health care fraud, and even drug trafficking are all examples of the types of crimes that revolve around money. In these cases, a financial investigation often becomes the key to a conviction.

Amy continues: Traditional law enforcement relies on investigative tools such as crime scene analysis, physical evidence, fingerprint identification or eyewitness accounts. The limitations of these techniques become obvious to those who are trying to prove wrongdoing in a sophisticated financial crime. With no proof, there is no conviction.

Jeff states: When the IRS astounded Public Enemy Number 1 “Al Capone” by obtaining a conviction for tax evasion and demanding millions of dollars in back taxes, Capone said, “They can’t collect legal taxes from illegal money”. But it’s really pretty simple: No matter what the source of income — all income is taxable.

Windus asks: And this creates a real problem for drug dealers. What are they going to do with their money — so that IRS won’t find it?

Jeff states: Well usually it involves some level of foreign banking. And speaking about taxpayers who have undisclosed bank accounts, about 60,000 U.S. taxpayers have come forward in special voluntary disclosure programs established by IRS to avoid criminal prosecution and benefit from lower penalties than the maximum provided by law.

Amy states: By law, many U.S. taxpayers with foreign accounts exceeding certain thresholds must file FinCEN Form 114, Report of Foreign Bank and Financial Accounts, known as the “FBAR.” It is filed electronically with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Windus asks: So what are the Filing Requirements if someone has foreign bank accounts?

Amy replies: Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file FBARs. It is due by June 30 and must be filed electronically through the BSA E-Filing System website.

Amy continues: Generally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. The lowest reporting threshold for Form 8938 is $50,000 but varies by taxpayer.

Windus asks: But I thought that if income was earned abroad, it does not get reported on a U.S. income tax return?

Amy replies: Many people mistakenly believed that. The law requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Amy continues: Additionally by law, Americans living abroad, as well as many non-U.S. citizens, must file a U.S. income tax return. In addition, key tax benefits, such as the foreign earned income exclusion, are only available to those who file U.S. returns.

Windus asks: So what are the penalties for non-compliance?

Amy replies: Civil Fraud – If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%.

Amy continues: Criminal Fraud – Any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution (Code Sec. 7201).

Jeff states: Now if the IRS are targeted you for investigation or even started a random audit of your tax returns, you are locked out of going into any voluntary disclosure program. Which is why ….

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Question from Chelsea of San Diego: Are mutual fund expense ratios tax deductible?

Windus answers.

Question from Martin of Newport Beach: Should I pay attention to all notices I may receive from the IRS?

Jeff answers: Definitely yes! Look, the IRS does not send out junk mail or mass mailers. The IRS sends notices and letters for the following reasons:

• You have a balance due.
• You are due a larger or smaller refund.
• The IRS has a question about your tax return or is changing it.
• The IRS needs to verify your identity.
• The IRS needs to notify you of delays in processing your return.

It is important to read the notice to see what it is about. For example, if the IRS changed your tax return, compare the information the IRS provided in the notice with the information in your original return.

Then check and see if a response is required. If your notice requires a response by a specific date, you will want to comply to minimize additional interest and penalty charges and to preserve your appeal rights if you do not agree.

I believe that IRS notices are designed to confuse laypersons so that they unknowingly waive their appeals rights. That’s why if you receive a notice from the IRS, take it seriously and engage a tax professional such as myself to handle this matter for you.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

Cruiz flat tax plan

Cruz Tax Plans would end payroll tax and flatten tax code

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses Cruz Tax Plan; Investing Tips; Tax Tips and the IRS On ESPN Radio – March 25, 2016 Show

Topics Covered:

1. Senator Ted Cruz’s Tax Plan
2. Emotions, expectations and your money
3. Hot tax tips to save money on taxes
4. Questions from our listeners:

a. I am about to finish my residency at UCSD and my student loans payments are about to begin. I have about $150k in debt and my required monthly payment is going to be huge. Luckily I have a good job but my student loan payment is going to be higher than my rent. How am I going to keep this up?

Gary states: Good afternoon! Yes sometimes we just have to take the money and run! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Licensed Financial Planner, Gary Sussman, Senior Vice President Of Investments at Trilogy Financial Services.

Jeff states:

And this is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Gary states:

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Gary states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Gary states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Gary states:

For today’s show we have coming up:

Segment 2 material: Emotions, expectations and your money.

Jeff states:

Also coming up is:

Segment 3 material: Hot tax tips to save money on taxes.

And of course towards the end of our show, we will be answering some of your questions.

Gary starts chit chat with Jeff.

Gary states: So for today’s top story:

Senator Ted Cruz’s Tax Plan

https://www.tedcruz.org/tax_plan/
http://taxfoundation.org/article/details-and-analysis-senator-ted-cruz-s-tax-plan

Gary states: So imagine this – 4.9 million new jobs, average wages rising 12.2% over the next decade, capital investment rising 43.9%, and every income-level seeing double-digit increases in after-tax income. Imagine exports and manufacturing jobs booming and our trade deficit falling as the tax bias against American made goods is eliminated. Imagine a 10% income tax, with every American filling out his or her taxes on a postcard or iPhone app. And lastly imagine abolishing the IRS as we know it.

Gary states: Maybe this is fantasy but according to GOP Presidential candidate Ted Cruz, this is what would happen under his tax plan.

Jeff states: And just like we critiqued other candidate’s tax plans, Ted Cruz is no different so here are the key points of Cruz Tax Plan:

Gary states: For individuals – Replace Current System With A Flat Tax. Under the Simple Flat Tax, the current seven rates of personal income tax will collapse into a single low rate of 10 percent.
a. For a family of four, the first $36,000 will be tax-free (compared to $26,000.00 under current law) .
b. The Child Tax Credit will remain in place.
c. The Earned Income Tax Credit would be expanded with greater anti-fraud and pro-marriage reforms.
d. Under the plan, deductions for charitable contributions and mortgage interest payments are preserved.
e. Eliminates the Net Investment Income Tax of 3.8% and the Medicare surtax of 0.9%, which were passed as part of the Affordable Care Act.

Jeff states: For businesses, the corporate income tax will be eliminated. It will be replaced by a simple Business Flat Tax (operating as a Value Added Tax) at a single 16% rate. The current payroll tax system will be abolished, while maintaining full funding for Social Security and Medicare. Also, provides a temporary tax holiday at a 10% rate (instead of a full 35% rate) on any deferred foreign profits that are repatriated.

Gary states: Other taxes eliminated: Payroll Tax will be eliminated. The Death Tax will be eliminated. The Alternative Minimum Tax will be eliminated. The tax on profits earned abroad will be eliminated. And of course, the Obamacare taxes will be eliminated.

Jeff states: Except for the Child Care Credit and Earned Income Credit, all other tax credits are eliminated.

Jeff continues: His plan also creates a new “universal savings account” that allows up to $25,000 of tax-deductible savings.

Gary states: A simpler Tax Code: replaced with new rules of the game – so simple, in fact, that individuals and families could file their taxes on a postcard or phone app. Also gone will be the unending loopholes in the current code, the stacks of depreciation schedules for businesses, and the multi-tiered rates on income and investments. Under the Simple Flat Tax, the Internet remains free from taxes.

Jeff states: And lastly Ted Cruz is looking the end the IRS. He states it will cease to exist as we know it, there will be zero targeting of individuals based on their faith or political beliefs, and there will be no way for thousands of agents to manipulate the system.

Gary states: Cruz believes his plan for the Simple Flat Tax will ensure that low- and middle-income Americans have greater opportunities – not only through minimal taxes, but also through better, high-paying jobs that the Simple Flat Tax will generate.

Jeff states: According to the Tax Foundation’s Taxes and Growth Model, the plan would significantly reduce marginal tax rates and the cost of capital, which would lead to a 13.9% higher GDP over the long term, provided that the tax cut could be appropriately financed. The plan would also lead to a 43.9% larger capital stock, 12.2% higher wages, and 4.8 million more full-time equivalent jobs. On a static basis, the plan would cut taxes by 9.2%, on average, for all taxpayers. Accounting for economic growth, all taxpayers would see an increase in after-tax income of at least 14% at the end of the decade.

Gary states: The figures for this model sound great but beware that The Taxes and Growth Model does not take into account the fiscal or economic effects of interest on debt. It also does not require budgets to balance over the long term, nor does it account for the potential macroeconomic effects of any spending cuts that may be required to finance the plan.

Jeff asks: So we all these grand tax cuts, how does Ted Cruz expect to pay for this?

Gary states: Senator Cruz’s plan would cut taxes by $3.6 trillion over the next decade on a static basis. However, the plan would end up reducing tax revenues by $768 billion over the next decade when accounting for economic growth from increases in the supply of labor and capital and the much broader tax base due to the new value-added tax which system is similar to most developed countries.

Jeff states: Senator Cruz’s tax reform would be a significant shift from the current tax code. Under this plan, the income tax would be greatly diminished in its importance compared to current law. Instead, the U.S. federal government would raise 71% of all revenue from the new broad-based value-added tax. The tax is a broad consumption tax that would include most of U.S. GDP, including both wages and profits. Due to these changes, the taxation of investment would significantly decline, which would greatly increase incentives to save and invest.

Gary states: But going back to the Death Of The IRS – Jeff what do you have to say about that?

Jeff states: Cruz claims each year, Americans spend 6.1 billion hours on tax compliance. That’s roughly the equivalent of every American taxpayer devoting 45 hours to filing their taxes every year. Well I do know that most individuals spend nowhere near close to 45 hours to prepare and file their tax returns.

Gary states: Of the 84,000 IRS employees roughly half (48%) work on “Examinations and Collections”; roughly another quarter (23%) work on “Filing and Account Services.” Under the Simple Flat Tax, with Americans filing taxes on a postcard, Cruz claims we will need vastly fewer examiners, collectors, filers and account servicers and that will save the government money. Furthermore, Cruz claims the IRS needs to be abolished because of the institutional corruption and political self-dealing it causes to abuse taxpayers.

Jeff states: So I guess in Cruz’s view the IRS is the only government agency that is so corrupt it should be abolished. So Mr. Cruz I ask you who would then be collecting the taxes under your system? Do you have an “app” in mind for this?

Gary states: Well it’s time for a break but stay tuned because we are going to tell you Emotions, expectations and your money.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Gary states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

And be aware of the special offer that I have for you: Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Emotions, expectations and your money.

http://blogs.wsj.com/moneybeat/2016/01/08/stock-market-puts-in-its-worst-opening-week-ever/
www.usatoday.com/story/money/personalfinance/2016/03/21/stock-rebound-erases-bad-start-2016-proves-point-investors/81914668/
http://www.usatoday.com/story/money/personalfinance/2016/03/21/stock-rebound-erases-bad-start-2016-proves-point-investors/81914668/
www.dalbar.com
Franklin Templeton Investments: Emotions, Expectations and Economics Seminar Presentation (#2015-730)
Rules: FIN 2210, SEC 482

Jeff states: As we approach the end of the 1st quarter, Gary thought it would be a good idea to take notice of the wild ride the stock market has been on since the turn of the year and hopefully give our listeners some perspective on how to make sense of things moving forward.

Gary states: Jeff it certainly has been an interesting start to the year. As investors got over their New Year’s hangovers the stock market did not do much to relieve their headache. The first week of trading this year was literally the worst opening week in Wall Street’s history.

Jeff states: The DOW Jones ended the first five days of trading down 6.2% to start the year. The S&P 500 did not fare much better, closing down 6% to start the year. Naturally there was panic in the air. All the pundits were opening up their history books and charts to create their own narrative of what the future may hold. For all the bears out there, this was a feeding frenzy.

Gary states: After a horrible first week things did not get much better and after the first 2 weeks of the year both the DOW and S&P were off 9 percent, and by February the S&P had lost about 18% from its high last summer. Needless to say, people were concerned, and their emotions were starting to drive their financial decision making. That almost always is a recipe for disaster.

Jeff states: I remember the headlines. Oil was in a free fall, China was collapsing and interest rates were rising. If you were looking for a reason as to why everything was going to collapse, you wouldn’t have to go too far to find it.

Gary states: Well let’s fast forward to today. What a difference a few weeks make, the stock market has rallied strongly from its lows and is now back in the black. “While stocks are admittedly still down from their summer highs after this run, investors should learn from the recent rebound and try to think longer term instead of fretting about day-to-day volatility” says Josh Brown CEO of Ritholtz Wealth Management in New York.

Jeff states: The pressures we faced to start the year have largely abated driven primarily by the rebound in oil prices. And after last week’s meeting with the Fed where they indicated rates were not going higher anytime soon, investors continued to bid stocks higher.

Gary states: With such vicious volatility that is then amplified by the internet and social media, how can people keep a level head! How can you not get caught up in the hype? How do you stop your emotions from driving your investment decisions?

Jeff states: It seems many investors struggle with removing emotion from decisions about their investments, maybe even overestimating their ability to deal with periods of market decline and volatility.

Gary states: Completely correct, people only truly understand risk when they experience loss, and tend to be influenced more by the prospect of loss than by the opportunity for gain, with fear being the greatest motivator.

Jeff states: A loss aversion study conducted by the Journal of Marketing Research found that people place about twice the value on giving up an item than on receiving the same item.

Gary states: That is why, there is such a gap between the average return for the S&P 500 and the average equity investor.

Jeff states: In a recent DALBAR study of investor behavior, for the 20 year period from December 31, 1994 to December 31, 2014 the S&P 500 grew an average of 9.9% whereas the average equity fund investor earned an average of just 5.2%.

Gary states: Jeff, DALBAR has been releasing that study forever and the numbers don’t change very much. The primary reason for this occurring is that some investors jumped in and out of the market at the wrong time for the wrong reasons thus missing out on long term opportunities, by ultimately buying high, and selling low.

Jeff states: The media seems to be playing a major role in how people feel about their money. We seem to be living in a world made up of headlines and sound bites.

Gary states: Very true and with 24/7 access to information these headlines are changing by the hour. Think about what emotions words like “slammed,” “plunge,” “tumble” and “surge” provoke. They make you feel like you should be taking some sort of action daily and the only way to make money in the market is to effectively time it as when to get in and out.

Jeff states: Market timing in turn can be risky simply because you are now trying to predict the future, which is impossible. These investors think about missing the “worst” days, but what if they land up missing the “best” days?

Gary states: Trying to accurately time the market is impossible. I always tell people that it is hard enough to time it right once let alone on a consistent basis.

Jeff states: In a study conducted by Morningstar, they looked at what would have happened if an investor tried to time the market, but missed the best, 10,20,30 or 40 trading days over a 20 year period from 1994-2014.

Gary states: If you would have stayed fully invested in the S&P 500 you would have earned an average 9.85% return, once you started to remove the best days, results were not so pretty. If you missed the 10 best days you would have earned 6.11%, if you missed the best 20, you would have earned 3.63%, the best 30 it would be 1.5% and miss the best 40 days you would have actually lost .45%.

Jeff states: So how do investors stay unemotional?

Gary states: I would start off by managing expectations. If you expect the market to be going up every day or every year, you will be sadly disappointed. When the market is doing well, investors can become “blinded” by euphoria over their investment returns and tend to expect consistent double digit returns, the problem is that our memories of bear or declining markets are simply a blur. So keep a level head, and don’t let the daily movements in the market drive your long term decision making.

Jeff states: Franklin Templeton did a study that looked at the three investor types and their expectations of the markets. They broke the three types into optimist, the skeptic and the pessimist and the missed opportunities that can result.

Gary states: Optimists tend to think the stock market continually rises, but fail to consider the many short-term fluctuations that have occurred throughout history. In turn optimists may become too heavy in stocks and overlook other asset classes like bonds and cash and thus feel too much pain when markets correct or maybe even land up making rash decisions.

Jeff States: Then we have the skeptic. Skeptics tend to assume the market will stay flat, and tend to be handcuffed by indecision. The net result is that skeptics may then miss out on the opportunity for additional growth that can come out of owning stocks and may in turn limit their upside returns.

Gary states: Lastly we have the pessimist. They tend to see the stock market as too much of a gamble, and believe CDs are the only way to go. While the pessimist may not expose themselves to any market based risk they open up the door to a potentially bigger risk, that of inflation and the decreasing value of their dollars over time and severely limiting their ability to grow their wealth and maybe even land up locking in the likelihood that they never even reach their goals.

Jeff states: Regardless of which category you fall in, it seems investor’s expectations can lead to disappointment in the performance of their investments.

Gary states: Jeff, the thing I consistently strive to do when working with clients is manage expectations to avoid any type of surprise when their long term performance does not match the often times unrealistic expectation of what their money should be doing.

Jeff states: So what should our listeners do to keep their emotions and expectations in line with each other?

Gary states: Number 1, make sure you are working with a professional. Very few people can effectively manage the cycle of emotions on their own. Number 2, review your financial plan to determine if your portfolio matches your risk tolerance and don’t adjust your risk tolerances based on the movements in the market. Number 3, understand the rationale for your investment strategy. Number 4, set realistic performance expectations and lastly, discuss how to prepare yourself financially and mentally during times of market decline.

Jeff states: Sounds like, if you can set realistic investment expectations, you may be able to more easily ride the market’s ups and downs with a greater sense of confidence.

Gary states: Exactly! Having the right asset allocation is key to ensuring the ride you are taking matches the amount of risk you are comfortable taking. If that is in place, you may feel more at ease when we go through our next market correction which is why you should remember …

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Gary states: Stay tuned because after the break we are going to tell you hot tax tips to save money on taxes.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Gary states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

Gary states: And before we start our next segment, Jeff would you please tell our listeners of your offer?

Jeff states PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.
Six Facts You Should Know Before Deducting a Charitable Donation
Gary states: If you gave money or goods to a charity in 2015, you may be able to claim a deduction on your federal tax return. Here are six important facts you should know about charitable donations.
[Gary reads off the name of each fact and Jeff describes]
1. Qualified Charities. You must donate to a qualified charity. Gifts to individuals, political organizations or candidates are not deductible. An exception to this rule is contributions under the Slain Officer Family Support Act of 2015. To check the status of a charity, use the IRS Select Check tool.
2. Itemize Deductions. To deduct your contributions, you must file Form 1040 and itemize deductions. File Schedule A, Itemized Deductions, with your federal tax return.
3. Benefit in Return. If you get something in return for your donation, you may have to reduce your deduction. You can only deduct the amount of your gift that is more than the value of what you got in return. Examples of benefits include merchandise, meals, tickets to an event or other goods and services.
4. Type of Donation. If you give property instead of cash, your deduction amount is normally limited to the item’s fair market value. Fair market value is generally the price you would get if you sold the property on the open market. If you donate used clothing and household items, they generally must be in good condition, or better, to be deductible. Special rules apply to cars, boats and other types of property donations.
5. Form to File and Records to Keep. You must file Form 8283, Noncash Charitable Contributions, for all noncash gifts totaling more than $500 for the year.
6. Donations of $250 or More. If you donated cash or goods of $250 or more, you must have a written statement from the charity. It must show the amount of the donation and a description of any property given. It must also say whether you received any goods or services in exchange for the gift.

Save on Your Taxes and for Retirement with the Saver’s Credit

Gary states: If you contribute to a retirement plan, like a 401(k) or an IRA, you may be able to claim the Saver’s Credit. This credit can help you save for retirement and reduce the tax you owe. Here are some key facts that you should know about this important tax credit:

[Gary reads off the name of each fact and Jeff describes]

1. Formal Name. The formal name of the Saver’s Credit is the Retirement Savings Contribution Credit. The Saver’s Credit is in addition to other tax savings you get if you set aside money for retirement. For example, you may also be able to deduct your contributions to a traditional IRA.

2. Maximum Credit. The Saver’s Credit is worth up to $4,000 if you are married and file a joint return. The credit is worth up to $2,000 if you are single. The credit you receive is often much less than the maximum. This is partly because of the deductions and other credits you may claim.

3. Income Limits. You may be able to claim the credit depending on your filing status and the amount of your yearly income. You may be eligible for the credit on your 2015 tax return if you are:
o Married filing jointly with income up to $61,000
o Head of household with income up to $45,750
o Married filing separately or a single taxpayer with income up to $30,500

4. Other Rules. Other rules that apply to the credit include:
o You must be at least 18 years of age.
o You can’t have been a full-time student in 2015.
o No other person can claim you as a dependent on their tax return.

5. Contribution Date. You must have contributed to a 401(k) plan or similar workplace plan by the end of the year to claim this credit. However, you can contribute to an IRA by the due date of your tax return and still have it count for 2015. The due date for most people is April 18, 2016.

6. Form 8880. File Form 8880, Credit for Qualified Retirement Savings Contributions, to claim the credit.

Jeff states: You know we are always thinking of ways to save our clients’ money from taxes which we why …

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Gary states: Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Gary states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

Jeff states: And Gary and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Gary, what questions have you pulled for us to answer?

Question from Sandra of San Diego: I am about to finish my residency at UCSD and my student loans payments are about to begin. I have about $150k in debt and my required monthly payment is going to be huge. Luckily I have a good job but my student loan payment is going to be higher than my rent. How am I going to keep this up?

Answer by Gary: Student debt is a serious problem for recent graduates. With the cost of college the average student is graduating with 30k in debt. Having a budget is essential no matter what and considering the amount of your payment you should look to see where else you can make cuts in your spending. Another alternative is to explore Income Driven Repayment plans. These programs exist for the majority of federal loans. They will base your payment on a percentage of your income rather than on the balance of the loan. These programs may allow you to significantly reduce your monthly payment and eventually have that debt forgiven. The benefit is that you may actually be able to afford to live. The caveat is that because this will become forgiven debt at some point in the future, it will be taxable. These programs are not right for everyone and I would definitely investigate this topic further with the guidance of a financial adviser and tax professional.

Gary states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Jeff states: Have a great day everyone!

Hillary Clinton’s Tax Plan, DOL Fiduciary Rule, Undisclosed Foreign Bank Accounts and the IRS

Jeffrey B. Kahn, Esq. and Gary Sussman Discusses Clinton Tax Plan, DOL Fiduciary Rule, Undisclosed Foreign Bank Accounts and the IRS On ESPN Radio – March 18, 2016 Show

Topics Covered:

1. What You Need To Know About The Hillary Clinton Tax Plan.
2. How the new “Department Of Labor Fiduciary Rule” will impact your investing habits.

3. What taxpayers need to know about their filing requirements if you have foreign bank accounts.

4. Questions from our listeners:

  • My wife and I are looking at Long Term Care Insurance. It just seems so expensive, are there any other choices out there.
  • Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for a prior year’s federal taxes?

****************************************************************************

Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Gary states:
And this is Licensed Financial Planner, Gary Sussman at Trilogy Financial Services.

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Gary states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: How the new Department of Labor Fiduciary Rule will impact you.

Gary states:

Also coming up is:
Segment 3 material: what taxpayers need to know about their filing requirements if you have foreign bank accounts.
And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Gary.

Jeff states: So for today’s top story:

What You Need To Know About The Hillary Clinton Tax Plan.

www.npr.org/2016/01/13/462944798/hillary-clinton-s-new-tax-proposal-likely-wont-affect-you

http://www.npr.org/2016/01/13/462944798/hillary-clinton-s-new-tax-proposal-likely-wont-affect-you

Gary states: Clinton’s plan has four major parts to it: A 4 percent surtax, Instituting The Buffett Rule, Tightening loopholes and Expanding the estate tax’s reach.

Gary continues: So let’s discuss in more detail each part.

Jeff states: A 4 percent surtax (the campaign calls it a “Fair Share Surcharge”), which has been getting the most attention. It involves taxing all income (that is, not just wage and salary income) over $5 million. That’s what makes it a surcharge and not just the creation of a new income-tax bracket.

Gary states: The Buffett Rule — Clinton would require people earning more than $1 million annually to pay at least a 30% tax rate.

Jeff states: Tightening loopholes that tend to be used by the wealthy. In particular, the Clinton camp points to what’s been dubbed the “Romney loophole.” That refers to the practice of stashing millions of dollars in IRAs. They also highlight the “Bermuda reinsurance loophole,” which has allowed some hedge-fund managers to reduce their taxes via insurance companies in Bermuda.

Gary states: Expanding the estate tax’s reach — Right now, the tax applies to estates worth more than roughly $5.5 million. She would take that threshold down to $3.5 million, where the level was in 2009 (but higher than the $2 million level that existed throughout the mid-2000s) and also raise the rate from the current 40% to 45%.

Jeff states: To be clear, this isn’t a full tax plan in the same vein as the ones many Republican candidates released. While GOP candidates like Jeb Bush and Marco Rubio released more comprehensive plans covering things like estate, corporate, capital gains and income taxes at once, Clinton has released her ideas in pieces. For example, she also released a corporate tax plan in December and a capital gains plan in July.

Gary states: So you may ask whom would this new proposal affect? Well it’s not supposed to impact the average American. That’s because the elements in this plan focus on either the richest sliver of Americans making more than $5 million, the wealthy people taking advantage of specific tax breaks, or the relatively few people earning $1 million or more.

Jeff states: According to the NPR article, the surcharge, firstly, would affect very, very few people. In 2013, about 34,000 tax returns out of 147 million (or about 0.02 percent) had an adjusted gross income of $5 million or more.

Gary states: Likewise, Clinton’s proposal says the estate tax expansion would affect 4 out of every 1,000 estates. And the Romney loophole would similarly be limited in scope — as of 2011, 98.5% of taxpayers with IRAs had balances of less than $1 million. In addition, only about 346,000 returns listed incomes of $1 million or more in 2013 — about 0.2 percent of returns.

Jeff states: So it won’t affect most people’s lives, and that’s kind of the point. Clinton’s plan over and over stresses that it’s aimed at the richest people, and it also provides numbers showing how limited the number affected will be.

Gary states: You may think these be big tax hikes but let compare to history. The 4 percent surtax would be on top of the current top marginal tax rate of 39.6 percent (so, 10 percent higher) and on top of the total 23.8 percent paid on long-term capital gains right now (so, nearly 17 percent higher).

Gary continues: From that perspective, those seem like sizable bumps, but in historical perspective, the rates still would be modest. Tax rates are much lower in these two areas than they have been in the past. Consider that in 1981, Ronald Reagan cut taxes from 70% to 50% according to the Tax Policy Center. Meanwhile, Clinton’s proposal would essentially raise the top marginal rate to nearly 44%.

Jeff states: So the big question is what’s the price tag? For its part, the Clinton camp says this plan will raise up to $500 billion in revenue over 10 years. Big difference from Bernie Sander’s raising an additional $1 trillion in just one year!

Jeff continues: But what’s just as important is what Clinton will do with that half-trillion dollars. She does not say how she would spend the new revenue but I guess she feels it is better to figure that out later than what is facing the Republicans on what spending cuts would make up for the lower revenues from their plans.

Gary states: So under Clinton’s plan what would it do to the economy? The plan could reduce economic growth because it could cause wealthy Americans to invest less, says Kyle Pomerleau, director of federal projects at the right-leaning Tax Foundation. However, he said it would only be a “minor” reduction to output.  He pointed to a paper from the Brookings Institution’s William Gale, which found a weak relationship between tax changes and growth. He also said that wealthy Americans have been sitting on their cash lately (meaning new taxes wouldn’t reduce already-low investment levels, though if that changes, so could the effect of these taxes).

Jeff states: So it seems Clinton’s biggest revenue raiser is that surtax. Clinton says the surtax is to make sure the richest people pay higher tax rates than “middle-class families.” The campaign points to IRS data showing that the top 400 taxpayers, who had an average income of more than $260 million in 2013, also paid an effective income tax rate of 23% that year.

Gary states: But even if Clinton does win the Presidency, with a Republican led House and an almost balanced Senate, she will not be able to on her own pass her tax policies.

Jeff states: Well it’s time for a break but stay tuned because we are going to shed some light on the new Department of Labor Fiduciary Rule which will impact you.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

Before we start with our next segment, Gary would you tell our listeners about how they can reach you and what you offer.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Jeff resumes:

Jeff states: So let’s continue with our next story. We are on the brink of finalizing of a new rule that will have major implications for investors and financial advisors.

The Department of Labor (DOL) Fiduciary Rule.

www.motherjones.com/print/288971 www.americanfunds.com/advisor/tools/policy-spotlight/fiduciary-rule-policy-update.html www.investmentnews.com/article/20160211/FREE/160219984?template=printart

www.investmentnews.com/article/20160204/FREE/160209953?template=printart www.investmentnews.com/article/20160229/FREE/160229937?template=printart www.wealthmanagement.com/february-2016?utm_rid=CPG09000002941562&utm_campaign=5095&utm_medium=email&elq2=6c06f3316e9242909297e623f2e37e27#1 www.fa-mag.com/news/ria-rollover-advice-could-fall-under-dol-rule-23473.html?print www.wsj.com/articles/financial-advisers-worry-fiduciary-duty-rule-to-have-negative-impact-1457949604

Gary states: Jeff, this is really something that for the most part has gone unnoticed. As an advisor I have been very well aware of what has been going on in D.C. regarding this proposal. But just about everyone else who is not working in the industry is completely unaware of what is about to take place even though just about everyone who has a retirement account or offers retirement accounts will be affected by this proposal.

Jeff continues: This proposal was initially introduced in 2011. However, widespread criticism from the industry and lawmakers forced the department to withdraw its initial proposal. In April of last year the DOL published its draft fiduciary rule and it is now possibly weeks or even days away from become law.

Gary states: Under this new rule, advisors who sell retirement savings products will likely be held to a fiduciary standard. This means they would have to put their clients’ interest above their own, which is a stricter standard than the current one for brokers in which recommendations must be merely “suitable.”

Jeff continues: Many brokers are fuming over the rule that would block them from selling any investment into a retirement account in return for a commission. Instead, the DOL would restrict a broker’s compensation to a fee based on a financial advisor’s hours or a flat percentage of the value of a retirement account.

Gary continues: The goal is to curb an advisor’s temptation to sell products with the highest commissions rather than those that serve the best interests of customers saving for retirement. The DOL would still allow commissions for easily valued investments including exchange-traded stocks and bonds, but only if brokers sign contracts giving customers the right to bring class-action lawsuits if their best interests are not met.

Jeff states: The Labor Department’s fiduciary standard is also different from the one under which registered investment advisers currently operate under securities law.

Gary continues: This is where this whole thing becomes a nightmare for everyone. Many advisors are already fee-based and don’t work on any type of commission. Many of them have naturally assumed they are immune to this and in turn have come out in favor of the rule, thinking that this is their way of cleaning out the small group of brokers who may not always do the best thing for a client.

Jeff continues: A little known provision in the rule would capture RIAs under the DOL’s proposed best interest contract exemption (BICE) if RIAs recommend a rollover and their fees are higher than the retirement plans. The fact that the RIAs charge higher fees to cover the extra cost of advice is immaterial. Many fee-based advisors, because of their level fees, have assumed they would be unaffected by the DOL’s rulemaking. But Gary, that’s simply not the case.

Gary states: Jeff, this is why those who offer advice whether it be for a commission or a fee are so up in arms. I think the intent of the rule is very genuine, however the consequence to investors and the financial services industry can ultimately mean that this proposal will do more harm than good.

Jeff continues: It seems that there are a wide array of conflicting and strong opinions on this proposal.

Gary states: The rule has been the source of a fierce lobbying battle. President Barack Obama has said the rule is needed to protect workers and retirees from conflicted advice that increases their investment costs and erodes savings.

Jeff continues: Senator Elizabeth Warren is in favor of the proposal and has been its biggest advocate. She contests that that many financial advisers promote inferior financial products to collect kickbacks. She references lavish trips and golf outings offered by companies that sell certain annuities.

Gary continues: Opponents say the rule will significantly increase liability risk and regulatory costs for financial advisers and force them to abandon clients with small accounts.

Jeff states: Gary doesn’t it seem like she is trying to address a specific problem with regulation that would have bigger consequences?

Gary states: Jeff, that’s what it sounds like to me. I agree that these kickbacks should be disallowed to negate the temptation to put your own interests before your clients, but this rule goes much further. The peculiar thing to me is that the companies she singles out, names like, American Equity and Fidelity Guarantee offer products that most broker dealers prohibit their representatives from even selling, because of the high commissions and kickbacks. When it comes down to it, the people selling these products may not even be securities licensed, yet the regulation is going to impact the securities industry the most.

Jeff continues: Just recently MetLife became the second major insurance company that decided to exit the brokerage business. They sold their advisor unit which included the firm’s Premier Client Group, consisting of about 4,000 advisers. MetLife is shedding the unit as brokerage firms face higher compliance costs tied to the Labor Departments proposed fiduciary rule.

Gary states: It seems like the writing is on the wall. Even though nothing is official, firms are scrambling in anticipation of this new rule.
The Financial Services Institute, the trade group for independent broker-dealers, calculated that its members would spend $3.8 billion alone for such startup costs as new record-keeping and disclosure systems to implement the rule, almost 20 times the estimate made by the Labor Department. The cost of implementation alone is going to drive companies out of the business.

Jeff continues: The rule will force small firms out of business, giving “small and medium-sized investors” less access to needed retirement advice. Brokers say they would have to abandon giving retirement advice to thousands of middle and working class investors who cannot meet the minimum balance requirements for fee-based advisory accounts if the DOL proposal is not changed.

Gary states: In a recent wealthmanagement.com article, Michael Wong, equity analyst for capital markets at Morningstar, said the “entire value chain” would be affected by this rule, resulting in fewer commission-based products available to investors and a decline in the overall number of financial advisors.

Jeff continues: Other theorists expect attrition levels at wirehouses and IBDs to increase. Some expect a wave of mergers and acquisitions in the independent space, as it gets more complicated and expensive to do business.

Gary continues: To survive, many resource starved smaller firms will need to join forces with larger firms, taking advantage of greater scale and a more robust infrastructure.

Jeff states: So Gary, what does this all mean for those people that are currently working with a financial advisor in some sort of capacity?

Gary states: I would stay tuned. If your advisor has not spoken to you about this, I would go ahead and suggest giving them a call to see how much they know about this proposal and see if they or their firm has any type of plan to make the necessary adjustments once the Office of Management and Budget has completed their review and the rule is finalized. Hopefully they have been following this as closely as we have and are not going to be caught off guard. Unfortunately the consequence is that some clients will be left in the dust as they won’t be able to afford to work in a fee only world, or their advisor will be abandoning them because the advisor won’t be able to afford to keep them as a client or perhaps some senior advisors may decide that this watershed moment represents a perfect opportunity to retire rather than adapt to the new way of doing business.

Jeff states: Seems like the DOL is going to accomplish their goal of driving down costs for retirees, but to what extent it will help or hurt the average consumer remains to be seen.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Jeff states: Stay tuned because after the break we are going to tell you what taxpayers need to know about their filing requirements if you have foreign bank accounts.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

Jeff states: And before we continue with this segment, I want to remind our listeners that…

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Foreign Bank Account Filings Top 1 Million – What Taxpayers Need to Know About Their Filing Requirements If You Have Foreign Bank Accounts.

Jeff states: Earlier this week the IRS announced that strong and sustained growth of taxpayers complying with foreign financial account reporting reflects improving awareness and compliance of this important part of offshore tax rules.

Gary states: By law, many U.S. taxpayers with foreign accounts exceeding certain thresholds must file Form 114, Report of Foreign Bank and Financial Accounts, known as the “FBAR.” It is filed electronically with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN).

Jeff states: So here are the statistics – In 2015, FinCEN received a record high 1,163,229 FBARs, up more than 8% from the prior year. In fact, FBAR filings have grown on average by 17% per year during the last five years, according to FinCen data.
Gary states: Filings of IRS Form 8938, Statement of Specified Foreign Financial Assets, are another sign of growing awareness of foreign reporting requirements. Taxpayers filed more than 300,000 Forms 8938 with their tax returns for tax year 2014, roughly the same as the prior year and up from about 200,000 for tax year 2011, the first year of the form. Form 8938 resulted from the Foreign Account Tax Compliance Act, known as “FATCA.” The filing thresholds are much higher for this form than for the FBAR.

Filing Requirements

Jeff states: Taxpayers with an interest in, or signature or other authority over, foreign financial accounts whose aggregate value exceeded $10,000 at any time during 2015 must file FBARs. It is due by June 30 and must be filed electronically through the BSA E-Filing System website.

Gary states: Generally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on Form 8938 if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad. The lowest reporting threshold for Form 8938 is $50,000 but varies by taxpayer.

Jeff states: By law, Americans living abroad, as well as many non-U.S. citizens, must file a U.S. income tax return. In addition, key tax benefits, such as the foreign earned income exclusion, are only available to those who file U.S. returns.

Gary states: The law requires U.S. citizens and resident aliens to report worldwide income, including income from foreign trusts and foreign bank and securities accounts. In most cases, affected taxpayers need to complete and attach Schedule B to their tax return. Part III of Schedule B asks about the existence of foreign accounts, such as bank and securities accounts, and usually requires U.S. citizens to report the country in which each account is located.

Jeff states: Now consider this – about 60,000 U.S. taxpayers have come forward to disclose their previously undisclosed offshore accounts but just last year alone, 300,000 U.S. taxpayers filed Form 8938 disclosing foreign accounts. That would mean that about 240,000 did not previously report their foreign accounts and that under this recent filing of Form 8938 to IRS, they have put the IRS on direct notice of their non-compliance.

Gary asks: Jeff what are the penalties for non-compliance of not reporting foreign income?

Jeff replies: Penalties for non-compliance:

  • Civil Fraud – If your failure to file is due to fraud, the penalty is 15% for each month or part of a month that your return is late, up to a maximum of 75%.
  • Criminal Fraud – Any person who willfully attempts in any manner to evade or defeat any tax under the Internal Revenue Code or the payment thereof is, in addition to other penalties provided by law, guilty of a felony and, upon conviction thereof, can be fined not more than $100,000 ($500,000 in the case of a corporation), or imprisoned not more than five years, or both, together with the costs of prosecution (Code Sec. 7201).

Jeff continues: The term “willfully” has been interpreted to require a specific intent to violate the law (U.S. v. Pomponio, 429 U.S. 10 (1976)). The term “willfulness” is defined as the voluntary, intentional violation of a known legal duty (Cheek v. U.S., 498 U.S. 192 (1991)).

Gary asks: Jeff what are the penalties for non-compliance of filing an FBAR?

Jeff replies: Penalties for non-compliance: The penalties for FBAR noncompliance are stiffer than the civil tax penalties ordinarily imposed for delinquent taxes.

  • For non-willful violations it is $10,000.00 per account per year going back as far as six years.
  • For willful violations the penalties for noncompliance which the government may impose include a fine of not more than $500,000 and imprisonment of not more than five years, for failure to file a report, supply information, and for filing a false or fraudulent report.

Gary states: The U.S. requires foreign financial institutions to report U.S. accountholder to the IRS.

Jeff replies: U.S. taxpayers with foreign accounts should also understand their reporting requirements under the Foreign Account Tax Compliance Act (FATCA). Third-party information reporting from foreign financial institutions or through intergovernmental agreements began in 2015.

Gary asks: Jeff what are the penalties for non-compliance for these foreign banks?

Jeff replies: Penalties for non-compliance: Foreign banks that are not certified by the IRS for reporting U.S. accountholders are subject to a 30% withholding tax on all U.S. sourced investments.

Gary states: The IRS requires disclosure of foreign financial accounts with your Form 1040.

Jeff replies: In addition, under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. Generally, U.S. citizens, resident aliens and certain non-resident aliens must report specified foreign financial assets on this form if the aggregate value of those assets exceeds certain thresholds. Reporting thresholds vary based on whether a taxpayer files a joint income tax return or lives abroad.

Gary asks: Jeff what are the penalties for non-compliance of filing Form 8938?

Jeff replies: Penalties for non-compliance: Failing to file Form 8938 when required could result in a $10,000 penalty, with an additional penalty up to $50,000 for continued failure to file after IRS notification. A 40% penalty on any understatement of tax attributable to non-disclosed assets can also be imposed.

Gary states: The IRS has special programs for taxpayers to come forward to disclose unreported foreign accounts and unreported foreign income.

Jeff replies: The main program is called the Offshore Voluntary Disclosure Program (OVDP). OVDP offers taxpayers with undisclosed income from offshore accounts an opportunity to get current with their tax returns and information reporting obligations. The program encourages taxpayers to voluntarily disclose foreign accounts now rather than risk detection by the IRS at a later date and face more severe penalties and possible criminal prosecution.

Gary asks: Jeff, When did the IRS first start OVDP?

Jeff replies: OVDP was first started by the IRS in 2009. Since then there have been more than 54,000 voluntary disclosures by taxpayers with undisclosed foreign bank accounts. The IRS has collected more than $8 billion from this initiative.

Gary asks: What advantages does a taxpayer have coming into any of these programs.

Jeff replies: For taxpayers who willfully did not comply with the U.S. tax laws, we recommend going into the 2014 Offshore Voluntary Disclosure Program (OVDP). Under this program, you can get immunity from criminal prosecution and the one-time penalty is 27.5% of the highest aggregate value of your foreign income producing asset holdings.

Jeff continues: For taxpayers who were non-willful, we recommend going into the Streamlined Procedures of OVDP. Under these procedures the penalty rate is 5% and if you are a foreign person, that penalty can be waived. This is a very popular program and we have had much success qualifying taxpayers and demonstrating to the IRS that their non-compliance was not willful. Which is why …

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Gary Sussman.

And Gary and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Gary states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Gary Sussman. The number to call is 949.536.2030. That is 949.536.2030. Or visit www.yourfinancialstory.com.

Securities and advisory services offered through National Planning Corporation (NPC), Member FINRA/SIPC, a Registered Investment Adviser. Additional advisory services offered through Trilogy Capital, a Registered Investment Adviser. Trilogy Capital and NPC are separate and unrelated companies.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Gary, what questions have you pulled for us to answer?

Question from Patrick in Del Mar. My wife and I are looking at Long Term Care Insurance. It just seems so expensive, are there any other choices out there.

Answer: Yes it can be pretty expensive depending on when you get it and how much protection you are looking for. But it can be far more costly to need assisted living care and not have any type of protection. Without knowing your exact circumstance it’s difficult for me to say what is best, but you do have options. If you are very wealthy you can self-insure, just be prepared for the fact that you may need to use upwards of $250,000 of your own money assuming you or your spouse need extensive care. The reality of that may make the sound of paying a few hundred dollars a month more palatable. Alternatively there are hybrid products that may offer the ability to get protection against things like terminal and chronic illness, but if you never need those benefits a death benefit will still go to your beneficiaries. This type of product can combat the argument of potentially paying substantial premiums for a LTC coverage that you only have a 50% probability of ever using.

Question from Tim in Mission Viejo: Can I receive a tax refund if I am currently making payments under an installment agreement or payment plan for a prior year’s federal taxes?

Answer: Generally, no. A condition of your installment agreement is that the IRS will automatically apply any refund due to you against taxes you owe. If your refund exceeds your total balance due on all outstanding liabilities including accruals, you will receive a refund of the amount over and above what you owe. Because your refund is not applied toward your regular monthly payment, you must continue making your installment agreement payments as scheduled and in full until your liability including accrued penalties and interest is paid in full. Regardless whether you are participating in an installment agreement or other payment arrangement with the IRS, you may not get all of your refund if you owe certain past-due amounts, such as federal tax, state tax, a student loan, or child support.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Gary states: Have a great day everyone!.

Bernie sanders tax plan

Women In Politics, Bernie Sanders Tax Plan, Hot Tax Tips And The IRS On ESPN Radio – Friday, March 11, 2016 Show

Topics Covered:

1. Celebrating International Women’s Day but Women in Politics Still Face Barriers.

2. Bernie Sanders Got Guts but His Tax Plan is Hopeless.

3. How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

4. Questions from our listeners: If Bernie Sanders is looking to make college free to everyone, and such a situation actually occurred, what would happen to my kids 529 plans? Are ALL colleges on this list or is it more like the Board of Governors fee waiver that allows those from low income families to have their costs waived. How exactly is the plan supposed to work?

************************************************************************************

Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: Bernie Sanders Got Guts but His Tax Plan is Hopeless.

Windus states:

Also coming up is:

Segment 3 material: How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

We’re Celebrating International Women’s Day But Women In Politics Still Face Barriers.

http://blogs.wsj.com/washingtonwire/2016/03/07/susan-collins-says-women-in-politics-still-face-barriers/; http://www.propublica.org/article/the-impact-and-echos-of-the-wal-mart-discrimination-case; http://www.proplublica.org/article/pregnancy-discrimination-case-reaches-supreme-court

Windus begins: U.S. Senator Susan Collins suggested, that because of her gender, Hillary Clinton is treated differently than other candidates in the race for the white house.

Jeff continues: Senator Collins made this statement on Monday, as female professionals and political figures gathered at the “Women in Leadership: Pathways and Possibilities Conference” at the Edward M. Kennedy Institute for the United States Senate in Boston.

Windus continues: During the conference that celebrated Women’s History Month, Senator Collins made several comments on the obstacles women still face when ascending to the highest levels of politics.

Jeff states: Reminiscing her bid for Governor of Maine in 1994, Senator Collins shared a learned lesson of how “women were held to different standards than men were.” She recalls the constant reports of what she wore, rather than what she said.

Windus replies: Even now, you see it all the time with Hillary Clinton. Articles focused on her many colorful pant suits or hair style instead of only focusing on what she’s saying.

Jeff states: Well hold on Windus, the whole hair thing is not a female thing with Trump in the presidential race.

Windus states: True Jeff.

Jeff states: But turning back to Senator Collins, a political centrist elected to the Senate in 1996, she goes on to explain, “When women are elected into office, [she] thinks they still have to prove that they belong there. Men don’t face that barrier.”

Windus continues: She believes men do not face that same barrier, as there seems to be the general consensus that if a man is elected to the senate, then he belongs there.

Jeff states: It doesn’t stop there, though. We’re still following the reverberation of the impact of the Wal-Mart v. Dukes discrimination case from June 2011.

Windus states: In a 5-4 decision, the U.S. Supreme Court threw out a monstrous lawsuit by female employees who claimed to be systematically underpaid and under promoted by the world’s largest corporation.

Jeff continues: That’s right, Windus. That verdict upended decades worth of employment discrimination law and raised serious barriers to all sorts of future large-scale discrimination cases.

Windus replies: Repercussions of the Dukes decision have poured through the federal and state courts, being cited in more than 1,200 in rulings and viewed as remarkable.

Jeff states: Lawsuits all over the country have had verdicts overturned, settlements thrown out and class actions rejected or decertified. In many instances, these cases undergo years of litigation.

Windus replies: This isn’t just about Wal-Mart, though. All sorts of companies including retailers (Family Dollar), government contractors (Lockheed Martin Corp), business-services providers (Cintas Corp.), and magazines (Hearst Corp), have experienced similarities in their rulings.

Jeff continues: There’s been apprehension post Wal-Mart v Dukes. The aftermath is being closely monitored but critics are doing anything but calling off the fight.

Windus continues: Another blockbuster case from just a couple years ago was the Peggy Young v. United Parcel Service. In this case, Young, a delivery driver for UPS, had requested to be excused from lifting more than twenty pounds per doctor’s orders while she was pregnant.

Jeff replies: However, in Young’s job description she was required to lift up to seventy pounds. This is where UPS argued that assigning Young “light duty” would amount to special treatment, being viewed as unfairly favorable.

Windus states: UPS stood by its policy to only accommodate associates who were temporarily injured on the job or covered by union contract mandates, and the Americans with Disabilities Act, in a few other gender-neutral circumstances.

Jeff continues: As a result, Young was forced to take seven months of unpaid leave thus resulting in the loss of her medical benefits when she needed them the most.

Windus states: With this discrimination case under close scrutiny, Justice Ruth Bader Ginsburg accused the court’s conservative majority of having a “blind spot” in regards to women’s rights.

Jeff continues: Especially considering the same five justices in query had not only thrown out the Walmart v. Duke sexual discrimination class action but they rejected Lilly Ledbetter’s equal pay lawsuit, as well.

Windus states: The result of the pregnancy discrimination case came only a year ago. The Supreme Court ruled 6-3 in favor of Young. While the justice’s declined to accept the broadest version of the discrimination argument, they made it clear that no employer had the right to treat anyone the way they did Young.

Jeff replies: Pregnancy-related discrimination isn’t isolated to the workplace though. Claims have also surfaced in mortgage lending, housing and education.

Windus states: To combat this issue, support organizations like Babygate have launched a New York-based non-profit, A Better Balance, that is a wonderful source of information about the rights of pregnant workers and their families under state and federal laws.

Jeff states: It’s a whole new world out there and the only way to keep up with it is to stay ahead of it…

Well it’s time for a break but stay tuned because we are going to tell you how Bernie Sanders Got Guts but His Tax Plan is Hopeless.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: But before we start on this next segment, Windus would like to remind you of her offer.

Windus states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Bernie Sanders Got Guts but His Tax Plan is Hopeless.

Jeff states: So in continuing the political discussion it is time to turn to Bernie Sanders’ tax plan which is discouraging to say the least. The populist Democratic presidential candidate has run his campaign on the basis of a “wholesale dismantling of the nation’s economic and political status quo,” according to Yahoo! Finance.

www.taxes.yahoo.com/post/140456796658/bernie-sanders-tax-plan-is-hopeless

Jeff replies: These details are coming from the nonpartisan Tax Policy Center who are releasing estimates that Sanders’ plan would amount to about $1.5 trillion in new tax revenue a year!

Windus continues: Currently, the government takes in about $3.4 trillion in a year, which would mean that Bernie’s plan would rocket the tax bite by around 46%. By the next decade, new taxes would be totaling nearly $2.5 trillion per annum.

Jeff replies: Granted most of these tax hikes are targeting the wealthy but “all income groups would pay some additional tax,” the center reports in its most recent analysis.

Windus states: Bernie Sanders, as gutsy as he is, explains that those new taxes would be worth it since they’d cover the cost of universal healthcare, college education for anyone who wanted to further their education, extended family leave, new infrastructure stimulus and a whole bunch of other things.

Jeff states: But how idealistic is this plan is we can’t even get congress to vote on shoveling the snow after a blizzard?? Take the example of, congress refusing to raise national taxes on gasoline. Gas prices right now are extremely low but the Highway Trust Fund (funded by gas tax) has to “offset” its expense each year by pulling from other programs.

Windus continues: Congress has steadily refused to raise taxes despite the ballooning national debt that’s now around $19 trillion and change. How is Sanders’ going to convince them to increase new taxes by 46%, when the government is more apt to borrow additional funding then raise taxes, passing the tab to future generations to pay?

Jeff states: Sanders’ still confidently charges on though. Maybe it’s the assumption that voters don’t care where it comes from, just as long as they have their freebies. Maybe he’s looking to start a big debate by offering a segway from business as usual.

Windus replies: If it’s a segway, let’s look at the details. The new tax plan that Sanders’ has suggested would enact a new 2.2% surtax on all taxable income and a new 6.2% payroll tax on employers.

Jeff continues: Now Windus, according to the tax plan, the employers would be responsible for paying the new taxes but we all know that they will almost unquestionably recoup their losses by lowering employee wages or reducing the benefits. Look what happened with ObamaCare.

Windus states: They have to make up that money somewhere, Jeff, and it always seems to be detrimental to the guy at the bottom. In addition to the new employer taxes, the top income tax rate would drop from 39.6% to 28%.

Jeff continues: However, a plethora of new surtaxes would raise the tax burden on those at the $200,000 a year and up. Those surtaxes would just keep growing on your way up the income chart.

Windus states: Also under Sanders’ new tax plan, capital gains for the wealthy would be taxed as ordinary income, meaning a much larger tax bite. For lower earners, lower tax rates for capital gains would still apply.

Jeff continues: In addition, there would be new taxes on financial transactions. Now does all of this change in taxes means new changes in tax law?

Windus states: Well, there are a lot of other provisions but that does bring up the point that these changes would make tax code much more complicated instead of simpler.

Jeff replies: All things considered, the utopian plan Sanders’ has revealed will leave Americans with higher taxes before they could figure out what they will be getting for it. Or as it’s put “front-loading the pain, back-loading the gain.”

Windus states: But then again, every presidential candidate has some sort of new tax plan, no more reliable than what Bernie Sanders has asserted. Take Donald Trump for example.

Jeff continues: Yes, Trump almost wants to completely oppose Sanders by cutting individual and business taxes across the board. Sounds great but there’s that one little problem, analysts at the Tax Policy Center say it would hack nearly $1 trillion a year off of government revenue.

Windus states: By cutting revenue, we’d need to start looking for other places to get that money from. Medicare and Social Security would either have to take big cuts or eliminate various government functions.

Jeff states: Hillary Clinton may have the most practical solution under her belt. Although, while it’s unlikely for congress to agree with the steep tax hikes she wants to slap on the wealthy, at least her plan is a starting point for future legislation.

Windus replies: According to the Tax Policy Center, estimates are showing that her plan would increase government revenue by roughly $110 billion per year. Although, those funds are not going to be used to pay down the national debt.

Jeff states: Clinton plans to offset tax cuts for lower earners with the extra revenue brought in by taxing the wealthy. There is the likelihood that it would cost more than planned, but we all know that no tax plan comes free.

Windus replies: But you know what does come free…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Stay tuned because after the break we are going to tell you How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: But before we continue with this next segment, I want to remind you that PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

Jeff states: So now that we approaching the middle of March, I thought we would cover today some hot tax tips to save you money.

Windus states: But first Jeff, I heard an announcement by the IRS that they are holding refunds totaling $950 million for people who have not filed a 2012 Federal Income Tax Return. Is that true?

Jeff states: It’s hard to believe that the IRS is holding almost $1 billion of funds that should be refunded to taxpayers and that is just for the 2012 tax year alone. That amount is also probably consistant for the 2013 and 2014 tax years.

Windus states: That being the case the IRS is holding about $3 billion that does not even belong to them!

Jeff replies: Well earlier this week the IRS announced that Federal income tax refunds totaling $950 million may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2012. The IRS estimates the midpoint for potential refunds for 2012 to be $718.00, with half being worth more than $718.00 and half being worth less.

Windus asks: So for someone who has not filed, what rules apply to claim their money?

Jeff replies: In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund; however under some circumstances you can lose your right to receive a refund of overpaid taxes if already two years have passed. But if you file a tax return that is late and there is an overpayment, the IRS will not assess a penalty for filing that return late. Nevertheless, under all circumstances if no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. For 2012 tax returns, the window closes on April 18, 2016 (although this year residents of Maine and Massachusetts have until April 19th). The law requires the tax return to be properly addressed, mailed and postmarked by that date.

Jeff continues: Additionally you should be mindful that taxpayers seeking a 2012 refund may still have their refund checks held up if they have not filed tax returns for 2013 and 2014. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.

Windus asks: Are there any other benefits taxpayers loose by not filing a tax return?

Jeff replies: Yes, if you are a low or moderate income worker who is entitled to the Earned Income Tax Credit, you cannot get a tax refund that includes this credit unless you file a tax return. For 2012, the credit is worth as much as $5,891.00.

Windus asks: So what if you figure that you will still owe the IRS if you file a delinquent tax return, should you still file?

Jeff replies: By all means! Besides not receiving or even forfeiting your refund, not filing a Federal income tax return can be even more costly as the IRS may file a substitute return for you if you do not voluntarily file. These “substitute tax returns” always show a higher liability than if an actual return was filed because they do not take into account your marriage or household status, your dependents, any business expenses, available itemized deductions, basis in assets sold, income exclusions or tax credits. Also, all interest and penalties will be based on this higher liability.

Jeff continues: Outstanding tax returns also prevent you from making payment arrangements and avoiding collection action so even if you are unable to fully pay any tax due on the late returns, it is to your benefit to seek tax counsel to coordinate their preparation and secure collection holds with the IRS. Additionally tax counsel should seek abatement of the penalties which include the “failure to file” penalty that could increase your tax bill by 25% or more.

Facts about the Adoption Tax Credit

Windus asks: OK Jeff. I understand that if a taxpayer adopted a child in 2015 there is a tax credit that may be available.

Jeff replies: That’s right Windus. If you adopted or tried to adopt a child in 2015, you may qualify for a tax credit. Here are some things you should know about the adoption credit.
1. Credit or Exclusion. The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can’t get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax.
2. Maximum Benefit. The maximum adoption tax credit and exclusion for 2015 is $13,400 per child.
3. Credit Carryover. If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2015, you can use it to reduce your taxes for 2016. You can do this for up to five years, or until you fully use the credit, whichever comes first.
4. Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themself.
5. Qualified Expenses. Adoption expenses must be directly related to the adoption of the child and be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.
6. Domestic or Foreign Adoptions. In most cases, you can claim the credit whether the adoption is domestic or foreign. However, the timing rules for which expenses to include differ between the two types of adoption.
7. Special Needs Child. If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you didn’t pay any qualified adoption expenses.
8. No Double Benefit. Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion. However, you can’t claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense.
9. Income Limits. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount you can claim depending on the amount of your income.

Tax Savings from Higher Education Costs

Windus asks: OK Jeff. I understand that if a taxpayer paid for higher education in 2015 there is an opportunity to save money on taxes.

Jeff replies: That’s right Windus. Money you paid for higher education in 2015 can mean tax savings in 2016. If you, your spouse or your dependent took post-high school coursework last year, there may be a tax credit or deduction for you.

Windus asks: So what are the key tax breaks for higher education?

Jeff responds:
The American Opportunity Credit (AOTC) is:
• Worth up to $2,500 per eligible student.
• Used only for the first four years at an eligible college or vocational school.
• For students earning a degree or other recognized credential.
• For students going to school at least half-time for at least one academic period that started during or shortly after the tax year. Claimed on your tax return using Form 8863, Education Credits.

The Lifetime Learning Credit (LLC) is:
• Worth up to $2,000 per tax return, per year, no matter how many students qualify.
• For all years of higher education, including classes for learning or improving job skills.
• Claimed on your tax return using Form 8863, Education Credits.

The Tuition and Fees Deduction is:
• Claimed as an adjustment to income.
• Claimed whether or not you itemize.
• Limited to tuition and certain related expenses required for enrollment or attendance at eligible schools.
• Worth up to $4,000.

Additionally:
• You should receive Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. Your school also sends a copy to the IRS.
• You may only claim qualifying expenses paid in 2015.
• You can’t claim either credit if someone else claims you as a dependent.
• You can’t claim either AOTC or LLC and the Tuition and Fees Deduction for the same student or for the same expense, in the same year.
• Income limits could reduce the amount of credits or deductions you can claim.

Jeff states: We are always thinking of ways to save money at tax time and remember ….

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Jack from San Diego asks: If Bernie Sanders is looking to make college free to everyone, and such a situation actually occurred, what would happen to my kids 529 plans? Are ALL colleges on this list or is it more like the Board of Governors fee waiver that allows those from low income families to have their costs waived. How exactly is the plan supposed to work?

Answer by Windus and Jeff: Well these are good questions that I don’t even think Sanders has considered but according to the Bernie Sanders official website https://berniesanders.com/issues/its-time-to-make-college-tuition-free-and-debt-free/, here are the steps that Sanders will take as President to make college debt free:

1. MAKE TUITION FREE AT PUBLIC COLLEGES AND UNIVERSITIES.
Sanders states – Last year, Germany eliminated tuition because they believed that charging students $1,300 per year was discouraging Germans from going to college. Next year, Chile will do the same. Finland, Norway, Sweden and many other countries around the world also offer free college to all of their citizens. If other countries can take this action, Sanders believes that so can the United States of America.

2. STOP THE FEDERAL GOVERNMENT FROM MAKING A PROFIT ON STUDENT LOANS.
Sanders states: Over the next decade, it has been estimated that the federal government will make a profit of over $110 billion on student loan programs. Sanders is looking to prevent the federal government from profiteering on the backs of college students and use this money instead to significantly lower student loan interest rates.

3. SUBSTANTIALLY CUT STUDENT LOAN INTEREST RATES.
Under the Sanders plan, the formula for setting student loan interest rates would go back to where it was in 2006. If this plan were in effect today, interest rates on undergraduate loans would drop from 4.29% to just 2.37%.

4. ALLOW AMERICANS TO REFINANCE STUDENT LOANS AT TODAY’S LOW INTEREST RATES.
Sanders states – It makes no sense that you can get an auto loan today with an interest rate of 2.5%, but millions of college graduates are forced to pay interest rates of 5% to 7% or more for decades. Sanders is looking to allow Americans would be able to refinance their student loans at today’s low interest rates.

5. ALLOW STUDENTS TO USE NEED-BASED FINANCIAL AID AND WORK STUDY PROGRAMS TO MAKE COLLEGE DEBT FREE.
The Sanders plan would require public colleges and universities to meet 100% of the financial needs of the lowest-income students. Low-income students would be able to use federal, state and college financial aid to cover room and board, books and living expenses. And Sanders would more than triple the federal work study program to build career experience that will help them after they graduate.

6. FULLY PAID FOR BY IMPOSING A TAX ON WALL STREET SPECULATORS.
The Sanders plan calls for the cost of this $75 billion a year plan to be fully paid for by imposing a tax on Wall Street speculators. Sanders claims some 40 countries throughout the world have imposed a similar tax including Britain, Germany, France, Switzerland, and China.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!