FBAR: Form FinCEN 114 replaces TD F 90-22.1

FBAR: Form FinCEN 114 replaces TD F 90-22.1 replaced

• On September 30th, 2013, the Financial Crimes Enforcement Network (FinCEN) made a very important change to the FBAR form which will effect it's filing for 2014. 
• Form FinCEN 114 reporting threshold (total value of foreign assets) is $10,000 at any time during the calendar year.

What Are The Changes:

• The FinCEN Form 114 supersedes TD F 90-22.1 as the official FBAR form. 
• The new FinCEN Form 114 is only available online on the BSA E-Filing System website. 
• A paper copy of the FinCEN Form 114 will not be accepted. 
• The system allows the filer to enter the calender reported, including past years on the online form. 
• The online form offers an option to explain a late filing. 
• It also lets you indicate if a filing is being made in conjunction with an IRS compliance program. 
• If you are filing FBAR with your spouse jointly or if you wish to have a third party preparer file your FBARs on your behalf, you can use the new FinCEN Form 114a. Form 114a is not filed with the Form 114 but maintained with the FBAR records by the filer. 

BSA E-Filing System

• The taxpayer has to go on the website and can download an Adobe PDF version of the FBAR, fill out the report, sign & save a copy & then submit the FBAR on the BSA Website. 
• Or the taxpayer can designate their EA, CPA or attorney to file on the BSA website on their behalf. 

Becoming a BSA Filer:

• An Enrolled Agent, CPA or Attorney can become a designated third-party filer. 
• The EA, CPA or attorney must make sure they have documented authority from the taxpayers required to file to sign & submit FBARs on their behalf through the BSA E-Filing System. 
• If such authority has been provided, the EA, CPA or attorney can file the FBARs through the single BSA account established for them. 
• Professional tax software programs may have included the FinCEN Form 114, enabling e-fling with the BSA Website. 

FBAR (Foreign Bank Account Report FinCEN 114) due no later than June 30th annually.

• The electronic version of the FBAR is currently available and must be filed electronically effective July 1, 2013.
• To file an FBAR report
• Line Item Instructions for completing the FBAR (Form 114)
• Record of Authorization to Electronically File FBARs (Form 114a) Click on the link to open the form to authorize spouse (if filing jointly) or a third party (individual or entity) to file the FBAR on your behalf. This form may be completed and saved electronically. Follow the instructions and complete all of the requested information. The filer and the account owner should maintain a copy of the completed form. The form must be made available upon request by FinCEN or the IRS. 
• Special notice for 2013 filings due by June 30, 2014

New Reporting Requirements by US Taxpayers Holding Foreign Financial Assets (Form 8938)

• Taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS on Form 8938, Statement of Specified Foreign Financial Assets. File Form 8938 if max value of account(s) exceeds $50,000 at any point during the year. Must use US Treasury FMS website Treasury Reporting Rates of Exchange to calculate foreign currency exchange rate. 
• The new Form 8938 filing requirement does not replace or otherwise affect a taxpayers requirement to file FBAR. A chart providing a comparison of Form 8938 and FBAR requirements, and other information to help taxpayers determine if they are required to file Form 8938, may be accessed from the IRS Foreign Account Tax Compliance Act Web page.
• Attach Form 8938 Statement of Specified Foreign Financial Assets to Form 1040 if max value of account(s) is more than $50,000 on the last day of the tax year, or more than $75,000 at any time during the tax year

Offshore Voluntary Disclosure Program

• On Jan 9, 2012, the IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. This program will be open for an indefinite period until otherwise announced.

Spring Cleaning: What Financial Records to Keep and What to Throw Away

Spring Cleaning: What Financial Records to Keep and What to Throw Away

When it comes to financial papers, an approach of “better safe than sorry” can lead to a whole lot of clutter. Tax season is coming to a close, and spring is upon us; it’s time to rummage through those mounds of financial records and other important documents and determine what financial records to keep and what can go.

Here is a quick overview of how long you should keep those important documents:
Safe to Dispose of (optionally, keep permanently):

• Bank Deposit Slips (after reconciling statements)
• Certificates of Deposit (after maturity)
• Loan Documents (when repaid)
• Term life Policies (after term expires)
• Savings Bonds (after maturity)
• Car Title (when car sold)
• Warranties (after expiration)

Keep Permanently:

• Birth Certificate
• Death Certificates
• Marriage License
• Military Discharge Papers
• Social Security Card
• Loan Discharge Notices
• Employer Defined-Benefit Communications
• Permanent Life Policies
• IRA Contribution Records

Keep for One Year:

• Canceled Checks (7 years if needed to support tax filings)
• Check Registers
• Check Statements
• Credit Card Statements (7 years if needed to support tax filings)
• Pay Stubs

Keep for Seven Years:

• Brokerage Statements (after securities sold)
• Receipts (if needed to support tax filings)
• Purchase Confirmations and 1099s (after securities sold)
• Tax Returns and Supporting Documents
• Paperwork on Charitable Donations
• Investment and Real Estate Records (after you sell)
• Bank Statements

Keep Indefinitely:

• W-2 Wage and Tax Statement (until you start receiving social security)
• Receipts for Big Ticket Items

When You Receive a New One:

• 401k Statements
• Social Security Statements
• Bills for Non-Deductible Items
• Insurance Policies

Dispose of Old Copy When Updated:

• Health-Care Proxy
• Living Trust
• Living Will
• Power of Attorney
• Will
• Insurance Inventory

Every household must work out it’s own records management system, but some general guidelines can help. This is not necessarily a fully comprehensive list. However, it gives an idea of what can go and when. If you are confused or unsure about a document it’s best to check with your accountant before disposing of it.

This information was provided by:
Mary Ellen Hall EA
Rauker, Scheinfeldt & Company, Inc.
Auburn, MA
Phone - 508-832-4085
Email - Mary Ellen
Website - Rauker, Scheinfeldt

Courtesy:  My Senior Portal

10 Tips for Business Success

10 Tips for Business Success

Running a business and a home can be complex, with so many people and government agencies pulling at you from 50 different directions. With endless duties, it’s amazing that anyone is actually able to get work done, to produce a product, finish a project and raise a family. Yet, we do, don’t we? And we do it well.

In a workshop conducted for executive women, the universal complaint was their days were so full of interruptions that these women couldn’t get their own work done. By the end of the workshop, they had come to realize – the interruptions are the job. To manage interruptions and make your life less taxing, here are some guidelines.

1. Know what you want. Whether in life or business, have a goal. Have you ever seen people who seem to always get what they want? When the opportunity presents itself, they know what to ask for – and don’t hesitate to ask.
2. Have a plan. When outlining the steps to reach your goal, you’ll actually take those steps. It feels good to cross off each step as you go along. Besides, business plans can really save you when you get audited.
3. Care. Care about the people you live with, you work with, supply you and pay you. When you treat people well; when you listen to them; when you make each person feel they have 100% of your attention when it matters – you’ll have earned powerful loyalty, respect and love.
4. Know things. Learn the things you need to know to reach your goals, while limiting reliance on others as much as possible. On deadline, you can step in to do the task, or quickly train someone to do it.
5. Delegate. Once you know the things you must know to run your business or project, hire the right people to do the things requiring expertise. If you have any doubts before hiring them – keep looking.
6. Market yourself with finesse – not aggressiveness. Whatever you do, you’re always selling – whether it’s yourself, your company, your product, your services, or your ideas and passions. Don’t be overly modest. Learn to express your ideas or pitches succinctly and effectively.
7. Go to the top. Start with the president, CEO, or the person with the decision-making authority, at the company you want to pitch. To get past their executive assistants, just tell the assistant what you want to accomplish. Make the assistants your allies. They not only have the ear of the top boss – but also influence all the executives’ assistants. Let the boss and his/her aide introduce you to their operations executives or managers.
8. Don’t waste your advertising budget on big ticket, splashy ads unless you have unlimited funds. Those are good for the moment only. Use your budget and your customers’ word-of-mouth to establish a constant, visible presence.
9. Keep great records and comply with all government requirements – on all levels. Not only will this make audits easier, but give you information to keep your costs under control, good records reduce your taxes,
10. Have no competitors. Everyone in your industry does something just a little differently. So when someone else is a better choice for your customer or client – refer them. In fact, make the introduction. You’ll generate good will all around.

BONUS – Number 11. Don't "cut corners" or scrimp on quality. Make each product or project as important the 100th time as it was the first time. Doing a good job is the best form of marketing.

Net Investment Income Tax

Net Investment Income Tax
Starting in 2013, some taxpayers may be subject to the Net Investment Income Tax. You may owe this tax if you have income from investments and your income for the year is more than certain limits. Here are four things from the IRS that you should know about this tax:

1. Net Investment Income Tax.  The law requires a tax of 3.8 percent on the lesser of either your net investment income or the amount by which your modified adjusted gross income exceeds a threshold amount based on your filing status.

2. Net investment income.  This amount generally includes income such as:

• interest
• dividends
• capital gains
• rental and royalty income
• non-qualified annuities

This list is not all-inclusive. Net investment income normally does not include wages and most self-employment income. It does not include unemployment compensation, Social Security benefits or alimony. Net investment income also does not include any gain on the sale of your main home that you exclude from your income.

After you add up your total investment income, you then subtract your deductions that are properly allocable to this income. The result is your net investment income. Refer to the instructions for Form 8960, Net Investment Income Tax for more on how to figure your net investment income or MAGI.

3. Income threshold amounts.  You may owe the tax if you have net investment income and your modified adjusted gross income is more than the following amount for your filing status:

Filing Status	Threshold Amount
Married filing jointly	$250,000
Married filing separately	$125,000
Single	$200,000
Head of household (with qualifying person)	$200,000
Qualifying widow(er) with dependent child	$250,000

4. How to report.  If you owe this tax, you must file Form 8960 with your federal tax return. If you had too little tax withheld or did not pay enough estimated taxes, you may have to pay an estimated tax penalty.

For more on this topic visit IRS.gov/aca. You can also get tax forms on IRS.gov or by mail by calling 800-TAX-FORM (800-829-3676)
Net Investment Income Tax FAQs
Tax Topic 559 - Net Investment Income Tax

Bitcoin News

Bitcoin

• New IRS guidance treats Bitcoins and other crypto-currencies not as money, but as property, for tax purposes and applies immediately to all returns. See the full text of Notice 2014-21. IRS Virtual Currency Guidance
• Regardless of what Bitcoin’s creators and promoters may say, as far as the IRS is concerned, bitcoin is not money or currency. The IRS will treat bitcoin holdings much like corporate stock or other property (IRS Notice 2014-21).
• Bitcoin are created by a digital “mining” process and is not backed or regulated by any government, central bank or other legal entity. Some claim this makes Bitcoin safer than traditional currency because its value can’t be manipulated by central banks or governments.
• Bitcoin can also be directly transferred anonymously across the Internet. This can make the Bitcoin a cheap way to settle international transactions because there are no bank charges to pay or exchange rates to deal with.
• No one has to accept Bitcoin as money. Nevertheless, a growing number of merchants are accepting them. In fact, a Manhattan real estate broker recently announced that it would start accepting payments in Bitcoin.
• Interestingly, people buy and sell Bitcoin for dollars on online exchanges — much like gold.
• Wages paid to employees using virtual currency are taxable to the employee, must be reported by an employer on a Form W-2, Wage and Tax Statement, and are subject to federal income tax withholding and payroll taxes.
• Payments using virtual currency made to independent contractors and other service providers are taxable, and self-employment tax rules generally apply. Normally, payers must issue Form 1099.
• Payments made using virtual currency will be subject to the same information-reporting rules as any other payment made in property.
• The IRS warns that taxpayers who treated virtual currencies in a manner inconsistent with IRS Notice 2014-21, before the date the notice was issued, will not get penalty relief, unless they can establish that their underpayment or failure to properly file information returns was due to "reasonable cause".

References:
inmanNEWS, "IRS’ Bitcoin Guidance Turns Every Transaction into a Reportable Capital Gain or Loss at Tax Time",  Stephen Fishman, Contributor, March 31, 2014

IRS Notice 2014-21

Journal of Accountancy, "New Guidance Clarifies Tax Treatment of Bitcoin and Other Virtual Currencies", Alistair M. Nevius, JD, March 25, 2014

Auto Expenses - Standard Mileage Rate or Actual Expenses

Auto Expenses - Standard Mileage Rate or Actual Expenses 
If you use your vehicle for business purposes, you may be able to deduct auto expenses. You can either claim Standard Mileage Rate or Actual Car Expenses.

Standard Mileage Rate Tables 
Source: Small Business Taxes & Management^TM

• IRS Standard Mileage Rates
• If standard mileage is used for a year, you cannot claim any actual expenses for that year (insurance, repairs, maintenance, tire changes, title fees, etc) 
• If you choose standard mileage, you must do so before the deadline for filing your return. 
• Standard mileage must be chosen in the first year the vehicle is placed in service. In future years, it can be changed to actual expenses, but then cannot be changed back to standard mileage. 

Actual Expenses

• Actual expenses can include: depreciation, lease payments, registration fees, licenses, gas, insurance, repairs, oil, garage rental, tires, tolls, and parking fees. 
• Actual expenses can be chosen at any time during the useful life of the vehicle, but once chosen cannot be changed to another method. 
• If changed from standard mileage, you must use straight-line depreciation for the remainder of the years the vehicle is in service. 

Source: IRS Pub 463

Reduce Tax-Time Stress!

Reduce Tax-Time Stress!
Start Collecting Your Tax Records Now

• Paperwork necessary to file your income taxes? 
• What should you keep? 
• Here is a checklist of some common items needed at tax time:

Income

• W-2s 
• 1099s for miscellaneous income 
• Proof of alimony 
• Interest and dividend income statements 
• Social Security (1099-SSA) and pension income statements 
• Retirement plan distributions (1099-R) for contributions, distributions, & rollovers 
• Brokerage statements (1099-B) 
• Profit/loss K-1 statements from partnerships, trusts, and small business 
• Proof of other income (jury duty, child support, etc.) 
• Income/expense from rental properties, self-employment, and hobbies 

Deductions

• Mortgage Interest (1098) 
• Real estate tax documents 
• Expenses: moving, education, child-care, mortgage and student interest, IRA contributions 
• Charitable donations (cash and non-cash) receipts 
• Health care expenses 
• Casualty and theft loss documentation 
• Un-reimbursed employee expenses 
• Receipts for qualified energy efficiency purchases 
• Documents for the purchase, sale, or refinance of your home 
• Motor vehicle registration receipts 
• Gambling profit and losses documentation 
• Mileage logs for business, moving, medical, and charitable travel 
• Job related expenses 
• Tuition payments (1098-T) 

Other

• Cost information for any investment or property sale 
• Full information on any dependents (DOB, age, any income, etc.) 
• Education information for all qualifying family members 
• Review all checking account and credit card statements for deductions 
• Identify any estimated tax payments made during the year 
• Copies of any tax refunds 
• Year-end payroll check stub 
• Recap of any gifts received or given in excess of $14,000