Here are few suggestions to get you started:

If you’re like most Americans, you don’t have a secret bank account in Switzerland where you stash money to keep it out of IRS hands. Being out of the foreign tax-shelter loop isn’t such a bad thing. Uncle Sam recently signed a new tax treaty with that Alpine nation that should help U.S. collectors crack down on tax-evading owners of foreign bank accounts. But there still are plenty of legal tax havens for law-abiding taxpayers. Even better, most regular Joe and Jane taxpayers can easily take advantage of them.
Gimme Shelter
If you own a home, your actual shelter is probably your best tax shelter. Your house’s tax-cutting opportunities start as soon as you buy it and continue until you sell it. You get deductions for all or part of your mortgage interest, points paid to get the loan, interest on certain home equity loans, and your annual property tax payments. These write-offs can help reduce your tax bill each filing season.
Then there is the profit on your home’s sale. That’s money the IRS can’t touch. The biggest thing in real estate that would apply to most people is the primary residence sale exclusion. Under this tax code provision, up to $250,000 in sale profit for a single taxpayer, twice that for a married couple filing a joint return is not taxed. “If you sell before your gain gets to that point, you can avoid ever having to pay tax on the residence.  The beauty of this home-related tax shelter is that it applies to every principal residence you ever own as long as you meet the IRS rules. The key requirement is that you live in the home two of the five years before you sell. There are instances where people will buy a fixer-upper and live there for two years while fixing it up and then sell it at a profit. And though a lot of that profit can be attributable to their sweat equity, they still qualify for home sale exclusion.
Investment Opportunities
Investment real estate also offers some tax-shelter opportunities. One thing with real estate that puts it in that tax category as a more conventional shelter is that you can make a small down payment on real estate yet base your depreciation deduction on the entire purchase price. Along with the depreciation on the investment property, you also get mortgage interest and real estate tax deductions, as well as a write-off for upkeep and maintenance costs. Of course, when you sell investment real estate, you will owe capital gains on the profit. But you might be able to delay that bill by taking advantage of another tax law.
Exchange Advantages
Internal Revenue Code Section 1031 offers you a chance to postpone paying taxes on investment property by swapping it for another. Also known as a like-kind exchange, you sell a property and then use those proceeds to purchase another like one. Instead of recognized gain on the sold property, you roll it into new property and essentially reduce your cost basis in the new property by that gain. When you eventually sell the new property, you’ll recognize the originally deferred gain plus any additional accrued since you purchased the replacement property. But if you don’t need the proceeds and just want to get rid of the property, a 1031 exchange could help postpone an investment tax bill. In effect, you get an interest-free loan from Uncle Sam in the amount you would have paid in taxes. While like-kind exchanges are often used by real estate investors, the technique is available for any investment or business property. If you’re interested in a 1031 exchange, consult an expert in the area. It can get complicated and there are strict rules, such as the requirement that any swap be made by a qualified intermediary rather than by the property owner. If you make a misstep in the exchange process, it could invalidate any tax benefits.
Municipal Bonds
If you prefer more traditional investments, there are some tax shelter opportunities there, too. If bonds fit into your financial plan, look at municipal bonds. These instruments are issued primarily by state or local governments, or state-related organizations. The tax benefit? Some states don’t tax interest on bonds issued by their municipalities. As for the IRS, municipal bond income is not taxed at the federal level.
Business Tax Breaks
Business owners, including those who set up a sideline to supplement full-time wage income, can use several IRS-approved tax shelters. Section 179 of the tax code allows you to deduct substantial costs of business property purchases in the tax year they are made. Without this provision, the costs of items such as furniture and other equipment special to your business would have to be recovered through depreciation over several years. If you operate your business out of your home, you could be entitled to a home office deduction. With this tax break, you can convert some of the maintenance cost of your home to tax deductions. The insurance on your house or if you need a new roof, a percentage of these costs would be deductible. The amount is figured using the percentage of space that your home office represents. A business owner also can hire the spouse and kids as long as they do real work for the company. That gets additional income to them and provides deductions to the business.
Workplace Benefits You don’t have to be an entrepreneur to shelter income from Uncle Sam. Employees should take advantage of workplace benefits. Flexible spending accounts, to help pay child care costs and out-of-pocket medical expenses, allow workers to contribute money to the accounts before payroll taxes are figured. You never pay taxes on that money. That same pretax break is available for workplace 401(k) retirement plans.
Retirement Plans
Other outside-the-office retirement savings also can help you shelter income. Some traditional IRA owners might get an immediate tax deduction on their returns, along with a deferral of taxes on the IRA earnings. A Roth IRA is great way for some folks to avoid tax. You don’t get any deduction for Roth contributions, but when you eventually take money out of the account, it will be tax-free. And entrepreneurs have a variety of retirement plans — SEP and SIMPLE IRAs, Keoghs, Solo 401(k)s — that can help reduce their taxable business income as well as help prepare for eventual life after work.
With each of these various tax shelters, from your home to investments to your job to retirement savings, the IRS offers ways to hang onto more of your money. And when the tax man says it’s OK to keep money out of his hands, who’s going to argue?
Sal Scott

5 Principles Of Success

Prospecting:

Calling the leads who have responded to your ads or talking to people about the products and/or business.

Follow-Up:

Calling the leads that qualified and were invited to a call. The follow-up may include a three-way call if the lead qualifies for one.

Collecting the Check:

Signing up new distributors and customers and processing their orders.

As you are learning the ins-and-outs of your new business, it is highly suggested that you take time to look up any words or terms that you are unfamiliar with or that seem confusing. You can go to:

Dictionary.com

Wikipedia.org

Step 1: Lead Generation/Marketing

Sales Lead:

A sales lead is the identity of a person or entity potentially interested in purchasing a product or service, and represents the first stage of a sales process. The lead may have a corporation or business associated (a B2B lead) with the person(s). Sales leads come from either marketing lead generation processes such as trade shows, direct marketing, advertising, Internet marketing or from sales person prospecting activities such as cold calling. For a sales lead to qualify as a sales prospect, or equivalently to move a lead from the process step sales lead to the process sales prospect, qualification must be performed and evaluated. Typically this involves identifying by direct interrogation the lead’s product applicability, availability of funding, and time frame for purchase. Source: Wikipedia.org

Marketing: mar • ket • ing -noun:

The act of buying or selling in a market.

The total of activities involved in the transfer of goods from the producer or seller to the consumer or buyer, including advertising, shipping, storing, and selling. Source Dictionary.com

The two most important skills you will develop in your business are communication and marketing. How you communicate with people will directly affect their willingness and enthusiasm about doing business with you. The more time you dedicate to educating yourself and implementing what you learn, the faster you will become a master prospector/communicator and a master marketer. Learning how to communicate effectively through a variety of media will help you develop a satisfied and motivated team and customer base.

There are tutorials in the Marketing section of NorthStar to help you market the business opportunity and products.

Step 2: Prospecting

“Prospecting” is the act of communicating with leads, also known as prospects.

A prospect is:

A potential customer, client, or purchaser.

Candidate deemed likely to succeed.

Review the Polaris Conferencing Schedule for the Live Prospecting Training that is available to all Polaris Distributors.

The best way to become an effective business builder and prospector is to dive right in. You can role-play various prospecting conversations and product conversations with fellow associates and/or your enroller and up-line leaders. The sooner you start calling leads and talking to people about the products, the sooner you’ll become a master of the conversation and will build your business.

Connect with your Enroller and Up-Line Leaders to practice Prospecting and Product Conversations. They are eager to help you build your team.

Step 3: Follow-Up

It has been said that the “fortune is in the follow-up”. An essential element of the business is to follow up with your prospects after they have attended the call. The purpose of the follow-up is very simple: to assess how enthusiastic the prospect is about moving forward with the business and/or how excited the customer is about purchasing the products.

If the prospect is motivated and has the intention to move forward, you can conduct a three-way call. The three-way call demonstrates to your prospect that they will have support while building their business and they do not have to spend their time answering questions. You can also use a three-way call to complete a product sale with a customer.

The absolute best thing you can do between prospecting and following-up is to hop on the call you have invited guests to and give a testimonial. Giving testimonials establishes you as a leader to your guests and fellow associates. It also contributes the overall value and energy of the call.

You can obtain a Three-Way Call List with team members who are available to assist you with three-way calls. Ask your up-line leader or Enroller.

One More Step: Welcome Your New Customer/Distributor

Congratulations! You are about to enroll a new team member and/or customer. This is very simple to do.

Send them the appropriate Getting Started e-mail in the NorthStar System. This will give them all the instructions they need. You can also walk them through their enrollment or purchase over the phone, or in person. The Polaris Online Business Manager will track all the sales and ensure you are given accurate credit for your new distributor enrollment and/or sale.

Congratulations… you are building your business!

Let’s talk and get you the information in front of you to make an educated decision if this is a good fit for you.

Call me directly @ 949 929 1733

Jana Clinton

PMG Director & Founding Member

PMG Business Overview 800-845-1972

http://www.webtrafficjuggernaut.com/vlt/links/92672

Went into Pre-Launch Mode today, but it won’t be long until it’s live…a few weeks, perhaps a couple of months. I cannot begin to even list the benefits, assistance, and how this will turn around our own personal economy issues. You MUST Join from the free link above in order to to reserve your position. Soak up everything on the site.

The Financial Industry Regulatory Authority has fine Citigroup $600,000 for helping foreign clients avoid (or more appropriately evade)  taxes on dividends.  A $600k fine?  That’s less than 1% of the compensation for Andrew Hall.  Give me a break….  That’s not even a slap on the hand!   Citi has been pushing products that help clients evade taxes for years.  How about a criminal investigation?

Let look at some law courtesy of FindLaw:

US Code – Title 26 – Section 7201:  “Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall…be guilty of a felony…”

US Code – Title 26 – Section 7202:  “Any person required under this title to collect, account for , and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall…be guilty of a felony…”

Where’s a cop when you need one?

Just some thoughts…

Bob

The Ernst Young article on Canadian tax, touches on a wide aspect of tax. Especially important are their lil tips that tell you how best you can use each vehicle.

Latest 2009 calculators from EY are here. Its nice that u can see fo all the provinces at a glance. However this does’nt take into consideration the tax credits and/or any other income that are receiving.

President Obama has announced a further “crack down” on individuals trying to illegally avoid taxes in the USA by moving their money offshore.

No PROBLEM!

The fat cats and special interests are sure to have loopholes designed “just for them.” Luckily, with information available so FREELY, these loopholes aren’t difficult to find if you are looking!
(Post below is “re-blogged” from bestarticlesmanagement.com)

5 trillion in assets worldwide is held “offshore” in tax havens the IRS writes on their website: “It is difficult to quantify the amount of assets being held offshore or the rate at which the industry is growing. But it has been estimated that some $5 trillion in assets worldwide is held “offshore” in tax havens. Presumably transfers from the U.S. Represent a large share of this wealth. One authority has estimated the annual revenue loss to the U.S.  at a minimum of $70 billion.”

Prior to the 1960’s, US taxpayers could purchase real estate located outside the United States and that property would not be included in his estate for purposes of US estate taxes. Today, all assets owned by a US taxpayer (wherever situated) are subject to both Federal estate and Federal income taxes – the same as his/your US real estate holdings. But, there is “financial planning” US citizens can take to avoid and mitigate these federal taxes.

Revocable foreign trust and underlying company
Assets held in a revocable foreign trust are considered by the tax code to be owned by the entity that has the power to revoke the assets – or a power under Code/Section 671 through 679.

For example, John Detroit (a US citizen) buys a waterfront home/condo in the British Virgin Islands (or Antigua or St. Barts) for $1,000,000. He rents the home to another US citizen half of the year at $8,000 per month.

Under the US tax code, John Detroit is considered the owner of the rental property and must put the $48,000 rental income on his US tax return.

But, suppose John Detroit holds the offshore home in a revocable foreign trust (with himself as the trustee), and suppose the foreign trust is revocable to an Anguilla International Business Company ( IBC ) instead of to a U.S. settlor (I.e., John Detroit ).

“One of the most effective applications of offshore trusts is in an ownership combination with a limited company.”
- Richard Graham-Taylor – partner Ernst & Young – Grand Cayman (January 1990)

But, suppose John Detroit holds the offshore home in a revocable foreign trust (with himself as the trustee), and suppose the foreign trust is revocable to an Anguilla International Business Company (IBC) instead of to a U.S. settlor (I.e., John Detroit). Under the US tax code, the owner of the offshore property is considered to be the Anguilla IBC; because the foreign trust is revocable to the foreign company. Under the US tax code when a grantor trust power under sections IRC 671 – 679 exists (called a “general power of appointment” in the tax code) , the tax liability is shifted to the settlor of the offshore trust (I.e., the Anguilla company), not the beneficiaries of the trust or the trustee. While any “power of appointment” will satisfy the tax code requirement, the “POWER to REVOKE” the assets is best when using “ordinary” Commonwealth Discretionary trusts – used by offshore barristers and trust companies, whose discretionary trusts are anything but “ordinary”.

How it’s done? Here’s one possible scenario:

Example #1: John Detroit buys $1,000,000 in bonds/debentures from Anguilla IBC X. Anguilla IBC X forms a revocable Anguilla trust, and moves the $1,000,000 into a bank account of the trustee (John Detroit) in an offshore bank.

There are no US beneficiaries named for the Anguilla trust.

John Detroit (as trustee) thereafter buys the B.V.I. home for $1,000,000 – and title is held in John Detroit ’s name (as trustee). Assets held in Offshore Commonwealth trusts are traditionally held in the name of the trustee of the trust.

In 2009, $48,000 in rental income is collected by John Detroit. Under the US tax Code, neither the offshore Anguilla trust nor John Detroit (as trustee) is considered the owner of the offshore property/real estate – the offshore company is the “owner”.

John Detroit does not have to put the $48,000 in rental income on his U.S. tax return (1040).

If the Anguilla IBC does not carry on any business “within the United States” or have an office inside the US, it does not have to file any US tax return or information returns.

Compliance is critical!

John Detroit should file a TD F-90.22.1.

http://www.irs.gov/pub/irs-pdf/f90221.pdf

Read the instructions for this Treasury Form TD F-90.22.1 at the link above. The instructions are only two pages long. Note especially, the definitions for financial interest and signature authority in Form TD F-90.22.1.

Note, if John Detroit is not a “beneficiary” of the Anguilla trust and does not have a beneficial interest of “more than 50% in the income or assets of the trust”, than he is not considered to have a “financial interest” in the offshore real estate. The instructions for Form TD F-90.22.1 also say John Detroit must own “more than 50% of the shares” in the offshore company for him to be considered to have a “financial interest” for purposes of Form TD F-90.22.1.

In the case of John Detroit, he would have a signature authority over the foreign bank account not a financial interest. The distinction is important not only for tax liability purposes, but for filing the TD F-90.22.1 form itself.

Example #2: John Detroit, as trustee of the Anguilla trust, sells the real estate in 2015 for $2,000,000. There is a capital gain of $1,000,000, but the offshore company does not have a US tax liability, and Anguilla does not have a CGT. The $1,000,000 capital gain goes untaxed.

But, if John Detroit owned the offshore home in his own name (I.e., not as trustee); he would have a CGT of about $150,000 (15% of the $1,000,000 in appreciation). He would also have to put the annual rental income ($48,000) on his US tax return and pay US taxes on this income.

Under the US tax code, rental incomes from property located outside the United States would not be subject to inclusion as “Sub-part F” income under the US Controlled Foreign Corporation provisions (See Code sections 951 thru 958). There would be no US tax liability for John Detroit under the CFC legislation.

“One of the most effective applications of offshore trusts is in an ownership combination with a limited company.” – Richard Graham-Taylor – partner Ernst & Young – Grand Cayman (January 1990) 2005 revenues for Ernst & Young worldwide were $19 billion.

(BLOGGERS NOTE: The Cayman Islands recently signed transparency treaties with the US. The countries of Nevis and Belize are still havens that have no transparency guidelines with the US. As of July, 2009, even Switzerland has caved to US pressure to report the identity of account holders. See my previous blog)

Asset Protection
In the financial plan above John Detroit would have good asset protection against creditors (including the IRS). US judgments are not enforceable in any of the offshore tax havens. To seek a judgment in an offshore financial center, actions have to be initiated in the offshore jurisdiction.

This proves to be very difficult, became US trained and licensed attorneys cannot practice before the courts (for example in the Bahamas). Moreover, only a citizen of the Bahamas can become an attorney in the Bahamas. In other words, the US attorney or plaintiff needs to hire an additional Bahamian attorney.

Even when such actions are initiated, they are often futile, and the local courts almost always side with defendants. This is especially true in (IRS) tax litigation – which understandably the IRS (or State) courts NEVER initiate. An exception would be activities which involve drug money laundering and other criminal behavior.

Placing liens on offshore property is not the domain of the US judicial system.

To the extent this document constitutes tax advice subject to Circular 230 this tax advice was not intended or written to be used and it cannot be used by any taxpayer for the purpose of avoiding penalties that may be imposed on the taxpayer. (The foregoing legend has been affixed pursuant to U.S. Treasury Regulations governing tax practice).
Article Source:
http://www.bestmanagementarticles.com
http://asset-management.bestmanagementarticles.com

About the Author:
The author has been domiciled in a tax haven (Nassau, Bahamas) since 1990. Tom is currently an overseas agent for the Anguilla registrar (since 2001) – a UK overseas territory in the eastern Caribbean like the Cayman Islands, Bermuda and the B.V.I.

Switzerland and the United States have agreed on a new Tax Information Exchange (TIA) Agreement, a further erosion of offshore banking secrecy. The new agreement will allow the U.S. greater access to banking records regarding Americans with Swiss accounts. Americans who have relied on offshore secrecy to avoid getting caught by the IRS need to re-examine their strategy. IRS guidelines require citizens to pay taxes on all their worldwide income.

Many issues remain about the agreement: whether it will be narrowly tailored to requests regarding specific people, or more general fishing expeditions, like the ‘John Doe’ summons the United States is presently seeking to enforce against UBS. It is also not known whether the new TIA will only be prospective, or whether it will require disclosure of past accounts. The agreement will be subject to public referendum in Switzerland, where challenges to traditional banking secrecy have met with vigorous defense.

Another open issue is whether the new agreement will result in the IRS dropping its litigation against UBS, demanding the disclosure of 52,000 accounts. The Swiss have indicated that the new agreement will effectively settle that case, while American officials state that the litigation will continue and the IRS will pursue disclosure of the offshore accounts.

In light of these events, Americans with non-compliant offshore accounts should consider voluntary disclosure before the IRS discovers their accounts. The IRS is offering a sort of amnesty to taxpayers who voluntarily come forward before they are discovered. The IRS’ Voluntary Disclosure Program offers reduced penalties and a promise of no criminal prosecution. This program expires in less than three months and will not apply to taxpayers once the IRS gets their names.

Pre-emptive disclosure can be made by qualified legal counsel, experienced in offshore compliance and IRS negotiations. A qualified law firm can approach the IRS on your behalf, demonstrate proper current compliance and negotiate to avoid criminal prosecution and reduce fines and penalties for past non-compliance. Although fines and penalties may be significant, they pale before the consequences of an IRS criminal prosecution.

Smart investors have always complied with the IRS regulations and used the proper loopholes to legally pay as little as possible. Solutions include not moving your money back and forth offshore which is a huge red flag, but to simply grow it offshore in real estate and then leave the equity there. If no liquidation of assets occurs, then no income is derived and no tax consequences occur.

Specializing in legally reducing your taxes is actually quite simple, once you become a worldwide citizen. The country of Belize, a tax haven that CONTINUES to respect the privacy of its bank account holders is one of my favorite places to invest in ocean front real estate. For details, contact me at dcrowe@themayanislands.com.

This week ICSC led an effort to show the support of the commercial real estate industry for S. 823/H.R. 2452, the Net Operating Loss (NOL) Carryback Act.

The NOL Carryback Act would provide American companies struggling in the current economy with the ability to access a quick infusion of cash by writing off losses from 2008 or 2009 against gains from the last five years, rather than carrying them forward for the next 20 years. ICSC supports the NOL Carryback Act and is advocating removal of the program exemption for companies that have accepted funds from the Troubled Asset Relief Program (TARP).

The act will allow businesses to stabilize operations and stay current with mortgage payments, thereby protecting banks from absorbing another round of write-downs associated with non-performing real estate loans. While the losses being experienced today will be offset against future tax liabilities, the real estate industry needs liquidity to make payroll, maintain the commercial properties in our communities, and stave off foreclosures and bankruptcies.

Learn More

Robert Reich, May 4, 2009

Robert Reich was the nation’s 22nd Secretary of Labor and is a professor at the University of California at Berkeley. His latest book is “Supercapitalism.” This is his personal journal.

Why, one may ask, is Obama taking on yet another huge fight by taking aim at foreign tax havens? Yes, it’s unfair that multinationals pay an average tax rate of only 2 percent on their foreign revenues, and it’s unfair that some wealthy Americans are avoiding taxes altogether by parking their fortunes abroad. But, hey, these have been true for decades. So why take them on now, when the President is also taking on universal health insurance and global warming, and trying to get the economy going again?

The White House says that some jobs go abroad because American companies are lured there by tax loopholes which, if closed, would bring the jobs home. True. But a crackdown on tax havens might also cost American jobs if companies decided that a higher tax burden here required them to cut payrolls in order to stay competitive or to simply leave the United States altogether.

Another possible explanation is that it was a campaign promise. Obama frequently criticized the tax code for allowing American companies with overseas operations to defer paying taxes on corporate profits if they placed the money back into their foreign subsidiaries. But this can’t be it, either. He criticized several other things as well — such as the North American Free Trade Agreement — which he now seems comfortable with.

So again: why this, and why now?

Two reasons, both strategic. The President needs the cooperation of many big corporations if he’s going to get universal health insurance enacted this year. Many of these companies would benefit from lower health costs but they’re reluctant to take on Big Pharma, big health insurance companies, and major health providers, all of whom are dead set against a provision in the emerging health insurance proposal that would allow the public to opt for a government health plan. How does it help for him to take on corporate tax havens? Because the President needs as many bargaining chips with the rest of corporate America as possible. The proposed crackdown on foreign tax avoidance is one such chip. He might be willing to take it off the table if big corporations lend him active support on health insurance.

Read More Here

The idea of having a Swiss bank account has long been a subtle way of hiding the money that you have.  For years, TV and film have given examples of the big criminals hiding their assets in Swiss bank accounts and the image of having one seemed only possible for the fabulously rich and wealthy.  As much as that may be true, it looks like those times are ending.  

As millions of Americans are screaming out about having the rich be taxed at higher percentages, few if any are calling for honest tax filing.  What has become normal is the use of tax havens for the rich and wealthy to hide the true value of their assets.  By doing so they, of course, pay much less in income tax.  Sounds great, you might say.  But think of it this way.  There’s only some Americans that have the fiscal leverage to acquire a Swiss bank account or use one of the world’s tax havens.  Of those Americans, arguably some of the richest Americans, they are making some of that money in America presumably and should be paying taxes on it.  That’s how the system works.  If those incomes are never reported and never taxed then those individuals are cheating the system.  Something that many of us have always assumed took place, but had little to no knowledge of how it’s done.

The BBC has reported that the United States IRS has requested the identities and account information of over 50,000 U.S. residents believed to have illegally cheated on their taxes.  For now, the UBS (one of the largest Swiss banks famous for this type of activity) is denying said information because it would go against Swiss law.  International treaties have recently been put together to insure that no country is being cheated of their tax revenue, but UBS is saying that ample proof of these 50,000 Americans cheating on their taxes hasn’t been provided.  Earlier, 300 accounts were requested by the IRS and UBS settled with the IRS for 700 million in taxes that their customers should have paid. 

700 million dollar settlement for only 300 people’s accounts.  By a simple comparison that would be over 11 billion dollars in unpaid taxes from those 50,000 people!  

The US suspects 52,000 Americans of using UBS accounts to hide almost $15bn of assets and unpaid taxes.

What?!  15 billion dollars?!  How long has this been going on?  How many billions, or trillions, of dollars have been lost while costs are passed onto the middle and lower classes by those cheating the system?  If this is the money from UBS only, how much more is there in all of the world’s tax havens.  Maybe if we simply kept people from cheating on their taxes and using tax havens then taxes wouldn’t need to be raised.  Maybe some American businesses (yeah, that’s being nice because you know plenty do) have been doing the same thing.  How much money has America lost?

A reality check is going on in this country. Our homes may never be the money maker we have seen in the past. Our homestead may no longer be our bulging piggy bank; it may just have to go into the slot of shelter. No, I don’t mean the “shelter” like taking cover from the cold and rain but tax shelter for the biggest investment in your life.

For example, Uncle Sam gives gifts to homeowners called mortgage-interest write-offs. A home-buying program called mortgage credit certificate (MCC) allows low-income, first-time homebuyers to benefit from a mortgage interest tax credit of up to 20% of the mortgage interest payments made on a home.

The MCC is available each year a loan is kept and you live in the house purchased by the MCC. The fun thing is trying to figure out the formula to your benefit. For example, the credit is subtracted, dollar for dollar, from the income tax owed. This means if you paid $10,000 in interest on your home, your tax credit would be $2,000. So, if you make $20,000 income per year, you would owe the IRS nothing because your tax credit would cover the $2,000 tax debt.
(Check with the IRS or H & R Block for the details and paperwork)

Understand this is just an example how we can use our mortgage and home as a shelter rather than a second-mortgage or third-mortgage debt nightmare. Remember, if you signed on the dotted line for these equity “piggy bank” mortgages and then lose your job, you could lose your home if you cannot pay the equity loan. It is a gamble many people have taken to use the equity cash for home improvement, college bills or expensive vacations. Remember, many individuals may be losing their homes not because they cannot make the monthly mortgage payment; it could be that the homeowners cannot meet the equity loan debt. Either way, a homeowner is in danger of losing a home to foreclosure.

Check out these articles for different views on why shelter is better than investment.

http://gildedbutterfly.wordpress.com/2008/03/26/a-home-is-not-an-investment/
http://hbswk.hbs.edu/item/5843.html

http://www.usatoday.com/money/economy/housing/2008-12-12-homeprices_N.htm

The Democratic chairman of the powerful House Ways and Means Committee has been at the center of a seemingly endless swirl of questions about his activities. He came under fire this week after The New York Times reported that Rangel worked to protect a tax shelter for Nabors Industries, an oil company whose chief executive was pledging $1 million to a school bearing the congressman’s name.

The executive, Eugene M. Isenberg, also personally pledged $200,000 to the City College of New York, where the public policy school is named for Rangel. Last year, the company won congressional approval to preserve its tax shelter in the Caribbean, saving Nabors tens of millions of dollars annually and depriving the federal treasury of $1.1 billion in revenues over a decade, according to a Congressional analysis by the nonpartisan Joint Committee on Taxation.

The recent disclosures have hurt Rangel’s standing in the House, political watchers say.

SOURCE: Washington post

With democrats in congress still wasting money at this rate and wanting more of our tax money to give out to these large companies we shall never get out of the hole that they put us in from the start of the democratic control congress.

Belize is one of my favorite places in Central America and the Caribbean.  One of the main reasons for this can be found in the previous sentence; Belize combines the sunshine, white sand beaches and gin-colored waters of the Caribbean with the flavors and cultures of Central America.  Belize is the best of both worlds, and an excellent place to consider for travel and investment.

The Waters off Ambergris Caye

One of the most popular destinations in Belize for both tourism and for property investment is the island of Ambergris Caye.  Located just 12 miles off the mainland of Belize, Ambergris Caye boasts a laid-back lifestyle with views of the world’s second-largest living barrier reef just offshore.  A haven for SCUBA diving, fishing and other water sports, the island also offers plenty of dining, and shopping options for those that prefer to keep their feet dry.  I’m not the only one who loves Ambergris Caye.  Islands Magazine just named it one of the Ten Best Islands to Live On in their August, 2008 issue.

Belize, a former British Colony named British Honduras, is the only English-speaking country in Central America.  As a former colony, the Brits are very familiar with Belize, but it’s been Americans and Canadians that have been the primary expats moving to Belize.  This is set to change, according to International Living Magazine.  A recent article called, “Buy Belize and Buy Now” says that the Brits are set to come back to Belize in droves as more non-stop flights from the UK to Belize are being added.  Their advice is to not wait for the Brits arrival to drive up prices.  Get in now and reap the rewards.

Some other reasons that I like Belize over some of Central America’s other countries is that it is politically stable, provides some excellent tax benefits, and offers a world-class private banking system.  Belize has a popularly elected government, and has not suffered the internal strife and war that some of the other countries in Central America have endured.  Belize also provides the same property rights to citizens and non-citizens alike.  Property rights are sacred in Belize, and I don’t fear nationalization of property like I do in a place like Nicaragua, Venezuela or even Mexico.  Americans and Canadians that own rental property in Belize can enjoy little to no taxes on their rental income by keeping the funds in a Belize bank account. And Belize’s banking system, like Switzerland or the Cayman Islands, is private and very secure.  Even better, when you go to sell your property, Belize has no capital gains tax!

Maya Ruins

It’s not just sun and beaches that bring people to Belize.  There are many cultures that you can experience, including Maya, Latin, Garifuna, Mestizo, Mennonite and more.  Enjoy a day (or more) exploring the many ancient Maya ruins and caves spread across Belize and it’s neighboring countries.

Prices for property vary greatly in Belize.  On the mainland, acreage is available a very low prices.  Once you get to the coast or the islands, prices you up.  However, Belize offers many more opportunities for bargains that you will find in other Caribbean or Central American locations.  One of the best bargains we have found is Sapphire Beach Resort on Ambergris Caye.  Sapphire Beach offers a gated community right on the shores of the Caribbean Sea, with fully furnished condos available for under $100,000.  We compared pricing at Sapphire Beach to their closest neighbors.  Blue Reef, to the south, prices start well over $500,000. Sapphire Beach also offers a 3-night stay in Belize to allow you to see their property and Belize.

For more information on Ambergris Caye try these other resources:

The New York Times

Chicago Sun Times

7 Reasons to Invest in Property in Belize

Shelter Offshore

I found this post in a comments section . . . hope I don’t get sued for using it, but I hope even more that those better off in our society don’t resort to using this strategy, as it would crush us. Even so, the guy has a valid point and you can’t blame him for looking out for number one. So without further ado . . .  

“I don’t think there’s too many people in this country that want to continue this downward spiral of greater debt, more corporate and bank bailouts, more borrowing from China, more foreclosures, more unemployment and layoffs, and more war. I believe that both Obama and McCain know that if they are elected and keep us on the current compass heading, they’ll be looking for a job in 4 years. They may argue about the best METHOD to get us back on track,”

Well, there you go. Analyze the economics involved and you will discover that Obama’s answer is more government spending, bigger bureaucracy, and higher taxes on the golden geese who make the economy work. As I said some time ago, in a post far, far away, the problem with Obama’s plan to tax the rich is that the rich are the people who ALREADY pay the majority share, per capita, of actual tax revenues collected. I saw a chart in the paper two days ago that said it all.

The top one percent of income earners, those who make more than $336,550 per year pay a 35% tax rate and actually pay 33% of the collected revenues the government gets. The top 50% of earners, those who earn more than $123,700 per year, pay 54% of the taxes collected. However, that top 50% comprises only SEVEN PERCENT of all tax returns filed.

Thus, we have seven percent of the taxpaying public paying 54% of the taxes, and 93 percent of taxpayers paying only 46 percent of revenues collected. How is that fair? Obama’s idea of fairness is “because they have money, and the middle class doesn’t.” Pure Socialist rhetoric.

On the other hand, 47% of the tax returns filed are filed by people who make between $15,100 and $61,300, and pay at a 15% tax rate, but they pay ONLY 20% of the revenue collected. That 47% of the taxpaying public consumes the lion’s share of public resources, so why do they only have to pay for 20% of the costs involved?

Twenty-four percent of taxpayers, who make less than $15,100, pay at 10% rate and pay 1 percent of the tax revenues collected.

To complete the list, four percent of taxpayers make $123,700 to $188,450, pay at 28%, and pay 11 percent of revenues, and two percent of taxpayers make $188,450 to $336,550, pay at 33% and pay 10 percent of the revenues.

So, under Obama, if you make less than $250,000 per year, which is somewhere in the middle of the 33% tax bracket, you’ll pay less taxes. This means that the upper third or so of taxpayers will be paying MORE than 54% of the tax burden, perhaps a LOT more, while the “middle class” will be getting a free ride. And all of this ignores the other, unstated percentage of citizens who don’t pay any taxes at all, who will be getting “free money” from the upper third of income earners. And the lower 75% of taxpayers will be consuming 99 percent of the public resources while paying less than their fair share.

Now, this is a lovely Socialist wealth-redistribution scheme perfect fitting Obama’s Socialist tendencies, but it ignores a major unintended consequence.

The top tier of income earners, those who pay ONE-THIRD of all the tax revenues collected, are wealthy enough to stuff their capital under their mattress (metaphorically speaking), stop earning ANYTHING for four years, and cause Obama’s utopia to collapse when ONE-THIRD (or 50% or more under Obama’s plan) of the money he’s counting on to hand out to the welfare statists among us simply disappears into thin air.

They can do this because the revenues collected are based not on how much cash some “rich” person has in the bank, but on how much they *earn* from their cash. I.e.: how much interest or return on their INVESTMENT they realize.

So, first, recognize that the amount of cash that this top-tier has is enough that they are not *required* to invest, they will only invest if it suits them and they will make a profit. Second, recognize that they already pay 33 percent of taxes collected from the INTEREST ON THEIR INVESTMENTS. Not the principle, the INTEREST.

Guess what happens to government income if they stop investing for four years, something they can easily do?

Guess how much new tax Obama can collect if the top-tier doesn’t make any income that can be taxed? You do the math.

Worse yet, it is the top-tier of income earners that ALSO employ everybody else, either directly through businesses and “evil corporations” they own, or indirectly through investment in those companies.

If you think the mortgage meltdown was bad, just wait till nervous investors (not just the top-tier, but at least the top 50%, and arguably the top 75% of taxpayers) dump their investments and stick their money in non-interest bearing bank accounts because they don’t want to be subject to confiscatory ObamaTax.

That’s certainly what I’m going to do (I HAVE savings because I’m smarter than Wall Street), because I’d rather spend my savings supporting myself for four years than give it to Obama to give to welfare slugs. This means that if Obama wins, I won’t be paying ANY taxes at all, because I won’t be earning any money at all, I’ll just be spending my savings to try to survive Obama’s reign. Heck, I won’t even have to file a return.

There’s no reason “the rich” can’t do exactly the same thing, in which case, his whole agenda collapses like the house of cards that it is. And I sincerely hope that the “rich” do exactly that, so that the Proletariat can experience “democracy” good and hard. That will guarantee a Conservative comeback big time in 2012.

On the other hand, if McCain wins, there is at least the *chance* that the economy will recover, because obviously, when tax rates on the “rich” are lowered, people are stimulated to invest because they see a potential for return on their investment that they don’t have to immediately turn over to the government. The more investment in the economy, and in small businesses, medium businesses and even “evil corporations” (you know who owns “Big Oil?” Ma and Pa, Grandma and Grandpa, Sister and Brother) the faster the economy grows. The faster the economy grows, the greater the tax revenues collected, even at lower marginal rates.

To make the analogy simple, what McCain wants to do is bake a much, much bigger pie by inducing investors to invest in the baking goods by giving government a smaller piece of that bigger pie, which actually results in a net increase in the amount of money government collects, because 15% of one pound is greater than 60% of nothing.

Obama wants to make the pie smaller and take 99% of it to give to the lower 50% of the people, while trying to charge the top 1% for all the baking supplies. Problems occur when the top 1% refuse to pay.

Obama’s plan simply will not and cannot work. He knows this, because he’s anything but stupid, but he will promise the Proletariat ANYTHING to get elected. Since he knows his plan will destroy the economy if he implements it, it therefore follows that he INTENDS to destroy our economy. We already know that he INTENDS to destroy our national sovereignty. So, destroy the economy and our national sovereignty and what do we end up with: The New World Order, where the UN runs the US, draining it of equity to enrich the “underdeveloped” nations of the world, because the US is evil and deserves to be chastised.

“but I don’t believe that Obama has some not-so-secret agenda to imprison all of us, make abortion mandatory, give America away to terrorists, part out our children to demons, kick our dogs and rape our wives.”

The fact is that Obama is a tax-and-spend, hard-left-wing Democrat who has absolutely no compunctions about imposing confiscatory taxes on people who make more than $250,000 per year NOT because it’s the “right thing to do”, but because it’s a populist tactic intended to win the election. He knows full well that he CANNOT do what he says he’s going to do, because he doesn’t set tax policy, and he knows (or he’ll find out) that the economy will tank even worse if he tries to punish the “rich” in order to enrich the middle-class. That’s not creation of wealth, that’s just redistribution, and it’s a temporary fix at best, because once the golden goose figures out it’s safer to sit on her eggs for four years than to invest it, only to have Obamastiltskin steal it away, the goose will fly the coop.

The original author stated that he/she was “(sorry about the mixed metaphors )” Perplexing? Yes! Do I care? No! After all they’re not mine! Fact is, I got it, and just maybe you need to revisit your nursery rhymes . . .

Last week,  Sarah Palin took Joe Biden to task for telling Americans that it is “patriotic” to pay taxes. Good old bright-white tooth Joe gave an angry response about how unpatriotic is was for U.S. companies to be shirking their patriotic tax duty by sheltering in foreign countries. His tone of voice was such as to be in command. Well, he is in command, of his lack of business knowledge and simple economics. 

My guess is that right now, all across this country, businesses, large and small, are strategizing on how to minimize taxes under a new socialist president. The stategic planners are dusting off “Plan B.” Many  times, “Plan B,” is a move to another country. It is the very heart of a business to maximize the amount of money they make. After all, anyone can buy a government bond and get a healthy one percent return on the investment. There is nothing more debilitating to a business than paying taxes. In fact, I find it dibilitating too. There is nothing like working your ass off  40-60 hours a week to leave a huge amount of your pay on the table for uncle.

The point that Joe Biden and Obama are missing, is the primary reason for companies moving off-shore; TAXES. The host country sees an opportunity for it’s citizens, while the evacuated country waves goodbye to jobs. Politicians like Biden and Obama, blame the move on a lack of patriotism. It is the “greed of big government” that causes profit making corporations to flee. Big government can never get enough to feed the dragon of socialistic give aways.

I worked for a man who built his fortune by sleeping, eating, and working his business seven days a week for fifty five years. He is in his eighties, and still working. When Ronald Reagan cut capital gains taxes in the eighties, our company went berserk with expansion. The owner couldn’t push us hard enough or fast enough to make investments in new products and markets. The company expanded. The number of people he employed increased from 1000 to 3000. Ronald Reagan didn’t create the jobs, hard working people with an incentive to invest created the jobs. Then came the Clinton years. Taxes increased. My efforts were spent shipping equipment to the far east. I traveled extensively, to train new people on how to make our products on our equipment. Our employment numbers in the states shrunk.

You answer this question, ”Is it more patriotic to pay taxes to feed the greed of big government, or is it more patriotic to cut taxes to feed people with jobs?”

A trust involves placing legal title with one person or institution for the benefit of one or more beneficiaries. It can be revocable and changeable, or it can be irrevocable. The person creating the trust is usually referred to as the trustor or settlor. The trustee is the person or entity selected to take legal title and administer the trust assets.

Trusts are often an important part of estate planning. Most estate planning trusts do not become effective or funded until the person creating the trust dies. If established by the person’s last will and testament, the trust does not even come into existence until the person dies. When the trust is established by a will, it is termed a testamentary trust. The remainder of this article we will discuss some of the uses for testamentary trusts.

Believe it or not, some families have what could be affectionately termed a “black sheep.” This person is not good with money, addicted to gambling, alcohol or drugs, frequently married and divorced or just not good with finances. If the black sheep is a beneficiary of the will, he or she may spend or lose their inheritance quickly.

Instead of giving the black sheep an inheritance, his or her portion can be left to a trustee in trust. Terms of the trust can provide for distribution of income, payment of medical bills, rent, emergency expenses and such other items as the person creating the trust deems appropriate. The trust can also include provisions prohibiting assignment by the beneficiary and prohibiting attachment by creditors of the beneficiary.

Protection from creditors is done by including a “spend thrift” provision. This provision prohibits assignment or anticipation by the beneficiary, which means a creditor cannot reach the beneficiaries interest in the trust. This feature can be attractive even where a black sheep is not involved, as the funds in the trust can provide a safety net for the beneficiary, free from unforeseen creditors. I frequently refer to the unexpected car accident as creating an unforeseen creditor.

Trusts are often used to provide for minor children. Funds are placed in trust until such time as the beneficiary, or beneficiaries, attain a certain age. Funds in the trust can be used for the health, welfare and education of the beneficiary, with the remaining assets not distributed until the minor has reached the age that the person creating the trust felt would be sufficiently mature to deal with a large financial gift.

Grandparents often create educational trusts for grandchildren. Such trusts usually limit use of the monies to post high school education and provide for final distribution of any remaining funds at the time the beneficiary reaches a certain age.

Estate tax savings may also be realized by creating what is known as a credit shelter trust in the will. Under current estate tax law, each person may give two million ($2,000,000) dollars to beneficiaries other than the person’s spouse, free of estate tax. There is generally no estate tax due on a gift to a spouse. However, when the spouse dies, the spouse will be limited to the two million ($2,000,000) dollar exemption from estate tax when assets pass to children, grandchildren or others. The IRS allows tax payers to have most of their cake and eat it too, if a credit shelter trust is utilized.

A maximally funded credit shelter trust will involve a decedent leaving two million ($2,000,000) dollars in trust when he or she dies. In simplest terms, the income from the trust can be automatically paid to the surviving spouse and the trustee can have power to invade principal if needed by the surviving spouse. Assets in the trust when the surviving spouse dies pass to children, grandchildren or others free of estate tax, so that the ability of both spouses to give two million ($2,000,000.00) dollars at death free of estate tax is preserved. Better yet, if the credit shelter trust assets increase in value between death of the first spouse and final distribution, that increase also escapes estate tax. Since the estate tax rate on the non-exempt portion of an estate is 49 percent, fully funding the credit shelter trust can save $780,800 dollars in taxes.

Even without tax savings, a trust might be created for benefit of a surviving spouse. This is often done in a second marriage situation, where the first spouse to die sets up a trust for benefit of the surviving spouse. At death of the surviving spouse, the assets remaining in the trust are distributed to children from a previous marriage.

A trust is a flexible instrument that can be applied to almost any situation. Creating a trust should be discussed with your estate planning attorney.

Source:  William G. Morris, Esq., MarcoNews 

Here are a few visuals that popped out during my normal tour around town.

Tax Shelter?

The glass is half empty or full?

With gas and food prices climbing we start to feel the pinch in our wallet.

We just came off the RRSP season and for many this will be the only investment strategy that they will use their entire life.

With 80% of Canadians retiring financially challenged does it really make sense to be doing what the masses are doing when it come to money? Probably not. The challenge is, people don’t get educated, instead; they get sold too. My industry is largely the problem.

In his book: “The 10 Secrets Revenue Canada Doesn’t Want You To Know,” Author David Voth shares secret #8 with us: Create a Tax Shelter.

Actually, this isn’t a secret at all but a widely used strategy by many professionals and financial planners.

What does it do? Well, it can give you tax free income. Let’s compare it to the RRSP. When we retire and we take money our of ourr RRSP/RRIF it is fully taxable at our marginal tax bracket (no different than the paycheck you are getting right now.)! The government doesn’t care how old you are they tax it all the same.

With a personal investment tax shelter that has been set up correctly you can create the possibility of having tax free income. Meaning, if you were getting $100K from your RRSP today in income after tax you’d have about $53,000 to spend – exciting isn’t it With a personal investment shelter you’d have $100K – I wonder why the government isn’t promoting this?

Are these tax shelters hard to set up? Not at all, it’s as easy as setting up an RRSP, you just need a financial Advisor who is Insurance Licensed.

What are the investments like? The investments are the same as your RRSP, for most it will be a mutual fund, and you can have the best available.

Tyler Hoffman, FMA

Vancouver’s Wealth Coach

www.tylerhoffman.ca

Looks that way. The IRS is heavily litigating tax shelter schemes and winning regularly in court. This aggressive stance toward taking disputes to court has been growing over the last several years and looks to be what will become the standard modus operandi of the IRS for all manner of disputes.

From the CFO.com link:

LILOs and SILOs haven’t been the only shelters in the IRS’s crosshairs. Last April, in a case involving a so-called intermediary transaction, a Texas federal court judge decided that Enbridge Energy was liable for more than $155 million in past and future taxes, plus penalties. Enbridge had bought stock in a pipeline company in 2001 through what was eventually deemed a sham company, thus gaining tax deductions.

Even companies that aren’t harboring any tax shelters on their books may not be safe. Experts say the IRS’s treatment of all types of tax disputes is changing as the agency applies the tough tactics it used in shelter cases to more-ordinary transactions. Gerald Kafka, global chair of Latham & Watkins LLP’s tax-controversy practice group, calls this “the trickledown effect,” which includes more national coordination on issues, a greater involvement of attorneys, and more requests for information from corporate advisers and other third parties. This new approach, coupled with an unprecedented amount of new disclosure required from companies, has made the IRS a fundamentally tougher opponent, both in court and out. “The odds are overwhelmingly in our favor,” says Donald Korb, chief counsel for the IRS since 2004.

Given the earlier post on curious economic indicators, I thought it might be fun to talk about the January effect where stocks, especially small-cap stocks, have historically risen in the period starting from the last day of December to the 5th trading day of January.

This rally is generally attributed to an increase in buying, which follows the December drop in price when investors try to offset capital gains taxes, prompting a sell-off. In recent years, this effect is less pronounced because of two reasons,
1) the market has accounted for it
2) tax-sheltered retirement plans have removed much of the incentive to sell and create a tax loss.

Source