Amy Feldman http://blogs.reuters.com/amy-feldman Amy Feldman's Profile Wed, 25 Jun 2014 16:45:03 +0000 en-US hourly 1 http://wordpress.org/?v=4.2.5 Selling the family silver might not make you rich http://www.reuters.com/article/2014/06/25/column-feldman-silver-idUSL2N0P51H820140625?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/06/25/selling-the-family-silver-might-not-make-you-rich/#comments Wed, 25 Jun 2014 16:21:18 +0000 http://blogs.reuters.com/amy-feldman/?p=160 NEW YORK, June 25 (Reuters) – Like a lot of American couples
in the late 1950s, my parents got a set of sterling silver
flatware for their wedding. And also like many, they have not
used it for many years.

So this spring, with my parents looking to move and my
sister, brother and I uninterested in silverware that requires
regular polishing, I started looking to sell it.

Even though my parents’ full-service set for 12 was from a
reputable manufacturer, Towle, and in impeccable condition in a
blue-velvet-lined wooden box, selling it turned out to be
neither as easy nor as lucrative as we had hoped.

“Do not expect your 19th- or 20th-century flatware is going
to be worth a lot of money,” says Matthew Erskine, a lawyer and
principal at the Erskine Co, a Wooster, Massachusetts-based
strategic adviser to entrepreneurs and collectors.

If you have high-end Tiffany, that is better than
mass-market sterling flatware by the likes of Towle or Reed &
Barton. “They cranked that stuff out like popcorn,” Erskine
says.

Still, even if what you have is not worthy of “Antiques
Roadshow,” you will want to get a sense of what you have. Real
sterling silver should be identified with the number .925 marked
in miniature print. Other details may be noted as well.

Picking a buyer means venturing into unregulated turf, where
it is easy to be ripped off unless you know your stuff.

Be careful of buyers that advertise heavily or want to do a
quick deal. And be aware that regardless of where you sell on
the open market, you will owe taxes on the gain, at the special
28 percent rate for collectibles.

Start with the most high-end buyer on your list, and work
your way down, advises Stuart Slavid, a vice president at
auction house Skinner Inc, one of whose specialties is silver.
That way you will have a better chance of getting the best
price.

Slavid figures that some 75 percent of those who bring in
silver have something worth more than melt value. Certain
patterns by Tiffany and Gorham are particularly prized by
collectors, he notes.

OUR SALE

I did not think our silver was especially valuable, so I
started by sussing out what it was selling for on eBay
and Replacements Ltd, a company that sells sterling flatware by
the piece and posts all its retail prices online.

Replacements was selling a teaspoon in our 1958 Awakening
pattern at $35.99. A large serving spoon went for $79.96.

I was pretty sure our items would be worth more at resale
than as metal, especially since silver prices had fallen to
around $19.50 per troy ounce from their 2011 peak near $50.

But getting a good price proved less simple. I contacted
Replacements, which I calculated was offering the 72 items in
our set for about $2,800. They offered to pay around $700.

I also contacted Classic Replacements, which had the
advantage of being within driving distance, but they had no
interest in our pattern. A friend of a friend with a retail
store offered just $500.

I could have gotten more quotes from silver buyers, such as
Antique Cupboard, or even talked with an auction house like
Skinner.

In retrospect, I wish I had, but it seemed that melting
would be a better deal.

Refiners buy all types of metals and pay based on their melt
values. Sterling is 92.5 percent silver, and there is also a
little bit of loss during the melting process; a good refiner
should pay 90 percent of the melt value.

If you weighed your silver at home, keep in mind that an
ounce of sterling silver is 84.3 percent of a troy ounce of
silver, which is how the price is quoted. You do not need a
middleman to sell to a refiner.

A few refiners got good online reviews. I chose Northern
Refineries. It was willing to buy the knives, which many
refiners refuse because the blades are stainless and there is
filler inside the handles to create the appropriate weight.

My parents packed their flatware, and shipped it off a few
weeks ago, making sure to insure the package. The company
promised to pay 90 percent of the value of the silver after
melt, at current prices.

We waited.

When my parents received the check earlier this month, it
was not as high as we had hoped, but it was far better than the
other offers we’d received: $1,052.

Now we just have two sets of china to sell.

(Editing by Beth Pinsker and Lisa Von Ahn)

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Thai police fire teargas at protesters bent on toppling ‘Thaksin regime’ http://uk.reuters.com/article/2014/05/09/uk-thailand-protests-idUKKBN0DP03N20140509?feedType=RSS&feedName=everything&virtualBrandChannel=11708 http://blogs.reuters.com/amy-feldman/2014/05/09/thai-police-fire-teargas-at-protesters-bent-on-toppling-thaksin-regime/#comments Fri, 09 May 2014 07:20:15 +0000 http://blogs.reuters.com/amy-feldman/?p=158 BANGKOK (Reuters) – Thai police fired teargas on Friday at royalist protesters bent on bringing down a caretaker government after a court threw Prime Minister Yingluck Shinawatra out of office and an anti-graft agency indicted her for negligence.

Yingluck’s Puea Thai Party still runs the interim government and is hoping to organise a July 20 election that it would probably win, but the protesters want the government out, the election postponed and reforms to end the influence of Yingluck’s brother, former premier Thaksin Shinawatra.

Protest leader Suthep Thaugsuban, speaking to supporters in a city park, urged them to rally outside parliament, the prime minister’s offices and five television stations to prevent them being used by the government.

“We will sweep the debris of the Thaksin regime out of the country,” said Suthep, a former deputy premier in a government run by the pro-establishment Democrat party.

Thaksin, a former telecommunications tycoon, is vilified by his enemies in the royalist establishment as a corrupt crony capitalist. But he won the unswerving loyalty of legions of rural and urban poor with populist polices when he was prime minister from 2001 until he was ousted in a 2006 coup.

He lives in exile to avoid a 2008 jail sentence for abuse of power but has been the guiding hand behind his sister’s government.

By mid-morning, Suthep had led one group of flag-waving protesters to Government House, the official offices of the prime minister but which have been empty since January. He said protesters would camp outside overnight.

Trouble flared at another protest site when police fired teargas at a crowd of several hundred trying force their way into a police compound housing a government security group in the north of Bangkok.

The Erawan Medical Centre, which monitors hospitals, said four protesters were taken to hospital after inhaling teargas.

“That puppet Yingluck is gone but our work is not over,” Pornprasert Chernalom, 39, who owns a small business in Samut Sakhon province, west of Bangkok, said earlier.

“The illegitimate Thaksin cabinet remains in power. Our next step is to give power back to the people.”

Some protesters held pictures of Thaksin and Yingluck with their faces crossed out. Others held banners that read: “Love Thailand, eradicate the Thaksin regime”.

Tens of thousands of the Shinawatras’ “red shirt” supporters, angered by Yingluck’s ouster, are also on their way to Bangkok for a rally on Saturday. They are clinging to the hope that the interim government will win the July election and bring the Shinawatras’ party back to power.

ECONOMIC IMPACT

The prospect of rival protesters in the capital over the weekend has raised fears of trouble. Both sides have armed activists in their ranks.

Twenty-five people have been killed since the anti-government protests began in November.

About 21,000 police and troops have been deployed in the capital, authorities said, but there was little security presence on the streets on Friday.

More trouble would deepen worry about Southeast Asia’s second-largest economy which is already teetering on the brink of recession amid weak exports, a year-long slump in industrial output and a drop in tourism, presided over by a caretaker government with curtailed powers. Consumer confidence fell to its lowest level in more than 12 years in April. (Full Story)

The anti-graft agency indicted Yingluck for negligence on Thursday – a day after the Constitutional Court threw her out of office – in connection with a rice-subsidy scheme under which the state paid farmers way above market prices for their crops.

The scheme, a flagship policy of Yingluck’s administration, was aimed at helping her rural supporters. But the government could not sell much of the rice it quickly stockpiled and was unable to pay many farmers.

If Yingluck is found guilty by the Senate, she could be banned from politics for five years. Several other members of the family and about 150 of Thaksin’s other political allies have been banned for five-year terms since 2007.

Yingluck dissolved parliament in December and called a snap election but the main opposition party boycotted it and anti-government activists disrupted it so much it was declared void.

Yingluck and the Election Commission agreed last week a new ballot should be held on July 20, but the date has not been formally approved.

Thaksin or his loyalists have won every election since 2001.

The anti-government protesters say Thaksin buys elections. They want to change the electoral rules before new polls to try to stop his party winning again.

((Additional reporting by Apornrath Phoonphongphiphat; Writing by Robert Birsel; Editing by Alan Raybould and Nick Macfie))

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Tax nightmare: What if you can’t pay the IRS? http://www.reuters.com/article/2014/04/10/us-column-feldman-taxes-idUSBREA3916P20140410?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/04/10/tax-nightmare-what-if-you-cant-pay-the-irs/#comments Thu, 10 Apr 2014 15:08:21 +0000 http://blogs.reuters.com/amy-feldman/?p=156 NEW YORK (Reuters) – There are many tax-time nightmares, but here’s one of the most common: You don’t have the cash to pay what you owe on April 15.

“A couple of weeks ago, I ended up talking a young woman off a ledge, as it were, because she discovered she had screwed up on her withholding and owed a bunch of tax,” says Melody Thornton, a certified public accountant in Cardiff, California.

If you find yourself in that situation, don’t ignore the problem. The worst thing you can do is put off filing your return, without at least requesting an extension, because you’re afraid of the bill. The penalties for not filing a tax return are far harsher than those for not paying what you owe.

How bad could it get? The penalty for not filing a tax return normally runs 5 percent per month that your return is late, up to a maximum of 25 percent. That means if you owe $2,000, and don’t pay it until the fall, you could owe a $500 penalty.

The penalty for not paying is just a fraction of that, at 0.5 percent a month of the unpaid tax at April 15.

Either way you’ll also owe interest, though the current rate is a modest 3.0 percent a year.

FILE AN EXTENSION

The simplest thing to do is to file for a six-month extension, using Form 4868, to get some breathing room. If you can, send in a partial payment to reduce the penalties and interest due.

“The most important thing is making sure that you have a valid extension,” Thornton says. “If you file an extension and say, ‘I owe nothing,’ and then you do owe, that extension is not a valid extension.”

HOW TO PAY

You’ll need to decide whether to pay the Internal Revenue Service first – the standard advice – or to swallow the penalties and interest.

What’s ideal for you depends on what your options are for coming up with the funds. If you can scrimp a little to find the cash, borrow from friends or family, or have access to cheap credit (through a home-equity loan, for example), your best option is to pay the tax bill first.

But if you’d have to pay your taxes with a high-interest-rate credit card – today’s national average interest rate on credit cards is 15 percent, according to CreditCards.com – it may be better to borrow briefly from the government (see below), especially if you’ll have additional income coming in soon.

When you pay your taxes on a credit card, you also have to pay an added “convenience fee” that could add up to 2.35 percent to your transaction.

IF YOU’RE IN DEEP FINANCIAL DISTRESS

While it may sound counter-intuitive, let the IRS know you’ve got financial problems. You can request an installment plan to pay those taxes, and it’s pretty much automatic that you’ll be approved if you owe less than $50,000. While there’s no hard-and-fast rule on when to do this, generally the more you owe and the longer it will take to pay off, the better off you’ll be to request a formal payment plan rather than simply paying late.

“If you are not paying, the IRS can come after your property or garnish your wages, so you definitely want to contact them and work with them,” says Lindsey Buchholz, principal analyst at the Tax Institute at H&R Block. “The IRS is usually willing to work with people because they would rather you pay voluntarily than have to come after you.”

To set up an installment plan, you’ll file Form 9465, and pay an application fee of between $43 and $120, depending on your income level and whether you’re setting up a direct debit agreement. You’ll then have a monthly payment schedule, that you better stick with, and a much-smaller, 0.25 percent, monthly penalty on those unpaid taxes.

As for the client of California accountant Thornton, she calmed down once they worked out a solution to her tax travails. Thornton says her client applied for a credit card with a teaser zero-percent interest rate in order to pay her tax bill.

Says Thornton: “There will be a fee, but as long as she gets it paid off within that grace period, and she thinks she can, then she will not owe any other interest.”

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Follow us @ReutersMoney or here

Editing by Beth Pinsker, Lauren Young and Andrew Hay)

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Tax-time complexities for road warriors http://www.reuters.com/article/2014/04/07/us-column-feldman-roadwarriors-idUSBREA361N320140407?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/04/07/tax-time-complexities-for-road-warriors/#comments Mon, 07 Apr 2014 19:19:43 +0000 http://blogs.reuters.com/amy-feldman/?p=154 NEW YORK (Reuters) – If you spend large chunks of your working life on a plane, you may have a tax issue: The tax complexities of road warriors can be mind-numbingly complicated, and consultants, entertainers, motivational speakers and others who work in multiple states may not even realize where and what they owe.

“Road warriors need to look at where they are going, how often they are going, and what they are doing there,” says Michael Bozimowski, a principal at accounting firm Rehmann in Farmington Hills, Michigan. “There is no good way to come up with a flat ‘this is what you need to do’ because the state rules are so variable.”

As April 15th approaches, a lot of Americans are finishing up their federal tax returns. If federal taxes are complex, state ones are even more so. Each state has slightly different rules and regulations for who’s considered a resident for tax purposes, who needs to file as a non-resident, and what constitutes working in that state.

Those complexities can trip up everyone from Madonna (who was tripped up by New York’s residency rules in the 1990s) to frequent business travelers, telecommuters and entrepreneurs whose businesses may have inadvertently established residence in another state.

More people face multi-state tax issues as the nature of business has changed, while a number of cash-pressed states continue to look for ways to ease their budget woes.

If you work for a large company, and have multi-state tax issues, chances are that your W-2, which you received earlier this year, has already split your income into its various state pieces. If you have a W-2 that shows multiple states, you’ll simply file state tax returns for each state listed. You can generally claim a credit on your resident state tax return for taxes paid to a state where you are not a resident.

DEFINING “BUSINESS”

If you’re a one-person shop or an entrepreneur, you will need to understand the rules – or hire an accountant who does. At its most basic, if you do business in multiple states, you may need to file tax returns in those states. But there’s that thorny question: What constitutes doing business in a state?

The answer is more art than science, and depends on details such as whether you signed a contract for new business in that state or whether you appeared in a television commercial filmed there. “If you’re just going to a trade show, and you man the booth and schmooze with customers, and you’re there for a few days or a week, nobody cares,” says Daniel Morris, a senior partner at Morris + D’Angelo in San Jose, California. “But if you are regularly in the garment district, and you are constantly in the showrooms, then you have a different issue.”

Whether it’s complicated for you depends on your own specific situation. Someone who receives partnership income on a K-1 from an out-of-state partnership may need to file a state tax return in that state. A football player who travels to games all over the country would generally owe state tax for the income attributable to each state in which the games were played. And an entertainer who goes on the road for a theatrical production or concert, would typically owe taxes based on where those performances were held.

For creative folks, there’s added complexity: If you receive residuals from a book or a film, the money will always be attributable to the state in which the work was produced, according to Andrew Blackman, a partner at Schulman Lobel Wolfson Zand Abruzzo Katzen & Blackman in New York. “I have clients with 25 W-2s on their returns, with maybe 10 different states,” he says.

Blackman recalls telling a British actor who works on a popular American television show that he would have to keep track of not only days spent in the United States, but of days spent in each state, no matter how onerous that record-keeping might be. “I had a tough time explaining this,” Blackman says. “He said, ‘how do you keep up with this?’ It’s not just that there are multiple taxes to pay, but every jurisdiction has multiple rules.”

In another case, Blackman says, a potential client who works for a television network and makes millions is trying to sort through the complexities of moving from California to New York mid-year, with resident and non-resident income from both locations. “There is so much to trap you,” he says.

If you make a lot of money, of course, you’re more likely to face an audit if you mess up on your tax reporting. But even if you income is more modest, you may still be playing audit roulette. As Morris says: “What are you going to say? Gee, it was too complex. That is not an excuse.”

(Follow us @ReutersMoney or here

Editing by Beth Pinsker and Steve Orlofsky)

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Column: Taxable swag: If you got free goodies, the IRS wants to know http://www.reuters.com/article/2014/03/28/us-column-feldman-swag-idUSBREA2R0ZK20140328?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/03/28/column-taxable-swag-if-you-got-free-goodies-the-irs-wants-to-know/#comments Fri, 28 Mar 2014 13:45:38 +0000 http://blogs.reuters.com/amy-feldman/?p=150 NEW YORK (Reuters) – You might be able to score a free lunch these days, but get anything beyond that and the Internal Revenue Service may come after you for taxes.

Lucky enough to score an $80,000 goodie bag at the Oscars? You’ll owe something in the neighborhood of $26,400, if you’re in the 33 percent tax bracket. Won an iPad in a raffle at a conference? That would be more than $100.

Stuff We All Get, known to most as “swag”, comes with no direct price tag to you. We all score a few promotional t-shirts or pens every now and then, and while you may think they’re gifts – or, worse, utterly useless junk – they’re not gifts for tax purposes since they weren’t given to you out of sheer generosity. Instead, those so-called gifts are taxable income in the amount of their fair market value, and you need to report them to the IRS and pay the appropriate tax on it.

“People go to events all the time, and if you go to an event for your job and get certain swag, it affects you,” says Lisa Greene-Lewis, a certified public accountant at TurboTax.

The rules on swag aren’t new. In fact, as far back as 1960, the Supreme Court, in Commissioner v Duberstein, ruled that a businessman who’d received a Cadillac as a gift from a company he did business with needed to pay taxes on it. (The company, as it turned out, had deducted the value of the car as a business expense on its corporate income tax return.)

But as the value of those Oscar goody bags soared to $100,000 in 2006, the IRS took notice. As then-IRS Commissioner Mark Everson warned at the time: “There’s no special red-carpet loophole for the stars.”

Consider the ways you could get hit:

If you go on a golf outing, where the organizers offer a prize for a hole-in-one, and you win, you’ll owe tax. And if you’re salesperson of the month at your job, and get a trip to Hawaii, ditto. Even if you take home $1,000 from the church raffle, you have a tax issue.

In 2011, restaurant-equipment salesman Bob Choate won a year’s supply of Shipley’s Do-Nuts at a Houston Astros fan appreciation day, and got a notice from the IRS for $927.61 for taxes due, according to the Houston Chronicle. Later that year, New York Yankees fan Christian Lopez handed back Derek Jeter’s 3,000th-hit ball, and the team gave him luxury seats and other goodies in return — again, taxable.

“There are some food establishments, like Chik-fil-A, where when they are opening a new store, people wait in line for coupons for free food for a year. They would have to report taxes on that, and I am quite sure that they don’t,” Greene-Lewis says. (The official rules for Chik-fil-A’s giveaway note that the grand prize’s value is $250, and that participants are “solely responsible for any applicable taxes.”)

If you won a big-ticket item during the 2013 tax year, chances are you’ve already received a 1099 tax form in the mail detailing what you got. Little goodies like umbrellas or tote bags or USB drives, which are often passed out at conferences, generally fall under the $600 reporting amount required for 1099s (though, technically, yes, the rules cover those, too).

What if you’d rather not have the gift? You could simply say no – and refuse to accept the swag. And there is another important loophole: If you get a gift certificate or a voucher for a trip, it’s only taxable once you redeem it. If that voucher sits in your kitchen junk drawer for a year and expires, as so many of these do, you don’t need to do anything.

Alternatively, you could donate the “gift” to charity. If you give it away to a qualified non-profit (assuming that charity will accept what you’re offering), you would still have to report it as income, but you’d also be able to take the charitable deduction for that donation, lowering your tax bill.

What you can’t do is simply ignore the goodies on your tax return.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Follow us @ReutersMoney or here;

Editing by Beth Pinsker, Lauren Young and Stephen Powell)

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Taxable swag: If you got free goodies, the IRS wants to know http://www.reuters.com/article/2014/03/28/column-feldman-swag-idUSL1N0MO20N20140328?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/03/28/taxable-swag-if-you-got-free-goodies-the-irs-wants-to-know/#comments Fri, 28 Mar 2014 13:44:44 +0000 http://blogs.reuters.com/amy-feldman/?p=152 NEW YORK, March 28 (Reuters) – You might be able to score a
free lunch these days, but get anything beyond that and the
Internal Revenue Service may come after you for taxes.

Lucky enough to score an $80,000 goodie bag at the Oscars?
You’ll owe something in the neighborhood of $26,400, if you’re
in the 33 percent tax bracket. Won an iPad in a raffle at a
conference? That would be more than $100.

Stuff We All Get, known to most as “swag”, comes with no
direct price tag to you. We all score a few promotional t-shirts
or pens every now and then, and while you may think they’re
gifts – or, worse, utterly useless junk – they’re not gifts for
tax purposes since they weren’t given to you out of sheer
generosity. Instead, those so-called gifts are taxable income in
the amount of their fair market value, and you need to report
them to the IRS and pay the appropriate tax on it.

“People go to events all the time, and if you go to an event
for your job and get certain swag, it affects you,” says Lisa
Greene-Lewis, a certified public accountant at TurboTax
.

The rules on swag aren’t new. In fact, as far back as 1960,
the Supreme Court, in Commissioner v Duberstein, ruled that a
businessman who’d received a Cadillac as a gift from a company
he did business with needed to pay taxes on it. (The company, as
it turned out, had deducted the value of the car as a business
expense on its corporate income tax return.)

But as the value of those Oscar goody bags soared to
$100,000 in 2006, the IRS took notice. As then-IRS Commissioner
Mark Everson warned at the time: “There’s no special red-carpet
loophole for the stars.”

Consider the ways you could get hit:

If you go on a golf outing, where the organizers offer a
prize for a hole-in-one, and you win, you’ll owe tax. And if
you’re salesperson of the month at your job, and get a trip to
Hawaii, ditto. Even if you take home $1,000 from the church
raffle, you have a tax issue.

In 2011, restaurant-equipment salesman Bob Choate won a
year’s supply of Shipley’s Do-Nuts at a Houston Astros fan
appreciation day, and got a notice from the IRS for $927.61 for
taxes due, according to the Houston Chronicle. Later that year,
New York Yankees fan Christian Lopez handed back Derek Jeter’s
3,000th-hit ball, and the team gave him luxury seats and other
goodies in return – again, taxable.

“There are some food establishments, like Chik-fil-A, where
when they are opening a new store, people wait in line for
coupons for free food for a year. They would have to report
taxes on that, and I am quite sure that they don’t,”
Greene-Lewis says. (The official rules for Chik-fil-A’s giveaway
note that the grand prize’s value is $250, and that participants
are “solely responsible for any applicable taxes.”)

If you won a big-ticket item during the 2013 tax year,
chances are you’ve already received a 1099 tax form in the mail
detailing what you got. Little goodies like umbrellas or tote
bags or USB drives, which are often passed out at conferences,
generally fall under the $600 reporting amount required for
1099s (though, technically, yes, the rules cover those, too).

What if you’d rather not have the gift? You could simply say
no – and refuse to accept the swag. And there is another
important loophole: If you get a gift certificate or a voucher
for a trip, it’s only taxable once you redeem it. If that
voucher sits in your kitchen junk drawer for a year and expires,
as so many of these do, you don’t need to do anything.

Alternatively, you could donate the “gift” to charity. If
you give it away to a qualified non-profit (assuming that
charity will accept what you’re offering), you would still have
to report it as income, but you’d also be able to take the
charitable deduction for that donation, lowering your tax bill.

What you can’t do is simply ignore the goodies on your tax
return.

(Follow us @ReutersMoney or here;
Editing by Beth Pinsker, Lauren Young and Stephen Powell)

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How to sort through the changes for same-sex tax filers http://www.reuters.com/article/2014/03/20/us-column-feldman-lgbt-idUSBREA2J1K520140320?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/03/20/how-to-sort-through-the-changes-for-same-sex-tax-filers/#comments Thu, 20 Mar 2014 16:02:46 +0000 http://blogs.reuters.com/amy-feldman/?p=148 NEW YORK (Reuters) – Married same-sex couples this year will file their U.S. income tax returns just like heterosexual married couples because of the Supreme Court’s decision in June to strike down key parts of the Defense of Marriage Act.

For insight into how gay and lesbian couples should plan this tax season, we turned to Nanette Lee Miller and Janis Cowhey McDonagh, who head accounting firm Marcum’s LGBT and nontraditional family practice.

Marcum started its LGBT practice in 2012, and it has grown rapidly as same-sex couples struggled to deal with the patchwork of financial rules.

“A lot of LGBT couples want the specialty we have, but some just want to walk into a friendly environment,” McDonagh says. “I had a client who came in, and said: ‘My last accountant didn’t like me and didn’t approve of me getting married.'”

Here is what McDonagh, who is based in New York, and Miller, who is in San Francisco, say will be different this year:

Q: Will married same-sex taxpayers, who previously were forced by the Defense of Marriage Act to file as single or heads of household on their federal returns, see their taxes go up or down this year? And under what circumstances?

Miller: If one has a salary and the other doesn’t, they may save money. Otherwise, they will pay a little more. Equality means that they can all complain on the same issue.

McDonagh: The majority of my clients are two high-wage-earners, and they are paying a lot more to file joint rather than single (because they now are in a higher tax bracket).

Q: Will tax season at least be a little easier this time?

McDonagh: In some respects, it is easier. You don’t have to decide who is the head of household and who is going to claim the child. Before, I had to ask who owns the house and who is paying the mortgage taxes. Sometimes one party owned the home and the other one was making the mortgage payments off of income, so no one could take the deduction.

We have a big client who filed joint for the first time this year. One had been married years ago and had capital losses for tax purposes from when he was divorced. He’d never generated the gains to use against it, and the other one was able to sell and generate some gains. As soon as they could file a joint return, they got back $85,000.

Miller: You can put that under the category of pleasant unintended consequences. Unlike the unpleasant unintended consequences.

Q: While the federal rules are now clear, the state rules remain a patchwork. What issues come up at tax season for same-sex couples whose lives span states where their marriage is recognized, and others where it is not?

McDonagh: That’s what we’ve been dealing with in New York for years. We filed taxes for couples single for federal purposes and married at the state level. Now that may flip.

It is inconvenient because most state returns are based off of federal returns, so you are duplicating your work. A lot of my clients get K-1s (for partnership or trust income) and income from several states, so we need to look at each state’s law to see how to file.

There are a few states that do not recognize same-sex marriage but will allow you to file jointly. That’s the case in Missouri and Colorado. Their state returns are based on federal returns; they just threw their hands in the air and gave up.

Q: Are there particular issues for same-sex couples with kids?

McDonagh: One thing that’s come up was the adoption credits. Previously, when you were doing a second-parent adoption, you could take those credits. Now you cannot because you are married, and you cannot take them when you are adopting your spouse’s child. So you are losing out on your adoption credit.

Also, I had some couples who took each other as a dependent on their tax returns; that goes away with a joint return.

Q: Married same-sex couples who were prohibited from filing joint tax returns can now go back and amend their previous year’s returns for the past three years if they were married then. Should they?

Miller: We have not had that many people go back and file revised returns. I was surprised that not that many people went back.

McDonagh: It’s expensive to go back and amend a return. We had one that was worth going back and amending for 2010 because one (of the people) was in school. They amended 2010 and not 2011 or 2012. You can take it year by year.

Q: Is doing the returns now easier and less costly?

Miller: If you are married, it should be easier. In California, where you had to do allocated returns (because of the state’s community property rules), it probably added 33 percent to the fee because you had to do all these dummy returns.

McDonagh: It’s definitely a third to a half less now. It is nice to tell people that their costs are going down this year.

(The opinions expressed here are those of the author, a columnist for Reuters.)

(Editing by Beth Pinsker and Lisa Von Ahn)

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Seven injured in Thai protest shooting, military chief fears escalating violence http://www.reuters.com/article/2014/01/11/us-thailand-protest-idUSBREA0A05C20140111?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2014/01/11/seven-injured-in-thai-protest-shooting-military-chief-fears-escalating-violence/#comments Sat, 11 Jan 2014 05:53:45 +0000 http://blogs.reuters.com/amy-feldman/?p=146 BANGKOK (Reuters) – Seven people were wounded, one seriously, after gunmen opened fire on anti-government protesters in Bangkok early on Saturday, heightening fears of more violence when protesters try to “shutdown” the capital next week in their long-running bid to overthrow Prime Minister Yingluck Shinawatra.

“Two shootouts occurred in the early hours of this morning at an intersection near the Khao San Road tourist area. Altogether seven people were injured, most of them anti-government protesters. We are still investigating who the gunmen were,” said national police chief Adul Saengsingkaew.

One of the injured protesters remains in a critical condition, according to the Erawan Medical Center which monitors Bangkok hospitals.

The incident follows clashes between government supporters and protesters on Friday outside Bangkok that left at least six people injured.

At a celebration to mark national Children’s Day on Saturday Thailand’s army chief, Prayuth Chan-ocha, said he feared an escalation in violence next week.

“I am concerned about security because there will be many people. The violence is increasing…,” said Prayuth.

“We can think differently but we cannot kill each other. Please don’t use violence.”

The turmoil is the latest episode in an eight-year conflict that pits Bangkok’s middle class and royalist establishment against the mostly poorer, rural supporters of Yingluck and her brother, former premier Thaksin Shinawatra, who was overthrown in a military coup in 2006.

The protesters accuse the Shinawatra family of corruption and nepotism. Yingluck called a snap election for February 2, but this failed to placate protesters, who want her government to resign to make way for an unelected people’s council to oversee political reform.

COUP FEARS MOUNT

Many Thais believe the military will soon step in to break the political deadlock, especially if the protests turn violent, and rumors of an impending coup have intensified.

The army has staged or attempted 18 coups in 81 years, but it has tried to remain neutral this time.

The authorities say they will deploy more than 14,000 troops and police on Monday, including police at the main airport, to maintain order in the streets.

Protesters led by former opposition politician Suthep Thaugsuban aim to paralyze Bangkok starting Monday for between 15 and 20 days. They plan to block seven main intersections, causing gridlock in a city clogged with traffic at the best of times, and say they could block other areas as part of their prolonged siege of the city.

Paralyzing Bangkok is the latest bid in a two-month attempt by protesters to topple Yingluck.

Eight people, including two officers, have been killed and scores injured in violence between protesters, police and government supporters in recent weeks.

The government has repeatedly played down talk of a military intervention but officials said on Friday it had a plan to counter a coup if there was one.

“I don’t think any coup will happen… this Monday the army and the police will take care of the (security) situation,” Foreign Minister Surapong Tovichakchaikul told foreign media on Friday.

U.N. Secretary-General Ban Ki-moon at a news conference in New York on Friday urged all sides to show restraint as Thailand’s latest round of protests gathered pace.

“I am very concerned that the situation could escalate in the days ahead, particularly next Monday… when protesters said they will shut down Bangkok,” Ban said.

“I urge all involved to show restraint, avoid provocative acts and settle their differences peacefully, through dialogue.”

(Reporting by Amy Sawitta Lefevre; Editing by Michael Perry)

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Should you super-fund your 529 college savings plan? http://www.reuters.com/article/2013/12/16/us-column-feldman-idUSBRE9BF0LZ20131216?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2013/12/16/should-you-super-fund-your-529-college-savings-plan/#comments Mon, 16 Dec 2013 13:04:25 +0000 http://blogs.reuters.com/amy-feldman/?p=144 NEW YORK (Reuters) – With college costs already astronomical and rising, saving for them isn’t just a year-end thing. But if those prices – averaging $40,917 a year for a private four-year college or $18,391 for a state school, according to the College Board – have got you down, there are some ways to max out your savings before 2013 ends.

You can stuff a lot of money into a 529 college savings plan now and then do the same thing at the beginning of 2014 – a strategy that advisers say they are seeing many wealthy clients adopt this year. Because of the interplay of gift tax rules and generous contribution limits on these plans, affluent grandparents (or parents, but it’s usually grandparents) can set aside as much as $84,000 per grandchild over the next month or so.

Contributions to 529 plans are made with after-tax money, but earnings that build up in the account are free of federal and state income taxes when funds are withdrawn for qualified education expenses. Some states sweeten the pot by offering tax deductions or credits against those contributions. In Illinois, for example, contributions of up to $10,000 a year for an individual or $20,000 for a couple filing jointly are deductible for state income tax purposes.

Federal tax rules allow annual gifts excluded from gift taxes of $14,000 per grandchild or other recipient per year, and there is a special rule for 529s that allows contributors to front-load five years worth of savings in one year. That means you can set aside $14,000 now and another $70,000 in January – for each budding scholar you’ve got.

Two grandparents with enough money could double that – with each putting away $84,000 per grandchild. Depending on where the child goes to school and how much the money earns within the 529 plan, you might be done with one sizeable contribution.

“Think of this as super-funding,” says Michael Conrath, executive director and 529 program director at JPMorgan Asset Management, a unit of JPMorgan Chase & Co. “You are getting six years compressed into a small window. That is a strategy that more affluent families will look at” as a way to aggressively cover those college costs and save on taxes.

THE SUPER STRATEGY

There’s no timetable by which you have to spend down 529 funds and no required withdrawals, and that’s what makes these plans a good place to do some estate planning while you’re saving for college.

The super-funding strategy allows wealthy grandparents to get substantial amounts of money out of their estates, notes Mike Campbell, a tax partner in the private client services practice at tax and accounting firm BDO USA. He says he has clients taking advantage of the five-year front-loading for their kids and their grandkids. “They are thinking about it in terms of estate planning,” he says.

If your child or grandchild ends up not needing all of the money you’ve set aside, you can change the beneficiary on the plan to another child, a cousin or yourself. Even if you needed to withdraw the funds for some other purpose, you would get most of your money and earnings back – owing a 10 percent penalty and taxes on the earnings.

There are some ramifications for financial aid. For federal, need-based aid calculations, the 529 plans owned by college students (who are dependents for tax purposes) or their parents count as assets and reduce need-based aid by a maximum of 5.64 percent of the asset’s value. But money withdrawn to pay for college does not get factored into aid calculations.

The reverse is true for 529 plans held by grandma, grandpa or anyone else. Those assets won’t appear on the federal financial aid application so have no impact on aid at first – but withdrawals do count against aid needs and can ding you pretty hard.

(For more details on how this works, see our previous story here)

The result, generally, is that it’s better to have the plans in the name of the parents or students (assuming they are dependents), than the grandparents. Grandparents can contribute to those plans, however.

BENEFITS OF COMPOUNDING

Of course, there are a limited number of people who can afford to set aside such astronomical sums. But even smaller savers can benefit by plowing money into a 529 plan now.

You could, for example, use bonus money or cash received for the holidays to fund a 529 plan before year-end, and then do a second funding in January or from a tax refund next spring.

To really see the value of 529 contributions, consider the way that earnings on those savings compound, and then compare that to the interest you might be paying on college loans if you don’t save enough, suggests mutual fund giant (and 529 plan provider) T. Rowe Price Group Inc.

Covering $40,000 in college costs, for example, would require $32,000 in 529 plan contributions over that child’s first 18 years or $61,000 in total payments on student loans, according to T. Rowe Price calculations.

Calculating the optimal contribution is less important than making a contribution, says Conrath: “Don’t get caught up in the numbers, but do something.”

(Follow us @ReutersMoney or here Editing by Linda Stern and Leslie Adler)

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Seeking tax losses in a winning year http://www.reuters.com/article/2013/11/25/column-feldman-idUSL2N0J71C220131125?feedType=RSS&feedName=everything&virtualBrandChannel=11563 http://blogs.reuters.com/amy-feldman/2013/11/25/seeking-tax-losses-in-a-winning-year/#comments Mon, 25 Nov 2013 13:00:00 +0000 http://blogs.reuters.com/amy-feldman/?p=142 NEW YORK, Nov 25 (Reuters) – Investors who bet on the U.S.
stock market have done very well this year – the Standard &
Poor’s 500 stock index is up more than 25 percent since
2013 dawned.

That might make the average investor think there is no point
in trying to look for losing investments to sell for tax
purposes, typically a smart year-end tax strategy. But it would
be a mistake to not at least look for losers.

After all, not every stock or fund or strategy is up this
year, and it is likely you have at least one clunker in your
portfolio.

Perhaps you own an emerging markets fund. They have been
extremely volatile, and as a group are down nearly 1 percent so
far this year, according to Morningstar.

Or maybe you bought Apple Inc stock for $700 back
in September 2012, and now you have lost more than one-quarter
of your money. Or you came late to a diversified bond fund,
heavy on the Treasuries, that has been struggling, and you own
shares that are under water.

As Debbie Cox, managing director of JPMorgan Private Bank in
Dallas, puts it, “It would be unusual for any investor to not
have some losses.”

As long as they are not tucked away in tax-protected
retirement accounts, those losses have value at tax time. But to
take advantage of them, you need to sell before year-end. That
way, when you are preparing your 2013 income tax return next
year, you can offset your investment gains with your losses, and
take an additional $3,000 net loss against your ordinary income.
If you still have losses left over after that, you can carry
them forward to use in future tax returns.

Studies have shown that such tax-loss harvesting –
particularly when done throughout the year – adds to returns.
But this year, it is even more important than usual for two
reasons.

First, given the market’s rise, you probably do have gains.
Even if you have not sold winning stocks, it is likely that the
stock mutual funds you own will post taxable gains for the year.
It is also likely that you have run out of losses that you have
been carrying over since the 2008-2009 financial crisis.

Second, if you are an upper-income taxpayer, you may be
paying taxes on your investment gains at a higher rate. There is
a new 3.8 percent net investment income surtax that kicks in for
joint filers who earn above $250,000 and for singles earning
more than $200,000. And the long-term capital gains rate has
gone to 20 percent from 15 percent for high-earners (married
couples who make above $450,000 and singles over $400,000). For
those close to either of those thresholds, losses are
particularly valuable.

In previous years, when those tax rates were lower, some
advisers recommended waiting to take losses until a future year
when they could be used to offset gains that would be taxed at a
higher rate. With these higher rates, set by the so-called
fiscal cliff tax agreement at the beginning of 2013, it is now
that future year.

For those who hate to part with any of their portfolio’s
holdings in a rising market in order to take losses, JPMorgan’s
Cox points to an additional strategy: “Double up” by buying more
of that stock or fund, and then selling the older shares that
show a loss for tax purposes.

When you do that, you have to be aware of two constraints:
(1) You have to identify and sell the correct shares to make
sure you log the loss; and (2) You have to abide by the
so-called wash sale rule, which prohibits buying or selling the
same security 30 days before or after taking a capital loss.

If you want to double up without violating the wash sale
rule, the last day to buy is Friday, Nov. 29 – the day after
Thanksgiving. Then you can sell the losing shares on Dec. 30.

So while you are gorging on leftovers, take a few minutes to
review your portfolio for its old turkeys.

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