Are You Working With High Net-Worth Clients? Learn How To Support Your Clients From This Free On-Demand Webinar

Are You Working With High Net-Worth Clients? Learn How To Support Your Clients From This Free On-Demand Webinar

This is an extraordinary GIFT of Education for you from the Tax Forum. As CEO of www.taxconnection.com we see many trainers. If you are working with high-net- worth tax clients, partnerships, flow through, S corps built in gain rules, grantor trusts and more, you will benefit from listening to this 30-minute free education on demand webinar These Educators are widely known as the best educators in the tax profession.

If you are a Partner or Staff, you will learn from this on demand presentation. If you have tax colleagues or even a team reporting to you, please invite them to this on demand training. You will all be smarter, and your clients will be happier you gained this knowledge.

Read this blog to access your free on demand education.

Go Here The Access Free On Demand Course 

https://www.taxconnections.com/taxblog/complimentary-30-min-flow-through-program-on-using-grantor-trusts/

All the best,

Kat Jennings, CEO
www.taxconnections.com
858.999.0053 X100

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The Life Cycle Of Real Estate

The Life Cycle Of Real Estate

It’s not a “one size fits all” approach.  We make it a point of understanding our clients’ needs – not just in the current year but throughout the ownership period.

Properties go through life cycles – whether it’s based on use, age or market conditions. Also, different groups within a client organization play distinct roles within the various phases of the life cycle.  It is not uncommon for these groups to be unaware of the value of tax-centric information.

Life cycle of real estate graphic

Here are just a few examples of how the information from our reports can be utilized.

Concept / Feasibility

Many sophisticated investors will want to gain a better understanding of how the depreciation  deductions will impact cash flow.  Source Advisors is routinely engaged by clients who wish to include our projections in the pro-forma packages.

Acquisition

It is usually best to have a Cost Segregation Study completed following acquisition in order to maximize depreciation deductions from day one, benchmark property for asset management purposes and for a better understanding of what was specifically included or excluded as part of the acquisition.  Also, in light of the Tangible Property Regulations, a comprehensive study will also properly document all assets that might be subject to disposition in the future.

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Taxation Of Foreign Dividends

Taxation of Foreign Dividends

For U.S. expats, foreign dividends must be reported on your U.S. tax return, as the U.S. taxes worldwide income. This guide explains how to handle foreign dividend taxation, including potential credits like the Foreign Tax Credit (FTC) to avoid double taxation. Whether filing on your own or with a professional, understanding these rules helps ensure compliance and maximizes your tax benefits.

What Are Dividends? 

The IRC 26 U.S. Code § 316 (a) defines the dividends as:“ any distribution of property made by a corporation to its shareholders”. Dividends are considered as an investment type of unearned income and are treated in the same way as taxable interest and capital gain distributions.

Note: You must report all of your income, both earned and unearned regardless of where in the world it is sourced. Foreign income should be converted and reported on your US expat tax return in US dollars.

Are Foreign Dividends Taxable In The U.S.?

Yes, foreign dividends are taxable for U.S. taxpayers, including both citizens and residents. U.S. tax law requires individuals to report any dividends earned from foreign companies on their tax returns. This applies whether the dividends are reinvested or received in cash, as U.S. taxpayers are taxed on their worldwide income. This means that no matter where the income is generated, it must be included on the U.S. tax return.

When it comes to tax rates, foreign dividends are generally taxed at the taxpayer’s ordinary income tax rate. Unlike dividends from U.S. corporations that often qualify for lower capital gains tax rates, foreign dividends usually do not receive the same preferential treatment.

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California Wants To Raise Your Taxes: Learn How They Will Confuse You On The Ballot

California Wants To Raise Your Taxes: Learn How They Will Confuse You On The Ballot

Please Do Your Part And Pass This Blog Post On To 10 California Taxpayers So They Are Educated On Exactly What They Are Voting For This November!

Carl DeMaio and Reform California have released their “Plain English” voter guide to give you an easy-to-understand explanation of the ballot measures and to grade candidates.

California’s Election is underway and ballots must be returned by November 5, 2024. With a bunch of confusing ballot measures and hundreds of candidates running for office, voters can feel overwhelmed and lost.

This “Plain English” voter guide makes voting simple – especially when it comes to the ballot measures and local offices that do not allow candidates to disclose their party affiliation. Endorsements below are given only to candidates who “passed the test” on these crucial criteria: opposing taxes, fighting crime, improving schools, addressing homelessness, and securing the border!

2024 offers a real chance for a wave election to block costly tax hikes and elect common-sense leaders – but to do that we need your help in turning out your friends, family and neighbors to vote and share this easy-to-understand voter guide with them!

Statewide Ballot Measures

PRIORITY STATEWIDE MEASURES

Proposition 5: NO

Plain English Title: Guts Prop 13 and Makes it Easier to Raise Taxes by Lowering Vote Required on Ad-Valorem Taxes from Two-Thirds to 55%

Politicians’ Deceptive Title on Ballot: Allows Local Bonds for Affordable Housing and Public Infrastructure with 55% Voter Approval. Legislative Constitutional Amendment.

Description: California politicians have long sought to repeal Prop 13 and impose costly and unfair tax hikes on struggling residents. Prop 5 is another effort to chip away at Prop 13 protections and make it much easier for politicians to raise your taxes. Californians face a cost-of-living crisis and simply cannot afford higher taxes that Prop 5 would help impose.

>> Watch Short Video Explaining Prop 5

Proposition 36: YES

Plain English Title: Restores Ability for Police and Prosecutors to Arrest and Punish Criminals to Combat Crime Wave

Politicians’ Deceptive Title on Ballot: Allows Felony Charges and Increases Sentences for Certain Drug and Theft Crimes. Initiative Statute.

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Massachusetts Sales And Use Tax Amnesty Period: What You Need To Know

Massachusetts Sales And Use Tax Amnesty Period: What You Need to Know

The Massachusetts Sales and Use Tax Amnesty Period is a special initiative introduced by the Massachusetts Department of Revenue (DOR) to encourage businesses to resolve overdue taxes. Running for a limited time only between November 1, 2024, through December 31, 2024, the program offers businesses an opportunity to settle outstanding tax liabilities while providing significant relief from penalties and interest.

Key Benefits of the Amnesty Program:
  1. Waiver of Penalties: Normally, late tax payments accumulate significant penalties. Under the amnesty program, most of these penalties are waived, offering businesses the chance to settle their tax obligations at a much lower cost.
  2. Protection from Legal Action: Businesses that participate in the program will not face prosecution or further legal action for the taxes they disclose and pay during the amnesty period.
Why Should Your Business Participate?

For businesses with overdue sales or use taxes, participating in the amnesty program is a smart financial move. Here’s why:

  1. Avoid Hefty Penalties: Once the amnesty period ends, the state will resume its standard enforcement actions, which could include steep penalties and interest on unpaid taxes. By settling during the amnesty period, you can significantly reduce these penalties and avoid future collection efforts.
  2. Enhance Your Financial Health: Unresolved tax debts can burden your business’ finances. Clearing these liabilities will improve cash flow, enabling you to focus on growth rather than dealing with back taxes.
  3. Ensure Future Compliance: Participating in the program also helps you reset your tax compliance. This reduces the risk of future audits or legal complications and sets your business on a clear path for maintaining tax obligations.
Who Qualifies for the Amnesty Program?

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Using A Grantor Trust To Transfer Closely Held Business Interests (Free On Demand Webinar For JDs And CPAs)

Using A Grantor Trust To Transfer Closely Held Business Interests (Free On Demand Webinar For JDs And CPAs)

TaxConnections is happy to introduce you to leading educators on closely-held businesses and partnerships. You have everything to gain (including happy clients) by learning from these highly experienced educators on-demand at the Tax Forum. Rarely do you have an opportunity to listen and learn from some of the most elite educators in the tax profession on closely held business and partnership taxation. This on-demand webinar is offered on a complimentary basis to all tax professionals in any firm or organization. You can register now and take it any time that suits you. Please share this learning opportunity with all your colleagues. These educators are so extraordinary with their knowledge, many big firms bring them in to train their tax teams on partnerships, closely held businesses, high net worth individuals. You have an opportunity now to learn from them for free. Highly Recommended Webinar!

We are excited to announce that our training partner, Tax Forum, the pre-eminent resource for flow-through tax planning training, has just made available a complimentary 30-minute presentation entitled: “Using a Grantor Trust to Transfer Closely Held Business Interests.”

This presentation was the first exhibit presented during their 2023 Tax Planning Forum® program – included within the section entitled “Top 10 Structuring Techniques and Foot Faults” – and uses a real-to-life example to provide tax-planning professionals with both strategic and practical insights into the reasons to use a grantor trust for income tax and estate tax purposes involving the transfer of an interest on a closely-held business for the benefit of family members.

The Tax Planning Forum is developed entirely new each year, so this exhibit will not be included within their 2024 program, but it remains as relevant and valuable today as it was in 2023.  Plus, take it from me, the Tax Planning Forum faculty deliver their programs in an exceptionally enjoyable and easy-to-understand manner.

Note: this complimentary on-demand program includes no quizzes or tests and therefore attendees will not receive any CPE or CLE credit.  However, Tax Forum’s regular programs – both group live and self-study QAS – are all NASBA certified and provide CPE and CLE credit.

More flow-through tax planning programs available – designed to meet your needs, schedule and learning style

You can learn more about Tax Forum and their flagship group live and in-person programs by visiting their website.

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The Transformative Power Of Sales Tax Consulting: Real-Life Success Stories

The Transformative Power Of Sales Tax Consulting: Real-Life Success Stories

Sales tax compliance isn’t what it used to be—thanks to the Wayfair ruling and a maze of state-specific tax laws, it’s now a bit like playing a game where the rules keep changing. For businesses of all sizes, this can feel overwhelming. That’s where a seasoned sales tax consultant can be a game-changer.

Miles Consulting is ready to help you navigate the maze, as we’ve done for so many of our clients. But the proof is in the pudding, as they say. So, here are some real-world examples of how we’ve helped our wonderful clients master their sales tax obligations.

Here’s what you can read about:

  1. Case Study 1: Small Retail Business Manages a Sales Tax Audit
  • Background: Challenges faced by a security products manufacturer during a California state audit.
  • How We Helped: Use of a Managed Audit Program (MAP) to mitigate penalties and interest.
  • Results: Avoidance of penalties and significant cost savings, leading to full compliance.
  1. Case Study 2: Mid-Sized Manufacturing Company Successfully Navigates Sales Tax Challenges
  • Background: Risks identified during a due diligence process for a company planning to sell its business.
  • How We Helped Implementation of best practices to address, retroactive liabilities, reduce exposure and come into compliance.
  • Results: Reduction of audit-related stress, mitigation of financial impact, and successful sale.
  1. Case Study 3: E-Commerce Business Tackles Multi-State Sales Tax Compliance
  • Background: A SaaS company discovers unreported sales tax liabilities in multiple states.
  • How We Helped : Multi-state compliance strategy including VDAs and tax software implementation.
  • Results: Remediation of sales tax exposure, penalty avoidance, and streamlined compliance processes.
  1. Common Themes Across Success Stories
  • Cost Savings: Significant financial improvements through expert intervention.
  • Penalty Avoidance: Effective strategies to navigate complex tax landscapes and avoid penalties.
  • Improved Compliance Processes: Sustainable compliance achieved through expert advice and technology.

Want to know how we can help you? Let’s talk. Reach out to us at info@milesconsultinggroup.com.

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Understanding Maine’s New Sales And Use Tax Rules For Leases and Rentals: A Guide For Lessors

Understanding Maine's New Sales And Use Tax Rules For Leases and Rentals: A Guide For Lessors

Maine Revenue Services recently released General Information Bulletin No. 114 to provide guidance regarding significant changes to the state’s sales and use tax rules as they apply to leases and rentals. These updates, which will take effect on January 1, 2025, reshape how lessors are required to handle sales tax on leases of tangible personal property.

For businesses and individuals involved in leasing and renting, understanding these new rules is essential to remain compliant with Maine’s tax regulations.

What Are The Current Rules?

Until the end of 2024, lessors (those leasing tangible personal property) must pay sales tax upfront when they purchase property that will be leased or rented out. The tax is calculated based on the full value of the property. This means that even if the property is rented over several years, the tax liability is borne by the lessor at the time of purchase.

This approach simplifies tax collection but creates a significant upfront cost for lessors, as they are paying taxes before they’ve even begun to collect lease or rental income.

Key Changes Effective January 1, 2025Starting on January 1, 2025, lessors in Maine will be able to purchase tangible personal property exempt from sales tax, provided they present a resale certificate. Here’s how it will work:

1. No Sales Tax on Initial Purchase: Lessors will no longer be required to pay sales tax when they purchase tangible personal property to lease or rent out. Instead, they will use a resale certificate to purchase the property exempt from sales tax.

2. Sales Tax on Lease Payments: Instead of paying the tax upfront, lessors will be responsible for collecting sales tax on each lease or rental payment they receive from their customers. This change aligns Maine’s rules more closely with how most other states handle sales tax on leases and rentals of tangible personal property.

3. Sourcing Rules for Taxation: The guidance also addresses sourcing rules, which determine how and where taxes are applied. The location of the leased or rented property, and potentially the location of the lessee, will play a role in determining where the tax is sourced.

What Does This Mean For Lessors?

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U.S. Taxation Of Canadian RRSP

U.S. Taxation Of Canadian RRSP

Saving for retirement is a crucial aspect of financial planning, and in Canada, two primary vehicles facilitate this: Registered Retirement Savings Plans (RRSPs) and Registered Retirement Income Funds (RRIFs). However, when individuals move between Canada and the United States or hold dual citizenship, the taxation of these accounts can become complex. The Internal Revenue Service (IRS) plays a significant role in the taxation of RRSPs for U.S. persons, adding another layer of complexity. This article aims to demystify RRSPs and RRIFs, explain how they are taxed in Canada and the U.S., and explore the tax implications for Canadian nationals moving to the U.S., U.S. expats, and dual citizens.

Key Takeaways

  • Automatic Tax Deferral: Under the U.S.-Canada Income Tax Treaty and Revenue Procedure 2014-55, the deferral of U.S. taxation on income accruing in your RRSP is automatic. You do not need to file a special election.
  • Reporting Obligations: You must report your RRSP on the FBAR and potentially on Form 8938, depending on your foreign financial assets’ total value.
  • Withdrawals Are Taxable: Distributions from your RRSP are taxable in the U.S., but you can often offset this with foreign tax credits for Canadian taxes paid.
  • Avoid Unnecessary Forms: Forms 3520 and 8621 are generally not required for RRSPs, contrary to what some may advise.
  • Withholding Tax on Withdrawals: Withdrawals from RRSPs may be subject to withholding tax, ranging from 5% to 30%, if taken before the age of 71. Treaty benefits and residency status can affect the withholding tax rates for U.S. citizens receiving income from Canada. Read More
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Complimentary 30-Min Flow-Through Program On Using Grantor Trusts

Free On Demand Training

I am excited to announce that our training partner, Tax Forum, the pre-eminent resource for flow-through tax planning training, has just made available a complimentary 30-minute presentation entitled: “Using a Grantor Trust to Transfer Closely Held Business Interests.”

This presentation was the first exhibit presented during their 2023 Tax Planning Forum® program – included within the section entitled “Top 10 Structuring Techniques and Foot Faults” – and uses a real-to-life example to provide tax-planning professionals with both strategic and practical insights into the reasons to use a grantor trust for income tax and estate tax purposes involving the transfer of an interest on a closely-held business for the benefit of family members.

The Tax Planning Forum is developed entirely new each year, so this exhibit will not be included within their 2024 program, but it remains as relevant and valuable today as it was in 2023.  Plus, take it from me, the Tax Planning Forum faculty deliver their programs in an exceptionally enjoyable and easy-to-understand manner.

Note: this complimentary on-demand program includes no quizzes or tests and therefore attendees will not receive any CPE or CLE credit.  However, Tax Forum’s regular programs – both group live and self-study QAS – are all NASBA certified and provide CPE and CLE credit.

More flow-through tax planning programs available – designed to meet your needs, schedule and learning style

You can learn more about Tax Forum and their flagship group live and in-person programs by visiting their website.

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What To Use Your Tax Refund For?

STEPHEN BLAKE - Rim Financing

Receiving a tax refund can feel like a windfall, a sudden infusion of cash that arrives with a sense of possibility. This unexpected financial boost allows you to make strategic decisions that significantly impact your financial future. 

The key is to allocate this money wisely, balancing immediate needs with long-term goals. Whether you’re looking to pay down debt, invest in your future, or splurge on something special, understanding the options available can help you make the most of your refund.

Debt Repayment

Prioritizing High-Interest Debt

One of the most prudent uses of your tax refund is to pay down debt, particularly high-interest debt such as credit card balances. High-interest debt can quickly spiral out of control, leading to a cycle of minimum payments and ever-increasing interest charges. By allocating your tax refund to these debts, you can reduce your financial burden, save money on interest, and improve your credit score.

The Snowball vs. Avalanche Method

Regarding paying off debt, two popular strategies are the snowball and avalanche methods. The snowball method involves paying off the smallest balances first, giving you a psychological boost as you eliminate each debt. 

The avalanche method, on the other hand, focuses on paying off the highest-interest debt first, which can save you more money in the long run. Choosing the right method depends on your financial situation and personality, but both can be effective in helping you become debt-free.

Student Loan Repayment Strategies

If you have student loans, using your tax refund to make an extra payment can help you pay off your loans faster and reduce the amount of interest you’ll pay over the life of the loan. Consider targeting loans with the highest interest rates first, or if you have multiple loans, use the refund to make a lump-sum payment on the principal. This can shorten your repayment term and save you money in the long run.

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The Biden Tax Hike Will Likely Exceed $7 Trillion

The Biden Tax Hike Will Likely Exceed $7 Trillion

According to the House Ways And Means Chairman Jason Smith…

Hidden inside President Biden’s Fiscal Year (FY) 2025 Budget is the revelation that he will increase taxes by a whopping $7 trillion, thanks to a range of tax increases and the expiration of Republicans’ 2017 tax reform. Ways and Means Chairman Jason Smith (MO-08) outlined a list of the biggest tax increases, saying:

“President Biden’s $7 trillion tax increase on small businesses and families means fewer jobs, higher prices, and handing our competitive advantage to China. Far from going after the wealthy, these are tax hikes that hit workers, mom-and-pop business owners, seniors nearing retirement, and family farms and ranches. And with the IRS getting another $104 billion and an expanded ability to approve penalties, Democrats will be on the fast track to collect your life savings.”

The Details:

President Biden Quietly Pledges to Let Trump Tax Cuts Expire

  • Even as the President claims he will not allow the middle-class tax cuts in the 2017 tax reform to expire, his budget fails to show any plan to stop the increases and spends as though they don’t exist anymore.
  • That’s approximately $2 trillion in new taxes on top of the nearly $5 trillion explicitly included in this budget.

Sending Jobs and Companies Overseas with Higher Business Taxes than China

  • Increasing the corporate tax rate to one of the highest in the world would put America at a disadvantage in attracting investment and jobs.
  • As much as 75 percent of the burden of corporate tax increases falls on American workers and consumers in the form of lower wages and higher prices according to recent economic studies.

Global Tax Surrender Allows Foreign Governments to Take American Tax Dollars

  • President Biden’s global tax surrender to the Organization for Economic Cooperation and Development (OECD) sends American tax dollars to foreign governments and entities, while failing to hold China accountable.
  • Analysis from the Joint Committee on Taxation (JCT) finds that under Pillar 2, the United States stands to lose over $120 billion in tax revenues to foreign nations. And under the current OECD Pillar 1 proposal, according to JCT analysis of tax year 2021, American companies earned 70 percent of the profits that would have been subject to reallocation and taxation by other foreign nations, and the U.S. would have lost up to $4.4 billion in tax revenue to them.

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