6. April 2010 by Dan Walkow, CFA, CMT.

The widely anticipated expansion of the Roth IRA conversion program steamrolled into 2010 in a blaze of hype and publicity, but a new report shows consumer interest has been more of a whimper than a bang. This tax break offers basically one year in which anyone with an Individual Retirement Account (IRA) can shift the money into a Roth IRA and never again pay tax on it.

Read more: http://www.time.com/time/business/article/0,8599,1977893-1,00.html#ixzz0kK2jJaxy

I think one of the most appealing aspects of the new IRA rules is for those investors who have more than enough retirement savings and are looking to “pass down” their IRA to their children who can grow and withdraw assets tax-free.

Posted in Tax, Pensions, Taxation | No Comments »

3. April 2010 by Dan Walkow, CFA, CMT.

The Problem:

Canada Revenue Agency tells me I was not eligible to split pension income with my wife in 2007 and 2008. Now I have a huge tax bill with a penalty. The income came from a registered retirement income fund and a locked-in retirement income fund. That money came from my defined-contribution pension plan when I left Sobeys in 2006. I am now 58 years old.

The Pain:

Only lifetime income paid directly from a pension plan qualifies for the federal pension credit and for splitting with a spouse to save tax, unless it is transferred to you on the death of an earlier spouse. Your RRIF and LRIF withdrawals will not qualify as pension income until you reach 65. It’s another example of discriminatory treatment toward folks without a pension plan.

Posted in Tax, Taxation | No Comments »

31. March 2010 by Dan Walkow, CFA, CMT.

Investors who are under the illusion that all is well in Canada in regards to provincial finances may want to think twice.

Ontario leads the defict parade in Canada and for an interesting comparision between Ontario, Canada and California check it out here.

Posted in Tax, Taxation, Economics | No Comments »

31. March 2010 by Dan Walkow, CFA, CMT.

Hiking taxes and raising fees are not exclusive to most States in the USA; Canadian provinces are faced with growing deficits and tax hikes are front and center both on the consumption and income sides of the ledger.

The squeeze also continues on the the service and government spending side where services and budgets are being slashed to narrow the budget margin.

Expect more, alot more. Deficit reduction is going to be a multi-year process and we are only beginning to  see federal governments both in the USA and Canada implement larger tax grabs. Mindful of the early stages of the economic recovery most governments are introducing tax hikes in bite size chucks but as things improve its going to accelerate.

One wants to revisit your tax planning strategy and prepare accordingly.

See the recent article at the Financial Post on provincial tax hikes here.

Posted in Tax, Taxation | No Comments »

28. March 2010 by Dan Walkow, CFA, CMT.

WITH all the hoopla over the health care bill, hardly anybody noticed that a job creation bill that President Obama signed on March 18 makes it much harder for United States citizens to avoid taxes by hiding money in overseas bank accounts.

Congress is attacking some of these schemes, courtesy of interesting provisions aimed at curbing tax avoidance that legislators wrote into the new jobs bill, known as the Hiring Incentives to Restore Employment Act.

The most substantive section of the bill states that foreign financial institutions will face a 30 percent tax on their United States investments if they refuse to disclose information about accounts they have opened for American citizens in offshore jurisdictions. Another aspect of the bill eliminates a clever derivatives strategy used by investors to make their tax bills on dividends disappear.

The law was written broadly and covers banks, hedge funds, securities houses, derivatives dealers, commodity traders and private equity firms. Indeed, any financial firm that holds or trades assets for its own account or for clients must comply with the new reporting requirements.

The United States continues to put legal means in place to compel offshore investors and advisors to declare and pay tax on offshore investment accounts and investments. Canada, as always, is  a little behind the USA in this regard but you can be sure that that gap will close soon as well. DGW

Read the full article at the New York Times here.

Posted in Tax, Taxation | No Comments »

23. March 2010 by Dan Walkow, CFA, CMT.

A California client of Swiss bank UBS was sentenced to six months home detention for tax evasion in the latest case stemming from a U.S. government probe of citizens hiding billions of dollars in offshore assets.

John McCarthy, a businessman from the wealthy seaside enclave of Malibu, also was placed on three years supervised probation on Monday and fined $25,000 for his guilty plea to a single felony count of failing to report a foreign bank account from 2003 through 2008.

In addition to the fine, McCarthy was ordered to make restitution of more than $485,000 he owed to the government, which he already has paid, and to perform 300 hours of community service, which he can do while under home detention.

He had faced a maximum penalty of five years in federal prison and $250,000 in fines.

But Judge Valerie Baker Fairbank said she weighed in McCarthy’s favor his cooperation with authorities, the fact that he had no prior criminal record and had otherwise “led a responsible, law-abiding life.”

Here is the kind of treatment one can expect if caught stashing money offshore and failing to report a foreign account!

Read more here.

Posted in Tax, Taxation | No Comments »

15. February 2010 by Dan Walkow, CFA, CMT.

Chalk it up to political gridlock. For the first time since 1916 there is no estate tax in force in the United States.

Amid all the wrangling and finger-pointing about the budget, government spending and taxes, Congress — under the Democrats’ control, no less — is right now, very quietly, passing the biggest tax break for billionaires in history.

Read more here.

Posted in Tax | No Comments »

5. January 2010 by Dan Walkow, CFA, CMT.

As reported in the Wall Street Journal the Internal Revenue Service said it intends to regulate the legions of American tax-preparation companies, the first time the agency has sought to oversee these businesses. The move could affect how tax returns are prepared for tens of millions of people.

Under the new rules, employees of chain tax-preparation firms including H&R Block Inc. and Jackson Hewitt Tax Service Inc. will be required to pay a registration fee to the IRS, pass a “competency” exam and have 15 hours of education a year. Previously these employees weren’t required to meet federal standards.

The requirements also will apply to hundreds of thousands of independent preparers and mom-and-pop storefronts that offer tax preparation as one of several services. About 60% of U.S. taxpayers use tax preparers, according to the IRS. That number includes certified public accountants, or CPAs, who are already subject to professional standards and aren’t covered by the new rules. Read more here.

Posted in Tax | No Comments »

2. January 2010 by Dan Walkow, CFA, CMT.

Spouses of those wealthy who die this year might find themselves with nothing if the family will isn’t revised—a major wrinkle that could follow Friday’s repeal of the federal estate tax.

An update on the ongoing estate tax issue in the USA.

 Read more here.

Posted in Tax, Taxation | No Comments »