I think multi-level marketing companies are a mixed bag. They are great in terms of providing you with a pre-packaged business model at a dirt-cheap price. People can put as little or as much time they wish into their business. They have a low cost of entry. The tax benefits of the home office can be massive.
The bad side of MLMs is that (depending on what they are selling) the company has almost full control. If the company is selling only one specific product, your business can be gone overnight if the company goes under. The company usually keeps your contact list and all databases. The client list is the real value in any business.
I have done many amended 2008 tax returns for clients seeking the first time homebuyer tax credit. This credit is scheduled to end on November 31, 2009. There ahs been a whole lot of discussion about what happens beginning December 1.
There is a proposal I the senate right now that would raise this credit amount to $15,000. It would also eliminate the requirement for having not owned a home in the past three years. This proposed version would also make the credit non-refundable. This means that it is limited to the amount of federal income tax you owe. We’ll keep you posted as this issue develops.
I was just sitting here looking out the office window thinking about some of the issues I see taxpayers encounter on a regular basis. There is typically a 10% penalty on the amount of early withdrawals you take from your qualified retirement accounts. There are, however, several exceptions to this rule. I will list only the more common ones I run across:
1) Distribution to a beneficiary after death of the participant.
2) Distribution to purchase a first home, up to $10,000.
3) Distribution to pay for unreimbursed medical expenses
4) Distribution for higher education expenses.
As with most things in our tax code, there are exceptions and details that you need to be aware of. Consult your tax advisor before paying a penalty you do not owe.
I’m sure everyone has heard about Earned Income Credit by now. This is a refundable credit, which means that you are eligible to get more back in refund than you paid in throughout the year. Depending on your filing status and the number of dependents you have, you can be eligible for up to $4,824 in earned income credit.
Keep in mind that you are not eligible for EIC if your filing status is married filing separate. Another interesting thing about EIC is that, if you meet the criteria, you may be eligible to get EIC on every paycheck as opposed to waiting until tax time to get this money from the government. For families with three or more children, the maximum Earned Income Tax Credit for 2009 and 2010 rises by $628.50. And the phaseout of the credit for joint filers starts at higher income levels in 2009 and 2010, allowing more of them to claim the credit.
The IRS estimates 20 to 25 percent of people who qualify for the credit do not claim it.
If you have purchased a home over the past twenty years or so, then you probably know what private mortgage insurance (PMI) is. If your mortgage amount is over 80% of the appraised value, then the lender will require that you pay PMI to insure their interest in the property due to the loan-to-value ratio exceeding 80%.
I recently had to sue the lender on one of my rental properties over an issue with PMI. I attempted to pay down the loan to the 80% level in order to get rid of the PMI requirement. The lender took the position that their investor required that I have the mortgage in good standing for two years before they would allow this.
I took them to court, and got paid outside court, on the grounds that they were unlawfully imposing a requirement outside of our written agreement(s). How does $2,500 in back-pay sound to you? These banks have gotten too big for their britches lately. Sometimes you have to fight back.
What is a reverse mortgage, and who is a good candidate for one? This is ideally suited for someone over 65 years old with a house that is paid off, or nearly paid off. In exchange for equity in your home, the lender will provide you with the cashflow you need to make it each month. This is often the only option for someone with a paid-off home, and a monthly cashflow deficit.
There are many options on how you can receive the funds. You can get a lump sum, monthly payments, or a mix of the two. We recently helped a single elderly lady with one of these mortgages.
There has been talk for many years about regulating the tax preparation industry. As with any industry that becomes regulated, efficiency goes down and costs rise. Don’t misunderstand me. I am all for competent professionals. This is why I get continuing education every year. I recently got my license as an Enrolled Agent.
In my assessment, bureaucrats will require some sort of license for tax preparers beginning in 2011. When this happens, look for preparation fees to rise sharply, and for some business models in the tax industry to either fail or change drastically.
