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BUSINESS FORUM

Choose Your Joint Account Holders Wisely

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Before adding a joint account holder to your account, it would be wise to read about this recent New Jersey case which illustrates the risks involved when adding someone, even a close family member, to your account.

In Coiro v. Wachovia, 11-cv-3587, the recently widowed Josephine Coiro added her daughter to her checking account so the money could be accessed even if she became ill or would be unable to act. In April 2010, she sold her home and deposited the proceeds of $381,272 in the account. Five days later, her daughter filed Chapter 7 bankruptcy. Even though her daughter did not include the account as an asset, Wells Fargo, which monitors bankruptcy filings, froze it.  [Read more…] about Choose Your Joint Account Holders Wisely

States Conforming to IRS Employee Classification Amnesty

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When the IRS announced its employee classification amnesty, it caused a number of concerns for employers. A primary concern was whether the States would conform, or if they would just consider the IRS application a confession and prosecute taxpayers that take advantage of the program. While it may be too soon to tell in many states, some have conformed already. [Read more…] about States Conforming to IRS Employee Classification Amnesty

Owe NJ or NY taxes? ? It Could Cost You Your Driving Privileges

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Ignoring a tax debt could cost you more than you might think. Traditionally, states have made use of  liens and wage garnishments as the primary method for collecting delinquent taxes. However, the reeling nature of the economy has emboldened states to employ a much more aggressive tactic.  On October 4, California passed a law mandating that state’s motor vehicle department to suspend the driver licenses of the top 1,000 tax debtors. Moreover, all their names are to be published online. At least 19 states, including New Jersey and New York, have followed California’s lead and are likewise listing the names of tax delinquents online. While they have not yet suspended driver licenses, these states are desperate for additional tax revenue. It would be wise to take care of your tax liability to ensure not having to move over to the passenger’s side.

Deadline to Convert Roth IRAs to Traditional IRA is Oct 17th

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In 2010, the law permitted you to convert your traditional IRA to a Roth and defer recognizing income on the amount converted until future years. For example, if your account was $100,000 you would declare no income on your 2010 return and $50,000 of taxable income in both 2011 and 2012. As a result of the volatility in the stock market, that $100,000 you converted might only be worth $60,000. Here’s where the problem arises: the tax you pay in 2011 and 2012 on the Roth conversion is NOT based on the current value of the account, but rather on the value at the time of conversion. In our example, assuming a tax bracket of 33%, you would end up with just $27,000 of your original $100,000 investment! ($100,000 investment – $40,000 loss of market value – $33,000 Uncle Sam’s portion = $27,000). There is a solution to this problem, but the deadline is October 17, 2011. [Read more…] about Deadline to Convert Roth IRAs to Traditional IRA is Oct 17th

Non-Profits are not 100% Tax-Exempt

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Many people think that tax-exempt organizations don’t pay federal income tax. While this assumption is true under most circumstances, there are times that they are indeed subject to income tax. When tax exempt organizations engage in commerce unrelated to their exempt status, Congress legislated that they are in fact required to pay their fair share in taxes. This is known as “Unrelated Business Income Tax” or UBIT for short. [Read more…] about Non-Profits are not 100% Tax-Exempt