Topics Covered:

1. Celebrating International Women’s Day but Women in Politics Still Face Barriers.

2. Bernie Sanders Got Guts but His Tax Plan is Hopeless.

3. How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

4. Questions from our listeners: If Bernie Sanders is looking to make college free to everyone, and such a situation actually occurred, what would happen to my kids 529 plans? Are ALL colleges on this list or is it more like the Board of Governors fee waiver that allows those from low income families to have their costs waived. How exactly is the plan supposed to work?

************************************************************************************

Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:
And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.
You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:
Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: Bernie Sanders Got Guts but His Tax Plan is Hopeless.

Windus states:

Also coming up is:

Segment 3 material: How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

We’re Celebrating International Women’s Day But Women In Politics Still Face Barriers.

http://blogs.wsj.com/washingtonwire/2016/03/07/susan-collins-says-women-in-politics-still-face-barriers/; http://www.propublica.org/article/the-impact-and-echos-of-the-wal-mart-discrimination-case; http://www.proplublica.org/article/pregnancy-discrimination-case-reaches-supreme-court

Windus begins: U.S. Senator Susan Collins suggested, that because of her gender, Hillary Clinton is treated differently than other candidates in the race for the white house.

Jeff continues: Senator Collins made this statement on Monday, as female professionals and political figures gathered at the “Women in Leadership: Pathways and Possibilities Conference” at the Edward M. Kennedy Institute for the United States Senate in Boston.

Windus continues: During the conference that celebrated Women’s History Month, Senator Collins made several comments on the obstacles women still face when ascending to the highest levels of politics.

Jeff states: Reminiscing her bid for Governor of Maine in 1994, Senator Collins shared a learned lesson of how “women were held to different standards than men were.” She recalls the constant reports of what she wore, rather than what she said.

Windus replies: Even now, you see it all the time with Hillary Clinton. Articles focused on her many colorful pant suits or hair style instead of only focusing on what she’s saying.

Jeff states: Well hold on Windus, the whole hair thing is not a female thing with Trump in the presidential race.

Windus states: True Jeff.

Jeff states: But turning back to Senator Collins, a political centrist elected to the Senate in 1996, she goes on to explain, “When women are elected into office, [she] thinks they still have to prove that they belong there. Men don’t face that barrier.”

Windus continues: She believes men do not face that same barrier, as there seems to be the general consensus that if a man is elected to the senate, then he belongs there.

Jeff states: It doesn’t stop there, though. We’re still following the reverberation of the impact of the Wal-Mart v. Dukes discrimination case from June 2011.

Windus states: In a 5-4 decision, the U.S. Supreme Court threw out a monstrous lawsuit by female employees who claimed to be systematically underpaid and under promoted by the world’s largest corporation.

Jeff continues: That’s right, Windus. That verdict upended decades worth of employment discrimination law and raised serious barriers to all sorts of future large-scale discrimination cases.

Windus replies: Repercussions of the Dukes decision have poured through the federal and state courts, being cited in more than 1,200 in rulings and viewed as remarkable.

Jeff states: Lawsuits all over the country have had verdicts overturned, settlements thrown out and class actions rejected or decertified. In many instances, these cases undergo years of litigation.

Windus replies: This isn’t just about Wal-Mart, though. All sorts of companies including retailers (Family Dollar), government contractors (Lockheed Martin Corp), business-services providers (Cintas Corp.), and magazines (Hearst Corp), have experienced similarities in their rulings.

Jeff continues: There’s been apprehension post Wal-Mart v Dukes. The aftermath is being closely monitored but critics are doing anything but calling off the fight.

Windus continues: Another blockbuster case from just a couple years ago was the Peggy Young v. United Parcel Service. In this case, Young, a delivery driver for UPS, had requested to be excused from lifting more than twenty pounds per doctor’s orders while she was pregnant.

Jeff replies: However, in Young’s job description she was required to lift up to seventy pounds. This is where UPS argued that assigning Young “light duty” would amount to special treatment, being viewed as unfairly favorable.

Windus states: UPS stood by its policy to only accommodate associates who were temporarily injured on the job or covered by union contract mandates, and the Americans with Disabilities Act, in a few other gender-neutral circumstances.

Jeff continues: As a result, Young was forced to take seven months of unpaid leave thus resulting in the loss of her medical benefits when she needed them the most.

Windus states: With this discrimination case under close scrutiny, Justice Ruth Bader Ginsburg accused the court’s conservative majority of having a “blind spot” in regards to women’s rights.

Jeff continues: Especially considering the same five justices in query had not only thrown out the Walmart v. Duke sexual discrimination class action but they rejected Lilly Ledbetter’s equal pay lawsuit, as well.

Windus states: The result of the pregnancy discrimination case came only a year ago. The Supreme Court ruled 6-3 in favor of Young. While the justice’s declined to accept the broadest version of the discrimination argument, they made it clear that no employer had the right to treat anyone the way they did Young.

Jeff replies: Pregnancy-related discrimination isn’t isolated to the workplace though. Claims have also surfaced in mortgage lending, housing and education.

Windus states: To combat this issue, support organizations like Babygate have launched a New York-based non-profit, A Better Balance, that is a wonderful source of information about the rights of pregnant workers and their families under state and federal laws.

Jeff states: It’s a whole new world out there and the only way to keep up with it is to stay ahead of it…

Well it’s time for a break but stay tuned because we are going to tell you how Bernie Sanders Got Guts but His Tax Plan is Hopeless.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: But before we start on this next segment, Windus would like to remind you of her offer.

Windus states PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Bernie Sanders Got Guts but His Tax Plan is Hopeless.

Jeff states: So in continuing the political discussion it is time to turn to Bernie Sanders’ tax plan which is discouraging to say the least. The populist Democratic presidential candidate has run his campaign on the basis of a “wholesale dismantling of the nation’s economic and political status quo,” according to Yahoo! Finance.

www.taxes.yahoo.com/post/140456796658/bernie-sanders-tax-plan-is-hopeless

Jeff replies: These details are coming from the nonpartisan Tax Policy Center who are releasing estimates that Sanders’ plan would amount to about $1.5 trillion in new tax revenue a year!

Windus continues: Currently, the government takes in about $3.4 trillion in a year, which would mean that Bernie’s plan would rocket the tax bite by around 46%. By the next decade, new taxes would be totaling nearly $2.5 trillion per annum.

Jeff replies: Granted most of these tax hikes are targeting the wealthy but “all income groups would pay some additional tax,” the center reports in its most recent analysis.

Windus states: Bernie Sanders, as gutsy as he is, explains that those new taxes would be worth it since they’d cover the cost of universal healthcare, college education for anyone who wanted to further their education, extended family leave, new infrastructure stimulus and a whole bunch of other things.

Jeff states: But how idealistic is this plan is we can’t even get congress to vote on shoveling the snow after a blizzard?? Take the example of, congress refusing to raise national taxes on gasoline. Gas prices right now are extremely low but the Highway Trust Fund (funded by gas tax) has to “offset” its expense each year by pulling from other programs.

Windus continues: Congress has steadily refused to raise taxes despite the ballooning national debt that’s now around $19 trillion and change. How is Sanders’ going to convince them to increase new taxes by 46%, when the government is more apt to borrow additional funding then raise taxes, passing the tab to future generations to pay?

Jeff states: Sanders’ still confidently charges on though. Maybe it’s the assumption that voters don’t care where it comes from, just as long as they have their freebies. Maybe he’s looking to start a big debate by offering a segway from business as usual.

Windus replies: If it’s a segway, let’s look at the details. The new tax plan that Sanders’ has suggested would enact a new 2.2% surtax on all taxable income and a new 6.2% payroll tax on employers.

Jeff continues: Now Windus, according to the tax plan, the employers would be responsible for paying the new taxes but we all know that they will almost unquestionably recoup their losses by lowering employee wages or reducing the benefits. Look what happened with ObamaCare.

Windus states: They have to make up that money somewhere, Jeff, and it always seems to be detrimental to the guy at the bottom. In addition to the new employer taxes, the top income tax rate would drop from 39.6% to 28%.

Jeff continues: However, a plethora of new surtaxes would raise the tax burden on those at the $200,000 a year and up. Those surtaxes would just keep growing on your way up the income chart.

Windus states: Also under Sanders’ new tax plan, capital gains for the wealthy would be taxed as ordinary income, meaning a much larger tax bite. For lower earners, lower tax rates for capital gains would still apply.

Jeff continues: In addition, there would be new taxes on financial transactions. Now does all of this change in taxes means new changes in tax law?

Windus states: Well, there are a lot of other provisions but that does bring up the point that these changes would make tax code much more complicated instead of simpler.

Jeff replies: All things considered, the utopian plan Sanders’ has revealed will leave Americans with higher taxes before they could figure out what they will be getting for it. Or as it’s put “front-loading the pain, back-loading the gain.”

Windus states: But then again, every presidential candidate has some sort of new tax plan, no more reliable than what Bernie Sanders has asserted. Take Donald Trump for example.

Jeff continues: Yes, Trump almost wants to completely oppose Sanders by cutting individual and business taxes across the board. Sounds great but there’s that one little problem, analysts at the Tax Policy Center say it would hack nearly $1 trillion a year off of government revenue.

Windus states: By cutting revenue, we’d need to start looking for other places to get that money from. Medicare and Social Security would either have to take big cuts or eliminate various government functions.

Jeff states: Hillary Clinton may have the most practical solution under her belt. Although, while it’s unlikely for congress to agree with the steep tax hikes she wants to slap on the wealthy, at least her plan is a starting point for future legislation.

Windus replies: According to the Tax Policy Center, estimates are showing that her plan would increase government revenue by roughly $110 billion per year. Although, those funds are not going to be used to pay down the national debt.

Jeff states: Clinton plans to offset tax cuts for lower earners with the extra revenue brought in by taxing the wealthy. There is the likelihood that it would cost more than planned, but we all know that no tax plan comes free.

Windus replies: But you know what does come free…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Stay tuned because after the break we are going to tell you How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: But before we continue with this next segment, I want to remind you that PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

How The IRS May Be Holding Money That Belongs To You and More Hot Tax Tips To Save You Money!

Jeff states: So now that we approaching the middle of March, I thought we would cover today some hot tax tips to save you money.

Windus states: But first Jeff, I heard an announcement by the IRS that they are holding refunds totaling $950 million for people who have not filed a 2012 Federal Income Tax Return. Is that true?

Jeff states: It’s hard to believe that the IRS is holding almost $1 billion of funds that should be refunded to taxpayers and that is just for the 2012 tax year alone. That amount is also probably consistant for the 2013 and 2014 tax years.

Windus states: That being the case the IRS is holding about $3 billion that does not even belong to them!

Jeff replies: Well earlier this week the IRS announced that Federal income tax refunds totaling $950 million may be waiting for an estimated one million taxpayers who did not file a federal income tax return for 2012. The IRS estimates the midpoint for potential refunds for 2012 to be $718.00, with half being worth more than $718.00 and half being worth less.

Windus asks: So for someone who has not filed, what rules apply to claim their money?

Jeff replies: In cases where a tax return was not filed, the law provides most taxpayers with a three-year window of opportunity for claiming a refund; however under some circumstances you can lose your right to receive a refund of overpaid taxes if already two years have passed. But if you file a tax return that is late and there is an overpayment, the IRS will not assess a penalty for filing that return late. Nevertheless, under all circumstances if no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. For 2012 tax returns, the window closes on April 18, 2016 (although this year residents of Maine and Massachusetts have until April 19th). The law requires the tax return to be properly addressed, mailed and postmarked by that date.

Jeff continues: Additionally you should be mindful that taxpayers seeking a 2012 refund may still have their refund checks held up if they have not filed tax returns for 2013 and 2014. In addition, the refund will be applied to any amounts still owed to the IRS, or their state tax agency, and may be used to offset unpaid child support or past due federal debts, such as student loans.

Windus asks: Are there any other benefits taxpayers loose by not filing a tax return?

Jeff replies: Yes, if you are a low or moderate income worker who is entitled to the Earned Income Tax Credit, you cannot get a tax refund that includes this credit unless you file a tax return. For 2012, the credit is worth as much as $5,891.00.

Windus asks: So what if you figure that you will still owe the IRS if you file a delinquent tax return, should you still file?

Jeff replies: By all means! Besides not receiving or even forfeiting your refund, not filing a Federal income tax return can be even more costly as the IRS may file a substitute return for you if you do not voluntarily file. These “substitute tax returns” always show a higher liability than if an actual return was filed because they do not take into account your marriage or household status, your dependents, any business expenses, available itemized deductions, basis in assets sold, income exclusions or tax credits. Also, all interest and penalties will be based on this higher liability.

Jeff continues: Outstanding tax returns also prevent you from making payment arrangements and avoiding collection action so even if you are unable to fully pay any tax due on the late returns, it is to your benefit to seek tax counsel to coordinate their preparation and secure collection holds with the IRS. Additionally tax counsel should seek abatement of the penalties which include the “failure to file” penalty that could increase your tax bill by 25% or more.

Facts about the Adoption Tax Credit

Windus asks: OK Jeff. I understand that if a taxpayer adopted a child in 2015 there is a tax credit that may be available.

Jeff replies: That’s right Windus. If you adopted or tried to adopt a child in 2015, you may qualify for a tax credit. Here are some things you should know about the adoption credit.
1. Credit or Exclusion. The credit is nonrefundable. This means that the credit may reduce your tax to zero. If the credit is more than your tax, you can’t get any additional amount as a refund. If your employer helped pay for the adoption through a written qualified adoption assistance program, you may qualify to exclude that amount from tax.
2. Maximum Benefit. The maximum adoption tax credit and exclusion for 2015 is $13,400 per child.
3. Credit Carryover. If your credit is more than your tax, you can carry any unused credit forward. This means that if you have an unused credit in 2015, you can use it to reduce your taxes for 2016. You can do this for up to five years, or until you fully use the credit, whichever comes first.
4. Eligible Child. An eligible child is an individual under age 18 or a person who is physically or mentally unable to care for themself.
5. Qualified Expenses. Adoption expenses must be directly related to the adoption of the child and be reasonable and necessary. Types of expenses that can qualify include adoption fees, court costs, attorney fees and travel.
6. Domestic or Foreign Adoptions. In most cases, you can claim the credit whether the adoption is domestic or foreign. However, the timing rules for which expenses to include differ between the two types of adoption.
7. Special Needs Child. If you adopted an eligible U.S. child with special needs and the adoption is final, a special rule applies. You may be able to take the tax credit even if you didn’t pay any qualified adoption expenses.
8. No Double Benefit. Depending on the adoption’s cost, you may be able to claim both the tax credit and the exclusion. However, you can’t claim both a credit and exclusion for the same expenses. This rule prevents you from claiming both tax benefits for the same expense.
9. Income Limits. The credit and exclusion are subject to income limitations. The limits may reduce or eliminate the amount you can claim depending on the amount of your income.

Tax Savings from Higher Education Costs

Windus asks: OK Jeff. I understand that if a taxpayer paid for higher education in 2015 there is an opportunity to save money on taxes.

Jeff replies: That’s right Windus. Money you paid for higher education in 2015 can mean tax savings in 2016. If you, your spouse or your dependent took post-high school coursework last year, there may be a tax credit or deduction for you.

Windus asks: So what are the key tax breaks for higher education?

Jeff responds:
The American Opportunity Credit (AOTC) is:
• Worth up to $2,500 per eligible student.
• Used only for the first four years at an eligible college or vocational school.
• For students earning a degree or other recognized credential.
• For students going to school at least half-time for at least one academic period that started during or shortly after the tax year. Claimed on your tax return using Form 8863, Education Credits.

The Lifetime Learning Credit (LLC) is:
• Worth up to $2,000 per tax return, per year, no matter how many students qualify.
• For all years of higher education, including classes for learning or improving job skills.
• Claimed on your tax return using Form 8863, Education Credits.

The Tuition and Fees Deduction is:
• Claimed as an adjustment to income.
• Claimed whether or not you itemize.
• Limited to tuition and certain related expenses required for enrollment or attendance at eligible schools.
• Worth up to $4,000.

Additionally:
• You should receive Form 1098-T, Tuition Statement, from your school by Feb. 1, 2016. Your school also sends a copy to the IRS.
• You may only claim qualifying expenses paid in 2015.
• You can’t claim either credit if someone else claims you as a dependent.
• You can’t claim either AOTC or LLC and the Tuition and Fees Deduction for the same student or for the same expense, in the same year.
• Income limits could reduce the amount of credits or deductions you can claim.

Jeff states: We are always thinking of ways to save money at tax time and remember ….

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Jack from San Diego asks: If Bernie Sanders is looking to make college free to everyone, and such a situation actually occurred, what would happen to my kids 529 plans? Are ALL colleges on this list or is it more like the Board of Governors fee waiver that allows those from low income families to have their costs waived. How exactly is the plan supposed to work?

Answer by Windus and Jeff: Well these are good questions that I don’t even think Sanders has considered but according to the Bernie Sanders official website https://berniesanders.com/issues/its-time-to-make-college-tuition-free-and-debt-free/, here are the steps that Sanders will take as President to make college debt free:

1. MAKE TUITION FREE AT PUBLIC COLLEGES AND UNIVERSITIES.
Sanders states – Last year, Germany eliminated tuition because they believed that charging students $1,300 per year was discouraging Germans from going to college. Next year, Chile will do the same. Finland, Norway, Sweden and many other countries around the world also offer free college to all of their citizens. If other countries can take this action, Sanders believes that so can the United States of America.

2. STOP THE FEDERAL GOVERNMENT FROM MAKING A PROFIT ON STUDENT LOANS.
Sanders states: Over the next decade, it has been estimated that the federal government will make a profit of over $110 billion on student loan programs. Sanders is looking to prevent the federal government from profiteering on the backs of college students and use this money instead to significantly lower student loan interest rates.

3. SUBSTANTIALLY CUT STUDENT LOAN INTEREST RATES.
Under the Sanders plan, the formula for setting student loan interest rates would go back to where it was in 2006. If this plan were in effect today, interest rates on undergraduate loans would drop from 4.29% to just 2.37%.

4. ALLOW AMERICANS TO REFINANCE STUDENT LOANS AT TODAY’S LOW INTEREST RATES.
Sanders states – It makes no sense that you can get an auto loan today with an interest rate of 2.5%, but millions of college graduates are forced to pay interest rates of 5% to 7% or more for decades. Sanders is looking to allow Americans would be able to refinance their student loans at today’s low interest rates.

5. ALLOW STUDENTS TO USE NEED-BASED FINANCIAL AID AND WORK STUDY PROGRAMS TO MAKE COLLEGE DEBT FREE.
The Sanders plan would require public colleges and universities to meet 100% of the financial needs of the lowest-income students. Low-income students would be able to use federal, state and college financial aid to cover room and board, books and living expenses. And Sanders would more than triple the federal work study program to build career experience that will help them after they graduate.

6. FULLY PAID FOR BY IMPOSING A TAX ON WALL STREET SPECULATORS.
The Sanders plan calls for the cost of this $75 billion a year plan to be fully paid for by imposing a tax on Wall Street speculators. Sanders claims some 40 countries throughout the world have imposed a similar tax including Britain, Germany, France, Switzerland, and China.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

Topics Covered:

1. FBI v. Apple: The feud that should get you thinking about providing electronic passwords to your family in case of emergency.
2. How Older Women are Reshaping the U.S. Job Market.
3. Important tax tips if you are self-employed.
4. Questions from our listeners:

• Considering women are living longer than men and should be looking further, long-term of managing money, how much would be a good base, considering interest income, amount for one to have saved up upon retirement? Say I retire at 65 but end up living until 92?  What if I out live my significant other and end up on my own in a nursing home. How much should I have squirreled away in order to not burden my family?
• I just incorporated my business and want to elect Subchapter S status. What are the procedures that I must follow?

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Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:

And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: How Older Women Are Re-shaping The U.S. Job Market.

Windus states:

Also coming up is:

Segment 3 material: Important tax tips if you are self-employed.

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

FBI v. Apple: The feud that should get you thinking about providing electronic passwords to your family in case of emergency.

Credit to Wall Street Journal: http://on.wsj.com/1XJm12L; http://on.wsj.com/1LDwaXJ; http://www.cnet.com/news/taking-passwords-to-the-grave/

Windus begins: Apple is facing court orders to help investigators in the Justice Department extract data from password protected iPhones. At least a dozen cases nationwide are calling on the tech corporation to assist in investigations where cell phones were confiscated as evidence.

Jeff replies: These disputes are similar to the current battle over a terrorist’s locked phone that has brought to light this on-going feud over privacy and security. The publicized terrorist attack is referencing the December 2nd attack in San Bernardino, where 14 people were killed and 22 were reported injured.

Windus continues: This dispute was funneled to the public after the court ordered Apple Inc. to help the Justice Department bypass security features on an iPhone belonging to one of the shooters, Syed Rizwan Farook.

Jeff states: Now, FBI Director James Comey pinpoints the terrorism case and explains that unlocking said terrorists phone is important to exposing possible other terrorist threats. He further goes on to explain, “We can’t look survivors in the eye, or ourselves in the mirror, if we don’t follow the lead.”

Windus replies: At the same time, Apple CEO Tim Cook is calling the government’s actions “a dangerous precedent that threatens everyone’s civil liberties”, urging prosecutors to withdraw their demands. He suggests that the government form a commission to address situations such as these, brought on by the growing use of encryption.

Jeff states: For now, 51% of the general public is in agreement with Comey’s argument of Apple helping the government to unlock the December 2nd terrorist’s phone, but 38% are in favor of Apple’s stance on preserving privacy and security.

Windus replies: And preserving privacy and security is a position that Cook feels very passionately about. Apple as a whole has hardened its stance over time, adopting more stringent security and encrypted more of its user data.

Jeff states: In a 2014 Charlie Rose interview, Cook elaborated “they would have to cart us out in a box before we would” allow outsiders including the National Security Agency to create a “backdoor” to access users’ personal data.

Windus replies: When meeting in January, both Comey and Cook spoke generally on the issue, but make no significant breakthroughs. If anything, each only solidified their respected stances on the subject.

Jeff states: In the end, it is likely that any legal outcomes of this case will be provisional. Technology evolves at such a rapid pace that Apple and other firms will eventually develop new programs that guard data more securely and out grow old rules.

Windus replies: This includes legislature like the 18th-century law, The All Writs Act, that is currently being pursued by the Justice Department to compel companies to assist with password security by-pass for phones held in evidence.

Jeff continues: However, in most of the cases, prosecutors says that instead of Apple challenging the orders in court, Apple simply deferred complying with them, without seeking appropriate judicial relief.

Windus states: In a letter last week from Apple CEO Tim Cook, “the government suggests this tool could only be used once, on one phone. But that’s simply not true. Once created, the technique could be used over and over again, on any number of devices.”

Jeff replies: When it comes down to it, the government is asking Apple to hack their own users while undermining decades of security advancements.

Windus states: Separately from terrorism, federal prosecutors in New York are disputing with Apple over an iPhone seized during a drug investigation there. But, Apple has continued to stand behind its position that forcing a company to extract data, could threaten the trust between Apple and its customers.

Jeff replies: So where does this leave us on a smaller scale when a relative passes and all of their financial information is eManaged?

Windus replies: I’m so glad you asked Jeff! We’re stuck in the mess but closer to home. If you pass away, so much is electronic; your family may not easily be able to find your assets.

Jeff continues: So, what’s supposed to happen when you lose mom or dad and they just so happen to be managing everything from their portfolios, to their life insurance, to their bank accounts on line?

Windus replies: A fall back is that the state SHOULD report them after one year of missed statements. BUT with technology, that isn’t always the case and sometimes statements aren’t missed because they are emailed, so reporting to the state lost money can take longer.

Jeff replies: In which case, it’s very important to keep a record of all of your accounts and passwords, in case of emergency. Some companies have help desks set up for such an occasion but others cite privacy laws prohibiting them from releasing information regarding anyone’s account, regardless of incident.

Windus completes: From a planning perspective, it’s not a question of privacy rights so much as property rights. You need to have a hard copy of ALL accounts including emails, usernames and passwords, just as much as you needed to have the accounts set up in the first place.

Jeff continues: According to Marc Rotenberg, executive director of the Electronic Privacy Information Center, “The so-called ‘Tort of Privacy’ expires upon death, but property interests don’t. Private e-mails are a new category. It’s not immediately clear how to treat them, but it’s a form of digital property.”

Windus replies: In terms of estate planning, it is much easier if a family member already has user sign on information, like a username and password, as the situation comes up fairly regularly. It would be wise to put all passwords to sites online in an estate planning document, end of story.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you how older women are re-shaping the U.S. job market

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Jeff states: And before we start on this next segment, Windus would like to tell you of her special offer.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff resumes:

How Older Women Are Re-shaping The U.S. Job Market.

Credit to Wall Street Journal, Bloomberg News and ProPublica: http://on.wsj.com/1XJrbf5; http://www.propublica.org/article/the-impact-and-echoes-of-the-wal-mart-discrimination-case; http://www.bloomberg.com/news/articles/2016-02-17/working-women-a-new-book-stands-up-for-the-single-ladies

Jeff states: More and more female workers are delaying retirement, in a shift that’s helping transform the US economy. There is a wave of American women who are working, or looking for work, longer than any previous generation.

Windus replies: In fact, since the beginning of the December 2007 recession, the percentage of older women working has grown while the rates of all other categories of U.S. worker, categorized by gender and age, has either declined or made no change at all.

Jeff continues: According to historical and projected statistics by the Labor Department, one in twelve women worked past the age of 65 in 1992. Currently, that same number has increased to around one in seven. By 2024, it will escalate to almost one in five, the equivalent of roughly 6.3 million workers.

Windus states: Richard Johnson, director of the Urban Institute’s program on retirement policy, this is “one of the most stunning developments that we’ve seen in the labor market in over the last 50 years.”

Jeff states: While some are extending their careers because they enjoy working late in life, others are doing so under a more fiscal necessity.

Windus replies: That’s right, Jeff. People are living longer, and with that are concerned with outliving their savings. Americans are approaching old age and finding themselves with more debt and less savings. In addition, fewer are receiving pensions than in previous generations.

Jeff states: Consider it this way, Windus. The current growth among older female workers in job market reflects a realignment that began over a half-century ago when women joined the workforce.

Windus replies: The rate of older Americans in the workforce fell every year from the end of WWII to the 1980s, but has since shifted. In the mid-1990s, employers transitioned from traditional employer sponsored pension plans to 401(k) savings plans that shift the responsibility of saving for retirement onto the employee, instead of the employer.

Jeff replies: This shift in funding made it necessary for Americans to continue to work until they could afford to retire and not just when they met a certain age.

Windus states: As a result, older Americans are leaving the work place more slowly than in the past, signifying a greater potential in the labor supply, as well as more slack, than an unemployment rate below 5% would usually entail.

Jeff replies: Last month, when the unemployment rate dropped below 5%, it was a faster drop than any economist had expected and a level that had not been seen since early 2008. This should trigger higher wages as employers search through fewer potential new hires, but it hasn’t yet.

Windus replies: But it’s not just about wanting to work longer, it’s having to work longer. Women out live men and therefor, have a greater propensity to out-live their savings. Older Americans have more debt than in previous years.

Jeff states: For example, in 2013, homeowners aged 65 or older with a mortgage, still owed roughly $88,000 on their loans. That’s up from the average in 2001, which ran about $43,400. The problem could be would-be retirees who were hit hard during the last financial crisis, cannot afford to retire.

Windus replies: Although several economists acknowledge a tie between financial insecurity and later retirement, it is difficult to prove considering that many working later in life are skilled workers with higher incomes.

Jeff states: According to census data maintained by the University of Minnesota, the increase in working women ages 55 to 64 over the past decade have been split fairly evenly between college graduates and those who only finished high school.

Windus replies: In reality, if financial hardship was the primary factor of women working later in life, there would be a greater ratio of those who had lower-skilled occupations.

Jeff continues: Regardless, of those who remain employed, the need for money was the most cited reason for working later into life, exceeding those who are working out of enjoyment nearly two to one, in a survey published in 2014 by AARP.

Windus states: Statistically women live longer and save more conservatively than men. This becomes a problem when the issue of out-living your finances presents itself. How to you remedy this situation? Put together a financial plan that pieces together all the factors that worry you and call me…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we are going to tell you important tax tips if you are self-employed.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Jeff states: So before we start this segment, I want to remind our listeners that PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Jeff resumes:

Important Tax Tips If You Are Self Employed.

If you are self-employed, you normally carry on a trade or business. Sole proprietors and independent contractors are two types of self-employment.

Independent Contractors.

Jeff asks Amy: How does the IRS define who is an Independent Contractor?

Amy replies: People such as doctors, dentists, veterinarians, lawyers, accountants, contractors, subcontractors, public stenographers, or auctioneers who are in an independent trade, business, or profession in which they offer their services to the general public are generally independent contractors.

Windus asks: But I know that many people who work in one of these occupations are treated as employees so how do you differentiate worker who are independent contractors?

Amy replies: Whether these people are independent contractors or employees depends on the facts in each case. The general rule is that an individual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done.

Sole Proprietorship

Jeff asks Amy: How does the IRS define what is a sole proprietorship?

Amy replies: A sole proprietorship allows an individual to own and operate a business by him/herself. A sole proprietor has total control, receives all profits from and is responsible for taxes and liabilities of the business. If a sole proprietorship is formed with a name other than the individual’s name, a Fictitious Business Name Statement must be filed with the county where the principal place of business is located. Generally, there are no other formal requirements to own and operate a sole proprietorship. However, depending on the business venture, a particular license or certification may be required.

Windus states: If either of these situations apply to you, there are a few basic things you should know about how your income affects your federal tax return and of course with our two tax attorneys in the house, let’s have them go over the most important tax tips you need to know if you are self-employed.

Amy and Jeff to read off each tax tip and explanation.

Jeff states:
• SE Income. Self-employment can include income you received for part-time work. This is in addition to income from your regular job.

Amy states:
• Schedule C or C-EZ. You must file a Schedule C, Profit or Loss from Business, or Schedule C-EZ, Net Profit from Business, with your Form 1040. You may use Schedule C-EZ if you had expenses less than $5,000 and meet certain other conditions. See the form instructions to find out if you can use the form.

Jeff states:
• SE Tax. You may have to pay self-employment tax as well as income tax if you made a profit. Self-employment tax includes Social Security and Medicare taxes. Use Schedule SE, Self-Employment Tax, to figure the tax. If you owe this tax, attach the schedule to your federal tax return.

Amy states:
• Estimated Tax. You may need to make estimated tax payments. Try IRS Direct Pay. People typically make these payments on income that is not subject to withholding. You usually pay estimated taxes in four annual installments. If you do not pay enough tax throughout the year, you may owe a penalty.

Jeff states:
• Allowable Deductions. You can deduct expenses you paid to run your business that are both ordinary and necessary. An ordinary expense is one that is common and accepted in your industry. A necessary expense is one that is helpful and proper for your trade or business.

Amy states:
• When to Deduct. In most cases, you can deduct expenses in the same year you paid, or incurred them. However, you must ‘capitalize’ some costs. This means you can deduct part of the cost over a number of years.

To Incorporate Or Not To Incorporate?

Jeff states: So a question that we hear a lot of is whether a self-employed individual should incorporate his or her business.

Amy states: When forming a legal entity, it’s best that it be created separate from the holdings of its owners to ensure limited liability. Historically, the choice has been for owners to form a corporation. Today, however, there may be better choices besides a sole proprietorship or corporation.

Amy continues: Other multiple organization structure possibilities include:
• Limited Liability Company (LLC)
• Partnership
• Limited Partnership
• Limited Liability Partnership

The advantages of incorporating (including forming an LLC).

Windus states: So to help our listeners who are considering this issue, how about I have our two tax attorneys, Jeff and Amy, go over the advantages of incorporating or forming an LLC.

Amy states: Limited Liability. Corporations and LLC’s offer limited liability risks to their owners (shareholders for corporations and members for LLC’s). In most corporate or LLC structures, shareholders or members are not personally liable for the debts and other liabilities (including legal) for the business.

Jeff states: Ease Of Attracting New Investors and Facilitates Exit Strategy. Whether it’s a corporation or LLC, your ownership interest is evidenced by a share certificate for a corporation or a membership interest for an LLC. Either way it is a document or a right that you can transfer to someone else without having to change anything on the business’ operations, assets or liabilities.

Amy states: Lower Audit Risk. It is a known fact that self-employed individuals who file their Form 1040 reporting their business income and business expenses on Schedule C run a higher risk of audit than self-employed individuals who incorporated their business and all of this detail appears on a separate corporation income tax return.

Jeff states: Favorable Payroll Tax Consequences. Corporate income is not subject to Social Security, Workers Compensation and Medicare taxes; and if planned correctly owners do not pay self-employment taxes and this can equate to a big tax savings to you.

The three most popular entities used by self-employed individuals:

Windus asks: What are the three most popular entities used by self-employed individuals?

Amy replies: C-corporation. A corporation is an entity that exists separately from its owners (shareholders). A corporation may be utilized to provide asset protection for its stakeholders, as well as protection for managers, officers and directors. Any corporation that does not elect to be treated under Subchapter S of the Internal Revenue Code is a C Corporation.

Jeff replies: S-corporation. A corporation electing Subchapter S regulation provides limited liability to its shareholders as well as pass through taxation to shareholders (meaning the corporation is not taxed but the corporations shareholders are taxed individually.) In other word, it is the income or loss of the S-corporation that will flow through to its shareholders to be reported on their individual income tax returns.

Amy states: Limited Liability Company (LLC). A domestic limited liability company generally offers liability protection similar to that of a corporation but is taxed differently. Limited liability companies may be managed and operated by one or more managers, or one or more members. In addition to filing the applicable documents with the Secretary of State, an operating agreement among the members as to the affairs of the limited liability company and the conduct of its business is required.

Jeff states: Generally, businesses operating in California will choose to become incorporated in California. However, there may be advantages to incorporating in Delaware or Nevada, and registering the business in California as a foreign corporation.

Jeff continues: Choosing the proper entity when establishing a business is a critical decision so consider this ….

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

Questions from Anne of Del Mar:

This is a two part set of questions.

Part 1: Considering women are living longer than men and should be looking further out, long-term of managing money, how much would be a good base, considering interest income, amount for one to have saved up upon retirement? Say I retire at 65 but end up living until 92?

Windus answers.

Part 2: What if I out live my significant other and end up on my own in a nursing home. How much should I have squirreled away in order to not burden my family?

Windus answers.

Stephanie from Newport Beach asks: I just incorporated my business and want to elect Subchapter S status. What are the procedures that I must follow?

Jeff Answer: A corporation or other entity eligible to elect to be treated as an S-corporation must use Form 2553 to make the election.

Requirements:
1. Corporation has no more than 100 shareholders. An individual and his or her spouse (and their estates) as one shareholder for this test. Special rules also apply for counting members of a family and other situations which can keep you within this 100 limitation. Note there is no limit on how much assets or income the entity has, only the number of owners.
2. Its only shareholders are individuals, estates, exempt organizations.
3. It has no nonresident alien shareholders.
4. It has only one class of stock (disregarding differences in voting rights).

You have to adopt as your tax year a calendar year meaning that your annual tax reporting will be January 1st to December 31st.
The Form 2553 must be signed by a corporate officer and each individual who is a shareholder at the time of making the election. You must file this form no more than two months and 15 days after the beginning of the tax year the election is to take effect. So that means to have an S-election effective for January 1, 2016, you must file this form with a postmark no later than March 15, 2016. If you wait until after that date for a corporation that was formed on or before January 1, 2016, your S-election would not be effective until January 1, 2017 unless your qualify for relief from late filing of this election.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!

Topics Covered:

1. Estate Planning for the Stars.

2. How to Own a T. rex?

3. Tax Scams To Avoid and Tips On Choosing A Tax Return Preparer.

4. Questions from our listeners:

• What are the different types of trusts and how do the benefits differ? Also, who do I go to in order to set up a trust? An accountant, financial planner, lawyer?
• If I made a bet on the Super Bowl and I won, is that “taxable income”?

*********************************************************************************

Jeff states: Yes sometimes we just have to take the money and run!

Good afternoon! Welcome to Inside Advantage – Your Financial And Tax Radio Show.

This is Board Certified Tax Attorney, Jeffrey B. Kahn, the principal attorney of the Law Offices Of Jeffrey B. Kahn, P.C. and head of the KahnTaxLaw team.

Windus states:

And this is Licensed Financial Planner, Windus A. Fernandez Brinkkord, Senior Vice President Of Investments at Trilogy Financial Services.

You are listening to our weekly radio show where we talk everything about finances and taxes from the ESPN 1700 AM Studio in San Diego, California.

Jeff states:

When it comes to knowing tax laws and paying taxes, let’s face it — everyone in the U.S. is either in tax trouble, on their way to tax trouble, or trying to avoid tax trouble!

Windus states:

And whether you are on the rebound or flying high, we have the information you need to make sound financial decisions and map out your strategy for success.

Jeff states:

Our show is broadcasted each Friday at 2:00PM Pacific Time and replays are available on demand by logging into the KahnTaxLaw website at www.kahntaxlaw.com.

Jeff states:

For today’s show we have coming up:

Segment 2 material: How to Own a T-Rex!

Windus states:

Also coming up is:

Segment 3 material: Tax Scams To Avoid and Tips On Choosing A Tax Return Preparer.

And of course towards the end of our show, we will be answering some of your questions.

Jeff starts chit chat with Windus.

Jeff states: So for today’s top story:

Estate Planning for the Stars: How best to organize your finances so you family doesn’t struggle with estate litigation.

http://www.crainsnewyork.com/article/20150318/CUSTOM/150319825/estate-planning-mistakes-lessons-from-the-stars; http://www.forbes.com/sites/trialandheirs/2014/02/10/five-estate-planning-lessons-from-the-paul-walker-estate/#6e07d11e5ffc; http://wmtoday.com/2015/03/05/5-epic-hollywood-estate-planning-fails/

Jeff states: We’ve had a rough start to 2016 and I’m not just talking about the global economy. We’re not even sixty days into the New Year and we’ve had to bid farewell to quite a few of our popular culture icons.

Windus replies: Our feelings aside, their families and loved one’s have been hit with even stronger grief. Dealing with the emotionally difficult parts of life is very trying and it only makes it harder if you haven’t prepared.

Jeff states: That’s right Windus, but we can learn from some of these epic Hollywood estate planning mistakes. And just in time too! Its tax season after all, time to get ahold of your local wealth management and tax experts.

Windus starts: Let’s look at a few example of estate planning gone wrong. First off, Phillip Seymour Hoffman was a beloved Hollywood icon. From The Big Lebowski to the role that earned him an Oscar in Capote, he was a very talented and versatile actor. Unfortunately after a drug overdose in 2014, his partner and mother of his three children, Marianne O’Donnell was left with a pretty hefty tax burden.

Jeff states: Despite his accountant’s advice, Hoffman decided not to create trusts for his children. Then by not marrying O’Donnell, a $15-million tax burden was tacked on to the transfer of the estate to his beneficiary. That amounts to around 40% of his $35 million net worth.

Windus replies: Not only would the estate have been transferred tax-free to O’Donnell had the two been married, but alternately, by not setting up a revocable trust, Hoffman fated his estate proceeding to probate. This is not only inefficient and expensive, but it also exposes family financial information to the public.

Jeff continues: Hoffman went wrong by relying on a Will rather than trusts. However, he also had not kept his Will up to date. The last revision of the document had been ten years prior to his departure, before his second and third child were born. In addition, he did not mention his mother, brother or any of his philanthropic causes, including non-profit theaters.

Windus states: No one will ever forget this next estate, or the memorable actor whose name headlined. James Gandolfini, aka Tony Soprano, died of a heart attack at the age of 51. No one expected that the IRS would end up being the biggest beneficiary of the estimated $70 million estate.

Jeff replies: Gandolfini also relied primarily on his Will instead of a more sophisticated estate taxing trust. In it he divided his estate between multiple beneficiaries including his friends, two sisters, and his son from a previous relationship, his most recent wife and his toddler daughter.

Windus continues: Regrettably, much of the estate that was being gifted was property and not liquid. When the IRS came knocking for its multi-million-dollars cut, the family had to succumb to fire-sale mode. The sole tax-free inheritance was the $7 million life insurance policy which was left to his teenage son.

Jeff states: The next notoriously eccentric actor, who had once rejected an Oscar because he felt Hollywood had mistreated Native Americans in films, illustrates an estate planning fiasco. Marlon Brando’s estate was already involved in more than two dozen lawsuits, five years after his death.

Windus replies: Most of these lawsuits arose from current and past employees of the actor’s estate who claimed that Brando had promised them particular assets, which were not mentioned in his estate plan.

Jeff states: Brando relied on his Will in this situation, too. The problem with his estate however, was that he had drafted a Will but ultimately his plans remained indeterminate.

Windus replies: Yet another Oscar worthy actor, Heath Ledger. Like Hoffman, Ledger fell to substance abuse in an accidental overdose of prescription drugs in 2008, just a few months after filming as The Joker in The Dark Night. The Australian actor and director did a horrible job at planning for his legacy.

Jeff continues: Once more, like Gandolfini, Ledger failed to update his Will after his daughter, Matilda Rose, was born. After that tragic night in his New York apartment, all of the 28 year old actor’s assets went to his parents and three sisters, in accordance with U.S. law. You guessed it, Matilda and her mother were left without any claim on the estate.

Windus replies: Fortunately, since Ledger was an Australian citizen, Matilda Rose’s guardians have filed for probate in the West Australian Supreme Court so that a judge might carve out a portion of Ledger’s fortune. Ledger’s estate was mostly held in Australian trusts and is more or less worth up to $20 million.

Jeff states: Our next icon never got to finish his last job. The passing of “Fast & Furious” series star, Paul Walker, was an ironically tragic death. The 40-year old actor died in 2013 in a car racing accident, as a passenger in a Porsche.

Windus states: Now Walker had a Will, a trust and $25 million in assets at the time of his passing. The issue was how it was set up. Walker had what you call a pour-over structured Will that had not been updated in 12 years to reflect current intentions.

Jeff replies: This means that his wealth-transfer was not only going to be a public affair but informed the public that his $25 million estate would be transferred to a trust that named his teenage daughter as the sole-beneficiary.

Windus continues: This brings to light key points when estate planning. For one, having a Will is only the beginning. The best estate planning tool for most people is a revocable trust, creating a simpler and less troublesome probate process.

Jeff replies: Furthermore, to be most effective, trusts need to be fully funded during life and not left to be funneled in through the Will afterward. If there is nothing to pass through the Will then the probate court process could be completely avoided.

Windus replies: In the case of Paul Walker leaving everything to his teenage daughter, naming a guardian for a minor is always a good idea. Walker did assign guardianship, but if he didn’t courts still favor custodial parent unless deemed unfit or the parent agrees to relinquish custody.

Jeff states: Most importantly, if all of these tragic young deaths haven’t emphasized this, do not wait until you’re older to have an estate plan in order. It pays to plan for the unexpected and not leave your loved ones with greater burdens.

Windus finishes: Finally, keep your estate plan up to date! So many things happen in life, whether it be marriages, children, grandchildren, close friends or other life events. It’s so very important to keep all of your documents up to date so your family doesn’t suffer the consequences.

Jeff states: Well it’s time for a break but stay tuned because we are going to tell you How to Own a T. rex.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Windus states: And before we continue with this next segment, I want to remind you that: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

A T. Rex of One’s Own: From movie stars to hedge fund managers to sheiks, how everyone wants their own dinosaur

(Credit: February’s issue of The Week, Vol. 16, Issue 758)

Windus states: Laurie Gwen Shapiro had a very interesting article about private dinosaur collecting in Issue 758 of The Week this month. Definitely not ideal for the humble estate plan, however movie stars, hedge-fund moguls and oil rich sheikhs are shelling out top dollar for dinosaur fossils at auctions.

Jeff replies: Desire for dino bones isn’t a trend either. In the 1870’s, the fossil frenzy began in Great Britain before spreading across the Atlantic, driving westward toward Wyoming. Interest intensified when The New York Journal and Advertiser ran the headline, “Most Colossal Animal Ever on Earth Just Found Out West.”

Windus continues: Although more false than factual, the real findings were of only a single leg bone of a creature. However, this sparked interest from philanthropist Andrew Carnegie who financed great discoveries in Wyoming and Utah.

Jeff states: Following Carnegie’s example, dinosaur collectors today make it difficult for museums to compete financially as the cost of fossils discovered on private lands are being astronomical. After all, who do you think is going to win in a bidding war with Nicolas Cage?

Windus replies: Glad you asked, Jeff. Remember back in 2007 when actors Leonardo DiCaprio and Nicolas Cage were trapped in a bidding war over a 32-inch Tyrannosaurus skull? Well, Cage triumphed over his opponent with a $276,000 offer.

Jeff continues: Other big name collectors include film directors James Cameron and Ron Howard, actor Brad Pitt, and Microsoft’s former chief technology officer Nathan Myhrvold who has a T. rex skeleton in his solarium in his large home in Washington.

Windus states: Keep in mind since these are priceless collectibles, they aren’t exactly liquid investments. What I mean by that is, if you’re in need of funds it’s not exactly easy to just find another home for your dinosaur. Honestly, some people are collectors and some people aren’t.

Jeff replies: Take Sue for example, the largest T. rex specimen ever found. It was offered by a private seller back in 1997 and even attracted the attention of Michael Jackson. After the excitement died down, it was the Field Museum of Chicago that walked away with the highest-priced dinosaur ever, with the closing bid at $8 million.

Windus continues: That kind of sale has never really happened again, though. More recently in fact, a couple of guys who had excavated a tetrapod and a large horned ceratopsian locked in mortal combat, tried their luck at Bonham’s in New York. There was a ton of publicity, the two men thought they’d be relaxing on a beach in the Bahamas for the rest of their lives but the piece didn’t even make reserve.

Jeff states: If by this point you’re thinking, “Man! I have to have a dinosaur!” You may want to consider going to Tucson, Arizona this month for that city’s annual mineral and fossil convention. People come from all over the world and they always have someone from Homeland Security and ICE there to deter the shadier dealers.

Windus replies: It should not be a surprise that in this industry there are sellers out there that knowingly are skirting the law. And when the government finds out that a buyer even in good faith acquired a piece that is contraband, the government will order its return to its rightful owner. Such was the case with the Tyrannosaurus skull that Nicolas Cage won in his bid over Leonardo DiCaprio which unbeknownst to him, had been smuggled out of Mongolia. He had to surrender it for return to Mongolia and so he lost the $276,000 he paid!

Jeff continues: Nevertheless there is still a lot of legal trade going on. As stated in an interview with Mark Norell, the world’s most famous paleontologist, of the American Museum of Natural History in New York, “crazy stuff goes to Dubai, to Qatar, and pretty regularly to Singapore. And there are all sorts of big odd collections in Germany.”

Windus states: Now if you are not able to get to Arizona this month, you can try the Astro Gallery of Gems, located in Manhattan on Fifth Avenue. It is the world’s largest gem and mineral store with a dinosaur dealership on the side.

Jeff continues: Owner Dennis Tanjeloff describes his ideal dinosaur customer as a grown-up boy who never got over the revelation that prehistoric animals were real. Salvador Dali and John Lennon were some of his most devoted clients.

Windus replies: Tanjeloff explains that many of his clients take pride in their collecting choices, most of them eventually donating their collections to research.

Jeff states: Ultimately, these pieces end up at a museum or university after the initial craze wears off. This is actually not a bad thing as it creates a write-off for the owner who is making a charitable contribution and now the public will have access to these pieces.

Windus replies: Looking back thirty years when you compare the prices for these pieces and even taking inflation into account, the increase in value is astronomical.

Jeff continues: Moving forward, Tanjeloff believes very strongly that this isn’t just a craze. He’s selling thousands of fossils a week and is looking forward to the investment opportunity of a relaunch of a section in FAO Schwartz that sells fossils next year. According to Tanjeloff, “boys who love dinosaurs, they’re our future customers.”

Windus concludes: So how are you going to afford all those amazing fossilized investments? You can figure that out by contacting me. At…

Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

Jeff states: Stay tuned because after the break we are going to tell you Tax Scams To Avoid and Tips On Choosing A Tax Return Preparer.

You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

Calling into the studio from my Walnut Creek Office is my associate attorney, Amy Spivey.

Chit chat with Amy

Scam Calls and Emails Using IRS as Bait Persist

Jeff states: Just yesterday I got a call to my office where the person said in response to a threatening call he received from someone who said he was from the IRS, he sent a $3,000.00 money gram to the person to avoid arrest. He did this even though he did not owe any taxes to the IRS and never received any letters from the IRS that there was a problem.

Windus asks: Jeff then why did he call you if he thought by paying the $3,000.00 he resolved this perceived problem?

Jeff replies: Because he then received another call from the same person acknowledging receipt of the $3,000.00 but saying that he made a mistake and that he should be sending $6,000.00!

Amy states: Scams using the IRS as a lure continue. They take many different forms. The most common scams are phone calls and emails from thieves who pretend to be from the IRS. They use the IRS name, logo or a fake website to try to steal your money. They may try to steal your identity too.

Amy continues: Be wary if you get an out-of-the-blue phone call or automated message from someone who claims to be from the IRS. Sometimes they say you owe money and must pay right away. Other times they say you are owed a refund and ask for your bank account information over the phone. Don’t fall for it.

Windus asks: Amy what tips do you have that will help our listeners avoid becoming a scam victim?

Amy replies: The real IRS will NOT:
• Call you to demand immediate payment. The IRS will not call you if you owe taxes without first sending you a bill in the mail.
• Demand tax payment and not allow you to question or appeal the amount you owe.
• Require that you pay your taxes a certain way. For example, demand that you pay with a prepaid debit card.
• Ask for your credit or debit card numbers over the phone.
• Threaten to bring in local police or other agencies to arrest you without paying.
• Threaten you with a lawsuit.

Jeff states: If you don’t owe taxes or have no reason to think that you do:
• Contact the Treasury Inspector General for Tax Administration. Use TIGTA’s “IRS Impersonation Scam Reporting” web page to report the incident.
• You should also report it to the Federal Trade Commission. Use the “FTC Complaint Assistant” on FTC.gov. Please add “IRS Telephone Scam” to the comments of your report.

Jeff continues: And if you think you may owe taxes, you should be calling ….

Jeff states: PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Jeff asks Amy: Now the IRS also warns about phishing scams. What is that all about?

Amy replies: In most cases, an IRS phishing scam is an unsolicited, bogus email that claims to come from the IRS. They often use fake refunds, phony tax bills, or threats of an audit. Some emails link to sham websites that look real. The scammers’ goal is to lure victims to give up their personal and financial information. If they get what they’re after, they use it to steal a victim’s money and their identity.

Amy continues: If you get a ‘phishing’ email, the IRS offers this advice:
• Don’t reply to the message.
• Don’t give out your personal or financial information.
• Forward the email to phishing@irs.gov. Then delete it.
• Don’t open any attachments or click on any links. They may have malicious code that will infect your computer.

Tax Scams Involving Fake Charities

Jeff states: The IRS is warning taxpayers about groups masquerading as charitable organizations to attract donations from unsuspecting contributors.

Amy states: Fake charities set up by scam artists to steal your money or personal information are a recurring problem so taxpayers should take the time to research organizations before giving their hard-earned money.

Windus asks Amy: What tips do you have for taxpayers making charitable donations?

Amy replies:
• Be wary of charities with names that are similar to familiar or nationally known organizations. Some phony charities use names or websites that sound or look like those of respected, legitimate organizations. IRS.gov has a search feature, Exempt Organizations Select Check, which allows people to find legitimate, qualified charities to which donations may be tax-deductible. Legitimate charities will provide their Employer Identification Numbers (EIN), if requested, which can be used to verify their legitimacy through EO Select Check. It is advisable to double check using a charity’s EIN.
• Don’t give out personal financial information, such as Social Security numbers or passwords to anyone who solicits a contribution from you. Scam artists may use this information to steal your identity and money. People use credit card numbers to make legitimate donations but please be very careful when you are speaking with someone who has called you and you have not yet confirmed they are calling from a legitimate charity.
• Don’t give or send cash. For security and tax record purposes, contribute by check or credit card or another way that provides documentation of the gift.

Impersonation of Charitable Organizations Alleging To Help Victims Of Natural Disasters

Jeff states: Impersonation of Charitable Organizations is another long-standing type of abuse or fraud involves scams that occur in the wake of significant natural disasters.

Amy states: Following major disasters, it’s common for scam artists to impersonate charities to get money or private information from well-intentioned taxpayers. Scam artists can use a variety of tactics. Some scammers operating bogus charities may contact people by telephone or email to solicit money or financial information. They may even directly contact disaster victims and claim to be working for or on behalf of the IRS to help the victims file casualty loss claims and get tax refunds.

Amy continues: They may attempt to get personal financial information or Social Security numbers that can be used to steal the victims’ identities or financial resources. Bogus websites may solicit funds for disaster victims.

Jeff states: To help disaster victims, the IRS encourages taxpayers to donate to recognized charities. If you are a disaster victim call the IRS toll-free disaster assistance telephone number (1-866-562-5227) if you have questions about tax relief or disaster related tax issues. And don’t forget to find legitimate and qualified charities with Select Check search tool on IRS.gov. (EINs are frequently called federal tax identification numbers, which is the same as an EIN when using Select Check.)

Tips For Choosing Your Return Preparer.

Windus states: It is important to choose carefully when hiring an individual or firm to prepare your return. Well-intentioned taxpayers can be misled by preparers who don’t understand taxes or who mislead people into taking credits or deductions they aren’t entitled to in order to increase their fee. Every year, these types of tax preparers face everything from penalties to even jail time for defrauding their clients.

Windus asks Jeff and Amy for tips when choosing a tax preparer.

Amy replies: Ask if the preparer has an IRS Preparer Tax Identification Number (PTIN). Paid tax return preparers are required to register with the IRS, have a PTIN and include it on your filed tax return.

Jeff replies: Inquire whether the tax return preparer has a professional credential (enrolled agent, certified public accountant, or attorney), belongs to a professional organization or attends continuing education classes. A number of tax law changes, including the Affordable Care Act provisions, can be complex. A competent tax professional needs to be up-to-date in these matters. Tax return preparers aren’t required to have a professional credential, but make sure you understand the qualifications of the preparer you select.

Amy replies: Check the preparer’s qualifications. Use the IRS Directory of Federal Tax Return Preparers with Credentials and Select Qualifications. This tool can help you find a tax return preparer with the qualifications that you prefer. The Directory is a searchable and sortable listing of certain preparers registered with the IRS. It includes the name, city, state and zip code of:
o Attorneys
o CPAs
o Enrolled Agents
o Enrolled Retirement Plan Agents
o Enrolled Actuaries
o Annual Filing Season Program participants

Jeff replies: Check the preparer’s history. Ask the Better Business Bureau about the preparer. Check for disciplinary actions and the license status for credentialed preparers. For CPAs, check with the State Board of Accountancy. For attorneys, check with the State Bar Association. For Enrolled Agents, go to IRS.gov and search for “verify enrolled agent status” or check the Directory.

Jeff states: Even using a competent and honest tax return preparer, remember that taxpayers are legally responsible for what is on their tax return which is why …

PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Thanks Amy for calling into the show. Amy says Thanks for having me.

Stay tuned as we will be taking some of your questions. You are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord on Inside Advantage on ESPN.

BREAK

Jeff states: Welcome back. This is Inside Advantage – Your Financial And Tax Radio Show on ESPN and you are listening to Board Certified Tax Attorney, Jeffrey B. Kahn, and Licensed Financial Planner, Windus A. Fernandez Brinkkord.

And Windus and I always pleased to make our offers to our listeners where… PLUG: The Law Offices Of Jeffrey B. Kahn, P.C. will provide you with a Tax Resolution Plan which is a $500.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Jeffrey Kahn, right here in downtown San Diego or at one of my other offices close to you. The number to call is 866.494.6829. That is 866.494.6829.

Windus states: Windus PLUG: Trilogy Financial Services will provide you with a retirement cash flow analysis which is a $600.00 value for free as long as you mention the Inside Advantage Radio Show when you call to make an appointment. Call my office to make an appointment to meet with me, Windus A. Fernandez Brinkkord. The number to call is 858.314.5169. That is 858.314.5169. Or visit www.guideyourstory.com.

You should also know that the securities and advisory services are offered through National Planning Corporation (NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.

Jeff states: If you would like to post a question for us to answer, you can go to my website at www.kahntaxlaw.com and click on “Radio Show”. You can then enter your question and maybe it will be selected for our show.

OK Windus, what questions have you pulled for us to answer?

1. Stephanie from Newport Beach asks: What are the different types of trusts and how do the benefits differ? Also, who do I go to in order to set up a trust? An accountant, financial planner, lawyer?

2. Steve from Los Angeles asks: – If I made a bet on the Super Bowl and I won, is that “taxable income”?

Answer: Taxpayers must report the full amount of their gambling winnings (with no reduction for gambling losses) for the year as income on Form 1040, and then deduct their gambling losses (up to the amount reported as gambling winnings) for the year separately on Schedule A (Form 1040) as a miscellaneous itemized deduction not subject to the 2 percent floor. When spouses file a joint return for the tax year, their combined gambling losses are deductible to the extent of their combined winnings. Gambling losses in excess of winnings are not deductible.

Professional gamblers, like casual gamblers, can deduct their gambling losses only up to the amount reported as gambling winnings. However, whereas casual gamblers must claim their gambling losses (up to the amount of their gambling winnings) as an itemized deduction, a professional gambler can deduct his or her losses (up to the amount of his or her winnings) as an above-the-line deduction in arriving at adjusted gross income.

Jeff states: Well we are reaching the end of our show.

Remember you can send us your questions by visiting the kahntaxlaw website at www.kahntaxlaw.com.

Windus states: Have a great day everyone!