Jeffrey B. Kahn, Esq. and Windus A. Fernandez Brinkkord Discusses Undisclosed Foreign Bank Accounts, Designating Beneficiaries On Your Investments and IRS Tax Planning Tips On ESPN Radio – August 7, 2015 Show

Topics Covered:

1. U.S. Taxpayers Renouncing Citizenship Due To FATCA.
2. The importance of naming a proper beneficiary AND contingent beneficiary for certain types of assets.
3. IRS’ Summertime Tax Tips and what they mean for you.
4. Questions from our listeners:

• I have been hearing a lot about hedge funds and always wondered what they are?
• I am a U.S. citizen and reside in Mexico. I have filed U.S. returns annually, however I may have omitted some income or annually, however I may have omitted some income or computed income incorrectly and omitted one or more international information returns. Can I rectify the issues with the streamlined program?

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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, 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: the importance of naming a proper beneficiary AND contingent beneficiary for certain types of assets.

Windus states:

Also coming up is:

Segment 3 material: our continuation of the IRS’ Summertime Tax Tips and what they mean for you.

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

Jeff starts chit chat with Windus.

U.S. Taxpayers Renouncing Citizenship Due To FATCA.

Windus states: CNN Money reported in article on May 8, 2015 http://money.cnn.com/2015/05/08/pf/taxes/american-expats-passports-renounce/index.html?iid=SF_LN

that a record 1,335 Americans in the first quarter of 2015 gave up their passports. The article goes on to state that’s nearly 40% of the 3,415 Americans that renounced citizenship last year, suggesting that U.S. renunciations will again hit a new high this year. In 2014, the number of Americans who gave up their passport was 15 times higher than in 2008.

Jeff you brought this to my attention so I suspect that this has something to do with taxes.

Jeff replies, that’s right and it’s called FATCA.  The Foreign Account Tax Compliance Act which became law in 2010 and as of 2014 is in full effect.

Talking Points – Windus to state the point and Jeff will comment:

1. U.S. taxes worldwide income of its citizens, green card holders and others having a “substantial presence” in the U.S.

2. Foreign banks now have the same reporting obligations as U.S. banks. Failure to comply results in a 30% withholding tax on U.S. investments.

3. U.S. taxpayers who fail to report foreign income and foreign account face steep penalties and could face criminal prosecution.

4. Just for failing to report a foreign bank account could result in a minimum $10,000.00 penalty.

5. Fortunately the IRS has programs in place that if your are proactive and come forward before the IRS finds you, you can avoid criminal prosecution and save a lot in penalties – in some cases even avoid penalties.

Well it’s time for a break but stay tuned because we are going to tell you the importance of naming a proper beneficiary AND contingent beneficiary for certain types of assets.

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.

The importance of naming a proper beneficiary AND contingent beneficiary for certain types of assets.

Jeff states: Windus you saw an article published on July 29^th in the Wall Street Journal titled “Avoid a Big Tax Hit by Properly Naming Beneficiaries” which caught your attention. http://www.wsj.com/article_email/avoid-a-big-tax-hit-by-properly-naming-beneficiaries-1438171200-lMyQjAxMTI1NTA5MTYwMDEyWj

And the article does point out the importance of naming a proper beneficiary AND contingent beneficiary for certain types of assets.

Jeff asks Windus: What assets would qualify and need a beneficial designation?

Windus Response.

Jeff asks Windus: What happens if you fail to designate a beneficiary?

Windus Response includes it triggered both a probate and issues on the transfer of assets.
Windus tells story:

A brief story about a husband and wife, in their 90’s, husband dies and because he didn’t add his wife to his brokerage account after over 60 years of marriage, the account triggered a probate. Wife dies before probate is over. Family struggles with 3 years of probate courts and thousands of costs in fees.

Jeff asks: How do you avoid this?

Windus reply includes: Ways to avoid this, name a spouse as a beneficiary, even in non-retirement assets.  You can do so by titling the account as a transfer on death account if you didn’t want their name on the account itself. Having a family trust and having the account properly titled in that trust.

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.

Windus tells second story:
Mom has a trust and an IRA, attorney has her list dad as the beneficiary on the IRA but mom doesn’t add the trust as the contingent.  Now dad passes away and then mom passes away years later.  Beneficiaries are not updated and therefore, the IRA goes to probate.

In the end, the probate court puts the IRA in the Trust and the trust forces liquidation of this and taxes are paid all at once.  When beneficiaries are named properly, you can avoid needless taxes from being paid.

In a beneficial IRA, you can either keep the IRA going with RMD’s and it can grow and be a part of your long term plan OR you can liquidate it over 5 years.

In either situation, you can further reduce the costs to you in terms of taxes.

Jeff asks Windus:  What considerations should someone think about in whom to designate as a beneficiary?

Windus response.

Jeff asks Windus:  After the owner of the asset dies or in case of an insured on an insurance policy dies, normally a beneficiary can come in and claim the asset or the death benefit and they have no restriction on what to do with it.  For someone who has this concern, what can be done?
Windus response.

Jeff asks Windus:  Discuss the flexibility of setting up a trust as the beneficiary versus individuals.

Windus response.

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.

Stay tuned because after the break we have Amy Spivey joining in to tell you some important summertime tax tips that can help you avoid tax problems with IRS.

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

IRS Summertime Tax Tips

Starting July 1^st, the IRS began offering its Summertime Tax Tip series which include useful information in English and Spanish. Tax Tip subscribers receive a new Tip via email three times a week during July and August. They also get a Tax Tip each weekday during the tax filing season. The IRS also issues Special Edition Tax Tips on important tax topics throughout the year.  Taxpayers can sign up for the IRS Tax Tips subscription through a free service on www.irs.gov. For this segment we have pulled some of these tips which we want to share with you and add our comments to them.

IRS Summertime Tax Tip 2015-11, July 27, 2015 – No Need to Wait Until Oct. 15 Extension Deadline to File

October 15^th is the last day to file 2014 tax returns for most people who requested an automatic six-month extension. However, you can file any time before October 15^th if you have all your required tax documents. If you are one of the nearly 13 million taxpayers who asked for more time to file your federal tax return this year, you don’t need to wait until Oct. 15 extension deadline to file your return. You can file now if you are ready.

Amy states: As you prepare to file, here are some things that the IRS in this tip wants you to know:

Using IRS Free File.  Even though it is after April 15th, nearly everyone can use e-file their tax return for free through IRS Free File. It does the math, checks to see if you qualify for tax breaks that you might miss, and it works best for those who are used to doing their own taxes. The program is available on IRS.gov now through Oct. 15^th.

Jeff states: The IRS claims that IRS e-file is easy, safe and the most accurate way to file your taxes. Also that E-file you get all the tax benefits that you are entitled to claim. That may be so if your return is simple but if you are self-employed, have rental properties or other investments, I would recommend that you see a tax professional to make sure you are getting all the tax benefits you are entitled to claim.

Amy states: A Refund May be Waiting.  If you are due a refund, you should file as soon as possible to get it.

Jeff states: I agree.  It’s your money and you should be earning the interest not the IRS.

Amy states: Try Easy-to-Use Tools on IRS.gov.  Use the EITC Assistant to see if you’re eligible for the credit. Use the Interactive Tax Assistant tool to get answers to common tax questions, including new Health Care Law topics. Use these interactive tools to find out if you’re eligible to claim the premium tax credit, qualify for an exemption or if you must make a payment.

Jeff states: Due to budget cuts over the years, the IRS has had to rely on beefing up its on-line resources so that taxpayers looking for self-help can find answers on their own instead of speaking with IRS representatives.  It does not hurt to try this resource but if your situation is not simple or the IRS has not covered it, you would be best served by seeking out a tax professional.

Amy states: Missed the April 15^th Deadline? File as Soon as You Can. If you did not request an extension by April 15, you should file and pay as soon as you can anyway. This will stop the interest and penalties that you will owe. IRS Direct Pay offers you a free, secure and easy way to pay your tax directly from your checking or savings account. There is no penalty for filing a late return if you are due a refund. The sooner you file, the sooner you’ll get it.

Jeff states: The IRS charges a late-filing penalty of 10% where that return shows a balance due.  Now if you can show reasonable cause, the penalty may be abated.

Amy states: More Time for the Military.  Some people have more time to file. This includes members of the military and others serving in a combat zone. If this applies to you, you typically have until at least 180 days after you leave the combat zone to both file returns and pay any taxes due.

Jeff states: There are special tax breaks for members of the military through the tax code which provides all the more reason for taxpayers in the military and even us regular folk to find out what are your options and what tax benefits are you entitled to.

PLUG: The Law Offices Of Jeffrey B. Kahn 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.

IRS Summertime Tax Tip 2015-14, August 3, 2015 – Back-to-School Education Tax Credits

Jeff states: If you, your spouse or a dependent are heading off to college in the fall, some of your costs may save you money at tax time. You may be able to claim a tax credit on your federal tax return. Here are some key IRS tips that you should know about education tax credits:

Jeff to read each credit and Amy to describe.

• American Opportunity Tax Credit. The AOTC is worth up to $2,500 per year for an eligible student. You may claim this credit only for the first four years of higher education. Forty percent of the AOTC is refundable. That means if you are eligible, you can get up to $1,000 of the credit as a refund, even if you do not owe any taxes.
• Lifetime Learning Credit.  The LLC is worth up to $2,000 on your tax return. There is no limit on the number of years that you can claim the LLC for an eligible student.

Jeff asks Amy: Can someone claim both types of credits?

Amy replies:  You can claim only one type of education credit per student on your tax return each year. If more than one student qualifies for a credit in the same year, you can claim a different credit for each student. For instance, you can claim the AOTC for one student, and claim the LLC for the other.

Jeff asks Amy: What expenses qualify for the credit?

Amy replies:  Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. You must pay the expenses for an academic period that starts during the tax year or the first three months of the next tax year.

Eligible expenses also include student activity fees you are required to pay to enroll or attend the school. For example, an activity fee that all students are required to pay to fund all on-campus student organizations and activities.

For AOTC only, expenses for books, supplies and equipment the student needs for a course of study are included in qualified education expenses even if it is not paid to the school. For example, the cost of a required course book bought from an off-campus bookstore is a qualified education expense.

Jeff states: In most cases, you should receive Form 1098-T, Tuition Statement, from your school by February 1, 2016. This form reports your qualified expenses to the IRS and to you.

PLUG: The Law Offices Of Jeffrey B. Kahn 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.

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.

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?

Sam from Carlsbad asks:  I have been hearing a lot about hedge funds and always wondered what they are?

Jeff states, I think that is a great question for Windus to answer so I will let you respond.  Windus responds.

Carlos from San Diego asks: I am a U.S. citizen and reside in Mexico. I have filed U.S. returns annually, however I may have omitted some income or annually, however I may have omitted some income or computed income incorrectly and omitted one or more international information returns. Can I rectify the issues with the streamlined program?

Jeff replies: The Streamlined Foreign Offshore Procedure is extended to amended returns for the 3 year period. The amended return feature is important as filing omissions such as the failure to include items in income or file various international information returns can come now under Streamlined Foreign Offshore Procedure without having to demonstrate a reasonable cause defense. The Streamlined Foreign Offshore Procedure is also extended to those who previously filed as a “quiet disclosure” outside of any amnesty program.

Jeff PLUG: The Law Offices Of Jeffrey B. Kahn 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 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!