PAUL’S TAX BLOG

Some serious stuff this time: Their may be a silver lining in the recent slide in the stock market. If you took advantage of the relaxed IRA/Roth Conversion rules last year and converted your regular IRA to a Roth, listen up! You probably paid tax on that conversion, and you have an opportunity until October 17, 2011 to undo that transaction and retrieve the taxes paid for 2010. Why would you want to do that? Well, if your Roth value has eroded due to market declines to a point below what it was when you initially converted, you can recharacterize...

Prior to getting married (a long time ago), I did some premarital tax projections and realized that our joint income tax burden as a married couple would be significantly higher than if we were to remain single. Although I was accused of stalling, after much cajoling I managed to convince my soon-to-be bride to postpone our planned Fall wedding to January, thus saving enough money that first year to pay for most of the reception. I was quite proud of the accomplishment, arguably getting the government to pay for part of our wedding, but have always been accused of weaseling...

The IRS is modernizing. The IRS has learned from the private sector how to leverage their resources and get the best bang for their buck. They have invested heavily in technology and information systems that enable the agency to conduct much business through the mail and avoid costly face time with auditors. This also allows them to reach out and resolve far more issues than they were previously capable of. Example: During 2001 IRS mailed out about 30 million notices to taxpayers regarding potential discrepancies on tax returns. During 2009, it was 201 million. That is an increase of over...

A couple things passed over my desk recently that I thought might be noteworthy, and I am passing them along for your review… If you have money in a foreign bank account the IRS is expanding its efforts to locate you. They are investigating Credit Suisse and other foreign banks to determine if they aided in tax evasion similar to the big UBS crackdown last year. If you have assets that are sitting in a foreign bank that you have not disclosed to the Feds the amnesty period to come clean expires August 31. Tax preparers who do not register...

There has been a lot of news recently about the new decrease in sales tax rates here in California, but very little about a recent law signed by California Governor Jerry Brown that attempts to levy sales tax on internet sales of goods to California residents by out of state retailers. This new law, affectionately called the “Amazon Tax” actually reaches any out of state seller, not just Amazon.com, and attempts to compel them to collect sales tax if they use third part affiliates located in the state to sell or ship products. These transactions were previously exempted, and this...

Now that the tax filing date has passed and I have some extra time to notice what’s happening in the rest of the world, I’ll try and keep you posted as things of interest pop up. One thing that we should all be mindful of is the promise of change. I know the word change has been overused a lot in the last few years when it comes to the political arena, but consider this: Most of the provisions of the 2010 Tax Relief Act (affectionately known as the tax hike prevention act) that was passed late in 2010 expire...