IRS Multilingual Gateway Offers Online Help in Other Languages

If you speak English as a second language, the IRS online Multilingual Gateway may be a good alternative for you to get the information you need to file your federal tax return. The Gateway provides basic federal income tax information in Chinese, Korean, Russian, Vietnamese and Spanish.

The Multilingual Gateway offers expanded online language services to individuals, small businesses and international taxpayers. Embedded links allow you to obtain tax filing information and products in your native language.

The Multilingual Gateway, found by clicking "Other Languages" on the top right of the IRS.gov homepage, features:

• Downloadable files
• Links to other sections on IRS.gov
• Uniform index for all languages
• Access via a user friendly link: IRS.gov/languages
• Files you can read online or download and print

The IRS.gov website service is designed to be a user-friendly resource as part of increased IRS efforts to better help taxpayers with Limited English Proficiency.

Links:

• Multilingual Gateway
• 中文 (Chinese)
• 한국어 세무 정보 (Korean)
• Налоговое Упраление СШA на русском языке (Russian)
• Tàì Liệu về thuế (Vietnamese)
• Información en Español del IRS (Spanish)

Retirement Savings Contributions Credit

Eligible low-income taxpayers may claim a nonrefundable credit for contributions to elective deferral plans or individual retirement accounts (IRAs) (Code Sec. 25B).  This credit is commonly referred to as the “retirement savings contributions credit” and has also been referred to as the “saver’s credit.”  The credit amount equals the eligible taxpayer’s applicable percentage, determined by filing status and adjusted gross income (AGI), multiplied by the total qualified retirement savings contributions (not to exceed $2,000) for the tax year.  The maximum credit amount is $1,000.  The credit is in addition to the exclusion or deduction from gross income for making elective deferrals and IRA contributions that are otherwise allowed.

Eligibility. To be eligible for the credit, a taxpayer making a contribution to a qualified retirement savings plan must be at least 18 years of age at the close of the tax year, must not be claimed as a dependent by someone else, and must not be a full-time student.  A qualified retirement savings plan contribution is the sum of:

·        Contributions to a traditional or Roth IRA (other than rollover contributions);

·        Any elective deferrals of compensation to a 401(k), 403(b), tax-sheltered annuity, or SIMPLE or SEP plan.

·        Any elective deferrals of compensation to a Code Sec. 457(b) plan of a state of local government or tax exempt organization; and

·        Any voluntary employee contributions to any qualified retirement plan.

Claiming the Credit. Form 8880 is used to calculate the amount of the credit, which is then reported on Form 1040.  For 2011, the credit is phased out when AGI exceeds $56,500 for joint return filers, $42,375 for heads of households, and $28,250 for single and married filing separately.  The applicable percentage is the percentage as determined by the inflation adjusted income ranges for 2011 in the following table:

AGI Joint Return Applicable Percentages Over Not Over 0  $  34,000 50%  $   34,000  $  36,500 20%  $   36,500  $  56,500 10%  $   56,500 -------- 0% Head of Household Applicable Percentages Over Not Over 0  $  25,500 50%  $   25,500  $  27,375 20%  $   27,375  $  42,375 10%  $   42,375 -------- 0% All other cases Applicable Percentages Over Not Over 0  $  17,000 50%  $   17,000  $  18,250 20%  $   18,250  $  28,250 10%  $   28,250 -------- 0%

For Example: if your AGI is $30,000, you contribute $2,000 into a Roth IRA, your 18, and not a dependent on someone else’s tax return; you will get a credit of $1,000. 

This information was quoted from the book “U.S. Master Tax Guide.”

Blog Pages

For those interested in learning the 1040, we have set up an easy way to learn the main parts of the 1040 on the '1040' page.  'New Tax Laws' page will help prepare you for this tax season.  'Meet the Staff!' page inlcudes a video of Max Jr.

American Sign Language

I know ASL for those who are deaf.  My wife is deaf and went to ISD.  We went to ISD basketball homecoming on Saturday.  We had a blast.  If you need help with your tax return, I would be pleased to help.

Heads or Tails? Greatest Entrepreneurs

Eight people are backed up to the edge of a cliff, and each flips a coin three times.  Heads means a step forward; tails, a step back, or utter failure.  By straight probability, half the field falls off the cliff after the first flip.  On the second flip, two will advance another step and two will return to the start, likely terrified to flip again knowing that the cliff is behind them once more.  On the final flip, probability dictates that one will fall off the cliff, two will end up a step ahead and one will be in quite an enviable position-two full steps ahead of the nearest competitors and three ahead of the start point.

This is an example given in the magazine “Entrepreneur.”  The article by Sam Hogg goes on to say, “Probability alone would allow some people to succeed time after time.  Being able to distinguish among people with talent and people just filling probability’s quota is not easy.  It is arguable that those who have failed bring just as much, if not more, to the table but must work much harder to get another chance.  Perhaps that is why many of the greatest entrepreneurs have racked up multiple failures as well.”

7 financial tasks

1.      Read your credit card agreements – If there’s something you don’t understand, now is a good time to dial up customer service and ask for clarification.  Sometimes the answers are obvious – but sometimes they’re not.

2.      Check your service levels – Are you still paying for a gym membership you no longer use?  Forking over a fortune for deluxe cable when you mainly watch Hulu?  Go through you monthly bills and cancel the services you don’t need.

3.      Ask for lower rates – As you review your bills, pick up the phone and ask (politely) for a discount.  It takes only a few minutes to call the cable company, and they just might cut you a break.  But remember: You always have the right to ask for a discount, but its not your right to receive one.  If the answer is no, don’t be a jerk.  Thank the representative and move on.

4.      Optimize your bank accounts – For 17 years, I (J.D. Roth) was an account holder at a large national bank.  I paid an $8 service charge every month, yet I received terrible service and earned no interest.  Eventually I wised up; I switched my checking account to a local credit union and moved my savings to an online high-yield savings account.  You should, too.  To find the best deals, check out bankrate.com or moneyrates.com.

5.      Inspect your investments – examine investment balances and asset allocation to ensure that things are going according to your investment plan.  Don’t have an investment plan?  Start by reading a good introduction, such as Burton Malkiel’s The Random Walk Guide to Investing.

6.      Review your insurance – Are you carrying policies with three different companies?  Consolidate.  Check the deductibles on you auto and homeowners insurance.  Can you afford to raise them and pay the first $1,000 in case of loss?  Is your liability coverage high enough?

7.      Reread your lease or rental agreement – If you rent your home or office, make sure you’re clear on the terms.  While you’re at it, consider asking for a rent reduction.  Sound crazy?  If you’re a good tenant and regularly pay on time, it’s not so far-fetched.

J.D. Roth is the founder of all these ideas.  I, Max Woodbury, did not come up with these 7 tasks.  Check out his blog at getrichslowly.org.

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Tax

Oxford Dictionary Definition
n. money compulsorily paid to the state.  v. impose a tax on; make heavy demands on.  tax return a form declaring income for a particular year, used for tax assessment.  taxation.




Welcome to Max S Woodbury, CPA, LLC for your tax assessment.

CPA SUPERHEROES

My friend Justin Hayes was chosen as a CPA SUPERHEROE by the INCPAS!  Congratulations Justin.

Life Insurance

The purpose of life insurance is to keep your family financially alive if you die.  A good amount of life insurance to have is 8.5 to 10 times your annual income.  So if your annual income is $30,000, purchase around $250,000 to $300,000 worth of life insurance. 

Term is the least expensive life insurance.

Problems with whole life insurance:

1.      “You can borrow your cash value.”

a.      If you need money, you can borrow your cash value at a low interest rate of 5% to 8%.  The insurance company is charging you interest on your own money that you overpaid in premiums.

2.      “Your policy will eventually be paid up.”

a.      Most everyone loves the idea of a paid-up policy; at a point in time that means no more yearly premiums.  In reality, a paid-up policy is created only by overpaying your premiums.  The overpayment will eventually be used to pay your future premiums.  Therefore, all paid-up policies are just prepaid policies.

3.      “You’ll be earning interest.”

a.      The interest you earn is added to your cash value.  The cash value is the amount of premiums you have paid over a number of years (paid $1,000 in  premiums for 20 years. Cash value = $20,000).  You earn interest on the premiums you paid and the interest is added to your cash value.  The cash value is then given to the insurance company when you die and your family gets the Death Benefit (face value).

4.      “Your insurance policy is a tax shelter.”

a.      “You can borrow money from your insurance company tax free.”  You can borrow money anywhere tax free.  There are no income taxes on borrowed money. 

b.      Insurance proceeds at the time of death are subject to estate taxes.

5.      “If you buy life insurance when you’re young, it will cost less.”

a.      Yes because you will pay greater total premiums over a longer period of time.  For example, mortgage payments are less each month on a 30 year mortgage than a 15 year mortgage.  The 30 year mortgage costs more over time due to interest.

Never buy life insurance on a child unless he/she is in a commercial on tv making money or some other form of income.

My source is Charles J. Givens book “More Wealth Without Risk.”  Copyright 1988, 1991