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Making Money RVF Tax Lounge
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Jetset Offline
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Post: #126
RE: RVF Tax Lounge
(02-24-2019 06:47 PM)frozen-ace Wrote:  And if you owned a REIT you will get a report showing your 199A amount which you can use to get a qualified business income deduction (seems to be like 20% of the 199A amount). Have you guys noticed this at all? It is very strange that you can get this deduction just by holding the mutual fund when you aren’t actually engaged in the business. Maybe this makes it more attractive to hold a REIT in a taxable account.

Wow. This is the first I'm hearing of this. That might change the asset allocation priorities for some people who were previously bent on putting REITs in Traditional retirement accounts no matter what.

Hidey-ho, RVFerinos!
02-26-2019 06:59 PM
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Cobra Offline
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Post: #127
RE: RVF Tax Lounge
Hey guys, Diop will be on my podcast this Thursday. Details:
https://www.rooshvforum.com/thread-73464...pid1992320

Any questions, post them.

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Accounting Career Data Sheet |Finance datasheets- Part I /Part II/Part III | 5 Things To Do Before You Lose Your Job
(This post was last modified: 06-17-2019 06:53 PM by Cobra.)
06-17-2019 06:52 PM
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Dr. Howard Away
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Post: #128
RE: RVF Tax Lounge
(02-23-2019 09:45 PM)Lampwick Wrote:  +1 Diop. I like your breakdown of the new tax law, and who it applies to in practical terms.

Are you familiar with the Mega Backdoor Roth?

This is a technique that allows you to contribute an extra $37,000 per year to a Roth IRA (above the $6,000 per year limit). The catch is that your employer's 401k plan has to support after-tax contributions to a traditional 401k, and allow in-service rollovers of those after-tax contributions to a Roth IRA.

It sounds like a killer way to grow a bunch of money tax free, but so far I haven't been lucky enough to have an employer with the required 401k features.

Are there other ways to do something similar?

I have two clients that did it last year. It is exactly what you describe. People get way too carried away with this stuff, especially if they are high income.

Yes it is tax advantaged, but locks your capital up until age 65. I don't trust the government to not change the rules or tax rates for that long.

You have to balance what you need for retirement and what you want to leave to your kids. Your non retirement accounts have the ability to pass through your kids tax free and with a step up basis.

Lampwick's idea can also be accomplished via a benefit plan set up through a business you control.

Either way, I did not know this thread existed! Its a good one.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
06-17-2019 07:15 PM
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Dr. Howard Away
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Post: #129
RE: RVF Tax Lounge
^ also for Cobra + Diop for the upcoming podcast, can you cover financial reporting for US Citizens and Permanent residents with foreign businesses and bank accounts. Just the brief terrifying penalties and ridiculous volume of forms.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
06-17-2019 07:17 PM
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Cobra Offline
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Post: #130
RE: RVF Tax Lounge
(06-17-2019 07:17 PM)Dr. Howard Wrote:  ^ also for Cobra + Diop for the upcoming podcast, can you cover financial reporting for US Citizens and Permanent residents with foreign businesses and bank accounts. Just the brief terrifying penalties and ridiculous volume of forms.

We have this on the list.

No one has anything else? Come on guys!

Spittin' Cobra - A Podcast
Accounting Career Data Sheet |Finance datasheets- Part I /Part II/Part III | 5 Things To Do Before You Lose Your Job
06-20-2019 02:18 AM
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Dr. Howard Away
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Post: #131
RE: RVF Tax Lounge
(06-20-2019 02:18 AM)Cobra Wrote:  
(06-17-2019 07:17 PM)Dr. Howard Wrote:  ^ also for Cobra + Diop for the upcoming podcast, can you cover financial reporting for US Citizens and Permanent residents with foreign businesses and bank accounts. Just the brief terrifying penalties and ridiculous volume of forms.

We have this on the list.

No one has anything else? Come on guys!

It might be the wrong season. Most normal people (unlike us accounting nerds) choose to live in a tax free reality from April 15 to about September 1 when the first batches of extensions start to close in.

Maybe that would be something to harp on, taking on taxes in small, quarterly pieces gets you out of the "Tax Time" mentality and actually makes that part of business life much less stressful.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
06-20-2019 12:19 PM
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JackinMelbourne Away
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Post: #132
RE: RVF Tax Lounge
(06-20-2019 12:19 PM)Dr. Howard Wrote:  Maybe that would be something to harp on, taking on taxes in small, quarterly pieces gets you out of the "Tax Time" mentality and actually makes that part of business life much less stressful.

Less stressful? It means you need to worry about lodging that rubbish and paying 5 times per year (4x plus income tax) instead of just once!

Screw that.

Maybe it's good for people who run accounting businesses and for the tax she-man, but not good for anyone else.

For entertainment and educational use only, your m8 Jackin'
06-20-2019 08:55 PM
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Dr. Howard Away
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Post: #133
RE: RVF Tax Lounge
(06-20-2019 08:55 PM)JackinMelbourne Wrote:  
(06-20-2019 12:19 PM)Dr. Howard Wrote:  Maybe that would be something to harp on, taking on taxes in small, quarterly pieces gets you out of the "Tax Time" mentality and actually makes that part of business life much less stressful.

Less stressful? It means you need to worry about lodging that rubbish and paying 5 times per year (4x plus income tax) instead of just once!

Screw that.

Maybe it's good for people who run accounting businesses and for the tax she-man, but not good for anyone else.

It depends on the person, I've got clients, who every year spend everything they have and then say "why do I owe so much in taxes?!" every year.

Also, when the penalties were lower for estimated taxes I also told clients it didn't make much interest either way, but now estimated tax penalties are up to 6% (back down to 5 this quarter). This is double the 3% estimated tax penalty rate that existed from 2012 to 2015.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
06-21-2019 07:30 PM
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456 Offline
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Post: #134
RE: RVF Tax Lounge
(The Spittin' Cobra podcast with Diop touches on how home office deductions are NOT a blanket audit-flag. But I have a question on a more specific case.)


Scenario: a sole proprietor with a place of business and a dedicated home office.

(i.e. employees loudly conducting business activity in the business location, owner is in his dedicated home office quietly getting work done also for the same business)



Q: does it look bad to write off both the business rent and the portion of home office rent/utes in this case?



(The worry is that for a sole proprietor it looks like double-dipping on write-offs. Because if it were just one person, that's kind of sketch. But if simulatenous activity is going on in the business space, it seems legit. Calendar of activities at place of business could be provided to corroborate / explain why proprietor uses home office from necessity).
(This post was last modified: 06-24-2019 12:22 PM by 456.)
06-24-2019 12:19 PM
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Post: #135
RE: RVF Tax Lounge
(06-24-2019 12:19 PM)456 Wrote:  (The Spittin' Cobra podcast with Diop touches on how home office deductions are NOT a blanket audit-flag. But I have a question on a more specific case.)


Scenario: a sole proprietor with a place of business and a dedicated home office.

(i.e. employees loudly conducting business activity in the business location, owner is in his dedicated home office quietly getting work done also for the same business)



Q: does it look bad to write off both the business rent and the portion of home office rent/utes in this case?



(The worry is that for a sole proprietor it looks like double-dipping on write-offs. Because if it were just one person, that's kind of sketch. But if simulatenous activity is going on in the business space, it seems legit. Calendar of activities at place of business could be provided to corroborate / explain why proprietor uses home office from necessity).

Opinions may vary among different CPA's, but assuming you are a Schedule C sole proprietor (meaning your business income/expenses are reported on your individual Form 1040 rather than through a pass-through entity such as an S-Corp or Partnership tax return) it's really not that big of a deal to write them both off.

I've somehow accumulated a lot of Psychotherapists as clients over the past few years and they are a classic example of this. They rent out office space for their therapy sessions with patients, but they also spend several hours each week preparing patient write-ups, billing, and insurance paperwork in their (dedicated) home offices so they can claim that deduction as well.

There are many other examples of this so as long as the home office deductions taken are not outrageous, it should not cause any problems as far as getting flagged for an IRS audit. As you can see from my example, even solo-businesses can do this without causing suspicion.
06-27-2019 10:35 PM
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456 Offline
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Post: #136
RE: RVF Tax Lounge
Thanks so much @Diop -- very helpful.
06-28-2019 08:21 AM
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Plus Oultre Offline
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Post: #137
RE: RVF Tax Lounge
I think the single most important advantage of having an office at home is not the deduction itself, but the opportunity to deduct the miles from office 1 to office 2; it basically converts many commute miles into business miles. So you can go conservative in the home office deduction, and follow to the T the rules (specially exclusive use, and a specific delimited space), so if it is challenged in an audit it can stand its ground. Anyways, I am not a big fan of this deduction. Each situation is unique.

"A human being should be able to change a diaper, plan an invasion, butcher a hog, conn a ship, design a building, write a sonnet, balance accounts, build a wall, set a bone, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, analyze a new problem, pitch manure, program a computer, cook a tasty meal, fight efficiently, die gallantly. Specialization is for insects."
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07-01-2019 11:01 AM
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Dr. Howard Away
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Post: #138
RE: RVF Tax Lounge
(07-01-2019 11:01 AM)Plus Oultre Wrote:  I think the single most important advantage of having an office at home is not the deduction itself, but the opportunity to deduct the miles from office 1 to office 2; it basically converts many commute miles into business miles. So you can go conservative in the home office deduction, and follow to the T the rules (specially exclusive use, and a specific delimited space), so if it is challenged in an audit it can stand its ground. Anyways, I am not a big fan of this deduction. Each situation is unique.

You have to be careful with that one. Your home office has to be your primary business location for that to work.

For example, a doctor that has a home office in which they don't meet clients or take client calls, doesn't have a primary office. They can take a home office deduction but not travel deductions between the two.

The commute between your home and primary work location is not deductible, however travelling from home to a temporary work location (meeting client for breakfast) is.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
07-05-2019 01:42 PM
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Post: #139
RE: RVF Tax Lounge
Could the use of crypto currency be a means to reduce the compliance burden for US citizens with foreign interests?

If a person took the strategy of holding funds intended for offshore use as crypto currency and converted it to foreign currency at no more than $10kusd equivalent at a time they would be able to get under the FBAR cutoff. The crypto assets would not have to go on the foreign asset reporting form either.

If the same person operated a US corporation or partnership, and moved distributions to the same crypto currency holdings and then to foreign currency as needed they would also avoid foreign corporation and partnership reporting requirements.

It certainly would reduce the reporting burden, but I wonder if it could be considered structuring or avoidance as they only reason to be doing it would be to avoid reporting.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
07-15-2019 06:58 AM
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Kid Twist Offline
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Post: #140
RE: RVF Tax Lounge
I didn't really see any threads or posts yet on living in a foreign country for more than half the year ... what does the US citizen have to do regarding state (would they even know? what about if you have a US bank and have to give an address?) returns? I realize that federal income would be a must, either way FEIE or regular filing. Anyone talk to IT guys or internet types in Colombia doing this that retain their citizenship in the US? Thanks.

Get your passport ready!
07-16-2019 11:42 PM
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Dr. Howard Away
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Post: #141
RE: RVF Tax Lounge
(07-16-2019 11:42 PM)Kid Twist Wrote:  I didn't really see any threads or posts yet on living in a foreign country for more than half the year ... what does the US citizen have to do regarding state (would they even know? what about if you have a US bank and have to give an address?) returns? I realize that federal income would be a must, either way FEIE or regular filing. Anyone talk to IT guys or internet types in Colombia doing this that retain their citizenship in the US? Thanks.

You've got a lot of parts to your question, let me see if I can split it up.

1. State returns - a foreign resident isn't going to meet state residency requirements in most cases in the next full year since they have moved. However, if they have state sourced income ex. investment or interest income from a US state they will have to pay tax to that state which it was sourced from

2. I haven't filed for any US citizens living in Columbia but definitely for other countries. In general, the layers you have to deal with are - the regular US income tax return, state source return, foreign information reporting returns for the US and then tax treaty information for US source income. In short, it is ALOT and US citizens living abroad with both US and foreign income have the most complicated personal income tax returns of any US citizen.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
07-17-2019 07:26 AM
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Post: #142
RE: RVF Tax Lounge
Doc, can you decide the state as per (1)? What if it is a multistate corporation that pays you for services? You choose the state of incorporation?

Would you recommend what others have done (I think roosh said this a while back), just retain an address and US banks, and then use ATM withdrawals among other things, going back and forth as appropriate?

How much worse do you think this global inspection will get, in light of the constant search for taxes by western governments?

Is Puerto Rico perhaps the best option at this point?

Get your passport ready!
07-17-2019 12:28 PM
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Dr. Howard Away
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Post: #143
RE: RVF Tax Lounge
(07-17-2019 12:28 PM)Kid Twist Wrote:  Doc, can you decide the state as per (1)? What if it is a multistate corporation that pays you for services? You choose the state of incorporation?

Would you recommend what others have done (I think roosh said this a while back), just retain an address and US banks, and then use ATM withdrawals among other things, going back and forth as appropriate?

How much worse do you think this global inspection will get, in light of the constant search for taxes by western governments?

Is Puerto Rico perhaps the best option at this point?

Sure, I'll try to elaborate more.

1) if you are are getting paid for services from a corporation, you would probably argue that you provided those services remotely, from whatever foreign country you were in. The state sourced income is more if you were getting paid dividends, or partnership distributions/income from that multi state entity. If you control that multi state entity, especially you can control what state the income is sourced, but that is very long set of variables to explain fully.

2) being abroad but not establishing foreign banks abroad will spare you from the foreign reporting requirements. This would also hold true if none of your income came from outside the US as well

3) Peter Schiff loves to talk about Pueto Rico, I don't know much about it besides what any of us can read online. Its got some great tax rates. I think the global inspection/dragnet from the US government is as good as its going to get at this point. Foreign banks report US holdings right back to the IRS if they know you are a US Citizen. Its currently an IRS gold mine of fines. I don't think they will do any more work on it though as their pet projects are going to be crypto taxation/regulation and trying to classify every UBER driver as an employee instead of a contractor.

^ On the above, something I learned today that I didn't previously know is that if you get hit with foreign banking/reporting penalties they are in a different section of the treasury code and its the one thing they CAN'T seize your passport for. Which is pretty hilarious, the tax penalty that targets travelers the most is the one which can't take passports.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
07-17-2019 07:18 PM
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Kid Twist Offline
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Post: #144
RE: RVF Tax Lounge
Thanks for the information, Dr. Howard. This State thing is a real quandary.

Get your passport ready!
07-18-2019 12:51 PM
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Dr. Howard Away
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Post: #145
RE: RVF Tax Lounge
(07-15-2019 06:58 AM)Dr. Howard Wrote:  Could the use of crypto currency be a means to reduce the compliance burden for US citizens with foreign interests?

If a person took the strategy of holding funds intended for offshore use as crypto currency and converted it to foreign currency at no more than $10kusd equivalent at a time they would be able to get under the FBAR cutoff. The crypto assets would not have to go on the foreign asset reporting form either.

If the same person operated a US corporation or partnership, and moved distributions to the same crypto currency holdings and then to foreign currency as needed they would also avoid foreign corporation and partnership reporting requirements.

It certainly would reduce the reporting burden, but I wonder if it could be considered structuring or avoidance as they only reason to be doing it would be to avoid reporting.

Someone at Forbes was thinking the same thing and got an answer https://www.forbes.com/sites/baldwin/201...8bbc524248

Their opinion is positive. No reporting of the assets for foreign compliance.

Why do the heathen rage and the people imagine a vain thing? Psalm 2:1 KJV
(This post was last modified: Yesterday 07:05 AM by Dr. Howard.)
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