Archive for 'Tax'

Tax Cuts, Political Promises and Outright Lies


taxes (Photo credit: 401K)

As the election year wears on we’re constantly being bombarded by the political machines of the candidates. They all think that they have the best plan to fix the economy, cut taxes, put more money in your pocket and create more jobs. They all promise the voters the best of all worlds but the stark reality after the election is always somthing a lot different. Here’s one take on reality…

A number of proposals on taxes and the budget have come out recently, one by President Obama, one by Mitt Romney, and one by a friend, John Mauldin.

Every one of the proposals are fatally flawed, most of the for multiple reasons. Before one can fix a problem one must understand it.

In general, Democrats want to raise taxes and spend money.

Republicans on the other hand generally want to cut taxes and spend money. Military spending and Medicare spending both soared under Republican. Bush signed a disastrous Medicare bill.

Both parties claim to be against deficit spending. However, if neither party wants deficit spending then why are their deficits?

Before we get to what’s wrong let’s take a short look at some recent proposals.

Tax Cuts to Prosperity

Mitt Romney proposes A Tax Reform to Restore America’s Prosperity

First, I will make an across-the-board, 20% reduction in marginal individual income tax rates.

Second, I will reduce the corporate tax rate to 25% from 35%, transition from a world-wide taxation system to a territorial one, and make the R&D tax credit permanent.

Third, I will promote savings and investment by maintaining the low 15% rate on capital gains, interest and qualified dividends, and eliminate the tax entirely for those with annual income below $200,000.

Fourth, I will take long overdue steps to correct failures in the tax code. I will abolish the death tax, whose primary effect today is to foster elaborate schemes for transferring wealth. I will also repeal the Alternative Minimum Tax, which was intended to make the code simpler and fairer but has accomplished precisely the opposite.

Fifth, I will bring stability to the tax code by making these changes permanent.

A Simple Question

Excuse me for asking a simple question: How the hell are you going to pay for this?

What spending cuts would Romney make? He did not have the decency to say.

Take another look at point number 5. It’s a blatant lie. There is no way to make changes permanent. Any Congress at any time can make tax changes undoing prior Congressional actions.


So who are we to believe? Your guess is as good anybody’s. Just put all the names in a hat and pick one. Works every time for me.



From brokers to investment advisors to financial planners, there are many different types of investment professionals.  With an endless number of options and philosophies to compare, choosing the right investment professional can be daunting.  “At Filomeno Wealth Management, we are independent, fee-only advisors,” said Mike Tedone CPA / PFS, Managing Director, Filomeno Wealth Management.

Independent, fee-only advisors are compensated only for their advice and not for the investments they recommend.  Brokers, in contrast, are commonly compensated by commissions and sale of products.

“It seems like a simple distinction, but it is a powerful one.  As fee-only advisors, we are legally required to act as fiduciaries to our clients, which means we must put the client first, thus eliminating any conflicts of interest,” Tedone said.  “These are not just interchangeable titles – they really mean something quite different.”

5 Tips for Making the Right Decision

  1. Make sure you know how your advisor is being paid. Ideally, the fee should be a percentage of the amount of money the advisor is managing for you.  Your advisor should only receive payment from you and not from the investments selected on your behalf.  This way, payment is straightforward and transparent.
  2. Create a long-term individualized investment plan. Seek an advisor who will sit down with you and listen to your unique financial situation and goals and compose an investment plan that will help you to achieve them.  Your advisor should take the time to empower you through continuous communication and education while preparing and executing your plan.
  3. Retain custody of your assets. Your advisor should use a third-party custodian to ensure the security of your investments.  This will guarantee that your money is in a separate account with your name on it.  The custodian will send you statements independent of information you receive directly from your advisor.
  4. Coordinate tax planning with investment strategies. An integrated strategy that includes investment, tax and estate planning is the best way to achieve optimal results.  An advisor who understands the many moving parts and how they intersect and affect one another will be able to help you make informed decisions about the ‘big picture.’
  5. Understand the breadth of services offered. While some advisors only offer asset management, others are able to offer wealth management as well.  Those who can offer wealth management have a more complete picture of a client’s finances.


“Beyond these five points it is critical that the advisor you choose shares your investment philosophy and works to nurture a trusting relationship with you,” Tedone said.  “After all, finances affect how you live your life, how you achieve your goals and what is most important to you.  This is personal – yet essential – information and you should feel comfortable sharing information with your advisor.”

About Filomeno Wealth Management

At Filomeno Wealth Management, we are compensated only for our advice, and not for the investments we recommend.  Therefore, we offer clients the peace-of-mind that they are receiving unbiased counsel as we develop and execute long-term individualized investment plans focused on asset allocation, diversification, expenses & taxes. Through its affiliate, Filomeno & Company, clients are offered a wide range of services including: individual tax or strategic tax, accounting & auditing, business advisory, business valuations, corporate tax, qualified plans and fraud prevention. Located in West Hartford, CT, the company’s mission is to ‘passionately serve our clients, our community, our firm and each other.’  For more information, contact Filomeno Wealth Management at 860-760-7017 or visit

Press Contact: Jessica Lyon 860.676.4400

Little-Known Glitch: “Making Work Pay” Tax Credit Improperly Applied to Millions of Retirees in 2010, Creating Surprises on Tax Returns 

Millions of seniors are in for an unpleasant surprise when they file their tax returns over the next few weeks. The Making Work Pay tax credit was incorrectly applied to an estimated 13.4 million taxpayers in 2010, many of them seniors, according to the Treasury Department. This leaves many retirees unexpectedly owing hundreds of dollars in taxes, and in some cases paying undue penalties for last year.

The tax credit, a provision of the 2009 stimulus legislation, was advanced to taxpayers in 2009 and 2010 in the form of higher payroll and pension checks (due to lower federal income tax withholdings being deducted from them). Eligible people qualified for a credit of up to $400. But millions of taxpayers were either advanced the tax credit without being eligible for it, or they were advanced more of the credit than they were entitled to.

One glitch affected working seniors who also received Social Security, Supplemental Security Income (SSI), railroad retirement or veterans’ disability compensation. They qualified for a separate $250 economic stimulus payment that should have reduced their maximum Making Work Pay tax credit to $150. But the IRS withholding tables used by employers did not adjust for those payments.

Seniors receiving pensions were affected as well, because the IRS tables allowed reduced withholdings for pensions — even though such income was not even eligible for the credit, which only applied to income earned from a job.

Married couples who worked and also received a pension are at greatest risk and could potentially owe as much as $1,600.

Because the faulty tax tables caused many people to owe taxes they didn’t expect to owe, the IRS has allowed penalties to be waived for the 2009 and 2010 tax years. But the waivers are only given if taxpayers explicitly request them. According to the Treasury Inspector General, last year virtually no taxpayer surveyed knew they could request a waiver.

The Senior Citizens League supports efforts to repeal or reform the way Social Security benefits are subject to taxation. Even though retirees already paid taxes during their working years to fund the Social Security system, their benefits are also taxed once they rise above $25,000 a year. Every year the benefits of more retirees are subject to tax, because the federal government does not adjust the income levels annually as is routinely done with income tax brackets.

Social Security recipients are also required to compute their taxes using a special formula that factors in “provisional” income, including supposedly “tax-free” money such as tax-free municipal bonds or proceeds from ROTH retirement accounts.

“Many seniors will be surprised to find they owe money on their tax returns for 2010 because of the way the IRS implemented the Making Work Pay tax credit,” said Larry Hyland, chairman of The Senior Citizens League. “We urge affected seniors to file their penalty waivers. We also urge the government to eliminate what amounts to double taxation of Social Security benefits, by removing taxes on those benefits.”

With 1.2 million supporters, The Senior Citizens League is one of the nation’s largest nonpartisan seniors groups. Its mission is to promote and assist members and supporters, to educate and alert senior citizens about their rights and freedoms as U.S. Citizens, and to protect and defend the benefits senior citizens have earned and paid for. The Senior Citizens League is a proud affiliate of The Retired Enlisted Association. Visit for more information.

CONTACT: Luba Vangelova, +1-202-657-6246,

Real Estate Investing with Your IRA: This Just Revealed

Real Estate Investing with Your IRA: This Just Revealed-Image via Wikipedia

Proprietary Safe Harbor IRA allows occupancy and enjoyment of IRA property today

Quote startUse your IRA to buy your dream home! Occupy and enjoy it today!Quote end

Would you like to use your IRA to purchase a new home, vacation home, or to buy an IRA real estate investment property that you can use and enjoy today? Or maybe you are wishing you could put your IRA savings to use to help with your current mortgage payments?

We may be able to help. If you qualify, you can use Lasaii’s proprietary Safe Harbor IRA to purchase and move into a new home, vacation home, or work place. You can buy a farm, raw land, or simply use our IRA Mortgage Relief Program to make mortgage payments on your current home.

“Everything is going like clockwork with our monthly deposits into our Real Estate Account. We are using those funds as a payment on the mortgage to our brand new house. We could not be any happier with the end result from Lasaii (a division of Uranga & Associates).”

R.L.T. Springfield, Oregon

Although we refer to them as the “new rules” of IRA Real Estate because they are not well understood or commonly applied yet, Lasaii (a division of Uranga & Associates) has been successfully using the IRA Safe Harbor method since 1992.

In 2005 Uranga & Associates was contacted by IRS tax shelter inspectors requesting a compliance review of our IRA/real estate program. This gave Uranga & Associates, along with their CPA advisers the opportunity to sit down with IRS tax shelter inspectors to present the details of the Safe Harbor IRA method of investing in IRA/real estate.

Each phase of the Safe Harbor IRA method process was carefully discussed and scrutinized in particular with regards to tax sections 6694, 6695, 6700, 6701, 7402, 7407 and 7408. After thorough examination the IRS inspectors were satisfied of full compliance. Uranga & Associates was officially notified by Letter 1866 (Rev. 4-2004), dated September 26, 2005 that action under these code sections was discontinued.

This thorough audit of Uranga & Associates’ proprietary process resulted in clearance from the IRS Tax Shelter Inspectors that our Safe Harbor IRA conforms with, and is in non-violation of, all applicable legislated tax laws

For more information check out our new website or contact a Lasaii consultant at 1-800-564-8625, or fill out an application form to see if you qualify for a Safe Harbor IRA.

Jackson Hewitt® Tax Service- Major Life Events Can Pay Big Dividends

Jackson Hewitt® Tax Service- Major Life Events Can Pay Big Dividends-Image by JimNtexas via Flickr

With 2010 quickly coming to a close, Jackson Hewitt Tax Service® encourages taxpayers to review the major life events that took place over the past twelve months with an eye toward possible tax implications.  Big life changes often mean big tax changes for consumers, some of which can lead to extra dollars in their pockets when filing a return.

“From a new child to a new home to a new job, there are tax deductions and credits tied to many major life changes,” said Mark Steber, chief tax officer, Jackson Hewitt Tax Service Inc.  “Knowing what tax benefits are available, and bringing any necessary documentation to your tax preparer is a smart way to make the most of these life changes.”

Steber notes several common life changes that can mean tax benefits:

  1. Having or adopting a child: Claiming a son or daughter as a dependent may significantly reduce a federal tax liability.  You may be entitled to a $3,650 exemption per dependent as well as a Child Tax Credit of up to $1,000 per qualifying child.  Those who adopt a child and pay adoption expenses may be able to claim a refundable credit for qualified expenses of up to $13,170 per child.
  2. Continuing an education: (for yourself, spouse, or dependent child): Up to $2,500 of student loan interest paid may be claimed as a direct deduction against your income.  The loan must be for tuition, fees, books, and other qualified expenses for a student enrolled half-time or more.
  3. Making energy efficient improvements to your home: The Nonbusiness Energy Property Credit is a tax credit for making your home more energy efficient, such as adding insulation, installing energy-efficient exterior windows or adding energy-efficient heating and air conditioning systems.  Up to 30 percent of the cost of all qualifying improvements may be available, for a total two year credit limit of $1,500 (2009 and 2010 combined).
  4. Working independently or self-employed: Taxpayers who are newly working as an independent contractor or self-employed can directly deduct all expenses for their business against their income.  Expenses such as advertising, supplies, office supplies, equipment, phones, and costs of owning and driving a vehicle are all allowed deductions that can reduce your total taxes.
  5. Caring for an adult parent financially: An aging parent may qualify as a dependent if the taxpayer is responsible for at least 50 percent of the parent’s expenses, such as for food, medical care and lodging.  Expenses for assisted living facilities or nursing homes can also count toward parental support if the taxpayer paid those costs.  Taxpayers may also be able to deduct any medical expenses being paid.  Finally, if they are paying for senior care, they may be eligible for a credit of up to $2,100.  However, according to Steber, “Often siblings will share in the support of the aging parent and are surprised to learn that only one of them can claim the parent as a dependent.”

“In addition to this group of life changes, there are many more that can mean tax benefits, or in some cases, tax liabilities, so working with a knowledgeable tax preparer is a good way for taxpayers to ensure that they review all of the things that impact a tax return, including many common life events and expenses,” noted Steber.  “Not all online options can fully assist a taxpayers with these life changes, hence the increased importance of experienced tax preparers.”

Billboards in West Hollywood-Potential Goldmine

Billboards in West Hollywood-Potential Goldmine In a recent Sunset Strip survey, 86% of 500 likely West Hollywood voters stated they support the Taxing of Billboards and Supergraphics in West Hollywood.

When asked the question of whether they would vote yes on the Tax Billboard Act, slated to be on the March 2011 ballot, overwhelmingly the response was yes. The remaining 14% were split between undecided and opposing the billboard tax.

The Billboard Tax Initiative Qualified for March Ballot 2011 in West Hollywood. The West Hollywood City Council certified the Billboard Tax Initiative and met the state’s election code requirements to be on the March 2011 Ballot.

Tens of millions of dollars in advertising revenues are received each year by billboard companies from billboards, large screen video displays, tall walls, supergraphics and other off-site signs. Yet, under current law, the billboard companies pay virtually no taxes to West Hollywood for the privilege of being allowed to advertise in the city.

This initiative would correct this inequity and provide over $4 million dollars of annual revenue for the City to provide added municipal services to the residents of West Hollywood. A 7% excise tax on advertising revenues received from the advertisers on billboards and supergraphics in West Hollywood would be paid to the City. The Tax Billboard Initiative does NOT allow for any new billboards in the city and will not allow any new tall walls without going through a city approved permit process. Currently, only one (1) new tall wall location may be approved and permitted by the Tax Billboard Initiative.

The City of Los Angeles will have a similar Tax on Billboards on their March 2011 ballot, based on the Philadelphia Billboard Tax Act. The billboard tax proposed in Los Angeles is 12% and will also generate millions of needed revenue for the City of Los Angeles. If approved, the billboard tax would generate over $24 million annually for the city’s general fund, which would benefit the citizens and public projects. Both Tax Billboard Initiatives, said City officials, have modeled the ballot proposal on a billboard tax approved in 2005 in Philadelphia, which Major Billboard Companies challenged in court and lost.

West Hollywood City Council Members may take the side of the Billboard Companies and not let the People vote on Taxing Billboards and Supergraphics. They are considering fighting the Tax Billboard Act in court in the closed session before the public council meeting. With 86% of the surveyed voters supporting a tax on billboards and thousands of the voters in West Hollywood signing the petition for Taxing Billboards & Supergraphics, many voters are asking why would the City Council members take the side of the Billboard Companies and not let the people vote on Taxing Billboards & Supergraphics? The City Council should respect the right of the people to express and voice their opinions concerning their city and the fairness to have a say in their government.