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Are You In FATCA Compliance?

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The Foreign Account Tax Compliance Act was enacted by the Congress in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act to combat tax evasion by US persons holding investments in offshore accounts. The United States Treasury Department and the IRS continue to develop guidance concerning FATCA. The Act generally requires foreign financial institutions to report certain information about certain financial accounts held by U.S taxpayers or by foreign entities in which U.S taxpayers hold a substantial ownership interest and pay the taxes they owe.

FATCA generally requires the reporting of foreign financial assets, including some common ones such as, financial accounts held at foreign financial institutions. Foreign stocks or securities not held in a financial account. Foreign partnership interests and mutual funds. Some less commonly reported are ones such as, investment assets held by foreign or domestic grantor trusts for which you are the grantor. Foreign issued life insurance or annuity contracts with a cash value. Foreign hedge funds and foreign private equity funds.

U.S law treats U.S persons and foreign persons differently for tax purposes. U.S national refers to an individual born in the United States, Puerto Rico, Guam, U.S Virgin Islands. Individual who were born in American Samoa or were born in the Commonwealth of the Northern Mariana Islands who have elected to be treated as U.S nationals. The Child Citizenship Act, applied to both adopted and biological children of U.S citizens which provide for the automatic acquisition of U.S citizenship after meeting certain conditions. An alien is any individual who is not a U.S citizen or U.S national, you are considered a nonresident alien unless you meet one of two tests. You are a resident alien of the United States for tax purposes if you meet either the green card test or the substantial presence test for the calendar year (January 1-December 31). You are a resident, for U.S federal tax purposes, if you are a Lawful Permanent Resident of the United States at any time during the calendar year. This is known as the “green card” test. To meet the United States resident for tax purpose test, you must be physically present in the United States (U.S) on at least:

1) 31 days during the current year and

2) 183 days during the 3 year period that includes the current year and the two years immediately before that.

Under FATCA, U.S taxpayers holding financial assets outside the United States must report those assets to the IRS. It’s in addition to the long-standing requirement to report with tax return known as FinCEN Form 114 Report of Foreign Bank and Financial Accounts known as FBAR. FATCA require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S taxpayers or by foreign entities wherein U.S taxpayers hold a substantial ownership interest. The reporting institutions not only include banks, but other financial institutions such as investment entities, brokers, and certain insurance companies. Some non-financial foreign entities also have to report of their U.S. owners. We can see that’s the reason when one try’s to set up a new account with a foreign financial institution, they ask information about citizenship.

FATCA requires U.S taxpayers who hold foreign financial assets with aggregate value of more than the reporting threshold (at least $50000) to report information about those assets on Form 8938 along with tax returns. Reporting thresholds vary based on whether you file a joint income tax return or live abroad. If you are single or file separately from your spouse, you must submit Form 8938 if you have more than $200,000 of foreign financial assets at the end of the year and you live abroad or more than $50,000, if you live in the United States. US Citizen whose tax home is in a foreign country and has been present in a foreign country or countries for at least 330 days out of a consecutive 12 month period is considered to live abroad. When you are filing married joint tax return and living abroad, one should file Form 8938 when the total value of foreign financial assets is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year. These thresholds apply even if only one spouse resides abroad. If you are not married then the total value of financial assets is more than $200,000 on the last day of the tax year or more than $300,000 any time during the year.

One should file Form 8938 if you file as single and total value of foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. In case filing tax return as married filing jointly, then the total value of foreign financial assets is more than $100,000 on the last day of the tax year or more than $150,000 at any time during the tax year. If you file as married filing separate then the total value of foreign financial assets is more than $50,000 on the last day of the tax year or more than $75,000 at any time during the tax year. While calculating the value of foreign financial assets, threshold, include one-half the value of any specified foreign financial asset jointly owned with your spouse. But for reporting purpose the entire value is to be reported on form 8938.

Foreign Financial Assets:

Foreign financial assets include foreign financial accounts and foreign non-account assets held for investment (as opposed to held for use in a trade or business), such as foreign stock and securities, foreign financial instruments, contracts with non-US persons and interests in foreign entities. These are to be reported.

Foreign currency is not a specified foreign financial asset. Foreign real estate is not a specified foreign financial asset if used as a personal residence or a rental property. If the real estate is held through a foreign entity, then the interest in the entity is to be reported if the total value of all specified foreign financial assets is greater than the reporting threshold that applied. Directly held tangible assets, such as art, antiques, jewelry, cars and other collectibles, are not specified foreign financial assets. Directly held precious metals, such as gold, are not specified foreign financial assets. However, gold certificates issued by a foreign person may be foreign financial asset and need to be reported based upon reporting threshold.

Exceptions:

You don’t have to report an asset if a financial account is maintained by a US payer. A US payer includes a US branch of a foreign financial institution, a foreign branch of a US financial institution, and certain foreign subsidiaries of US corporations. Therefore, financial accounts with such entities do not have to be reported. You don’t have to report assets if the person having beneficial interest in a foreign trust or a foreign estate, don’t know or have reason to know of the interest. If you receive a distribution from a foreign trust or foreign estate, you have the knowledge of your interest in the trust or estate. You don’t have to report if you have interest in a social security, social insurance or other similar program of a foreign government, as these are not considered specified foreign financial assets. If specified foreign financial assets has been reported on other Forms then you don’t have to report them a second time on Form 8938.

Normally a reasonable estimate of the highest fair market value of the asset during the tax year is reported and one needs to determine the value of specified foreign financial assets to know whether the value exceeds the threshold applicable based on the filing status etc. To determine fair market value of a specified foreign financial asset a reasonable estimate is sufficient based upon the publicly available information from reliable financial sources or other verifiable sources. For foreign assets the value is denominated in foreign currency. One has to use the US Department of Treasury’s Bureau of Fiscal Service’s foreign currency exchange rates to convert the denomination into US dollars. The exchange rate is based on the exchange rate on the last day of the tax year.

Effect of Non-Compliance:

Penalty for non-compliance is huge. If one has to file Form 8938 but does not file it, then IRS imposes $10,000 failure to file penalty, an additional penalty of up to $50,000 for continued failure to file after IRS notification, and a 40 percent penalty on an understatement of tax attributable to non-disclosed assets. If one fails to file or properly report an asset on Form 8938, statute of limitations is extended by three years following the time one provides the required information. If one omits from gross income more than $5000 attributable to specified foreign financial assets, the statue of limitations is extended to six years after you file your return. Exceptions apply if the failure is due to reasonable cause, then the statute of limitations is extended only with regard to the item or items related to such failure and not for the entire tax return. If the failure to disclose is due to reasonable cause and not due to willful neglect, no penalty will be imposed. Reasonable cause is determined on a case-by-case basis, based on facts and circumstances.

IRS has announced new streamlined compliance procedure, if you are a non-resident US taxpayer. Contact a tax professional to get your case visited to ensure compliance with FACTA.

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Source by T Rinu Cherian

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Where to Find Those Efficient and Hardworking Affiliates?

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Everyone wants a hardworking affiliate, employee, associate, partner, or even spouse, and why not? It’s the next best thing to doing the work yourself. However with the massive outbreak of work and income opportunities available online, how can you beat everyone else and find that one (or more) ideal person who will make your online business explode with success? Here are some of the most ingenious and uncommon ways to snag the idea affiliates for your affiliate program

Direct Sales Agents

Direct sales people are really one of the most enterprising, hard-working individuals in business. They mostly work on commissions or rebates and are willing to literally go door-to-door offering their products to anyone and everyone they bump into. Imagine how much easier their job would be if they could be an affiliate and simply work via the Internet and a mobile device or desktop.

Also, most direct sales people tend to carry more than one brand in their product arsenal so signing up as an affiliate would be almost the same type of work but using a different approach.

Colleges and Universities

Many college kids would be interested in a part-time income opportunity if it would mean funds to help pay for their education, loan, or partying. All you have to do is make sure to offer them products they can endorse as a student.

Freelancers

Did you know that the U.S. Census Bureau’s latest annual report show that 75% of U.S. businesses used freelancers in 2011? Freelancers earned a whopping US$990 billion in 2011 which is a 4.1% increase from the previous year. The only industries where the number of freelancers decreased were in insurance, finance, and construction. Most probably your affiliate program isn’t a part of these 3 industries.

Furthermore, online business and finance experts are predicting the growth to increase incrementally every year even with an economy that is improving. People just want income security and more control over their earnings. With the spate of lay-offs, it’s understandable why many would prefer to work as an affiliate than as an employee.

Scout For Them At Affiliate Conventions

There are annual affiliate conventions held in different cities around the country. You should try to catch one when it is held somewhere near your location. The average turn-out for these types of conventions has increased regularly over the years. Last year, many of them were sold out weeks before the event.

Advertise!

The US Census Bureau has said that as of 2012, 15% of Americans are poor, 43% of young adults depend on their parents to some extent for money. Even more surprising is that the median income of young adults in 1982 was $31,583 and last year it was $30,604 for the same age group! Income is dropping and people are looking for ways to earn additional income outside of their 9 to 5 jobs. That’s where you can come in playing the hero and helping others realize their dream income.

Finally, go online and talk about your product. Make the affiliate marketers come to you and have the luxury of picking the best candidates. You will need some help in marketing your affiliate program so target a marketer who’s experienced in affiliate program and SEO.

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Source by Lina Stakauskaite

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Recession Is Here… Six Costly Mistakes Home Sellers Make During Recessions And How To Avoid Them

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The U.S. is officially in a recession. What is a recession? A recession is a business cycle contraction or general economic decline due to significant drop in spending and other commercial activities. Most pundits and politicians will blame Covid-19 crisis for the recession, but even pre-Covid-19 the proverbial writing was on the wall.

The U.S. had over 120 months of economic growth, which was the longest expansion in the modern history. Other indicators, such as negative yield spread on treasuries (long term bonds having lower interest rates than short term T-notes), were pointing to an imminent change of the economic cycle and an impending recession. The only real question was: when and how bad?

Then Covid-19 came… If the cycle was going to change anyway, Covid-19 acted as a huge and unexpected accelerant to make the recession much more immediate and severe.

Inevitably during recessions all classes of real estate, including residential homes and condominiums, will be negatively impacted as lower consumer spending and higher unemployment rates affect real estate prices and marketing times.

Here are the six costly mistakes home and other real property sellers make during recessions and how to avoid them:

Mistake #1: This will pass and real estate market will be hot again soon

First thing to remember is that real estate cycles are much longer than general economic cycles. Even if the general economy recovers, which eventually it always does, a typical real estate cycle takes as long as 10 to 15 years. The cycle has four key stages: Top, Decline, Bottom and Rise.

Let us consider the last real estate cycle, which lasted approximately 14 years:

  • 2006 – Prices hit the Top
  • 2006 to 2012 – Prices Decline
  • 2012 – Prices hit the Bottom (Trough)
  • 2012 to 2019 – Prices Rise*
  • 2020 – Prices hit the Top
  • 2020 to? – Prices Decline

*NOTE: In 2016 the national residential real estate price index reached its pre-recession 2006 peak levels. It took 10 years for the real estate market to recover.

The way to avoid this mistake is to recognize that real estate cycles take years to run and plan accordingly. Additionally, nobody knows for sure when the prices will hit the top or bottom until after the fact.

Mistake #2: Low interest rates will make the economy and real estate market rebound

Between 2006 and 2011 the interest rates (Fed Funds) were continuously cut by the Federal Reserve Board and went from low 5% to almost 0%. However, that did not stop the real estate recession and depreciation of property values.

Undoubtedly, low interest rates made the economic decline and real estate recession less severe and saved some properties from foreclosures, but it still took six painful years for the real estate market to hit the bottom and then four more years for the prices to go back to their pre-recession levels.

Some markets had never fully recovered. For example, residential home prices in some parts of California, Arizona and Nevada are still below their 2006 highs.

To avoid this mistake, one needs to realize that although low interest rates help stimulate the economy and the real estate market, they do not cure them.

Mistake #3: I don’t need to sell now, so I don’t care

If you do not need to sell until the cycle plays out, which typically is over ten years, then you will not be as affected, especially if you have a strong equity position, limited mortgage debt, and solid liquid assets.

However, it is good to keep in mind that “life happens” and either professional or personal circumstances can change and we may need to sell property before the downturn runs its course.

Furthermore, if a property has a mortgages and its value declines to the point being “upside down,” meaning the mortgage loan balance exceeds the value of the property, then the options of selling, refinancing or even obtaining an equity line of credit, will be significantly limited.

This does not mean that everybody should be rushing into selling their real estate if there is no need to do so, just keep in mind that circumstances may and often do change and property options will be affected, so plan in advance. As one wise proverb says: “Dig your well before your thirst.”

Mistake #4: I’m selling, but I won’t sell below my “bottom line” price

This is a common and potentially very costly mistake. Generally speaking, every seller wants to sell for the highest price and every buyer wants to pay the lowest price. That’s nothing new. When selling real estate, most sellers want to achieve a certain price point and/or have a “bottom line.”

However, it is important to understand that the market does not care what the Seller, or his/her Agent, think the property value should be at. The market value is a price a willing and able buyer will pay, when a property is offered on an open market for a reasonable amount of time.

Overpricing property based on Seller’s subjective value or what is sometimes called an “aspirational price,” especially in a declining market, is a sure first step to losing money. When a property lingers on the market for an extended period of time, carrying costs will continue to accumulate and property value will depreciate in line with the market conditions.

Additionally, properties with prolonged marketing times tend to get “stale” and attract fewer buyers. The solution is to honestly assess your selling objectives, including the desired time-frame, evaluate your property’s attributes and physical condition, analyze comparable sales and market conditions, and then decide on market-based pricing and marketing strategies.

Mistake #5: I will list my property for sale only with Agent who promises the highest price

Real estate is a competitive business and real estate agents compete to list properties for sale which generate their sales commission incomes. It is not unusual that Seller will interview several agents before signing an exclusive listing agreement and go with the agent who agrees to list the property at the highest price, often regardless if such price is market-based.

Similarly to Mistake #4, this mistake can be very damaging to Sellers, as overpriced properties stay on the market for extended periods of time costing Sellers carrying expenses such as mortgage payments, property taxes, insurance, utilities and maintenance.

Furthermore, there is the “opportunity cost” since the equity is “frozen,” and it cannot be deployed elsewhere till the property is sold. However, the most expensive cost is the loss of property value while the real estate market deteriorates.

During the last recession, we have seen multiple cases where overpriced properties stayed on the market for years and ended up selling for 25% to 40% below their initial fair market values.

The solution is to make sure that your pricing strategy is based on the market, not empty promises or wishful thinking.

Mistake #6: I will list my property only with Agent who charges the lowest commission

Real estate commission rates are negotiable and not set by law. A commission usually represents the highest transactional expense in selling real properties and is typically split between Brokers and Agents who work on the transaction

Some real estate agents offer discounted commissions, in order to induce Sellers to list their properties with them. But does paying a discounted commission ensure savings for the Seller? Not necessarily.

For example, if the final sales price is 5% to 10% below property’s highest market value, which is not that unusual, due to inadequate marketing, bad pricing strategy, and/or poor negotiation skills, it will easily wipe out any commission savings and actually cost the Seller tens of thousands of dollars in lost revenues.

The solution is to engage an agent who is a “Trusted Advisor,” not just a “Salesperson.” A Trusted Advisor will take his/her time and effort to do the following: 1) Perform Needs Analysis: listen and understand your property needs and concerns; 2) Prepare Property Analysis: thoroughly evaluate your property and market conditions; 3) Execute Sales and Marketing Plan: prepare and implement custom sales and marketing plan for your property; and 4) Obtain Optimal Results: be your trusted advocate throughout the process and achieve the best possible outcome.

Finding such a real estate professional may not be always easy, but it certainly is worth the effort and will pay off at the end.

In conclusion, this article has outlined six costly mistakes real estate Sellers make during recessions and how to avoid them. The first mistake is not understanding that real estate cycles are long and take years. The second mistake is a misconception that low interest rates alone will create a recovery. Another mistake is not realizing that circumstances may change and not planning in advance. Mistakes number four, five and six pertain to understanding the market value, proper pricing and selecting the right real estate professional.

By understanding and avoiding these mistakes, real estate Sellers have significantly better chances of minimizing the negative impact of a recession while selling their properties.

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Source by Robert W. Dudek

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Useful Tips To Build The Best Gaming Computer

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Every gamer will want their computer to be the best gaming computer among their peers. Sometimes, with a little knowledge and tips and tricks, it is possible to build the best gaming computer and show it off to your peers. This article will show you how:

1) You can’t get the best gaming computer from computer retailers

If you want to get the best gaming computer, you have to build your own. Different gamers have different requirement for their gaming machine. Unless you are willing to pay a high price, you will not be able to buy a commercial computer that fulfills all your gaming needs. The only option you have is to build your own gaming computer.

2) You don’t have to be rich to build the best gaming computer

It is not necessary to burn a hole in your pocket to build the best gaming computer. With some due diligence, do some market research and compare prices around the marketplace. Merchant such as TigerDirect and NewEgg give regular discount to their products and you could save a lot of money if you catch them during their promotional period.

3) Most expensive parts do not have to be the best part

Sometime, the latest model or the most expensive model does not have to be the best part for your computer. It requires various components to work together to form the best computer system. When choosing a computer part, what matters is how well it can integrate with the rest of the components. Compatibility is more important than individual performance. What use is there if you spend lot of money on the latest quad-core processor and find that your motherboard doesn’t support it?

4) You don’t need to change the whole PC to own the best gaming computer

It is a misconception that you have to change the whole gaming machine to build the best gaming computer. If you already have a good barebone system, what you need to do is to upgrade the necessary parts and your gaming computer can roar back to life instantly.

5) Brand is important

Unless you want to see your computer system malfunction every few days, it is important that you purchase the parts from branded manufacturers with strict quality control. Motherboard brand such as Gigabyte, ABIT, ASUS are some quality brands that you can consider

If you follow diligently to the tips stated above. You will be on your way to build the best gaming computer. While price can be an issue, it is better not to scrimp on important computer parts such as motherboard, CPU, RAM and graphics card as it will cost you more to upgrade in the future.

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Source by Damien Oh

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