Here’s a book that’s probably not on your summer reading list…but if you make a lot of money it should be.
It’s called the IRS Data Book.
It’s not as exciting as a Tom Clancy novel…but still fascinating in its own way.
The IRS Data Book is updated every year and it provides a great look inside the world of the IRS. The book points out all kinds of interesting stats including the number of tax-returns filed that year and how much tax revenue was collected. For example, in 2012 Americans filed 146 million individual tax returns…and the IRS examined a little more than 1% of them.
Going from percent to real numbers…that means the IRS audited 1.5 million Americans that year.
You might be patting yourself on the back by not being one of the 1.5 million audited Americans in 2012, but have you ever wondered your probability of being audited in the future? Like most things having to do with money…it all depends on how much you make.
For greater insight into this answer, take a look at this recent chart in The WSJ:
Income % of returns audited
General population 1%
$500,000 – $1 million 3.57%
$1 million – $5 million 8.9%
Greater than $10 million 27.4%
So what do you know…the more you make the greater your chance of being audited. Most people kind of know this, but now you know your approximate audit risk based on your reportable income.
The WSJ report also gives additional insight into higher risk audit activities. These activities include:
• closely held businesses
• partnership filings
• hedge fund portfolios and other complex investments
• sale of a business
• large charitable contributions
• large deductions
Our affiliate team of leading tax attorneys have helped approximately 5,500 business owners across the U.S. lower their taxes and lower their risk of audit. In fact, after working with thousands of wealthy business owners across 40-50 different industries, their audit rate is under 1% — which is even lower than the general population.
If you or a business owner you know wants to reduce your chances of being audited…plus save potentially 20-45% on taxes going forward, call or email us today for your free tax savings and audit reduction analysis. When was the last time you got a free second opinion on your second biggest expense…plus learn how you can reduce your likelihood of being audited?
One of the great national pastimes for people from all nations is to talk about their country’s tax situation. In the U.S. there is no shortage of public and private debate on what lies ahead for income taxes.
While it’s impossible to know for sure what what’s going to happen to taxes, it might be a good exercise to reflect on the past year to review what just happened.
Many tax attorneys will tell you changing the tax code is tantamount to open heart surgery. That’s why after all the tax code changing rhetoric dies down, tax rates…and not tax codes are changed.
Based on last year’s tax rate changes, it is estimated more than 75% of Americans saw a tax rate increase in 2013. It is no surprise the wealthiest American’s got hit the hardest. Consider two major components of last year’s legislation that affected tax rates:
1) The payroll tax break ended. For the past two years, the Social Security payroll tax was lowered by two percentage points, from 6.2 to 4.2 percent. If you are self-employed, you now pay 12.4%.
2) The highest tax bracket increased. The tax rate for individuals who earned more than $400,000 and couples making over $450,000 increased to 39.6 percent. That means if you made $1 million last year you paid $122,560 more than you did on the same income the year before. In addition, capital gains taxes went up to 20 percent on high income earners and a 3.8 percent increase was levied on certain levels of investment income. High earners also saw limitations to their exemptions and deductions.
High-earning taxpayers are also paying more for Medicare under the Affordable Care Act. For the first time ever, investment income is now subject to Medicare taxes. Other changes included a $2,500 cap on flexible spending account contributions.
While no one except perhaps a few government officials know for sure where taxes are headed…it would serve us all well to remember the famous aphorism…The best predictor of future behavior is past behavior. Unfortunately that applies to government tax policy as well.
Call or email us today if you want a free no-obligation second opinion on your recent tax filing to see if you overpaid in 2013 . . .and what you can do to better control your tax bills going forward.
The Beach Boys believed they had a plan for finding the cutest girls in the land when they wrote “California Girls”. Here is a quick stroll down memory lane of their plan…
Well East coast girls are hip
I really dig those styles they wear
And the Southern girls with the way they talk
They knock me out when I’m down there
The Mid-West farmer’s daughters really make you feel alright
And the Northern girls with the way they kiss
They keep their boyfriends warm at night
I wish they all could be California
I wish they all could be California
I wish they all could be California girls
Well, millions of Americans are thinking differently than the Beach Boys when it comes to retiring in California which comes in this year as the #10 worst states to retire.
According to the website TopRetirements.com, the 10 worst states for retirement in 2014 are:
- New Jersey
- Rhode Island
This site’s ranking is based on the following major criteria:
- High Property Taxes
- Taxation of Social Security & Pension/Retirement Income
- Cost of living
- Low Estate and Inheritance Taxes
Other factor the site considered were:
- Warm winter climate
- Good medical care
- Where your children, family, and friends live
- Where you have always wanted to live
- Recreational and cultural opportunities
- Natural beauty
- Natural disasters
There are lots of other factor that determine where you want to live in retirement with family listed near the top.
But these rankings are still good economic indicators of how far your retirement dollars will go in different states.
If you want some additional insight into how to make your retirement dollars go farther, call or email us today. We are happy to show you ways your retirement dollars can go farther in your favorite retirement state.
Remember the famous TV game show host who looked to his contestants and said….”Survey says…?”
Well, in a recent survey of millionaires from all over the world, they were asked to name their biggest financial regret. Guess what their #1 answer was from below?
A) Not paying close enough attention to asset performance
B) Took too much risk
C) Too much debt
D) Missed out on a blockbuster IPO
E) Not having a financial plan earlier in life
Their #1 answer will surprise you . . . It is E. Almost 60% of people with investable assets of more than $1 million say they regret not starting a personal financial plan earlier in life. That was more than 3x the second biggest regret (A) which was picked by 18% of the respondents.
According to Nigel Green, founder of the deVere Group, who conducted the survey, “The poll shows that the No. 1 regret of high-net-worth individuals was not putting in place a robust plan for their personal finances which could be efficiently and regularly reviewed.”
We strive to solve this problem every day at Advanced Wealth Preservation, Inc. We help successful clients reach their financial goals using different products and strategies. But the one thing we work together on is making sure they all have a plan that’s monitored and reviewed regularly to make sure they reach their goals.
Some people are better planners than others. But if you have investible assets in the millions, you need a plan…and an advanced one at that. “Waiting for interest rates to rise” and “I hope the market continues its rally may not be the best plan. We like to remind clients…”Hope” is not a plan.
If you find yourself describing your current plan using the words “hope” and waiting”, give us a call or email us to learn how you can eliminate those words from your plan. Only you can control whether you pick answer (E) on the questionnaire above. Your future is now.