My finance tips

Archive for February, 2010

Cash Gifting And The IRS A Negative Theory

If you have either investigated or participated in a cash gifting program youve have heard that cash gifting is a legal method used to lower your taxes. This is true. The Tax Code 26 Sections 25012504 and 2511 states that you may give 12000 per person to as many individuals as you choose throughout the year of 2007 and these gifts will not be subject to additional taxes by the giver or the recipient of the 12000. The IRS makes it quite clear that in order for the money to qualify as a gift under Title 26 your gifts must be given with no expectation of a return of something of equal value. Title 26s intention was to allow people to gift their heirs prior to their death in order to reduce their estate taxes.

Cash gifting program will invoke Title 26 as proof of their legality. However they may not be being totally honest with you as to how the IRS views the activities of the cash gifting program. IRS agent Connie Lorz President of the California Society of Enrolled Agents made this comment on the subject.

Some of these gifting organizations claim the money to be taxfree but the IRS considers all income derived from them to be reportable income. Of course for most of those who get involved in these gifting parties its a moot point a theyre never going to see any profit or even get their original stake back.

Those individuals who go involved in the scam early and have their piece of dessert are subject to tax evasion charges if they havent declared their gains.

One such cash gifting program called the Elite Activities Resurrected has tried to bypass IRS requirements by calling themselves charitable organizations under a Internal Revenue Code 501 3 license.

The IRS classifies some charitable groups as taxexempt:

To be taxexempt under section 501 c3 of the Internal Revenue Code an organization must be organized and operated exclusively for exempt purposes set forth in section 501 c3 and none of its earnings may inure to any private shareholder or individual.

But there is more to 501 c3:

An organization will not be regarded as operated exclusively for IRC 501 c3 purposes if more than an insubstantial part of its activities is not in furtherance of an exempt purpose. The presence of a single noncharitable purpose if substantial in nature will destroy the exemption regardless of the number or importance of truly charitable purposes.

Better Business Bureau v. United States 326 U.S. 279 1945

The IRS refers to an organizations illegal activities which are a substantial part of the activities deems the organization does not qualify for exemption under IRC 501c3.

1. The Texas Court of Appeals upheld his conviction when his case was represent in the court of appeals in 2007.

Once prospects join a cash gifting program they may also be advised on various means of depositing and handling of the cash gifts received in order to prevent the arousal of suspicion or trigger flags at financial institutions which will routinely report activities to the IRS. If cash gifting programs would adhere strictly to the tax code no instructions of this nature would be necessary.

Note: Not all cash gifting programs are operating outside the laws. The cash gifting programs mentioned above may not have been following the law to the letter. The circumstances of that case are unknown at this time. If you are considering joining a cash gifting program to better your life and your future make sure to do some checking before you join.

Since the tax code does state that this money is not considered to be a gift if you give the gift with the expectation of receiving something of equal value in return. You should claim the money on your taxes. However that is your decision and is between you and the IRS.

Make your own decision but do it wisely.

About the writer:  http://www.bestcashgiftingprograms.net/

How To Prepare A Personal Budget And Regain Your Financial Future

For anyone who wishes to regain control over their finances learning to prepare a personal budget is the first step. Unfortunately most people do not consider a budget to be that important and as such they tend to live paycheck to paycheck always wondering where there money went while waiting for that next payday. If this is how it is around your house then creating a monthly household budget could set you free financially speaking.

The other thing that seems to scare most people away from doing a budget is that they think it’s some sort of complicated mathematical formulation. But in reality this could not be further from the truth. A budget is in actuality rather simple. In its most basic form it is simply a comparison of income and expenses. Just two simple columns on a sheet of paper.

That’s all you need to get started a piece of paper or notebook and a pencil. On one sheet of paper you write down your sources of income for the month and add them up which of course gives you your monthly income. On another sheet you are going to create your expenses list. This is a little more involved but again it is not rocket science it’s just a matter of gathering all the necessary information. You need to divide your expenses up into relevant categories and these categories can be subdivided to further help you get control over your expenditures.

Below is a sample of how you might list out your budget expenses.

Housing and utilities

Mortgage payment or rent
Insurance
Taxes and electricity
Natural gas
Water and garbage pick up

Entertainment
Cable television or satellite service
Internet access
Dining out
Bars clubs

Sporting events parties lessons and recitals

Health and Beauty
Haircuts perms etc.
Makeup
Medical dental vision weight loss diet products
Nutritional supplements

Transportation

Car payments insurance
Gas
Routine maintenance repairs
Air travel
Rental cars public transportation

Communication

Telephone
Cellular phone
Voice mail

Household

Groceries
Cleaning supplies
Laundry dry cleaning
Home improvement projects towels linens

Others

Credit card payments
Other loan payments
Child care items for baby/elderly
Allowances for children book clubs magazines music etc. fast food
Investments vacation spending money donations to church or charity
Gifts Christmas birthdays anniversary etc.
Emergency fund
Cigarettes.

This gives you a good idea of how to structure your budget but your individual expenses may be different so customize it to fit your needs.

Once you’ve got your monthly income and expenses added up you can immediately see if like a good majority of people you are spending more then you are making. If this is the case you can now use your newly created budget to start cutting out those expenses that aren’t really necessary. There are many areas that we overspend on everyday and seeing it written down can help start culling out those unnecessary expenses.

When you prepare a personal budget for the first time don’t get discouraged. You may not like what you see but this is the perfect opportunity to get your financial affairs back in order. Setting up a personal budget tells your money what to do and when to do giving you control to create a bright financial future.

About the writer:  If you seriously want to take back control of your money you need to build a Personal Budget. To learn more about creating a budget please visit the website Household Budgets by clicking here.

Those Struggling With Debt Should Consult Professionals

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Moves to improve financial education and help more lowincome consumers access competitivelypriced loans and other forms of borrowing have been welcomed by one industry body.

According to R3 the Association of Business Recovery Professionals the trade body representing insolvency practitioners the recently announced government scheme could help borrowers avoid unscrupulous loan sharks who charge borrowers high rates of interest. As a result of being guided away from such providers it is possible that consumers could adopt a more responsible attitude towards handling their money and be able to successfully search for a lowcost loan.

Nick OReilly vicepresident for R3 claimed that those Britons who are struggling to handle various demands on their spending such as mortgages utility bills and secured loans should avoid loan sharks and instead seek advice on their debts from reputable professionals.

He said: Loan sharks take advantage of those who are at their most vulnerable. In most cases when an individual approaches a loan shark they see it as their only way out of trouble but unfortunately dealing with loan sharks can only lead to more problems. The advice from the professionals is to consult an expert as soon as you see problems arising. They can advise on the best course of action without resorting to illegal loans sharks.;

In addition the association pointed to statistics from its most recent debt index carried out in August which showed that only just over a third 38 per cent of people who claim that their finances are causing them great difficulties; have looked to get professional advice. Meanwhile 12 per cent of those concerned about their money management have gone on to borrow cash again via loans which in many cases; has seen them resort to loan sharks.

Findings from the R3 index also indicated that one in five see their debts as currently being out of control;. As a result 19 per cent of those struggling to handle their finances have taken out a debt consolidation loan with 28 per cent selling items as a means of raising extra cash. People on lower incomes are revealed to have higher proportions of debt as those earning 21540 pounds are some 8831 pounds in the red via nonmortgage borrowing. This compares to the 8995 pounds of arrears consumers on an annual salary of 37480 pounds are on.

Overall the West Midlands has the highest proportion of overall debt in comparison to Scotland which has the least. Women are also suggested to be the most astute in handling their money as despite earning less than their male counterparts they have lower levels of both mortgage and nonmortgage debt.

Earlier this month the Association of British Credit Unions revealed it is set to discuss the countrys money management difficulties being held at all three of the major political party conferences. The meetings are to discuss how to help financiallyexcluded members of society access competitivelypriced lending options such as lowrate loans. In addition the gatherings are to discuss the provision of borrowing for instance of adverse credit loans for the rising numbers who find themselves with a damaged financial history.

UK Loan Arrangers providing you with breaking bad credit loans news.

About the writer:  Alex Braun is a skilled internet marketer who has been creating wealth from his home based business for several years. He would like to share his experiences with people in his website Global Resorts Network. He will also make you understand why the grass is greener on the other side when compared to ours and how YOU can get there too!