Tag: Obama government


Tax breaks by Obama delights small business owners

Sanjiv Gupta CPA - 8 years ago
It was early in 2011 that U.S.president Barack Obama promised to pass tax-break laws to facilitate small business investments and new entrepreneurs plan their expense judiciously. This plan will be an important part of his 2013 budget, officials from the White House report. At a recent cabinet meeting, President Obama focused on this area and emphasized it to be one of his agendas in the ensuing Presidential election this year. He expressed his desire that Congress should consider eliminating profit quotient from investment in the small businesses and must extend its wilful help by considering deductions in the purchase of essential equipment and business software. This will help small business owners develop their businesses and will also generate employment. At a press meet the President stated that he has come to know that the Democrats and Republicans on Capitol Hill had discussions about his ideas and plans that he has in store for helping small businesses get potential resources and capital. He particularly stressed on the necessity of the Republicans and Democrats working together to pass the tax bill as law. He wants to have it off his desk as early as it may be possible. Once it comes out he will enthusiastically sign the bill and would be happy if the bill is enforced right away.              Obama hopes that the Congress won’t oppose the bill as they did the previous year. His only concern, however, is the Congress’s opinion on partisan lines. He fears that it might affect agreement and that the issuance of the bill might be delayed. On the contrary, the White House hopes that whatever may be their general point of dissent, the business-friendly matters which are directed towards a common good will surely pull support of both parties.               The small business ideas that Obama wants to implement and make a part of his February 13 budget package includes a 10 % tax break that is to be enjoyed by all small businesses that will contribute in creating employment or raising wages. Alongside the proposed tax reduction on business start-up expenses. This will help launch small establishments in the commercial market with the least trouble.  He is also keen to remove country-specific restrictions for some immigrant visas so that the US can hire more highly skilled foreign workers and entrepreneurs. Obama said government departments like the energy, education, commerce, and homeland security have been strictly instructed to help the small businesses in the best possible way.

IRS Seeking One Billion Dollars For Hiring

Sanjiv Gupta CPA - 3 months ago
How Many Tax Returns IRS Can Audit Each Year?It depends upon how much resources IRS has available.   And IRS is just getting ready to increase those resources.   Obama administration has recently asked Congress for an additional one billion dollars so that IRS can go on a hiring spree.  Why not? – after all, IRS is the best money-making department for the government.Obama’s administration estimates that hiring more IRS agents can bring in $1.5 billion dollars in additional revenue.  That is lots of money and the United States can sure use it to fund all the wars we are fighting.Just to be fair, the IRS budget was trimmed down in the year 2011 and this increase will bring a total IRS budget to about 12.8 billion dollars.  Just like the Obama administration, IRS is very happy this kind of budget increases. After all – more budget means more agents and more agents means more revenue.  You don’t need a certified public accountant to do this math.NTEU president Collen M. Kelley announced in a statement that the additional funding is critical to repair the damage of the harmful cuts during the past two years.  He further clarified that the IRS collects some 93 percent of all government revenues — it only makes sense to view IRS funding as an investment towards economic recovery.How many more agents can IRS hire with additional funding?“Rough figure is around 4000 agents,” according to National Treasury Employee Union.More jobs and more revenue – what’s there to lose for slow and sluggish recovery excepts fewer dollars in US taxpayer pockets.Share your thoughts, should IRS get this additional funding?

2012 and 2013 Tax Tips

Sanjiv Gupta CPA - 8 years ago
Considering the uncertain global conditions and economic downturn, federal tax rules in the US have not been formulated beyond the year 2012. In this context, it has become very difficult to prepare a final layout for estate and gift tax. In the face of such a situation, some important tax tips have been discussed below, which can efficiently help plan income tax propositions.In the first case, it is suggested that income should be deferred to the subsequent year, secondly, tax deductions should be enjoyed and last of all if there is any such tax provision that has expired, it must be taken into account. In the following passage, we have discussed the federal tax rules, which have been implemented by the U.S. government in the year 2012 and the proposals, which have found a place in the 2013 US budget.Transfer tax rules in effect for the year 2012The transfer tax rules, which have been put into effect for the year 2012, are as follows:1. In the event of a person’s death in 2012, an exemption limit of $5,120,000 has been set which is a revised and adjusted figure compared to the one that had been fixed in 2011. Other than the exemption limit, the landed properties will be taxed at a 35% rate.2. A tax enactment plan for married couples implies that if in the event of the death of one spouse the other person can utilize the unused portion of the dead partner’s deduced amount. Such a provision is called portability and this will remain in operation only for the year 2012. To get the fullest advantage of portability or deceased spousal unused exclusion amount, as it is technically known as there is the need to produce federal estate tax return of the dead partner’s estate. It does not matter even if the gross value of the estate is marked below $5,120,000 because whatever the case may be the estate tax return of the deceased person’s estate has to be filed.3. There are other spheres, which are subjected to the same amount of exemption limit and are known as lifetime gift tax and generation-skipping transfer tax. The exemption amount stands at $5,120,000 and like in the first two cases and the taxable amount for the lifetime and generation-skipping transfers remains the same at a flat 35% tax rate.4. The deductible amount remains the same at $5,120,000, which is applicable for lifetime gift tax. Like in the earlier cases, a 35% tax rate has been decided for all taxable gifts over the exemption amount. On a whole, the gift tax and the estate tax have been brought under a single section.New tax proposals indicated by President Obama in the 2013 budget If the tax proposals, planned for the 2013 US budget are finally implemented and brought into effect then there will be notable changes in estate tax payments, generation-skipping transfer, and gift taxes.1. Talking about exemption limit the new exemption amounts that have been fixed for estate and generation-skipping transfer tax are kept at $3.5 million and $1 million respectively.2. The new taxable amount has been increased from the earlier 35% to a new flat 45% tax rate.3. Coming to the section, which talks about the provision of portability where the earlier facility that allowed a surviving spouse to utilize a deceased partner’s unused exempted amount, has been made permanent.4. Valuation discounts have also been talked about in the 2013 budget plan. In the present scenario due to the absence of good control and proper marketing techniques, the interests of business organizations suffer heavily. However, according to the 2013 plan module, the value of interests will only be discounted in the case of family businesses.5. Grantor retained annuity trusts will face several changes as per 2013 tax rules. Going by the present condition laid down in the rule book, a person can save that extra money which he has to shell out for paying transfer tax costs by using grantor retained annuity trust. Two different conditions have been mentioned in the 2013 budget plan, which will bring the earlier provision of zeroing out the gift in the trusts to a permanent stop.Some other significant changes that have been noted in the tax evaluation rules applicable for grantor trust are that unlike before landed property owned by the grantor trusts will be included at the time of evaluating the grantor’s total estate under his possession. In addition, all kinds of distributions that will be made in the lifetime of the grantor will be indicated as gift tax.

President Obama and Taxes Next Year

Sanjiv Gupta CPA - 8 years ago
The re-election of President Obama to the white house may have come as a relief for him; however, it just is that part of the deal. He comes back to deal with the headache of an economy that is just coming out of the ditch. He has to handle the expiry of the tax breaks that have for a long time now buffered the American population. In fact, the imminent increase in the capital-gains tax rate in this coming year is fueling an increase in the sales of some privately-held businesses in America.The fact of the matter is that most of the business owners in America have lots to gain from making a sale on their assets as they seek to dispose of off the underperforming assets, especially those deals that can be closed before the start of the next year. At the turn of the year, it is expected that the maximum tax on investment income will rise from its current threshold of 15% to a minimum of 23.8% on most of the capital gains. This situation is especially true for higher-income earning homes. In the same vein, it is expected that many sellers will convert their equity in homes into retirement funds.While some people took advantage of the increase in taxes to make smart sales, there are other people who have chosen to wait until the last minute to see if there are chances of a better deal. However, the legislatures have to first come to a decision with regard to the direction the tax increases and spending cuts will take. While a number of austerity measures are being put in place, individuals and companies alike are being asked to take some austerity measures of their own.As it stands, the top tax rate is set to go up at the end of the year by a minimum of 3.8 percentage points due to a provision introduced by President Barack Obama through the overhaul of the health care system. Even then, now that the election is a done deal, the negotiations that will take place are expected to bring the numerous tax and spending measures to the economy.Sometime in the year 2012, the president and Congress had come into an agreement to extend the current 15% capital-gains tax rate all the way to this election year. However, that deal is on its death bed, and another deal must be hammered out. The absence of such a deal by the close of business this year could only mean one thing; that the rates revert to the higher ones that stood at almost 25%. Add this to the extra charge from the health-care law, which is to be charged for higher-income households as well as the maximum tax on investment income, and then you have a rate of up to 28.8% or even more. In essence, for the high earners who do not handle their estates in time, the next year is going to be a tough one.The re-election of President Obama to the white house may have come as a relief for him; however, it just is that part of the deal. He comes back to deal with the headache of an economy that is just coming out of the ditch. He has to handle the expiry of the tax breaks that have for a long time now buffered the American population. In fact, the imminent increase in the capital-gains tax rate in this coming year is fueling an increase in the sales of some privately-held businesses in America.The fact of the matter is that most of the business owners in America have lots to gain from making a sale on their assets as they seek to dispose of off the underperforming assets, especially those deals that can be closed before the start of the next year. At the turn of the year, it is expected that the maximum tax on investment income will rise from its current threshold of 15% to a minimum of 23.8% on most of the capital gains. This situation is especially true for higher-income earning homes. In the same vein, it is expected that many sellers will convert their equity in homes into retirement funds.While some people took advantage of the increase in taxes to make smart sales, there are other people who have chosen to wait until the last minute to see if there are chances of a better deal. However, the legislatures have to first come to a decision with regard to the direction the tax increases and spending cuts will take. While a number of austerity measures are being put in place, individuals and companies alike are being asked to take some austerity measures of their own.As it stands, the top tax rate is set to go up at the end of the year by a minimum of 3.8 percentage points due to a provision introduced by President Barack Obama through the overhaul of the health care system. Even then, now that the election is a done deal, the negotiations that will take place are expected to bring the numerous tax and spending measures to the economy.Sometime in the year 2012, the president and Congress had come into an agreement to extend the current 15% capital-gains tax rate all the way to this election year. However, that deal is on its death bed, and another deal must be hammered out. The absence of such a deal by the close of business this year could only mean one thing; that the rates revert to the higher ones that stood at almost 25%. Add this to the extra charge from the health-care law, which is to be charged for higher-income households as well as the maximum tax on investment income, and then you have a rate of up to 28.8% or even more. In essence, for the high earners who do not handle their estates in time, the next year is going to be a tough one.

Should We Tax The Rich ?

Sanjiv Gupta CPA - 7 years ago
During the campaign period, Obama and Romney were at each others’ throats over the taxation of the rich. The basis of this problem seems to have arisen from the Obamacare program, which sought to make the rich pay a little more in order to cover some of the costs of medical care for the less privileged in the society. On one hand, the Obama administration hailed this as a way in which every person can be given access to a good health care system. On the other hand, Romney, who is considered to be rich by most standards, held that the system was designed to punish those who were rich. From this simple example, you can begin to understand just why the topic of taxation among the rich is an important part of the whole scheme of things.A simple look at the start of all these problems shows that the rich are up in arms against any system that will reduce their spending abilities. However, faced with a government that seeks to ensure that they play their part in rebuilding the country, it becomes a very sore topic. Therein lays the root of the problem. The question is very simple, should the rich pay more taxes as a result of their success in business. On one hand, Obama wants to keep the taxes on the middle-income class while increasing the tax threshold on the higher income citizens. Romney and in effect the Republicans, want to keep the taxes on the middle-income earners low while sticking to the tax plan of the top 5% income earners. Now that the Republicans lost during the elections, it means that Americans want the rich to pay a little more and they agree with the democrats in terms of the tax plan that they came up with.Even then, the different houses are controlled by the different parties and since their approval is required, it can only wait to be seen how far each will go to implement their policies. So let us look at the logic behind each of the schools of thought. The rich tend to make more money off the common citizens. This, in essence, means that they owe it to everyone to contribute more towards the development of the social and economic fabric of the regions in which they operate. On the other hand, it is the rich who have the disposable income to actually make large scale investments and therefore affect the lives of the different people. With this in mind, it might be in the best interests of the general public to actually tax the rich at the current rate. This will allow them to have more disposable income that they can spend and re-activate the economy. Even then, the decision seems to be on whether the citizens would rather rely on the efforts of the government or that of private individuals. As it stands, the former seems to be taking the day, with more people preferring to the government's way.

State Budgets and Taxes: What Will Happen in 2013?

Sanjiv Gupta CPA - 7 years ago
2013 is a year of many expectations. In the USA, the new government (the Obama government) has been given another lease of life to implement its policies and affect the lives of the common Americans for the next 4 years.There is a school of thinking that the federal fiscal cliff has the potential on unloading a massive state tax fiscal cliff or disaster if left unchecked. The main reason for this expected increase in the tax bill arises from the fact that some of the states, and in essence most of the states, rely on the federal government to sort their programs. If this trend spills over to the next year, then the federal government will have to find new ways of sustaining the state's programs. The most common way that governments use to raise money for their needs is through taxation. An increased program bill can only result in an increased tax bill. According to various sources, the federal government provides support of up to 20% to the different states. In addition to this problem, the states will have to balance their budgets in a way that they can cut spending and increase the revenue that they receive. The result of these actions may include spending cuts and an increase in the tax bill to the ordinary citizens.Putting this in perspective, at least>48 states in the USA have budget deficits accumulating a total of $581 billionin the last four years only. How will different states seek to cover their deficits? Well, the rumor around town and in government is that there are going to be quite a number of changes that will tax place especially in relation to the taxation threshold. There have been suggestions to increase the number of taxes such as sales tax. However, not all states will follow the same path when trying to cut their deficits. In fact, it is expected that the most successful states are those that will come up with innovative ways of ensuring that the deficits are dealt with without increasing the taxes. Already, there is much public outcry about the increase in the federal debt, an issue that caused a lot of problems for the Obama administration during the campaign.2013 is a year that promises to be one with many solutions. However, it is also a year in which individuals will have to undergo some “baptism of fire” so to speak if the states in the USA are to achieve their long term goals.
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