The importance of Tax Knowledge Pioneering Business Today in Indonesia

For the desperate to have own business, success stories truly make endless envy. Jealous because until now still not able to realize the ideals have fixed income from the business without the cooperation of people or so employees.

It would be terrible to grow old with memories of youth that only contains road congestion, fear of coming late to the office, routine tasks that do not inspire the spirit, and life as a machine, which will only end up with a meager pension.

Satire can be a motivation to think about starting a business plan itself. It goes without heroics with a large capital or detailed plans. Precisely be wise to direct the action!

Indeed, starting a business was not as easy as imagined. Each person has a unique process when starting business. There are stories that try home-based business small capital. She was distraught capital looking here and there and got accustomed to accept rejection when applying for a bank loan disbursement.

The reason the banks are very cliche. Officers argued business loans can be disbursed if there have been efforts form. How would be no business if there is no capital! Finally a solution that is reached by opening the sake of selling a motor battered culinary business

Slowly but surely, begin to reveal the results of its business. Status is no longer a small capital home-based business because he was able to have his own restaurant. But the challenge does not stop there. Next is the tax affairs! Get ready just received a letter from the Office of the Regional Income Tax matter Eating (ref1). The letter will usually be attached obligations to pay taxes arguments with the description of the articles that make you upset and taste selfish.

Naturally, if the business is insufficient capital is rather upset by the arrival of the letter. When used, they are not going to help when trouble looking for capital. So has little effect, then blasted with clauses that bind anyone who has the restaurant business. Anyway, the state asked for money, aka taxes.

This could be an idea to build a business that does not merely dwell on the matter of capital, the location of the business, cash flow, profitability, and so forth. But mastery of the tax affairs are also important.

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Dealing with Inflation and Tax Advantages of Long Term Care Insurance Plans

LTC insurance policies may be considered as one of the most important and most beneficial investment that an individual can get for his future use. Not only does it provide services and facilities that are helpful in lessening the burdens and financial discomfort of being old and sickly, but it also gives the policyholders other benefits such as the various tax advantages of long term care insurance policies.

This kind of insurance policies usually provides services and facilities that are necessary in order to help an aging individual to lessen the hardships and burdens that old age or certain illnesses and diseases might bring him. LTC plans ensure that the health and welfare of the insured persons are prioritized and are given utmost importance.

One of the advantages of owning an LTC insurance plan is the assurance that no matter how much the costs of LTC services increase in the coming years, your needs and other demands are all covered and taken care. One does not have to worry about his policy being valid or authorized even if he was able to acquire his plan at a lower price than the actual and current LTC rates.

This was made possible by the levels of inflation protection that each LTC insurance plan must provide. The levels are based according to the age of the person when he purchased his policy, and it follows that when an individual bought his plan at a younger age, a higher level of inflation protection will be given to him.

Aside from the inflation protection, there are also some tax advantages of long term care insurance that make it more practical and more beneficial to the policyholders. Tax qualified policies are common nowadays and is in fact the one that is more preferred to receive tax advantages.

By implementing and supporting tax qualified policies, it only proved that the government is having a hard time dealing or managing the LTC-related matters, especially with regards to Medicaid, thus encouraging the public to purchase their own private LTC insurance plans.

There are several types of tax advantages that an insured individual might get depending on the filing status of the policy owner:

a. Individuals (Non self-employed) – Their LT premiums may be treated and deducted as medical expense, given that it exceeds at least 7.5 percent of his adjusted gross income.

b. Self-employed individuals, S-Corporations – Tax deductions are taken as health insurance expense but it is still limited to the Maximum Allowable Premium Deduction guidelines.

c. C-Corporations – These corporations can pay the full amount of the insurance premiums or just a portion of it for their employers. Those employees who pay half of their insurance premiums will be under the Non-self-employed status for the portion of the premiums that they are paying.

LTC plans are really complicated and may sometimes be tricky that is why the guidance and assistance of those who are more familiar with the process of how it works are valuable. Tax advantages of long term care insurance and the levels of inflation protection are just some of the areas and samples of how complicated and confusing it can be. Good thing there are now a lot of LTC resources that can give helpful feedbacks to the public.

There are lots of ways to have that long term care plan right next to you before you become overwhelmed with the rising prices of health care services. Plan now!

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Taxation of Commodity Traders

Commodity Traders may be taxed under two different methodologies. One I refer to as the "Default Rule" and the other I refer to as the "Mark-To-Market Election Rule".

THE DEFAULT RULE
Under Internal Revenue Code ("IRC") section 1256, Commodity Traders are granted two major tax breaks:
Tax Break #1
60% of commodity gains are taxed at the long-term gains tax rate and 40% of gains are taxed are treated as short-term gains. This is known as the "60/40 Rule".
Tax Break #2
Commodity trading losses may be carried back three years, to offset prior years commodity trading gains.

In order to meet the definition of a Commodity Trader, for purposes of the above favorable tax breaks, an individual must be a member of a domestic board of trade designated as a contract market by the Commodity Futures Trading Commission (a.k.a. "regulated exchange"). The definition of a commodity under IRC section 1256 includes any regulated futures contract, any foreign currency contract, any non-equity option, any dealer equity option and any dealer securities futures contract. If you trade on a regulated exchange you are a "Commodities Trader" under IRC section 1256 and can avail yourself of the preferential 60/40 Rule.

When such Commodity Traders file their tax returns for the year they report their commodities gains and losses on Form 6781, which is attached to Form 1040 (Federal Income Tax Return for individuals). The gains and losses reported on Form 6781 are split into two groups: 60% long-term gains and 40% short-term gains. The next step is to move these two groups of gains/(losses) over to Schedule D and they are taxed accordingly (long-term gains/losses are netted against short-term gains/losses). If there is a net long-term gain this is taxed at the current favorable capital gains tax rate of 15%.

What I just described is the general rule of taxation of Commodity Traders and most Commodity Traders are taxed under this rule. Any expenses you may have incurred (such as margin interest expense) may only be deducted as an itemized deduction and, thus limited.

MARK-TO-MARKET ELECTION RULE
There is another tax option available to Commodity Traders, however. If a Commodity Trader meets the definite of a "Professional Trader" they are eligible to make the IRC section 475 Mark-To-Market election. This new optional rule came into effect in 1997 under The Taxpayer Relief Act of 1997, which gave Commodity Traders the ability to make the Internal Revenue Code ("IRC") section 475 Mark-To-Market election. When you make this election it allows Commodity Traders to do two things:

#1 Treat commodity gains and losses as ordinary income (loss). When you make the IRC section 475 Mark-To-Market election you are eligible to file a Schedule C and list your commodity business expenses. Under this election, commodity business expenses have more value as they are no longer considered itemized deductions but, instead, ordinary business expenses. These expenses can then be used to offset other income you reported, such as wages. When you make the Mark-To-Market election, a Commodity Trader is electing out of the 60/40 Rule and, instead, treats all gains and losses as ordinary. The 60/40 Rule is the default rule that is available to Commodity Traders who have not made the IRC section 475 Mark-To-Market election. Most Commodity Traders do not make the IRC section 475 Mark-To-Market election in order to preserve the favorable taxation of commodities (60% long-term gain treatment and 40% short-term gain treatment).

#2 Allow Commodity Traders to take deductions on Schedule C for business expenses associated with your commodity trading business. You can only take deductions on a Schedule C where you have a valid IRC section 475 Mark-To-Market election in place.

In order to be eligible for the IRC section 475 Mark-To-Market election a Commodity Trader must meet the stringent tax definition of a Trader. The "Trader" definition, for purposes of the Mark-To-Market election, requires an individual to seek to profit from short-term changes in the market. This trading activity must be substantial, frequent and continuous. You must be a full-time trader who is trying to capitalize on the momentary swings in the market each day. If you meet the definition of a "Trader" then you are eligible to make the Mark-To Market election, which must be made by April 15th of the current year if you want the election to be effective for the current year. Example: You make the election by April 15, 2012 for tax year 2012. Once in place the election allows you to treat all gains and losses as ordinary (reported on Form 4797, which is attached to your individual income tax return Form 1040).

Commodity Traders cannot take advantage of the 60/40 Rule and take deductions on Schedule C at the same time. It's one or the other. The 60/40 Rule is only available to Commodity Traders who DID NOT make the IRC section 475 Mark-To-Market election. The ability to take Schedule C deductions is only available to Commodity Traders DID make the IRC section 475 Mark-To-Market election.

Tom is a Certified Public Accountant, a Certified Financial Planner, CLTC (Certified Long-Term Care) and President of Cerefice & Company, the largest CPA firm in Rahway, New Jersey. Tom works with clients helping them manage their money, retirement planning, college savings, life insurance needs, IRAs and qualified plan rollovers with an eye towards maximizing tax benefits and minimizing taxes. Tom is founder of the Rich Habits Institute and author of "Rich Habits".

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