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Recent Tax Court decision could wreak ha

Glover v. Comm, a recent tax court decision, presents several issues to Merchant Mariners. Mr. Glover worked for Reinauer Transportation. His tugs pushed oil coastwise as far as Virginia. The tugs wou

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Recent Tax Court decision could wreak havoc on Mariners

State Taxes and Mariners

Suz asked this question So, what about if you live in one state (TN) and work as a merchant mariner in another state (HI), 45 days on/45 days off rotation? Do you pay HI state taxes, or does the payro

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State Taxes and Mariners

Mariner Tax Update January 2011

E-Filing alert! How many times have you read that mariners cannot E-File? How many websites have posted this. Year after year. And then all of a sudden preparers start proclaiming “mariners can

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Mariner Tax Update January 2011

Employee vs. Non-Employee LLC and S-Corp

I’ve been a client of yours for a few years now and I had a general tax question concerning my wife’s job status. She currently works full time for a marketing firm in “Deleted”

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Employee vs. Non-Employee LLC and S-Corp Planning for Mariners and their families

Maritime Tax Preparers and the Alternati

What they don’t want you to know… This video points out the tremendous effect of the AMT on merchant mariners. Seamen taking business deductions and offsets may very well be realizing litt

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Maritime Tax Preparers and the Alternative Minimum Tax

Recent Tax Court decision could wreak havoc on Mariners

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by on March 1, 2012 at 5:11 pm

Glover v. Comm, a recent tax court decision, presents several issues to Merchant Mariners. Mr. Glover worked for Reinauer Transportation. His tugs pushed oil coastwise as far as Virginia. The tugs would assist on docking jobs when in the New York area.

Mr. Glover took deductions on his income tax returns that would be considered acceptable if he was on a “temporary assignment”. Mariners have generally been characterized as such. Thus, their tax home has been considered to be their residence.

Mr. Glover’s attorney cited the now infamous Sailor Tax cases Johnson and Westling, stating that Glover’s tax home was in Missouri as per the decisions. Mr. Glover’s attorney did not introduce any statutory evidence (Jones Act Law) defining tax home for State tax liability purposes.

The attorney failed to meet substantiation requirements to shift burden of proof to the respondent. This means that the IRS’s position is considered to be correct and that Glover was required to meet the burden of proof.

The Tax Court has defined a Tax Home as the area surrounding a taxpayer’s principal place of business. If a taxpayer does not have a principal place of business, it can shift to their residence.

The Court concluded that all of Glover’s arguments were moot irrelevant, or without merit. This is a dangerous outcome that could cause global implications if not addressed. We’re talking coastwise and foreign.

We need someone to appeal this decision….

State Taxes and Mariners

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by on February 28, 2011 at 3:11 pm

Suz asked this question

So, what about if you live in one state (TN) and work as a merchant mariner in another state (HI), 45 days on/45 days off rotation? Do you pay HI state taxes, or does the payroll clerk change your home state to TN, which has no state income tax? This will be my fiance’s issue next year as we are moving from Hawaii to Tennessee, but he will be commuting for his pull. Also, would travel expenses to and from HI be a deductible expense? I’ve looked at IRS publication 463 and it was a bit confusing. I’m hoping for a little clarification.

It’s going to be impossible to figure this one out via IRS publications. The problem is that we’re dealing with State law and the applicability of Title 46. Section 11108 says the following.

(a) Withholding.– Wages due or accruing to a master or seaman on a vessel in the foreign, coastwise, intercoastal, interstate, or noncontiguous trade or an individual employed on a fishing vessel or any fish processing vessel may not be withheld under the tax laws of a State or a political subdivision of a State. However, this section does not prohibit withholding wages of a seaman on a vessel in the coastwise trade between ports in the same State if the withholding is under a voluntary agreement between the seaman and the employer of the seaman.

(b) Liability.–

(1) Limitation on jurisdiction to tax.– An individual to whom this subsection applies is not subject to the income tax laws of a State or political subdivision of a State, other than the State and political subdivision in which the individual resides, with respect to compensation for the performance of duties described in paragraph (2).

(2) Application.– This subsection applies to an individual–

(A) engaged on a vessel to perform assigned duties in more than one State as a pilot licensed under section 7101 of this title or licensed or authorized under the laws of a State; or
(B) who performs regularly-assigned duties while engaged as a master, officer, or crewman on a vessel operating on the navigable waters of more than one State.

Does this mean I don’t pay State taxes?

Unfortunately no. In this case it appears as though the mariner works in and around Hawaii. This doesn’t qualify as a foreign voyage. Meaning the mariner would file as a non-resident in Hawaii and receive a credit for taxes paid in their state of residency. The key term is INTERSTATE.

 

JM

Mariner Tax Update January 2011

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by on January 26, 2011 at 1:53 pm

E-Filing alert!

How many times have you read that mariners cannot E-File? How many websites have posted this. Year after year. And then all of a sudden preparers start proclaiming “mariners can now e-file”. But nothing had changed in the law. So why the scuttlebutt?

It’s no surprise that most preparers have come down from the bogus position that merchant mariners cannot electronically file their tax returns. The justifications used over the years have been flimsy and the supporting documentation has been lacking. I actually remember a citation of the IRM (Internal Revenue Manual) to a specific line that stated mariners would have to mail in supporting documentation. I guess they figured no one would ever read the heading that stated these were the procedures for AUDIT AND AMENDMENT and had nothing to do with regular filing.

E-Filing Signature Documents

It’s difficult, I know. You have to get a signed form back to your preparer for them to electronically file you. But it isn’t optional. There could be serious issues with returns being filed without the proper signature documents.

Do not give a preparer signing power

It is a conflict and poor practice. Unless you are physically entering your pin you need to be providing a signature form. These are the rules.

Maguire Taxes

Federal Benefit Calculator For Massachusetts Teachers

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by on January 19, 2011 at 10:08 pm

How Does The Tax Relief Act Effect You

We saw a great calculator from Kiplinger’s that figures your tax savings under the new Tax Relief Act signed into law this past December. This law is going to put cash back in the pockets of many taxpayers.

For instance – A single taxpayer who is 24 and earns $120,000 a year will get back $2,400

What are the additional benefits for teachers in Massachusetts?

Our legislators certainly understand the financial sacrifice required by all educators. They have designed the tax relief act to help alleviate the sacrifices made by our teachers.

Other Calculators have failed to account for the additional provisions for Massachusetts teachers. We have developed this calculator to give you a low ball quick estimate of how much our government respects you…

1. Enter your annual salary:

2. How much of your salary is subject to Social Security

EIC Update

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by on January 12, 2011 at 8:47 pm

Changes in the Earned Income Credit This Year

In 2011 there are a few changes to the EITC. Due to the Education Jobs and Medicaid Assistance Act of 2010 the Advance EITC is no longer available. This provision previously allowed workers who expected to qualify for the EITC to receive part of the credit in their paycheck by filing a form with their employer.

Also this year the maximum EITC has increased slightly to $5,666, and the maximum income limit rises to $49,078. The maximum credit goes to families with three or more children. Another change this year, due to the American Recovery and Reinvestment Acct, increased the EITC by 5% for families with 3 or more children. The provision is set to expire at the end of 2012.

Filing Deadline Changed

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by on January 5, 2011 at 5:08 pm

Tax Deadline Extended

The Internal Revenue Service recently opened the 2011 tax-filing season by announcing taxpayers have until April 18 to file their tax returns. The IRS reminded taxpayers impacted by recent tax law changes that using e-file is the best way to ensure accurate tax returns and get faster refunds.

Taxpayers will have until April 18 to file their 2010 tax returns and pay any tax due because Emancipation Day, a holiday observed in the District of Columbia, falls this year on April 15.

If you live in a State that observes a Monday Holiday, your due date may be extended even further.

in IRS Updates

Making Gifts From Your IRA

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by on December 28, 2010 at 5:45 pm

Wish I had this problem…

The provision itself is simple–at least as tax rules go. It allows a taxpayer who is 70½ or older to contribute a total of $100,000 in IRA assets to one or more qualified charities. The payout can satisfy the required minimal distribution. The donor gets no deduction, but neither does he or she have to report the payouts as income.

That last point is key: If the donor had to claim the payout as income and then deduct it, there could be problems. The deduction itself could be limited because of other tax rules, or else the donation might swell the donor’s reported income, possibly raising Medicare premiums or taxes on Social Security payments. Instead, the donation bypasses tax calculations altogether.

via Tax Report: Making Gifts From Your IRA – WSJ.com.

Mariners last minute tax checklist…

2
by on December 28, 2010 at 5:36 pm

Shipped out all year?

That’s a lot of dough… With four days left in the year you may be wondering how much you’ll be owning when you file your return next spring. You might be able to substantially reduce your tax bill if you act now. But when the ball drops at midnight – game over… There’s one golden rule – time deductions in December and income in January….

Here’s a few helpful last minute tips…

  1. Do you pay State income taxes? Did you make your estimated payments? Did you make your 4th quarter payment? Do it now… You get the deduction in the year the taxes are paid. By writing a check out for $5,000 in December, you’ll get a deduction for Tax Year 2010. If you wait until 2011, you’re out of luck.
  2. Homeowner? If so, two things. Make your January mortgage payment and pay your property tax bill. Again, you’ll get the property tax and interest deduction for Tax Year 2010.
  3. Are you due vacation pay? Don’t file until next year! That way you hold the money for the year before you pay.
  4. In the Union? Paying down an initiation fee? Pay it down. Or pay your dues for that matter.
  5. Need to take license? Pay the fees now.
  6. Need a certification class? Sign up and pay.
  7. Flying to a hall to look for work? Buy your ticket.
  8. Have some loser stocks? Dump em… Up to a $3,000 net loss.
  9. Energy credit is still in effect. If you were going to upgrade your home anyways, might as well get the tax benefit.
  10. There are still several hybrid credits available as well.

Things I didn’t mention

  1. Close on the house you’re buying… You won’t see any benefit until next year.
  2. Pay medical expenses. With the 7.5% limitation, there’s rarely a recognized benefit.
  3. Donate that old junk car. I applaud charitable tendencies. But from a tax perspective it’s not very beneficial. Odds are you won’t get more than a $500 deduction (about $150 cash). If you can sell it for $500 on craigslist, you’re in better shape… Again, I’m not discounting donations, just not solely for tax purposes. It’s more of a fringe benefit.

Pay up Blade!

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by on November 23, 2010 at 6:37 pm

Blade and New Jack City actor Wesley Snipes is prepping to get hauled off to federal prison over his tax evasion charges after appealing it on several occasions.Wesley Snipes who got his start alongside Goldie Hawn in the 1986 movie Wildcats based off the real-life Memphis Coach Shirley McCray, has been battling his tax evasion case for the last two years and it seems U.S District Judge Terrell Hodges, who has been lenient to Snipes who has also been out on bail the past two years, now feels that Snipes has had a fair review of his case.On Friday, it was ordered for Snipes to begin serving his three-year sentence, however there was no surrender date set although he is listed as in transit awaiting the judge’s ruling.

in IRS Updates

New Customer At Helga’s House of Pain

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by on November 22, 2010 at 7:44 pm

Billionaire Warren Buffett rebutted claims that the Obama administration is unjustly hurting business orders with high taxes by saying that in fact, the wealthy have never had it so good.”I think that people at the high end, people like myself, should be paying a lot more in taxes. We have it better than we’ve ever had it,” he told ABC’s Christiane Amanpour in a clip played on “This Week” on Sunday.When Amanpour pointed to critics’ claims that the very wealthy need tax cuts to spur business and capitalism, Buffett replied, “The rich are always going to say that, you know, ‘Just give us more money, and we’ll go out and spend more, and then it will all trickle down to the rest of you.’ But that has not worked the last 10 years, and I hope the American public is catching on.”

via Warren Buffett: I ‘Should Be Paying A Lot More In Taxes’.

in Investing