Executive Summary of National Taxpayer Advocate Report to Congress: How a Self-Prepared Tax Return Could Be Costly.

Time can be invaluable; and when lost spending it with family and friends, it’s irreplaceable. For day traders, it’s a commodity that always seems in short supply. The Executive Summary of National Taxpayer Advocate 2010 Annual Report to Congress, compiled from IRS data by Nina Olson, showed that taxpayers and businesses spend 6.1 billion hours a year complying with tax-filing requirements. To place this in context, it would require more than three million full-time employees to work 6.1 billion hours. This makes “tax compliance” one of the largest industries in the United States.

Time away from our families and profession is not the only reason to consider hiring a day trader tax professional. Olson’s report found that around 60 percent of individual taxpayers pay a professional to prepare their return. Due to the complex nature of compliance, finding special tax breaks and loopholes within the Tax Code proved difficult for the remaining 29 percent of taxpayers who used tax software or others who could not afford professional help.

Is preparing a single tax return really that complicated and time consuming? After all, I can prepare and efile my return in less than an hour…

Taxpayers can always expeditiously prepare and file their tax return. However, a correctly filed return takes time and professional knowledge - especially with the added complexities of day trading tax rules.

IRS Recommendations for Choosing a Competent Tax Professional

When purchasing goods or services, you hear the common phrase, “You get what you pay for”. Unfortunately, this is not always true. To help assist you finding a qualified tax professional, the IRS has its own recommendations. The number one recommendation from “IRS Tax Tip 2011-6 – Points to Keep in Mind When Choosing a Tax Preparer” is:

Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.

Don’t be fooled by firms touting they have CPAs and enrolled agents. An important thing to ask when you are inquiring about a tax preparation firm is, “Is your firm registered with the State Board of Accountancy?” In order to hold a CPA license, a CPA has to be registered with the state board. HOWEVER, only firms with 50% or more CPA owners can register with the Board of Accountancy.

Does this really matter? Absolutely!! In order for a firm to register and maintain its registration, they are required to meet stringent requirements. Requirements that help assure you receive correct, knowledgeable tax advice. Any Joe Blow can hang up a sign and say they have prepared taxes for years. Only those with the highest degree of education and certification can register with the State Board.

Finding out if a firm is registered with the State Board of Accountancy is usually as simple as going to the State Board of Accountancy’s website (the state where the firm is located) and clicking on license lookup. Any firm registered with that state should show up on that website. For example; Boyer Tax Services can be found on the Arizona State Board of Accountancy (www.azaccountancy.gov)

With all of the changes and complexities that resulted in 2010, why trust your tax refund with an unregistered organization? Start here to discover the professional excellence that sets us apart from the rest.

Day-Trader Incorporation: Exposing the Myth While Discovering Tax Reduction Secrets of Corporations and LLCs

With a turbulent sea of misinformation, lack of knowledge, and outright accounting scams, finding the right information can be a complicated journey.

“Trading as a business may be your single most powerful profit-generating strategy”. said Ryan Gibson, Vice President of Boyer Tax Services, P.L.L.C. “A properly structured and well-documented business is what separates successful day traders and investors from failures”. “Trading as a business reinforces the two most important elements of trading - psychological discipline and cash flow management.” Mr. Gibson explained.

To help clear the murky waters, Ryan Gibson will present clear and concise information both new and seasoned traders need to know in a free webinar titled "Trader Tax Reduction Workshop: Trading as a Business". Michelle Boyer, CPA and Director of Taxation for Boyer Tax Services, stated, “This free workshop is certainly not marketing fluff or an attempt to up sale attendee’s more information. You will learn valuable strategies to apply to your trading today.”

With the year quickly coming to an end, time is running out for effective trader tax planning. As a trader, your largest expense is taxes, regardless if you make money or lose money! We all know it's easier to trade with more money than less and it’s not only about what you make; it’s about what you keep! This information packed webinar will provide you with essential tax reduction strategies.

During this time-sensitive webinar you will learn:

• The tax treatment of your trading activity and how to use it for your benefit.

• The risks of filing as a Sole Proprietorship or Schedule C trader.

• How to eliminate Wash Sales starting today.

• Overcoming the $3000 a year loss limitation.

• The myths, benefits, and drawbacks of using the following for your trading business:
- “C” Corporation
- “S” Corporation
- Limited Liability Companies
- Limited Partnerships
- Self-Directed 401(k) Plans

• Deducting 100% of your medical expenses such as co-pays, deductibles, and other out of pocket expenses.

• Protecting your trading capital and profits from predatory creditors.

• And much more.

Attendance is limited to 100 registrants, so act quickly to reserve your seat. To register or for more information visit our Trader Tax Webinars page.

Downgrading of Spain's IDRs from AAA to AA+ Caused an "Insider Anticipated" Worldwide Equity Sell-Off!

Fitch, Inc., the International ratings agency downgraded Spain's long-term foreign and local currency Issuer Default Ratings (IDRs) to 'AA+' from 'AAA', caused a massive sell-off of equities and a sharp decline in the euro.

Fitch cited an inflexible labor market and a restructuring of regional and local savings banks as hindrances to the pace of adjustment.

"This should exacerbate the tremendous volatility we've seen in global stocks as the world wrestles with the idea of a debt-based collapse," said Chip Hanlon, president of Delta Global Advisors in Huntington Beach, California. "Adding to this is the fact that no one wants to be long over a holiday weekend."

The release in the drop of Spain's credit rating fueled investor fear in an already emotionally driven market. Those who are able to control their emotion and not allow it to control their trading decisions are remaining profitable in the current economic climate.

Restoring American Financial Stability Act of 2010 – A Day Trader’s Horror or a Brighter Future?

Starting in 2008, millions of Americans lost their jobs, homes, and savings while countless businesses have failed or downsized. Most of the so-called financial gurus can agree that lack of cash flow or insufficient liquidity caused our current economic crisis. With a devastating domino effect of collapsing investment banks and other institutions, this downturn is the worst financial crisis since the Great Depression.

The financial regulatory reform bill, titled “Restoring American Financial Stability Act,” was written in an attempt to create a sound economic foundation. The objective of this new legislation is to stimulate job growth, end the “too big to fail” theory, restrain or control Wall Street, protect consumers, and most importantly, prevent a future financial crisis.

The bill summary delivers a serene and assuring feeling: “Create a Sound Economic Foundation to Grow Jobs, Protect Consumers, Rein in Wall Street, End Too Big to Fail, and Prevent Another Financial Crisis.” The statement portrays a seemingly well-intended and much needed change.

Much Needed Change of Corporate Accountability and Shareholder Protection

The two most critically needed legislation additions contained within the bill are the prevention of “too big to fall” bailouts and shareholders' ability to vote on executive compensation.

With the past bailouts of auto and financial industries, these large corporations were not held financially responsible for their actions. This promoted further incautious decisions and substantially higher risk taking with the expectation that taxpayers would catch the fall. The elimination of taxpayer funded “too big to fall” bailouts will restore accountability and lead to more responsible business management.

Another positive section of the bill is the requirement of procedures for annual shareholders to approve executive pay. This will enable shareholders of a corporation to cast a non-binding vote on executive compensation and other business affairs.

The Strongest Consumer Protections in History OR is the Government Overstepping its Bounds?

Political parties are in yet another heated debate over this bill. Arguably, highlights of the bill can be interpreted as Socialism. Socialists advocate ownership and control of production, capital, land, and property by the community as a whole in the interest of all people.

Limiting of large, complex financial companies by discouraging excessive growth can be viewed as an anti-capitalist approach. Capitalism by definition is an economic system in which the means of production are privately owned; supply, demand, and price are set by market forces rather than economic planning.

The bill has strict rules for capital, leverage, liquidity, risk management and sets other requirements as companies grow in size and complexity. In addition, through the Volcker Rule, the bill prohibits banks from proprietary trading, investment in and sponsorship of hedge funds and private equity funds, and limits banks' relationships with hedge funds and private equity funds. These restrictions could also be interpreted as Socialism.

A Day Trader’s Horror or a Brighter Future?

As traders, we pursue the American dream with the freedoms provided by our great nation. As a day trader, and tax professional, I spend countless hours researching trader tax issues, self-directed retirement plans, and corporate/ LLC statutes. Interfacing with the various government agencies such as the IRS, Department of Labor, and Secretary of State, I have experienced our government’s bureaucratic red tape, lack of organization and slow results first hand.

The Restoring American Financial Stability Act of 2010 may be a good way to protect traders and investors from unscrupulous business and financial practices and it may also sustain our banking and financial industry. I worry though that additional government regulation may inhibit the trading of the people and firms that drive today’s success in the markets.

U.S. Posts 19th Straight Monthly Budget Deficit - Will IRS Come to the Rescue?

The United States posted an $82.69 billion deficit in April, nearly four times the $20.91 billion shortfall registered in April 2009 and the largest on record for that month, the Treasury Department said on Wednesday.

Receipts in April -- mostly from income taxes -- were $245.27 billion, up from $153.36 billion in March but lower than the $266.21 billion taken in during April 2009. Receipts from individuals, who faced an April 15 filing deadline for paying 2009 taxes, fell to $107.31 billion from $137.67 billion in April 2009.

The U.S. full-year deficit this year is projected at $1.5 trillion on top of a $1.4 trillion shortfall last year!

"Due to incorrectly filed returns, many taxpayers have already donated hundreds of millions of dollars to the IRS!" said Michelle Boyer CPA, of Boyer Tax Services, P.L.L.C. - the largest online tax preparation and tax reduction planning resource, announced.

With this large government deficit, stay clear of the IRS cross hairs! Now more than ever it’s extremely important to make sure your tax returns are filed correctly.

Astonishingly, misreporting of income not only effects those who self-prepared using tax software programs such as TurboTax® or H&R Block At Home™, but it also plagues those who used a paid preparer. With a wizard-like interface, tax software programs are narrowly focused "cookie cutter" approaches to our tax code of over 60,000+ pages of regulation.

For those of you who hired an accountant or CPA, we have found that a general review could reveal costly mistakes. Although you may have paid your tax professional good money to prepare your returns, the ultimate burden of responsibility lies with you, the taxpayer.

Racing to beat the April 15th deadline creates what we call "tax time anxiety". This leads to poor judgment and mistakes that cost you thousands of dollars in additional taxes. Unfortunately, the FDA does not recognize "tax time anxiety" as a medical condition nor is there approved medication for treatment. The good news is there is a cure! And yes, it could be tax deductible!

The common phrase "haste makes waste" is particularly true when it comes to the complexities of preparing tax returns. Being rushed when gathering records creates a multitude of opportunities for errors even with the most organized and detail minded people. During tax season, most tax professionals are overwhelmed. The available time to spend on each tax form becomes stretched thin. Chances of poor judgment and errors are statistically higher during this time. These costly mistakes are compounded with preparers who lack organization skills and work ethics.

There is high probability that you failed to capture certain tax deductions or missed a tax code change that could reduce your tax liability. In addition, you may have been given bad advice from a professional preparer or tax software program.

Don't become the co-signer on 2.9 trillion of projected government debt!

To help ensure accuracy, maximize your tax savings, and reduce your chances of being audited, consider the following for your 2009 tax return.

Amend your tax return - Many worry that an amended return will increase the chances of an audit. The IRS clearly states that this is not the case. An amended return is much better than an incorrect return. Always take into consideration, filing an amended return. A correctly amended return will decrease your chances of being audited and could put additional cash back into your pocket!

Carefully select a knowledgeable tax professional - You are urged to use care and caution when choosing a tax preparer. Remember, you are legally responsible for what is on your tax return even if another individual or firm prepared it. Most tax return preparers are professional, honest and provide excellent service to their clients. However, unscrupulous tax return preparers do exist and can cause considerable financial and legal problems for their clients. Therefore, it is important to find a qualified tax professional.

The IRS has provided the following tips to help you choose a preparer who will offer the best service for your tax preparation needs.

1. Check the person’s qualifications Ask if the preparer is affiliated with a professional organization that provides its members with continuing education and resources and holds them to a code of ethics.
2. Check on the preparer’s history Check to see if the preparer has any questionable history with the Better Business Bureau, check for any disciplinary actions and licensure status through the state boards of accountancy for certified public accountants; the state bar associations for attorneys; and the Office of Professional Responsibility for enrolled agents.
3. Find out about their service fees Avoid preparers that base their fee on a percentage of the amount of your refund or those who claim they can obtain larger refunds than other preparers can.
4. Make sure the tax preparer is accessible Make sure you will be able to contact the tax preparer after the return has been filed, even after April 15, in case questions arise.
5. Provide all records and receipts needed to prepare your return Most reputable preparers will request to see your records and receipts and will ask you multiple questions to determine your total income and your qualifications for expenses, deductions and other items.
6. Never sign a blank return Avoid tax preparers that ask you to sign a blank tax form.
7. Review the entire return before signing it Before you sign your tax return, review it and ask questions. Make sure you understand everything and are comfortable with the accuracy of the return before you sign it.
8. Make sure the preparer signs the form A paid preparer must sign the return as required by law. Although the preparer signs the return, you are responsible for the accuracy of every item on your return. The preparer must also give you a copy of the return.
   

Report abusive tax preparers and suspected tax fraud to the IRS on Form 3949-A, Information Referral or by sending a letter to Internal Revenue Service, Fresno, CA 93888. Download Form 3949-A here or order by mail at 800-829-3676.

Boyer Tax Services, P.L.L.C. Discounted Flat Rate Tax Return Review Service

Stay clear of the IRS cross hairs! Let our tax professional review your return now to ensure accuracy. Now more than ever it’s extremely important to make sure your tax returns are filed correctly. Our new discounted flat rate is only good until the end of the month! For more information visit our Tax Return Review Service page.

Advantages of Trading in an LLC

A Limited Liability Company has many advantages such as simplicity to operate, reduced corporate formalities and minimal documentation requirements. Structured as a “flow-through” entity, the LLC’s profit and loss will flow to each partner’s return. The characteristic of each income type will stay intact as it flows to each return. This enables a trader who has a capital loss carry forward in their personal name to be offset by future LLC capital gains. In addition, each partner will be able to take advantage of the beneficial 60/40 split (60% taxed as long-term capital gain and 40% taxed as short-term capital gain) of 1256 contracts.

The LLC also avoids the 15.3% employment tax. Thus, you can take cash out of the LLC without having to draw a salary! In order to receive benefits from trading inside an LLC, it should always be structured and taxed as a partnership.

Disadvantages of Trading in an LLC

The major disadvantage of using an LLC for your trading business is that you need a partner. You may also want to consult with our tax professionals to make sure there is no adverse state tax on an LLC where you are domiciled.

Click here for more information about "trading as a business".

Advantages of Trading in a “C” Corporation

A “C” Corporation can have many advantages for traders. This “separate” taxpayer is taxed at a 15% rate on the first $50,000 of net profit. This would allow a trader who is in a high personal tax bracket to have his $50,000 of trading profit to be taxed at 15% instead of his personal rate; thereby, paying fewer taxes.

In addition, a “C” Corporation is the only entity that may deduct 100% of out-of-pocket medical expenses through a “medical reimbursement plan”. Yes, you read that correctly! A corporation can deduct 100% of out-of-pocket medical expenses! Compare this to the inferior 7.5% of your AGI reduction you must take as an individual on your personal return.

Disadvantages of a “C” Corporation

A “C” Corporation could impose disadvantages on the unsuspecting or ill-advised taxpayer. The possible tax traps that one may step into are the accumulated earnings tax, double taxation on dividends, and the additional employment taxes (Social Security) which would be required to be paid on a salary.

When it comes to capital losses and 1256 contracts, the "C" Corporation also isn’t very favorable. A "C" Corporation cannot deduct ANY capital losses – and you thought the $3,000 personal limit was bad. The "C" Corporation also does not receive any benefit from a long-term capital rate. Therefore, the 60/40 split of 1256 contracts that is so beneficial to an individual has the possibility of being wasted at the corporate level.

What’s more, a corporate owner needs to be mindful of the activity that generates corporate profit. In the event that 60% or more of corporate profit is from passive income (as defined in IRC code section 543), the Corporation will be considered a Personal Holding Corporation and subject to an additional 15% tax on the undistributed personal holding company income.

Click here to learn more about "trading as a business".