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SL: Fun (and Evil) April Fools Prank + Flip the IRS the Bird

SSL: The Great American Brain Drain: People are leaving America in droves.
Heres why the brain drain is really happening

Fun (and Evil) April Fools Prank: Heres how to freak out those
early birds this tax season
The Great American Brain Drain: People are leaving America in
droves. Heres why the brain drain is really happening
Laissez Faires Freedom Tax Summit: Your opportunity to give the
IRS less of your money and more of your bird
FREE Tip of the Day: Seven Last-Minute Tax Filing Mistakes
People Often Make And How to Avoid Them
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** April Fools is coming up quick

And if you dont already have a prank in mind we have just the thing.

Heres how you can freak out those early birds.

Presenting

The fake IRS audit letter.

Provided by the Pretty & Prudent blog, co-founder Jaime explains:


Simply replace the names, addresses, and identifying details (every number on
there relates to her birthday in some way, make sure you change all the dates
and initials and what not).
Head to Staples or Amazon and pick up some w2 envelopes (the ones that say
important tax documents enclosed) and stuff them.
And, she adds, definitely take them to the post office and have them run through
the postage meter instead of stamping them for maximum scare-impact.

(One more thing: Make sure you snap a picture of them reading it for future
laughs.)

CLICK HERE TO DOWNLOAD THE APRIL FOOLS PRANK LETTER.


(Go to File Download As Microsoft Word or OpenDocument)

Not animated? Click here.

[Are you going to pull this prank? Let us know! Chris@lfb.org.]

** When youre done with that, scroll on down.

Well begin todays episode with a real letter out of the mailbag from David F.

Before we open this letter, though, theres something you should know about salt.

Yes... salt.

Take a moment, if you will, to check out the weird salt conspiracy weve
uncovered. And then well begin!

http://jointhe.saltrevolution.com/now/?
AFFID=169973&ims=kbpns&SUBID=LFT0313

** One of the reasons my wife and I moved to Ecuador, David F. writes,


was in anticipation of and in order to avoid this cluster of government
health care socialism-affordable care act/Obamacare requirements
Whatever you want to call it.
If we have health insurance in Ecuador, does that meet "qualified plan"
requirements, especially since one of the reasons we moved was to get away
from this madness and we will never seek medical treatment from this
overpriced/sinister system in the U.S.?
We have an accountant in the states working on our taxes, but want to hear
from you/experts before I hear something from our U.S. accountant that may not
understand foreign exemptions from this ACA crap
Hoping he knows, but just don't see how anyone can possibly understand this
stuff unless youre an attorney that specializes in it!
I know the U.S. doesn't like it that us expats aren't "paying our fair share"
supposedly
(Never mind the decades we paid for insurance and many other taxes so those
who were uninsured/unemployed/etc. could get treatment/fed/etc
Still get mad thinking about the ridiculousness of it.
At any rate, any advice is appreciated.
** Good timing, David.
Todays LFT is all about the uptick in Americans bugging out for greener
pastures.
Its a trend we think is worth paying attention to and pretty indicative of the
times.
Before we get to that, though

First, our own in-house tax maven Sandy Botkin, CPA, has a quick answer for
your tax question
SANDY BOTKIN: If you operate your business outside of the USA and use
employees outside of the USA, it is my understanding that you are not subject to
Obamacare rules.
Moreover, if you are an employee working in Ecuador, you are also exempt from
the Obamacare fee.
Please check this out with your accountant.
** Thanks, Sandy.
Hope this helps, David.
OK. Lets jump to the strange expat trend.
** It was on Feb. 10 that the Treasury Department published their quarterly
List of Shame.
The individuals on that list either renounced their U.S. citizenships or expatriated
during the fourth quarter of 2014.
There were 1,062 names listed.
Added up, a total of 3,415 people decided to take the leap and live elsewhere in
2014.
That might not seem like a lot, but consider this
In the seven years between 2001 and 2008, only 3,937 people either renounced
or expatriated.
But in the five years between January 2009 to fourth quarter 2014, though,
according to the IRS, that number shot up to 9,566.

Quite the jump.


And, according to Forbes contributor Robert Wood, these numbers could be
vastly understated.
What is often called consular expatriations, Wood writes, where people dont
file exit tax forms with the IRS, are apparently not counted.
Indeed, the Treasury Departments published list states explicitly this is just
those about whom the Secretary of the Treasury has data. It means these
numbers are under-stated, some say considerably.

** Although motives are hard to assess, Doug Bandow, senior fellow at the
Cato Institute chimes in, Washingtons increasingly greedy and petty
behavior appears to be having an impact on possible new citizens.
There are high, progressive income tax rates at home, on top of a comically
complicated tax code.
The United States is alone among major industrialized states in that it taxes
Americans living overseas. A German residing in America, in contrast, pays only
U.S. taxes.
Moreover, Uncle Sam is paranoid that someone somewhere might be shielding
a euro or pound from the IRS. So Washington requires Americans to report
international bank accounts over $10,000 and assets over $50,000.
U.S. citizens overseas must file foreign bank account reports, backed by big civil
and criminal penalties.
Sooo all of that could have something to do with it.
But we cant forget about the IRS global bear hug. More on that in a moment.
Right after this short break
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** And of course, we cant forget about the Foreign Account Tax
Compliance Act (FATCA), which Congress passed in 2010.
This act, in case youre unaware, attempts to turn all foreign banks into
extensions of the IRS.

FATCA, Julie Borowski writes on the FreedomWorks blog, forces all foreign
financial institutions (FFIs) -- that includes banks, stock brokers, hedge funds,
pension funds, trusts, insurance companies -- to reveal accounts held by U.S.
citizens to the IRS.
These FFIs will be required to provide an annual report to the IRS and collect
tax withholdings for the IRS from U.S. citizens. The yearly report must disclose
the name and address of each U.S. citizen as well as their largest account
balance in the year and total debits and credits.
Alas, the long arm of the IRS law wants to hug the whole world. In response,
foreign banks are simply closing accounts and telling U.S. expats to take their
business elsewhere.
So U.S. citizens living abroad, in turn, are being forced to either renounce or
move back to the birdcage of United States.
** Some argue that, for various reasons, renouncing your U.S. passport and
heading overseas is immoral.
Especially if its to save on taxes.
But, Bandow asks, what is moral about the looting and pillaging that goes on
every day in Washington?
Being an American citizen is good so long as America is the proverbial land of
the free and home of the brave -- a country that protects life, liberty, and property,
provides opportunity, and values entrepreneurship.

Given our current landscape, says Bandow, cutting Uncle Sams take is a moral
imperative. Indeed, when other efforts at reform fail, as most have, cutting
Washingtons revenue is the only hope of bringing Leviathan to heel.
In this way, those who refuse to remain obedient geese to be plucked are the
truest patriots.
America once was a land of opportunity.
As it loses that distinction more people are tempted to go elsewhere. Instead of
seeking to punish those who desire to move, policymakers should change the
punitive policies that are pushing people abroad.
If Americas rulers do not reform, they risk a brain drain the likes of which
America has never seen.
[Ed. note: Though its always an option, you dont have to renounce your
citizenship to strike back at Leviathan. A less extreme way is learning how to
give them the least amount of your hard-earned money. And you do that by
exposing yourself to the smartest tax professionals on the planet.
Whats the maximum amount you could save this year? Its time you found
out.
Again, thats where we have you covered. In a couple weeks, well be hosting our
Freedom Tax Summit. Once you reserve your seat, youll be entitled to some
of the best tax advice money can buy.
We cant reveal their identities just yet, but some people call one of them the
Loophole Queen. Others call another the sharpest IRS conciliator in

America. And yet another has decades of experience helping everyday


Americans cut their taxes to the bone.
Their mission is to help make sure you can legally... give the IRS less money
and more bird.
This summit is for Laissez Faire Letter members only. Click here for all the
details. Please dont share that link.]
Lets take another tax-related question out of the mailbag
** Rumor is, Robert R. writes, that if the available premiums for insurance
under ACA offered in a person's geography are above a certain percentage
of a person's net income (not gross income), then that person is not
subject to the penalty.
Can you confirm or deny or explain how that works?
I'm curious. Prior to last year I lived in AZ and had insurance that was actually
pretty good for around $350 a month. Sure, it had a $5500 deductible so my all-in
was $9700 (if I used services). Moved to WI.
The cheapest premiums around here are over $800 per month. That would
make the insurance the largest monthly expense I would incur, more than rent
plus utilities, more than food, more than anything. AND, those "cheap" premiums
carried deductibles of $7500 to $10K. So my all-in would be $16.5K on the low
end.
Gee, thanks, Bam-Bam!
SANDY BOTKIN: Yes, there are hardship rules, which allow for an exemption.

Generally, if you don't have enough income to require you to file an income tax
return, you can qualify for the exemption by filing IRS form 8955.
However, there are many other ways to obtain a hardship exemption. For
example, you would qualify if you meet any of the following:
1. You were homeless
2. You were evicted in the past 6 months or were facing eviction or
foreclosure
3. You received a shut-off notice from a utility company
4. You recently experienced domestic violence
5. You recently experienced the death of a close family member
6. You experienced a fire, flood, or other natural or human-caused
disaster that caused substantial damage to your property
7. You filed for bankruptcy in the last 6 months
8. You had medical expenses you couldnt pay in the last 24 months
that resulted in substantial debt
9. You experienced unexpected increases in necessary expenses due
to caring for an ill, disabled, or aging family member
10.
You expect to claim a child as a tax dependent whos been
denied coverage in Medicaid and CHIP, and another person is required by
court order to give medical support to the child. In this case, you don't have
the pay the penalty for the child.
11.As a result of an eligibility appeals decision, youre eligible for
enrollment in a qualified health plan (QHP) through the Marketplace, lower
costs on your monthly premiums, or cost-sharing reductions for a time
period when you werent enrolled in a QHP through the Marketplace
12.
You were determined ineligible for Medicaid because your
state didnt expand eligibility for Medicaid under the Affordable Care Act
13.
Your individual insurance plan was cancelled and you believe
other Marketplace plans are unaffordable
14.
You are a US citizen living abroad and more.
15.
You were incarcerated.

16.

Here is a more complete list published by OMB:

https://marketplace.cms.gov/applications-and-forms/hardshipexemption.pdf
17.
There are more exemptions too. Thus, please check out with
your tax professional whether you meet one of the exemptions.
Please check this with your accountant.
** Thanks again, Sandy.
Before we wrap up, make sure you check out todays Tip of the Day below.
In it, one LFT contributor covers seven of the most common tax filing mistakes.
That way, you can make sure youre not spending all this time whittling down
your taxes only to make a mistake on the easy stuff.
Todays Tip of the Day begins in one moment.
Right after this short break
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Seven Last-Minute Tax Filing Mistakes People Often Make


[This article was written by Carolyn OHara originally appeared here on
Learnvest.com]
ONE: Overlooking Income

The IRS requires you to claim all income made in 2013, regardless of whether or
not you received a W-2 or 1099 from an employer. Failing to disclose income is a
common issue for last-minute filers and an oversight the IRS is keen to
uncover.

Maybe someone did one little freelance job back in February and kind of forgot
about it and forgot to include it on their tax return, says Lindsey Buchholz,
principal analyst with H&R Blocks Tax Institute. Those are the kind of things that
the IRS can catch pretty easily. And once the IRS realizes you owe more, youll
be on the hook for the extra tax, plus penalties and interest. So even if you only
worked a side job for a day, the income you received is still taxable, and you
must claim it on your return.

TWO: Messing Up the Math


If youre pressed for time, put away the pencil and paper. E-filing is easier, faster
and more secure than processing your returns via snail mail and youll avoid
the long line at the post office come April 15.
Another upside to e-filed returns: You can eliminate mistakes, like not
understanding how to apply a tax table or not doing the math correctly, says
Buchholz, adding that online software will generally catch any errors youve
made along the way. The good news is that the IRS offers free tax software to
people whose incomes are less than $58,000, and free fillable tax forms for those
who earn more. Companies like H&R Block and TurboTax also offer free
simplified returns online.
That said, if you still prefer to file on paper, take the time to run your figures
through a software program to make sure your final tallies are correct.

THREE: Forgetting to Double-Check Numbers and Signatures


One of the most common tax mistakes, according to the IRS, is an incorrect
Social Security number, so make it a point to check that you havent accidentally
transposed the digits. And if youve opted for a direct deposit refund, you should
also make sure that your bank account information is accurate.
Finally, dont forget to sign and date the return and have your spouse do the
same if you are filing jointly. An unsigned return is like an unsigned check in the
eyes of the IRS: Its invalid.
FOUR: Missing Out on Deductions and Credits
When youre rushing to file, you are more likely to overlook credits and
deductions that could save you hundreds even thousands of dollars on
your tax bill. According to H&R Block, one in five filers who prepare their own
taxes disregard benefits, losing out on an average of $460 in either credits or
deductions.
Education credits, in particular, are missed quite often, Buchholz says. There
are several different kinds of benefits, and it can be hard to figure out which one
you qualify for, and which benefits you the most. I think some people get
stressed-out about it, and decide not to do it.
Child care benefits are also often misunderstood, says Koreen Jervis, an enrolled
tax agent with Korj Tax Professionals in New York City. People hear child care
and they think day care, she says. But they forget that when their kids do
summer programs, thats also a child care expense, and therefore are eligible
for a credit.

Tax procrastinators arent just subject to leaving money on the table either. They
also run the risk of double-dipping on deductions in their rush to file and
running afoul of the IRS. People often forget that if they contribute to a child care
flex spending account, they cant also get the child care credit, Jervis says. A lot
of people do that, and then get letters from the IRS.
FIVE: Failing to Itemize Deductions
For many people, taking the standard deduction $12,200 for couples or
$6,100 for single filers may seem like the simplest and easiest route when
doing taxes, especially if theyre pressed for time. But itemizing your deductions
can sometimes save you a bundle.
If youve had large, uninsured medical expenses, made sizable charitable
contributions, or paid a significant amount of interest or taxes on a home in the
past year, itemizing may be worth your while. Not sure if itemizing is right for
you? Take this quiz to find out.
SIX: Not Asking for More Time
Its far better to opt for an extension than to file a tax return full of mistakes. If its
last-minute, your best bet is to file an extension, Jervis says. It will give you time
to really look at your options and make sure you arent leaving valuable
deductions out there or making errors that can cost you later. Form 4868 it
can be filed by mail or online gives filers an automatic six-month extension on
their returns.
SEVEN: Misunderstanding Extension Rules

That said, just because you file an extension doesnt mean that you dont have to
send in a check on April 15 if you owe taxes. In fact, its one of the most common
mistakes Jervis encounters. An extension is an extension on the return not on
the payment, she says.
So even if you push off filing your return until October, you need to be prepared
to estimate your income, and pay whatever you may owe come April 15, adds
Buchholz. Otherwise, you will get penalties and fees.
Bottom line: If you are feeling truly overwhelmed because youve waited until the
eleventh hour to do your taxes, ask for an extension and then ask for help. If
you dont understand your particular situation and what you can claim, even the
best tax software wont be much help. When in doubt, Jervis says, find a good
preparer.
Have a great weekend. And make it count.
Chris Campbell
Managing editor, Laissez Faire Today
P.S. Have something to say? Say it! Chris@lfb.org.