Broker Check

April, 2012


The Newlywed Finance Game

          As I prepare to be a newlywed, I’ve learned that after years of managing my finances as a single gal, managing finances as a married couple is a whole different ballgame.  For those in a similar situation, taking an honest look at your and your partner’s financial history, spending habits, and financial goals can go a long way towards ensuring that the monetary aspects of your union are stress-free.  When companies merge, there is a period of due diligence in which financial information is disclosed and reviewed.  Ironically, many couples do not undertake the same steps before getting married.  By discussing finances throughout the stages of dating and your engagement, you can address issues such as:

• Will we have joint checking and savings accounts when we are married?
• What is each individual’s spending patterns and monthly expenses?
• Does either partner have credit card or other debt that will be brought into the marriage?
• Have both partners stayed current on their tax filings?
• How much should we be saving monthly for our first home? a comfortable retirement? our future children’s education?

            If you or your children are planning upcoming nuptials, please consider contacting us for a complimentary financial planning consultation.  We can help guide the dialogue to ensure the marriage is on sound financial footing.

Expatriating.  What is It and What Does It Mean?

          Eduardo Saverin, one of the founders of Facebook, and 1,800 other Americans renounced their U.S. citizenship in 2011.  One of the many reasons that someone may choose to give up their U.S. citizenship is potentially large tax liabilities that will arise as U.S. income tax rates increase on January 1, 2013.  The U.S. taxes the worldwide income of its citizens, no matter where the individual resides.  The U.S. has also imposed more arduous foreign asset reporting requirements, which cause additional compliance headaches for those citizens with significant overseas financial assets.  Many foreign jurisdictions tax their citizens or residents at substantially lower income and capital gains rates than the United States, making it financially appealing for Mr. Saverin, among others, to give up their citizenship.

          It is a lengthy process to renounce your citizenship.  You will need to answer a series of questions in an interview with a U.S. official and certify that you have filed the last five years of your U.S. tax filings.  You need to identify your new tax home.  Some countries are more welcoming than others, while some require a real estate purchase or charitable donation in exchange for citizenship.  If your net worth exceeds $2 million or you have earned an average of $151,000 for the past five years, you will be subject to an ‘exit tax’.  This tax is calculated on the gain of your assets, after an exemption of $651,000, assuming they were all sold the day that you renounce your citizenship (even if they are not).  After complying with each of these criteria and successfully renouncing your citizenship, you may find it difficult to visit the U.S., even for leisure travel.

Are You or Your Business Liable for New York Use Tax?

          New York State has updated its guidance on an individual or business’s use tax liability.  New York has been working hard to require that online retailers collect sales tax if they have nexus in New York State, which allows New York to collect the tax upfront on the purchase, rather than on the backend from the individuals.  If you owe sales or use tax, it is able to be reported on your individual income tax return. 

          The following examples are provided by New York State and demonstrate when an individual is liable to pay use tax:

You buy furniture in Massachusetts and bring it to New York State for use.

You take your stereo equipment to Connecticut to be repaired; after it has been fixed, you bring it back to New York.

You order a bedspread over the Internet from a vendor located in Georgia, and it is delivered by mail for your use in New York State.

You purchase a piece of jewelry and pay sales tax in a locality in New York State at a lower tax rate than the rate in the locality where you live.  When you bring the jewelry back to the locality where you live, you will owe tax for the difference between the rate in the locality where you live and the rate in the locality where you purchased the jewelry and paid the sales tax.

The following examples are provided by New York State and demonstrate when a business is liable to pay use tax:

The business buys office supplies in New Jersey and brings them back to New York State for use in the business.

A dentist located in New York State buys equipment from a dental supply company in another state, and has the equipment delivered to the New York office.  The dentist will owe tax at the rate in the locality in New York State where the office is located.
   As always, if you have any questions about these or any other matters, do not hesitate to call us.
  Remember, We’re Here For You!!

       Melissa Lisch, CPA