Ubit Return Payment: Fill & Download for Free

Is there any reason not to join AARP?My issue with AARP is that theyare active in Insurance sales,derive massive revenue from licensing the logo,do not disclose the economic biasare a political agenda based organization -and often have opposed the member majority in political activismThey have also had the relationship they have with insurers under IRS REVIEW,-IRS Complaint Against AARP for Excessive Lobbying - Cause of Action InstituteIn September 2012, Senator Jim DeMint (R-SC) released a report, “Profits Before Principles: How AARP Wins When Seniors Lose” about AARP’s strong financial interest in keeping Medigap supplemental insurance premiums high. AARP earns nearly twice the amount of revenue from “Medigap” plans than it receives in membership dues.In 1994, AARP paid the IRS a settlement payment of $135 million in lieu of taxes, resolving an audit over tax returns for years 1985 through 1993 for failure to fully pay unrelated business income tax (UBIT) on its commercial activities.Also in 1994, AARP agreed to pay the U.S. Postal Service $2.8 million to settle allegations that AARP improperly mailed health insurance solicitations at non-profit rates in 1991 and 1992.In 1999, the IRS and AARP once again reached a settlement to conclude an IRS audit of the organization covering tax years 1994 through 1998. This time it was for revenues AARP received from licensing and selling its name and logo to insurance companies—clearly not tax-exempt income.AARP: The Bigger they are, the Harder they FallAARP’s Captive and Historically Secretive Relationship with UnitedHealth Group Now Out of The BagClass action suit against AARP 2014 Two days before Christmas, Dr. John Milton Peacock and Robbie Cowan filed a class action lawsuit against AARP, formerly known as the American Association of Retired Persons, AARP Insurance Plan, UnitedHealth Group and UnitedHealthcare Insurance Company in U.S. District Court for the Southern District of Texas.http://causeofaction.org/wp-content/uploads/2014/12/2012-11-29-Letter-to-IRS-re-AARP-Inc..pdf

The BIG difference:- in a for-profit business, your revenue usually comes from providing services or products to CUSTOMERS who pay you for them.- in a non-profit venture, your revenue usually comes from SOMEONE ELSE besides the people for whom you are providing services (or products, such as food and clothing).For-profit founders and employees can generally assume that their revenue will come from providing the desired services and products to their clients (although they may need some venture capital / startup funding from another source).Non-profit founders and employees (and volunteers - whole 'nother can of worms!) are constantly splitting their time between finding sources of funding and providing services to their clients.We've been working for over 6 years to develop our OSPREY Village project - a "neighborhood with a purpose" to support adults with developmental disabilities and their aging parents in our area (near Hilton Head Island in SC). We have identified a site that we are ready to purchase, have a plan for how to build out the neighborhood, and know what services we need to provide - but are still trying to nail down how to pay for operational expenses without having to charge our future "customers" over $40K per year to provide the residential services that they need!We've even started a thrift store that is now bringing in a nice revenue stream for us - but it's still woefully inadequate when you're working to develop something like this in a state where the only developmentally disabled folks who get funding for residential services (via Medicaid waivers) are those who have nowhere to live or no one to care for them anymore (dead or ill parents). And so there are more people on waiting lists for residential services here than those being served!So "finding the money" is always the biggest challenge for a non-profit - both the startup capital as well as the ongoing operational funding to keep the doors open.The other big difference is that non-profits have to jump through a whole lot more hoops with the IRS and state governments than for-profits do. I started my own S-Corp nine years ago to provide website design and SEO services. No big deal - I just have to report my income to the state DoR and the IRS and pay the anticipated taxes quarterly, then file a corporate return each year. (And pay for a business license from my local municipality annually.)But a non-profit has to be very careful about what "businesses" they engage in that generate revenue - other than thrift stores, any business activities have to be tied to your charitable mission as declared in your Form 1023 (the IRS application for tax exempt status). And you do have to submit a detailed report (Form 990) annually to the IRS and the state as well regarding your funding sources, what you spent it on, your Board members, how many people you've assisted, any conflicts of interest, etc.Run afoul of those rules and you expose your charity to potential Unrelated Business Income Tax (UBIT) payments and penalties or even revocation of your tax-exempt status. And having for-profit business experience, while helpful, doesn't really prepare you for dealing with many of these non-profit-specific issues!So to answer the question: "How is working on a non-profit start-up project different from working for a for-profit start-up project?"It's harder, more complex, and requires more personal investment of time and energy! But it can also be very rewarding when a plan comes together!

What type of investments should be in a Roth IRA?A: Much like a traditional IRA your investment options in a Roth IRA are close to unlimited. You can invest in stocks, bonds, options, futures, mutual funds, exchange-traded funds, foreign securities, certificates of deposit, and real estate investment trusts. Jun 11, 2019Leveraging – A Hidden Advantage of Roth 401(k) AccountsFall 2017 – ArticlesFor Your BenefitBy Harvey M. Katz[There have been numerous articles published about the advantages of Roth IRAs and Roth 401(k) accounts. While no tax deduction is available for contributions to Roths, in general, distributions of both principal and earnings are tax-free. When combined with the ability for leveraging (subject to payment of unrelated business income tax (UBIT)), some interesting planning and tax-saving opportunities arise. One such opportunity may be the ability to leverage a Roth account to enhance the deferral and tax-free distribution power of the Roth.As a threshold matter, it is preferable to leverage a Roth 401(k) rather than a Roth IRA. While it may be possible to accomplish a similar result in a Roth IRA, Section 408(e)(4) of the Internal Revenue Code prohibits a pledge of IRA assets as security for a loan, which complicates the situation. While it is not clear whether the prohibition applies to IRA investments themselves (as opposed to security for third party loans), it is best to avoid leveraging in Roth IRAs. However, unlimited rollovers are permitted from IRAs to qualified plans such as a 401(k) plan, and there are no significant impediments to the use of a Roth 401(k) for leveraging purposes. Undoubtedly, not every individual is able to dictate the provisions of the Roth 401(k) sponsored by their employer. However, business owners and those with independent consulting and/or directorship income have the ability to establish their own 401(k) plans with a Roth 401(k) feature.Leveraging is permitted in 401(k) plans, but earnings derived as a result of the leveraging are taxed as UBIT. It is important that any individual engaged in leveraging be aware of the tax rules for computation of UBIT before engaging in any leveraging transaction. The specific issue is that the tax is computed based upon the total earnings of the account, including the non-leveraged assets. This rule is best illustrated by the following example:The result in the foregoing example is somewhat counter-intuitive to this article’s focus insofar that while only $30,000 was earned on the borrowed funds, the result is that $47,000 is taxed. It occurs because the UBIT is computed on a percentage of the total earnings of the fund. While it is common to borrow to make a specific investment, money is fungible and the taxable income is computed as if the borrowed funds were allocated to all of the investments on a proportionate basis. (Please note that this is a simplified illustration; the actual calculation of UBIT is more complex involving the calculation of “average acquisition indebtedness.”)However, the inverse of the foregoing rule is also true and can be used to the taxpayer’s advantage in a situation where the borrowed funds significantly outperform the non-leveraged assets. This opportunity is illustrated in the following example.As illustrated above, the opposite result occurs here. By pairing the “borrowing” with other assets that do not produce ordinary income (as opposed to capital gains) the amount upon which tax is paid is reduced from the $20,000, which is the net income that results from investment on the “borrowed” funds to $7,000. (It should be noted that UBIT is also payable on capital gains producing property; however, if the “acquisition indebtedness” is eliminated more than one year before the sale, the gain is not subject to UBIT.)While minimizing taxable income on borrowed funds is desirable, it is only a technique to maximize the real “hidden” benefit of leveraging in a Roth 401(k) – which is the tax-free earnings generated on borrowed funds.In the last illustration, the net investment earnings on the “borrowed” funds were $20,000. Assuming that $3,000 in tax is paid on the $7,000 of UBIT generated, then the Roth 401(k) is net $17,000 “richer” than it otherwise would be without leveraging. All things being equal, all of the subsequent earnings produced by the additional $17,000 will never be taxed. If we assume that these “extra” dollars earn interest at 5 percent, compounded annually, after 20 years the $17,000 will have grown to more than $45,000. In other words, by borrowing a single $1,000,000 in one year, the Roth 401(k) can generate more than $45,000 in tax-free income by simply investing the resulting net income in conservative investments.These results shown above can be dramatically improved by borrowing every year. In fact, we estimate that almost an additional $600,000 in tax-free income could be generated over a 20-year period, by borrowing $1 million each year under circumstances shown in the second illustration.Undoubtedly, those results are a product of utilizing a somewhat optimal set of facts, particularly in connection with the “mix” of assets for leveraging purposes. In the first case, assets that produce capital gains, rather than ordinary income, may not be part of the underlying plan’s overall investment portfolio. Even when such assets are part of the investment portfolio, the investment mix may not produce optimal tax results. However, with the use of multiple plans, each of which is its own taxpayer, a business owner will have greater flexibility to structure the optimal investment mix. Because a trustee-to-trustee transfer of assets among plans is generally permitted, it may be easier to achieve the desired combination of income and capital gains producing properties than you might otherwise think.There are other challenges, however. One is the complexity of UBIT calculation. While the examples provided above are intentionally based on a simple, straightforward set of facts and assumptions, it is unlikely that the actual situation will be so straightforward. Another challenge is to properly isolate the leveraged and non-leveraged assets. While it is possible to write a plan to segregate Roth 401(k) assets from non-Roth assets for internal plan allocation purposes, it is unclear whether the asset segregation language will be respected by the IRS for purposes of UBIT calculations. This issue can likely be minimized by maintaining separate plans as noted above. If non-owner employees also participate in one of the plans, care must be taken to provide the same rights, benefits and features to rank and file participants as are available to those key participants desirous of leveraging.Without question, the benefits of leveraging in a Roth account require complex planning and structuring. Implementing this type of planning should be performed with the assistance of an experienced pension and retirement planning professional.]InvestopediaMaximize Your Traditional or Roth IRABoost your retirement savings with these tipsBy JEAN FOLGERUpdated Nov 29, 2019[There are two main types of individual retirement account (IRA) available to you, and whether you choose the traditional version or the Roth, or some combination of the two, you'll be getting a tax-advantaged way to invest your money long-term.But there are certain IRA investment strategies that can really boost your retirement savings.KEY TAKEAWAYSStart saving as early as possible, even if you can't contribute the maximum.Make your contributions early in the year or in monthly installments to get better compounding effects.As your income rises, consider converting the assets in a traditional IRA to a Roth. You'll be glad later.How Does an IRA Work?If you're self-employed or a small business owner, either type of IRA is a great way to save money towards your retirement and get a tax break.In either case, you can invest up to $6,000 a year in tax years 2019 and 2020, plus another $1,000 if you're age 50 or over. You can have more than one IRA, but those are the limits for one or more. There's one big difference:The traditional IRA gets you an immediate tax break for the year. That is, the amount you contribute is deducted from your gross taxable earnings. You'll owe taxes way down the road after you retire and begin taking the money out.The Roth IRA doesn't get you an immediate tax break. You pay the income taxes on that money in that year. But the entire balance will be tax-free when you start taking it out after retiring.A couple with one spouse who does not have earned income can get around the limit. The spouse with earnings can contribute to a spousal IRA on the other's behalf. To do so, you must be married and file jointly. This works with either a traditional or a Roth IRA.Traditional IRAsOne note on that tax deduction that comes with the traditional IRA. You can deduct your entire contribution for the year, up to the limit, if neither you nor your spouse has a 401(k) or another retirement plan at work. If either one of you is covered by a plan, the deduction may be reduced or eliminated.A traditional IRA grows tax-deferred. That is, you'll pay no taxes on the money over the years you build the fund. However, you'll pay ordinary income tax on the entire balance as you withdraw funds.You also must start taking required minimum distributions (RMDs) by April 1 following the calendar year you turn age 70½.Roth IRAsAs noted, with Roth IRAs you don't get an upfront tax break for the money you contribute. But withdrawals are tax-free if you're age 59½ or older and the account has been open for at least five years.There are no required minimum distributions. You've already paid the taxes due, so the IRS doesn't care when or whether you take your money out. You can even leave it for your heirs as a tax-free inheritance.Roth IRAs are subject to income limits for eligibility. If you earn too much, your eligibility is limited or eliminated. The income limits are adjusted from year to year:In 2019, a single person has reduced eligibility at $122,000 and cannot contribute to a Roth at $137,000. For couples, the phase-out range is $193,000 to $203,000.In 2020, the range for a single person is $124,00 to $139,000. The range for a couple is $196,000 to $206,000.Best StrategiesWhichever type of IRA you choose (and you can have both), you can boost your nest egg by following some simple strategies.1. Start EarlyCompounding has a snowball effect, especially when it's tax-deferred or tax-free. Your investment returns are reinvested and generate more returns, which are reinvested, and so on. The longer your money has to compound, the larger your IRA balance will get.Don’t be discouraged if you can’t contribute the maximum amount in any given year. Invest whatever you can. Even small contributions can expand your nest egg substantially given enough time.2. Don’t Wait Until Tax DayMany people contribute to their IRAs when they file their taxes, typically on April 15 of the following year. When you wait, you deny your contribution the chance to grow for up to 15 months. You also risk making the entire investment at a high point in the market.Making your contribution money at the start of the tax year allows it to compound for a longer period. Alternately, making small monthly contributions is easier on your budget and still gets you to the right place.If you hold stocks in your IRA, it's a good idea to make equal monthly contributions throughout the tax year. This strategy is known as dollar-cost averaging. It takes the guesswork out of market timing and helps you develop a disciplined approach to saving for retirement.3. Think About Your Entire PortfolioYour IRA maybe just part of the money you're setting aside for the future. Some of that money may be in regular, taxable accounts. Financial advisors often recommend distributing investments across accounts based on how they'll be taxed.Usually, this means that bonds—whose dividends are taxed as ordinary income—are best bought for IRAs, to postpone the tax bill. Stocks that generate capital gains are taxed at lower rates, so they are better used in taxable accounts.But in practice, it isn't always that simple. For example, an actively managed mutual fund, which may create a lot of taxable capital gains distributions, might do better in an IRA. Passively managed index funds, which are likely to produce much lower capital gains distributions, might be fine in a taxable account.If the bulk of your retirement savings is in an employer-sponsored plan, such as a 401(k), and it's invested relatively conservatively, you might use your IRA to be more adventurous. It could provide an opportunity to diversify into small-cap stocks, emerging foreign markets, real estate, or other types of specialized funds.4. Consider Investing in Individual StocksMutual funds are the most popular IRA investments because they're easy and they offer diversification. Still, they track specific benchmarks and often do little better than the averages.There may be a way to get higher returns on your retirement investments if you have the expertise and time to pick individual stocks.Investing in individual stocks takes more research, but it can yield higher returns for your portfolio. In general, individual stocks can give you more control, lower management fees, and greater tax-efficiency.5. Consider Converting to a Roth IRAFor some taxpayers, it may be advantageous to convert an existing traditional IRA to a Roth IRA. A Roth account often makes more sense if you’re likely to be in a higher tax bracket in retirement than you are in now.There are no limits on how much money you can convert from a traditional IRA toa Roth. And there are no income eligibility limits for a Roth conversion, either. In effect, these rules provide a way for people who make too much money to contribute to a Roth directly to fund one by rolling over a traditional IRA.Of course, you’ll have to pay income tax on that money in the year you convert it to a Roth. And it could be substantial, so look at the numbers before you make any decisions.Here's a quick example. Say you're in the 22% marginal tax bracket and you want to convert a $50,000 traditional IRA. You'd owe at least $11,000 in taxes. On the other hand, you'll owe no tax when you take money out of your Roth IRA in the future. And that includes any money your investments earn.It basically comes down to whether it makes more sense to take the tax hit now or later. The longer your time horizon, the more advantageous a conversion could be. That's because the new Roth account's earnings, which are now tax-free, will have more years to compound. And you won't have to worry about the five-year rule, either.6. Name a BeneficiaryIf you don't name a beneficiary, the proceeds of your retirement account could be subject to probate fees and vulnerable to any creditors you have. Also, its tax-deferred compounding will be cut short. Naming a beneficiary for your IRA can allow it to keep growing even after your death.Adding a beneficiary not only avoids these problems, but it can in some cases allow your heir to stretch out the tax deferral by taking distributions rather than a lump-sum payment.Moreover, a spouse can roll over your IRA into a new account and won’t have to begin taking distributions until he or she reaches age 70½. Then, your spouse can leave the account to another beneficiary, which recalibrates the distribution requirement.If you want to name more than one beneficiary, simply divide your IRA into separate accounts, one for each person.There are separate beneficiary rules, depending on the type of IRA you leave to your heirs. Check with your financial advisor to make sure you're using the most tax-efficient tax strategy.]