Have you ever hired a contractor on Craigslist or Elance? Perhaps you hired a copywriter or programmer…from a foreign country? Hiring a foreigner poses many inherent risks, and a couple of probably never thought of…

…like TAXES!

As if hiring a foreign firm wasn’t tricky enough, the tax implications are also a little bit more difficult. For example, did you know that in certain circumstances you MUST withhold taxes. Yup, you heard it right. In certain cases when dealing with a foreign firm, you MUST withhold taxes. And what cases might that be?

When the firm you are dealing with hasn’t submitted Form W-8BEN, Form W-8ECI, or Form W-8EXP you may have to withhold taxes. And let me tell you something……they often don’t like having a portion of their fee being withheld for tax purposes. In fact, they might be downright mad!

So what do you do?

BEFORE hiring a firm, ask them if they are comfortable submitting Form W-8BEN, Form W-8ECI, or Form W-8EXP to you. These forms are available online at irs.gov. There are 3 different forms that are used in 3 different situations. If the firm isn’t OK submitting, then strongly consider not using them.

That being said, if they don’t want to submit that form, you may have to withhold up to 30% of the fee and submit it to Treasury Department. Why is that? Because the income was earned the US. US law says, “If you make money here, you pay money here”

More importantly, if they say they are okay it (submitting form), make sure you receive the proper form BEFORE they start doing work on your project. It is important to ask your accountant which form you need to have signed.

So bottom line: when dealing with foreign firms, make sure they are willing to send you Form W-8BEN, Form W-8ECI, or Form W-8EXP PRIOR to starting on your work.

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Homer Simpson introduced as Chase’s new CEO?

by Arnold Libman on October 22, 2009

Will Homer ditch his coffee & donut for running a Fortune 500 Company?

It’s a greater possibility today than it was yesterday.

Yes, an idiot like Homer Simspon may be running Chase once Jamie Dimon is fired.


Because all the good CEO’s are leaving dodge.  Because Big Brother thinks CEO pay should be government regulated.

Yeep, both the Treasury & Fed  think investment banks CEOs pay should have a ceiling (at this time this new ruling seems directed towards companies that got bail out money).

It’s very tempting to throw your hands in the air and say, “Yes, the government is finally standing up to the big boys”.  

And that feeling is well warranted.  Top level CEO have been raking in boat loads of cash via stock options for the past decade.  I mean, some CEOs cashed in 100 milion dollars worth of options in ONE day.

Wouldn’t it be cool to say to your wife, “Honey, I’m going to bank today and withdraw 20 million.  Can I get you something on the way home?”

Yes, the pay was excess.  But it was the CHOICE of the board of directors.  Their choice.  Not Big Brothers.

And the last time I checked, smart guys follow the money.  I mean, isn’t that usually true.  First it was being a doctor (today, who wants 500K of debt to make 150K a year).  Then is was M&A (weren’t those the days).  Now is it the internet.  Thats were the talent is headed.  Because that is where the money is.

And when the government starts restricting the amount of cash a person can make, the smart players decide NOT to play in that sandbox (didn’t those commie bastards do a failed experiment called the USSR?).  

In other words, the very people we need to get us out of this mess are leaving for better opportunities. Wouldn’t you?

In all reality Homer Simpson probably wouldn’t head up a fortune 500 firm.  

But maybe his cousin!

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Fewer CA Foreclosures Due To Decreased Variable Rates

by Arnold Libman on October 20, 2009

I laughed today when reading the headline, “Pace of foreclosures slows in California”

Los Angeles Times has a bunch of great writers…

…not financial analysts.

Seriously, I laughed.

What the article fails to mention is that most of the folks who have lost their home were on what are know as variable interest rate loans (VIL).  And their mortgages payments have dropped DRAMATICALLY over the past year.

Now there are SEVERAL reasons why home foreclosures have increased so much; especially in California.

But one of the factors that doesn’t get enough “pub” (isn’t that what the kids call it today?) has more to do with Vegas than anything else.

Vegas? you ask?

Yes, VEGAS!  See…

…People bet that interest rates would go down or stay low forever.  You could say they bet.  Most people “bet” interest rates would stay the same or go down.

The problem was that folks not only “bet”, but they took bad bets.

You see, a lot of folks in 2003-2005 were buying out of fear.  As in the fear that “their” home would be outbid by somebody else.  So they bid even more.  Problem…

…they COULDN’T afford it!

Now,  would affordability ever stop a loan broker?


So, these loan brokers came up with crazy loan programs.  Programs so crazy that enticed buyers by offering these crazy loan interest rates for the first couple of years, and then added the interest in later years.

By the time 2008 hit, home owners not only had their interest rates adjust, but they adjusted from crazy low rates to a bit higher than average.  Where people could once BARELY afford the payments, now they didn’t have a chance.

So 2008 foreclosures spike.  And then the stock market takes a shit.  And then…

Fear.  Man, fear can do crazy stuff to a man. 

Fear hit main street and wall street at the same time.

And you know what fear does?

STOP! It makes you stop doing what you were doing.

And in this case, people were buying LOTS  of stuff…which they STOPPED.

When people stop buying, owners decrease production…

…and fire people.  Which turns this cycle into a cancer.

Now its late 2009, and money is cheap again.

Why, because people are scared.  Businesses don’t want to invest.  Consumers don’t want to buy.

Interest rates go down.

And here’s how the whole things ties together…

People with variable rates have seen their mortgage payments decrease substainally over the past year due to the decrease in interest rates.  Because of lower mortage payments, families can afford to make their payments, which is a hidden factor in why foreclosures are down in California.

Every story has another story…

…The untold story.

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Beauty = The Balance Sheet

by Arnold Libman on October 18, 2009

Accountants have an odd sense of reality.  Take the Balance Sheet for example.

I personally think the Balance Sheet is a thing of Beauty.  No, B.S., LOL. 

Before we got any further, we gotta talk a little about beauty.  What is it?

Well, it sure is hard to put it into words.  But, it sure feels good.  There is something about beauty that feels right… like everything is in Balance.  In harmony. In sync.

And I think that is part of the secret of beauty; there is harmony of different parts coming together to create this synergy that we experience as beauty.

And when it comes to balance, who can’t appreciate one of the more beautiful formulas of all of Business:

A= L +OE

That little formula is the underpinning of every financial transaction.  EVERY. No matter what the transaction is, it must balance.

In an uncertain world, there is peace of mind in knowing that EVERY transcation must balance.

And that is a thing of beauty.

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Today is the tax deadline

by Arnold Libman on October 15, 2009

Hello.  This is my first post on Arnold Libman.com.

Guess even us old guys are starting to us the internet.  Funny how things change.

I thought it would be apporiate to start my first post on this Oct 15th deadline.

Today is the deadline for personal returns.  I hope you got yours in today.

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Hello world!

by Arnold Libman on August 11, 2009

Welcome to WordPress. This is your first post. Edit or delete it, then start blogging!

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