Category Archives: Elder News & Alerts

Baby Boomers & Retirement Planning

Retirement Planning & InvestmentsFacebook, GE,  Johnson & Johnson and other stocks that Baby Boomers love.

If you are a Baby Boomer, and have investments in your retirement planning, you’ll enjoy this article.  Forbes writer, Samantha Sharf, looks at the stocks that the different generations favor.  “Johnson & Johnson JNJ -0.59% is the tenth most popular stock among Baby Boomers — the generation born between 1946 and 1964 — making up 0.9% of the average Boomer’s stock portfolio, according to TD Ameritrade. Two key facts make a strong case for why the healthcare giant ranks with this group but not their younger counterparts.

First fact: Boomers are turning 65 at a rate of about 10,00 per day. That trend is expected to continue until around 2030, according to Pew Research.

Second: Last year Fidelity Benefits Consulting estimated a 65-year-old couple will need an average of $220,000 to pay for medical expenses throughout retirement. That’s a lot.”

“The healthcare giant ranks 14th for Millennials’, the youngest adult generation, and 22nd for Gen Xers, the generation just behind Boomers. Johnson & Johnson, however, is even more popular with people over 70 making up 1.1% of a Senior’s portfolio on average.”

Stocks Baby Boomers Love Most:
Apple
General Electric
Microsoft
Facebook
Bank of America
Intel
AT&T
Exxon Mobil
Berkshire Hathaway
Johnson & Johnson

Read original article Johnson & Johnson and the 9 other stocks Baby Boomers Love Most.


We do more than just tax preparation. US-TaxLaws is your best source for professional tax preparation and/or financial consulting services that include:

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services
Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & TrustsEstate Planning   Bookkeeping   Payroll 

 

Identity Theft Alert – IRS Security Breach

 

Identity Theft AlertIRS Issues An Identity Theft Alert To Taxpayers

Over 100,000 taxpayers at risk.  IRS issued an Identity Theft Alert resulting from the security breach on the “Get Transcript” Application portal.

The IRS announced today that criminals used taxpayer-specific data acquired from non-IRS sources to gain unauthorized access to information on approximately 100,000 tax accounts through IRS’ “Get Transcript” application. This data included Social Security information, date of birth and street address. Continue reading

Social Security Spousal Benefits

The 3 Secrets to Maxing out Social Security Spousal Benefits

Social Security Spousal Benefits is not something many of us look into, until necessary.  Philip Moeller  in his Money.com, Ask The Expert column takes a close look at this benefit, and what you have to do to protect yourself.  “If there’s one set of rules worth understanding, it’s spousal benefits.”  Social Security Spousal Benefits and Investments

Q: My wife was born in 1950 and will be 65 this year; I was born in 1953 and will be 62. As I have earned more in my lifetime, my Social Security benefit is estimated to be larger than hers at full retirement age. But her spousal benefit would be less than half of her individual retirement benefit. When the younger spouse has a higher estimated benefit, what are some strategies to explore? —Jack

 

Every year, couples leave literally billions of dollars on the table because they make the wrong claiming choices. Here are three secrets to getting this claim right, and how they apply to your situation:

  1. To get spousal benefits, the primary earner must file for retirement benefits first. Spousal benefits can equal as much as half of the amount the person would receive in individual Social Security benefits at full retirement age (FRA). For anyone born in 1943 through 1954, FRA is 66; it will gradually rise to 67 for people born in 1960 or later.
  2. If you file for a spousal benefit before your FRA, you will end up with a smaller amount. You can file as early as age 62 but if you do, you will be hit with benefit reductions. Retirement benefits will rise each month they are deferred between FRA and age 70. Spousal benefits peak at FRA, so there is no reason to defer claiming them past that point.

An early filing will also trigger a Social Security provision called deeming—this means the agency considers you to be filing both for your individual retirement benefit and you spousal benefit. You will be paid an amount roughly equal to the greater of the two benefits. But you lose the opportunity to get increases for delayed claiming on your individual benefits. This is a bad deal.

  1. Use a file-and-suspend strategy. If both spouses defer claiming until FRA, the higher-earning spouse can file and suspend benefits then. This way, the lower-earning spouse can file for spousal benefits, allowing his or her individual retirement benefit to grow due to delayed retirement credits. Then you can each file for maximum retirement benefits at age 70.

So what’s the right approach for you? If you both defer filing, you can file and suspend your benefit at age 66. This will enable your spouse, who will have turned 69, to file for her maximum spousal benefit. Meanwhile, she can continue to allow her individual benefit to grow due to delayed credits up to age 70

Alternatively, your wife can file and suspend at 69, allowing you to file for your maximum spousal benefit at 66 and collect it for four years, while deferring your own retirement benefit until 70. Even though you are the higher earner. this strategy seems likely to maximize your family’s total benefits.

There’s another advantage to waiting until 70: if you die before your wife, she will receive a widow’s benefit that will equal your maximum retirement benefit. (She can only collect the greater of her retirement or widow’s benefit.)

Of course, choosing the best spousal claiming strategy for a couple depends on many factors, including relative ages, finances and health. This is something married partners need to talk about.

To read Philip Moeller’s answer to Jack and other questions, read the full article in its original format: http://time.com/money/3735837/social-security-spousal-benefits-secrets/

Philip Moeller is an expert on retirement, aging, and health. He is co-author of The New York Times bestseller, “Get What’s Yours: The Secrets to Maxing Out Your Social Security,” and is working on a companion book about Medicare. 

Hey Boomers – want to know where is the best place to live in retirement?

Want to know where is the best place to live in retirement? Use this map.Want to know where is the best place to live in retirement?

Use This Interactive Map on State-by-State Guide to Taxes on Retirees

Is *retirement* in your life plan?  Want to know where is the best place to live in retirement?  Visit Kiplinger  and click on any state in the map for a detailed summary of taxes on retirement income property and purchases, as well as special tax breaks for seniors.

Go over to Kiplinger for more maps including the most tax-friendly and least tax-friendly states for retirees. Read more at http://www.kiplinger.com/tool/retirement

SOURCES: State tax departments, CCH and the Tax Foundation.

Will you have enough to retire?

blue-calculatorMethodology

Retirement is something we want to look forward to. Some have planned this *future* … others, not so much. To get an idea of what you have in contrast to what you will need, CNN’s article “Will You Have Enough To Retire” includes an online calculator.

**************************************

This calculator estimates how much you’ll need to save for retirement. To make sure you’re thinking about the long haul, we assume you’ll live to age 92. But you could live to be 100 or incur large medical bills early on in retirement that may raise your costs even further. Social Security is factored into these calculations, but other sources of income, such as pensions and annuities, are not. All calculations are pre-tax.

The results offer a general idea of how much you’ll need and are not intended to be investment advice. The results are presented in both future dollars (at retirement) and today’s dollars, which is calculated using an inflation rate of 2.3%.

USE CNN ONLINE CALCULATOR http://money.cnn.com/calculator/retirement/retirement-need/

How we calculate your savings goal

First, we determine what your income will be at the time you retire by growing your current income at an annual rate of 3.8% (the inflation rate of 2.3%, plus the salary growth rate of 1.5%). We then assume you can live comfortably off of 85% of your pre-retirement income. So if you earn $100,000 the year you retire, we estimate you will need $85,000 during the first year of retirement. For each subsequent year, we increase your income need by 2.3% to keep up with inflation. We then factor in Social Security by subtracting your estimated benefits (more on that below) since that income will reduce the amount you will need to save.

The second step is to calculate the total savings you will need at the time you retire, in order to generate enough income for each year of retirement. To do this, we determine what it would cost to purchase a fixed income annuity, with inflation-adjusted payments, using a discount rate (or rate of return) of 6%. The cost to purchase this hypothetical annuity is your target savings goal.

How we calculate the amount you will save

To figure out how much you will save by the time you retire, we first estimate your future income by growing your current income at a rate of 3.8% (the inflation rate of 2.3%, plus the salary growth rate of 1.5%). Then, we determine what the sum of your annual contributions will be between now and retirement. We assume your current savings and future contributions are invested and will earn an average annual rate of return of 6%.

How we estimate Social Security benefits

We estimate your Social Security benefits based on the assumption that you will have worked at least 35 years and will start collecting benefits at age 67. For most people who are working today, that’s considered full retirement age. If you plan on retiring after age 67, we assumed the benefits are invested (along with your savings) and grown at the same average rate of return of 6%. We use your estimated pre-retirement income to calculate your estimated annual Social Security benefits, based on current benefit formulas and accounting for inflation. To better understand your actual Social Security benefits, please visit www.ssa.gov.

 

Sources: Social Security Administration; Federal Reserve of Philadelphia; Department of Labor; CNN http://money.cnn.com/calculator/retirement/retirement-need/

Uh oh. Get Ready. 1040, Line 21- Other Income

Someone with a Magnifying Glass in a blurb about the IRSUnder The Magnifying Glass

The IRS is taking a closer look at 1040’s, specifically Line 21 – OTHER INCOME. They are scrutinizing CoD’s aka “Cancellation of Debt”.  I’ll have more information for you by November. In the meantime, If you think this affects you, give me a call at 619-589-8680.

MarketWatch Highlights Tax Law Changes

Have you planned for these 7 tax law changes?

CALL US - 619-589-8680Seven significant new income tax law changes went into effect at the beginning of the year as a result of two pieces of legislation:

The 2010 Health Care Reform Act
The American Taxpayer Relief Act of 2012

Although the new laws are primarily designed to increase taxes for those with higher levels of income, everyone with earned income is affected. With the first seven months of 2013 behind us, have you begun planning for these changes? Continue reading

Part I : Tips Substantiating Tax Deductions for Charitable Contributions

SUBSTANTIATING CHARITABLE CONTRIBUTIONS

Larger IRSMany charitable organizations described in section 501(c)(3), other than testing for public safety organizations, are eligible to receive tax-deductible contributions in accordance with section 170. Most eligible organizations are listed in Exempt Organizations Select Check (Pub 78 database). Continue reading

IRS Red Flag Scenarios

CAUTION Audit Alert SignTAXPAYER CLAIMS HE IS A WRITER…

A taxpayer was unable to prove his business deduction as a legitimate expense.  In 2006-2007 the taxpayer claimed his trips abroad were to take photographs for a book on world travel.  He deducted $20,000 for costs associated with his travels to Africa, Australia, Asia and South America.  He claimed he was a writer, but in 2011 he still had failed to publish anything – and the book was still in rough form.  It was decided that even though he had a business plan, and a profit motive, he failed to produce evidence that he was in a trade or business of being an author.  (¹Oros v. Comm. (December 31, 2013) US Court of Appeals for the Ninth District, Case No. 12-71071)

MBA TUITION DEDUCTION DENIED

Husband and wife were denied a major deduction of $17,138 for the husband’s MBA tuition expenses.  Why?  Because they could not provide evidence that the schooling was required for his employment.  Education expenses may be deducted if the education:

  1. Maintains or improves skills required by the individual’s employment; or
  2. It meets the requirements of the individual’s employer or the law, as a condition of employment.

 

Source of content : Spidell’s Elder Client Care Planner , March 2014

 

 

Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & Trusts Estate Planning   Bookkeeping   Payroll

 

Helping Your Widowed Parent With Legal and Financial Issues

A checklist for helping a surviving parent get organized.

  1. Find assets.
    Often, just one spouse manages most of a couple’s finances. Be sure that your surviving parent knows where important assets are located. Over time, you may find it helpful to make a master list of bank and brokerage accounts, retirement plans, insurance policies, real estate, items in safe deposit boxes, and other significant assets. Make note of sizeable debts as well.
  2. Collect insurance.
    Find out whether your surviving parent is the beneficiary of a life insurance policy and, if so, contact the insurance company and file a claim for benefits. This is one of the first things you can do to ensure there’s enough cash on hand.
  3. Apply for benefits.
    Helping your parent apply for Social Security benefits should be near the top of your list of things to do. Contact the Social Security Administration (www.ssa.gov) for information about survivor’s benefits. In addition, investigate other benefits to which your parent may be entitled, including pension, veterans, or other employment-related payouts.
  4. Change title to jointly owned assets.
    If your parents owned property together — as joint tenants or in another form of joint ownership — the survivor should change the title document to show that he or she now owns the property alone. This will make it easier for your surviving parent to manage the property — and for you to wrap up your surviving parent’s affairs when the time comes. Check title documents for real estate, vehicles, bank or brokerage accounts, and other significant assets to see whether you need to update ownership records.
  5. Update will and trusts.
    Losing a mate will more than likely cause your parent to reevaluate his or her own plans for leaving property at death. If your surviving parent has a will or living trust, you should eventually have him or her review it and change it, if necessary, to reflect your parent’s current life circumstances and wishes. Also take a look at who is named as beneficiary of retirement plans and any other major assets that will pass outside the will or trust.
  6. Take steps to avoid probate court.
    When changing title documents and reviewing your surviving parent’s estate plan, you should consider whether any part of the estate will be subject to probate when he or she dies. Simple probate avoidance methods could save a bundle of time and money — for example, your parent might name pay-on-death beneficiaries for a bank or brokerage accounts that used to be jointly owned.
  7. Update insurance policies.
    If your deceased parent is still named as a beneficiary on insurance policies, those policies will need to be modified, cashed out, or canceled, depending on your parent’s current needs and wishes.
  8. Make a health care directive (living will).
    If your parent hasn’t already prepared a living will and a durable power of attorney for health care, now is the time. These important documents will allow your parent to set out health care wishes and name a trusted person — perhaps you — to oversee his or her care and make medical decisions if that ever becomes necessary. Making health care documents can also open the door to discussing your parent’s feelings about organ donation, burial or cremation, and other final arrangements.For more information, seeHelping a Loved One Make a Power of Attorney.
  9. Make a financial power of attorney.
    This document lets your parent name someone to handle financial matters — from writing monthly checks to managing investments — if he or she ever becomes incapacitated and unable to take care of things alone. Without this document in hand, you or other loved ones would most likely have to go to court to get the necessary authority. For more information, see Helping an Elder Make a Power of Attorney.
  10. Organize documents.
    A world of careful planning won’t do any good if you can’t find important paperwork when you need it. Do what you can to help your mom or dad set up a good filing system. Here are some critical things to keep track of:
    – will, trust, and other estate planning documents
    – powers of attorney
    – bank and brokerage account statements
    – retirement plan statements
    – government benefit paperwork
    – insurance policies
    – business records
    – tax returns
    – credit card and debt information
    – secured places, such as a safe or safe deposit box
    – email accounts and passwords
    – property records for real estate, cars, and other major assets.

Source: NOLO 

Pat Michael and his team at US-TaxLaws is your best source for professional tax preparation services with more than 30 years experience and thousands of satisfied clients.

Personal Tax Preparation   Business Tax Preparation   Partnership Tax Preparation
Corporate Tax Preparation  Incorporation-Choice of Entity   Business Support Services
Corporate Compliance   Audit Representation  Retirement Tax Planning   Wills & Trusts
Estate Planning   Bookkeeping   Payroll 

Net Investment Income Tax (NIIT) EA UPDATE

IRS Affordable Care Act Tax Provision WebsiteUPDATE: Funding the Affordable Care Act through NIIT

Want to know why it is a good idea to have an Enrolled Agent (EA) as your professional tax preparer?  They are “America’s Tax Experts®!” An EA can explain, in easy-to-understand language, how the new tax code will affect you and your taxes today, and help you plan for the future, The IRS is the *enforcement arm* for the Affordable Care Act Tax collection, and the laws and reporting requirements are changing almost daily.  You want someone who is looking out for you and your best interest (no pun intended).  Continue reading

10 Things The IRS Needs To Know About Your Child or Dependent Care.

Small CCP teaching childrenIF YOU WANT TO GET CREDIT FOR CHILD and DEPENDENT CARE, THE IRS NEEDS TO KNOW…  

If you paid someone to care for your child, spouse, or dependent last year, you may be able to claim the Child and Dependent Care Credit on your federal income tax return.

Below are 10 things the IRS wants you to know about claiming a credit for child and dependent care expenses. Continue reading

Moves To Lower Your 2013 Tax Bill

1040 Sm Photo IstockTAX MOVES TO MAKE BEFORE CHRISTMAS.
Ways to reduce your 2013 tax bill. 

December 31 is approaching quickly – and there are some things you can do to lower your tax bill.  We encourage our clients to come in for a review, especially if there are life-situation changes. Did they marry or divorce? Is there are new child? Is there unscheduled income, or benefits. We want to look at that before the close of the year.   

As part of our updates on the laws that are changing, we are sharing valuable articles for your convenience.

This article is the first of two we will bring you from one of MarketWatch of the Wall Street Journal.

 

Continue reading

New IRS Healthcare Law Website for Individuals and Businesses

The IRS has launched a new Affordable Care Act Tax Provisions website at IRS.gov/aca to educate individuals and businesses on how the health care law may affect them.

small IRS logo for blogging

The new home page has three sections, which explain the tax benefits and responsibilities for individuals and families, employers, and other organizations, with links and information for each group. The site provides information about tax provisions that are in effect now and those that will go into effect in 2014 and beyond.

Topics include premium tax credits for individuals, new benefits and responsibilities for employers, and tax provisions for insurers, tax-exempt organizations and certain other business types.

Visitors to the new site will find information about the law and its provisions, legal guidance, the latest news, frequently asked questions and links to additional resources.

Several other federal agencies have a role in implementing the health care law, including the Department of Health and Human Services, which has primary responsibility. To help locate additional online resources from the Department of Health and Human Services, the Department of Labor and the Small Business Administration, the IRS has issued a new Web-based flyer – Healthcare Law Online Resources (Publication 5093).

Visit IRS.gov/aca for more information regarding the tax provisions of the Affordable Care Act.

Congress Looking At New Stuff To Tax

Congress is looking for potential sources of tax revenue and the list includes employer-paid healthcare, retirement plans, medicare and other potential sources.

Continue reading

Second Half 2013 Tax Questions Just To Be Safe

Pat_003_S_Mid Year Tax Questions You Need To Ask  Yourself

This is a good time to take a look at your present financial picture.  Has your income or withholding changed in a significant way? If you are my client – then I need to know.

  Most new tax rules affect incomes above $200K.  Will these new rules affect you?  If you aren’t sure how these new rules will affect your taxes, give me a call.

 Are you sure you are withholding enough to cover your taxes?  Let’s go over your information, and make sure it is where it needs to be.  If it isn’t enough, and you need to make estimated tax payments, I can help you.

√  Significant changes in your income?  If so, it can have a big impact on your taxes.  Don’t get fooled by the “graduated tax rate”.  10% income increase can result in a 20% increase in your taxes.  Don’t wait on this, call me ASAP so we can be sure you are covered.

√  Life-Changing Events?    Divorce, Marriage? New Child?  All these shape how the government looks at you.  If there are job changes, home sale, moves, launching a new business, loss of a job or starting a new one, these are all important events that impact your financial profile.  Let me know about any of these.

√  Unscheduled Income?  Unemployment benefits, social security or pension, sale of an investment property or rental …. all of these can affect your tax rate also.  Let me know as early as possible so we can factor them in.

When it comes to taxes, I’m in a “need-to-know” capacity.  I need to know about anything that can affect your tax rate so you aren’t caught off-guard.

Have a great Autumn!

Taxes, Death… and Marriage?

Marriage – tax advantage?  Maybe yes, maybe no.

Marriage can have a tax-rate advantage, but it depends on the incomes.  Did you know you can actually save tax money if one spouse is making a lot less than the other?  It’s true.  The tax bill of the high-income earner can almost (if not totally) be cancelled out.  Continue reading

Social Security Changes Based on Life Expectancy

Social-Security-AdministrationThere are changes in Social Security. This affects everyone who is approaching retirement age.

Update:  Want to learn more on the latest from the Social Security Administration, see https://ssa.gov/planners/lifeexpectancy.html

Back on July 29, 2013 the Ways & Means Committee released bipartisan proposals which it stated were necessary to strengthen and protect Social Security. In an effort to engage stakeholders in a dialogue on the potential legislative solutions, the Committee is soliciting feedback. Such changes would include the controversial “chained consumer price index (CPI)”option, see Article 2141 and Article 2140.

Without action addressing the fiscal and structural challenges facing the entitlement programs, the Committee notes that Medicare will be bankrupt by 2026 and seniors will experience a 23% cut to their Social Security benefits in 2033.

As part of a bipartisan hearing series on entitlement reforms announced in April, the Committee is reviewing a variety of proposals to protect and preserve Medicare and Social Security that have been identified by President Obama, either in his budget or in other recommendations to Congress, as well as bipartisan ideas for entitlement reform from the President’s National Commission on Fiscal Responsibility and Reform (the “Simpson-Bowles Commission”) and the Bipartisan Policy Center Debt Reduction Task Force (“Domenici-Rivlin Task Force”).

Source:  https://cs.thomsonreuters.com/

Want to cut your spouse’s tax cost of inherited IRA’s?

Use Estate Planning to protect your IRAs!

This post speaks to the IRA owner in planning the future, and how essential it is to plan your estate today.  Put bluntly, To get your estate situation the way you want it at death, you need to do your estate planning at the same time you build your asset portfolio.  If you wait until you have built them, estate planning is much more difficult¹.”    Continue reading