Photo credit: coop It’s a little known fact that certain costs for caregivers, licensed or unlicensed, may qualify as medical expenses for tax deductions. Maintenance and personal care service costs can be considered qualified medical expenses in cases where the patient receiving the care has been certified by a health-care professional as unable to perform two or more of the six activities of daily living: Bathing, Eating, Dressing, Toiletting, Continence, and Transferring (moving from bed to chair, for example). Note: An easy way to remember these six activities is to use the first charact ..read more

Photo credit: jb In his Preface to the Fourth Edition of Benjamin Graham’s legendary book The Intelligent Investor, Warren Buffett wrote the following: To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information. What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must supply the emotional discipline. I’ve seen the same sentiment boiled down and paraphrased a bit, also attribute ..read more

When you’re married to someone who has worked under the Social Security taxation system, you have two different benefits that may be available to you: Survivor Benefits, and Spousal Benefits. These two benefits may be more than the benefit you’ve earned under your own working record. Spousal Benefits are available while your spouse (or ex-spouse) is still alive. Survivor Benefits are available after your spouse’s (or ex-spouse’s) death. Social Security Survivor Benefits are much different from Spousal Benefits in several ways. In fact, there’s very little to compare between the two, other than ..read more

As taxpayers, many of us have faced difficulties in dealing with the IRS – and it can be a daunting position to be in. One way to deal with these issues is to hire a CPA or Enrolled Agent to help you through the process. Another way is to deal with it yourself. The problem is that dealing with the IRS by yourself can be a very difficult thing to do. The good news is that you have a friend at the IRS: The Taxpayer Advocate Service (TAS).  The purpose of the TAS is to help taxpayers: whose problems with the IRS are causing financial difficulties; who have tried but have not been able to re ..read more

Photo credit: jb There are generally two ways that the IRS can assess a penalty to you – failure to file, or failure to pay; and it’s not out of the question that you could be subjected to both types of penalties. There are many other penalties, such as accuracy-related penalties, that may also apply. Listed below are some facts from the IRS about penalties. Facts on Penalties If you do not file by the deadline, you might face a failure-to-file penalty. If you do not pay by the due date, you could face a failure-to-pay penalty. The failure-to-file penalty is generally more than the failure ..read more

Photo credit: steelo When you leave full-time employment, there is a period of time after that when you will continue to be covered by Social Security Disability Benefits. Welcome to the 20/40 Rule. The 20/40 Rule If you have become disabled after you’ve left employment, you may be eligible for Social Security Disability Benefits – assuming that you’re under Full Retirement Age (FRA). In a case such as this, if you have worked the required number of quarters to be eligible for Disability Benefits, the rule is that you must have worked 20 quarters out of the previous 40 quarters, earning at l ..read more

Photo credit: jb If you or someone you know has inherited an IRA from a spouse, there are several options available for handling the account. You could transfer the IRA to an inherited IRA, properly titled, and begin taking RMDs based upon your own age; or you can transfer the IRA to an IRA titled in your own name and treat the IRA as your own. Each option has merit, you just need to determine which is best for you. Take the IRA as an inherited IRA If you transfer the IRA to an inherited IRA, you can immediately begin taking RMDs based upon your own age, using IRS Table I.  This will al ..read more

Image via Wikipedia If violent weather has caused damage to your property, you may be able deduct a part of the cost of the damage from your taxes, if the event was a federally-declared disaster. You are generally eligible to deduct losses that result from federally-declared disasters. This can include, here in the Midwest, such mundane items like floods or tornados, plus the occasional derecho. In California, it might include (per Jimmy Buffett) riots, fires, mudslides and sushi in the mall*. Remember that the deduction amount is limited by any amount that you recover by way of insur ..read more

Image via Wikipedia If you don’t know what a SOSEPP is, that’s okay – chances are if you don’t know what it is, you don’t have one. SOSEPP stands for Series Of Substantially Equal Periodic Payments. It’s a method that you can use that allows you to take a series of distributions from your IRA prior to age 59½ without being subject to the 10% early withdrawal penalty. The SOSEPP is a very complicated avenue to travel, and there are some specific restrictions that you need to follow. One of the restrictions is that you absolutely must maintain the “equality” of payments you’re taking fr ..read more

Photo credit: jb If you have an IRA that you have to take Required Minimum Distributions (RMDs) from, you need to do this every year by the end of the year.  So what if you forget one year? The rule is that if you don’t take your RMD by the end of the year, you could be subject to a penalty of 25% of the amount of the RMD. If you’ve realized your error before the IRS has notified you, there are a few things you can do to try to resolve the situation. There may even be a way to resolve it even though the IRS has caught on, as well. The very first thing you should do is immediately withdr ..read more