Protecting Your Financial Records From Disaster

Among other worthy causes, July is Bioterrorism/Disaster Education and Awareness Month. With all of the unexpected happenings in the world, it is important that we are prepared for an emergency disaster. Take this time to educate yourself and your whole family on what to do in any type of disaster. Get a plan ready and have needed supplies handy if you ever need them.

Identification. If you suddenly find yourself standing in a pile of rubble that was once your home and your worldly possessions, establishing your identity will be of paramount importance. Access to personal identification documents such as your Social Security card, driver’s license, marriage license, birth certificate, passport and any citizenship papers will help you quickly establish your identity and speed up the co-ordination of your efforts with insurance companies, construction contractors, bankers and other entities involved in rebuilding and recovery.

Create a Backup Set of Records Electronically. Individuals and businesses should keep a set of backup records in a safe place. The backup should be stored away from the original set. Keeping a backup set of records – including, for example, bank statements, tax returns, insurance policies, etc. – is easier now that many financial institutions provide statements and documents electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned, which converts them to a digital format. Once documents are in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them onto a CD or DVD.

You should also consider online backup, which is the only way to ensure data is fully protected. With online backup, files are stored in another region of the country – so if a hurricane or other natural disaster occurs in your area, documents remain safe.


Document Valuables.  Another step you can take to prepare for disaster is to photograph or videotape the contents of your home, especially items of higher value. A photographic record can help prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area, or in the above mentioned online backup solution. Such proof can include photographs or videos of personal possessions; remember, digital cameras and camcorders make it possible to quickly and easily create a complete home inventory record.

Update Emergency Plans. Emergency plans should be reviewed annually. Personal and business situations change over time, as do preparedness needs. When employers hire new employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes.

Make sure you have a means of receiving severe weather information; if you have a NOAA Weather Radio, put fresh batteries in it. Make sure you know what you should do if threatening weather approaches.

We’re Here to Help. Rebuilding your life in the wake of a disaster is a daunting task. However, advanced preparation can go a long way toward making recovery easier. If you don’t have your documents in order, there’s no time like the present to get started. Once you have everything in its proper place, remember to update it. If you lack the time or energy to keep your files updated on an ongoing basis, schedule a yearly checkup and use it as an opportunity to put the latest version of everything into your files. Even the most well-organized disaster recovery materials will be of no use to you if they are out-of-date. Please click here for your FREE “Emergency Planning Guide” today. This detailed guide will provide more in depth plans to help you protect your financial records from disaster.

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Include a Few Tax Items in Your Summer Wedding Checklist

If you’re preparing for summer nuptials, make sure you do some tax planning as well. A few steps taken now can make tax time easier next year. Here are some tips from the IRS to help keep tax issues that may arise from your marriage to a minimum:

Change of name. All the names and Social Security numbers on your tax return must match your Social Security Administration records. If you change your name, report it to the SSA. To do that, file Form SS-5, Application for a Social Security Card. The easiest way for you to get the form is to download and print it on SSA.gov. You can also call SSA at 800-772-1213 to order the form, or get it from your local SSA office.

Change tax withholding. When you get married, you should consider a change of income tax withholding. To do that, give your employer a new Form W-4, Employee’s Withholding Allowance Certificate. The withholding rate for married people is lower than for those who are single. Some married people find that they do not have enough tax withheld at the married rate. For example, this can happen if you and your spouse both work. Use the IRS Withholding Calculator tool at IRS.gov to help you complete a new Form W-4. See Publication 505, Tax Withholding and Estimated Tax, for more information. You can get IRS forms and publications on IRS.gov/forms at any time.

Changes in circumstances. If you receive advance payments of the premium tax credit you should report changes in circumstances, such as your marriage, to your Health Insurance Marketplace. Other changes that you should report include a change in your income or family size. Advance payments of the premium tax credit provide financial assistance to help you pay for the insurance you buy through the Health Insurance Marketplace. Reporting changes in circumstances will allow the Marketplace to adjust your advance credit payments. This adjustment will help you avoid getting a smaller refund or owing money that you did not expect to owe on your federal tax return.


Change of address. Let the IRS know if you move. To do that, file Form 8822, Change of Address, with the IRS. You should also notify the U.S. Postal Service. You can change your address online at USPS.com, or report the change at your local post office.

Change in filing status. If you are married as of Dec. 31, that is your marital status for the entire year for tax purposes. You and your spouse can choose to file your federal tax return jointly or separately each year. It is a good idea to figure the tax both ways so you can choose the status that results in the least tax.

For a FREE Life Guide on “Marriage & Money” from NFS, click here to request one. This guide includes help in pre-planning for your wedding including tips on “tying the financial knot”, a wedding budget worksheet, monthly budget organizer and a name/address change checklist.



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Supreme Court Rules in Favor of Same-Sex Marriage

In a 5-4 ruling, the Supreme Court held in Obergefell v. Hodges that the 14th amendment requires all states to license a marriage between two persons of the same sex, and to recognize same-sex marriages validly performed out of state.

Justice Anthony Kennedy wrote the majority opinion, and was joined by Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan. Chief Justice John Roberts filed a dissenting opinion, in which Justices Antonin Scalia and Clarence Thomas joined. Scalia, Thomas and Alito also filed their own dissenting opinions, in which other justices joined.

In reversing the Sixth Circuit Court of Appeals, Justice Kennedy wrote: “No union is more profound than marriage, for it embodies the highest ideals of love, fidelity, devotion, sacrifice, and family. In forming a marital union, two people become something greater than once they were. As some of the petitioners in these cases demonstrate, marriage embodies a love that may endure even past death. It would misunderstand these men and women to say they disrespect the idea of marriage. Their plea is that they do respect it, respect it so deeply that they seek to find its fulfillment for themselves. Their hope is not to be condemned to live in loneliness, excluded from one of civilization’s oldest institutions.  They ask for equal dignity in the eyes of the law. The Constitution grants them that right.”

“Today’s ruling will provide both same-sex and opposite-sex married couples with the same rights across all 50 states and the District of Columbia,” said Gail Cohen, vice president and general trust counsel for Fiduciary Trust Company International.


“The myriad of state and federal rights and privileges that are afforded to married couples will apply to everyone equally,” she added. “As advisers, we can now provide advice to all of our married clients in a manner that is consistent regardless of where the marriage takes place and regardless of where the married couple lives.”

“The decision affects fewer states than a ruling the other way would have done,” said Mark Luscombe, principal federal tax analyst for Wolters Kluwer. “Only four states were directly before the court, so the ruling technically only directly applies in Michigan, Ohio, Kentucky and Tennessee. Other states may decide to go along with the Supreme Court on this, or drag their heels and wait until a federal court with jurisdiction over them files a decision in line with this case.”

“There are 20 states in which same-sex marriage has been imposed by a court,” Luscombe observed. “Had the ruling gone the other way, it might have caused some of the 20 states to try to reverse.”

Rishi Agrawal, a state tax law editor at Bloomberg BNA, said the U.S. Supreme Court’s decision in Obergefell v. Hodges allows same-sex couples to now marry in all 50 states. “This right confers the same benefits to same-sex married couples that opposite-sex married couples already have in all states, including the ability to file joint tax returns and the right to inherit property from each other,” he said.

“Before the decision, same-sex married couples were already able to file joint tax returns at the federal level as a result of the 2013 U.S. Supreme Court case, U.S. v. Windsor. The 37 states that already recognized same-sex marriage generally require same-sex married couples to use the same filing status on their state returns as on their federal return. However, most states that did not recognize same-sex marriage required couples to file individually or as head of household. Some states even required same-sex married couples that filed jointly at the federal level to prepare pro forma individual returns for their federal taxes, creating an additional burden for those couples.”

“As a result of today’s decision, it is likely that states that did not recognize same-sex marriage before will follow the lead of other states and require same-sex married couples to use the same filing status on their state returns as on their federal returns,” he added. “We anticipate that states will soon issue tax guidance as a result of today’s decision on how same-sex couples can file joint returns and whether couples who were already married can file amended returns for 2014.”

“The U.S. v. Windsor decision in 2013 specifically addressed the fact that same-sex spouses may take advantage of the federal estate tax exemption for married couples when inheriting property,” Agrawal noted. “Following today’s decision, same-sex married couples will likely be treated identically to all married couples in all states with regards to estate tax and other inheritance issues.”

“The decision is the culmination of decades of litigation and the fastest shift in public opinion in American history,” said Nicole M. Pearl, a partner in the Los Angeles office of McDermott Will & Emery who has extensive experience in estate and tax planning for gay, lesbian and unmarried couples.

Those couples who live in states that don’t currently allow or recognize same-sex marriages will finally have the opportunity under federal tax regulations to:

  • Make unlimited gifts to one other without having to worry about gift tax implications.
  • Leave property to one another without the survivor needing to pay estate taxes.  
  • Leave an IRA to the surviving spouse as a “rollover” IRA, which is treated much more favorably for tax purposes than an “inherited” IRA.  
  • Qualify as a surviving spouse for purposes of determining Social Security benefits. For instance if a deceased spouse was receiving a higher Social Security benefit than the surviving spouse, the surviving spouse can generally qualify for the higher benefit.

Various state benefits will also accrue to such couples.  Pearl added that those who traveled to another state to marry but reside in a state that does not currently recognize their marriage may be able to take advantage of certain state rights afforded only to married couples, including:

  • Rights to visit each other in the hospital, or act as guardian or conservator for an incompetent spouse. 
  • Rights to file joint state income tax returns, thus saving money in many cases. 
  • Rights to inherit property under a state’s intestacy statute, or to act as executor or personal representative of a deceased spouse’s estate, and importantly,
  • Enable same-sex couples to end a marriage that did not work out. Most states allow anyone to obtain a marriage license—regardless of where a couple is living. However, a couple generally cannot file for divorce in the court of any state in which they do not live.
ACCOUNTING TODAY

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