by NFS | May 6, 2013 | Archives
You’ve just become disabled, but you’re not worried. Why? Because you think Social Security disability payments will “take care of you.” Really? According to statistics from the Social Security Administration, the average person who has qualified for Social Security benefits receives $1,125.10 a month.
If you’re making $50,000 per year, how long could you (and your family) survive on a disability payment of $1,125.10 per month? That’s only $13,501 per year, or 27% of your income. This assumes you qualify for benefits, and not everybody does. And if you do, it may still be more than two years—yes, years— before you start to receive any payments. What will you do in the meantime?
It’s time for you to protect your paycheck.
What am I talking about? You protect your home by insuring it against loss. You do the same for your car, boat, motorcycle, RV and personal property, but have you insured your paycheck?
Yes, I am talking about disability insurance. You protect your worldly goods with insurance, and you also need to protect your income against loss. If you become ill or injured and are unable to work, disability insurance pays you a percentage of your income until you can return to work.
May is Disability Insurance Awareness Month, the perfect time to talk to us and learn how to protect your paycheck.
-Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation
by NFS | May 1, 2013 | Archives
Don’t Let These Myths Stop You From Getting the Proper Coverage
Figuring out if you need disability insurance is pretty easy. If you have a job, you need it. Why then do the majority of American workers lack this basic protection? Common misconceptions are largely to blame. Here I will debunk four of the big myths surrounding this essential insurance coverage.
1. Myth: “I’d rely on my savings until I could get back to work.”
Reality: Most people overestimate the resources they have to cover their expenses if a disabling illness or injury kept them from earning a paycheck. According to a LIFE Foundation survey, half of working Americans say they couldn’t make it a month before financial difficulties would set in, and more than one in four would have problems immediately. Keep in mind that disabling illnesses or injuries often last for months or even year.
2. Myth: “I don’t need it – I don’t work in a dangerous profession.”
Reality: You actually have a three in 10 chance of suffering a disabling illness or injury during your career that would keep you out of work for three months or more. While it’s true that people in professions like farming, law enforcement, and construction face greater risks, the odd of suffering a long-term disability are high for all workers because illness – not accidents – account for 90 percent of disabilities that keep people out of work.
3. Myth: “The government provides assistance when people get disabled.”
Reality: According to the National Safety Council, 73 percent of long-term disabilities are a result of an injury or illness that is not work-related and therefore wouldn’t qualify for state-based Workers’ Compensation programs. If you were hoping for Social Security disability benefits, know that about 45 percent of those who apply are initially denied, and those who are approved receive an average monthly benefit of just $1063, which would leave you with an income barely above the poverty online. Government programs are a good back-up plan, but shouldn’t be your main line of defense.
4. Myth: “I have disability coverage at work.”
Reality: Disability insurance through work is a great benefit, but you need to find out exactly what coverage you have. According to the U. S. Department of Labor, more than 70 percent of employers don’t offer long-term disability coverage. And short-term or partial coverage wouldn’t be enough to allow you to meet your current and future financial obligations if you were unable to work for an extended period of time.
Call our office to see how we can help you get your protection today – 800-560-4637
by NFS | Apr 15, 2013 | Archives
Today is the filing deadline for your 2012 tax returns! If you live in Massachusetts or Maine, you have until tomorrow April 16th to file your state return, but your Federal Return is still due with the IRS on 04/15.
If you haven’t finished up and you need to file an extension, come on in today to our office and we will take care of that for you…the coffee and donuts are here waiting for you!
by NFS | Apr 11, 2013 | Archives
If you find you owe tax after completing your federal tax return but can’t pay it all when you file, the IRS wants you to know your options.
Here are four tips that can help you lower the amount of interest and penalties when you don’t pay the full amount on time.
1. File on time and pay as much as you can. Filing on time ensures that you will avoid the late filing penalty. Paying as much as you can reduces the late payment penalty and interest charges. For electronic payment options, see IRS.gov. If you pay by check, make it payable to the United States Treasury and include it with your return.
2. Consider getting a loan or paying by credit card. The interest and fees charged by a bank or credit card company may be lower than IRS interest and penalties. For credit card options, see IRS.gov.
3. Request a payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment plan. You can:
- Use the Online Payment Agreement tool at IRS.gov, or
- Complete and submit Form 9465, Installment Agreement Request, with your tax return. Find out about payment agreement user fees at IRS.gov or on Form 9465.
4. Don’t ignore a tax bill. If you get a bill from the IRS, contact them right away to talk about payment options. The IRS may take collection action if you ignore the bill, which will only make things worse.
In short, it is always best to file on time, pay as much as you can by the tax deadline and pay the balance as soon as you can. For more information on the IRS collection process go to IRS.gov or see IRSVideos.gov/OweTaxes.If you need help, please do not hesitate in contacting our office.
by NFS | Mar 13, 2013 | Archives
If your lender cancelled or forgave your mortgage debt, you generally have to pay tax on that amount. But there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2012.
Here are 10 key facts from the IRS about mortgage debt forgiveness:
- Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home.
- To qualify, you must have used the debt to buy, build or substantially improve your principal residence. The residence must also secure the mortgage.
- The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return.
- You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring. You may also be able to exclude mortgage debt cancelled in a foreclosure.
- You may also qualify for the exclusion on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing.
- Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify.
- If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Submit the completed form with your federal income tax return.
- Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings. Form 982 provides more details about these provisions.
- If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property.
- Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form.
Use the Interactive Tax Assistant tool on IRS.gov to check if your cancelled debt is taxable. Also, see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments.
by NFS | Mar 10, 2013 | Archives
The term “capital asset” for tax purposes applies to almost everything you own and use for personal or investment purposes. A capital gain or loss occurs when you sell a capital asset.
Here are 10 facts from the IRS on capital gains and losses:
- Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. Capital assets include your home, household furnishings, and stocks and bonds that you hold as investments.
- A capital gain or loss is the difference between your basis of an asset and the amount you receive when you sell it. Your basis is usually what you paid for the asset.
- You must include all capital gains in your income.
- You may deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of personal-use property.
- Capital gains and losses are long-term or short-term, depending on how long you hold on to the property. If you hold the property more than one year, your capital gain or loss is long-term. If you hold it one year or less, the gain or loss is short-term.
- If your long-term gains exceed your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a ‘net capital gain.’
- The tax rates that apply to net capital gains are generally lower than the tax rates that apply to other types of income. The maximum capital gains rate for most people in 2012 is 15 percent. For lower-income individuals, the rate may be 0 percent on some or all of their net capital gains. Rates of 25 or 28 percent can also apply to special types of net capital gains.
- If your capital losses are greater than your capital gains, you can deduct the difference between the two on your tax return. The annual limit on this deduction is $3,000, or $1,500 if you are married filing separately.
- If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they occurred that year.
- Form 8949, Sales and Other Dispositions of Capital Assets, will help you calculate capital gains and losses. You will carry over the subtotals from this form to Schedule D, Capital Gains and Losses. If you choose to work with us and e-file your tax return, the professionals here at NFS will do this for you automatically.
