Category Archives: Newsletter – “Tips & Strategies to Steer By”

CARES (Coronavirus Aid, Relief and Economic Security) Act – Individuals

Posted on by Tuesday, April 14
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Catching a break – For many, in addition to the health and other challenges we face, this a financially difficult time. This ezine is offered in the spirit of providing information on options that may be available to help you as you weather the coming weeks and months. Please know that this document is meant to be brief and not comprehensive, i.e. especially related to the COVID 19 related criteria.

Cash Payments

Recovery Rebates – They are available in the form of a refundable tax credit. You won’t need to apply, and the IRS will do the calculation to determine the eligible amount. The base amount is $1,200 per taxpayer and $500 for each dependent child who does NOT turn age 17 by the end of the year. If you have a son or daughter away at college, they may receive their own check as long as they are not your dependent and they have been required to file taxes. What about senior citizens who don’t make enough to need to file taxes? If they receive Social Security benefits then they will receive a check regardless of their taxable income.

Here’s a Recovery Rebate calculator: https://www.washingtonpost.com/graphics/business/coronavirus-stimulus-check-calculator/?itid=hp_hp-top-table-main_virusfiscal-desktopblurb%3Ahomepage%2Fstory-ans&template-name=%7B%7Bletter.config.name%7D%7D&utm_campaign=wp_personal_finance&utm_medium=email&utm_source=newsletter&wpisrc=nl_finance

Looking at it from the other side, who doesn’t get a check?
Dependents, for tax purposes, age 17 and over
Taxpayers who exceed income limits on a scale that starts at $75,000 for those who file as individuals and $150,000 for married filing jointly filers, etc.

Do you need to have filed 2019 tax returns? No, if you have not yet filed, then the calculation will be based on your 2018 tax return.

So, if it sounds like you qualify, then you might consider if the IRS has your banking information and whether you’ve moved since you last filed your taxes. If the IRS doesn’t have your banking information they will be mail a check to your last known address. If you have moved, then file IRS Form 8822 to provide your change of address. Taxpayers who haven’t provided direct deposit information on their 2018 or 2019 tax returns will be able to enter it in a portal the IRS is setting up to expedite receipt of their checks. Checks could arrive as early as April 15 or before if the IRS has you banking information and as late as September if they don’t.

Unemployment – There will be an additional $600 weekly payment for each recipient of unemployment insurance for four months. Think you don’t qualify for unemployment? You may want to investigate the COVID 19 specific exceptions that make it possible for some small business owners. In addition, you may qualify for short-time unemployment that allows you to work for less time and compensation, if the State of California decides to offer this coverage. In addition benefits have been extended by 13 weeks during the crisis. And, the benefits will start immediately, as compared to after the normal waiting period of one week.
For updated and more detailed information, check the IRS website at: https://www.irs.gov/coronavirus.

Debt Payments Made for You

Are you paying off federal student loans using the income-based repayment, Public Service Loan Forgiveness or have a defaulted loan enrolled in a rehabilitation program? If so, your payments will be suspended till September 30th and will be counted as a loan payment. In other words, the federal government will be making your loan payments during the suspensions.

Pell Grants – A student who received a Pell Grant will for the most recent semester or quarter will not to pay back or return the Pell Grant to the federal government if they stopped attending college prematurely due to a qualifying emergency. The amount will not be applied against your lifetime limits.

Deferred Responsibilities and Deadlines

Mortgage, Auto Payments – Depending on your lender you may be able to defer making payments for as long as long as 120 days.

Income tax filing and the resulting tax payments – Now due on July 15th instead of April 15th.

FICA payments – And, if you’re a sole-proprietor, you can defer the employer portion (6.2%) of your Social Security payments until 12/31/21 for 50% of the amount and 12/31/22 for the remaining 50%.

Taking Distributions from Your Retirement Accounts – The federal government has made it easier to for you to access money in your retirement accounts.

They have waived the early withdrawal (prior to age 59 ½) 10 per cent penalty for distributions up to $100,000.

They will allow you to recognize the income over three years rather than in one year, the year you took the distribution. And, if you recognize the income this year, you will be allowed to amend your return to spread this income recognition over the next three years.

The amount available as a loan was increased from $50,000 to $100,000. You pay yourself any interest owed.

You will be allowed to “return” a distribution to your retirement account for up to three years, despite contribution limits, for the next three years.

Possible Tax Savings There is a new above-the-line $300 tax deduction for charitable cash contributions. Above-the-line means that you receive the benefit even if you take the standard deduction. Be careful about the organization to which you contribute. It needs to be a Section 501(c)(3) organization. There are organizations that collect for other charities and they don’t quality. They are Section 409(a)(3) organizations.

If you are feeling really generous, you can now give up to 100% of your Adjusted Gross Income (AGI), as compared to 60% of your AGI in previous years.

You will be able to forego your Required Minimum Distributions (RMD’s). And if you did take them, you can put the distribution back, within 60 days of taking the distribution.

There are more provisions that relate to businesses that are not discussed here.

Have a question? Please send an email or give me a call. If I can help you in a 15-30 minutes phone call or via email by providing general information, I will do so on my nickel. If I can’t, I will try to find a resource for you. And, if some analysis specific to you is necessary, I will let you know how we might work together.

Moon Doggie, Get Your Board ‘cause the Home Equity Amortization Wave is Coming

Posted on by Friday, January 10

Amortization sounds like a nerdy, financial term. It’s really a simple way to describe the process of paying off of debt in regular installments over a period of time according to Investopedia. Home equity lines of credit are debt. So, how and when are they paid off, other than when a home sells? Unfortunately that’s a question to which too many homeowners have given too little consideration. READ MORE

Financial Abuse and Charities– It’s Not Just Your Elderly Mother Who is a Target

Posted on by Monday, July 15

You want your money to work hard for you when you invest it.  Helping my clients make the best decisions about investments is part of what I do in my financial planning practice. Shouldn’t you also want the money you donate to charities to work hard doing good things for your chosen cause?  Unfortunately, too many people are drawn to give to a charity by a guilt-tripping phone solicitation and sympathetic sounding name. The Center for Investigative Reporting found in a recent in depth investigation that:

“The 50 worst charities in America devote less than 4 percent of donations raised to direct cash aid. Some charities give even less. Over a decade, one diabetes charity raised nearly $14 million and gave about $10,000 to patients. Six spent nothing at all on direct cash aid.”  http://cironline.org/americasworstcharities READ MORE

Brokerage accounts – a necessary evil for the accidental investor?

Posted on by Tuesday, April 23
Who is the accidental investor?  It’s the tech genius who moves from company to company, participating in 401(k)’s, which he forgets once he moves on to the next opportunity.  Or perhaps it’s the self-employed entrepreneur whose CPA told her to set up a retirement account at year end.  Or maybe it’s the working Mom who recently inherited a small next egg she would like to use to fund her kid’s education.    READ MORE

Saving money on Rx – my wallet is feeling better already

Posted on by Wednesday, February 6

What’s better than saving money on a $1,000 purchase? Saving on a $1,000 purchase you make year after year. For me, and most likely, a good portion of our aging population, prescription drugs is just such an expense, so I was especially excited to hear that there are websites that will tell me what local pharmacy has the lowest price for a prescription. READ MORE

In search of a pot of gold or maybe just a savings account that pays interest

Posted on by Wednesday, January 16
When I think of cash for emergency funds, I think of “parking” the funds somewhere accessible and out of mind.  I want those funds to be a line item on the investment statement that reminds my clients — on those occasions when  they review their investment statements — that if they lose their job tomorrow, or become sick, they would be able to pay their bills in the short term.  READ MORE

How to prevent your own fiscal cliff

Posted on by Tuesday, December 4
While our representatives in Washington attempt to come up with a plan to avoid a national financial cliff, many of my clients are attempting to deal with the uncertainty that abounds.  My advice is to focus on what you know, and what you can control.
Here’s a short list of the more significant tax changes scheduled for January:

  • In California, sales tax will increase by .25%.
  • Medical deductions on your Federal return will have to exceed 10%, and not 7.5% of Adjusted Gross Income.
  • Flexible spending account deductions will be reduced. READ MORE

Give it NOW if you’ve got it, or pay Uncle Sam when you pass in the big way

Posted on by Friday, November 2
That’s right. I am talking about estate taxes. Your heirs are in great luck if you die in 2010, with a zero estate tax rate, but if you die in 2011, and if changes in tax legislation remain unresolved, the portion of your estate which will avoids estate tax will drop back down to $1.0 million, as compared to $3.5 million in 2009. My guess is that for many of you that your net worth could exceed the $1.0 limit in 2011, especially if you own real estate. So while estate tax planning was once only for the “fat cats,” it’s not any more. READ MORE

Long term care needs – the wild card of financial planning

Posted on by Tuesday, October 16
Nothing is going to send a financial plan into a “crash & burn” faster than a disabling sickness or accident.  Even when you have medical insurance, you still have to worry about the costs of nursing homes, assisted care facilities and home health care — none of which are covered by most medical insurance policies, including Medicare.
READ MORE