Comprehensive Advisor

Have a Digital Camera? Now's the Time to Use It!

If you’re ever audited, it helps to have photographs or video of these items.  When purchasing a new item always demand a detailed receipt.

 

One other supremely beneficial use of the video recording you make for Uncle Sam is to use your digital records for insurance claim purposes.

 

For one small investment in a digital camera, you can take care of two birds at one time.  You can prove to your prodigious Washington-based Uncle Sam the item you donated was what you claimed.  Also, in the case of a fire, flood, or other disaster (natural or otherwise), you can prove to the insurance company the extent of your loss.

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

Think Twice Before Unloading Junk

Under a provision of the 2006 Pension Protection Act, contributions of physical items must be in good used condition or better to qualify for a deduction. This means you can’t deduct ripped or discolored clothing (unless those jeans were bought in such condition!).  Non-working Appliances don’t qualify for a deduction any longer, either.

 

If you donate noncash property valued at more than $500, you need to report to the IRS how and when you acquired the property and your cost basis. You must file Form 8283, Noncash Charitable Contributions, for all donations of property valued at more than $500.

 

When this $500 limit came into being a number of years ago, the IRS reported record numbers of taxpayers claiming $495 or so of noncash contributions.  Now there’s a surprise!

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

Giving It Away, Keep Those Records!

If you give away property whether it’s clothing or household items, get a receipt that includes a description of the donated property and the amount of the fair market value of the donated property.

 

If a donation is left at a charity’s unattended drop site, keep a written record of the donation.  Your record should include a description of the property, its condition, and its value (of course!).  The IRS is looking for appraised values or fair market value.  Without substantiation, the IRS might be looking for yard sale value.

 

For any kind of vehicle, boat or airplane, the deduction is now limited to the gross proceeds from the sale of the item.   Back in the good old days, you could claim blue book value for a clunker.  Those days are gone forever!  This rule applies if the claimed value of the vehicle is more than $500.   Form 1098-C, or a similar statement, must be provided to the donor by the organization and attached to the donor’s tax return.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

There are Charities, and Then There are Charities!

You need to make sure the organizations receiving your hard earned dollars are qualified as Section 501c3 charities.  You can check IRS Publication 78, available online and at many public libraries.  Pub. 78 lists most organizations that are qualified to receive deductible contributions.  Better yet, there’s an online version too. Just go to IRS.gov and type in “Search for Charities.”

 

There is a key exception to the Pub. 78 list.  It’s important to note that churches, synagogues, temples, mosques and government agencies are eligible to receive deductible donations, even though they often are not listed in Publication 78.

 

Oftentimes, what looks like a charity on the outside is really a social club or political organization.  For example, I’m active in the local BMW car club.  While it’s a great bunch of folks and we have fun driving around, it’s purely a social club.  Contributions to it receive no favored status within the tax code.

 

Political parties are another bunch that do not qualify as a recipient of tax deductible contributions.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

Keep These Records Playing!

Uncle Sam likes a record. To deduct any charitable donation of money, a taxpayer must have a bank record or a written communication from the charity showing the name of the charity and the date and amount of the contribution.  It definitely helps to have both. Bank records mean canceled checks, bank or credit union statements or credit card statements. Bank or credit union statements should show the name of the charity and the date and amount paid. Credit card statements should show the name of the charity and the transaction posting date.

 

For payroll deductions, the taxpayer should retain a pay stub, Form W-2 wage statement or other document furnished by the employer showing the total amount withheld for charity, along with the pledge card showing the name of the charity. If you remember the good old days when the IRS was satisfied with personal bank registers or scribbled notes to document the donation, forget about them!  They’re not so easily satisfied anymore.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

Year End Planning, It's Not Too Late to Start

Charitable giving is an important part of tax planning at yearend, so be sure to look at both the cash and the noncash aspects of giving. Depending on the amount of earned income you have and the amounts of your charitable donations, it may make sense to contact a tax expert or financial planner to talk about the tax ramifications for your particular giving situation.

 

 

Remember, you have to itemize.  Only individual taxpayers who itemize their deductions on Schedule A can claim a deduction for charitable contributions. This deduction is not available to people who choose the standard deduction, including anyone who files a shorter form (1040A or 1040EZ).

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

Charitable Giving, It's Not Too Late!

There’s a special sinking feeling as you approach Dec. 31 and realize you’ve done no tax planning whatsoever. That includes big issues like end-of-the-year investment decisions, and the smaller ones, like that stuff you no longer use

piling up in the basement.

 

While there may not be much value in each individual item, maybe in aggregate there is enough to save some on your 2009 tax bill.  Imagine that, the stuff in the basement can save you money on taxes!

 

Over the next few posts we’ll discuss some of the finer points of gifting strategies.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

What's Medicaid?

This is the name for the federal program and corresponding state programs that pick up healthcare costs for indigent children and adults. Unless you’re below the poverty line or you spend out your assets in your senior years, this won’t be part of the discussion.

 

There is one benefit Medicaid offers that might tempt people to wonder about trying to qualify for Medicaid.  That benefit is long term care.  The downsides though are sufficiently scary for most people so as to dissuade them from attempting this.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

When Do I Enroll in Medicare?

You have a six-month window to enroll for Medicare starting three months before your 65th birthday and ending three months after. As mentioned above, if you’re already receiving Social Security at age 65, you’ll automatically be enrolled in Part A, but if not and you enroll more than three months after your 65th, you may be subject to a late enrollment penalty.

 

You will be enrolled automatically in Part B, if you are receiving Part A automatically.  Suppose you don’t want Part B?  You’ll need to take affirmative action not to be enrolled.  Also, signing up beyond three months after your 65th birthday may result in additional fees for your premium unless you qualify for one of the Special Enrollment Period exceptions.

 

Part D is entirely different.  You may sign up when you sign up for Part A.  Or, every November 15-December 31 is an open enrollment period during which you can join.  Further, during this open enrollment period you can switch from one plan to another.  As with other Parts of Medicare, late enrollment in Part D may lead to higher premiums.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.

 

Medigap, Does it Fill the Hole?

So-called “Medigap” coverage is supplemental coverage that’s available for people who opt to be covered under Original Medicare’s Part A and Part B coverage. You buy Medigap insurance from a private insurer.  Your primary goal is to determine whether that supplementary coverage actually pays for the things you know you’ll need that Medicare doesn’t cover. You do have to pay a monthly premium for this coverage. And again, if you choose Medicare Advantage (Part C) coverage, you’re not allowed to buy Medigap coverage. 

 

To compare Medicare and Medigap coverage, visit the Medicare Personal Plan Finder on the Medicare.gov website.

 

There are 12 standardized policies: Plan A to Plan L. Each has a different set of benefits. Medigap policies only work with the Original Medicare plan. You do not need to buy a nor are you even allowed to buy a Medigap policy if you are enrolled in a Medicare + Advantage Plan.

 

Medigap policies follow certain Federal and state laws designed to protect you. They must be clearly identified as Medigap policies.  Medigap policies must provide specific benefits that help fill in the gaps in the original Medicare plan. 

Insurance companies must use the same format, language and definitions when describing all of the Medigap policies. They must also use the same uniform chart and outline of coverage to summarize the benefits of each plan.  Because of these requirements, it is easier for you to compare the policies of different insurance carriers.  Most of the cost difference between providers is due to geographic area of coverage and that particular provider’s claims history.

 

Standardized Medigap Plans:  There are 12 standardized policies. Plan A is the basic benefit package. Each of the other plans includes the basic Plan A, plus different combinations of additional benefits. Plan L will provide the most coverage. Insurance companies cannot change the combinations of benefits or the letter names of them.

 

Medicare Select:  This is a type of standardized Medigap insurance policy. If you choose this policy, you are choosing one of the standardized Medigap plans.

The only difference between Medicare Select and Standardized Medigap insurance is that each insurance company has specific hospitals, and in some cases, specific doctors that you must use. The premiums for this policy are usually lower.

 

Basic benefits:

• There are basic benefits that every plan (Plans A-L) must include.  These are:

• Hospitalization—Pays Part A coinsurance plus coverage for 365 additional days during your lifetime after Medicare benefits end.

• Medical expenses—Pays Part B coinsurance (generally 20% of Medicare-approved expenses)

• Blood—Pays for first 3 pints of blood each year

 

The Medicare coverage selection process involves a lot of choices.  Be sure to involve those who might be helping to take care of you in this process.  Whether it’s your spouse, your children, or someone else, they will want to help.  It may make their job of helping you that much easier.

 

As always, please visit our website www.weslingfinancial.com or email us at info@weslingfinancial.com for further info and to discuss your personal situation.