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Tax Tip of the Week | No. 374 | How Much is a Hundred Bucks Really Worth in Ohio? September 28, 2016

Posted by bradstreetblogger in : General, Tax Tip, Taxes , add a comment

Tax Tip of the Week | September 28, 2016 | No. 374 | How Much is a Hundred Bucks Really Worth in Ohio?

A hundred dollars will get you more in Ohio than most states.

How much is $100 really worth? It depends on where it’s spent.

Products often cost less in the Midwest or the Great Plains than on the East Coast. As a result, the same amount of cash can buy comparatively more in a state where prices are lower.

Using price data from the Federal Bureau of Economic Analysis, the Tax Foundation, a nonprofit, nonpartisan tax research organization based in Washington, adjusted the value of $100 to show how much it buys in each state and the District of Columbia.

In Ohio, a C-note is worth $111.98, which is among the highest in the country. That isn’t too surprising as the Buckeye State is routinely recognized for its affordability. Many businesses have relocated to Ohio, and the Dayton region, to take advantage of that.

The states where $100 is worth the most are Mississippi ($115.34), Arkansas ($114.29), Alabama ($113.90), South Dakota ($113.64) and West Virginia ($112.49).

On the flip side, that $100 is only worth $84.67 in the District of Columbia; $85.62 in Hawaii and $86.43 in New York.

Now, go spend some of those cheap dollars!!!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 373 | What You Need to Know About Medicare – Part 2 September 21, 2016

Posted by bradstreetblogger in : Deductions, General, Tax Planning Tips, Tax Preparation, Tax Tip, Taxes , add a comment

Tax Tip of the Week | September 21, 2016 | No. 373 | What You Need to Know About Medicare – Part 2

We keep getting more and more questions about Medicare from people who are planning for retirement. This two part series will hopefully give you a start in knowing what to do—and what NOT to do. The following is some seminar material put together by the Tax Speaker, a publication we receive.

Medicare Enrollment-continued

The special enrollment period (SEP-see example below) is used any time after the initial enrollment period (IEP) when an eligible individual loses coverage in an employer sponsored group health plan. Medicare B coverage begins the month following enrollment. An employee only qualifies for the SEP if he or she is losing coverage under a group health plan offered by their employer or their spouse’s employer because the individual was actively working. It does not apply to insurance under a retiree health plan, a COBRA plan, an individually purchased plan, a VA plan or a plan provided by a former employer.

Example: Some folks turning 65 elect to continue with coverage through their employer as active employees, as retired employees or through COBRA. Once you leave the job at 65 however, you must enroll in Part B within 8 months after the month you retire, even if you continue to be covered by the employer’s plan or COBRA under the Special Enrollment Period rules. If you miss enrollment during this time, you will be forced to wait until the general enrollment period (1/1-3/31) during which time you will be uninsured.

Even worse, most employers consider Medicare B a primary payer and will only pay those things Medicare B will not cover, and if the employer plan doesn’t realize it, they could ask for repayment of any incorrect payments. For each 12-month period you delay in enrolling in Part B, you will pay a 10% penalty of your Part B premium forever!

The general enrollment period is available January 1-March 31 each year when the above two periods do not apply, usually for late enrollment. Medicare participation does not begin until July 1. This period is also called the late enrollment period because the late penalty discussed previously may apply.

The open or annual election period (AEP) is available from October 15-December 7 for the next year. The AEP is used to change types of coverage to/from Medicare Advantage, Part D prescription coverage, etc.

Most people MUST enroll in Medicare at age 65 during the IEP or face a late enrollment penalty, except for those still working and covered by an employer group plan of 20 or more employees. Unless you meet the exception, late enrollees will be subject to a 10% of Part B premium penalty for each 12-month period they go without applying after becoming eligible, and the penalty will continue for the rest of their life!

Individuals who sign up for Social Security benefits by age 65 must watch this Medicare signup rule very closely so as not to miss the age 65 deadline. They should sign up 3 months before their 65th birthday (1-800-772-1213). Enrollment applies to Parts A and B automatically but not Part D, which is voluntary. Whenever the Medicare Part B premium increases,  the late enrollment penalty (LEP) will also increase, without a dollar limit!

Let us know if you have any retirement planning questions.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504, or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 372 | What You Need to Know About Medicare – Part 1 September 14, 2016

Posted by bradstreetblogger in : Deductions, General, Tax Planning Tips, Tax Tip, Taxes , add a comment

Tax Tip of the Week | September 14, 2016 | No. 372 | What You Need to Know About Medicare – Part 1

We keep getting more and more questions about Medicare from people who are planning for retirement.  This two part series will hopefully give you a start in knowing what to do—and what NOT to do. The following is some seminar material put together by the Tax Speaker, a publication we receive.

Review of Medicare Enrollment Periods:

If you are already getting Social Security retirement, disability benefits or railroad retirement checks, you will be contacted a few months before you become eligible for Medicare and given the information you need. You will be enrolled in Medicare Parts A and B automatically. However, because you must pay a premium for Part B coverage, you have the option of turning it down.

An individual that does not sign up for Social Security at age 65 will not be informed by any Federal agency of the Medicare enrollment rules, so they must proactively enroll themselves. At age 65 Medicare becomes the primary payer even for individuals covered under private plans. The only conventional insurance that remains primary is an employer group plan of 20 or more employees.

Alert: Individuals that have bought insurance through the Marketplace need to be aware that at age 65 the Marketplace plan becomes secondary to Medicare. If they do not sign up for Medicare at age 65 they do not have primary health insurance coverage which means they are essentially without insurance. Enroll in Medicare at age 65! Because of the three month enrollment window in Medicare before age 65, the individual needs to decide and act on Medicare at age 64½.

Because of the late enrollment penalty for Part B, nearly everyone should enroll in Part A during their initial enrollment period so that they have a record of timely enrollment, and so that the decision to delay in enrolling in Part B is proven to be due to coverage through an employer plan. The only reason to delay in enrolling in Part A would be because the participant is covered by a high-deductible HSA-qualified conventional insurance plan and they still wish to deposit to the savings account feature.

The initial enrollment period (IEP) is used for when an individual turns 65 to sign up for Medicare Part A, Parts B and D if desired, or Part C-Advantage programs if desired. It begins 3 full months before the month in which the individual turns age 65 and ends 3 full months after the month of the individual’s 65th birthday. Once signed up there is no need to sign up again-it is a permanent thing, not an annual election.

Part 2 will be presented next week.

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.

Tax Tip of the Week | No. 371 | New Law to Affect Refunds in 2017 September 7, 2016

Posted by bradstreetblogger in : General, tax changes, Tax Planning Tips, Tax Tip, Taxes , add a comment

 

Tax Tip of the Week | September 7, 2016 | No. 371 | New Law to Affect Refunds in 2017

Here is a recent memo we received from the IRS I thought you would find interesting……..

The IRS has announced initial plans for processing tax returns involving the Earned Income Tax Credit (EITC) and Additional Child Tax Credit (ACTC) during the opening weeks of the 2017 filing season. The IRS is sharing the information now to help the tax community prepare for the 2017 season, and plans are being made for a wider communication effort later in the summer and fall to alert taxpayers about the changes that will affect some early filers.

This action is driven by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act) that was enacted into law on December 18, 2015. Section 201 of this new law mandates that no credit or refund for an overpayment for a taxable year shall be made to a taxpayer before February 15 if the taxpayer claimed the Earned Income Tax Credit or Additional Child Tax Credit on the return.

This change begins January 1, 2017, and may affect some returns filed early in 2017.

– To comply with the law, the IRS will hold the refunds on EITC and ACTC-related 2016 returns until February 15, 2017.

– This allows additional time to help prevent revenue lost due to identity theft and refund fraud related to fabricated wages and withholdings.

– The IRS will hold the entire refund. Under the new law, the IRS cannot release the part of the refund that is not associated with the EITC and ACTC.

– Taxpayers should file as they normally do, and tax return preparers should also submit returns as they normally do.

– The IRS will begin accepting and processing tax returns once the filing season begins, as they do every year.

– The IRS still expects to issue most refunds in less than 21 days, though IRS will hold refunds for EITC and ACTC-related tax returns filed early in 2017 until February 15 and then begin issuing them.

It is never too early to start thinking about “Tax Season”!

You can contact us in Dayton at 937-436-3133 and in Xenia at 937-372-3504.  Or visit our website.
Rick Prewitt – the guy behind TTW

…until next week.