Tag: Insurance

Don’t Miss Out on the Small Business Health-Care Tax Credit

Sanjiv Gupta CPA - 9 years ago
I am sure you won’t mind taking some more business tax credits.   Here is another tax credit, if you are a small business employer with less than 25 employees who are earning an average wage of less than $50,000 a year and you pay at least 50% of the employee’s insurance premiums.This tax credit is targeted towards tax-exempt organizations and small businesses.  This credit allows small business owners to offer health insurance for the first time.Here is the scope of health insurance tax credit:You take this credit as part of the general business credit.  You can use the form 3800 and any unused general Business Credit would be included with the tax return.  This unused credit can be carried back one year and then forward for up to 20 years. You must have less than 25 full-time employees.  The number of employees is calculated by calculating total number of hours and the total number of employees.The average annual wage should also be less than $50,000.  Once again, this is calculated based upon FICA wages and the total number of full-time employees.The tax credit is for Small Business Owners or Tax-Exempt Organization.Businesses who can’t take credit for 2011 may be eligible to take advantage in future years.  Small employers can claim this credit between 2010 to 2015.Now the question you are waiting for, How much tax credit?The maximum credit for small business employers is 35% of premiums paid.  For tax-exempt employers, the maximum tax credit is 25% of premium paid.Want more good news?Beginning in the year 2014, the tax credit will go up to 50% of premiums paid and 35% for tax-exempt organizations.Please note tax credit is on the amount you pay for health care premiums.  Credit is not on employee-paid premiums.   With up to 50% tax credit, I am sure you would love to offer healthcare for your employees.Want to take credit this year? Call our office for an appointment.

Road Block To Retirement

Sanjiv Gupta CPA - 8 years ago
Have you ever wondered if you may hit a roadblock in your journey to retirement?I will cover some basic strategies that can help you limit the damage caused by an unexpected event or change of lifestyle.A Protracted Illness | 21st Century Major CrisisNursing home care is super expensive both in India and the United States.   The nursing home cost can exceed well over $250/day in the US.  In a recent phone call with Kiser, I was told that paying $500/night for stay at the hospital is a great deal. Well – maybe for Kiser, not for me.If your family has a history of a health problem then you should consider long term care insurance.   At least have a plan in place to deal with such a situation.  You don’t want to end up spending all your retirement savings on nursing homes.Starting or Selling a Business Having a second stream of income during retirement can be very helpful.  Consider buying a business that has a long history of profitable years and has a good management team in place.   A real estate management company and good running restaurants can be great investments.You want to delay collecting from social security as much as possible.  Consider using income from Roth IRA, investment, and businesses during the early part of your retirement.Divorce: Don’t even think about itDivorce can cause all sorts of the problem including major financial issues.  You can do some damage control by purchasing annuity but try to avoid divorce as much as possible.Taking care of Kids or Grand KidsSupporting kids and grandkids during retirement can take a big chunk of your savings.  Carefully plan your retirement with your CPA to see how much you can spare to help your kids.  You can also consider buying a life insurance policy or funding a 529 college saving plan for your grandkids.Volatile Markets Retirement is not the right time to invest in volatile markets.  You want to play safe bets but talk to a financial adviser who can find safe bets with good returns. Thinking about retirement? Here are a few questions you can ask your Financial Advisor?Which income should I draw from first?What other cost should I consider?As I get closer to retirement, how should I adjust my allocation?Which options for covering health care costs make the most sense for my situation?How often should I make changes to the portfolio?

What Are The Available Medical Deduction Plans?

Sanjiv Gupta CPA - 8 years ago
A medical deduction plan helps to reduce tax on medical expenses.  This type of plan is beneficial for one who has to spend excessively on medical issues.   Medical deduction plans allow a person to qualify for tax exemptions. However, to file a tax return on medical expenses it is essential for an individual to present all supporting medical documents.Tax Deductible ExpensesTax deduction for medical expenses is available for a large number of issues. One can get a deduction on diagnosis cost, cost of treatments and even cost of medical supplies. Medical deduction plans are available for the following issues generally. Fees payable to doctors and dentistsExpenses that one has to pay for medicines that are prescribed by a doctor.For medical aids and equipment like pacemakers, wheelchairs, hearing aids and dental equipment.Charges of weight loss program which is prescribed by a doctor.  However, the charges of low-calorie foods can not be tax-deductable.Travel expenses due to medical treatment. The cost of any type of surgery including eye surgery and cosmetic surgery.However, one point to remember is that medical expenses that improve general health such as vitamin deficiency are not tax-deductible.Who can have the benefits of a tax deduction?A taxpayer can deduct medical expenses for his/her own medical treatment, cost of equipment and surgery.A taxpayer can receive tax deduction for the treatment of a spouse.A taxpayer can claim a tax deduction for the medical issues of a person who is dependant on him/her.  Is there any exposure for non-dependant?IRS generally offers no tax deduction offers for the non-dependants. However, in some special cases tax deduction rules can be changed.IRS does not offer any coverage for a non-dependant even if it is one’s, own child. But if the child is a non-dependable according to the law of divorce or separation. A taxpayer can not claim a person as a dependent if he/she gets $3,700 and more. How to apply for tax deduction? A taxpayer can claim a deduction of medical and dental expenses if the services were made during the tax year.  An applicant can apply for a tax deduction when the payment is complete. This is applicable for each type of payment, such as online payment, payment by phone or credit card.Deduction plans for long term medical expensesIRS offers a tax deduction for long term medical expenses.  If a person suffers a long time from a severe medical issue, he/she can claim a tax deduction for diagnostic, therapeutic, treatment and personal care costs. In order to avail of a long-term medical deduction, one must meet all criteria as specified by the IRS.Medical issues must be of chronic type:  a person can be diagnosed as a chronic sufferer if he /she has been suffering for one year or more and is unable to perform daily activities without substantial cooperation.  if the mentioned person requires extensive care to maintain personal care andDiagnosis, treatment and all other necessary medical services should be executed under the supervision of a recognized doctor or medical practitioner. What should be included in long term medical deduction plans?A tax deduction can also be granted for the following issues. Expenses of meals that a person takes at a hospital or nursing home. However, such meals must be part of medical care. Charges paid for the medical conferences including transportation and admission costs. The time of the conference must involve medical sessions. A person is not capable to claim a tax deduction for food and lodging charges that he/she has to pay during the medical conference. IRS offers a tax deduction for medicines, injections and other medical supplies that are prescribed by a certified medical practitioner. For diabetes patients, the charge of insulin is deductable without prescription. A chronic patient some times requires additional nursing services to perform regular activities. In such a case, the cost to appoint a nurse or an attendant or a caregiver is deductable. Cost of operation, eye surgery can be tax-deductible. On the other hand, IRS does deduct amounts that are spent due to unnecessary surgical treatments such as some kind of cosmetic surgery, artificial implantation, etc.IRS offers a tax deduction for certain issues. These are mentioned in the following points.Stop smoking programPsychoanalysisSterilizationPregnancy test kitsSpecial educationWeight loss programIssues that do not tax deductableChildcare services for a healthy babyCosmetic Surgery except for a medical requirement.The weight loss program is only for general health and appearance improvement.Household serviceElectrolysisExpenses for funeralHair TransplantIllegal surgical treatmentsCost of Insurance PremiumsImported drugs and medicinesNutritional SupplementsFees for Veterinary treatmentDiaper Service

Tax Breaks for Health Insurance

Sanjiv Gupta CPA - 8 years ago
Health insurance is one of the largest costs that most people deal with on a monthly basis other than the mortgage. Health insurance for those who are self-employed is normally higher than those who have employers offset health insurance. Luckily, there is a tax break for those who are experiencing large health insurance payments.To qualify for the IRS health care tax deductions for you and your family you must be either a self-employed individual with a net profit, have a self-employed partner who qualifies or is a shareholder with more than a 2 percent stock in an S corporation.The insurance plan must be established under your name or the name of your qualifying partner. For the self-employed, this can be your personal name as long as this is the name the business is run under. The self-employed individual or the stockholders must be the one who is paying the health insurance premium for this credit to apply.Stockholders must have the health insurance plan in their name or be reimbursed by the business for health costs to be eligible. This must be verifiable via W-2. To qualify for the tax credit, you must use the Schedule C or 1040 form to apply for the credit.This tax credit can be a large offset for those who are self-employed, as health insurance costs can equal up to a large amount of self-employed income each year. Self-employed persons also pay a higher tax rate than those with an employer so this credit can decrease the tax amount in an effective manner.

President Obama Has Been A Boon For Entrepreneurs And Small Businesses.

Sanjiv Gupta CPA - 7 years ago
The health care plan issued by President Obama has been a boon for entrepreneurs and small businesses. This Affordable Care Act gives these small businesses a lot of support and helps for buying health insurance. Venture capitalists see this as a massive opportunity and they have been giving away lots of cash benefits for starting up health care centers across the US.The investments made in health care setups grew at a whopping 64% in the first quarter of 2013 which is way higher than investments last year.  Brad Weinberg, a partner at Blueprint Health and venture capitalists for new health care setups suggests that this is the best time for entrepreneurs for setting up health centers as all infrastructure is available like interest, support, and capital.  Blueprint has been helping around 30 companies with $20,000 each for setting up health care centers for a stake of 6% in equity.Health care was never the most sought after industry in the US as a technology was the booming sector. Even IT companies were more focused on social networking or game centers. However, the Affordable Care Act turned everybody’s focus on the health care industry, due to the huge financial incentives that it provided. There are more opportunities to set up newer units and speedily resolve many health problems.Attractive financial incentives accompany the Affordable Care act. These are offered to health care providers to upgrade their medical equipment to newer models and the patients are encouraged to stay healthy always. People who work with the new startups have stated out of their experience, that the hospitals and insurance companies always look up to entrepreneurs for their innovative technologies. New startups are given huge aids to come up with new and cheap techniques to make healthcare a booming industry.David Whitlinger, executive director of the New York eHealth Collaborative announced recently that the list of venture capitalists and health care providers that have registered with them is more than what they can deal with.  Whitlinger runs a digital health accelerator program that had graduated its initial set of startups recently.  This initiative selects a list of startups that have the potential to help New York’s medical program that finds dozens and dozens of venture capitals who are interested in investing in these setups.Insurance leaders, medical centers and medical shops have gone on record to offer huge discounts and financial assistance for health startups that solve their problems. This has encouraged these small businesses and entrepreneurs to come out with new models and help the people in reducing their hospital visits. These entrepreneurs have found the able support of venture capitalists, who offer them the much-needed capital and support to set up their establishment. This is a mutually beneficial plan of the Affordable Care Act where the venture capitalists get a stake of equity of the fresh startups and these new businesses get the backing of established venture capitalists and enough capital to start working.

Obama Care Explained in Plain English

Sanjiv Gupta CPA - 7 years ago
The US President, Barack Obama and Congress signed an agreement in the year 2010 to bring Obamacare into practice. This is a health insurance scheme initiated by the President so that all the US citizens are covered. The medical costs are on an uptrend in recent years and average medical expenses run into thousands of dollars. In a bid to reduce these costs and make the citizens feel covered in case of medical emergencies, the Obamacare plan was launched.Once a family is covered with the general health insurance, then it need not worry about the shooting medical expenses in case of hospital visits, as a majority of the expenses are covered under this scheme. The patient only needs to pay a very nominal amount during the first visit to the hospital. This is called a co-payment. Most of the employees provide this scheme to their employees in return for a reasonable monthly premium payment.However, Obamacare gives additional benefits to families who already have this scheme and it also provides coverage for people who are so poor that they cannot afford even the minimum premium payments. There are lots of daily wage workers in the US, whose employers do not offer any health insurance schemes to cover them. Obamacare is a panacea for all.Changes that are reflected alreadyPeople who have health insurance get additional benefits from Obamacare in various ways. Parents can get additional coverage for their kids, till the kids turn 26 years of age. This plan does not drop patients midway or remove the coverage if somebody in the family falls ill suddenly. Insurance companies, under Obamacare policy, can never refuse to cover for families that have a chronically sick member. The co-payment option is taken off from this system and most of the general check and pregnancy tests can be done free of cost.Insurance companies cannot act fraudulently and can raise premiums during the term of the policy, only if the increase rates are allowed by the state government. According to this policy, the insurance companies should use 80% of the premiums they receive, for settling claims of the insured people. However, if they fail to do it and instead spend on advertising expenses, they have to send a check to the insured for the excess amount used up. Families that do not have any insurance can use Obamacare to get temporary insurance cover till the year 2014.Important changes in futureObamacare will make health insurance compulsory in the year 2013. Failure to take insurance will attract a fine of 2.5% of the annual income to be paid to the government. Insurance schemes can be easily purchased online. Small business employers will have to mandatorily buy health insurance, failing which, they have to cough up a fine of $2000 per employee, except for the first set of 30 employees who joined the company.

New York Times gets so - called “Cadillac Tax” wrong

Sanjiv Gupta CPA - 7 years ago
Healthcare-Now! is an online portal that specializes in the health schemes of the US and helps the people to understand the schemes better and ways to access the same. Recently it clarified a mistake that was done by the New York Times about the coverage and purpose of the Cadillac Tax. Healthcare-Now! explained the right concepts and insisted that the article by the New York Times was clearly misleading to the general public.They insisted that thought the publication was right about the perils of this tax, it had gone wrong about who can use this tax and how the employers are looking out for ways to evade the same.  The tax was incorrectly said to punish the employers who provided high-end health welfare plans to their workers. However, in reality, the tax actually punishes plans that have huge premium charges. ($10,200 for individuals and $27,500 for families).It was also found out that the coverage of the insurance plans had no relation to their premium amounts, which means that plans with high premiums do not necessarily offer wide coverage and plans with low premium do not necessarily offer a small coverage. Recent studies reveal that only 3.7% of the entire premium differences could be related to the difference in coverage. This tax would not give any impact for people, who already have a good coverage, but this could affect older patients who might be required to pay up to three times the premium amounts of what the younger patients pay and it could also mean more premiums to pay for people who live in states that have expensive health care.The Times had explained that this tax would encourage employers to lower their employees’ premium costs through various health and wellness centers to monitor the employees’ health. However, lots of research was done on this subject lately and it was found out these health centers only act as a tool through which the employers transfer costs onto workers with lifelong illnesses. These employees are either exorbitant rates of premium or their benefits are withheld.Healthcare-Now insists that a single-payer tax system is a better way to reduce healthcare costs as it would take off the burden of huge costs from the employer’s shoulders and ensures that all employees get reasonable coverage for their premiums. A publication as reputed as the New York Times should act more socially responsible and stop publishing wrong information about the Cadillac Tax as millions of people get misled due to this.Hence, this portal requests and encourages the readers to submit a short 150-page letter to the editor of the New York Times explaining about any recent article and requesting them to change their stand on the Cadillac Tax. People who are interested and write to the editor must mention their names, addresses and phone numbers so that it is easy for tracing. A huge collective effort like this would surely stop people from misinterpreting the properties of the Cadillac tax.

Health Insurance Deduction

Sanjiv Gupta CPA - 6 years ago
A tax deduction is a big concern, and on the other hand, it is highly beneficial because it can help you in various ways. Health insurance is one of the most crucial things that you can consider in your life. And although you may compromise on many things in life, health insurance is surely something where you don’t want to take a chance. This becomes more important when you know that tax deduction can considerably help you pay for health insurance.The Internal Revenue Service or IRS provides various kinds of deductions for medical expenditures. There are some itemized reductions. Thus, you can make claims for standard deductions. Again some medical deductions are over-the-line exemptions and so all these can be claimed in addition to the standard deductions. With regard to healthcare tax deductions, three options as mentioned below can be chosen. In case you find that your expenditure crosses 7.5 percent of the adjusted gross earnings, then you could take an itemized reduction where your expenses surpass the brink. By qualifying medical expenses, you could consider medical, vision or dental care for your own self, your spouse or any individual dependant on you. Medical services include the ones that would prevent problems that could arise in the future, solve present problems or reduce pains. Medical drugs that need a prescription can be deductible. Further, expenses that you may incur in due course of traveling to the hospital in the form of parking fees, mileage, tolls can also be included.In order to save for future medical expenditures, health savings accounts are sheltered by the tax. However, in order to be eligible for this, you also need to possess a health insurance plan which has a high deductible. Every year, your contribution can go up to a limit set on the basis of the fact as to whether the health insurance plan is just meant for you or also includes your family.Health insurance deduction can also be seen when you are self-employed. If you are in a partnership or you are the owner of greater than 2% of a corporation, you would be able to deduct the price of your health insurance policy and also that of your spouse and any other individual dependant on you. But if you have to qualify for the deductions, your policy should be in your name, that is, the name of the self-employed person, business or partnership. In this deduction, qualified long-term care premiums can be included. But again, there is a limit to the deductible amount because the age of the insured plays an important role in this. This deduction would affect your income tax. But as far as the decrease of your tax liability is concerned, this deduction would not be of any help. As a self-employed individual, you could deduct health insurance premiums from federal income taxes. As a taxpayer, you would be offered huge exemptions that could bring down the taxable income and thus lower the total amount that you would pay in federal income tax.In order to understand more about tax deduction and the way it helps health insurance, you should have a clear idea about the following.If there is a group health insurance provided through an employer then the tax exemption can be enjoyed. In such a scenario, probably your employer is paying the premiums of your insurance from your gross income before holding back federal tax income. This way your yearly tax income comes down and thus you will have a reduced tax bracket. In case your employer is not offering health insurance, you should ideally buy an individual health insurance policy from a private insurance organization. This might also be the case if you prefer to have a completely different coverage plan other than what is available. But again in order to avail tax deductions on health insurance in this regard, you need to note that you will only be able to deduct your private health insurance premiums on your federal income taxes if they are greater than 7.5 percent of your adjusted gross earningsA tax deduction can also be seen in long term health care. The number of adults who need long term health care is on a sharp rise. With the constant increase in health care expenditure, it seems that every single year, insurance coverage is getting lesser with respect to the total expenses for health care. Here, if you can comply with certain qualifications, then you can deduct the cost of long term health care on the returns of your income tax. There are certain long term medical care expenses that are deductible. These include the costs incurred for diagnosis, medical treatment, healing and preventing an ailment. Certain drugs that need a prescription are also deductible. With respect to long term medical care, the expenses include the cost incurred on nurses or certain care facilities on a long term basis, provided these have been prescribed specifically by a doctor. Health insurance payments can be deducted by you in the total expense, but again you would not be allowed to take health insurance deduction pertaining to life and disability.While availing the benefits that tax deductions can do to health insurance, you need to make a note that all deductions should be the expenses paid during the year of tax filing from January 1 to December 31. In case you are mailing a payment on the last day of a year, that is the 31st of December then it will surely be considered to be the expenditure for that particular calendar year.

Premium Tax Credit

Sanjiv Gupta CPA - 6 years ago
Recently, the U.S. government has made some adjustments to the way health care coverage plans are administered to the people. One of these adjustments became feasible in 2014, the Premium Tax Credit.Background InformationThere are dozens of tax credits out there, what makes Premium Tax Credit so important? Premium Tax Credit was established in early 2014 as part of the new Affordable Care Act and is designed to make health insurance more affordable. Premium Tax Credit is available through the Health Insurance Marketplace, which provides thousands of health insurance plans to people with low income.What is Premium Tax Credit? Basically, Premium Tax Credit is an amount of money given to your insurance company via the government in order to make paying for health insurance easier and more affordable.How do I Receive the Premium Tax Credit?The first step in receiving the Premium Tax Credit is to obtain a health insurance plan, preferably through the Health Insurance Marketplace (average enrollment period runs from November to February). Once you have selected a plan that works within your budget, Marketplace will check to see if you qualify.Qualifications for Receiving the Premium Tax Credit There are several qualifications you must meet in order to be eligible to receive this tax credit. To qualify, you will need the following:You must be within the average income rangeYou should not be filed as a dependentCannot file a Married Filing Separately formYou should have applied for health insurance through MarketplaceYou should be unable to qualify for health insurance through work or other health insurance companyUpon confirmation that you are eligible for Premium Tax Credit, the Marketplace will display an amount of money that the government is willing to offer you. If you are satisfied with this tax credit, you move on to selecting how/when you want to receive these benefits.What are the Options for Claiming My Tax Credit?There are two ways in which you can claim your tax return amount.Get It NowThe Get It Now option is designed to lower the monthly premiums that are required to pay, instantly. This means that the tax credit you received is transferred directly to your health insurance company – in increments or all at once – upon acceptance of the credit.Get It Later Get It Later option is designed to pay you back a fixed amount of money towards your health insurance expenses upon the completion of the tax return. This means that you pay your premiums and health insurance cost as expected and then receive your tax credit all at once when the tax return form is completed.What Forms Do I Need to Fill Out? Once you have chosen what option you want to engage in, you are required to fill out a couple of forms.The first one is Form 8962, which is the Premium Tax Credit form. You will confirm that you have received a tax credit from the said insurance company as well as the amount of that credit. This form is to be completed along with your Tax Return form.If you received a health coverage plan through the Marketplace, you will fill out Form 8962 with the information listed on Form 1095-A. Form 1095-A is the Health Insurance Marketplace Statement form that confirms all of your information.* We strongly suggest that you speak with your CPA to ensure proper calculations.Penalty Relief There may be a time or two where you owe a fee to the government for late payment or unpaid bills. However, if you have received a premium tax credit, those fees are waivered if the reasoning behind your late payment relates to advance payments made by the government.If you choose to have your Premium Tax Credit split up and given to your insurance company month by month to lower premium costs, and the payments don’t add up to the amount of credit you are entitled to, you receive a refund of the amount that was not credited to you. If you are unable to make a payment due to this unequal payment method, you do not need to pay any late fees.You are required to let the IRS know about your circumstance by filling out Form 4868 before the required due date.Record All Changes During a tax year, if there are any changes to the information you provided the IRS with, you are required to make those changes as soon as possible through the Marketplace. These changes can affect the amount of Premium Tax Credit you are given so it is crucial that you keep the IRS updated.ConclusionPremium Tax Credit, although new to taxpayers, has influenced the lives of thousands of people and helped make health insurance much more affordable. By using the Health Insurance Marketplace, you are almost guaranteed a health plan that fits within your budget and the additional tax credit offered to you will make that price even lower.Take a few minutes to see if you can receive a Premium Tax Credit and keep you and your family healthy for an affordable price.

Protect Your Property Using Death Deed Law In California

Sanjiv Gupta CPA - 4 years ago
There are several ways an owner of real property can direct the transfer of real property when they die. Up until recently, the most common ways were through trust and a last will and testament.In California, transfer on death deed (ToD deeds) is the newest method of transferring real estate. It’s relatively easier and less expensive than estate planning or probate administration. It is also quicker to undertake. In this article, let’s look at the pros and cons of the transfer on death deed.Transfer on death deed became a law effective January 1, 2016, after California Governor Jerry Brown signed Assembly Bill 139. The said bill established a procedure for transferring real estate property upon the death of the grantee through a revocable transfer on death deed. This allows a person to transfer a real estate property to a family member, long-time partner, and even a friend without the need to set up a living trust.More than half of the states in the US have this option for real estate. It was first passed into law in 1989, in the state of Missouri.  Before Gov. Brown signed it into law, there have been five previous attempts to pass similar legislation.ToD has been referred to as ‘poor man’s thrusts’ since it doesn’t require setting up expensive trusts to keep the assets out of probate.How it WorksA transfer on death deed allows the owner of a residential property to identify one or more beneficiaries who will receive the property immediately upon his death. The property may either be a single-family residence on 40 acres or less of agricultural land, a single-family home or condominium unit or multiple residences with no more than four residential dwelling units.The deed must be accomplished in the form provided by Probate Code Section 5462. In the said form, the owner of the property states his or her name then provides a description of the property. The form should also list the name or names of the beneficiaries who will immediately receive the said property upon the death of the grantor. The ToD expressly states that the grantor transfers all his/her interest in the described property to the beneficiary(es) on his/her death.The ToD must be signed and dated before a notary public. It must also be recorded within 60 days or less from the date it was signed. If not recorded within the 60 days, the ToD is void.Moreover, the ToD can be revoked by the transferor at any time.In revoking a ToD, a transferor may record a formal notice of revocation. He can also record a new ToD with a different beneficiary. Or he or she can sell the real property to someone else, effectively revoking the ToD.It should be noted that the real estate will only be transferred when the owner dies. This means that the beneficiary as stated on the ToD won’t have any rights to the domicile when the owner is alive. Moreover, creditors of the beneficiary won’t be able to place any liens on the residence.  As long as the owner is living, he or she has the right to sell the property.Theoretically speaking, it is possible for an elderly who owns a house in California to execute and record 2 or more ToDs. In such cases, the deed with the most recent recording date will be considered the one in effect.Comparison vs Other Estate Planning MethodsFor the uninitiated, there are only a handful of traditional methods of estate planning. These are:Joint TenancyJoint tenancy with right of survivorship will always be a very common kind of titling for real property. In this method, the property is transferred to the spouse of the property owner. But this method becomes useless when the property owner’s spouse has passed away.Some property owners would also add non-spouse to the list of beneficiaries or joint tenants to avoid probate. While this may sound like a wise idea, there are also concerns about this.One is that doing would mean that the owner is subjecting the property to the creditors of the beneficiaries. Then there’s a significant tax disadvantage to this method. If the beneficiary inherits the property or other assets from the deceased owner, he or she will receive a ‘step up’ in basis. This means that the date of death value will become the applicable value in calculating the capital gains tax.It also has the potential to exclude other heirs from the estate plan.  For example, husband and wife add their two children to the title of their property. But child 1 dies young, leaving 100% of the property to the other child. This basically means the grandchildren of husband and wife are disinherited due to joint tenancy, even if the couple would want their grandchildren to get their share.Trust TransferRevocable living trusts are considered the best and most reliable method of estate planning, not all people lean towards it because of the costs involved. First, the owner has to create a revocable living trust with the help of an attorney. He or she would then record a deed transferring the real estate to the revocable living trust.  But since attorney assistance is needed, the cost of a revocable living trust is a lot higher than a joint tenancy deed.ProbateAnother method of transferring property from an owner to his/her intended beneficiaries is probate proceeding. But there are lots of downsides to this method, from high costs to the time it would take for the beneficiaries to receive their share.   Finally, since probate cases are a matter of public record, real property owners and their heirs won’t have privacy at all.Transfer on Death deed is designed to address and resolve the downsides of the revocable living trust, probate, and joint tenancy.AdvantagesThere are several advantages of ToD that make it very appealing to property owners.For one, it is very quick and easy to undertake.  The owner of the property simply has to fill the form, sign, and date it before a notary public, and then have it recorded. In cases when the owner is too old or sick to undertake this, the beneficiary(es) can do it instead for him/her.It is also a lot cheaper than a living trust. ToD preparation including the recording fee should set back the property owner or beneficiary anywhere from $300 to $500.Also, the ToD is revocable as long as the property owner is alive. If the property owner has a change of heart as to who will be the heir to the asset, he or she can revoke the deed or simply record a new ToD to supplant a previous deed.Another advantage of ToD is that it can avoid the expensive and time-consuming probate.  The time and cost of probating an estate generally depend on several factors.  In California, it usually takes 7 to 9 months for an average estate to go through probate. In terms of expenses, probate can easily cost 7 percent of the total estate value.ToD is seen to benefit single people, including widows and widowers.  Through ToD, they can skip setting up a trust which could cost around $5,000. They can also skip going through probate.It can also reduce or completely eliminate the acrimony amongst heirs and beneficiaries which usually happens during a formal probate or trust administration. This is because it dispenses post-death transfer formalities.Simply put, a transfer on death deed can be an inexpensive, straightforward, and practical way of transferring one’s property upon his/her death.  It greatly simplifies the real estate transfer at death.DisadvantagesWhile there are pros to a transfer on death deed, legal luminaries also say there are a lot of downsides.One is that it can’t completely avoid a property from going through probate. For instance, if the beneficiary named in the deed dies before the property owner, then the ToD has no effect at all. There’s no provision for designating contingent beneficiaries in a ToD. So if there’s no other beneficiary(es) indicated in the deed, the property goes back to the grantor.There’s also the fear that because it is very easy to execute, unscrupulous individuals can defraud property owners particularly the elderly.  Anyone can gain possession of a house or any real property after downloading an online form, then tricking the elderly homeowner into signing it. Once the document is notarized and recorded, the individual will only have to wait for the elderly’s death.Moreover, those who opposed the bill say that since the ToD automatically transfers ownership of the property to a named beneficiary, the latter individual can then sell the real estate to another party before anyone realizes what happened.But legislators who passed the bill into law say that the beneficiary won’t be able to sell the property he or she inherited under a ToD within 120 days after the death of the property owner. This, in a way, protects the relatives of the homeowner as they can file a complaint with the court to contest the transfer of the property to a beneficiary named in the ToD.Of course, that’s another disadvantage that presents itself. If the legitimate heirs to home would want to sell the inherited home because of urgent and legit reasons, they would have to wait for 120 days before they can dispose of the property.Also, there’s the fear that if the property owner becomes incapacitated, no one would be able to revoke the deed. This particularly becomes crucial in case the family has to revoke the ToD due to changes in circumstances. The property owner may suffer a stroke or dementia to the point he or she would no longer be able to revoke or record a new ToD.Even beneficiaries face risks when they receive property from a deceased relative or loved one through ToD. For one, it does not offer protection against the original owner’s creditors. While the beneficiary inherits the real property, he or she will also inherit the personal liability including unsecured debts relevant to the real property. To file their claims, the creditors of the deceased property owner can start a probate proceeding within a year after the death of the original property owner.The worst-case scenario that can happen to beneficiaries who receive a property under a ToD is the forcible return of the asset.  Called “Restitution Demand,” this requires the beneficiary or beneficiaries to return the home or property to the estate. This can happen up to three years after the death of the original property owner. Thus, the beneficiary of the real estate property cannot be assured that he or she would own the property until the 3 year period has lapsed.If he or she claims the property as a residence, then the house has to be returned to the estate. The beneficiary will have to make other living arrangements.If the beneficiary sells the property and only receives the Restitution Demand, he or she would have to return the proceeds.  The beneficiary will also have to deal with the fact that he/she can’t reimburse expenses spent on the improvement of the property, including property taxes. Legislators who pushed hard for this law understand that like any other initiative or bill, the Transfer on Death deed is by no means fool-proof. Thus they have set a five-year expiration for the new law to give the authorities, particularly the California Law Revision Commission, enough time to study the effects of the deed.ToD deeds executed starting January 1, 2016, and then won’t be impacted.The bottom line is that the Transfer on Death deed simplifies the transfer of real property in California. It is a more cost-effective choice than setting up a Living Trust or going through probate.

Say Goodby To Mortgage Insurance Premium Reduction – Welcome President Trump

Sanjiv Gupta CPA - 4 years ago
Get ready for roller coaster ride, Mr. Trump has stared to make changesThe Department of Housing and Urban Development (HUD) announced a reduction in Mortgage Premium last week.  However, Trump administrations do not feel that the US Citizen really need this benefit.  This reduction has been suspended indefinitely.“FHA is committed to ensuring its mortgage insurance programs remain viable and effective in the long term for all parties involved, especially our taxpayers,” the HUD statement said. “As such, more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”The HUD statement added that “FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.”Mortgage Banking Association is not that happy with the move. The statement was released by David H. Stevens, President and CEO Mortgage Bankers Association (MBA) and the FHA Commissioner in the first term of the Obama Administration, following the news of the premium suspension.  “We recognize the Administration’s need to examine the overall health of the insurance program and weigh that against the benefits of lowering mortgage insurance premiums,” he said. “Given that lenders have already started preparing for the MIP decrease, it is important that any new policy is implemented in a way that minimizes disruption for borrowers and lenders. MBA looks forward to working with the new Administration to ensure the long term stability of the FHA program, creating an environment that provides clarity in regulations for lenders while at the same time promoting access to credit and protecting consumers.”

Treatment of Transportation Expenses When Not Traveling Away from Tax Home

Sanjiv Gupta CPA - 3 years ago
When you ride a cab or get in your own car to do business somewhere, have you ever thought of your transportation costs and how much of it you can actually write off? So many materials have been written about deductible expenses when people travel away from their tax homes for business, but those that tackle deductible expenses when not traveling away from home are scarce.Here, let’s focus on your transportation costs when you are technically not traveling away from home. But before we go to your expenses, remember first that you are considered traveling away from home if you meet the following criteria:Your business or job requires you to be away from your tax home considerably longer than your ordinary day at work.You need to sleep to meet the demands of your work.If you don’t meet the above-mentioned criteria, then you are not traveling away from home so this chapter is for you.You probably know that the law mostly does not allow deductions for personal expenses, so we’re talking about business expenses here.Transportation ExpensesBy definition, transportation expenses cover your cost of transportation– may it be by rail, bus, taxi or air, as well as the cost of maintaining and driving your own car.According to the IRS rule, these expenses include all ordinary and necessary costs of the following:Going from one location to another while conducting business or performing your profession, as long as you are traveling within the general area of your tax home.Visiting your customers or clients.Going to a business meeting that is not within the area of your regular workplace.Temporarily going from your home to a workplace when your business or job requires you to have more than one regular place of work. Here, it doesn’t matter whether your temporary workplaces are within the general area of your tax home or not.Remember that generally, the transportation expenses that will be discussed in this chapter do not include those that you incur when you travel away from your tax home overnight, though the rules here apply when you use your own car to travel away from home overnight as this will cover car expense deductions.Basically, the transportation expenses that you incur daily when traveling from your home to one or more of your regular workplaces are considered nondeductible. That means that if you ride a bus to travel from your home to one of your regular workplaces, you are generally not allowed to write off the commuting expenses that you incur. However, there are certain exceptions to this rule.If you go between your home and your temporary workplace outside the general area of your residence, you are allowed to deduct the transportation expenses that you incur. You can also deduct your daily transportation expenses in the following situations:If you have at least one regular work location away from your home.If your home is your regular workplace or place of business and you incur transportation expenses when you go to your home and another work location. However, that work location should fall in the same industry or business, regardless of the distance and regardless of whether the work you do there is permanent or temporary.When Transportation Expenses are DeductibleBefore we go into the finest details, here is a summary of the key locations you should consider and the instances when you can and cannot deduct your transportation expenses:This home is not necessarily your tax home but the place where you live. The transportation expenses that you incur when you travel to and from your regular or main place of work are considered personal commuting expenses and are therefore nondeductible.Regular or Main Job. This refers to your main place of work or business. In the event that you have more than one job, you can determine which of your workplaces your main workplace is by considering the time you spend at each, as well as the activities you have at each and the income you earn at each. While your transportation expenses from your main job to your home are nondeductible, your expenses from your main work location to your temporary work location or second job and vice-versa are always deductible.Temporary Work Location. Your temporary work location is any place where you are expected to perform your job in a year or less. You can only write off your transportation expenses to your temporary work location if it is not within your metropolitan area unless you have a regular workplace or place of business.Second Job. You are allowed to deduct your transportation expenses when you get from one workplace to another if you have more than one job and are required to regularly work in more than one place in a day. Whether or not your two or more jobs are for the same employer, your transportation expenses are always deductible. However, you cannot deduct your transportation expenses if you’re coming from your home going to your second job. Remember that you have to go directly from your first job to your second job for your transportation expenses to be deductible. If you go somewhere else after leaving your first job, the amount you spend on your transportation going to that place is nondeductible.The above-mentioned rules apply when you incur transportation expenses since you have a regular job away from your home. If your main workplace or place of business is your home, do not use the rules for reference.How to Know if Your Work Location is Temporary If your regularly incur commuting expenses because you have more than one regular work location in the same business away from your residence, you can write off the transportation expenses that you incur for your daily round trip between your home and your temporary workplace, regardless of how near or far that workplace is from your home.In case you are expected to complete your employment at a particular workplace in a year or less, then your employment is considered temporary. Your employment is not considered temporary if your employment at a work location is expected to last for more than a year.But what if your employment was initially expected to last for less than a year, but due to unavoidable circumstances, you are suddenly expected to work for more than a year?In that case, your employment will be treated as temporary and the same rules on tax deductions apply. If your temporary workplace is not within the general area of your regular work and you stay there overnight, then you are considered traveling away from home and the treatment of your transportation expenses depends on the rules under the Traveling Away From Home section of the IRS Publication 463. If You Do Not Have a Regular Place of Work If you do not have a regular place of work but usually works in the metropolitan area of your residence, you can write off your daily transportation expenses between your home and temporary workplace that goes beyond that metropolitan area. The IRS defines this metropolitan area as the area which covers the area within the city boundaries, as well as the outskirts of the city.Keep in mind that you cannot write off your daily transportation costs if your temporary workplace is located just within the metropolitan area because these expenses are considered nondeductible.When You Have Two Places of Work Some people have more than one job in a day, and therefore have to go to two work locations in a day. If you are one of them, you are allowed to deduct your transportation expenses when you get from your first work location to the other and vice-versa. That is regardless of whether or not your two jobs are for the same employer.But what if for some personal reason you fail to go directly from your first work location to the next?In that case, you are not allowed to deduct your transportation expenses because the rule states that you cannot write off more than the amount it costs you to go directly from your first workplace to the next.For instance, it’s your day off from your main job and you incur transportation expenses when you go between your home and your part-time job, such costs are considered commuting expenses and are therefore nondeductible.When You are a Member of the Armed Forces Reserve Unit Specific laws are set in place for people who are members of the Armed Forces reserve unit.Say you have a meeting in that unit. If that meeting is held on a day when you are not off from your main job, then the venue of the meeting is considered as a second place of business and the transportation expenses you incur in getting there from your main workplace is deductible.However, if the meeting is held on a day when you don’t work at your regular job, your transportation expenses become nondeductible.The story is different if the place where the meeting is held is temporary and you have more than one regular place of work.Say you regularly work in a certain metropolitan area but not at any specific location in that area, and the meeting is temporarily held outside that metropolitan. In that case, you are allowed to deduct your travel expenses.Your transportation expenses also become deductible if your being a reservist requires you to travel more than 100 miles away from your residence. If you travel that distance in connection with your performance as a reservist, you can deduct some of your costs not as itemized deductions but as an adjustment to your gross income.Commuting Expenses Generally, commuting expenses are the transportation costs you incur when you commute from your home to your main place of work and vice-versa. The costs of taking a trolley, bus, taxi or subway between your home and your regular work location are nondeductible since the law sees them as personal commuting expenses.Regardless of how far your residence is from your regular place of work, you cannot deduct your transportation expenses.You may ask, what if you still work during the commuting trip?Performing your job during your commuting trip does not change your commuting expenses from personal to business expenses.Take this as an example. You use your phone to make business calls while commuting. Or you have your own car and colleague rides with you on your way home. During your travel, you engage in a business discussion. In both cases, your transportation expenses remain personal and nondeductible.When you commute to and from work, your taxi fare usually is not the only cost covered by your transportation. Take a look at these accompanying commuting expenses:Parking Fees. When you bring your own car to work and pay to park your car at the parking lot of your business location, the parking fee is nondeductible. The only parking fee that is considered deductible is that which you pay for when you visit a client.Advertising Display on Car. Just because you put display material advertising your company does not necessarily mean that your car is for business use, so the expenses you incur for putting such displays on your car are all nondeductible.Car Pools. When you use your car in a nonprofit car pool, you still cannot write off the cost of doing that. You should not include the payments that you receive from your passengers in your income. However, you may do otherwise if you operate a carpool for a profit. In that case, you may include their payments in your income and then deduct your car expenses.Hauling Tools or Instruments. Hauling instruments in your car when you are commuting to and from work does not make your transportation expenses deductible. When Your Home Qualifies as a Principal Place of Business If you consider the place where you live as your main place of work or business, your daily transportation costs between your home and your other work location are deductible. Take note, however, that the work you do in your home and in the other work must be in the same business.All things considered, it is safe to say that nothing in tax law is straightforward, no matter how easy you may find identifying deductible transportation expenses is.

Medical Expenses Deduction – What you can and can not do?

Sanjiv Gupta CPA - 3 years ago
Medical bills can sure burn a hole on your wallet especially if there are emergencies that come out of nowhere and are not completely covered by one’s insurance. This being said, the IRS allows the taxpayers some relief, making these expenses somehow tax-deductible. In order for anyone to make the most out of the tax deduction, they must know what is regarded as medical bills and the steps to claim a deduction from these.Deduction from medical billsThe IRS lets taxpayers subtract medical expenses that are qualified and also exceed 10% AGI. The AGI or the adjusted gross income is taxable income and also deducts any adjustments such as contributions and deductions to the traditional interest from student loans and IRA.Take this, for example, a modified AGI that totals $45,000 that has medical costs of $5,475 can be calculated by $45,000 and 0.10 to find out the 10 percent which means $4,500 is deducted to the amount. This then leaves the taxpayer a deduction on his medical expenses that amount to $975. This was calculated by deducting $4,500 from $5,475.Which medical bills can be deducted?The IRS lets the taxpayer subtract preventative care, vision and dental care and treatment surgeries as medical expenses that qualify. Consultations with psychiatrists and psychologists are also deducted. An appliance like contacts, glasses, hearing aids and false teeth as well as prescription medications are also considered as deductibles.The IRS allows the taxpayer to subtract the expenses for travel when the purpose is medical care. This includes bus fare, parking fees and mileage on cars.What cannot be deducted?Medical expenses that are reimbursed, like from the payer’s employer or insurance, are not deductible. This also includes the fact that IRS usually does not allow expenses for cosmetics. The cost for drugs that were not prescribed, with the exception of insulin, as well as purchases primarily for the purpose of general health, like health club bills, toothpaste, diet food or vitamins, nicotine products that are non-prescription or medical bills that were paid for in a previous year cannot be deducted.How to claim the deduction for medical expensesTo claim the deduction from medical expenses, this must be itemized. Itemizing medical expenses require the taxpayer does not follow the deduction that is already considered as standard but only the expenses deduction in the situation that it is greater than the former.Those who choose to itemize must use the Form 1040 when filing their taxes and then attach this to Schedule A. Here, they can also document the total of their medical expenses that they paid for that year on Line 1. The AGI income can be found in Line 2.Then 10% of the AGI is placed in Line 3.The difference between the expenses as well as 10% of the AGI is in Line 4.The total amount that is listed in Line 4 will then be subtracted to the AGI to reduce the income that is taxable for that year.If the amount obtained, along with the standard deductions claimed, is lower than the standard deduction, then this should not be itemized.Maximizing Medical Expense DeductionIf taxpayers spent loads of their hard-earned cash on medical bills, they can write those off but the first requirement is that it should exceed a hefty amount before it is regarded as a deduction.The IRS allows the taxpayer to subtract the costs of medical bills on their tax returns if it is beyond 10% of the AGI. Only the costs that go beyond this amount is deducted.Taxpayers aged 65 and older can use 7.5% from the previous year when claiming the medical expenses that have been itemized.Which Medical Deductions Are Covered?The taxpayer’s bills from medical and dental expenses along with his or her spouse and dependents are listed on the tax return. Therefore, these are allowed deductibles. However, medical expenses for parents are not considered due to exemption purposes. Another deductible is that of a dependent that has passed away during the year that they were covered.Medical Deductions That Are Often-Overlooked:Travel expenses when going to and returning from locations for medical treatments. The IRS considers this as a deductible and also evaluates the allowance through a standard rate of cents-per-mile. For this income tax year, the rate per mile is 17 cents.Insurance payments income has already been taxed. This also covers insurance costs for long-term care, which has certain limits depending on the age of the claimant.Medical treatments that are uninsured, like eyeglasses, contact lenses, hearing aids, false teeth, and even artificial limbs.Cost of treatment for drug and alcohol abuse.The cost of corrective vision surgery through laser. This is also tax-deductible. This is often-overlooked and such a shame because taxpayers can have lots of tax-deductible from this.Medical costs as prescribed by physicians. For example, if a doctor prescribes installing a humidifier into the home’s air-conditioning and heating to relieve problems concerning chronic breathing, the device along with the extra costs on electricity for it to operate are partially deductible.Costs for medical conferences. Expenses on admission and transportation to any medical conference of a chronic illness that is suffered by the taxpayer, his or her spouse or dependents can be covered. Lodging costs and meals incurred during the seminar cannot be reduced.Weight-loss programs. There are some instances that may count as deductible, just like the programs to stop smoking. However, diet programs are also medically necessary. Take this, for example, a doctor can recommend a particular regimen to decrease the risks of obesity and hypertension in one’s health.One can also get a tax break with a flexible account for medical spending. Taxpayers can check for plans they can participate in to increase pay that they can take home.Special medical needsThe cost of special medical needs can also be written off. These are wheelchair, equipment that lets the deaf person use a phone, devices that produce television captioning and crutches. Service animals especially there for the hearing impaired and the blind and the costs in retrofitting cars with hand controls and spaces to hold wheelchairs can also be written off.Another Aging-in-place remodels in the home that can be written off:Ramp installationWidening hallways and doors as well as lowering cabinets and countersAdjusting fixtures and electrical outletsExterior landscaping that can ease the house accessThere are home remodeling that can be prescriptions for tax breaks, in the situation that the IRS rules and doctors’ orders are followed.  If needed, adding chairlift can also be used to ascend and descend the stairs all for a medical condition. Therefore, this is also considered an expense that is legitimate.Changes to one’s home in order to make this especially accessible for any handicapped resident are also tax-deductible. Taxpayers must remember that they won’t be able to be considered as deductions from the overall costs of the tax return. Once there is an improvement, it increases the property’s value, then the amount is deducted from the cost of the project. The difference, then, can count as medical expenses.Elevators are not deductible. IRS regards this as structural changes that add more to the value of the home and therefore does not necessarily require a medical deduction.Medical yet not tax-deductibleCosmetic surgery and health club payments or bills from weight-loss programs are not deductible because these are not medically necessary. Operations for hair transplant and electrolysis treatments are also not deductible. For these procedures, taxpayers can consider financing surgeries that are not medical related and has credit card cash-back.6 Medical Deductions That Can Be Deducted Without the Taxpayer ItemizingCalculating medical expenses for deduction is difficult due to the Adjusted Gross Income floor of 10%. If the taxpayer is below 65 years of age, it is 7.5%. There are medical expenses that are considered to be deductible despite one not qualifying for deducting the medical expenses in the form of itemized deduction. Deducting expenses can also lower the taxable income and also cut the taxpayer’s taxes. Filing status, as well as the number of dependents, usually does not affect the deductions.Listed are the medical deductions that the IRS considers, even without itemizing:Account Contributions from Health Savings. If the taxpayer contributes any amount to the HSS or the Health Savings Account, then it serves as a deduction from the taxable income of the taxpayer. The maximum that is allowed can reach to a maximum of $3,350 for the individual. For families, it is $6,650 per year. If the taxpayer is beyond 55, he or she can contribute an additional $1,000 every year. If the employer contributes to the HSA, this can either be deducted or not deducted in the contributions.Account Contributions from Flexible Spending. Like the HSAs, when there is an employee-sponsored that can be spent in a flexible manner, which is also known as the FSA, the taxpayer is contributing his income before tax and therefore, reducing his income that is taxable. For income tax year of 2016, the rate was $2,550 for every spouse.Health Insurance for the Self-Employed. If one is self-employed, he or she can deduct the premiums from the insurance for himself or herself, his or her dependents. The premiums for LTC or long-term care insurance can also be paid for the year.Work Experiences That Are Related for the Impaired. If the taxpayer is physically as well as mentally disabled and requires services or equipment in order to perform a job, then this can be deducted. Expenses can also include readers, personal assistants, and pieces of equipment that are required and necessary for the job. There are expenses that are paid by the taxpayer’s employer and are also considered as a reasonable accommodation as it is stated under the ADA or Americans with Disabilities Act.Personal Physical Injury DamagesIf the taxpayer is reimbursed for physical injuries as well as expenses from legal action, then the taxpayer can deduct this amount from the taxes. If they are receiving a settlement and the reimbursement,  there is a tax on the settlements but there are no reimbursements. The taxpayers cannot reduce medical costs that have been covered by reimbursement.Tax Credit on Health CoverageThe HCTC or the Health Coverage Tax Credit covers the monthly health insurance premium for as much as 72.%%. These are premiums that are paid by taxpayers who are regarded as eligible. These are the requirements for those who wish to claim HCTC:TAA or Trade Adjustment Assistance recipientRecipient of the Reemployment TAAAlternative TAA recipientPBGC or Pension Benefit Guaranty Corporation pension. This is for the payer who covers his own health insurance.Any qualifying members that are listed of the individuals above.Here is a rundown of the medical expenses you can deduct:Fees to doctors, dentists, psychiatrists, surgeons, chiropractors, and other medical professionals.Medical insurance premiums that are beyond the portion of what the employer paysLong term care insurance premiums that are up to certain limitsLong term careInpatient drug treatment and alcohol programsDenturesAmbulance serviceModifications to the tax payer’s home for medical care, like wheelchair rampsWeight loss programs for specific diseases that have been diagnosed by a certain physicianFertility treatments like sterilization and pregnancy test kitsNursing supplies like breast pumpsPrescription drugs as well as insulinGlasses, hearing aids, contacts, and crutchesGuide dogs for the deaf or the blindCosmetic surgery required because of a disease or an accidentRemoving lead-based paint from surfaces that are in poor repair and is within the reach of any childAdmission and transportation going to a conference about a chronic condition of the taxpayer or any of the dependentsStop smoking programs, but excluding non-prescriptions drugs such as patches and nicotine gumPsychiatric careFor a complete list of deductible medical expenses, anyone can just check the IRS Publication 502. These deductions are then used when filing out Form 1040 or Schedule A. Writing off medical expenses as deductions can make for a healthier bottom line on anyone’s tax return. Taxpayers should make sure that the only appropriate expenses are included because auditing IRS can be stressful. It is also possible to ask for the assistance of experts so there are no mistakes made in taxation and the appropriate deductibles.

COBRA – Continuation Health Coverage

Sanjiv Gupta CPA - 3 years ago
Congress passed the Consolidated Omnibus Budget Reconciliation Act that has health benefit provisions since 1986. This law amends Employee Retirement Income Security Act, Public Health Service Act, and the Internal Revenue Code. The goal of COBRA is to continue health coverage for groups that must be terminated otherwise.COBRA has provisions giving former retirees, employees, dependent children, and former spouses the right for temporary continuation of coverage on health insurance plans in terms of group rates. However, the coverage can only be made available when this is lost because of specific needs. The group health plan coverage for participants in COBRA is more expensive than the health coverage of employees who are currently active. Usually, it is the employer that pays the portion of the premium for the employees who are currently working while the COBRA participants pay the full premium themselves. Surprisingly, it is less expensive than the usual health policies.Employers who have 20 or more individuals in their company are required to provide COBRA coverage for them. It is also their responsibility to notify the employees that this coverage is available. COBRA also applies to the health plans that have been maintained by the employers in the private sector as well as those that are sponsored by local governments and most states.Who are entitled to COBRA benefits?There are three qualifications for COBRA benefits. In fact, COBRA has already established specific and clear data for the policy plans, qualifying events and qualified beneficiaries.Plan Coverage: Employers who have 20 employees under their wing for more than half of the typical business days in the year before are required to be under COBRA. Both the part-time and full-time employees are included in the tally of determining whether the health plan is more suitable for COBRA> Every part-time employee is a fraction of the other employee, therefore what one gets is equal to what the others guest, if they share the same number of rendered hours. The calculation is the hours that part-time employees rendered divided by hours that the employee will work if he will be rendering full-time hours in the future.Qualified Beneficiaries: To be considered as a qualified beneficiary, the individual must be covered by a health plan for groups on the very day before an event that is considered to be qualifying by either the employee, the spouse of the employee or the dependent child of the employee. There are cases wherein the retired employee or the spouse of retired employees and dependent children of retired employees are also qualified beneficiaries. Aside from this, a child that was born or placed through adoption with an employee who is covered during COBRA coverage is also regarded as a beneficiary that is qualified. Independent contractors, agents, and directors who are part of the health care for groups can also be eligible beneficiaries.Qualifying Events: As mentioned earlier, these are events that cause the employee to lose or discontinue his health coverage plan This kind of qualifying event can also determine who among them will be qualified beneficiaries as well as the time duration that the plan will be offered to cover them through COBRA. The plan, using its discretion, can also provide a longer period of coverage that will continue for a long time.These are qualifying events specifically for employees:Voluntary termination as well as an involuntary termination of the individual’s employment due to reasons aside from gross misconduct.Reducing the total hours of the individual’s employment.These are qualifying events specifically for the spouses of the employees:Voluntary termination as well as an involuntary termination of the individual’s employment due to reasons aside from gross misconductReducing the total hours that are worked by the employee who is covered by the planThe individual who is covered by COBRA is entitled to get MedicareThe legal separation or divorce of the individual who is coveredThe death of the individual who is coveredQualifying events for the dependent children of the individuals who are covered are similar to that of the spouse but has this addition:Losing the status of being a dependent child as listed in the rules of the specific plan. What are the Benefits Covered Under Cobra? The qualified individuals and beneficiaries must also receive coverage that is similar and available to those who are situated in the same beneficiary as those not receiving the coverage of COBRA. In general, this is the similar coverage that an eligible beneficiary has as immediately as possible before he or she has qualified for coverage that continues. If there is a change in benefits due to the specifics of the plan for an employee who is currently working, this will still apply to the beneficiaries who qualify. Qualified beneficiaries can also make similar choices that are offered to the individuals who are not under COBRA, like periods of enrollment in the plan in an open setting.Who is charged for the COBRA coverage?The beneficiaries are required to pay for the coverage under COBRA. This premium may not go beyond 102% of the total cost of the plan especially for individuals who are similarly situated but have no incurred the qualifying events as specified. This also includes the portion that is covered by the employees as well as the portion that the employer has already paid for even before the event that qualifies, atop the 2% rendered to cover the administrative costs.For beneficiaries who qualify, they receive the 11-month disability that is the extended duration of the coverage. This is also the premium targeted for the additional months that can also increase to as much as 150% for the total cost and coverage of the health plan.COBRA premiums can also increase if there are costs to the said plan that also increases but these can also be fixed when setting in advance for every premium cycle of 12 months. The plan can also let the qualified beneficiaries pay the premiums indicated on a monthly basis if they requested this. The plan can also let them make the payments at other intervals, the choices are weekly basis and quarterly basis.The initial payment of the premium can also be made during the 45 days after the COBRA election date of the qualified beneficiary. The payment can also cover the coverage period after the COBRA election date that is retroactive to the loss of coverage date because of the event that is considered to be qualifying. The premiums for successive coverage periods are due and set on the date that is stated and mentioned in the plan coverage with a 30-day minimum for grace period payments. Payment is also considered to be made accordingly on the specific date that is directly sent to the plan coverage.If the premiums have not been paid on the first day of the coverage period, then the plan can opt to cancel the coverage until the payment for this has been received and immediately reinstate the coverage as retroactive to the start of the coverage period.If the amount of payment that was made to the coverage was conducted in error but not significantly lower than the amount due, then the plan requires to be notified by the beneficiary that is qualified and reports it as a deficiency. The individual will then be granted a period that is reasonable, which is usually 30 days, to pay for the difference. The plan coverage is also not required to send the individual monthly notices of the premium.The COBRA beneficiaries stay as subject to the rules especially to the plan and must also satisfy the costs that are related to deductibles and co-payments. These are also subject to benefit limits.The Federal Government and COBRAThe continuing coverage of COBRA as administered by several agencies like the Department of Treasury and Department of Labor has jurisdiction especially on the private-sector and health group plans. Meanwhile, the Department of Health and Human Services also administers the coverage as it continues because it has an effect on the plans for the health of the public sector.The regulatory and interpretative responsibility of the Labor Department can be limited to the notification requirements and disclosure of COBRA. If further information is needed about ERISA in general, then the individual can just write to the office of EBSA that is nearest to him or her. It is also possible to consult the US Department of Labor as well as the US Government for the listing in the phone directory of the office near them. EBSA is Employee Benefits Security Administration under the US Department of Labor.The Department of Treasury as well as the IRS has also issued regulations on the provisions of COBRA that is related to the coverage, eligibility, and premiums. Both the Department of Treasury and the Department of Labor share the jurisdiction for enforcing the said provisions.COBRA coverage and the MarketplaceWhen the individual loses the insurance that is received from his job, then he is also offered the continuation coverage of COBRA by his or her former employer, if the latter opts to do so.If the individual chooses not to take the coverage of COBRA any longer, then he or she can just enroll in the Marketplace plan. Losing the coverage from the job-based health premium lets the individual qualify for the Special Enrollment Period. This is a period of 60 days that allows the individual to enroll in the health plan and this can be done even if it is outside the Open Enrollment Period.Is it possible to change from COBRA to a Marketplace Plan?If the individual’s COBRA is running out, he or she can still change during Open Enrollment. It is also possible to change outside Open Enrollment as long as the individual qualifies for the Special Enrollment Period.If the individual is ending his or her COBRA coverage earlier than expected, he or she can still change to the Marketplace plan during Open Enrollment. It is, however, a different case outside Open Enrollment. The individual can no longer change from Cobra to Marketplace in this scenario. He or she has to wait for the COBRA to run out and for him or her to qualify for the Special Enrollment Period in one way or another.If the COBRA costs have changed because the individual’s former employer have also stopped contributing and is required to pay the full cost of the coverage, the individual can still change to the Marketplace Plan during Open Enrollment. It is the same during outside Open Enrollment. He or she can still change especially when he qualifies for the Special Enrollment Period.More information on COBRACOBRA also qualifies as the health coverage or what is also regarded as the minimum essential coverage. That being said, if the individual has the COBRA coverage, then he or she does not have to pay the complete fee that other people who are not covered by COBRA are required to pay.If the individual has already signed for COBRA coverage but then eventually finds the premium and payments to be too expensive, his or her options depend entirely on whether it is the Open Enrollment Period. He or she can change to the Marketplace but that can cost him or her more than usual because he or she has to opt-out of the coverage.As for people who are wondering if it is possible to switch to Medicaid from their COBRA coverage but outside the period of Open Enrollment, it is important to note that it is also possible to apply for as well as enroll to be covered by Medicaid at any time. The process is to drop the COBRA coverage earlier than expected and to check if the individual qualifies for both Medicaid and CHIP. This is done by people who leave the employers and those who find the COBRA coverage more expensive than expected.

Everything Everyone Must Know About Medicare

Sanjiv Gupta CPA - 3 years ago
Medicare is the single-payer and social insurance health policy program in the national setting that is administered by the federal government. This has been around since 1966. It is also currently using 30 to 50 privately owned insurance companies all over the United States and is also under contract in the administration.Medicare in the US is funded by payroll taxes, surtaxes, and premiums from the beneficiaries as well as the general revenue. It also provides health insurance for Americans who are also over the age of 65 and are 65 years old, as long as they have worked and paid the system through the deductions in their payroll in the form of taxes. Medicare also offers health insurance to the young generation who have disability status as long as it is determined by the SSA or the Social Security Administration. They also consider the individuals who are suffering from the end stages of renal diseases as well as the end stages of amyotrophic lateral sclerosis.On average, the health policy Medicare covers half of the health care plan policies and charges for those who have been enrolled. These enrollees and participants must also cover the remaining costs using their supplemental insurance or their separate insurance. There are others who even get the payments fresh from their pockets. These costs also vary and depend on the total of the health care policy that the enrollee from the Medicare needs. There might also be costs of the services that have been uncovered. For example, for the long-term policies, these include the hearing, dental as well as vision care. These also include insurance premiums that are supplemental.It is important to know that Medicare has four Parts. Part A covers hospice and hospital services and costs. Part B covers the costs for outpatient services. Part D is the portion that covers the prescription drugs that are self-administered. Part C serves as the alternative to all the other parts that are allowed to experiment with structured plans that are set up differently which also reduces the costs to the government. This lets patients decide which plans to choose and they usually opt for one that has the most benefits.History of Medicare Medicare has always been known as Medicare. This was the original name given to the program that has provided medical care for different families of the people who were serving in the military. They were part of the military and members of the Dependent’s Medical Care Act. This was passed in Congress in 1956. It was President Eisenhower who held the very first White House Conference on the topic of Aging. This was in January 1961. This was also the time when the program for health care that would provide social security benefits was proposed. In July 1965, when Lyndon Johnson was the president, Congress has enacted under the benefits of Medicare as stated in Title XVIII and stated in the Social Security Act. It also provided the health insurance coverage and policies to individuals aged 65 and even older, no matter how much they earn and their medical history. Johnson then signed the bill and it became a law on July 30, 1965. This was done at the Presidential Library named after Harry S. Truman in Independence, Missouri. The first recipients of the said program were Former President Truman along with his wife, the former First Lady named Bess Truman.Before Medicare was created, around 60% of individuals who were over the age of 65 had access to health insurance. The coverage, unfortunately, was often unaffordable and unavailable to most, simply because the older individuals paid more than thrice as much for the younger people who had health insurance. Many of this younger group have become eligible for both Medicaid and Medicare because the law was passed and this gave them the benefit.In 1966 Medicare combatted the racial integration of many people who were in the waiting room. They also promoted desegregation in hospital floors as well as physician practices and made sure that any race is equal whenever they made payments to their health care issuers and providers.Medicare has been operating for almost half a century and it has gone through several changes. For example, since 1965, the provisions of Medicare have already expanded and included benefits for physical, chiropractic therapy and speech in 1972. Medicare also added the beneficiaries to opt and pay for health maintenance in the 1980s. Through the years, Congress has already expanded the Medicare eligibility to younger individuals who have been diagnosed with permanent disabilities and also received the SSDI or the Social Security Disability Insurance payments. Those who have also been diagnosed with ESRD or end-stage renal disease are also eligible for this.In the 1980s, the association of Medicare with HMOs has begun and it was formalized under the presidency of Bill Clinton. It started in 1997 in the form of Part C of Medicare. In 2003, under the presidency of George W Bush, the program under Medicare that covered almost every drug was submitted to the congress and was passed as the bill. It was also taken in effect in Part D of Medicare.In the year of 1982, the government has also added the benefits to hospice in order to assist the elder policyholders but only on a temporary basis. It became permanent in 1984. Congress has also expanded this further in 2001 to include the younger individuals with Lou Gehrig’s disease, also known as ALS or the scientific name is amyotrophic lateral sclerosis.Administration of Medicare The CMS or the Centers for both Medicare as well as Medicaid Services is the component of the HHS or the Department of Health and Human Services that also administers Medicaid, Medicare, CHIP which is also the Children’s Health Insurance Program, CLIA and Clinical Laboratory Improvement Amendments and also parts of the ACA or the Affordable Care Act. Along with the Department of Treasury and Department of Labor, CMS also looks into the implementation of the insurance reform and the provisions on the Accountability Act of 1996 which is Health Insurance Portability. This is also known as HIPAA. Most aspects and parts of the PPACA or the Patient Protection and Affordable Act. The SSA and the Social Security Administration is also responsible for determining the eligibility for Medicare, payment, and eligibility for Extra Help as well as the Low-Income Subsidy Payments that are related to the Part D of Medicare. It also collects the payments that are premium for the program that Medicare conducts.The Chief Actuary of the CMS is also responsible for providing the necessary cost projections and accounting information to the Trustees of the Medicare Board. It is essential in assisting them and also assessing the financial care and health of the Medicare program. The Board is also required by the law to give out annual reports regarding the financial status of the Trust Funds of the Medicare. Those reports are also required to contain the actuarial opinion statement from the Chief Actuary.Since Medicare programs started, CMS has always been the institution that was contracted with the insurance companies that are privately owned in order to operate the intermediaries between the medical providers and the government to be responsible for administering Part B as well as Part A benefits. The processes that are contracted also include the claims and the processing payment along with clinician enrollment, call center services as well as a fraud investigation. In 1997, other insurance and policy plan companies started administering Part C. In 2005, other insurance plans started administering Part D.The RUC or the Relative Value Update Committee or what is also known as the Specialty Society Relative Value Scale Update Committee is composed of a group of physicians that are associated with the AMA or the American Medical Association. This institution advises the policyholders as well as the government regarding the pay standards for the insurance plan of Medicare as well as the procedures that patients should be performed by professionals as well as doctors under Part B of Medicare. A similar yet different CMS system that also determines the rates that are paid for hospitals along with acute care. This also includes nursing facilities that are under Part A of Medicare.Financing of Medicare Medicare has also several sources where it gets its finances. The inpatient under the portion Part A can be admitted in skilled nursing and hospital coverage and this is largely funded from 2.9% of the revenue and payroll tax. The law also provided a maximum amount when it comes to the compensation of the Medicare tax as well as its being imposed every year. The Social Security tax also works in a similar way. On January 1, 1994, the government removed the compensation limit. Employees who are also self-employed are required to pay the full 2.9% on the net earnings of the self-employed individual because they are for the employer as well as the employee. They can also deduct half of the taxes from their income by calculating the income tax.Starting in 2013, the portion of Part A and its taxes from the earned income has exceeded $200,000 for every individual plan. As for married couples that filed jointly, this reached $250,000. It also rose an additional 3.8% so that the portion of the subsidies can also be paid and mandated by the PPACA.Parts D, as well as Parts B, are funded partially by the premiums that have been paid by the Medicare enrollees and these are also considered as the general revenue fund. In 2006, Medicare started adding surtax on the premium of Part B. This was targeted to seniors who earned a higher income in order to fund Part D partially. In the PPACA legislation of the income tax year 2010, Medicare added surtax to the premium portion of Part D and also targeted these to the seniors who were earning lots of income. This is also conducted so that the PPACA can be partially funded along with the beneficiaries from Part B and subject to the double surtax. There is a double amount so that it can also partially fund PPACA.Parts A, B, and D all use trust funds that are separate from one another so that there can be a reimbursement of both the receipt and disbursement of the funds that are mentioned. Part C utilizes all these trusts funds in proportion to one another so that it can be determined by the CMS and reflect that all the beneficiaries of Part C are complete in the full parts of Part A and Part B. Medicare, as well as the medical needs for each capita, are regarded as fee for service or what is also known as FFS.Medicare and its spending amounted to 15% of the whole federal spending of the United States. Research all show that this can even exceed 17% by the year 2020.The retirement of individuals who are called the Baby Boom generation is expected to increase its enrollment by 2030 and reached up to 80 million because that was how the number of workers who are enrolled in the program has declined. The figures dropped from 3.7 and to a low of 2.4. There are the rising and total health care costs that also pose the financial challenges that are substantial to the program. Medicare spending is also projected to even get higher and reach $1 trillion by the year 2020.It is important to note that for every three dollars, one dollar is spent on Medicare as part of the cost-reduction program. The cost reduction is also influenced by the various factors that include the reduction in unnecessary and inappropriate care through the evidence-based practices of evaluation along with reducing the total amount of duplicative health care. The cost reduction can also be affected by the medical errors that are done when administrative agency increases and the development of clinical guidelines reach the quality standards

Self-Employed Individuals are Still Entitled to Health Insurance Deductions

Sanjiv Gupta CPA - 3 years ago
Self-Employed Individuals are Still Entitled to Health Insurance DeductionsIRS makes it a point to inform individuals that there is a certain kind of tax deduction that is specifically available to those who choose to be self-employed and not work for any corporation. This deduction that the establishment speaks of is targeted to dental, medical and insurance premiums that are for the long-run. Usually, self-employed people pay for these bills themselves. They even cover those of their spouse as well as their dependents. This insurance also covers children who are under the age of 27 toward the end of the year 2016, even if said children are not dependents of the self-employed individual. The definition of a child is the daughter, son, stepchild, foster child or adopted child or the self-employed. Foster child defined is a child that has been placed with the self-employed individual by a placement agency that is authorized or by a decree, order or judgment of a court and of any competent jurisdiction.Self-employed individuals who are entitled to this deduction meet the following requirements:They have a net profit that they received from their self-employment. The report and list this on Schedule C (this is the profit or the loss generated from a business), Schedule C-EZ (this is the net profit that is garnered from a business) or Schedule F (this is the profit or the loss that is obtained from farming.)They have earnings from their self- employment as partners and have been reported on Form 1065 which is also Schedule K-1. This is the Partner’s Share on the income, credits, deductions and the like.They figure out their net earnings and income from being self-employed by using a method that is optional and this is listed on Schedule SE which is also known as the Self-Employment Tax.They have paid wages that have been reported on Form W-2 which is the Statement on wages and taxes. They are regarded as shareholders and they own more than 2% of the over-all stock of a corporation listed as an S-corporation.There are rules that apply to how exactly this insurance plan can be established. Self-employed individuals must follow the guidelines and make sure that they qualify:If they are self-employed and have filed Schedule C, Schedule C-EZ or Schedule F and the policy is possible to be listed under the individual’s name or the business’ name.If they are partners of a business, the policy is listed in their name or the name of the partnership and the partners pay premiums. If the policy is in the name of the self-employed individual and he or she pays the premiums, then the partnership must reimburse said individual and include these premiums and regard them as income and list it on their Schedule K-1.If they are shareholders of an S-corporation, the policy is listed in their names or the name of the S-corporation. Either the self-employed individual or the corporation pays the premiums. If the policy is under the name of the individual and he or she pays the premiums, then the S corporation reimburses the individual and also includes this premium and regard is as some kind of wage income and list it on Form W2.As for Medicare premiums, these are voluntarily paid to obtain the insurance under the name qualified for health insurance that is private and possible to be used in order to figure out the deduction. The total amount that is paid for coverage of health insurance obtained from distributions on retirement plans that are nontaxable cannot be used to calculate this deduction.Health Insurance Deduction Worksheet for Self-Employed IndividualsEach business or trade must be listed under a separate worksheet that has been established by an insurance plan.Enter the over-all amount that has been paid for the year 2016 that is solely for coverage of health insurance that is established and listed under the business. This can also be listed under an S corporation that the individual has more than 2% in shares. The mentioned health insurance is for the self-employed individual, the spouse as well as the dependents.List any amounts for the months that the self-employed individual is eligible in participating in health plans that are subsidized by the individual or the employer or the spouse or the employer of the dependents or the child who is below 27 by the last leg of 2016.List any amounts that have been paid from distributions of the retirement plan that were considered non-taxable because the self-employed individual was a safety officer for the public and is retired.List any health insurance that is a coverage payment and is included on the Form 8885 and specifically on line 4 in order to obtain the HCTC.List any monthly payments for HCTC that were made in advance and that was received by the administrator of the health plan from IRS, as depicted on the Form 1099-H.List any qualified health insurance that is a coverage payment that was paid for coverage months that are considered eligible and the self-employed individual has received in the form of a benefit through the monthly payment in advance of the HCTC program.For coverage that is listed under long-term insurance and is a qualified contract, every person that was covered must be entered. Total payments that were made for the specific person during the whole tax year must be listed.The amount depends on the age of the person by the end of the said tax year. It is $390 for individuals who are 40 or even younger, $730 for those between the age range of 41 and 50, $1460 for those who are between the age range of 51 and 60, $3,900 for those between the age range of 61 and 70 and $4,870 for those who are between the ages of 71 and older.The payments that were made for months that were eligible but subsidized by the insurance plan of the self-employed individual’s spouse or the employer of the spouse. Remember that if there is more than one individual that was covered, the amount should be entered separately. Then, once completed, enter the over-all amount.Add Line 1 and Line 2.Enter the net profit as well as earned income from the business or trade that the plan of the insurance was established. Do not put the payments for the program of Conservation Reserve because these payments are exempted from self-employment. If the business is listed as an S-corporation, proceed to Line Eleven.The amount of all profits that have been listed from Schedule C on Line 31 which is Form 1040, Schedule C-EZ on Line 3 which is Form 1040, Schedule F on Line 34 which is Form 1040, or Schedule K-1 on Box 14 and Code A which is Form 1065. Include any income that is allocable to the said profitable businesses. Do not include the payments made from the program of Conservation Reserve because these are already exempted from the tax of the self-employed. Check the instructions that are listed for Schedule SE which is also Form 1040. Net losses must not be included on any schedule.Divide Line 4 from Line 5.Multiply the Form 1040 or the Form 1040 NR which is found on Line 27 by the percentage amount listed on Line 6.Subtract the amount listed on Line 7 from the amount listed on Line 4.If there is any amount listed on Form 1040 or 1040 NR which is on Line 28 that is considered to be attributable to the business or trade in which the plan for the insurance has been established, then this must be entered.Subtract the amount in Line 9 from the amount in Line 8.Enter the Medicare wages that are listed in the Form W-2 and on Box 5 from the S corporation in which the self-employed individual has more than 2% of the shares and which established the insurance plan.Enter the amount that is listed on the Form 2555 and Line 45 and the attributable amount that is listed on Line 4 or Line 11. Any amount that is listed from the Line 18 of Form 2555-EZ can also be attributed alongside the amount that has been entered above Line 11.Subtract the amount from Line 12 from the amount in either Line 10 or Line 11.Enter the smaller amount between the one in either Line 3 or the one in Line 13 along with the amount on either Form 1040 or Form 1040 NR which is on Line 29. When figuring the total of the deduction on the medical expense listed on Form 1040 or Schedule A, this must not be included. Sounds complicated – that is why people specialize in accounting. Please consult with your local CPA to discuss this.How to Claim Health Insurance Deductions from Self-EmploymentOne of the reasons why more and more people choose to be self-employed is that they can deduct what they usually spend on premiums of health insurance which can be found on page 1 and above a line on the individual’s tax return. These self-employed individuals can also claim their medical expenses as a form of deduction, and this includes premium on health insurance. The catch is that they have to itemize the tax returns to get this done. The downside is that this is not always end up being a good deal to the individuals. Eligible PoliciesThe overall cost of premiums that have been paid for insurance that is specifically for medical, dental and long-term purposes can be deducted in the policies that cover the individual, the individual’s spouse and the individual’s children, who are below the age of 27. If the self-employed individual pays supplemental premiums to Medicare, then these can also be deducted. Policies can be listed under the name of the business. Limitations to Claiming the Health Insurance DeductionSelf-employed individuals cannot deduct the costs of insurance from their health benefits if they or their spouses were found eligible in participating in the subsidized health plan for groups that are obtained via the employer.This is the case for those who work regular jobs and have their own businesses or their spouses are employed and are found eligible for the coverage that is under the health plan for the group.The individual’s self-employment over-all income can be calculated and totaled on Schedule F and Schedule C and this must be the same amount or go beyond the amount of the deduction. Take this for an example. If the business has earned a total of $12,000 but the premiums cost $15,000 then the individual cannot claim the whole $15,000. He can claim only the $12,000 amount. If the business reports some kind of loss, then the individual will not be considered eligible for health insurance deduction. He or she can still obtain the health insurance amount that has been itemized on the medical deduction that is listed on Schedule A but the amount that is listed “above the line” and its adjustment is more advantageous to the self-employed.Self-employment taxes are also based on the total business income minus the other expenses – this is the income that is calculated and listed on Schedule C, but this is not less than the individual’s insurance premium. That is regarded as a break in the double tax.When claiming the deduction, the self-employed individual can enter this on Form 1040 located in Line 29. There is a worksheet that is provided in the Instruction Guide for Form 1040 and provides a step by step on how to calculate the total amount of the deduction. A more detailed practice worksheet can be located in the Publication 535 guide. These worksheets can be used for practice and can also amount to the deduction that can be obtained in health insurance for the self-employed individual. Worksheet P can also be used and is found in Premium Tax Credit which is Publication 974.

Understanding Long Term Care Coverage

Sanjiv Gupta CPA - 3 years ago
A long-term care coverage may be expensive but there are possible steps that can be taken so that it would become more flexible and affordable. “Long-term care” is the help people who have chronic illnesses or disabilities or conditions require every day and over extended periods of time. The kind of help that is needed can also vary from assisting simple activities like bathing, eating and dressing to expert care that only nurses and other professionals such as therapists can provide.Employer-based coverage of health insurance does not cover the daily and extended services for long-term care. Medicare can only cover short stays in nursing homes or limited time at home care but only under extremely strict conditions. In order to cover the potential expenses in long-term coverage for health care, some people opt to buy long-term insurance.Policies provide a wide range of coverage options to choose from. Since it is hard to predict the future and how long-term care necessities will be, individuals are strongly advised to buy policies with flexible options. It depends on the policy options that are selected. Long term insurance for medical care can also assist in paying for the ideal care that is necessary, whether the patient is staying at home or in a nursing home or a facility that is assisted-living. The insurance also covers the expenses for care coordination as well as daycare of and other extra services. There are even policies that can also assist in paying the costs that are associated with modifying homes in order for the elderly to live safely in it.Factors to consider Health and age. Insurance policies are inexpensive when purchased at a younger age and the individual is of good health. If the individual is older and has already been diagnosed with health conditions that are serious, there is a high possibility of them not getting coverage. If they do, then they are expected to spend more. The premiums. The individual must always check whether he or she can pay the premium of the policy – today and tomorrow – without having to go broke. Premiums have the tendency to increase over a long period of time and when the individual’s income unexpectedly goes down, it may be a challenge. There are individuals who find themselves unable to pay the premiums. They should be careful when making this decision because it is possible to lose all the hard-earned money that was invested in policies. The income. If the individual has difficulty paying the bills and are concerned regarding paying this for the coming years, then spending thousands for a year just for long-term care policies will not make sense. If the income of the individual is low and there are few assets that are needed for the health policies, then they can qualify immediately for Medicaid. Medicaid covers the care in nursing homes. In a number of states, it also covers at-home care but a limited amount. The downside is that for individuals to qualify, they must exhaust all of their resources first and meet the requirements for eligibility that Medicaid has posted. The support system. The individual can surround himself with friends and family that can offer long-term care especially if he needs it. However, they should think about the possibility of these people’s abilities to help them and how they can help them. Sometimes, some friends and family cannot help as much as the individual would like them to which only results in disappointment. Savings and investments. Financial advisers and lawyers specialize in estate planning or elder law and they can advise elderly individuals on ways to save and invest for long-term expenses in care for the future. They can also list the cons and pros and show these to their clients so the latter is knowledgeable before completely purchasing or investing in car insurance that is long-term. Taxes. The benefits that were paid through the policy of long-term care are generally not regarded as taxed in the form of income. There are also many policies that are sold today that are considered to be “tax-qualified” when setting in federal standards. Therefore, if the individual itemizes the deductions and also have medical costs that exceed 7.5% of the adjusted gross income, then he or she can also deduct the final value of all the premiums obtained from the federal income as well as the taxes. The total amount of the deduction from the federal taxes depends heavily on the age of the individual. The number of states offer tax deductions and credits but limited. The Policy Sources for Long-Term Care Individual Plans. A number of people opt for long-term care health insurance policies via their insurance agents or their brokers. When they choose to do this, they have to make sure that the person they are working to get this policy has had training when it comes to insurance for long-term health care, as there are many states that require this. They should also check with the insurance departments of their states for the credibility of the person they are dealing with to see if this particular agent or broker has the license to sell health care policies within that state in the first place.Plans from Employers. There are employers that offer long-term health insurance policies or make these policies available for every individual through group rates that have discounts. There are also group plans that do not have underwriting. This means that these policyholders do not have to meet the medical requirements in order to qualify, at least in the beginning. There are also benefits that are available to various family members who need to pay premiums and also have to pass the medical screenings. There are also cases wherein when the individual leaves the employer or the latter has stopped providing benefits to the former, then the individual can retain the health insurance policy and also receive something similar if they choose to continue paying the premiums.Plans That Organizations Offer. Professional as well as service organizations that the individual belongs to offer group-rate insurance policies for long term health care to every member. Similar to coverage that is sponsored by employers, individuals must study their options so that they know the possible scenarios if they choose to have their coverage terminated or they choose to leave these organizations that they belong to.Partnership Programs from the State. If the individual chooses to invest in long-term health care insurance policies that qualify for the partnership programs from the state, he or she can keep a specific amount of the over-all assets and still be regarded eligible for Medicaid. These states also have partnership programs. The individuals have to make sure to check with their insurance agents whether the health policies that they are considering are qualified under these partnership programs of the particular state if it is associated with Medicaid and how and when they could qualify for this. If they have additional questions re Medicaid and the State Partnership Program, then they should check with the Health Insurance Policies Assistance Program of their state.Joint Policies. There are plans that let the individual by single policies to cover more than an individual. The policy is also used by husbands and wives, partners, or a couple of adults that are related to one another. There are usually maximum benefits that apply to every individual that is insured with that particular policy. For example, if a husband and wife have a health care policy that has $100,000 benefit maximum and one of them uses $40,000, then the other would still have $60,000 remaining for him or her. The downside to this is that there is a possibility that one person will deplete the funds that the other one would eventually need in the future.Long Term Health Care Insurance Coverage and Its Pre-Existing Conditions Insurance providers turn down the applicants for pre-existing conditions that they already have. If a company sells health care policies to individuals who already have conditions, the insurers can withhold payment for the healthcare that is related to these specific conditions for some time after the insurance has been sold. Therefore, the individual then has to make sure that the time that the payments have been withheld is reasonable for him or her. If they fail to inform the company of this pre-existing condition, then the insurer may not even pay for the care that is related to the specific condition in the first place.Covered Services There are insurance companies that require their policyholders to turn to services from home care agencies or licensed professionals that are certified. There are others that allow the latter to hire non-licensed and independent providers or even family members. There are some companies that put certain qualifications like licensure if this is available within the state or restrictions on the programs and the facilities that are used. Policyholders must then make sure that they buy policies that cover these facilities, services, and programs and these are also available in their locations. Moving to a different location may also make differences in the coverage as well as the kinds of services that are available.Health care insurance coverage has the following arrangements on long-term care:Nursing home. These are facilities that provide full-range health care, personal care, rehabilitation care, and daily activities 24 hours a day and 7 days a week. It is necessary that individuals cover to find out if this policy does not just cover lodging.Assisted living. This is a resident that is like an apartment. It has units and there are individualized services and personal care available whenever necessary. An example of this is that the patients can have their meals delivered right into their apartment. Day Care Services for Adults. This is a program that is not included in the home and it provides social, health and support services for adults in a supervised setting. These are ideal for those who need some help during their stay. Home Care. This is an individual or an agency that performs personalized services like grooming, bathing, and assistance in housework and chores. Home Modification. These are adaptations and renovations done in the home, like installing grab bars or ramps, to make it more livable and accessible. Care Coordination. These are services from licensed and trained professionals who assist in locating services, determining needs and arranging the care for policyholders. This policy also includes monitoring the care providers. Service Options for Future. If there is a new kind of long-term health care services that have been developed after purchasing the insurance, then there are also some policies that are flexible enough to cover these services as well. This option can be available once the policy has a specific language regarding alternative options. Amounts and Limits of the Policy Coverage Long-term health care coverage also pays for various services (for example, $50 for home care as well as $100 for nursing home care). They can also pay a particular rate for a specific service. Most health care policies have limits to these amounts for the benefits that they receive, like specific total years or the over-all dollar amount. Therefore, when purchasing a health care insurance policy, the individual must select the specific benefit amount as well as the duration that is right to fit the budget as well as the anticipated needs.In order to figure out how useful policies are to the individual, he or she must compare the total value of the policy and its daily benefits alongside the average cost and value of the health care within the area. They also have to remember that they have to cover the difference. The price of long term health care can increase over a period of time. These benefits can also begin to erode especially if the policyholder does not choose one that protects it from the inflation in that particular policy.

Protecting Your Business - Limit your liability

Sanjiv Gupta CPA - 10 months ago
This is no joke. Bad things can occur even to the kindest of people at any point in time. They do not have to be negligent or irresponsible to be sued. Therefore, for business owners or any individual to protect what they have, it is crucial that they take on defensive measures. This makes ir harder for creditors to obtain their assets just in case they lose a lawsuit when a judgment is filed against them. This also protects them when they find themselves bankrupt, not by their own doing but because they were forced to do so. Resort to Business EntitiesEntrepreneurs of any kind must separate their personal assets from that of their business. If these specific legal steps in creating the business as a separate entity, corporation or LLC is neglected, the owner will find him or herself in dire consequences. It may even cost them everything that they own and all that they worked hard for.Here are business entities worth considering:* Sole Proprietorships. These offer no limit on the individual's liability. The downside to this is that a single mistake can easily cost the individual his or her home, depending on the state that he or she resides.* General Partnerships. These are the worst option. If the business partner has personal disputes that have nothing to do with the other partners, everyone can lose the lawsuit because all the partners are joined by the hip. Usually, lawyers come after every partner because of one's action whether it be concerning the business or the personal lives of those running it.* Limited Partnerships. These can help limit the liability of the individuals. If they invest as limited partners in partnerships, then they cannot be sued for anything that is more than what they possess and have invested in the company. The worst scenario is when the investments are totally wiped out. Lawyers cannot come after every owner and maximize the claims against the corporation. The kicker is that the owners cannot completely participate in running the business. If this is one, then the individual who does so is the general partner. Therefore, his or her assets are fair game.* Corporations. These provide excellent protection of the owners' assets. This come with the exception of cases when it comes to fraud. Therefore, if the person fails to pay the payroll taxes to the IRS or they do not treat the corporation as separate entity for themselves, then these personal assets cannot be stripped away from them. This is in the event that the business also loses the lawsuit. Entrepreneurs should know that there are two kinds of corporations: the C Corporations and the S corporations. These are taxed differently. Entrepreneurs should also know that they have varying restrictions when it comes to ownership. However, both of these provide the same asset protection for the owners.* Limited Liability Companies. Limited liability companies provide the protection of the business owner's assets against lawsuits hurled to them. However, there are few restrictions on the ownership for LLCs than with S corporations. They also let their owners choose whether they would like to file the federal taxes as some form of partnership or corporation. There is a major advantage that the LLCs have some jurisdictions and this because they charge their order protection. If the corporation loses the lawsuit then the judge can award the number of shares to the business and award this to the creditor. This also gives them access to the books of the business. However, with the LLC, the plaintiff gets an interest in the membership. They also cannot force the distribution of the cash but they are also taxed once this has been received. This is why they regard it as a "poison pill." Despite the name though, it also helps in preventing the lawsuit and settle these on the favorable terms. Business Owners’ InsuranceThere are professions that generate vast exposure to liability when compared to other businesses. If the individual is a real estate agent, financial advisor, gynecologist or any professional in various fields that generate lawsuits for malpractice, they need to have their errors along with their omissions coverage paid up. If they cannot afford to do this, then they can invest this in extra or even in expanded coverage. They should also not stop there. They need to enact this in different kinds of coverages:* Homeowners Insurance. This help in covering the individual is someone is hurt within his or her property. The individual must choose a deductible that can cover savings and also make sure that the liability coverage is adequate just in case someone gets hurt within their property and they are sued by this.* Commercial Liability Insurance. These kinds of insurance protect the business if someone is hurt on the premises and is injured as the result of the action by the employee.* Worker's Compensation Insurance. These are mandatory and carried through by most jurisdictions. The worker's compensation also protects the workers along with them ensuring that there is enough liquidity that comes in place in order to take care of the employee when they get hurt on the job. Their expenses pretty much do not come out of their pockets.* Auto Insurance. Individuals must not settle for the legal liability coverage at its most minimum. Instead, they should always check if they can afford the additional coverage. Individuals must buy additional coverage when looking into insurance so that they are protected just in case their vehicle is involved in the accident that results in a lawsuit. It is a general rule of thumb that they are made liable to coverage equal to the total assets.* Umbrella Coverage. These are back up insurance that is used in the situation where other coverages are regarded as inadequate. Just in case the individuals' auto, liability or homeowners coverages are all exhausted, then the umbrella coverage eventually pays the benefit that is limited to the policy. Take this example. If the individual has $1 million for auto liability and is sued $2 million in judgment, then this umbrella policy eventually picks up an additional $1 million in terms of coverage. Otherwise, the plaintiffs can also start seizing the assets for the accumulated damages. These policies are underwritten for the amount of $1 to $5 million in face value. It is also usually quite affordable.* Long-Term Care Insurance. These are the insurance the protect the individual against unexpected costs that are financially devastating. This can be in the form of nursing home care or in-home care for chronic ailments like dementia, paralysis, Alzheimer's, multiple sclerosis, paralysis, strokes, and spinal cord injuries just to name a few. Medicare does not provide coverage for these kinds of afflictions and a number of medical insurance policies also do not provide this. If the individual has no long-term care insurance, then they could be spending $200 for just one day at a nursing home. These expenses can drive them to poverty that it is enough for them to qualify for Medicaid. The longer the individual waits, the higher that the premium gets. Additionally, they can also develop an ailment that can preclude them from getting coverage or at least then make it expensive. Alternatively, it is important that the individuals consider the long-term care insurance for the parents if it will otherwise be on the hook for the expense. Retirement Accounts Must Be Used. The Federal law provides asset protection that is unlimited for the ERISA-qualified retirement plans. It can amount to a total of $1 million in terms of assets just in case an event of bankruptcy occurs in the IRA. There are some states that proved more protection but there are also some states that chose to opt-out of the Bankruptcy Reform that was created in 2005. The federal bankruptcy exemptions can also exempt this to a decreasing amount.Individuals must check the laws of their states in order to see how protected they are just in case these funds are provided to their accounts. They can also speak to their attorneys as long as the latter is familiar with the laws that are indicated in their state. They can also determine whether the creditors can choose between the federal and the state exemption amounts.If the state has generous exemption then they can consider moving the cash that they do not need until they reach the age of 59 1/2 into their protected entries. They should also remember that there will be a restriction on the annual contribution limit and this varies depending entirely on the kind of retirement plan. If the individuals go beyond this limit or they are able to withdraw the funds prior to the age indicated, then they can be assessed for penalties. The retirement accounts are also excellent transport to protect their long term savings. They can also provide substantial tax benefits and are needed to thoroughly and understand then use this with care. The Exemptions in Homestead. There are some states that provide tons of protection to the home equity. This means that if the individual declares bankruptcy then the law also prohibits the courts in awarding the home equity to the creditors. There are some states that include Florida and Texas. There are also state laws that protect the unlimited amount that is the home equity. Other states can also provide quite a little protection in the events of bankruptcy to home equity.Individuals must check the laws in their states. If the state is able to offer generous homestead exemption, then they should consider contributing extra to the mortgage payment principal in order to protect the funds. The principal contributions of the housing market along the vagaries are also subject to risk if the individual loses access to the equity. The cash of the property value often falls.Alternatively, if the state is able to provide a homestead exemption that meets the minimum requirement, then they can also accelerate the mortgage payments and then also pay the down principal that can also make sense if they are looking to protect the assets along with the creditors. Obtaining Titles. Take this for example. Check how an individual's home is titled. If the individual owns the home with his or her spouse as the tenants, then both the individual and the spouse own an interest for the home that cannot be divisible. If only the individual is sued, then the creditors can also not force the other spouse to sell for his or her share of the interest in the house. The interest is indivisible, therefore this also protects the home equity where the law eventually states the provision for the sufficient homestead exemption.Only a number of states has this kind of option available for them. It also applies to the personal residence and never does it apply to the investment property. There are other kinds of titling that also includes the tenancy as well as the joint tenants that possess the rights for survivorship.The way that the property is titled can also profound the ramifications just so it goes with the event that the creditor can also make an attempt to obtain this. Individuals should speak to lawyers that are licensed in their state for the specifics that concern this kind of situation.Individuals must not wait until the lawsuit is made imminent before they can even make any of these. If they do, then the court will only rule that the transfer of funds be conducted to a protected class. This is a fraudulent conveyance and the court may not even allow this transfer. This results to the assets being exposed.The most important consideration is for the individual to not be a target. This can also be done by avoiding display the conspicuous consumption. This can also attract the trial lawyers and can also create the plaintiff's case where they would also otherwise pay for this.

What is ADB or Accelerated Death Benefit?

Sanjiv Gupta CPA - 1 year ago
An ADB or accelerated death benefit is the benefit attached to life insurance policies. This insurance benefit pays the insured while he is still living. This lets the policyholders receive advances in cash and not the death benefit when the holder has a terminal disease. Individuals who prefer ADBs are those who have less than a year left. The money they receive is what they use for additional costs like medicine and treatments so that they can keep living.When choosing insurance policies with accelerated death benefits, the policyholder can then pay for day to day expenses. Another upside is that when they pass away, their loved ones do not have to worry about the final expenses such as funeral and burial costs. In fact, they can even live comfortably. This kind of benefit started around the late 1980s. This was to lessen financial pressures, especially individuals who were living with AIDS.There are policies that have this available for their holder even if it is not stated clearly in the contract. How does an Accelerated Death Benefit work?It is worth investing in life insurance. It ensures that the loved ones of the policyholder receive the financial protection required when the latter passes away. It is also an opportunity for the holder to provide for his family if there is a tragic and unexpected occurrence – like accidents. However, what about those who have conditions that are draining their bank accounts?This is where the Accelerated Death Benefit comes in and becomes the savior. In most cases, people going through the terminal and diagnosed illnesses are considered to be eligible to get the ADBs. This is the reason why it is also regarded as a living benefit. Definition of a Living Benefit?Living benefits are added to insurance policies before as well as after these have been purchased. With living benefits, patients diagnosed with terminal illnesses can also access portions of their benefits before they pass away. Initially, when living benefits were created, it was strictly for those who were diagnosed with AIDS/HIV. Over a period of time, it was then offered to patients who were diagnosed with cancer, kidney failure and terminal illnesses aside from AIDS. Medical expenses for these terminal illnesses can also be quite expensive. There are living expenses that the patient have to pay off as well. Living benefits can help all the expenses and can also be a form of assistance to those who are suffering from these terminal illnesses. A number of insurance companies provide living benefits in the form of the rider through life insurance policies. It comes in different forms of packages and there are lots of payment options to choose from. All in all, these have living death benefits. The death benefit is received when the policyholder has already been diagnosed with a terminal disease. It can also be obtained when the policyholder eventually contracts a disease. Contacting a terminal disease is definitely not in the mind of most people but for a majority, living benefits are something that they prefer to have in their policies. By having this, they can receive a particular percentage from death benefits. The percentage depends on their insurance companies. After death, the remaining percentage of the benefit is then paid out to the beneficiaries of the policyholder. If the holder recovers from the illness, they do not have to repay what they received in the form of benefits. Pros & Cons of Accelerated Death BenefitsSeniors who are terminally ill have insurance policies that can receive a percentage of the death benefits from their insurance providers way before their death. These benefits can also be used for any kind of assistance, especially for senior citizens. They can use this for nursing home care, hospice, assisted living and home care. ADB beneficiaries can also receive death benefits even if it is reduced in the amount of the ADB. ADBs are relatively new options. This results to elderly individuals who have been holding their policies for a number of years but not noticed that they can get the ADB in there. Policyholders who are interested should also ask their insurance providers if this option is available for them. The advantage of receiving accelerated death benefits is that they let policyholders have a percentage of the death benefit even before they pass away. There is no really major downside to this. The limitation is that there are policyholders that are required to only obtain this if they have been diagnosed by hospitals that they are terminally ill. Other Options for Life Insurance Policy HoldersThe same option that can be provided to terminally ill seniors is regarded as the viatical statement. Under this, policies are sold to the third party and the holder receives a settlement that is of a lump sum. The difference between viatical statements and that ADB is that with the latter, policy owners continue to pay monthly premiums. With the former, the person who purchased the policy is in charge of the payments on a monthly basis. This is the very reason why seniors prefer viatical settlement instead of accelerated death benefits. Death benefits which are also regarded as life insurance loans are options for seniors. This kind of loans with low interest allows the policyholder to borrow despite the cash value that is stated on the insurance policy. Borrowers can then pay the debt that they owe in their own time. They also have the option to not make payments. During the time of the death of the policyholder, the loan amount including the interest is then subtracted from death benefits. Benefits and LimitsAccelerated death benefits have no restrictions. Most cases have families who receive ADB putting the resources to a cost that provides food for loved ones. This is not a requirement nonetheless. The benefits are then paid out in a lump sum that arrives to policyholders once. However, there are insurance companies that offer installments. These policy holders then get an amount every month. It is very important to distinguish which option is better for them and has more impact on the eligibility of the Medicaid insurance of the policyholder along with their loved ones. When applying for accelerated death benefits, there is a requirement to release medical information. This lets the insurance companies be in the know of the life expectancy of the person that will be insured. Benefits are then paid out in four to six weeks. It is important to note that ADBs can have as high as 95% when it comes to death benefits. The insurance provider also sets maximum benefits that are based on the life expectancy of the holder. This then makes him come up with a final decision on the financial advance that they are required to obtain. It is very crucial for policyholders to also know that ADBs are not taxed. Qualifications for Accelerated Death BenefitsAn individual qualifies for living benefits if he or she has been contracted or diagnosed with a terminal disease. They are then expected to die in just a matter of two years. If they have this illness then this reduces their life span. If the diagnosed illness requires the policyholder to have an organ transplant, then the benefits cover their care in a hospice, even if this is long-term care. Accelerated death benefits provided to individuals who require assistance on a daily basis. The definition of this assistance are activities such as using the toilet and bathing. The cost of living benefits also depends on the insurance provider. If the policy already includes coverage, then the cost also comes with the policy. If this is not the case, policyholders pay fees or percentage for the death benefit. Taxation of Accelerated Death BenefitsADBs are usually not taxable. This is because the benefits are tax-exempt for those who expect they will die in a matter of two years. This kind of benefit is not there to serve as a substitute for long term coverage. It is a supplement for the costs that the insurance company failed to cover. If policyholders think that they are eligible and qualified for death benefits, it is best that they clarify this with their insurance agents. They should also remember that receiving living benefits affect their eligibility for SSI as well as Medicaid. Example of an Accelerated Death BenefitHere is how accidental benefit riders can play the policy out. 1. The client has a critical, terminal and chronic illness that qualifies under the insurance. 2. The client has filed a claim that accelerates the portion of death benefits. 3. The claims department, as well as the underwriters, are responsible for reviewing the prognosis ratings as well as the medical records of the potential policyholder. This is how they can estimate the discounted offer. It depends on the life expectancy and if there will be changes. If life expectancy is high, then the percentage that is offered to the client is also high. 4. Once the client accepts, then they can receive the lump sum of the amount that has been determined in a matter of two weeks. If the death benefit is then accelerated, then the face that remains is $0. The policy is also terminated. If there is still part of the portion remaining, then the premium of the client will also be reflected on the new face amount. Accelerated Death Benefits and Chronic IllnessesRegarding chronic illnesses, there has been a proposition but it has not yet been adopted to the rider. The IRS is yet to provide their policies on payments of critical illnesses. There is hardly or probably no accelerated benefit that is taxed by IRS. This is considering that the policy is turned into a MEC or a modified endowment contract. Once this happens, then it will remain a modified endowment contract.  All the benefits that go with it will also be taxable. Policyholders are advised to always have tax advisors or CPAs with them whenever they deal with IRS. Life Insurance and Accelerated Death RidersNo one can predict the future. No one wants to ponder on how they will die – whether they will suffer from a terrible illness or they will die in their sleep. Nonetheless, it is crucial that everyone plans for worst-case scenarios possible. Loved ones deserve as much protection as they can especially when it’s the head of the house who is diagnosed with the illness and is counting down the days. If this happens, then the holder will only leave his loved ones with quite a massive debt due to the final expenses. Funeral and burial expenses are also not cheap. They can be quite expensive. So if loved ones already have debt, giving them more debt is not a good idea. Not only do they lose someone they love dearly, but they will also be in a difficult financial situation.A common reason why a number of people do not get life insurance or even an accelerated rider is they assume it is quite expensive and way beyond their budget. That is not far from the truth. There are situations when there are multitudes of options that provide your family with the life insurance and protection that they need. The best and easiest way to obtain the insurance rate at its lowest is through an insurance agent that works independently. Unlike traditional agents, these independent agents do not work with just one company. They represent dozens of insurance providers that are highly rated all over the nation and they can easily bring the lowest premiums to the policyholder. Insurance companies are different from one another. For one, they have different ways of calculating their premiums on the riders and life insurance. In order to get the best rates, compare multitudes of quotes even before choosing the best insurance policy that works for you. It is a waste of time calling each and every agent. Go to one expert and compare all the possible plans that you can have. 

Medi-Cal vs Obamacare - What's the difference?

Sanjiv Gupta CPA - 1 year ago
First, let's see what is Obamacare (at least what is left of it).During the presidency of Obama, a bill was signed that was known as the Affordable Care Act or ACA. President Obama promoted it as Obamacare and this phrase quickly caught on.  This act provided numerous benefits to those who were uninsured and those with pre-conditions.  However, it also came with a penalty for those who didn't have insurance.  Penalty clause was repealed by the Trump administration (GOP Tax Bill that was enacted in December 2017).   Just to clarify, if you were uninsured in 2018, the penalty will still be assessed. Obamacare is usually referred to health insurance plans that are sold in the health insurance exchanges. Now, let's take a quick look at Medical.What is Medi-Cal?This is a government health insurance program. It is often FREE or low-cost.  Almost everyone with lower income can meet the criteria for Medical. Seniors, children, adults, people with disabilities, Kids in foster parents care can qualify for Medical. Do they cover all the services ?No, they do not.  These low-cost insurance plans usually only cover essential health benefits. For example:Emergency servicesAmbulatory patient services.HospitalizationPreventive and wellness services and chronic disease management.Laboratory servicesRehabilitative and habilitative services and devicesPrescription drugsMental health and substance use disorder servicesBehavioral health treatment We recommend that you carefully check what services are covered or NOT covered by Medi-Cal when you enroll. Rules are often changing.Medi-Cal or Obamacare - Getting ApprovedObamacare is easier to get. It is private and subsidized by the Government for those with lower income.  On the other hand, criteria to get the Medical is strict. It varies by the state.So, what should I get?Start with Health Insurance Exchange -  They will check to see if you qualify for medical. If they determine that you do qualify, it will forward that information to the right department. If you are not eligible then you can continue the process of getting Obamacare.

Why Life Insurance Is Necessary For You and Your Family ?

Sanjiv Gupta CPA - 2 years ago
As people grow older, marry, start families and engage in businesses, they realize that life insurance is a crucial part of a financial plan. It depends on the kind of policy that they sign up for. Life insurance can be cheap, so there is no excuse to not sign up for one. Through the years, people will find comfort knowing that there is money for their loved ones just in case curve balls are thrown, and unexpected events such as the individual occur.1. Protecting Loved Ones and FamilyLoved ones depend on the financial support of their livelihood. This is reason enough to press on the importance of life insurance. This replaces the income of the insured once he or she passes. This is also very important for the parents of young children or adults who would regard it difficult to sustain the standard of living that they have grown accustomed to if they have no more access to the income that the departed provided in the past. They need to provide money that is enough to cover the costs of taking care of the members who remain alive.2. Leaving an InheritanceEven if the individual has no assets to leave to their heirs, they can create an inheritance just by buying life insurance policies and listing them as beneficiaries. This is an excellent way to set up the kids for a financial future that is very solid and can provide them with the monetary needs that are required once the necessity arises.3. Paying off Debts and Other ExpensesAside from providing the income to sustain daily expenses, a family needs insurance in covering outstanding debts such as credit cards, mortgage, and car loans. There are other expenses that include the burial and funeral costs which can also run into thousands of dollars. No one wants their spouses, children, parents or loved ones left behind with financial burden along with the emotional burden that they are already going through.4. Adding More Financial Security Like most parents, the insured individual finds comfort in knowing that their kids are well taken care of especially when they are gone. They want them to get a good quality college education and also provide them with the necessary ventures such as marriage and starting a business. This is the very reason why additional coverage is a necessity especially when the kids are still living at home.5. Bringing peace of mindIt is hard to tell when people are destined to pass away. It can be today, a day from now or in 50 years. It will happen one way or another, and no amount of money can replace the person. More than anything, life insurance helps in protecting life's uncertainties. Without a doubt, having life insurance also brings loved ones the peace in mind that are needed especially in those trying times. It is also one thing that they can be sure of and have no questions regarding who will take care of them the minute they are gone. Life insurance can also protect the heirs from the unknown and assist them through the loss.It's not fun to talk about life insurance because it is not a process that anyone enjoys. However, just like death and taxes, buying life insurance is quite a crucial part of life and an essential element of sound financial planning. Some people are aware that they needed life insurance but based on the experience of most, some individuals procrastinate until there is a life-changing event that drives them to buy it. However, there are serious benefits to investing in insurance early in life, especially if the individual is in debt, married or planning to get married, have or starting a family or an entrepreneur.How Does Life Insurance Work?How life insurance works are quite simple. You can use it, or you can lose it. The insured individual pays a yearly premium because it is determined by the insurance provider. If the insured died during the duration of the policy (usually it is 20 years), the beneficiary collects the specific amount that is indicated and written on the policy. For example, assuming that the insured individual invests in purchasing a $1 million, 20-year term policy with a premium that is $600/year. If this is the current premium payment that is to be paid, and the individual dies within that period, then the beneficiary will also receive $1 million and tax-free. There are various kinds of life insurance products for purposes today.Why is Life Insurance a Necessity?A fundamental question that is often asked is will someone is adversely effected by the untimely death of the insured.Here is a question that most people ponder on. If they were to die the next day, who would then be responsible for paying her debt. If the deceased owns a home, business or personal liabilities, someone else will then be responsible for these. This is normally the next of kin. Therefore, the spouse, parents, and siblings of the deceased could end up paying the debts which makes it quite unfair for them.Those who have children invest in life insurance because they do not want to put their family at risk. For business owners, they consider it very important to have a succession plan just in case something does happen to them. For business owners who do not have a succession plan, the financial advisor has to figure out who will be next in line to run the company.Another concern of most people is how much insurance they should get. There is no specific answer because everyone requires different insurance. There are many variables that determine the kind of insurance that an individual invests in. It also depends on age, sex, and finances. The best factor is how much insurance a person can afford.Now that everything is all figured out, the individual then searches where to buy life insurance. It is a compelling and competitive industry. There are some companies that are better selling certain insurance over others. Having a financial advisor can make the decision making easier for the person buying the insurance. It also depends on the person if he or she would resort to a captain agent. A captain agent is a person who works for a specific insurance company and only sells the insurance from that company. It is better to go around and consider all possible insurance.Life insurance is never fun to talk about, but once individuals sit down and confide with experts who have their best interests in mind, then they may regard life insurance as something that they not only need but want as well - to protect their family, business, dependents, and legacy.1. No one knows what tomorrow has in store.Anyone can die suddenly, like an accident or an unexpected illness or natural causes. Any of these can happen at any moment. Life insurance also helps loved ones pay bills, mortgage, college costs even after this has long been gone. It also provides tax-free cash to pay death duties and estate. Nothing can replace the insured in their hearts but planning this with insurance can also make the grieving stage easier for those who are left behind.2. Funerals can be very expensive.Funerals can cost between $7,000 to as much as $10,000. This is just the average service and not the extravagant ones. The time is already emotional and difficult, and life insurance can cover these bills by not stressing those involved with financial hardship.3. Protecting the loved ones of the insured individual.Those who work wish to protect their loved ones - spouse, children, partner, family members. They make sure that these people are well taken care of. It is very important to consider financial support by providing the future for the dependents who survive.4. Death should not equate to debt.Life insurance assists the dependents in covering the financial responsibilities that the insured leave behind after her death. Debt can be quite a tremendous burden especially when this comes with the emotional toll that the death of the insured individual creates.5. The unexpected can happenIf the individual develops a serious illness, he or she may not get life insurance. If the person has been diagnosed with a terminal illness, life insurance can provide financial support. Life insurance can also be the tool in case of emergencies, and this can be done by requesting loans or withdrawals.6. Taking care of businessLife insurance is not just for individuals. It can also protect the business from any kind of liabilities, instability or financial loss just in case the insured individual does pass away. Whether the person provides the necessary short-term cash and keeping operations, then it goes until things settle down. Life insurance can also be invaluable when maintaining the business that the person has already worked so hard for.7. Supplementing the retirement.You can also use the life insurance to make sure the retirement savings that lasts as long as it is done. An annuity is like a pension plan that you can do for yourself. If the individual puts enough amount of money and turns this into a life insurance product, then in return this can guarantee a good enough stream of income each month.8. It makes logical financial sense.Life insurance is regarded as a financial asset that can also increase the credit and also help in loans and health insurance. There are policies that result in returning the cash value which occurs in case of bankruptcy and cannot be touched by any creditor.9. Giving to charityLife insurance also enables in leaving a lasting gift to the favorite cause and charity that is larger than is otherwise set aside for charity work and donation.10. Peace of mind, plain and simpleThere is no amount of money that can replace any individual. More than anything, life insurance helps in protecting any of life's uncertainties.Life insurance is a very selfless gift that can be given to people left behind. It is not as complicated or even as expensive as many people think. Rather than viewing this as such, it must be considered as a necessity for the individual and loved ones. This can be a potentially happy ending that leads to a difficult situation.The gist of it all is that life insurance is not really for the individual who gets it but for his or her loved ones. Whether it be short-term family needs such as rent, bills, and funeral costs, this is a way for the surviving dependents to get by financially especially when left with loans and credit card debt. Life insurance can also help in keeping family members from tackling financial issues when these are least expected.Long-term family needs can also be covered especially when this results to an economic impact due to a loss. Family members make major changes, and these create additional expenses. Sometimes, it may not even be death but non-working spouses returning to the workforce and also needed to pay for daycare. Life insurance can cover life's new expenses. If children are in the picture, life insurance provides normalcy and stability. Life insurance should not be as expensive as deemed to be. This is dependent on variables such as age, sex, health, and kind of policy. It costs less than people think. As long as there are appropriate budgeting and spending, life insurance is affordable. When life insurance is purchased, individuals will then feel that when the time comes they need it the most, they are saving more than what they thought they would have to shell out because of these unexpected costs.
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