Category Archives: Taxes

04/23/12

Group Benefits

It’s open enrollment time for us, and I love this time of year! (DORK!) Getting to organize the upcoming benefit year for our family brings me peace of mind and security. 

 

I recently did our family’s open enrollment online, choosing health care and dental options, long-term disability and life insurance, and for the first time for us—both a Flexible Spending Account for Medical and Flexible Spending Account for Dependent Care (ie, Max’s preschool).  All of this will help reduce our monthly after-tax pay, which means less money each year to old Uncle Sam.  That makes me happy :)

 

Here is some information I wrote recently for my Money Matters column in Kentucky Living magazine.  Hope it helps others going through open enrollment.  Can you feel the excitement in the air!?

 

Group Benefits

As an incentive to employees, most employers offer group benefits to eligible employees.  Commonplace are benefits such as health, dental and vision, life, disability, and long term care insurance, retirement plans, stock options, health savings accounts, and flexible spending accounts.  Here are some things to consider regarding your groups’ benefits:

 

Do your own research:

These decisions will have a great impact on your family’s everyday life (such as health insurance) and your family’s future (such as retirement).  Therefore, it’s prudent to devote time, effort, and research before you enroll in any benefit.  Ask your employer questions.   Read over the pamphlets, discuss with your financial or tax advisor, and do some research online.  Consider attending open enrollement info sessions if offered by the provider, free of charge.  Visit the provider’s website for details of benefits, financial calculators, FAQs, and other tools to navigate the process.

 

Review other options:

Many times, purchasing  insurance through a group policy can be cost effective and especially helpful to those with pre-existing conditions.  However, don’t just assume this to be the case.  Compare what is offered with your group to individual life, disability, or long term care insurance you could obtain outside the company.  Even if it’s not cheaper, it may provide more flexibility, options, and continuity than your group benefits.

 

Follow up:

Be your own advocate. Monitor your benefits throughout the year, rather than only during open enrollment.  Major life changes such as a birth of a child, divorce, or marriage, usually mean the employee may make changes to benefits mid-year.  Write down notes during the current benefit year of changes you’d like to make come next open enrollment.

10/14/11

IRS Red Flags

Be on guard. According to Sara Gould, CPA at Deming, Malone, Livesay and Ostroff, here are four IRS no-nos that might prompt an unwanted audit:

 

• Doesn’t add up: “What you provide to the IRS and what a third party provides better match up,” says Gould. “If not, the system will generate a notice that might prompt an audit.”
• Abnormal deductions: Excessive deductions in relation to your income will trigger a question mark with the IRS that Gould says, “Isn’t worth it.”

• Child deductions: Divorced families should be aware and decide who will claim the child as a dependent and take the appropriate deductions and credits.

 

• Social Networks: Be careful how much private information you divulge on social websites such as Facebook and Myspace.  IRS agents are  now using these websites as a way to research and locate tax evaders.

10/14/11

Charitable Giving

Even during times of economic uncertainty, millions of Americans are still generously giving both time and money to non profit and charitable organizations.  Thanks to IRS deductions provided by Uncle Sam, charitable contributions can be win-win to both the giver and the recipient. 

According to Michelle Musacchio, CPA and owner of Fit Money CPA in Louisville, Kentucky, “When you give to a qualified charity such as the Salvation Army, Humane Society, Goodwill, or your church, depending upon your taxing situation, you may be entitled to a charitable deduction on Schedule A of your individual income tax return.”
Here are a few tips from Musachhio to help you qualify for the deduction:

 

Save the Receipt:“All qualified charities are required to give you a receipt for your donation, no matter what the dollar amount,” Musacchio says.  “You may not take a deduction for cash contributions unless you have this.”

 

Household and Clothing items:
“You need a receipt for these items as well,” Musacchio mentions.  “But also, the items should be in good condition to be donated.  Clothes should not be holey and household items must be usable—not junk.”

 

What about my time?
While it’s admirable to donate precious time to any organization, “you are unable to take a charitable deduction for your time or services rendered,” she notes.  “But you may take a charitable deduction for mileage driven for charitable purposes and out of pocket expenses.” Once again, you must show record of these expenses through receipts and mileage logs.