Many of my tax clients and friends here in the Worcester area are reaching a stage in life when healthcare decisions become more and more important.
And it’s our business to not only provide counsel and hands-on service to Worcester families and businesses as it relates to setting up the best way to make tax-related decisions with your assets, but also to give some counsel on navigating the murky waters of other government programs.
Medicare and Social Security fall under this rubric, and I’d like to delve into the fun little world of healthcare funding, which is poised to become even more complex.
This isn’t to yet touch on the wonderful world of Obamacare, and how that is changing things (about which I’ll have more to say in future installments). No, this is stuff I’ve pulled together about programs currently on the books, and how they are not always as simple as they seem…
Worcester Tax Expert Guides You Through The New World of Medicare Decisions
As Americans approach age 65, they must begin making complex health insurance decisions related to the government-run Medicare program. Like food choices on a cafeteria line, there are hundreds of ways to assemble your own plate. As you begin this journey, the first big decision is whether to enroll in Original Medicare or one of the newer Medicare Advantage programs.
Medicare Advantage, also known as Part C for its place in the ABCDs of Medicare, was birthed in the Balanced Budget Act of 1997. It was created to offer much needed private competition to the government-run health program whose costs are ballooning out of control.
Public health officials assemble a package of necessary features and benefits, and private health insurers compete on price, service, and additional perks. Seniors can call their Social Security office or go to www.medicare.gov to view all of the Medicare plans offered in their area.
Like many employer-sponsored health insurance plans, Medicare Advantage plans are set up as health maintenance organizations (HMOs) or preferred provider organizations (PPOs). HMOs and PPOs are managed care plans that contract with a set of doctors, hospitals, and other health care providers to manage the costs. For example, an in-network doctor agrees to perform open heart surgery for a predetermined price.
All plans cover emergency care when traveling in the United States, but outside of your network. Most plans also offer international emergency care benefits, but make sure you confirm the details before you book your next cruise. Uninsured traveling can be costly.
Medicare Ratings System
To assist consumers, Medicare now rates Medicare Advantage programs using a star system. Using member satisfaction surveys and plan evaluations, plans are rated between one and five stars. In fact, at any time, you can switch into a five-star Medicare Advantage plan, but only if one is available in your region (only a few states have a five-star plan). Even if your area does not offer a top-rated plan, every state offers at least a four-star plan.
Advantages of Medicare Advantage
Many seniors choose a Medicare Advantage program because it can lower health costs. If you are willing to stay in network, a Medicare Advantage program is likely to have lower costs than the Original Medicare program that has no network restrictions. For this reason, it is important to check with your preferred doctors and specialists to confirm that they are part of the network before joining.
Medicare Advantage also offers greater simplicity. Those who use Original Medicare must purchase a private drug plan (Part D), and they typically buy a supplemental plan (Medigap) to limit costs. This assortment of plans requires carrying around three insurance cards that all have different copayments and deductibles. Medicare Advantage offers one comprehensive plan with one insurance card.
Unfortunately, the only way to really know if Medicare Advantage is right for you is to get an in-depth evaluation. You can pursue this personally by using the cost calculator tool available at www.medicare.gov. This helpful tool will produce a customized report listing your expected total costs for each plan after you enter all of your drug information.
If you do not feel comfortable using the online tool, you can seek advice from an independent advisor who is knowledgeable about the hundreds of Medicare cafeteria line options. Keep in mind that most Medicare insurance advisors are paid more to sell you more expensive policies.
Some of these plans are NOT “advantageous”, so I suggest that you get the help of someone who can inform your decision. Let me know if you’d like advice on that front.
What a terrible week we suffered through as a nation last week. I’m still trying to process all of it, honestly, here in my Worcester tax office.
Life does continue, however, and as such we’re starting to catch our breath around here, after a busier-than-normal tax season. Lots of our Worcester clients are on extension (an unfortunate consequence of longer-than-normal IRS delays this year from the last-minute tax deal), so we’ll continue to be around and advising our families and business owners on the best ways to continue their tax minimization strategies.
On that note, I have to point out: last Thursday (the 18th) was our “Tax Freedom Day” – that’s the date pegged as the date when you’ve finally worked enough days to pay off your taxes. The rest of the year is your “take home” pay.
The date varies year to year (this year it is five days later than last), and more information is here: http://www.taxfoundation.org/taxfreedomday/.
(And for some states, the date is even later. Here’s the state-by-state breakdown: http://taxfoundation.org/article/map-tax-freedom-day-state-2013 )
The calculating organization is the Tax Foundation, a non-partisan educational organization dedicated to informing US — the taxpayers — about the burdens of our tax liabilities, and according to the Foundation, here’s a fun little fact: Americans paid more taxes in 2012 than they did on food, clothing and shelter combined.
Which, of course, is why I and my Team Walia staff are here: keeping your tax bill as low as legally and ethically possible.
But we also deal with lots of questions this time of year related to a variety of “post-preparation” issues, so I thought I’d address many of them in one swell foop. Which is not at all to say that we won’t answer YOUR questions. Here’s our number: (508) 753-3532
On to the questions…
What To Do When The Taxes Are Done, Per Your Favorite Worcester Tax Office
It’s a familiar feeling.
Relief. Exhilaration (or frustration at having to pay *more* taxes!). Gratitude for a job well done by your preparer.
But that doesn’t mean you may not still have questions. Here are some common ones we get from Worcester taxpayers this week…
1. “When will I get my refund?”
Well, the IRS does seem to have entered the 21st century.
If you had us “e-file” your return, you can check your status right now, or if you had us mail a paper return, after about 3 to 4 weeks.
When you’re checking with the following options, make sure you have a copy of your tax return on hand or know your “filing status”, SSN and the exact dollar amount of the anticipated refund.
• Online: Go to IRS.gov and click on Where’s My Refund.
[or go right to: http://www.irs.gov/individuals/article/0,,id=96596,00.html ]
• Automated Phone: Call 1-800-829-4477 24 hours a day, 7 days a week for automated refund information.
• In-Person Phone: Call 1-800-829-1954 during the hours shown in your IRS form instructions. [Of course, the hold time for the IRS is ... somewhat of an issue -- and they're closed for five days this month because of the furloughs ]
2. “Do I need to keep a copy of my return?”
Yes, for a *minimum* of three years. There’s all kinds of contexts where it’s useful. We do keep one on file, on your behalf, but it’s just smart and safe for you to keep one in a secure place at home. (I’ve already written about Amended Returns, and you need a copy for that process, of course).
As for the supporting documents from your return, anything that relates to a home purchase or sale, stock transactions, retirement, business or rental property, should be kept much longer than the three years.
3. “I think there’s a mistake in my return. What should I do?”
Sometimes, you’ll find a receipt or a documentation after April 15th which really would have changed your prior year tax return. That’s, again, when you would have us file an “Amended Return”. Here are some other, common reasons to Amend…
• You neglected to report some income earned.
• You claimed deductions or credits you should not have claimed.
• You did not claim deductions or credits you could have claimed.
• You filed under one filing status, but you should have filed under another.
You might have other questions, which I haven’t addressed here. Let me know!
PS — For those of our clients who have previous years’ tax returns at another preparer, OR for their friends…
“No Charge” Return Review
Special Gift Certificate
As a complimentary service this year, we will provide a Return Review To Any Non-Client.
We will also review prior year returns from clients who did NOT have us handle their taxes during the year under question. No charge will be made, unless we have to file an amended return. Email our office or call (508) 753-3532 to set up this complimentary service!
Deadline May 10th
Wow, are we here at Team Walia ever tired! Thanks to you, our Worcester tax preparation business has been hopping this year. Because of the delays in the IRS system this year, we have many clients going on extension (about which I wrote last week), and we will continue to work with them … after we take a short break around here for some needed rest!
And speaking of the IRS, perhaps I should also thank the federal government for creating a tax system so complex and counterintuitive that it has provided myself and those who work for me with gainful employment.
Leaving my own personal Walia circumstances aside though, I’d be thrilled if our tax system was much simpler.
But it isn’t simple, and it is far better to live in the reality of what *is* (and work to make positive change), than to simply moan about a problem that is larger than what any one person can change.
Preparing tax returns is like that — it is dealing with what *is* — not with what “could be”. Which is why tax PLANNING will be the subject of a few of my Notes in the future.
And one last thing: If you have filed your taxes with us, and you had a good experience, would you…
A) Email me a note and tell me about it?
B) Share us on YOUR Facebook wall…?
Here’s something you can say:
“I had my taxes prepared by Jay Walia’s team, and had a great experience. They’re willing to review your return to make sure that everything was done right for you… Give them a call at: (508) 753-3532 and let them know I told you to call.” Join us on Facebook: http://www.facebook.com/worcestertax
Or some such… thanks again!
Lastly, I hope you’ll forgive me for taking a break from writing you a Personal Strategy Note for this week … I’m not sure that if I did so, anything besides numbers and spreadsheets would come out. It’s amazing what 4 months of staring at government forms does to a brain!
But hey — this is what we signed up for. And we are extremely grateful for your trust and for the chance you’ve given us to serve you and so many other taxpayers in the Worcester area in it, so you don’t have to suffer the same fate.
We will be in touch again soon. As long as this caffeine hangover ever releases me from its grip.
I’ve been saving up all kinds of wise financial and personal strategies to share with you straight from “Worcester Tax Preparer Central”, but I hope you’ll allow me some forbearance. It’s fair to say that the office has been a little busy these last few months as we’ve been preparing tax returns for our Worcester and national clients!
And, well, since we’re coming up against a hard deadline a week from Monday (April 15th), it’s important that I clarify some things for my clients and friends to whom it applies …
But before I get there, a couple quick reminders about what ELSE the 15th means…
1) Monday, April 15 is the deadline to contribute to IRA’s and HSA’s in order to have them count on this year’s (2012) taxes.
2) It is also the deadline to claim the almost $1 billion in unclaimed refunds for returns dating back to 2009. If you, for some reason, didn’t file for that year, you could be missing out. Call us for this special circumstance: (508) 753-3532
(Or for any other question — but again, bear with us, as we are extremely busy!)
And one last thing: if you have filed your taxes with us already, and you had a good experience, would you…
A) Email me, and tell me about it?
B) Share us on your Facebook wall…?
Join us on Facebook: http://www.facebook.com/worcestertax
Here’s something you can say:
“I had my taxes prepared by Jay Walia’s team, and had a great experience. They also just told me that they are willing to help procrastinators! So, if that’s you, give them a call at: (508) 753-3532 and let them know I told you to call. Or you could do it tomorrow, of course ”
Or some such… thanks again! (And you can even tell them about what’s at the end of this blogpost, if you so choose.)
Worcester Tax Office Explains What’s Actually Being Extended
Let’s clear some things up with some facts for Worcester taxpayers about getting an “extension”.
As you know, Monday, April 15th is the filing deadline for a federal tax return. If you need more time to get your paperwork complete, you need to file (or have us file on your behalf) Form 4868 (Automatic Extension of Time to File with the IRS by the end of the day on the 15th. This gives you an automatic six-month (until October 15, 2013) extension of time to file.
Here’s the deal: An “Extension of Time to File” is not an “Extension of Time to Pay”, unfortunately — except for certain cases (more on these in a moment). In normal circumstances, the Extension simply gives you an automatic six months of additional time to get your paperwork together and file that return. But, if you owe more than what you paid with your estimate, you’ll be accumulating penalties and interest on the difference–so PLEASE don’t take the entire six months to do this!
The exception to this rule is for:
1) Wage earners who have been unemployed at least thirty consecutive days during 2012 or in 2013 up to this year’s April 15 tax deadline; or
2) Self-employed individuals who experienced a 25 percent or greater reduction in business income in 2012 due to the economy.
So, if that’s you — let us know! We’ll get you payment relief. (508) 753-3532
For the rest of you, when filing your “Extension of Time to File”, you’ll need to estimate what you think you owe to the IRS. This should not be pulling numbers out of thin air (or various body parts)! You’ll still need to go through your receipts and tax documents and get them “somewhat” organized.
From here, you can estimate both your income and your expenses, and then approximate what you owe Uncle Sam. Keep in mind that this is an ESTIMATE. And, you’ll have to pay what you estimate you owe at the time we file for the extension.
You can do this all electronically through our office, you can mail in the form WITH estimated payment (must be postmarked by the 15th), or you can call a specialized provider and pay by credit card. We can provide you with the appropriate number to call.
And it’s NOT TOO LATE! See below, and come by right away!
To more of your money in your wallet!
“PROCRASTINATORS ONLY” Special Gift Certificate
$23 Towards Any Tax Service
“Yes, I Have Procrastinated Filing My Taxes This Year … But I Still Want to Protect Myself from All the New Tax Laws and Get MORE Money Back from Uncle Sam with A Peace-Of-Mind Guarantee that’ll Keep Me Sleeping like a Baby when My Taxes are Filed with the IRS!”
Deadline April 15th
Not valid with any other offer