• Firstly, we’re getting some nice feedback on last week’s message re: “making the switch” to Walia — and here is a small reminder for you here in Worcester (and beyond as well!), in case you missed it…

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    Make the “switch” to Jay Walia for your 2012 tax filing — and receive a complimentary post-season tax planning session.

    ($250 value)
    First TEN new clients only

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    And, of course, last week’s news that over 600,000 returns would be delayed due to training errors by Block came on top of the news from the state of Minnesota that TurboTax users would be delayed and affected by programming issues. And then we hear over the weekend that the State of New Jersey will be delaying refunds by 90 days in many cases …

    It’s already been a wild tax season for Team Walia.

    But I do hope that you’re assured that having a carefully-trained expert on top of YOUR file has been (or will be) the way to go for your tax filing.

    And, as much as I’d like to say that things will improve in the future … with the IRS taking the forefront on enforcing and implementing the ACA Act (aka Obamacare) … we can expect that “more user-friendly” won’t be said of future tax forms.

    But enough about all this. You should have received information from us about what you need to bring in, and if you have any further questions, feel free to drop us an email or give us a call at (508) 753-3532.

    Now, I’d like to switch gears for bit, and address my clients and contacts who are facing momentous retirement decisions…

    Worcester Tax Service Explains Social Security Election and Retirement Planning
    Social Security benefits can represent a big stack of cash for a Worcester couple. A typical monthly benefit of $2,200 has a present value of well over $500,000.00! So, despite the fact that it seems like an easy decision, you need to consider all your Social Security options carefully to avoid making a costly mistake.

    Like all government law, Social Security is not a simple piece of legislation. Since the Social Security Act became law in 1935, hundreds of amendments have been piled onto it, and have thereby added to the complexity. So to make the best decision about how to file for it, you’ll need to consider four things: 1) health, 2) income before retirement and 3) income during retirement, and 4) taxes.

    Retirees cannot rely on conventional wisdom! Simplistic “rules” such as “Always file for early benefits” or “You need to stop working to receive benefits” are NOT always true. There are specific cases that break every rule of thumb. And these one-size-fits-all answers leave many retirees failing to maximize the benefits they have earned.

    At least four methods are used when electing how to take Social Security. And if you’re married, the two of you can mix and match these in more than 16 different ways (!). Each choice results in a different cash flow. By using the cash flows and the time value of money, you can determine which method will offer you the best maximum value.

    So these methods differ significantly… they depend on your historical earnings, marital or divorce status, continued work in retirement, life-longevity and rates of return. The choice alone could be worth $250,000 of income or more. Filing options include “early filing,” “standard filing,” “delayed filing,” “file and suspend,” and many combinations of these options for married couples. It is DEFINITELY worth careful study and analysis of each option… yet a majority of Americans make their choice impulsively and emotionally.

    The decision is even more crucial for women. For 42% of single women older than 62, Social Security is their sole source of income. Women on average outlive men. Thus, planning for retirement is usually much easier for men (who statistically tend to have more assets and die younger). Widows are twice as likely to live under the poverty line as men who have lost their wives. And the poverty rate for elderly single women is 23% compared with just 5% for retired couples.

    So couples must take their joint longevity into account before either one files for benefits. The person with the longer life expectancy will inherit either a wise or a foolish decision that will last a lifetime. Given that a husband’s benefits are often higher and the wife’s life expectancy longer, each case needs to be analyzed carefully.

    Unfortunately, many people file after considering only one or two options in isolation. Even worse–the Social Security Administration’s new online filing system enables quick decision-making. People can easily submit their request without any professional advice or planning.

    Before filing, then, you obviously should be informed about all the options. To begin, you need to know your personal Social Security earnings and the projected benefits for both you and your spouse. You can request an estimate at www.ssa.gov/estimator and then print the results. Or call the Social Security Administration at 800-772-1213. You can also get a copy of “Retirement Benefits” (Publication No. 05-10035) online.

    Social Security planning is crucial for everyone. People with significant assets should carefully consider both the lifetime benefits and tax consequences of Social Security in light of their overall portfolio strategy. For the less well-off, Social Security benefits will dictate their retirement lifestyle. Proper planning could well determine what they can afford to eat.

    So … there’s obviously a lot to consider here. I recommend you sit down with somebody here in Worcester you trust that can walk you through your different options. It could make a BIG difference in your lifestyle!

    Regardless, I do hope this helps.