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What are Medicare Benefits?
Medicare is a medical insurance benefit for Americans 65 years of age or older, but it also provides coverage for those with severe disabilities, ALS (Lou Gehrig’s disease), and ESRD (end-stage kidney disease) at any age. The premiums for what is known as Part A are paid throughout the insured’s working career, with Part B available as a supplement at low cost. Once you’re over 65, this becomes your medical insurance unless you’re still on an employer’s plan. Medicare provides coverage for in-patient procedures and short stays in the hospital, as well as hospice care and a few other small benefits for home health care. That is just for Part A—the “free” portion of Medicare people pay into over their working lives as part of their FICA taxes. Continue reading...
What is IRS Publication 524, Credit for the Elderly and the Disabled?
IRS Link to Publication — Found Here Individuals over 65 years old or are disabled may be eligible for a tax credit. Publication 524 describes this credit in detail. The credit is only available to those whose adjusted gross income (AGI) is relatively low, and the income limits are described in Pub. 524. Individuals over the age of 65 or younger than 65 but permanently disabled may be eligible to receive a federal income tax credit. Continue reading...
How Does Social Security Work?
Social Security uses mandatory payroll taxes to grow trust funds that are used to pay income to retirees and other qualifying persons. Any surplus that is collected in a given year and not paid out is used to purchase Treasury Bonds, which pay a guaranteed rate of interest to the trusts and allows the government to use this surplus money in the meantime. When you receive your paycheck, you’ll see a deduction for FICA (Federal Insurance Contributions Act), which is a “combined payroll tax” for both Social Security and Medicare. Continue reading...
Will My Spouse and Children Receive Social Security Benefits if I Die?
Spouses and children can and do receive social security benefits upon the death of a person who paid into the system. A spouse who is older than 60 will always be able to receive either a majority of the benefit that was (or would have been) paid to you, using their own age against the full benefit amount that was part of your benefit equation. Children, including dependent grandchildren, can receive a payment equal to 75% of your full benefit amount until they are about 18. Continue reading...
When Will Social Security Go Bankrupt?
Most estimates project that the Social Security Trust Funds will be depleted by 2037. The system could still function at 70% of their full obligations by transferring cash flow directly from social security taxes to the retired beneficiaries, which most people don’t realize when they spread the news that the system is tanking. Adjustments to the system and interest rates could change how this plays out and keep it operating closer to full capacity. Continue reading...
What is Publication 15-b on Fringe Benefits?
IRS Link to Publication — Found Here IRS Publication 15-b outlines the different types of fringe benefits available to employees and describes which ones are taxable to the employee and which ones are not. Fringe benefits might include anything from the use of a company car to an employee life insurance policy paid for by the employer. Fringe benefits may be provided to regular employees or independent contractors (1099 employees). Some examples of fringe benefits include tuition reduction, group disability and cafeteria plans, and childcare benefits. Continue reading...
What is IRS Publication 525, Taxable and Nontaxable Income?
IRS Link to Publication — Found Here This IRS Publication describes the distinction to be made between taxable income and nontaxable income. Many types of individual income are described and many sources of non-taxable income are illustrated. Gross income is usually reduced by standard or itemized deductions to arrive at a portion of income which is taxable. The amount that was left out of this equation is called nontaxable income. Continue reading...
What if I Need the Money in My IRA Before Retirement?
It is possible to withdraw money from an Individual Retirement Account without incurring a penalty, but it should be used as a last resort. If you withdraw the money before age 59½, you will pay both a 10% penalty and regular income taxes on the amount you withdraw from a Traditional IRA. However, there are special circumstances that allow you to make withdrawals without being charged the 10% penalty. These circumstances might include: paying for college expenses (whether for you, your grandchildren, etc.), paying for costs associated with a disability, medical expenses (must be greater than 7.5% of your adjusted gross income), and first-time home purchase. Continue reading...
What Kinds of Social Security Benefits Exist?
Social Security benefits are streams of income available for retired workers, their spouses, children and dependents, and survivors. It provides insurance against longevity, disability, and, to some extent, the death of the primary contributor. Social Security benefits are available to a worker and their dependents if the worker has triggered eligibility, which usually calculated as earning over $5,040 for 10 years, but is modified if the worker dies or is disabled at a young age. Benefits can be paid to multiple people within a household (and an ex-spouse) based on one worker’s contributions to the system, up to a Maximum Family Limit, which is somewhere between 150-180% of a worker’s full benefit amount. Continue reading...
Am I Eligible for Social Security Benefits?
Social Security will pay benefits to those who have paid into the system, their beneficiaries in many cases, and also to some disabled individuals who have not paid into the system. In general, Social Security Benefits will only be paid in cases where individuals paid into the system. The exception is Supplemental Security Income (SSI), which is actually paid from the general tax revenue of the government, and not the actual Social Security trust funds, though it is administered by the Social Security Administration. Continue reading...
What is the difference between Medicare and Medicaid?
Demystifying Medicare & Medicaid: Dive into the key differences between these essential U.S. healthcare programs. Learn eligibility criteria, coverage specifics, and how they interact. A must-read for navigating American healthcare! 🔍🩺 #Medicare #Medicaid #USHealthcare Continue reading...
What Is a Conservatorship?
A conservatorship is a legal status established by a court that appoints an individual to manage the financial and personal affairs of a minor or an incapacitated person. This arrangement ensures that individuals who are unable to manage their own affairs due to factors such as mental incapacity, intellectual disabilities, or age-related conditions are provided for and protected. Let's delve into the intricacies of conservatorship, how it functions, its various types, and the alternatives available. Continue reading...
What is a Living Will?
A Living Will is a document that dictates your wishes in the event you become incapable of making decisions, whether because of illness or injury. The directives in a living will are almost always related to person's desires regarding their medical treatment in those circumstances of incapacitation, in which they are no longer able to express informed consent. What is Probate? Should I Notarize my Will? Continue reading...
What Is the Social Security Act?
The Social Security Act, signed into law by President Franklin D. Roosevelt in 1935, is a cornerstone of the U.S. social safety net. This landmark legislation created a system of benefits for retired individuals, the jobless, and those with disabilities, while also providing aid to dependent mothers and children, victims of work-related accidents, and people with visual or physical impairments. Prior to this groundbreaking act, the federal government's involvement in such social welfare programs was minimal, primarily limited to pensions for veterans. Continue reading...
What is FICA and How Does It Impact Your Paycheck?
Unravel the complexities of FICA, the cornerstone of the U.S. social safety net. This guide delves into the Federal Insurance Contributions Act, shedding light on its historical roots, tax rates, and its pivotal role in funding Social Security and Medicare. From the legislation's inception in 1935 to its modern-day implications, understand how FICA taxes impact both employees and employers. Whether you're an individual taxpayer, business owner, or finance enthusiast, this comprehensive overview offers insights into the legislation that safeguards the financial and health well-being of countless Americans. Dive in to demystify FICA's intricate landscape. Continue reading...
What is Medicare and Medicaid?
Medicare and Medicaid are two very substantial government-run healthcare programs which you have no doubt heard of before. Medicare website — Found Here | Medicaid website — Found Here Medicare is the federal program available to people over age 65, while Medicaid is a federally subsidized state program that provides care to lower-income families. Medicare is a government insurance program created to help retirees and the disabled. Continue reading...
What is the Federal Employee Retirement System (FERS)?
The FERS includes the Thrift Savings Plan (TSP) and other benefits available to employees of the federal government. The eligible features of FERS may be different for the employees of different branches and agencies of the government. Civilian and military personnel are included in FERS. FERS is essentially comprised of the Thrift Savings Plan (TSP), which is a 401(k)-type plan for federal employees, and, in most cases, a Federal employee retirement annuity. The Thrift Savings plan has lower fees than most 401(k)s and offers several kinds of index funds to employees. Continue reading...
How Much Money Does the Government Have Invested in Social Security?
As of 2016, there is about $2.8 trillion in the Social Security Trust Funds, if you include what is owed to it by the Treasury for the bonds purchased with the surplus funds every year. The funds in the Trust are partitioned from the rest of the government budget, but the surplus year to year is invested in Treasury Bonds which effectively gives the government temporary use of the funds in exchange for a market-value interest rate. Continue reading...
Is Buying High and Selling Low with Relative Strength a Viable Strategy?
Whether you have $1,000 or you manage billions, the relative strength (RS) technique is a popular and useful tool for comparing one investment against the overall market. But few individuals ever manage to use the technique effectively because they fail to incorporate RS into a comprehensive trading strategy. In this article, we'll define relative strength, explain why it works, and demonstrate how individual investors can employ RS strategies. This versatile tool can be applied to stocks, exchange-traded funds (ETFs), and mutual funds. Continue reading...
What are the Withdrawal Rules From My Self-Employed 401(k)?
Individual 401(k)s will have the same withdrawal rules as regular 401(k)s. The withdrawal rules for a Self-Employed 401(k) are identical to the rules for a traditional 401(k). If you want to avoid a 10% early withdrawal penalty, you’ll need to keep the money in your account until you reach age 59½, but if you separate from service after 55 you may be able to make withdrawals penalty-free. If you really need the money early, certain exceptions for disability, medical expenses, 72(t) annuitized distributions, and plan loans can allow you to sidestep the penalty. Withdrawals for any other reason, including hardships, are still subject to the penalty. Continue reading...