Money Solutions - January 2013 by SouthwestIowaNews.com

MONEY SOLUTIONS All about Social Security OBAMA’S HEALTH CARE REFORM how it affects your taxes

TAX DEDUCTIONS:

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All about Social Security website at www.socialsecurity.gov, and read our fact sheet about the changes at www.socialsecurity.gov/pressoffice/factsheets/colafacts2013.htm.

FINANCIAL WELLNESS CAN BE YOURS IN 2013

By DENISE JONES Social Security Manager in Council Bluffs, IA

A “RAISE” FOR PEOPLE WHO GET SOCIAL SECURITY As we ring in a new year, we can expect to see a number of changes. Social Security is no exception: in 2013, people who receive Social Security or Supplemental Security Income (SSI) payments will see their benefits increase. Beginning in 2013, a 1.7 percent cost-ofliving adjustment (COLA) was applied to all Social Security and SSI payments. The average monthly Social Security benefit for a retired worker in 2013 is $1,261 (up from $1,240 in 2012) and the average monthly Social Security benefit for a disabled worker in 2013 is $1,132 (up from $1,113 in 2012). These changes were reflected in SSI payments dated December 31, 2012 and Social Security payments dated in January 2013. For people who receive SSI, the maximum federal payment amount has risen to $710 (up from $698). Other Social Security changes in 2013 are worth noting. For example, a worker now pays Social Security tax on up to $113,700 of annual income (up from $110,100 in 2012). A worker earns one credit after paying taxes on $1,160 in earnings in 2013 (up from $1,130). As always, a worker may earn a maximum of four credits each year and a person generally needs forty credits (or ten years of work) to be eligible for retirement benefits. To learn more about these and other changes for 2013, visit the Social Security

January is Financial Wellness Month — a great time to think about your own financial future. It also happens to be at this time that many people make resolutions for the New Year. Why not combine the two and make your own financial wellness a resolution for 2013? Here are our suggested resolutions for your financial wellness. Start your financial plan with your Social Security Statement. The online Statement is simple, easy to use, and provides estimates you should consider in planning for your retirement. It provides estimates for disability and survivors benefits, making the Statement an important financial planning tool. Your Statement allows you to review and ensure that your earnings are accurately posted to your Social Security record. This feature is important because Social Security benefits are based on average earnings over your lifetime. If the information is incorrect, or you have earnings missing from your record, you may not receive all the benefits to which you are entitled in the future. www.socialsecurity.gov/mystatement Work the numbers. Once you get your online Statement, you can use the other free resources provided by Social Security. Use our Retirement Estimator, where you can get a personalized, instant estimate of your future retirement benefits using different retirement ages and scenarios. Visit the Retirement Estimator at www.socialsecurity.gov/estimator Once you are in the know, choose to save. The earlier you begin your financial planning, the better off you will be. Social Security replaces about 40 percent of the average worker’s pre-retirement earnings. Most financial advisors say that you will need 70 percent or more of pre-retirement earnings to live comfortably. You also will need other savings, investments, pensions or retirement accounts to make sure you have enough money to live comfortably when you retire. Visit the Ballpark Estimator for tips to help you save. www.choosetosave.org/ballpark

Do some light reading. Learn more about Social Security, the benefit programs, and what they mean to you and your family, by browsing through our online library of publications. In particular, our publication entitled “When To Start Receiving Retirement Benefits” provides helpful information regarding the things you should consider when making a decision on when to collect retirement benefits. Many of our publications also are available in audio format and other formats. Our library at www.socialsecurity.gov/pubs is always open. Help someone you love. Sometimes we get the most satisfaction out of helping someone else. If you have a grandparent, parent, relative, or friend who could benefit from Social Security, share our website and the features of our online services with them. You can even help a loved one apply for Social Security benefits in as little as 15 minutes — or for Extra Help with Medicare prescription drug costs. Whether you forward a publication or sit down to help someone apply for Social Security, the place to go is www.socialsecurity.gov. There are a number of ways you can celebrate Financial Wellness Month, so start off the New Year by looking out for your own financial wellness at www.socialsecurity.gov.

SOCIAL SECURITY CARDS AND NUMBERS Do you know where your Social Security card is located? Hopefully, it’s in a safe place, tucked away securely with your other important papers. It certainly should not be in your purse or wallet and should not be carried with you every day since it can be more valuable than cash to an identity thief. Do you know your Social Security

number? Chances are you have it memorized. If you know your number, you may never need your card again. It is the number, not the card, that is most important. In the event that you lose your Social Security card and really need a replacement, you can find out all the details on how to obtain a replacement card and what specific documents you need to provide at www.socialsecurity.gov/ssnumber. Each situation is unique, but in most cases you simply need to print, complete, and either mail or bring the application to Social Security with the appropriate documentation (originals or certified copies only). If you need to apply for a Social Security card and number for your child, you can do that the same way, and get the specific information at the same website. In almost all cases, though, an application for your infant’s Social Security card and number is taken in the hospital at the same time that you apply for your baby’s birth certificate. Why does a baby need a Social Security number? There are a number of reasons, but the main one is so that you can claim your child as a dependent on your tax return. Social Security numbers are also needed for children to apply for certain government and social service benefits. As you prepare for tax season, just around the corner, make sure the kids (and all the dependents) that you list on your annual tax return have Social Security numbers. If you want to claim your child as a dependent on your tax return (and who doesn’t?) your child will need a Social Security number. Note that all dependents listed on your federal tax return will need Social Security numbers, including a dependent parent who lives with you and receives support from you. Learn more about Social Security at www.socialsecurity.gov. And learn more about your Social Security card and number at www.socialsecurity.gov/ssnumber, where you can print out an application and find out everything you need for your specific situation.

MYTHS ABOUT SOCIAL SECURITY Like any other successful and long-standing program or organization, there are a see SOCIAL SECURITY, Page 4

SOCIAL SECURITY Continued from Page 3

number of myths surrounding Social Security. Some of them are grounded in truth but just slightly misconstrued. Others are completely out of line with the truth. Let’s take a look at a few. Myth 1: Social Security is just a retirement program. Social Security is more than a retirement program. It provides benefits to retirees, survivors, and people with disabilities who can no longer work. In fact, almost seven million disabled workers and nearly two million of their dependents get Social Security disability benefits. Six and a half million dependents of deceased workers (including two million children) get Social Security survivors benefits. Social Security is more than just retirement. Myth 2: I don’t need to save because Social Security will take care of me when I’m retired. Social Security was never intended to be a person’s sole income in retirement; it should be combined with pension income and personal savings and investments. Your Social Security Statement, available at www.socialsecurity.gov.mystatement, is a great place to get an idea of what to expect during retirement. You can also visit our

Retirement Estimator at www.socialsecurity.gov/estimator. Myth 3: If I work after I retire, I’ll be penalized. Once you reach your full retirement age, there is no penalty and no limit on the amount you can earn. You can determine your full retirement age by visiting www.socialsecurity.gov/retirecharted.htm. The earnings limit for workers who are younger than "full" retirement age (age 66 for people born in 1943 through 1954) is $15,120 in 2013. (We deduct $1 from benefits for each $2 earned over $15,120.) The earnings limit for people turning 66 in 2013 is $40,080. (We deduct $1 from benefits for each $3 earned over $40,080 until the month the worker turns age 66.) Keep in mind that if we withhold some of your benefits due to work, we will re-compute your monthly benefit amount when you reach full retirement age to account for those months that we withheld your benefit. There is no limit on earnings for workers who are full retirement age or older for the entire year. Myth 4: To apply for benefits or do business with Social Security, I need to go to an office. Not only is this false, but we encourage you to do business with us the most convenient and fastest way: at www.socialsecurity.gov. At our website, you can apply for

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benefits, use our Retirement Planner, get an estimate of your benefits, request a replacement Medicare card, and much more. You’ll find it all — along with answers to your questions — at www.socialsecurity.gov.

QUESTIONS AND ANSWERS GENERAL Question: I applied for my child's Social Security card in the hospital but have not received it. How long must I wait? Answer: On average, it takes about 4-5 weeks from the time you apply in the hospital until you receive your child’s Social Security card in the mail. However, it can vary depending on the State where you live. If you have not received your child's card within six weeks, please visit your local Social Security office. Be sure to take with you proof of your child’s citizenship, age and identity as well as proof of your own identity. And remember, we cannot divulge your child’s Social Security number over the phone. Question: Is it illegal to laminate your Social Security card?

Answer: No it is not illegal, but it’s best not to laminate your card. Laminated cards make it difficult, if not impossible, to detect important security features. Also, your employer may refuse to accept it. The Social Security Act requires Social Security to issue cards that cannot be counterfeited. We incorporate many features to protect the card’s integrity. That includes highly specialized paper and printing techniques — some visible to the naked eye and some not. Further, we continue to explore and adopt new technologies that hamper duplication. Keep your Social Security card in a safe place with your other important papers. Do not carry it with you. Learn more at www.socialsecurity.gov/ssnumber. RETIREMENT Question: I’m planning to retire next year. I served in the Navy back in the 1960s and need to make sure I get credit for my military service. What do I need to do? Answer: You don’t need to do anything to apply for the special credit for your military service—it is added automatically. For service between 1957 and 1967, we will add the extra credits to your record at the time you apply for Social Security benefits. For service between 1968 and 2001, those extra military service credits have already been added to your record. So you can rest assured that we have you covered. Read our online publication, Military Service and Social Security, at http://www.socialsecurity.gov/pubs/10017.html. And when the time comes to apply for retirement, you can do it conveniently and easily at www.socialsecurity.gov/retireonline. Question: I have young children at home and I plan see SOCIAL SECURITY, Page 5

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Lester never finished school, but he learned a lot mopping classroom floors. “You kids can be anything you want,” he’d say. Lester wasn’t rich, but because he included a gift to support the school’s tutoring program in his will, things will add up for a few more students. Include your favorite cause in your will or estate plan.

Sponsored by these local Leave A Legacy® members: Clarinda Foundation Clarinda Medical Foundation Clarinda Public School District Clarinda Youth Corporation Grandma’s House Day Care Iowa Western Community College Page County Federal Savings Association Shenandoah Healthcare Foundation Southwest Iowa Families, Inc. Greater Shenandoah Foundation Jennie Edmundson Hospital

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to retire next fall. Will my children be eligible for monthly Social Security checks after I retire? Answer: Monthly Social Security payments may be made to your children if they are: ·Unmarried and under age 18; ·Age 19 if still in high school; or ·Age 18 or over, who became severely disabled before age 22 and continue to be disabled. In addition to biological children, legally adopted children, dependent stepchildren, and grandchildren could be eligible. For more information, please read our publication Benefits for Children at www.socialsecurity.gov/pubs/10085.html.

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SUPPLEMENTAL SECURITY INCOME Question: I thought I'd be eligible for Supplemental Security Income (SSI) and I was going to apply until I talked to my neighbor. She said I would be turned down because I have children who could help support me. Is this true? Answer: Whether you can get SSI depends on your own income and the things you own. If you have limited income and few resources, you may be able to get SSI. However, if you are receiving support from your children or from anyone else, it could affect your monthly benefit amount. Support includes any food or shelter that is given to you, or is received by you, because someone else pays for it. For more information, visit our website about SSI at www.socialsecurity.gov/ssi. Question: I got a notice from Social Security that said my Supplemental Security Income (SSI) case is being reviewed. What does this

mean? Answer: Social Security reviews every SSI case from time to time to make sure the individuals who are receiving payments are still eligible and should continue to receive those payments. The review also will make sure you are receiving the correct amount in benefits. We could be paying you too much or too little. To learn more about SSI, visit www.socialsecurity.gov/ssi. DISABILITY Question: What is the difference between the disability application and the disability report? Do I have to complete both? Answer: The Disability Application is an application for Social Security disability benefits. To receive Social Security disability or Supplemental Security Income disability benefits, you must file an application. The Disability Report, meanwhile, is a form that provides Social Security with information about your current medical condition. We need this information to process your disability application. To start a claim for disability benefits, you need to complete a disability application, a disability report, and an authorization release form that allows us to obtain your medical records. You can get the disability application process started at www.socialsecurity.gov/applyfordisability. Question: I’ve been turned down for disability benefits. How do I appeal? Answer: Visit www.socialsecurity.gov and click on the “Appeal a disability decision online” link in the left-hand column. This is the starting point. There you can ask us to review our medical decision. There are two parts to the Internet appeal process: 1) An Appeal Request Internet form; and 2) An Appeal Disability Report, which gives us more information about your condition. You can complete both forms online. To appeal online, the only form you are required to submit is an appeal request (Part 1). However, we encourage you to submit an Appeal Disability Report (Part 2) because it will give us more information about you and help us process your appeal more quickly. The place to start is www.socialsecurity.gov. MEDICARE Question: see SOCIAL SECURITY, Page 6

SOCIAL SECURITY Continued from Page 5

In talking with my son, I found out that he submitted incorrect information about my resources when he completed my Application for Help with Medicare Prescription Drug Plan Costs. How can I get my application changed now to show the correct amount? Answer: You can call 1-800-7721213 and let us know. Or, you can contact your local Social Security office. (Find it by going to www.socialsecurity/locator/.) Data on your application will be matched with data from other federal agencies. If there is a discrepancy that requires verification, we will contact you. Learn more at www.socialsecurity.gov/extr ahelp.

Surcharge on prepaid telecommunication services begin Iowa Department of Revenue Beginning Jan. 1, a new E911 surcharge was imposed on the purchase of prepaid wireless telecommunication service. The surcharge is collected from the consumer by retailers. Prepaid telecommunication service includes: Prepaid wireless telephone minute cards; Prepaid phones that include minute plans; or Prepaid wireless service in any other form. If you sell prepaid wireless telecommunication service, you will be required to collect 33 cents per retail transaction. “Retail transaction” means the purchase of prepaid wireless telecommunications service from a seller for any purpose other than resale. If more than one separately priced item of prepaid wireless calling service is purchased by an end user, each item purchased constitutes a separate retail transaction. For example, if a seller sells two prepaid wireless phone calling cards to one consumer, two retail transactions have occurred. There are limited exceptions to this requirement. If a minimal amount of prepaid wireless telecommunications service is sold with a pre-

paid wireless device for a single, nonitemized price, the seller may elect not to apply the prepaid wireless surcharge to the retail transaction. A minimal amount of service is denominated as ten minutes or less, or five dollars or less. Retailers are permitted to keep 1 cent from

each retail transaction. The remaining 32 cents per transaction must be paid to the Iowa Department of Revenue when filing the Iowa sales tax return through eFile & Pay at: www.iowa.gov/tax

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Prepare for disasters by safeguarding tax records The Internal Revenue Service encourages individuals and businesses to safeguard themselves against natural disasters by taking a few simple steps. Create a Backup Set of Records Electronically Taxpayers should keep a set of backup records in a safe place. The backup should be stored away from the original set. Keeping a backup set of records –– including, for example, bank statements, tax returns, insurance policies, etc. –– is easier now that many financial institutions provide statements and documents

electronically, and much financial information is available on the Internet. Even if the original records are provided only on paper, they can be scanned into an electronic format. With documents in electronic form, taxpayers can download them to a backup storage device, like an external hard drive, or burn them to a CD or DVD. Document Valuables Another step a taxpayer can take to prepare for disaster is to photograph or videotape the contents of his or her home, especially items of higher value. The IRS

has a disaster loss workbook, Publication 584, which can help taxpayers compile a room-byroom list of belongings. A photographic record can help an individual prove the market value of items for insurance and casualty loss claims. Photos should be stored with a friend or family member who lives outside the area. Update Emergency Plans Emergency plans should be reviewed annually. Personal and business situations change over time as do preparedness needs. When employers hire new

employees or when a company or organization changes functions, plans should be updated accordingly and employees should be informed of the changes. Check on Fiduciary Bonds Employers who use payroll service providers should ask the provider if it has a fiduciary bond in place. The bond could protect the employer in the event of default by the payroll service provider. IRS Ready to Help If disaster strikes, an affected taxpayer can call 1-866-562-5227 to speak with an IRS specialist

trained to handle disaster-related issues. Back copies of previously-filed tax returns and all attachments, including Forms W-2, can be requested by filing Form 4506, Request for Copy of Tax Return. Alternatively, transcripts showing most line items on these returns can be ordered on-line, by calling 1-800-908-9946 or by using Form 4506T-EZ, Short Form Request for Individual Tax Return Transcript or Form 4506T, Request for Transcript of Tax Return.

Tax deductions one shouldn’t miss By TESS GRUBER NELSON Managing Editor

When it comes to taxes, unless you are an accountant, things can get real confusing, real fast. Regardless, CPA David Lashier, of Miller, Shearer and Lashier, in Shenandoah said there’s no reason why someone can’t file their own taxes. However, he added there are a few common tax deductions one should take advantage of in the adjusted gross income section, as well as some that are available if you choose to itemize your deductions. ■ A student loan interest deduction will allow you to deduct the interest you pay, if you are a current or former student paying on a qualified student loan. But Lashier said if you are married, and you file separately, you can’t take advantage of this deduction. ■ Moving expense tax deduction allows you to deduct your moving expenses from your income. In order to qualify for this deduction, one’s new job must be a minimum of 50 miles farther away than the old job location, and it must be a full-time job – at least 39 hours during the first 12 months right after you start the new job.

■ A tuition and fees deduction will allow a taxpayer to deduct the cost of college tuition, and other mandatory school fees, if currently a college student. Lashier said this is a deduction you don’t have to itemize to utilize. Instead, one can use it as a way to adjust your income or take a college fees credit. Additonally, in Iowa, Lashier

said there is a Iowa Tuition and Textbook Credit that will allow you to deduct workbook fees or other specific supplies Taxpayers who have one or more dependents attending Kindergarten through 12th grade in an accredited Iowa school are eligible. The credit amount is 25 percent of the first $1,000 paid for each dependent

for tuition and textbooks. To read what is eligible to deduct and what isn’t, go to http://www.iowa.gov/tax/1040EI/ Line/10Line48.html. For example, Lashier said football, soccer, and golf shoes, as well as track spikes are eligible, but basketball shoes are not – because they are also suitable for everyday wear.

■ Health Savings Account could be a deduction, but only if you are covered by a highdeductible health insurance plan and can’t be covered by any other health insurance plant. ■ Did you know you can deduct mileage for medical purposes? Lashier said 23 cents per mile can be deducted from your taxes if you are driving to and from a medical treatment facility for a medical condition. ■ Like to help out your church or a charitable organization? Lashier said you can also deduct mileage, if using your personal vehicle for charitable work – 14 cents per mile to be exact. On top of that, if you incur out of pocket expenses in helping a charity, that cost can be deducted as well. ■ Lastly, Lashier said giving away items you no longer want, lets say to West Central Development, or Goodwill, you can deduct what you gave away, if given a receipt from the organization that is detailed with what was given away, and the dollar amount. “It’s too bad it has to be complicated,” said Lashier, “But fortunately, it’s a little bit easier to find some extra money on your returns with the deductions above. “ 7

Here’s how Obama’s Health Care Reform affects your taxes By KRISTAN GRAY Staff Writer

Everyone who files their taxes will see financial changes from President Obama’s comprehensive health care reform, and as tax day approaches, H&R Block is answering questions. “March 23, 2010, President Obama signed the comprehensive health care reform, known as the ‘Patient Protection and Affordable Care Act’ into law,” said H&R Block’s Senior Tax Advisor 5 Tammie Carpenter. “The law takes affect in several phases. It mandates that individuals obtain health insurance and creates health care exchanges to help those who don't have health insurance to purchase it.” Carpenter details the changes and effective dates below: Tax season 2013 and health care reform: Beginning January 1, 2013, the Affordable Care Act requires virtually all US citizens and legal residents to have health

insurance or pay a tax penalty. Based on a family's household income and family size, they may be eligible for the cost of health insurance premiums. The federal government now uses the household income and family size from the 2012 federal tax return as the primary source to determine eligibility and potential penalty. The

2012 tax return is filed and basic qualification information is provided to the health care exchange that opens October 1, 2013. Health Care Reform time line: 2012 - tax return filed and used to determine eligibility for coverage 2013 - Employer sponsored coverage recorded on W-2

When filed in calendar year 2015, those subject to the mandate who don't have coverage may pay a penalty. Penalty will be low to start and increase over the years. 4) Tax Penalty: Citizens who do not comply with mandate to have Health Care coverage will be penalized in the form of a tax on the Federal Tax Return (via 1099 type form). 5) Reconciliation/Adjustments: Tax Return will be used for reconciliation/adjustments for overpayment or underpayment of subsidy based on individual changes in the prior year. 6) Other tax impacts: Changes to Medicare tax, Health Savings Account and Flexible Spending Accounts, and medical expense deduction. “A tax service that aids in navigating the health care reform as it relates to taxes would be helpful to people,” Carpenter added. “Any non-tax questions should be referred to insurance experts.”

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2014 - 2013 tax return filed and used to determine eligibility for coverage. Americans must obtain insurance coverage or face tax penalty on their 2014 tax return 2015 - 2014 tax return required for those who took a subsidy 2014 - tax return filed and used to determine eligibility for coverage; reconciliation via 2014 return: Subsidy adjustment in form of credit or additional tax; 2014-Penalty assessed for noncompliance Tax Specific Implications of Health Care Reform: 1) 2012 Federal Tax ReturnPrimary and most efficient means for the government to determine Health Care Coverage and/or subsidy. 2014 household income is estimated based on the 2014 return. The greater the subsidy, the less an individual will pay for insurance. 2) W-2 documents are used to flag employer Health Care coverage. 3) 2014 Federal Tax Return:

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