Get the right paperwork to claim charitable deductions

What supporting documentation do you need to claim charitable deductions on your federal income tax return?

In general, you can support monetary contributions of any amount with a cancelled check, credit card statement, proof of payroll deduction, or a receipt from the charity. The paperwork must show the organization’s name and the amount and date of your contribution.

When you contribute cash of $250 or more, get a written acknowledgement from the charity. The receipt must show the name of the charity, the date of your donation, and the amount donated, as well as a description and the estimated value of any nondeductible item (such as a book or dinner) provided to you. [Read more…]

Make time for a conversation with your parents about finances

Discussing finances with your parents may be a talk none of you are eager to tackle. But addressing the topic can benefit your entire family by clarifying your parents’ wishes and enabling you to help establish a joint plan for carrying those wishes to fruition. Here are questions that can start the dialogue. [Read more…]

Be aware of inflation-adjusted 2016 tax numbers

Certain tax numbers are adjusted for inflation each year. This year, many of the numbers are unchanged or change only slightly from 2015 amounts. Here are some of the tax numbers to use in your 2016 tax planning. [Read more…]

Note upcoming tax deadlines

  • February 29 – Payers must file information returns, such as Forms 1099, with the IRS. This deadline is extended to March 31 when the forms are filed electronically.
  • February 29 – Employers must send W-2 copies to the Social Security Administration. This deadline is extended to March 31 for electronic filing.
  • March 1 – Farmers and fishermen who did not make 2015 estimated tax payments must file 2015 tax returns and pay taxes in full to avoid a penalty.
  • March 15 – 2015 calendar-year corporation income tax returns are due.
  • March 15 – Deadline for calendar-year corporations to elect S corporation status for 2016.
  • March 31 – Large employers must furnish Forms 1095-C to employees.

Your IRA can affect your Medicaid eligibility

When you’re planning for Medicaid coverage of nursing home care, it’s important to take any IRAs you own into account.

Medicaid applicants can retain only a small amount of assets ($2,000 in most states) in order to be eligible for benefits. Certain assets may be exempt from this rule. Whether your IRA is exempt often depends on whether it is in “payout status.”

You can put your IRA into payout status starting at age 59½ if you elect to take regular, periodic distributions based on life expectancy tables. At age 70½, you’re required to put your IRA into payout status. [Read more…]

Medicaid helps children who live with aging parents

In most states, if you give your house to your children (or to someone else) and then apply for Medicaid coverage of nursing home care, you can be disqualified for a long period of time. That’s because you’re supposed to spend down your assets on your own care before applying for Medicaid, not give them away.

But there is an important exception that allows you to give your home to your children in certain circumstances. [Read more…]

New law warns seniors of Medicare nursing home loophole

A new federal law will help many seniors with a costly Medicare loophole that often results in their not being covered for a stay in a nursing home. It won’t make the stay covered, but it will at least put seniors on notice if a stay isn’t covered, so they can plan accordingly and won’t be hit with a nasty surprise.

Here’s the problem: Medicare covers nursing home stays for the first 20 days, so long as the patient was first admitted to a hospital as an inpatient for at least three days. But a lot of people who spend three days in a hospital later discover that they were never actually “admitted.” Rather, they were merely kept in the hospital “under observation.” As a result, the nursing home stay afterward isn’t covered. [Read more…]

Make sure your loved ones can get your medical info

If you’re in the hospital, you probably want certain family members and trusted friends to be able to get information about your condition or prognosis. But to make sure this happens, you may need to plan ahead.

A federal law called HIPAA (the Health Insurance Portability and Accountability Act) is designed to protect your health care privacy, and says that medical personnel can’t disclose your health care information to unauthorized people. Only a small number of people are authorized under HIPAA … so if you want other people to know about your condition, you have to authorize them in advance. [Read more…]

What to do if you have an Obamacare plan and become eligible for Medicare

If you or someone you know has a marketplace health care plan under the Affordable Care Act (an “Obamacare” plan), and you’ve reached the age of 65 or are close to it, it’s important to look carefully at your options. Not making the right decision could be costly.

In the vast majority of cases, the smart approach is to terminate the Obamacare plan and sign up for Medicare.

But many people are unaware of this fact, because there’s no warning given to such consumers that they have an important decision to make.  [Read more…]

Be aware of these tax deadlines

A new year means tax return filing season has arrived once again. Among the tax deadlines you may be required to meet in the next few months are the following: [Read more…]

Keys to effective cash management

Add cash management to your list of business goals for 2016. Commitment to effective practices and techniques can be the key to keeping your business operating on a sound footing. Some tips:

Reduce lag time. Reducing the time between sending out invoices and receiving payment may take the form of giving incentive discounts to customers who pay early. On the expense side, aim for just-in-time inventory to reduce holding costs. [Read more…]

Standard mileage rates reduced for 2016

  • Business. Starting January 1, the standard mileage rate for driving a vehicle for business purposes is set at 54 cents per mile. That’s down from 57.5 cents in 2015.
  • Medical and moving. The rate for medical and moving mileage decreases from last year’s 23 cents a mile to 19 cents a mile.
  • Charity. The general rate for charitable driving remains at 14 cents a mile.

Tax extender act renews tax breaks

In mid-December, Congress renewed a long list of tax breaks known as “extenders” that have been expiring on an annual basis. This year many of the rules are retroactive to the beginning of 2015, and you can benefit from them as you prepare your 2015 federal income tax return.

In addition, the Protecting Americans from Tax Hikes Act of 2015, which was signed into law on December 18, 2015, makes some of the rules effective through December 31, 2016. Others are effective through 2019, and some are effective permanently. Provisions in the Act also make changes to existing tax rules that were not part of the extenders. All of these changes will affect your tax planning for 2016 and future years. Here’s an overview of selected provisions. [Read more…]