COVERDELL EDUCATION SAVINGS ACCOUNTS The Coverdell Education Savings Account (ESA) was created as an incentive to help parents and students save for education expenses. The total contributions for the beneficiary of this account cannot be more than $2,000 in any year, no matter how many accounts have been established. A beneficiary is someone who is [...]
SOCIAL SECURITY AND MEDICARE UPDATE The annual inflation adjustments have been announced for the various social security amounts and thresholds, so we thought it would be a good time to update you for 2014. For social security beneficiaries under the full retirement age, the annual exempt amount increases to $15,480 in 2014, up from $15,120 [...]
RETIREMENT PLAN REVIEW Your retirement plan savings (e.g., qualified plans and IRAs) are important to your financial wellbeing for many reasons. You can accumulate income without currently paying tax, and the power of compounding pretax dollars makes a retirement plan one of the most powerful investment vehicles available. When you reach retirement age, your retirement [...]
INDIVIDUAL IS RESPONSIBLE FOR PAYING THE ADDITIONAL 0.9% MEDICARE TAX. Josh and Anna are married. Josh’s salary is $180,000, and Anna’s wages are $150,000. Assume they have no other wage or investment income. Their total combined wage income is $330,000 ($180,000 + $150,000). Since this amount is over the $250,000 threshold, they owe the additional [...]
ADDITIONAL 0.9% MEDICARE TAX Individuals must pay an additional 0.9% Medicare tax on earned income above certain thresholds. The employee portion of the Medicare tax is increased from 1.45% to 2.35% on wages received in a calendar year in excess of $200,000 ($250,000 for married couples filing jointly; $125,000 for married filing separately). Employers must [...]
IRS MODIFIES FSA USE-IT-OR-LOSE-IT RULE Health Flexible Spending Account (FSA) contributions left over at the end of the plan year are forfeited to the employer under the “use-it-or-lose-it rule,” although a plan can provide a grace period extending the period of incurring expenses for qualified benefits to the 15th day of the third month after [...]