http://finance.yahoo.com/retirement/article/113342/social-security-mistakenly-reports-deaths-cnnmoney
by Blake Ellis
More Americans are being erroneously killed off by the Social Security Administration every day.
Of the approximately 2.8 million death reports the Social Security Administration receives per year, about 14,000 -- or one in every 200 deaths -- are incorrectly entered into its Death Master File, which contains the Social Security numbers, names, birth dates, death dates, zip codes and last-known residences of more than 87 million deceased Americans. That averages out to 38 life-altering mistakes a day.
While these errors occur online, in the depths of the administration's database, they have a very real impact on the people who have effectively been declared dead.
"Erroneous death entries can lead to benefit termination, cause severe financial hardship and distress to affected individuals, and result in the publication of living individuals' [personal identifying information] in the [Death Master File]," the Inspector General said in its most recent evaluation of the database.
Laura Brooks, of Spotsylvania, Va., discovered she had been declared dead when she stopped receiving her disability checks, and her rent and student loan payments unexpectedly bounced.
She went to her bank and a representative said her account had been closed because she was dead. Brooks, a 52-year old mother of two, was already on permanent disability because of a severe depressive disorder, so hearing this turned her already difficult world completely upside down.
"It was one of those surreal things, like seeing a UFO," said Brooks. "When you are a person who already thought that maybe you should be dead because life was so bad to you, I thought this could be a premonition."
The bank representative told Brooks she couldn't reopen her account until she could prove she was alive. When she went to the Social Security office in January 2001, she found out she was declared dead on Dec. 6, 2000. To correct this, she had to submit the pay stubs she was receiving from a program that helps people on disability get back to work.
It took two months for the Social Security Administration to finally "revive" her. The administration later explained that a funeral director had mistyped a Social Security number when submitting a death notice to the agency.
Because of that misstep, Brooks said she accumulated between $300 and $400 in fees for bounced checks, and she hadn't received the more than $1,000 in disability payments she was owed. Once she was declared alive again, the Social Security Administration only resumed her payments -- it wouldn't reimburse her for missed payments, she said.
"Those disability checks were everything I had, and the $300 to $400 I had to pay in fees was more than half of that weekly income," she said. "But more than the financial impact of all of this was the psychological shock -- it spiraled me into further depression and really started me on the road to questioning authority."
Making matters worse, Brooks said the Social Security Administration had somehow lost the file containing all of her information, including her disability benefit records and medical history. It took her two years to rebuild it.
Eleven years after being declared dead by the Social Security Administration, Brooks claims the agency has yet to apologize to her for the debacle.
The Social Security Administration said it cannot comment on specific cases but said it works as quickly as it can to fix these types of mistakes and that two months is too long for an error like this to be resolved.
36,657 Erroneous Deaths in Three Years
Of course, Brooks isn't the only living person to have been put in the Social Security graveyard. In a recent investigation, the Social Security Office of the Inspector General, which oversees the Social Security Administration, discovered that the Death Master File contained 36,657 death entries between May 2007 and April 2010 for people who were very much alive.
In fact, the Social Security Administration admits that erroneous entries slip through the cracks.
"It is unfortunate, but some of the death data that we post to our records ... proves to be wrong and we correct it as soon as possible," said administration spokesman Mark Hinkle. "Usually the error was inadvertently caused because of a human typing error when death information was entered into a computer system."
This inaccurate information is then sold to the public, as well as to banks and credit bureaus.
Those who are declared dead not only lose their ability to apply for credit or receive benefits, but they are also at a high risk for identity theft now that all of their personally-identifying information has been made public.
In one review, the Inspector General found that months after the Social Security Administration deleted incorrect information from the database, the personally identifiable information of 28% of the individuals was still publicly available on at least one other web site.
What to Do If You've Been Declared Dead
To avoid the financial hardship or risk of identity theft as a result of being named to the Social Security's death list, the Identity Theft Resource Center recommends that you do the following:
First, find out who reported you as dead.
Then, get a copy of your death certificate from the county clerk's or recorder's office where the death was reported, and fill out a form to amend the certificate. The death certificate will include the name of whoever reported your death. This person is typically contacted to sign the amendment as well.
To remove your name from the database, you need to make an appointment at your local Social Security office. Bring a photo ID and the certified copy of the amended death certificate, the ITRC said.
http://www.blogger.com/img/blank.gif
Once you correct the information with Social Security, you may need to contact your bank, credit bureaus and any other entities that are under the impression that you're deceased to let them know you've been born again.
Social Security's Hinkle said it's typically easier to fix than this.
"It normally involves seeing the person face-to-face and verifying some form of current ID," he said, adding that the administration occasionally writes letters that people can present to other entities to prove they are alive.
"We take these situations seriously and wish they didn't happen at all, but when we find out it has occurred, we help the person fix it," said Hinkle.
Direct CNN link: http://money.cnn.com/2011/08/17/pf/social_security_deaths_mistakes/index.htm
Wednesday, August 17, 2011
Tuesday, July 26, 2011
California approves use tax table for 2011
The California State Board of Equalization voted today to approve the use tax table to be used for 2011 tax returns. Senate Bill 86 (Ch. 11-14) allows taxpayers to report use tax for single nonbusiness purchases of $1,000 or less each on their FTB return using either:
Adjusted Gross Income Range - Use Tax Liability
Less than $20,000 - $7
$20,000 - $39,999 - $21
$40,000 - $59,999 - $35
$60,000 - $79,999 - $49
$80,000 - $99,999 - $63
$100,000 - $149,999 - $88
$150,000 - $199,999 - $123
More than $199,999 - Multiply AGI by 0.07% (0.0007)
- The actual amount of tax due; or
- The amount shown on a lookup table, which would indicate an estimated amount of use tax due based on the person’s AGI.
Adjusted Gross Income Range - Use Tax Liability
Less than $20,000 - $7
$20,000 - $39,999 - $21
$40,000 - $59,999 - $35
$60,000 - $79,999 - $49
$80,000 - $99,999 - $63
$100,000 - $149,999 - $88
$150,000 - $199,999 - $123
More than $199,999 - Multiply AGI by 0.07% (0.0007)
Sunday, July 17, 2011
The 8 Most Annoying Fees
I am surprised bank charges don't make the list. Bank of America started charging a $3 per month fee for sending check images with the bank statement. Mind you, it's not the actual cancelled checks, just the front side of the check image. I would not have minded if BofA lists the details of the checks such as payee names with each cleared check on the statement. That would have satisfied IRS. But when BofA only lists the check numbers, taxpayers need something more to substantiate a tax deduction.
http://finance.yahoo.com/banking-budgeting/article/113142/most-annoying-fees-moneytalks
by Len Penzo
Fees for this, fees for that -- even a fee for paying a fee. Where does it end? I'm afraid I know the answer ...
In this tough economy, businesses of all types are trying to nickel and dime us with add-on charges. They want you to believe these fees are necessary to cover the cost of doing business, but more often than not, they simply mislead the consumer by adding a hidden mark-up to the advertised price.
Sometimes the fees are small, but other times they can be severe. The mortgage loan industry has been doing this forever, but now the practice has spread like the plague to many other services. I can't be the only person who is outraged by this continuing practice. Or am I?
Here are eight classic fees that really gnaw at me. Some of them I do a pretty good job of avoiding. Others, not so much ...
1. Unlisted Phone Number Fees
This is arguably the granddaddy of them all. I currently get charged $1.75 per month for my unlisted telephone number -- $21 per year. Why does it cost the phone company more to keep my number out of the phone book than in it? That's a rhetorical question, but I'll answer it anyway: It doesn't.
2. Convenience Fees
I recently bought four tickets online from Ticketmaster so I could take the wife and kids to see the Harlem Globetrotters. Cost: $300 for the set. But on top of that was a "convenience charge" of $5 per ticket that added $20 to my bill. Usually, buying online saves a company money that they'd otherwise spend on a telephone operator or a store clerk. So why am I being charged to make Ticketmaster's existence more convenient?
3. Fees for Printing Tickets
I'm not done with Ticketmaster. After gagging on the $20 "convenience" charge for my Globetrotter tickets, Ticketmaster wanted to charge me $2.50 so that I could print the tickets from my home printer. Keep in mind that I also had the option to get the tickets via the postal service -- for no charge. Where's the logic in that? How much do you think it costs Ticketmaster to print the tickets on heavier stock paper, using their ticket machines, and then pay their staff to place the tickets in envelopes with the proper postage and mail it to my house? I don't know either, but I made sure that's exactly what Ticketmaster did.
4. Hotel Safe Fees
There are more than a few hotels out there that charge you just for the privilege of using their in-room safes -- whether you use it or not. Here's one hotel that charges $1.69 per night. What a joke. Whenever I see this fee, I ask to have it waived.
5. Tax e-Filing Fees
Among the most egregious fees out there are the ones that charge money for essentially doing nothing more than making a mouse click or pushing a couple of keys on a computer keyboard. How much money does it cost to send some bits of information through the Internet? Well, if you ask TurboTax, it's $36.95. That's what they charge to e-file a state tax return. So rather than printing out the return and sending it through the mail, I clenched my teeth and reluctantly paid it. Hey, if you paid attention you'll find a lesson on opportunity cost buried in there.
6. Tax Refund Fees
After spending four hours doing my taxes with the online edition of TurboTax, I was due a refund. "Perfect!" I thought, "I'll have TurboTax simply deduct what I owe them directly from my refund." Unfortunately, it turns out TurboTax charges an additional $29.95 if you choose to go that route. My only other option was to pay by credit card -- at no charge. How does that make any sense? So I paid with plastic. I hope TurboTax had to pay the credit card company an interchange fee for me using it too. Dummies.
7. Mortgage Junk Fees
There are dozens of mortgage junk fees out there, some more dubious than others, that make you scratch your head and ask what the heck is that for? Re-conveyance verification fees, commitment fees, and the infamous "warehouse fee" are just three classic examples. (I know, I already mentioned them above -- but I wanted to make it official.)
8. And Then There's This ...
It's bad enough that airlines almost universally charge fees to people who have the audacity to travel with luggage. But a while back, United, US Airways, and Delta took things a step further by charging their "valued" customers who chose to pay for their bags at the airport, rather than online, an additional fee of between $2 and $3 per bag.
That's right, folks. A fee for paying a fee.
http://finance.yahoo.com/banking-budgeting/article/113142/most-annoying-fees-moneytalks
by Len Penzo
Fees for this, fees for that -- even a fee for paying a fee. Where does it end? I'm afraid I know the answer ...
In this tough economy, businesses of all types are trying to nickel and dime us with add-on charges. They want you to believe these fees are necessary to cover the cost of doing business, but more often than not, they simply mislead the consumer by adding a hidden mark-up to the advertised price.
Sometimes the fees are small, but other times they can be severe. The mortgage loan industry has been doing this forever, but now the practice has spread like the plague to many other services. I can't be the only person who is outraged by this continuing practice. Or am I?
Here are eight classic fees that really gnaw at me. Some of them I do a pretty good job of avoiding. Others, not so much ...
1. Unlisted Phone Number Fees
This is arguably the granddaddy of them all. I currently get charged $1.75 per month for my unlisted telephone number -- $21 per year. Why does it cost the phone company more to keep my number out of the phone book than in it? That's a rhetorical question, but I'll answer it anyway: It doesn't.
2. Convenience Fees
I recently bought four tickets online from Ticketmaster so I could take the wife and kids to see the Harlem Globetrotters. Cost: $300 for the set. But on top of that was a "convenience charge" of $5 per ticket that added $20 to my bill. Usually, buying online saves a company money that they'd otherwise spend on a telephone operator or a store clerk. So why am I being charged to make Ticketmaster's existence more convenient?
3. Fees for Printing Tickets
I'm not done with Ticketmaster. After gagging on the $20 "convenience" charge for my Globetrotter tickets, Ticketmaster wanted to charge me $2.50 so that I could print the tickets from my home printer. Keep in mind that I also had the option to get the tickets via the postal service -- for no charge. Where's the logic in that? How much do you think it costs Ticketmaster to print the tickets on heavier stock paper, using their ticket machines, and then pay their staff to place the tickets in envelopes with the proper postage and mail it to my house? I don't know either, but I made sure that's exactly what Ticketmaster did.
4. Hotel Safe Fees
There are more than a few hotels out there that charge you just for the privilege of using their in-room safes -- whether you use it or not. Here's one hotel that charges $1.69 per night. What a joke. Whenever I see this fee, I ask to have it waived.
5. Tax e-Filing Fees
Among the most egregious fees out there are the ones that charge money for essentially doing nothing more than making a mouse click or pushing a couple of keys on a computer keyboard. How much money does it cost to send some bits of information through the Internet? Well, if you ask TurboTax, it's $36.95. That's what they charge to e-file a state tax return. So rather than printing out the return and sending it through the mail, I clenched my teeth and reluctantly paid it. Hey, if you paid attention you'll find a lesson on opportunity cost buried in there.
6. Tax Refund Fees
After spending four hours doing my taxes with the online edition of TurboTax, I was due a refund. "Perfect!" I thought, "I'll have TurboTax simply deduct what I owe them directly from my refund." Unfortunately, it turns out TurboTax charges an additional $29.95 if you choose to go that route. My only other option was to pay by credit card -- at no charge. How does that make any sense? So I paid with plastic. I hope TurboTax had to pay the credit card company an interchange fee for me using it too. Dummies.
7. Mortgage Junk Fees
There are dozens of mortgage junk fees out there, some more dubious than others, that make you scratch your head and ask what the heck is that for? Re-conveyance verification fees, commitment fees, and the infamous "warehouse fee" are just three classic examples. (I know, I already mentioned them above -- but I wanted to make it official.)
8. And Then There's This ...
It's bad enough that airlines almost universally charge fees to people who have the audacity to travel with luggage. But a while back, United, US Airways, and Delta took things a step further by charging their "valued" customers who chose to pay for their bags at the airport, rather than online, an additional fee of between $2 and $3 per bag.
That's right, folks. A fee for paying a fee.
Friday, July 8, 2011
IRS Says Summer Day Camps May Qualify for Tax Credit
http://www.accountingtoday.com/news/IRS-Says-Summer-Day-Camps-Qualify-Tax-Credit-59100-1.html
BY MICHAEL COHN, ACCOUNTING TODAY
The Internal Revenue Service said Wednesday that parents may be able to qualify for a tax credit to help defray the added expenses of summer day camp for their children.
Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation, the IRS noted.
The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year. However, the IRS noted that the cost of day camp may count as an expense towards the child and dependent care credit. Expenses for overnight camps do not qualify. Whether the child care provider is a sitter at the family’s home or a daycare facility outside the home, parents will get some tax benefit if they qualify for the credit.
The credit can be for up to 35 percent of the qualifying expenses, depending on the parents’ income. Parents may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling (800) TAX-FORM.
The IRS also posted a link to a YouTube video from last year explaining the use of the tax credits for summer day care expenses. The tax deduction is not new, but the announcement issued Wednesday is part of a series of summertime tax tips that the IRS is emailing to subscribers this season.
NOTE: The best way to pay for child care is to use an employer's "Dependent Care Plan" or a cafeteria plan, using pre-taxed money. Make sure you do not over-estimate the cost as any unspent money is lost.
BY MICHAEL COHN, ACCOUNTING TODAY
The Internal Revenue Service said Wednesday that parents may be able to qualify for a tax credit to help defray the added expenses of summer day camp for their children.
Many parents who work or are looking for work must arrange for care of their children under 13 years of age during the school vacation, the IRS noted.
The Child and Dependent Care Credit is available for expenses incurred during the summer and throughout the rest of the year. However, the IRS noted that the cost of day camp may count as an expense towards the child and dependent care credit. Expenses for overnight camps do not qualify. Whether the child care provider is a sitter at the family’s home or a daycare facility outside the home, parents will get some tax benefit if they qualify for the credit.
The credit can be for up to 35 percent of the qualifying expenses, depending on the parents’ income. Parents may use up to $3,000 of the unreimbursed expenses paid in a year for one qualifying individual or $6,000 for two or more qualifying individuals to figure the credit.
For more information check out IRS Publication 503, Child and Dependent Care Expenses. This publication is available at www.irs.gov or by calling (800) TAX-FORM.
The IRS also posted a link to a YouTube video from last year explaining the use of the tax credits for summer day care expenses. The tax deduction is not new, but the announcement issued Wednesday is part of a series of summertime tax tips that the IRS is emailing to subscribers this season.
NOTE: The best way to pay for child care is to use an employer's "Dependent Care Plan" or a cafeteria plan, using pre-taxed money. Make sure you do not over-estimate the cost as any unspent money is lost.
Friday, July 1, 2011
'Temporary' FUTA Surtax Expires after 35 Years
http://www.accountingtoday.com/news/Temporary-FUTA-Surtax-Expires-35-Years-59061-1.html
WASHINGTON, D.C. (JUNE 30, 2011)
BY MICHAEL COHN, ACCOUNTING TODAY
The Federal Unemployment Tax Act surtax is set to expire Thursday after House Republicans refused to extend the 35-year-old “temporary” unemployment surtax.
The surtax has been extended eight times since it was originally enacted in 1976. House Ways and Means Committee Chairman Dave Camp, R-Mich., refused to extend the tax beyond its current June 30, 2011 expiration date.
“The death of any tax on jobs—no matter how big or small—is a historic moment and one to be celebrated,” Camp said in a statement. “The fact that it has taken 35 years for this ‘temporary’ tax to expire clearly illustrates the dangers of higher taxes—once in place, they are unlikely to ever go away. We need employers paying more salaries, not paying higher taxes. And when the surtax expires, job creators will get a little and long overdue relief.”
The original purpose of the “temporary” 0.2 percent surtax was to repay federal general revenues used to provide federal unemployment benefits paid in the wake of the 1973-75 recession. While the tax raised $27 billion (adjusted for inflation) and the general revenues were fully repaid by 1987, the 0.2 percent surtax remains on the books today. Since 1987, the tax has raised an additional $46 billion (adjusted for inflation) above and beyond what was needed at the inception of the tax in 1976.
The expiration of the surtax will reduce federal unemployment taxes by $1.4 billion per year, or about $14 per employee per year. That relief slightly offsets the effect of much larger state unemployment tax hikes imposed in recent years to pay for record unemployment benefit spending. Since unemployment benefits are not directly linked to the “temporary” federal tax, its expiration will not affect current or future unemployment benefit receipts.
Without the 0.2 percent surtax, the 6.2 percent FUTA tax rate will fall to 6.0 percent, according to CCH. It was last extended in 2009 as part of the Worker, Homeownership and Business Assistance Act.
Camp's office provided a timeline of the successive extensions of the surtax.
For more, read http://thehill.com/blogs/on-the-money/domestic-taxes/169335-temporary-unemployment-tax-to-expire--after-35-years
WASHINGTON, D.C. (JUNE 30, 2011)
BY MICHAEL COHN, ACCOUNTING TODAY
The Federal Unemployment Tax Act surtax is set to expire Thursday after House Republicans refused to extend the 35-year-old “temporary” unemployment surtax.
The surtax has been extended eight times since it was originally enacted in 1976. House Ways and Means Committee Chairman Dave Camp, R-Mich., refused to extend the tax beyond its current June 30, 2011 expiration date.
“The death of any tax on jobs—no matter how big or small—is a historic moment and one to be celebrated,” Camp said in a statement. “The fact that it has taken 35 years for this ‘temporary’ tax to expire clearly illustrates the dangers of higher taxes—once in place, they are unlikely to ever go away. We need employers paying more salaries, not paying higher taxes. And when the surtax expires, job creators will get a little and long overdue relief.”
The original purpose of the “temporary” 0.2 percent surtax was to repay federal general revenues used to provide federal unemployment benefits paid in the wake of the 1973-75 recession. While the tax raised $27 billion (adjusted for inflation) and the general revenues were fully repaid by 1987, the 0.2 percent surtax remains on the books today. Since 1987, the tax has raised an additional $46 billion (adjusted for inflation) above and beyond what was needed at the inception of the tax in 1976.
The expiration of the surtax will reduce federal unemployment taxes by $1.4 billion per year, or about $14 per employee per year. That relief slightly offsets the effect of much larger state unemployment tax hikes imposed in recent years to pay for record unemployment benefit spending. Since unemployment benefits are not directly linked to the “temporary” federal tax, its expiration will not affect current or future unemployment benefit receipts.
Without the 0.2 percent surtax, the 6.2 percent FUTA tax rate will fall to 6.0 percent, according to CCH. It was last extended in 2009 as part of the Worker, Homeownership and Business Assistance Act.
Camp's office provided a timeline of the successive extensions of the surtax.
For more, read http://thehill.com/blogs/on-the-money/domestic-taxes/169335-temporary-unemployment-tax-to-expire--after-35-years
Tuesday, June 28, 2011
IRS Issues Warning on FBAR Filing Deadline
http://www.accountingtoday.com/news/IRS-Issues-Warning-FBAR-Filing-Deadline-58973-1.html
WASHINGTON, D.C. (JUNE 28, 2011)
BY MICHAEL COHN, ACCOUNTING TODAY
The Internal Revenue Service is reminding anyone who has a bank account or other financial account in a foreign country, or who has signature authority over such an account, that they may be required to report the account to the U.S. Department of the Treasury by June 30 each year.
The IRS has recently been extending the filing deadline for the Report of Foreign Bank and Financial Accounts, also known as an FBAR, under certain circumstances (see IRS Offers Another FBAR Filing Extension and IRS Extends FBAR Filing Deadline for Some Finance Pros). However, the FBAR filing deadline in most instances is June 30 each year.
Many people in the U.S. have foreign financial accounts, the IRS noted in its announcement last Friday. While there is nothing improper about setting up or maintaining such accounts, many people may mistakenly believe their accounts are not large enough on a combined basis to trigger reporting obligations. Foreign account owners may have to report their accounts to the government, even if the accounts do not generate any taxable income.
U.S. persons are required to file a Report of Foreign Bank and Financial Accounts , or Treasury Department Form TD F 90-22.1, each year if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.
For 2010, the due date for filing the FBAR is Thursday, June 30, 2011, though some financial professionals will have until June 30, 2012 to file. Unlike with federal income tax returns, requests for an extension of time to file an FBAR cannot be granted.
The FBAR is not an income tax return and should not be mailed with any income tax returns, the IRS noted. It is due by June 30 of the year following the calendar year in which the aggregate value of the foreign accounts, on any one day, exceeds $10,000. But for 20009 and earlier years, the due date is generally Nov. 1, 2011 for individuals whose filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23, and have no financial interest in a foreign financial account but with signature or other authority over that account.
FBARs are filed with the U.S. Department of the Treasury, P.O. Box 32621, Detroit, Mich. 48232-0621. Civil and criminal penalties for non-compliance with the FBAR filing requirements are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Civil and criminal penalties may be imposed together.
If you learn that you or your clients were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies, for your records, of what you send. If, however, you or your clients have any unreported taxable income related to the foreign accounts, you should instead follow the procedures for making a voluntary disclosure to the IRS under the 2011 Offshore Voluntary Disclosure Initiative.
The address for delivery of an FBAR by a method other than U.S. mail is: U.S. Department of the Treasury, Currency Transaction Reporting, 985 Michigan Avenue, Detroit, Mich., 48226.
The FBAR form is not available for electronic filing, but many income tax software packages can prepare a printed copy. FBAR forms and instructions are also available on IRS.gov or the Financial Crimes Enforcement Network website, FinCEN.gov, and by calling 1-(800) 829-3676.
Taxpayers who need assistance completing Form TD F 90-22.1 can contact the IRS by telephone at 1-(800) 800-2877, option 2, or via email at FBARquestions@irs.gov.
WASHINGTON, D.C. (JUNE 28, 2011)
BY MICHAEL COHN, ACCOUNTING TODAY
The Internal Revenue Service is reminding anyone who has a bank account or other financial account in a foreign country, or who has signature authority over such an account, that they may be required to report the account to the U.S. Department of the Treasury by June 30 each year.
The IRS has recently been extending the filing deadline for the Report of Foreign Bank and Financial Accounts, also known as an FBAR, under certain circumstances (see IRS Offers Another FBAR Filing Extension and IRS Extends FBAR Filing Deadline for Some Finance Pros). However, the FBAR filing deadline in most instances is June 30 each year.
Many people in the U.S. have foreign financial accounts, the IRS noted in its announcement last Friday. While there is nothing improper about setting up or maintaining such accounts, many people may mistakenly believe their accounts are not large enough on a combined basis to trigger reporting obligations. Foreign account owners may have to report their accounts to the government, even if the accounts do not generate any taxable income.
U.S. persons are required to file a Report of Foreign Bank and Financial Accounts , or Treasury Department Form TD F 90-22.1, each year if they have a financial interest in or signature authority over financial accounts, including bank, securities or other types of financial accounts, in a foreign country, if the aggregate value of these financial accounts exceeds $10,000 at any time during the calendar year.
For 2010, the due date for filing the FBAR is Thursday, June 30, 2011, though some financial professionals will have until June 30, 2012 to file. Unlike with federal income tax returns, requests for an extension of time to file an FBAR cannot be granted.
The FBAR is not an income tax return and should not be mailed with any income tax returns, the IRS noted. It is due by June 30 of the year following the calendar year in which the aggregate value of the foreign accounts, on any one day, exceeds $10,000. But for 20009 and earlier years, the due date is generally Nov. 1, 2011 for individuals whose filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23, and have no financial interest in a foreign financial account but with signature or other authority over that account.
FBARs are filed with the U.S. Department of the Treasury, P.O. Box 32621, Detroit, Mich. 48232-0621. Civil and criminal penalties for non-compliance with the FBAR filing requirements are significant. Civil penalties for a non-willful violation can range up to $10,000 per violation. Civil penalties for a willful violation can range up to the greater of $100,000 or 50 percent of the amount in the account at the time of the violation. Criminal penalties for violating the FBAR requirements while also violating certain other laws can range up to a $500,000 fine or 10 years imprisonment or both. Civil and criminal penalties may be imposed together.
If you learn that you or your clients were required to file FBARs for earlier years, you should file the delinquent FBAR reports and attach a statement explaining why the reports are filed late. No penalty will be asserted if the IRS determines that the late filings were due to reasonable cause. Keep copies, for your records, of what you send. If, however, you or your clients have any unreported taxable income related to the foreign accounts, you should instead follow the procedures for making a voluntary disclosure to the IRS under the 2011 Offshore Voluntary Disclosure Initiative.
The address for delivery of an FBAR by a method other than U.S. mail is: U.S. Department of the Treasury, Currency Transaction Reporting, 985 Michigan Avenue, Detroit, Mich., 48226.
The FBAR form is not available for electronic filing, but many income tax software packages can prepare a printed copy. FBAR forms and instructions are also available on IRS.gov or the Financial Crimes Enforcement Network website, FinCEN.gov, and by calling 1-(800) 829-3676.
Taxpayers who need assistance completing Form TD F 90-22.1 can contact the IRS by telephone at 1-(800) 800-2877, option 2, or via email at FBARquestions@irs.gov.
Monday, June 27, 2011
10 Tax-Unfriendly States for Retirees 2011
http://finance.yahoo.com/focus-retirement/article/112987/tax-unfriendly-states-retirees
by Mary Beth Franklin, Kiplinger
Some states offer attractive tax benefits for retirees. Then there are these ten tax hells, which have earned a place on our "do not live here for your second act" list either because of higher-than-average taxes across the board or because of policies that don't exempt much retirement income from state taxation.
For retirees living on a fixed income, high income taxes, burdensome real estate taxes and hefty sales taxes on daily purchases can really eat into a nest egg. Choosing to relocate to — or stay put in — a state with a low overall tax burden can help stretch your retirement income.
#1 VERMONT
State Income Tax: 3.55%-8.95%
State Sales Tax: 6% (localities can add another 1%)
Estate Tax/Inheritance Tax: Yes/No
There are no exemptions for retirement income in the Green Mountain State, except for Railroad Retirement benefits (which are exempt in every state). Out-of-state pensions are fully taxed. Vermont exempts medical devices and prescription and nonprescription drugs from its 6% sales tax. But it imposes a 9% tax on prepared foods, restaurant meals and lodging, and a levies a 10% sales tax on alcoholic beverages served in restaurants. Real estate taxes have two components: school property tax and municipal property tax collected by towns and cities where the property is located. The Tax Foundation, a nonprofit tax-research group in Washington, D.C., lists Vermont's property tax among the ten highest in the nation.
#2 MINNESOTA
State Income Tax: 5.35%-7.85%
State Sales Tax: 6.875% (cities and counties can add another 2.65%)
Estate Tax/Inheritance Tax: No/No
Minnesota offers retirees cold comfort on the tax front. Social Security income is taxed to the same extent it is taxed on your federal return. Pensions are taxable regardless of where your pension was earned. Income-tax rates are high, and sales taxes can reach 9.53% in some cities. Food, clothing, and prescription and nonprescription drugs are exempt from sales taxes. The North Star State does offer some residents 65 and older who have income of $60,000 or less the option of deferring a portion of their property tax. But this is a low-interest loan, not a tax-forgiveness program.
#3 NEBRASKA
State Income Tax: 2.56%-6.84%
State Sales Tax: 5.5% (localities can add another 1.5%)
Estate Tax/Inheritance Tax: No/Yes
There are no tax breaks for Social Security benefits and military pensions in the Cornhusker State. Real estate is assessed at 100% of fair market value. Residents 65 and older qualify for a homestead exemption on property taxes. Food and prescription drugs are exempt from state sales taxes. But Nebraska imposes an inheritance tax on all transfers of property and annuities.
#4 OREGON
State Income Tax: 5%-11%
State Sales Tax: None
Estate Tax/Inheritance Tax: No/Yes
First, the upside: There's no state sales tax in the Beaver State. But it shares the distinction with Hawaii of imposing the highest tax rate on personal income in the nation on taxable income of $250,000 or more. Although Oregon does not tax Social Security benefits, that's the extent of its income-tax breaks for retirees. And Oregon has an inheritance tax that applies even to intangible personal property, such as investments and bank accounts, no matter where it is located.
#5 CALIFORNIA
State Income Tax: 1.25%-9.55%
State Sales Tax: 7.25% (effective July 1, 2011)
Estate Tax/Inheritance Tax: No/No
The Golden State has lost its luster for many retirees. Although Social Security benefits are exempt from state income taxes, all other forms of retirement income are fully taxed. Californians pay some of the highest income taxes in the U.S., with the top rate of 9.55% kicking in at $46,767 of taxable income. State and local sales taxes can reach 9.25% in some cities, although food and prescription drugs are exempt. Real estate is assessed at 100% of cash value, but taxes are capped at 1% of value.
#6 MAINE
State Income Tax: 2%-8.5%
State Sales Tax: 5% (counties can add another 0.5%)
Estate Tax/Inheritance Tax: Yes/No
Like the majority of states, Maine exempts Social Security benefits from state income taxes. And residents can deduct up to $6,000 per person of eligible pension income. But remaining income in excess of $20,150 per year is taxed at a steep 8.5% rate. Residents of the Pine Tree State pay a 5% sales tax statewide on everything except food and prescription drugs. All real estate and personal property is subject to local property taxes (and, in some cases, state property taxes, too), but permanent residents can receive an exemption of $10,000 on the assessed value of their home. Maine is also one of only three states that do not allow cities and towns to impose their own local sales taxes.
#7 IOWA
State Income Tax: 0.36%-8.98%
State Sales Tax: 6% (localities can add another 1%)
Estate Tax/Inheritance Tax: No/Yes
The Hawkeye State offers no feathered nest for retirees. Although it allows single retirees to exclude up to $6,000 of retirement-plan distributions from state income taxes, and married couples can exclude up to $12,000, the rest is taxed at rates as high as 8.98%. Iowa taxes a portion of residents' Social Security benefits, too, although it is in the process of phasing out the Social Security tax, which is scheduled to disappear in 2014. Food and prescription drugs are exempt from the statewide 6% sales tax. Real estate is assessed at 100% of market value, and most property is taxed by more than one taxing authority, such as cities, counties and school districts. There is a small homestead tax credit for residents who live in-state at least six months of the year.
#8 WISCONSIN
State Income Tax: 4.6%-7.75%
State Sales Tax: 5% (counties can add another 0.5%)
Estate Tax/Inheritance Tax: No/No
The Dairy State exempts Social Security benefits and military-related pensions from its state income taxes, but it taxes most other pension and annuity income the same way the federal government does. Retirees 65 and older can subtract $5,000 of qualified retirement income, including IRA distributions, from their Wisconsin taxable income, subject to income restrictions. Some Wisconsin state- and local-government retirees qualify for a tax exemption. But out-of-state government pensions are fully taxed. Food and prescription drugs are exempt from state sales taxes. Some homeowners may qualify for a school property-tax credit against their state income tax.
#9 NEW JERSEY
State Income Tax: 1.4%-8.97%
State Sales Tax: 7%
Estate Tax/Inheritance Tax: Yes/Yes
Its nickname may be the Garden State, but New Jersey is no Eden for retirees. The Tax Foundation says New Jersey's combined state and local tax burden is the highest in the nation, thanks in part to sky-high property taxes. But there are a few bright spots: New Jersey does not tax Social Security benefits and military pensions. It also allows residents 62 or older with incomes of $100,000 or less to exclude up to $15,000 ($20,000 for married couples filing jointly) of retirement income, including pensions, annuities and IRA withdrawals. Groceries, medicine and clothing are exempt from the 7% statewide sales tax. The state imposes an inheritance tax on the transfer of real and personal property worth $500 or more, but bequests to family members are exempt. Even with the bright spots, it's an expensive place to live for retirees.
#10 CONNECTICUT
State Income Tax: 3%-6.7%
State Sales Tax: 6.35%-7%
Estate Tax/Inheritance Tax: Yes/No
Connecticut can be inhospitable to retirees, depending on their income and where they earned their retirement benefits. Although some residents of the Constitution State can exclude their Social Security benefits from state income taxes, the exclusion applies only if their adjusted gross income is $50,000 or less ($60,000 or less for married couples). All out-of-state government and civil-service retirement pensions are fully taxed. Effective July 1, 2011, the sales tax rate statewide is 6.35%, with luxury items taxed at 7%. Connecticut residents pay some of the highest property taxes in the U.S., according to the Tax Foundation, but residents 65 and older qualify for an annual property tax credit or rent rebate.
Click here for the 10 Most Tax-Friendly States for Retirees.
Copyrighted, Kiplinger Washington Editors, Inc.
by Mary Beth Franklin, Kiplinger
Some states offer attractive tax benefits for retirees. Then there are these ten tax hells, which have earned a place on our "do not live here for your second act" list either because of higher-than-average taxes across the board or because of policies that don't exempt much retirement income from state taxation.
For retirees living on a fixed income, high income taxes, burdensome real estate taxes and hefty sales taxes on daily purchases can really eat into a nest egg. Choosing to relocate to — or stay put in — a state with a low overall tax burden can help stretch your retirement income.
#1 VERMONT
State Income Tax: 3.55%-8.95%
State Sales Tax: 6% (localities can add another 1%)
Estate Tax/Inheritance Tax: Yes/No
There are no exemptions for retirement income in the Green Mountain State, except for Railroad Retirement benefits (which are exempt in every state). Out-of-state pensions are fully taxed. Vermont exempts medical devices and prescription and nonprescription drugs from its 6% sales tax. But it imposes a 9% tax on prepared foods, restaurant meals and lodging, and a levies a 10% sales tax on alcoholic beverages served in restaurants. Real estate taxes have two components: school property tax and municipal property tax collected by towns and cities where the property is located. The Tax Foundation, a nonprofit tax-research group in Washington, D.C., lists Vermont's property tax among the ten highest in the nation.
#2 MINNESOTA
State Income Tax: 5.35%-7.85%
State Sales Tax: 6.875% (cities and counties can add another 2.65%)
Estate Tax/Inheritance Tax: No/No
Minnesota offers retirees cold comfort on the tax front. Social Security income is taxed to the same extent it is taxed on your federal return. Pensions are taxable regardless of where your pension was earned. Income-tax rates are high, and sales taxes can reach 9.53% in some cities. Food, clothing, and prescription and nonprescription drugs are exempt from sales taxes. The North Star State does offer some residents 65 and older who have income of $60,000 or less the option of deferring a portion of their property tax. But this is a low-interest loan, not a tax-forgiveness program.
#3 NEBRASKA
State Income Tax: 2.56%-6.84%
State Sales Tax: 5.5% (localities can add another 1.5%)
Estate Tax/Inheritance Tax: No/Yes
There are no tax breaks for Social Security benefits and military pensions in the Cornhusker State. Real estate is assessed at 100% of fair market value. Residents 65 and older qualify for a homestead exemption on property taxes. Food and prescription drugs are exempt from state sales taxes. But Nebraska imposes an inheritance tax on all transfers of property and annuities.
#4 OREGON
State Income Tax: 5%-11%
State Sales Tax: None
Estate Tax/Inheritance Tax: No/Yes
First, the upside: There's no state sales tax in the Beaver State. But it shares the distinction with Hawaii of imposing the highest tax rate on personal income in the nation on taxable income of $250,000 or more. Although Oregon does not tax Social Security benefits, that's the extent of its income-tax breaks for retirees. And Oregon has an inheritance tax that applies even to intangible personal property, such as investments and bank accounts, no matter where it is located.
#5 CALIFORNIA
State Income Tax: 1.25%-9.55%
State Sales Tax: 7.25% (effective July 1, 2011)
Estate Tax/Inheritance Tax: No/No
The Golden State has lost its luster for many retirees. Although Social Security benefits are exempt from state income taxes, all other forms of retirement income are fully taxed. Californians pay some of the highest income taxes in the U.S., with the top rate of 9.55% kicking in at $46,767 of taxable income. State and local sales taxes can reach 9.25% in some cities, although food and prescription drugs are exempt. Real estate is assessed at 100% of cash value, but taxes are capped at 1% of value.
#6 MAINE
State Income Tax: 2%-8.5%
State Sales Tax: 5% (counties can add another 0.5%)
Estate Tax/Inheritance Tax: Yes/No
Like the majority of states, Maine exempts Social Security benefits from state income taxes. And residents can deduct up to $6,000 per person of eligible pension income. But remaining income in excess of $20,150 per year is taxed at a steep 8.5% rate. Residents of the Pine Tree State pay a 5% sales tax statewide on everything except food and prescription drugs. All real estate and personal property is subject to local property taxes (and, in some cases, state property taxes, too), but permanent residents can receive an exemption of $10,000 on the assessed value of their home. Maine is also one of only three states that do not allow cities and towns to impose their own local sales taxes.
#7 IOWA
State Income Tax: 0.36%-8.98%
State Sales Tax: 6% (localities can add another 1%)
Estate Tax/Inheritance Tax: No/Yes
The Hawkeye State offers no feathered nest for retirees. Although it allows single retirees to exclude up to $6,000 of retirement-plan distributions from state income taxes, and married couples can exclude up to $12,000, the rest is taxed at rates as high as 8.98%. Iowa taxes a portion of residents' Social Security benefits, too, although it is in the process of phasing out the Social Security tax, which is scheduled to disappear in 2014. Food and prescription drugs are exempt from the statewide 6% sales tax. Real estate is assessed at 100% of market value, and most property is taxed by more than one taxing authority, such as cities, counties and school districts. There is a small homestead tax credit for residents who live in-state at least six months of the year.
#8 WISCONSIN
State Income Tax: 4.6%-7.75%
State Sales Tax: 5% (counties can add another 0.5%)
Estate Tax/Inheritance Tax: No/No
The Dairy State exempts Social Security benefits and military-related pensions from its state income taxes, but it taxes most other pension and annuity income the same way the federal government does. Retirees 65 and older can subtract $5,000 of qualified retirement income, including IRA distributions, from their Wisconsin taxable income, subject to income restrictions. Some Wisconsin state- and local-government retirees qualify for a tax exemption. But out-of-state government pensions are fully taxed. Food and prescription drugs are exempt from state sales taxes. Some homeowners may qualify for a school property-tax credit against their state income tax.
#9 NEW JERSEY
State Income Tax: 1.4%-8.97%
State Sales Tax: 7%
Estate Tax/Inheritance Tax: Yes/Yes
Its nickname may be the Garden State, but New Jersey is no Eden for retirees. The Tax Foundation says New Jersey's combined state and local tax burden is the highest in the nation, thanks in part to sky-high property taxes. But there are a few bright spots: New Jersey does not tax Social Security benefits and military pensions. It also allows residents 62 or older with incomes of $100,000 or less to exclude up to $15,000 ($20,000 for married couples filing jointly) of retirement income, including pensions, annuities and IRA withdrawals. Groceries, medicine and clothing are exempt from the 7% statewide sales tax. The state imposes an inheritance tax on the transfer of real and personal property worth $500 or more, but bequests to family members are exempt. Even with the bright spots, it's an expensive place to live for retirees.
#10 CONNECTICUT
State Income Tax: 3%-6.7%
State Sales Tax: 6.35%-7%
Estate Tax/Inheritance Tax: Yes/No
Connecticut can be inhospitable to retirees, depending on their income and where they earned their retirement benefits. Although some residents of the Constitution State can exclude their Social Security benefits from state income taxes, the exclusion applies only if their adjusted gross income is $50,000 or less ($60,000 or less for married couples). All out-of-state government and civil-service retirement pensions are fully taxed. Effective July 1, 2011, the sales tax rate statewide is 6.35%, with luxury items taxed at 7%. Connecticut residents pay some of the highest property taxes in the U.S., according to the Tax Foundation, but residents 65 and older qualify for an annual property tax credit or rent rebate.
Click here for the 10 Most Tax-Friendly States for Retirees.
Copyrighted, Kiplinger Washington Editors, Inc.
Tuesday, June 21, 2011
Medicaid for the middle class?
This is what happens when the law was written after lawmakers had passed it and the President has signed it.
http://news.yahoo.com/s/ap/20110621/ap_on_go_ca_st_pe/us_health_overhaul_glitch
By RICARDO ALONSO-ZALDIVAR, Associated Press
WASHINGTON – President Barack Obama's health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.
The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.
After initially downplaying any concern, the Obama administration said late Tuesday it would look for a fix.
Up to 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That's because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.
Medicare chief actuary Richard Foster says the situation keeps him up at night.
"I don't generally comment on the pros or cons of policy, but that just doesn't make sense," Foster said during a question-and-answer session at a recent professional society meeting.
"This is a situation that got no attention at all," added Foster. "And even now, as I raise the issue with various policymakers, people are not rushing to say ... we need to do something about this."
Administration officials said Tuesday they now see the problem. "We are concerned that, as a matter of law, some middle-income Americans may be receiving coverage through Medicaid, which is meant to serve only the neediest Americans," said Health and Human Services spokesman Richard Sorian. "We are exploring options to address this issue."
Administration officials and senior Democratic lawmakers initially defended the change, saying it wasn't a loophole but the result of a well-meaning effort to simplify the rules for deciding who would get help under the new health care law. Instead of a hodgepodge, there would be one national policy.
But Sen. Orrin Hatch of Utah, the ranking Republican on the Senate Finance Committee, called the situation "unacceptable" and said he intended to look into it.
Governors have been clamoring for relief from Medicaid costs, complaining that federal rules drive up spending and limit state options. The program is now one of the top issues in budget negotiations between the White House and Congress. Republicans want to roll back federal requirements that block states from limiting eligibility.
Medicaid is a safety net program that serves more than 50 million vulnerable Americans, from low-income children and pregnant women to Alzheimer's patients in nursing homes. It's designed as a federal-state partnership, with Washington paying close to 60 percent of the total cost.
Early retirees would be a new group for Medicaid. While retirees can now start collecting Social Security at age 62, they must wait another three years to get Medicare, unless they're disabled.
Some early retirees who worked all their lives may not want to join a program for the poor, but others might see it as a relatively painless way to satisfy the new law's requirement that most Americans carry health insurance starting in 2014. It would help tide them over until they qualify for Medicare.
The actuary's office said the early retirees eligible for Medicaid would be on top of an estimated 16 million to 20 million new people that Obama's law already brings into the program, by opening it to childless adults with incomes near the poverty level.
It's unclear how much it would cost to cover the retirees. Federal taxpayers will cover the entire initial cost of the expansion.
Republicans already see a problem.
Former Utah governor Mike Leavitt said bringing early retirees in will "just add fuel to the fire," bolstering the argument from Republican governors that some of Washington's rules don't make sense.
"The fact that this is being discovered now tells you, what else is baked into this law?" said Leavitt, who served as Health and Human Services secretary under President George H.W. Bush. "It clearly begins to reveal that the nature of the law was to put more and more people under eligibility for government insurance."
The Medicare actuary's office roughed out some examples to illustrate how the provision would work. A married couple retiring at 62 in 2014 and receiving the maximum Social Security benefit of $23,500 apiece could get $17,000 from other sources and still qualify for Medicaid with a total income of $64,000.
That $64,000 would put them at about four times the federal poverty level, which for a two-person household is $14,710 this year. The Medicaid expansion in the health care law was supposed to benefit childless adults with incomes up to 133 percent of the poverty level. A fudge factor built into the law bumps that up to 138 percent.
The actuary's office acknowledged its $64,000 example would represent an unusual case, but nonetheless the hypothetical couple would still qualify for Medicaid.
http://news.yahoo.com/s/ap/20110621/ap_on_go_ca_st_pe/us_health_overhaul_glitch
By RICARDO ALONSO-ZALDIVAR, Associated Press
WASHINGTON – President Barack Obama's health care law would let several million middle-class people get nearly free insurance meant for the poor, a twist government number crunchers say they discovered only after the complex bill was signed.
The change would affect early retirees: A married couple could have an annual income of about $64,000 and still get Medicaid, said officials who make long-range cost estimates for the Health and Human Services department.
After initially downplaying any concern, the Obama administration said late Tuesday it would look for a fix.
Up to 3 million more people could qualify for Medicaid in 2014 as a result of the anomaly. That's because, in a major change from today, most of their Social Security benefits would no longer be counted as income for determining eligibility. It might be compared to allowing middle-class people to qualify for food stamps.
Medicare chief actuary Richard Foster says the situation keeps him up at night.
"I don't generally comment on the pros or cons of policy, but that just doesn't make sense," Foster said during a question-and-answer session at a recent professional society meeting.
"This is a situation that got no attention at all," added Foster. "And even now, as I raise the issue with various policymakers, people are not rushing to say ... we need to do something about this."
Administration officials said Tuesday they now see the problem. "We are concerned that, as a matter of law, some middle-income Americans may be receiving coverage through Medicaid, which is meant to serve only the neediest Americans," said Health and Human Services spokesman Richard Sorian. "We are exploring options to address this issue."
Administration officials and senior Democratic lawmakers initially defended the change, saying it wasn't a loophole but the result of a well-meaning effort to simplify the rules for deciding who would get help under the new health care law. Instead of a hodgepodge, there would be one national policy.
But Sen. Orrin Hatch of Utah, the ranking Republican on the Senate Finance Committee, called the situation "unacceptable" and said he intended to look into it.
Governors have been clamoring for relief from Medicaid costs, complaining that federal rules drive up spending and limit state options. The program is now one of the top issues in budget negotiations between the White House and Congress. Republicans want to roll back federal requirements that block states from limiting eligibility.
Medicaid is a safety net program that serves more than 50 million vulnerable Americans, from low-income children and pregnant women to Alzheimer's patients in nursing homes. It's designed as a federal-state partnership, with Washington paying close to 60 percent of the total cost.
Early retirees would be a new group for Medicaid. While retirees can now start collecting Social Security at age 62, they must wait another three years to get Medicare, unless they're disabled.
Some early retirees who worked all their lives may not want to join a program for the poor, but others might see it as a relatively painless way to satisfy the new law's requirement that most Americans carry health insurance starting in 2014. It would help tide them over until they qualify for Medicare.
The actuary's office said the early retirees eligible for Medicaid would be on top of an estimated 16 million to 20 million new people that Obama's law already brings into the program, by opening it to childless adults with incomes near the poverty level.
It's unclear how much it would cost to cover the retirees. Federal taxpayers will cover the entire initial cost of the expansion.
Republicans already see a problem.
Former Utah governor Mike Leavitt said bringing early retirees in will "just add fuel to the fire," bolstering the argument from Republican governors that some of Washington's rules don't make sense.
"The fact that this is being discovered now tells you, what else is baked into this law?" said Leavitt, who served as Health and Human Services secretary under President George H.W. Bush. "It clearly begins to reveal that the nature of the law was to put more and more people under eligibility for government insurance."
The Medicare actuary's office roughed out some examples to illustrate how the provision would work. A married couple retiring at 62 in 2014 and receiving the maximum Social Security benefit of $23,500 apiece could get $17,000 from other sources and still qualify for Medicaid with a total income of $64,000.
That $64,000 would put them at about four times the federal poverty level, which for a two-person household is $14,710 this year. The Medicaid expansion in the health care law was supposed to benefit childless adults with incomes up to 133 percent of the poverty level. A fudge factor built into the law bumps that up to 138 percent.
The actuary's office acknowledged its $64,000 example would represent an unusual case, but nonetheless the hypothetical couple would still qualify for Medicaid.
Monday, June 20, 2011
5 Ways to Get Taken by Fake Checks
http://financiallyfit.yahoo.com/finance/article-112945-10011-1-5-most-common-fake-check-scams-to-watch-out-for
Kathy Kristof
Fake check scams are the most pervasive fraud in America, hitting virtually every demographic group with some permutation of the same clever con, according to the National Consumer's League.
"Fake check scams are an equal opportunity fraud," says John Breyault, director of the National Consumers League Fraud Center. "Scam artists are savvy, networked and know every button to push to get consumers from all walks of life to fall for their schemes."
There are multiple permutations of the same con. But the basic way it works is this: You get a check for a relatively large amount of money and are asked to refund or pass on a portion of the amount to the sender or a third party. By the time you find out that the check is fake, your money is long gone.
The typical victim loses between $3,000 and $4,000 in the scam, says Susan Grant, director of consumer protection at the Consumer Federation of America. "Once you send money to a crook, it's almost impossible to get back."
Tragically, the scam works partly because of common misunderstandings about how banks clear checks. Financial institutions are required by federal law to give you credit for checks deposited in your account within a set number of days. The precise timing depends on whether the check issuer is local, national or international. Most consumers assume that when the bank makes the funds available, it has determined that the check is good. But that's not the case.
It can take weeks to discover a good forgery. At that point, the bank will reverse the credit it gave you for the fake check and you're on the hook for any checks you wrote against it. Worse, many banks will consider you the crook, close your account for "suspicious activity" and enter your name into a database that will make it more difficult to open another bank account, says Grant.
Consumer experts have been warning about this growing con for years. And yet, the crooks are so clever and convincing that they are believed to have conned more than 1.3 million people. Here are the five most common ways that they do it, and the tip-offs that help you know it's a scam:
Mystery Shopper
You're looking for a job and answer an advertisement for mystery shoppers. The company sends you a check supposedly to cover the items you'll be buying and to "test" Western Union's services. You get to deduct your pay from the check too.
Tip-offs that this is a scam?
You have won an international lottery! Congratulations! Here's a $20,000 check for just a portion of your winnings. To claim the additional hundreds of thousands of Euros or dollars that you've won, all you have to do is send a personal check for the taxes due on your winnings.
Tip-offs?
You've been hired as the account manager at a major international distributor. You can work at home. Your only responsibility is to handle remittances. You get checks, deposit them into your own account and pass them on, subtracting your fee. Your fee is substantial.
Tip-offs?
You are selling your car/puppy/chest-of-drawers and have placed an advertisement on the internet. You get contacted from somebody who just loves English Bull Terriers (or whatever you're selling) and is desperate to pay full price. Just one problem. The buyer is from overseas; hasn't yet opened a U.S. bank account; and can only pay with a third-party check -- maybe even a paycheck. If you take that check and deposit it, you can pay yourself and just give them cash for the overpayment, right?
Tip-offs?
You get an official looking letter saying that you have won a $100,000 grant from the government or some foundation. But to claim the grant money, you need to send a "processing fee."
Tip-offs?
Kathy Kristof
Fake check scams are the most pervasive fraud in America, hitting virtually every demographic group with some permutation of the same clever con, according to the National Consumer's League.
"Fake check scams are an equal opportunity fraud," says John Breyault, director of the National Consumers League Fraud Center. "Scam artists are savvy, networked and know every button to push to get consumers from all walks of life to fall for their schemes."
There are multiple permutations of the same con. But the basic way it works is this: You get a check for a relatively large amount of money and are asked to refund or pass on a portion of the amount to the sender or a third party. By the time you find out that the check is fake, your money is long gone.
The typical victim loses between $3,000 and $4,000 in the scam, says Susan Grant, director of consumer protection at the Consumer Federation of America. "Once you send money to a crook, it's almost impossible to get back."
Tragically, the scam works partly because of common misunderstandings about how banks clear checks. Financial institutions are required by federal law to give you credit for checks deposited in your account within a set number of days. The precise timing depends on whether the check issuer is local, national or international. Most consumers assume that when the bank makes the funds available, it has determined that the check is good. But that's not the case.
It can take weeks to discover a good forgery. At that point, the bank will reverse the credit it gave you for the fake check and you're on the hook for any checks you wrote against it. Worse, many banks will consider you the crook, close your account for "suspicious activity" and enter your name into a database that will make it more difficult to open another bank account, says Grant.
Consumer experts have been warning about this growing con for years. And yet, the crooks are so clever and convincing that they are believed to have conned more than 1.3 million people. Here are the five most common ways that they do it, and the tip-offs that help you know it's a scam:
Mystery Shopper
You're looking for a job and answer an advertisement for mystery shoppers. The company sends you a check supposedly to cover the items you'll be buying and to "test" Western Union's services. You get to deduct your pay from the check too.
Tip-offs that this is a scam?
- The check is for more than $1,000 and the company says you can keep a $200 or $300 fee for the job. Real mystery shoppers get paid $10 to $25 per job.
- They paid in advance. Legitimate mystery shopping jobs pay only after you've turned in your review.
- Review Western Union? If the con artists were to be believed, Western Union would be the most mystery-shopped company in the world. They want you to use Western Union because sending this draft is the same as sending cash. Once it leaves your hands, it's gone.
You have won an international lottery! Congratulations! Here's a $20,000 check for just a portion of your winnings. To claim the additional hundreds of thousands of Euros or dollars that you've won, all you have to do is send a personal check for the taxes due on your winnings.
Tip-offs?
- You didn't enter an international lottery. (I swear, you would remember if you did.)
- Taxes are collected after you receive income, not before.
- Governments collect taxes, not lotteries.
You've been hired as the account manager at a major international distributor. You can work at home. Your only responsibility is to handle remittances. You get checks, deposit them into your own account and pass them on, subtracting your fee. Your fee is substantial.
Tip-offs?
- International corporations have no problem opening their own bank accounts. Why do they need you to use yours? Oh ... because they're not an international corporation and if they used their own accounts, they couldn't steal your money.
- Jobs that require very little work for high pay don't exist unless you're a corporate Chief Executive Officer. And to get a job as a CEO, you need to know how to golf.
You are selling your car/puppy/chest-of-drawers and have placed an advertisement on the internet. You get contacted from somebody who just loves English Bull Terriers (or whatever you're selling) and is desperate to pay full price. Just one problem. The buyer is from overseas; hasn't yet opened a U.S. bank account; and can only pay with a third-party check -- maybe even a paycheck. If you take that check and deposit it, you can pay yourself and just give them cash for the overpayment, right?
Tip-offs?
- Opening a bank account with a paycheck is pretty dang easy. It might take a few hours, but the Bull Terriers can wait. If you cash this check, you are the bank and you have your first bad debt. (Congratulations. Maybe you can apply for a government bail-out.)
- Your Bull Terriers are clearly the cutest in the world, but there are others in the world -- even others in your state/city/county. Your buyer is generating a sense of urgency -- I've got to have one and I'm afraid they'll all be sold before I get my account opened! -- just to scam you. Tell them to let you know when their account is opened, and you'll put them on the list to have first pick of the next litter if this litter is, indeed, all spoken for by the time their bank account is opened.
You get an official looking letter saying that you have won a $100,000 grant from the government or some foundation. But to claim the grant money, you need to send a "processing fee."
Tip-offs?
- You didn't apply for a grant.
- You are not a scientist.
- Government agencies and foundations that provide grants send you money. They don't ask you to send them money (unless they're soliciting donations ... and that's not the kind of letter you got).
Friday, June 17, 2011
AARP sounds alarm: Social Security must change
About time for AARP to recognize something must be done about Social Security. What took them so long?
http://www.cbsnews.com/stories/2011/06/17/eveningnews/main20072092.shtml
By Nancy Cordes
(CBS News)
Washington woke up to a new political reality.
The nation's most powerful senior's group telling the Wall Street Journal it was ready to deal on cutting Social Security benefits. The AARP's policy chief John Rother admitting "some of our members will no doubt be upset."
So upset that within hours the AARP was insisting this was always their position, CBS News correspondent Nancy Cordes reports.
"We can make changes that are modest and we can make changes with a great deal of lead time so we don't need to affect anyone who is currently retired today or near retirement," said said David Certner, AARP's legislative policy director.
But the group has long opposed such cuts.
As one of their ads says: "AARP has been working to preserve social security for more than 50 years."
Politicians on both sides were stunned.
"I think it's a very good thing," said Erskine Bowles, who co-chaired President Obama's fiscal commission. "I think they've recognized reality, that the trust fund of social security is operating in a substantial cash negative position."
Bowles' commission proposed trimming Social Security benefits for wealthy seniors and slowly increasing the retirement age to 69 by the year 2075 - incremental changes many lawmakers, like Republican Johnny Isakson, support.
"We could fix Social Security tomorrow just like they did in 1983 and not take a penny away from anybody but move the eligibility up to be more reflective of life expectancy," Isakson said.
But both parties have been reluctant to make those changes and risk angering the nation's most consistent voting bloc - seniors.
Said one senior: "Social Security is an insurance, it's not a gift, it's not welfare."
And that's where the AARP comes in. Its support for modest cuts could give lawmakers the political cover they need to fix Social Security at long last.
Why is AARP doing this now?
"Essentially it's because of the debt cutting talks that are going on right now on Capitol Hill led by Vice President Biden," Cordes explained. "Some proposals had been floated to bring Social Security into those talks to cut it as a way to bring down the debt and the AARP insists that Social Security should not be raided, that it didn't cause the debt and that it shouldn't be used to lower it."
http://www.cbsnews.com/stories/2011/06/17/eveningnews/main20072092.shtml
By Nancy Cordes
(CBS News)
Washington woke up to a new political reality.
The nation's most powerful senior's group telling the Wall Street Journal it was ready to deal on cutting Social Security benefits. The AARP's policy chief John Rother admitting "some of our members will no doubt be upset."
So upset that within hours the AARP was insisting this was always their position, CBS News correspondent Nancy Cordes reports.
"We can make changes that are modest and we can make changes with a great deal of lead time so we don't need to affect anyone who is currently retired today or near retirement," said said David Certner, AARP's legislative policy director.
But the group has long opposed such cuts.
As one of their ads says: "AARP has been working to preserve social security for more than 50 years."
Politicians on both sides were stunned.
"I think it's a very good thing," said Erskine Bowles, who co-chaired President Obama's fiscal commission. "I think they've recognized reality, that the trust fund of social security is operating in a substantial cash negative position."
Bowles' commission proposed trimming Social Security benefits for wealthy seniors and slowly increasing the retirement age to 69 by the year 2075 - incremental changes many lawmakers, like Republican Johnny Isakson, support.
"We could fix Social Security tomorrow just like they did in 1983 and not take a penny away from anybody but move the eligibility up to be more reflective of life expectancy," Isakson said.
But both parties have been reluctant to make those changes and risk angering the nation's most consistent voting bloc - seniors.
Said one senior: "Social Security is an insurance, it's not a gift, it's not welfare."
And that's where the AARP comes in. Its support for modest cuts could give lawmakers the political cover they need to fix Social Security at long last.
Why is AARP doing this now?
"Essentially it's because of the debt cutting talks that are going on right now on Capitol Hill led by Vice President Biden," Cordes explained. "Some proposals had been floated to bring Social Security into those talks to cut it as a way to bring down the debt and the AARP insists that Social Security should not be raided, that it didn't cause the debt and that it shouldn't be used to lower it."
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