The only way to maintain, or even grow, your purchasing power is to take on some additional risk and invest for the long-term in stocks.
In the financial services world that we live in at Dreggors, Rigsby and Teal, P.A., we ring in New Year’s Day on January 1. But, as of January 2, it’s tax prep season.
Many of our clients are great partners in helping our CPAs and accountants prepare their income tax paperwork for filing with the IRS. Having your documents ready when we begin preparing your return can equate to a quicker turn-around time and ultimately, a faster return in your bank account. Who doesn’t want that?
Read below some of the most common documents we need to prepare a client’s income tax returns. You can take the stress out of gathering these by using our tax organizer as a guide. Once you have all of your documents, let us get started on your tax return.
Here’s a list of the information the IRS may need from you so your income tax return can be filed completely and accurately. Start getting your documents together this month, and see that as you collect the details step by step, the process can be a lot easier (and less painful!) to accomplish!
Last year’s tax records. Have copies of last year’s return? Look over your tax return from last year. Most likely there will be few changes. If you had a 1099 from someone last year, you should be looking for one this year.
Income information. Have numbers in hand (and the forms that go with them) so you can accurately report your income. Examples of common income sources that most of us need for income tax returns include:
- W-2 forms for you and your spouse
- 1099 forms from other forms of income (such as a savings account)
- Unemployment income
- Income from the sale of a property
- Social security benefits
- Rental property income
- Miscellaneous income, such as medical savings accounts, scholarships or Lotto winnings (lucky dog!)
Adjustments to your income. Several items can reduce the amount of income that’s taxed, and these include:
- Student loan interest paid
- Tuition paid
- Classroom expenses (for teachers) paid
- Receipts from energy-efficient home-improvements paid
- Moving expenses paid
- Alimony paid
Many of us who file income taxes are eligible for deductions and credits, too. These can include IRA contributions, child care costs, education costs, adoption fees, charitable donations, medical and dental expenses and expenses related to home business or rental property.
Bank account info. If you want your return directly deposited into your account, have your bank account information ready. You can find these at the bottom of checks or bank statements.
These are a few of the items your tax accountant will need to get your documents rolling on over to the IRS in a timely manner. It doesn’t need to be a daunting task.
If you need tax prep help or more tips on doing it right, call us at 386-734-9441. We are at your service at Dreggors, Rigsby & Teal, P.A.
What if investment advisors were like car dealers?
Beginning last year (2014), individual taxpayers were required to have health insurance. To help enforce this requirement, the IRS started requiring that every taxpayer report, on their 2014 tax return, whether they have been covered by health insurance for the entire year, and if not, which months they were not covered. When you bring in your information to get your taxes prepared, please let us know if you were covered by health insurance (either through your employer, the health insurance marketplace, private coverage, or Medicare).
To help subsidize the cost of insurance for certain individuals, the government offered tax credits to individuals who purchased insurance through the health insurance exchange. As you purchased the insurance, a credit was calculated based on your anticipated income and family size. Most people chose the option to use the credit immediately to pay for the monthly premiums on their health insurance.
Because the insurance credit was based on your estimated income for 2014, we must re-calculate the actual credit for your income tax return. Our recalculation is based on your actual income. Any difference between the credit calculated on your tax return and the estimated credit provided to you when you signed up for health insurance will either be an additional refund (if your actual credit is more than you originally received), or you will be required to repay a portion of the credit that you received in advance (if your estimated credit was higher than the credit based on actual income).
The IRS will be sending a Form 1095-A to all individuals who signed up for health insurance through the health insurance exchange. Please bring this form to us with your tax information so that we can properly report this information on your tax return.
If you have any questions regarding the taxability of your health insurance, health insurance credits, or any other tax or financial planning issues, please let us know. We are here for you! Call us at 386-734-9441 or email me at email@example.com.
Unlike prior generations, our children will not have the opportunity to work for companies that offer retirement plans that guarantee an employee has a “paycheck for life.” Even governments, long known for their generous benefit packages, are dropping their guaranteed benefit plans. It will be up to our children to save for their retirement, invest appropriately and set realistic retirement expectations.
We all want to make sure our children (or grandchildren) have a comfortable life. While working to obtain our own financial goals, we sometimes forget that with a very small investment we can jumpstart our children’s retirement savings and start them on a path to a comfortable retirement.
Would you be willing to sacrifice $1 per day for your child for the first 18 years of their life? The power of compounding turns this small sacrifice into a large retirement fund.
For example, if you invested $1 a day in a low-cost S&P 500 index fund, you would have invested $6,570 by the time your child turns 18. The S&P 500 earned an average of 10.2% per year between 1973 and 2014. Therefore, if you left the investment alone and did nothing after your child reached age 18, your child would have more than $1,775,000 by age 67 (a typical retirement age).
Obviously, there are some caveats to this plan. Your child will be liable for taxes on the dividends earned by this plan. (Fortunately, if your child is in the 15% tax bracket, the current divided tax rate is 0; If they are in a higher tax bracket, they can hopefully afford to pay the taxes).
Also, while $1,775,000 sounds like a lot of money, you must remember that 67 years from now, that $1,775,000 will only likely have the purchasing power of approximately $250,000 in today’s dollars. (But would you complain about investing $6,570 and getting back more than $250,000?).
At Dreggors, Rigsby & Teal, P.A., we encourage our clients to help their children and grandchildren secure a solid future. Call us for a free consultation at 386-734-9441 or email us at firstname.lastname@example.org. We look forward to the opportunity to help.
Life insurance that benefits the policy holder and discounts tuition for college-bound beneficiaries
College is expensive; that’s no surprise. But what may surprise you is you have more options than you may realize when it comes to saving for it. What if your child’s (or grandchild’s or nephew’s or niece’s) tuition was discounted as a benefit of your purchase of a particular life insurance product?
With its Tuition Rewards ® program, Cashback Life 20 & 30 is an excellent alternative to traditional term life insurance. Cashback Life 20 & 30® gives you the best of both worlds: Term life insurance plus tuition assistance. Policyholders also receive a return of 100% of their premiums at the end of the term.
Traditional solutions like 529 plans can interfere with financial aid. The Cashback Life Insurance program with Tuition Rewards, overseen by Kansas City Life and available through Dreggors, Rigsby & Teal, P.A., helps clients save for college for their designee by collecting points through the program. Each point collected equals $1 in tuition discounts (scholarships).
- Earn 500 points when we talk to you about the Cashback Life Tuition Rewards program.
- Earn 4,500 points when you purchase a qualifying product.
- Earn 2,000 points for every year you keep the qualifying product.
These Tuition Rewards points are earned by account holders – who can be parents, grandparents, aunts or uncles of the tuition beneficiary. The Rewards must be assigned to a student before the start of their senior year of high school. One student can receive points from multiple sponsors/account holders.
The Tuition Reward program can cover up to 25% of the cost of a four-year education at participating private colleges, and are taken as a discount off the “list price” of tuition. What’s more, these discounts do not impact financial aid and they are not taxable income.
If you’re stuck on how to pay for college and are in the market for a life insurance product, give Dreggors Rigsby & Teal a call today at 386-734-9441, or email us at email@example.com. We may have the perfect solution to help you curb the cost of the all-important college experience, while maintaining the life insurance you need.
Has it been awhile since you’ve updated the beneficiaries on your estate planning documents?
Consider this. An elderly man dies, leaving his estate to his beloved wife of 20 years. But his $200,000 life insurance policy lists his former wife as the beneficiary. Who gets the insurance money? His former wife.
This hypothetical case underscores the importance of updating the beneficiary designations on your financial accounts and insurance policies regularly. You’ve worked hard to get where you are today, and you don’t want your savings to go to the wrong person.
We recommend that you review all of your bank accounts, CDs, retirement plans, insurance policies, wills and trusts every year. It’s also important to update your beneficiary designations when you experience major life events, such as the birth of a child or grandchild, death of a family member, marriage, divorce, and remarriage. Even if your preferred beneficiaries haven’t changed, they may have new addresses or even new last names.
Consider hiring a financial advisor to review your beneficiary designations. Your advisor will help you remove your ex-spouse, name contingent beneficiaries, identify a new heir after the death of a primary beneficiary, update beneficiary forms after major events, and make sure matters are handled efficiently and properly after your death. He or she can also advise you on changes in estate and tax law. This will save your loved ones a major inconvenience and a lot of unnecessary grief during probate.
Contact the financial experts at Dreggors, Rigsby & Teal for a free consultation at (386) 734-9441 or firstname.lastname@example.org. We’ll review your financial situation and recommend the best options for updating your records and making sure your estate goes to your preferred beneficiary without delay or hassle.
If you have group disability insurance through your employer, you may receive 45 to 60 percent of your salary for a limited time. Unfortunately, more than half of American workers don’t have disability insurance, and those who are covered probably won’t receive enough to cover their bills. The average disability lasts 2.5 years.
Most people insure their homes, their cars and their lives. But they balk at disability insurance because they think it’s not necessary. Think again. The Social Security Administration estimates that one in three Americans will suffer a disability before they retire.
Don’t count on Workers’ Compensation or the Social Security disability benefit. Most disabilities occur off-the-clock and are not covered by Workers’ Compensation. Social Security requirements are stringent, and most recipients receive just over $1,100 a month.
Group disability insurance is a good starting point. Review your policy and figure out how much it will provide, and for how long. Ask your employer if you can pay for additional coverage.
If you don’t have disability insurance, or if it provides inadequate coverage, consider purchasing an individual disability policy. Premiums are fairly inexpensive, and are based on your age, income, type of work, benefit amount, and the terms you choose.
When you combine the benefits you receive from your group and individual policies, you may receive up to 70 percent of your income. Keep in mind that no insurance companies offer 100 percent coverage. That would remove the incentive to work!
One of the advantages of an individual policy is that the benefits are not taxable, while the benefits from a group policy are taxed.
Contact the financial experts at Dreggors, Rigsby & Teal for a free consultation at (386) 734-9441 or email@example.com. We’ll review your financial situation and recommend the best options for disability insurance.
For 15 years, Dreggors, Rigsby & Teal, P.A. has been proud to support the local chapters of Rotary International. In fact, several of our employees are members of all three local chapters – the Downtown, Noon and Breakfast Rotary clubs in DeLand. We enjoy giving back to the community and networking in Rotary; there are so many benefits to being involved in these clubs.
As part of that commitment, Dreggors Rigsby & Teal is proud to sponsor Rotary events. You probably have heard of the one that occurs each year in early May: The Wild Game Feast. We get knee-deep in this one! Our very own CPA and partner Ron Cantlay is a longtime member of the DeLand Breakfast Rotary, and helps to plan out the huge “Feast” every year for the club. This year, the May 1 evening of wild game dishes – including wild boar stew and fried rattlesnake – and camaraderie, welcomed a record 1,300 guests and netted approximately $85,000.
The majority of expenses of the Feast are offset by corporate sponsorships, so there’s a healthy amount to give to community nonprofits and organizations each year. So, after the numbers are crunched and nonprofits apply for grants, the DeLand Breakfast Rotary doles out the funds. Past recipients of Wild Game Feast funds include the West Volusia YMCA, The Neighborhood Center of Wet Volusia, The Good Samaritan Clinic, Volusia County Council on Aging, and many more. The $85,000 distributed this year will bring the Wild Game Feast/DeLand Breakfast Rotary’s total contributions to community agencies to more than $1.425 million.
We welcome you to join us next year; the Wild Game Feast will be held May 7, 2015. If you’d like to get involved in the Rotary and join one of our staff members for breakfast or lunch sometime, we’d to have you! Please call Ron at our office at 386-734-9441. Join Dreggors, Rigsby & Teal in giving back…it’s a great feeling.