Tuesday, March 15, 2022

Things to Remember at Tax Time

Tax day, which is Tuesday, April 19 in 2022, is approaching and it is time to begin crossing T's and dotting I's in preparation for paying taxes. As tax time draws near, you want to make sure you file all the proper forms and take all deductions you're entitled to.

Following are some things to keep in mind as you prepare your tax form.

Gifts. Did you give away any money this year? The gift tax can be very confusing. If you gave away more than $15,000 in 2021, you will have to file a Form 709, the gift tax return. This does not necessarily mean you will owe taxes on the money, however.
Medical Expenses. Many types of medical expenses are tax deductible, from hospital stays to hearing aids. To claim the deduction, your medical expenses have to be more than 7.5 percent of your adjusted gross income. This includes all out-of-pocket costs for prescriptions (including deductibles and co-pays) and Medicare Part B and Part C and Part D premiums. (Medicare Part B premiums are usually deducted out of your Social Security benefits, so be sure to check your 1099 for the amount.) You can only deduct medical expenses you paid during the year, regardless of when the services were provided, and medical expenses are not deductible if they are reimbursable by insurance.
Parental Deduction. If you are caring for your mother or father, you may be able to claim your parent as a dependent on your income taxes. This would allow you to claim the $500 tax credit for any non-child depedents.
Long-Term Care Insurance Premiums. Premiums for "qualified" long-term care policies are treated as an unreimbursed medical expense. Long-term care insurance premiums are deductible for the taxpayer, his or her spouse and other dependents.
Social Security Benefits. Although Social Security benefits are generally not taxable, people with substantial income in addition to their Social Security may pay taxes on their benefits. If you file a federal tax return as an individual and your "combined income," including one half of your Social Security benefits and nontaxable interest income is between $25,000 and $34,000, 50 percent of your Social Security benefits will be considered taxable. If your combined income is above $34,000, 85 percent of your Social Security benefits is subject to income tax.
Home Sale Exclusion. Married couples can exclude from income up to $500,000 in profit on the sale of a home ($250,000 for single individuals). If a surviving spouse sells the home, he or she can still claim the exclusion as long as the house was sold no more than two years after the spouse's death.
Elderly or Disabled Tax Credit. Some low-income elderly or disabled individuals are entitled to a special tax credit. To be eligible, you must meet income limits. For more information, click here.
Earned Income Tax Credit. Previously primarily available to people with young children, for 2021 working seniors without dependents may qualify for this important credit. For more, click here.
Tax Refunds. Getting a federal tax refund should not affect your Medicaid or Social Security benefits. For a year after recieving a tax refund from the federal government, the refund will not be considered income or resources for SSI or Medicaid purposes. You can also transfer the refund within a year without incurring a penalty.

The IRS's Tax Counseling for the Elderly (TCE) Program offers free tax help to taxpayers who are 60 and older. For more information, click here. The IRS also publishes a Tax Guide For Seniors.

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Elise Lampert, Esq.

Law Office of Elise Lampert

9595 Wilshire Blvd. | Suite 900 | Beverly Hills , CA 90212

Phone: (818) 905-0601 / Email: elise@elampertlaw.com

https://www.eliselampert.com

Tuesday, March 1, 2022

When a Social Security Recipient Dies, Survivors May Be Eligible for Benefits

When loved ones pass away, there are lots of considerations, including what happens to their Social Security. The decedent’s payments need to be stopped, but survivor’s benefits may be available to the spouse or, in certain cases, children.

Social Security benefits stop at death. If a loved one who was receiving Social Security dies, you need to notify the Social Security Administration as soon as possible. Often the funeral home does this as one of its services, but if not, you can notify Social Security by calling 1-800-772-1213 or contacting your local Social Security office. Benefits are not paid for the month the recipient dies and are not prorated. So, even if the recipient dies in the middle or end of the month, Social Security will not pay any benefits for that month. If the Social Security Administration is not notified on time and makes a payment, that payment will have to be returned.

Death Benefit

Regardless of age or eligibility for survivor’s benefits, surviving spouses are entitled to a one-time lump-sum payment of $255 if they were living with the decedent or collecting benefits on the decedent’s record. If there is no surviving spouse, the payment can be made to a child who qualifies for benefits on the decedent’s record.

Survivor’s Benefits

In addition to the lump-sum death benefit, certain family members may be eligible to receive monthly survivor’s benefits, including the following:

A widow or widower age 60 or older (age 50 or older if they have a disability).
A surviving divorced spouse, under certain circumstances.
A widow or widower at any age who is caring for the deceased’s child who is under age 16 or has a disability and is receiving child’s benefits.
An unmarried child of the deceased who is younger than age 18 (or up to age 19 if they are a full-time student in an elementary or secondary school) or age 18 or older with a disability that began before age 22.
Parents, age 62 or older, who were dependent on the deceased for at least half of their support.

If the spouse has reached full retirement age when the decedent died, then the spouse begins receiving the decedent’s actual benefits. This is true even if the decedent and spouse were divorced, so long as they had been married for at least 10 years.

While a spouse can claim survivor's benefits as early as age 60, the benefits will be permanently reduced. If the surviving spouse claims benefits between age 60 and full retirement age, he or she receives a reduced percentage of the decedent’s benefits. At age 60, the spouse will receive 71.5 percent of the actual benefits. If the spouse waits to collect, this percentage increases each year until the spouse reaches full retirement age, at which point he or she can receive 100 percent of the actual benefits. A surviving spouse who is age 50 to 59 also receives 71.5 percent of the actual benefits. Spouses caring for a child and the decedent’s dependents receive 75 percent of the decedent’s actual benefit. Dependent parents receive 75 percent each or 82.5 percent if there is only one parent.

If a surviving spouse, including a divorced spouse, remarries before turning age 60, then the spouse is no longer eligible for benefits unless the new marriage ends. Spouses who remarry after age 60 are still eligible for survivor’s benefits.

For more information about Social Security survivor’s benefits, click here.