Janell A. Israel & Associates
What's new in taxes:
Next
month, the IRS will begin sending out the tax rebate checks authorized by the
Economic Stimulus Act of 2008. The only way to receive a stimulus payment in
2008 is to file a 2007 tax return. The IRS says the majority of taxpayers do
not have to take any additional steps to receive their checks besides the
routine filing of their 2007 tax return. No other action, extra form, or call
is necessary.
However,
some taxpayers would not normally be required to file a 2007 tax return (for
example, low-income workers, social security recipients, and those receiving
veterans' disability benefits). These individuals may still be eligible to
receive checks of $300 for individuals and $600 for couples if they had at
least $3,000 of qualifying income. Qualifying income includes social security
benefits, certain railroad retirement benefits, certain veterans' benefits, and
earned income (i.e., wages, salaries, tips, or self-employment income).
The
IRS is recommending Form 1040A to be used by these individuals to claim their
tax rebate checks. They suggest writing "Stimulus Payment" across the
top of the form. The IRS Web site (www.irs.gov) has this very brief form
available, along with instructions for completing the form.
If you
have family members whose income normally would not require filing a 2007
return, you may want to pass this information along to them. For any questions
you have or filing assistance you need, please call our office.
Act
Fast Or You'll Lose Your Refund
If you
didn't file a tax return for the year 2004, you're not necessarily in trouble.
In fact, you could be about to lose out on a nice refund check. The IRS reports
that it is holding an astonishing $1.2 billion in refunds from the year 2004.
Here's how the situation arose.
Approximately
1.3 million filers, many of them students and retirees, had taxes withheld from
their earnings that year but didn't bother to file a return. That was quite
legal if they didn't earn enough to reach the minimum income for required
filing. And in many cases they forgot that taxes had been withheld and that
they were eligible for a refund. For example, a student might have worked at a
summer job, gone back to school in the fall, and not given taxes a second
thought.
If you
think you are due a refund for 2004, it's worth filing a return. The IRS
estimates that around half those who are eligible would receive refunds of just
over $500. In some cases, you could find you're eligible for even more than the
refund. If you were a low-income worker that year, you might also have
qualified for the earned income tax credit. But you'll need to act fast. Unless
you file a year-2004 return by April 15, 2008, the statute of limitations will
have run and you'll be too late to claim your refund.
Be
aware that the IRS won't issue a 2004 refund check unless you've also filed
returns for years 2005 and 2006. And if you owe taxes for those years, they'll
deduct that from the amount of the 2004 refund.
Worried
about late-filing penalties? Here's good news: They're typically not assessed
if you file a return showing a refund.
According
to the IRS, over a million people are eligible to claim refunds for tax year
2004. If you're one of them, or if you haven't filed returns for other years,
give us a call. Acting now can save your already-paid-in tax dollars.
New Business:
Sleepy
Workers Are A Business Problem
The
nonprofit National Sleep Foundation recently conducted a survey that reveals
many American workers suffer from lack of sleep. Almost a third of employees
surveyed said they had become very sleepy or actually fallen asleep on the job
during the past month. 12% of those surveyed said they came to work late in the
past month. 36% said they have nodded off or fallen asleep while driving, with
26% reporting driving drowsy on the job.
Factors
that apparently contribute to sleepy employees include longer work hours and
technology that keeps people "on the job" even beyond the regular
work day. According to the survey, 63% of workers just accept being sleepy, 32%
use caffeinated drinks to try to cut sleepiness, and 54% try to catch up on
sleep on weekends.
For
more information revealed in the survey, go to www.sleepfoundation.org.
What's New in Finances:
Check
your deposit insurance
The
recent failure of Bear Stearns, the fifth largest investment bank in the U.S.,
may have you wondering about the health of the banking system in general.
Indeed, you may be wondering if your bank accounts are safe. Here's a quick
review of deposit insurance that may help put your mind at ease.
The
sign at your savings and loan states that your accounts are insured up to
$100,000. Knowing the rules of the Federal Deposit Insurance Corporation can
help you extend your protection beyond this amount.
Generally,
the FDIC insures only $100,000 per person per institution. Thus, if you have
more than one account in a single bank, only $100,000 of the aggregate of your
accounts is protected. Amounts over that are uninsured.
To
increase your protection, you can simply spread your accounts over a number of
different banks. Remember, however, that accounts in different branches of the
same bank will be aggregated.
Because
joint accounts are insured apart from separate accounts, you can increase your
protection by placing some funds into a joint account. If you and your spouse
have a joint account and each of you has a separate account, the three accounts
can be insured to a total of $400,000. As with personal accounts, however, all
joint accounts held by the same persons will be aggregated.
Different
types of accounts are also aggregated. Individual retirement accounts (IRAs),
however, are separately insured to $250,000 if the underlying investments are
insured.
For
more information on deposit insurance, go to www.fdic.gov. You may also want to
review your accounts with your banker to be sure you have the protection you
need.
Do
A Financial Review At Tax Time
As
long as your tax and financial records are out for filing your 2007 tax return,
why not take one more step and do something positive for your financial
well-being? This is the ideal time to review your financial affairs and make
any needed changes.
Here
are some suggestions on how to get started.
Hold a
discussion with your family. Spouses and children need to share and prioritize
their financial aspirations.
*
Write down your financial goals. How much money will you need to meet each
goal? When will you need the money, and how will you get it?
* Do a
net worth statement (a list of your assets and debts), and compare it to last
year's statement. Are you gaining or losing ground?
* With
your goals (and the effects of inflation) in mind, review the performance of
your investments.
Take
steps to protect what you already have. Goals may become instantly unobtainable
if you lose your present assets or your income potential.
* Do
you have adequate disability insurance coverage to replace take-home pay if you
become incapacitated?
* Do
you have enough life insurance if you or your spouse should die?
* Do
you have replacement value property insurance on your home?
* Do
you have adequate insurance for calamities such as automobile accidents or
lawsuits?
Note:
Make sure that you need all of the insurance that you have. Do not duplicate
employer-provided coverage. Review your coverage annually; do not just
automatically renew policies.
Review
your will and your estate plan. Has your situation changed recently (marriage,
divorce, births, deaths, move to another state, for example)? If so, make
appropriate changes to your will and estate plan.
Review
your credit use. Keep your credit card bills current. If you're finding that
hard to do, it's probably time to cut up some of those credit cards and get
your debt under control.
Organize
your records. If you had trouble assembling data for your financial review, you
need a better system. Set one up.
For
help with any aspect of your review, call us. We're here to assist you in any
way we can.
Take a Break
Tease
Your Brain
Can
you solve this word riddle: What nine-letter word in the English language is
still a word when each of the nine letters is removed one by one?
Give
up?
The
word is "startling."
Remove
the "l" and the word becomes "starting."
Remove
the second "t" and you have "staring."
Drop the "a" to get "string."
Drop
the "r" for "sting."
Drop
the "t" for "sing."
Drop
the "g" for "sin."
Remove
the "s" to get "in."
Finally,
drop the "n" to get "I."
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The information contained in this newsletter is of a
general nature and should not be acted upon in your specific situation without
further details and/or professional assistance. For more information on
anything in this newsletter, or for assistance with any of your tax, business, or financial strategy concerns, contact
our office.
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