Can You Claim A Parent As A Dependent?

One of the nuances of the United States tax code is the possibility of claiming a parent as a dependent on your tax return. As the population continues to age and life spans increase many adults find themselves financially caring for their children and their parents.

 

Monies an adult child contributes to the care of a parent can be used as a tax deduction in a variety of ways on your tax return. The first consideration is the amount of money an adult child contributes; at least 50 percent of the parents' care must be contributed to begin assessing where and how the care of a parent would benefit your tax return

Financial Contributions To Assess

• Cost of the room provided
• Cost of a care facility
• Food, utilities
• Prescription costs
• Durable Medical Equipment Costs
• Medicare Advantage premiums, long term care insurance, deductibles, co-insurance payments

The Dependent Care Credit, Multiple Support Declaration, dependent qualifications and medical expense itemization are important areas to consider when filing a tax return if you are financing the care of a parent.

 Additional information at: http://burdensasblessings.com/2014/03/04/does-your-parent-qualify-as-a-tax-deduction/

 
Image credit http://www.flickr.com/photos/lendingmemo/11746158465/sizes/l/

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Federal Government Tweaks ACA For State Health Exchanges

A policy change regarding the implementation of the Affordable Care Act (ACA) and the state run health exchanges was quietly announced last week by the Health and Human Services (HHS) department.

The problems with the federal health exchange at www.healthcare.gov have been well documented locally and nationally. However, consumers attempting to sign up for coverage on the state exchanges have experienced technical issues which have prevented enrollment through the state exchange.

Currently 17 states haves their own healthcare exchange. Particularly problematic have been the exchanges in Oregon, Massachusetts, Maryland and Hawaii. The change in policy may allow consumers who were unsuccessful at enrolling in the state exchange access the federal subsidies and tax credits retroactively.

Consumers must prove they attempted to enroll in the state exchange unsuccessfully and then purchased an ACA compliant policy for 2014. Federal subsidies for the cost of the insurance could then be applied for the current policy as well as retroactively should the consumer satisfy the income requirements.

Additional information available at www.burdensasblessings.com

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Celebrate Your Local Hero

I'd suspect your hometown has more than a few. They don't tend to seek or garner the spotlight, but are integral to your community. Their words are equate to action. The grass roots leaders, participants and volunteers who are action oriented and make all of our lives just a little easier.

 We lost one of ours this week.

Angelo Henderson, most likely unknown outside of his city or his network of peers, was one of those heroes who cannot be replicated.

Angelo Henderson was the only African American reporter to win a Pulitzer Prize for the Wall Street Journal. He has a long and varied journalism career in which he travelled through writing, community activism, public relations, neighborhood outreach, the ministry and a community oriented radio talk show.

His support of a city which continues to sputter and struggle was invaluable and his unwavering support of its' residents was legendary.

Let's make sure his voice continues. Let's make sure his voice is heard.

 

public domain flickr cc http://www.flickr.com/photos/quickfix/7741216066/sizes/m/in

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The Three Bucket Retirement Strategy

 Jane Bryant Quinn, the personal finance expert and author of "Making the Most of Your Money NOW" and AARP money columnist, has an interesting take on the traditional methods of retirement planning.

Traditionally the four percent rule is used to fund a retirement. The four percent rule is the amount of funds one can annually withdraw from a retirement fund to provide a steady income stream. Also to be considered is the ratio of stocks to bonds in a retirement portfolio; experts have traditionally recommended to allocate more money to bonds than stocks as one progresses through retirement.

However the traditional retirement strategies are being reconsidered due to the recent recession, unstable recovery, retirement fund liquidations, people working longer and people living longer. Social Security Administration (SSA) estimates the average lifespan of American women at 86 years, men 84 years.

Are your retirement monies sufficient to fund a twenty or thirty year retirement? The days of a five percent return on a CD are not only gone, but their reappearance seems unattainable with the current economy. Funds need some growth to hedge the increased number of years and low interest rates. Ms. Quinn has reconsidered the traditional retirement strategies and finds the Three Bucket Strategy has merit.

A thumbnail of the Three Bucket Strategy where funds for retirement are allocated into three buckets:

Bucket One

Funds for current year expenses which are not covered by income such as pensions, social security or part time jobs.

Bucket Two

Short and intermediate term bonds with the dividends reinvested. Each year funds from bucket two are used to replenish your cash flow and bucket one.

Bucket Three

Thirty percent of total remaining funds to invest in mutual funds and stocks. Funds earmarked "do not touch" for 10-15 years.

It seems a strategy worth considering and perhaps integrating into a retirement plan.

 Public domain image pixabay.com

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