Northeast Financial Strategies Inc - Wrentham MA Tax, Accounting & Financial Services Firm

Safeguarding Your Income From the Impact of a Disability

2013-05-20T03:00:00.000-04:00

Decades ago, the traditional family unit consisted of a husband and wife with 2.5 children. Most women were stay-at-home mothers, able to call on extended family members in case illness or injury affected their abilities to care for their children.

But these days, there is no longer a “traditional” family unit (and by extension, an extended support network), as the following figures attest:

In 2010, 43.6% of all U.S. residents 18 and older were unmarried—more than half of them women—while the elderly comprised 16.5% of all unmarried and single people 18 and older.
45% of households nationwide were maintained by unmarried men or women, while number of single parents living with their children in 2010 reached 11.7 million. (Almost a third of grandparents are raising their grandchildren.)
There were 6.5 million unmarried-partner households, which included 581,300 same-sex couples.
Finally, the number of people who lived alone totaled 31.4 million in 2010, comprising 27% of all households—up from 17% in 1970.

What does this mean to you? Well, if you fall into one of the above categories—a single parent or grandparent raising a child, an adult living alone, or an unmarried couple—you need to do a little “worst case scenario” thinking. Specifically: should you experience an illness or injury that results in a disability (temporary or permanent), what type of impact will that have not only on your finances, but also on anyone who depends on you?

During Disability Insurance Awareness Month, educate yourself about the reality of the impact a disability can have on your budget—and your life.

Disability coverage facts
If you think you have your bases covered with health insurance, worker’s compensation or Social Security, the following information might change your mind.

While health insurance will cover medical-related expenses, it won’t provide an income to cover your needs if you are unable to work even for a relatively short period of time.
Worker’s compensation coverage only comes into play if the disability is job-related—which only happens in about 5% of the cases, according to the Council for Disability Awareness. (If you’re playing the odds, you might want to reconsider, since 30% of those entering the workforce today will be disabled for three months or more during their career, with the average long-term disability claim lasts 31.2 months.)
While Social Security provides coverage, qualifying for benefits can be challenging (60% are initially denied) and, at a little over $1,100 a month, the average monthly payment is barely above poverty level.

In the meantime, bills keep mounting up and your financial situation becomes even more precarious. According to one study, more than 62% of bankruptcies in 2007 were due to medical issues—a significant increase from the 2001 figure of 46.2%.

Fortunately, you do have several options to help safeguard yourself and those who depend on you. Employer-sponsored coverage (short-term disability insurance, long-term disability insurance, or both) can replace a significant percentage of your income—possibly up to 40% to 60% of your pre-tax income. (In a few states, employees can also purchase additional short-term disability coverage on their own, paid for through payroll deductions.)

If you are self-employed or want a stronger safety net, an individual disability insurance policy is the best choice. Start by calculating the amount of income you would need to maintain your current standard of living in the event you’re unable to work. Then, look at your life and work situation. Do you have children, a spouse or an elderly relative who depends on you for support? Is there a cap on the benefits available through your employer—and are you getting close to that level? Finally, has your standard of living increased or you have taken on a significant amount of new debt?

Once you have a clearer picture of your “worst case scenario,” schedule a meeting with your insurance advisor to review your disability insurance purchase options: through your employer, a professional organization or on your own. This will help you make the best decision for your budget, your future and those who are part of your “family unit.” For more disability information, visit www.protectyourpaycheck.org.

-Jaimee Niles, VP of Communications, LIFE Foundation

What's Keeping You Up At Night?

2013-05-13T03:00:00.000-04:00

2013-05-09T14:28:00.000-04:00

"All My Paychecks"

Why are soap operas so riveting? Is it because the characters are larger than life and always, always live in a really big, fancy house, regardless of their profession or income? Or, maybe it’s due to the fact that despite everything being over the top—from the plot to hairdos—there is a kernel of truth in these stories … something that resonates with us. That’s why I think “All My Paychecks” will resonate with you. Indulge in a few minutes of guilty pleasure and watch (all three episodes!). Then let us know what you think.

Could You Live on $1125 a Month? If Not, Read This

2013-05-06T03:00:00.000-04:00

You’ve just become disabled, but you’re not worried. Why? Because you think Social Security disability payments will “take care of you.” Really? According to statistics from the Social Security Administration, the average person who has qualified for Social Security benefits receives $1,125.10 a month.

If you’re making $50,000 per year, how long could you (and your family) survive on a disability payment of $1,125.10 per month? That’s only $13,501 per year, or 27% of your income. This assumes you qualify for benefits, and not everybody does. And if you do, it may still be more than two years—yes, years— before you start to receive any payments. What will you do in the meantime?

It’s time for you to protect your paycheck.

What am I talking about? You protect your home by insuring it against loss. You do the same for your car, boat, motorcycle, RV and personal property, but have you insured your paycheck?

Yes, I am talking about disability insurance. You protect your worldly goods with insurance, and you also need to protect your income against loss. If you become ill or injured and are unable to work, disability insurance pays you a percentage of your income until you can return to work.

May is Disability Insurance Awareness Month, the perfect time to talk to us and learn how to protect your paycheck.

-Marvin H. Feldman, CLU, ChFC, RFC, President and CEO of the LIFE Foundation

May is Disability Insurance Awareness Month

2013-05-01T14:22:00.000-04:00

Don’t Let These Myths Stop You From Getting the Proper Coverage

Figuring out if you need disability insurance is pretty easy. If you have a job, you need it. Why then do the majority of American workers lack this basic protection? Common misconceptions are largely to blame. Here I will debunk four of the big myths surrounding this essential insurance coverage.

1. Myth: “I’d rely on my savings until I could get back to work.”

Reality: Most people overestimate the resources they have to cover their expenses if a disabling illness or injury kept them from earning a paycheck. According to a LIFE Foundation survey, half of working Americans say they couldn't make it a month before financial difficulties would set in, and more than one in four would have problems immediately. Keep in mind that disabling illnesses or injuries often last for months or even year.

2. Myth: “I don’t need it – I don’t work in a dangerous profession.”

Reality: You actually have a three in 10 chance of suffering a disabling illness or injury during your career that would keep you out of work for three months or more. While it’s true that people in professions like farming, law enforcement, and construction face greater risks, the odd of suffering a long-term disability are high for all workers because illness – not accidents – account for 90 percent of disabilities that keep people out of work.

3. Myth: "The government provides assistance when people get disabled."

Reality: According to the National Safety Council, 73 percent of long-term disabilities are a result of an injury or illness that is not work-related and therefore wouldn’t qualify for state-based Workers’ Compensation programs. If you were hoping for Social Security disability benefits, know that about 45 percent of those who apply are initially denied, and those who are approved receive an average monthly benefit of just $1063, which would leave you with an income barely above the poverty online. Government programs are a good back-up plan, but shouldn't be your main line of defense.

4. Myth: “I have disability coverage at work.”

Reality: Disability insurance through work is a great benefit, but you need to find out exactly what coverage you have. According to the U. S. Department of Labor, more than 70 percent of employers don’t offer long-term disability coverage. And short-term or partial coverage wouldn’t be enough to allow you to meet your current and future financial obligations if you were unable to work for an extended period of time.

Call our office to see how we can help you get your protection today - 800-560-4637

April 15th - Tax Filing Deadline is Here!

2013-04-15T08:35:00.000-04:00

Today is the filing deadline for your 2012 tax returns! If you live in Massachusetts or Maine, you have until tomorrow April 16th to file your state return, but your Federal Return is still due with the IRS on 04/15.

If you haven't finished up and you need to file an extension, come on in today to our office and we will take care of that for you...the coffee and donuts are here waiting for you!

Tips for Taxpayers Who Can't Pay Their Taxes on Time

2013-04-11T11:03:00.000-04:00

If you find you owe tax after completing your federal tax return but can't pay it all when you file, the IRS wants you to know your options.

Here are four tips that can help you lower the amount of interest and penalties when you don’t pay the full amount on time.

1. File on time and pay as much as you can. Filing on time ensures that you will avoid the late filing penalty. Paying as much as you can reduces the late payment penalty and interest charges. For electronic payment options, see IRS.gov. If you pay by check, make it payable to the United States Treasury and include it with your return.

2. Consider getting a loan or paying by credit card. The interest and fees charged by a bank or credit card company may be lower than IRS interest and penalties. For credit card options, see IRS.gov.

3. Request a payment agreement. You do not need to wait for IRS to send you a bill before requesting a payment plan. You can:

Use the Online Payment Agreement tool at IRS.gov, or
Complete and submit Form 9465, Installment Agreement Request, with your tax return. Find out about payment agreement user fees at IRS.gov or on Form 9465.

4. Don’t ignore a tax bill. If you get a bill from the IRS, contact them right away to talk about payment options. The IRS may take collection action if you ignore the bill, which will only make things worse.

In short, it is always best to file on time, pay as much as you can by the tax deadline and pay the balance as soon as you can. For more information on the IRS collection process go to IRS.gov or see IRSVideos.gov/OweTaxes.If you need help, please do not hesitate in contacting our office.

Important Facts about Mortgage Debt Forgiveness

2013-03-13T23:52:00.000-04:00

If your lender cancelled or forgave your mortgage debt, you generally have to pay tax on that amount. But there are exceptions to this rule for some homeowners who had mortgage debt forgiven in 2012.

Here are 10 key facts from the IRS about mortgage debt forgiveness:

Cancelled debt normally results in taxable income. However, you may be able to exclude the cancelled debt from your income if the debt was a mortgage on your main home.
To qualify, you must have used the debt to buy, build or substantially improve your principal residence. The residence must also secure the mortgage.
The maximum qualified debt that you can exclude under this exception is $2 million. The limit is $1 million for a married person who files a separate tax return.
You may be able to exclude from income the amount of mortgage debt reduced through mortgage restructuring. You may also be able to exclude mortgage debt cancelled in a foreclosure.
You may also qualify for the exclusion on a refinanced mortgage. This applies only if you used proceeds from the refinancing to buy, build or substantially improve your main home. The exclusion is limited to the amount of the old mortgage principal just before the refinancing.
Proceeds of refinanced mortgage debt used for other purposes do not qualify for the exclusion. For example, debt used to pay off credit card debt does not qualify.
If you qualify, report the excluded debt on Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness. Submit the completed form with your federal income tax return.
Other types of cancelled debt do not qualify for this special exclusion. This includes debt cancelled on second homes, rental and business property, credit cards or car loans. In some cases, other tax relief provisions may apply, such as debts discharged in certain bankruptcy proceedings. Form 982 provides more details about these provisions.
If your lender reduced or cancelled at least $600 of your mortgage debt, they normally send you a statement in January of the next year. Form 1099-C, Cancellation of Debt, shows the amount of cancelled debt and the fair market value of any foreclosed property.
Check your Form 1099-C for the cancelled debt amount shown in Box 2, and the value of your home shown in Box 7. Notify the lender immediately of any incorrect information so they can correct the form.

Use the Interactive Tax Assistant tool on IRS.gov to check if your cancelled debt is taxable. Also, see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments.

Ten Facts about Capital Gains and Losses

2013-03-10T00:30:00.000-05:00

The term “capital asset” for tax purposes applies to almost everything you own and use for personal or investment purposes. A capital gain or loss occurs when you sell a capital asset.

Here are 10 facts from the IRS on capital gains and losses:

Almost everything you own and use for personal purposes, pleasure or investment is a capital asset. Capital assets include your home, household furnishings, and stocks and bonds that you hold as investments.
A capital gain or loss is the difference between your basis of an asset and the amount you receive when you sell it. Your basis is usually what you paid for the asset.
You must include all capital gains in your income.
You may deduct capital losses on the sale of investment property. You cannot deduct losses on the sale of personal-use property.
Capital gains and losses are long-term or short-term, depending on how long you hold on to the property. If you hold the property more than one year, your capital gain or loss is long-term. If you hold it one year or less, the gain or loss is short-term.
If your long-term gains exceed your long-term losses, the difference between the two is a net long-term capital gain. If your net long-term capital gain is more than your net short-term capital loss, you have a 'net capital gain.’
The tax rates that apply to net capital gains are generally lower than the tax rates that apply to other types of income. The maximum capital gains rate for most people in 2012 is 15 percent. For lower-income individuals, the rate may be 0 percent on some or all of their net capital gains. Rates of 25 or 28 percent can also apply to special types of net capital gains.
If your capital losses are greater than your capital gains, you can deduct the difference between the two on your tax return. The annual limit on this deduction is $3,000, or $1,500 if you are married filing separately.
If your total net capital loss is more than the limit you can deduct, you can carry over the losses you are not able to deduct to next year’s tax return. You will treat those losses as if they occurred that year.
Form 8949, Sales and Other Dispositions of Capital Assets, will help you calculate capital gains and losses. You will carry over the subtotals from this form to Schedule D, Capital Gains and Losses. If you choose to work with us and e-file your tax return, the professionals here at NFS will do this for you automatically.

What Taxpayers Should Know about Identity Theft and Taxes

2013-03-09T00:30:00.000-05:00

Protecting taxpayers and their tax refunds from identity theft is a top priority for the IRS. This year the IRS expanded its efforts to better protect taxpayers and help victims dealing with this difficult issue.

When your personal information is lost or stolen, it can lead to identity theft. Identity thieves sometimes use your personal information to file a tax return to claim a tax refund. Then, when you file your own tax return, the IRS will not accept it and will notify you that a return was already filed using your name and social security number. Often, learning that your return was not accepted or receiving a contact from the IRS about a problem with your tax return is the first time you become aware that you’re a victim of identity theft.

How to avoid becoming an identity theft victim.

Guard your personal information. Identity thieves can get your personal information in many ways. This includes stealing your wallet or purse, posing as someone who needs information about you, looking through your trash, or stealing information you provide to an unsecured website or in an unencrypted email.
Watch out for IRS impersonators. Be aware that the IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information or notify people of an audit, refund or investigation. Scammers may also use phone calls, faxes, websites or even in-person contacts. If you’re suspicious that it’s not really the IRS contacting you, don’t respond. Visit our Report Phishing web page to see what to do.
Protect information on your computer. While preparing your tax return, protect it with a strong password. Once you e-file the return, take it off your hard drive and store it on a CD or flash drive in a safe place, like a lock box or safe. If you use a tax preparer, ask how he or she will protect your information.

How to know if you are, or might be, a victim of identity theft.

Your identity may have been stolen if the IRS notifies you that:

You filed more than one tax return or someone has already filed using your information;
You owe taxes for a year when you were not legally required to file and did not file; or
You were paid wages from an employer where you did not work.

Respond quickly using the contact information in the letter you received from the IRS so that we can begin to correct and secure your tax account.

If you think you may be at risk for identity theft due to a lost or stolen purse or wallet, questionable credit card activity, an unexpected bad credit report or any other way, contact the IRS Identity Protection Specialized Unit toll-free at 1-800-908-4490. The IRS will then take steps to secure your tax account. The Federal Trade Commission also has helpful information about reporting identity theft.

If you have information about the identity thief who used or tried to use your information, file a complaint with the Internet Crime Complaint Center.

For more information – including how to report identity theft, phishing and related fraudulent activity – visit the Identity Protection home page on IRS.gov and click on the Identity Theft link at the bottom of the page.

IRS Works to Protect Taxpayer Refunds, Detect and Resolve Identity Theft Cases

The IRS takes identity theft-related tax fraud very seriously and realizes that identity theft is a frustrating process for victims. By late 2012, the IRS assigned more than 3,000 employees — more than double from 2011 — to work on identity theft-related issues.

The IRS continues to enhance its screening process to stop fraudulent returns. During 2012, the IRS protected $20 billion of fraudulent refunds, including those related to identity theft, compared with $14 billion in 2011.

The IRS recently announced that a year-long nationwide focus on tax refund fraud and identity theft has resulted in more than 100 arrests in 32 states and Puerto Rico. In January 2013 alone, the IRS targeted 389 identity theft suspects resulting in 734 enforcement actions. To learn more, see IRS Intensifies National Crackdown on Identity Theft on IRS.gov.

Beware of Bogus IRS Emails

2013-03-08T00:30:00.000-05:00

The IRS receives thousands of reports every year from taxpayers who receive emails out-of-the-blue claiming to be from the IRS. Scammers use the IRS name or logo to make the message appear authentic so you will respond to it. In reality, it’s a scam known as “phishing,” attempting to trick you into revealing your personal and financial information. The criminals then use this information to commit identity theft or steal your money.

The IRS has this advice for anyone who receives an email claiming to be from the IRS or directing you to an IRS site:

Do not reply to the message;
Do not open any attachments. Attachments may contain malicious code that will infect your computer; and
Do not click on any links in a suspicious email or phishing website and do not enter confidential information. Visit the IRS website and click on 'Identity Theft' at the bottom of the page for more information.

Here are five other key points the IRS wants you to know about phishing scams.

The IRS does not initiate contact with taxpayers by email or social media channels to request personal or financial information;
The IRS never asks for detailed personal and financial information like PIN numbers, passwords or similar secret access information for credit card, bank or other financial accounts;
The address of the official IRS website is www.irs.gov. Do not be misled by sites claiming to be the IRS but ending in .com, .net, .org or anything other than .gov. If you discover a website that claims to be the IRS but you suspect it is bogus, do not provide any personal information on their site and report it to the IRS;
If you receive a phone call, fax or letter in the mail from an individual claiming to be from the IRS but you suspect they are not an IRS employee, contact the IRS at 1-800-829-1040 to determine if the IRS has a legitimate need to contact you. Report any bogus correspondence. Forward a suspicious email to phishing@irs.gov;
You can help the IRS and other law enforcement agencies shut down these schemes. Visit the IRS.gov website to get details on how to report scams and helpful resources if you are the victim of a scam. Click on "Reporting Phishing" at the bottom of the page.

Eight Tax Benefits for Parents

2013-03-07T00:30:00.000-05:00

Your children may help you qualify for valuable tax benefits, such as certain credits and deductions. If you are a parent, here are eight benefits you shouldn't miss when filing taxes this year.

Dependents. In most cases, you can claim a child as a dependent even if your child was born anytime in 2012. For more information, see IRS Publication 501, Exemptions, Standard Deduction and Filing Information.
Child Tax Credit. You may be able to claim the Child Tax Credit for each of your children that were under age 17 at the end of 2012. If you do not benefit from the full amount of the credit, you may be eligible for the Additional Child Tax Credit. For more information, see the instructions for Schedule 8812, Child Tax Credit, and Publication 972, Child Tax Credit.
Child and Dependent Care Credit. You may be able to claim this credit if you paid someone to care for your child or children under age 13, so that you could work or look for work. See IRS Publication 503, Child and Dependent Care Expenses.
Earned Income Tax Credit. If you worked but earned less than $50,270 last year, you may qualify for EITC. If you have qualifying children, you may get up to $5,891 dollars extra back when you file a return and claim it. Use the EITC Assistant to find out if you qualify. See Publication 596, Earned Income Tax Credit.
Adoption Credit. You may be able to take a tax credit for certain expenses you incurred to adopt a child. For details about this credit, see the instructions for IRS Form 8839, Qualified Adoption Expenses.
Higher education credits. If you paid higher education costs for yourself or another student who is an immediate family member, you may qualify for either the American Opportunity Credit or the Lifetime Learning Credit. Both credits may reduce the amount of tax you owe. If the American Opportunity Credit is more than the tax you owe, you could be eligible for a refund of up to $1,000. See IRS Publication 970, Tax Benefits for Education.
Student loan interest. You may be able to deduct interest you paid on a qualified student loan, even if you do not itemize your deductions. For more information, see IRS Publication 970, Tax Benefits for Education.
Self-employed health insurance deduction - If you were self-employed and paid for health insurance, you may be able to deduct premiums you paid to cover your child. It applies to children under age 27 at the end of the year, even if not your dependent. See IRS.gov/aca for information on the Affordable Care Act.

For help in preparing these forms give us a call at 800-560-4NFS today.

Parents and Students: Check Out College Tax Benefits for 2012 and Years Ahead

2013-03-06T00:30:00.000-05:00

WASHINGTON — The Internal Revenue Service today reminded parents and students that now is a good time to see if they qualify for either of two college education tax credits or any of several other education-related tax benefits.

In general, the American opportunity tax credit, lifetime learning credit and tuition and fees deduction are available to taxpayers who pay qualifying expenses for an eligible student. Eligible students include the primary taxpayer, the taxpayer’s spouse or a dependent of the taxpayer.

Though a taxpayer often qualifies for more than one of these benefits, he or she can only claim one of them for a particular student in a particular year. The benefits are available to all taxpayers – both those who itemize their deductions on Schedule A and those who claim a standard deduction. The credits are claimed on Form 8863 and the tuition and fees deduction is claimed on Form 8917.

The American Taxpayer Relief Act, enacted Jan. 2, 2013, extended the American opportunity tax credit for another five years until the end of 2017. The new law also retroactively extended the tuition and fees deduction, which had expired at the end of 2011, through 2013. The lifetime learning credit did not need to be extended because it was already a permanent part of the tax code.

For those eligible, including most undergraduate students, the American opportunity tax credit will yield the greatest tax savings. Alternatively, the lifetime learning credit should be considered by part-time students and those attending graduate school. For others, especially those who don’t qualify for either credit, the tuition and fees deduction may be the right choice.

All three benefits are available for students enrolled in an eligible college, university or vocational school, including both nonprofit and for-profit institutions. None of them can be claimed by a nonresident alien or married person filing a separate return. In most cases, dependents cannot claim these education benefits.

Normally, a student will receive a Form 1098-T from their institution by the end of January of the following year. This form will show information about tuition paid or billed along with other information. However, amounts shown on this form may differ from amounts taxpayers are eligible to claim for these tax benefits. Taxpayers should see the instructions to Forms 8863 and 8917 and Publication 970 for details on properly figuring allowable tax benefits.

Many of those eligible for the American opportunity tax credit qualify for the maximum annual credit of $2,500 per student. Here are some key features of the credit:

The credit targets the first four years of post-secondary education, and a student must be enrolled at least half time. This means that expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college do not qualify. Any student with a felony drug conviction also does not qualify.
Tuition, required enrollment fees, books and other required course materials generally qualify. Other expenses, such as room and board, do not.
The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.
The full credit can only be claimed by taxpayers whose modified adjusted gross income (MAGI) is $80,000 or less. For married couples filing a joint return, the limit is $160,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $180,000 or more and singles, heads of household and some widows and widowers whose MAGI is $90,000 or more.
Forty percent of the American opportunity tax credit is refundable. This means that even people who owe no tax can get an annual payment of up to $1,000 for each eligible student. Other education-related credits and deductions do not provide a benefit to people who owe no tax.

The lifetime learning credit of up to $2,000 per tax return is available for both graduate and undergraduate students. Unlike the American opportunity tax credit, the limit on the lifetime learning credit applies to each tax return, rather than to each student. Though the half-time student requirement does not apply, the course of study must be either part of a post-secondary degree program or taken by the student to maintain or improve job skills. Other features of the credit include:

Tuition and fees required for enrollment or attendance qualify as do other fees required for the course. Additional expenses do not.
The credit equals 20 percent of the amount spent on eligible expenses across all students on the return. That means the full $2,000 credit is only available to a taxpayer who pays $10,000 or more in qualifying tuition and fees and has sufficient tax liability.
Income limits are lower than under the American opportunity tax credit. For 2012, the full credit can be claimed by taxpayers whose MAGI is $52,000 or less. For married couples filing a joint return, the limit is $104,000. The credit is phased out for taxpayers with incomes above these levels. No credit can be claimed by joint filers whose MAGI is $124,000 or more and singles, heads of household and some widows and widowers whose MAGI is $62,000 or more.

Like the lifetime learning credit, the tuition and fees deduction is available for all levels of post-secondary education, and the cost of one or more courses can qualify. The annual deduction limit is $4,000 for joint filers whose MAGI is $130,000 or less and other taxpayers whose MAGI is $65,000 or less. The deduction limit drops to $2,000 for couples whose MAGI exceeds $130,000 but is no more than $160,000, and other taxpayers whose MAGI exceeds $65,000 but is no more than $80,000.

Eligible parents and students can get the benefit of these provisions during the year by having less tax taken out of their paychecks. They can do this by filling out a new Form W-4, claiming additional withholding allowances, and giving it to their employer.

There are a variety of other education-related tax benefits that can help many taxpayers. They include:

Scholarship and fellowship grants—generally tax-free if used to pay for tuition, required enrollment fees, books and other course materials, but taxable if used for room, board, research, travel or other expenses.
Student loan interest deduction of up to $2,500 per year.
Savings bonds used to pay for college—though income limits apply, interest is usually tax-free if bonds were purchased after 1989 by a taxpayer who, at time of purchase, was at least 24 years old.
Qualified tuition programs, also called 529 plans, used by many families to prepay or save for a child’s college education.

Taxpayers with qualifying children who are students up to age 24 may be able to claim a dependent exemption and the earned income tax credit.

The general comparison table in Publication 970 can be a useful guide to taxpayers in determining eligibility for these benefits. Details can also be found in the Tax Benefits for Education Information Center on IRS.gov.

Social Security Benefits and Your Taxes

2013-03-05T00:30:00.000-05:00

Some people must pay taxes on their Social Security benefits. If you get Social Security, you should receive a Form SSA-1099, Social Security Benefit Statement, by early February. The form shows the amount of benefits you received in 2012.

Here are five tips from the IRS to help you determine if your benefits are taxable:

The amount of your income and your filing status affect whether you must pay taxes on your Social Security.
If Social Security was your only income in 2012, your benefits are probably not taxable. You also may not need to file a federal income tax return.
If you received income from other sources, then you may have to pay taxes on your benefits.
You can follow these two quick steps to see if your benefits are taxable:

Add one-half of the Social Security benefits you received to all your other income, including tax-exempt interest. Tax-exempt interest includes interest from state and municipal bonds.
Next, compare this total to the ‘base amount’ for your filing status. If the total is more than your base amount, then some of your benefits may be taxable. The three 2012 base amounts are:

$25,000 for single, head of household, qualifying widow or widower with a dependent child or married individuals filing separately who did not live with their spouse at any time during the year;
$32,000 for married couples filing jointly; and
$0 for married persons filing separately who lived together at any time during the year.

If you use IRS e-file to prepare and file your tax return, the tax software will figure your taxable benefits for you. If you file a paper return, you can use the Interactive Tax Assistant tool on the IRS website to check if your benefits are taxable. The ITA is a resource that can help answer tax law questions. There also is a worksheet in the instructions for Form 1040 or 1040A that you can use to figure your taxable benefits.

For more information on the taxability of Social Security benefits, see IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits. You can get a copy of this booklet on IRS.gov or by calling 800-TAX-FORM (800-829-3676).

Seven Important Tax Facts about Medical and Dental Expenses

2013-03-04T19:57:00.000-05:00

If you paid for medical or dental expenses in 2012, you may be able to get a tax deduction for costs not covered by insurance. The IRS wants you to know these seven facts about claiming the medical and dental expense deduction.

1. You must itemize. You can only claim medical and dental expenses for costs not covered by insurance if you itemize deductions on your tax return. You cannot claim medical and dental expenses if you take the standard deduction.

2. Deduction is limited. You can deduct medical and dental expenses that are more than 7.5 percent of your adjusted gross income.

3. Expenses paid in 2012. You can include medical and dental costs that you paid in 2012, even if you received the services in a previous year. Keep good records to show the amount that you paid.

4. Qualifying expenses. You may include most medical or dental costs that you paid for yourself, your spouse and your dependents. Some exceptions and special rules apply. Visit IRS.gov for more details.

5. Costs to include. You can normally claim the costs of diagnosing, treating, easing or preventing disease. The costs of prescription drugs and insulin qualify. The cost of medical, dental and some long-term care insurance also qualify.

6. Travel is included. You may be able to claim the cost of travel to obtain medical care. That includes the cost of public transportation or an ambulance as well as tolls and parking fees. If you use your car for medical travel, you can deduct the actual costs, including gas and oil. Instead of deducting the actual costs, you can deduct the standard mileage rate for medical travel, which is 23 cents per mile for 2012.

7. No double benefit. Funds from Health Savings Accounts or Flexible Spending Arrangements used to pay for medical or dental costs are usually tax-free. Therefore, you cannot deduct expenses paid with funds from those plans.

You’ll find more information in IRS Publication 502, Medical and Dental Expenses. Also see Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. Remember, we are always a call away for assistance - 800-560-4NFS.

Is It Too Late to Deposit This Check Into My IRA?

2013-02-11T15:46:00.000-05:00

Q: I retired and asked to do a direct rollover from my former employer's 401(k) plan to my IRA. The check was mailed to my house but made payable to my IRA custodian. I just realized that I didn't deposit that check right away. It's now past the 60 days since I received it. Can I deposit that check now, or is it too late?

A: You are in luck! You can deposit that check, even though it is after the 60 days from when you received it. The 60-day rule does not apply to a direct rollover. A direct rollover is when you don't have control of the money. In this case, the check was made payable to your IRA custodian, not you. Therefore, you can deposit that direct rollover check after 60 days.

IRS Update on Forms Acceptance

2013-02-08T12:49:00.003-05:00

Effective 9:00 am Eastern time on Sunday, February 10, 2013, the IRS will start processing 2012 returns that contain Form 4562, Depreciation and Amortization. This will include the Form 1040-family tax returns, Form 1065/1065-B, Form 1120-family tax returns and Form 990-family tax returns.

On Thursday, February 14, 2013, the IRS plans to start processing 2012 returns that contain Form 8863, Education Credits.

If we have already prepared a return for you with these forms, we can file them as of the above dates. Please let us know if you have any questions.

Six Important Facts about Dependents and Exemptions

2013-02-07T10:21:00.001-05:00

While each individual tax return is unique, there are some tax rules that affect every person who files a federal income tax return. These rules involve dependents and exemptions. The IRS has six important facts about dependents and exemptions that will help you file your 2012 tax return.

Exemptions reduce taxable income. There are two types of exemptions: personal exemptions and exemptions for dependents. You can deduct $3,800 for each exemption you claim on your 2012 tax return.
Personal exemptions. You usually may claim one exemption for yourself on your tax return. You also can claim one for your spouse if you are married and file a joint return. If you and your spouse file separate returns, you may claim the exemption for your spouse only if he or she had no gross income, is not filing a joint return and was not the dependent of another taxpayer.
Exemptions for dependents. Generally, you can claim an exemption for each of your dependents. A dependent is either your qualifying child or qualifying relative. If you are married, you may not claim your spouse as your dependent. You must list the Social Security Number of each dependent you claim on your return. See Publication 501, Exemptions, Standard Deduction, and Filing Information, for information about dependents who do not have Social Security numbers.
Some people do not qualify as dependents. While there are some exceptions, you generally may not claim a married person as a dependent if they file a joint return with their spouse.
Dependents may have to file. If you can claim someone else as your dependent on your tax return, that person may still be required to file his or her own tax return. Whether they must file a return depends on several factors, including the amount of their gross income (both earned and unearned income), their marital status and any special taxes they owe.
Dependents can’t claim a personal exemption. If you can claim another person as a dependent on your tax return, that person may not claim a personal exemption on his or her own tax return. This is true even if you do not actually claim that person as your dependent on your tax return. The fact that you could claim that person disqualifies them from claiming a personal exemption.

Remember that a person must meet several tests in order for you to claim them as your dependent. If you need help, let us know, we are here for you.

U.S. Income Tax Turns 100

2013-02-06T09:51:00.000-05:00

Most living Americans think that an income tax has always been there... but no. In 1913, the U.S. Congress passed the first permanent income tax.

Most living Americans think that an income tax has always been there... but no. In 1913, the U.S. Congress passed the first permanent income tax. Before 1913, federal taxes were enacted, when necessary, for wars or other national needs.

The first known taxes date back to ancient Egypt when grain, livestock or oils were used instead of money to pay what was owed to the government. Even then, the surviving hieroglyphic tablets record how people complained about high taxes. Some things never change.

February 3, 2013 is the 100th birthday of the 16th Amendment, which is the recognized birth of U.S. Federal Income Tax. The history of the 16th Amendment actually dates back to 1861 during the civil war, when Congress passed the Revenue act of 1861. This act included a 3 percent tax on personal incomes over $800 to help pay war expenses.

Ten years later, in 1872, this act was repealed. The idea stuck around though, and in 1894 Congress enacted a 4 percent tax on income over $4,000. The U.S. Supreme Court immediately struck this down in a 5-4 decision.

In 1909, Congress tried again with the idea of an income tax. This time, however, it stuck, and on February 3, 1913 the 16th Amendment was ratified stating, "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

In 1913 the first Form 1040 was documented. Congress placed a 1 percent tax on net personal income over $3,000, with an additional tax on those who had net income in excess of $20,000 of between 1 and 6 percent, depending upon income. The first year no taxes were collected; the IRS only checked the forms for accuracy.

During World War I the income tax rose to its highest point at 77 percent to help finance the war. Improvements to the system were made during World War II when Congress introduced payroll withholding and quarterly tax payments. The Alternative Minimum Tax (AMT) was later enacted in 1969.

When the 16th Amendment was first enacted, the deadline was March 1, but even that first tax day deadline was extended because it fell on a Sunday. In 1918 the official filing deadline was changed to March 15. In 1955, the date was change to the familiarly April 15.

Today, the IRS collects more than $1.2 billion in taxes and processes more than 133 million returns annually. And of course, people still complain about high taxes.

Dow Jones hits 14,000 for first time since 2007

2013-02-01T16:14:00.000-05:00

NEW YORK -- The Dow Jones industrial average briefly topped 14,000 on Friday morning, a milestone not seen since before the financial crisis rocked the markets and the world economy.

After rising steadily in early trading thanks to the U.S. jobs report, the Dow briefly crossed 14,000 around 10:07 a.m. EST. The milestone was by a hair -- the highest the Dow reached was 14,000.97 -- and it lasted only a moment. The index was trading around 13,980 shortly afterward. The other major stock indexes were also up.

The Dow has crossed 14,000 only 15 times in its history. The last time was Oct. 17, 2007.

If the gains hold and it closes above 14,000 on Friday, that would put it in even more rarefied territory: On just nine of those days did it manage to close above 14,000 at the end of trading.

That time more than five years ago seems almost a different era -- before signs of the devastating financial crisis were apparent to the average observer.
Lehman Brothers still existed. So did Bear Stearns, Wachovia and Washington Mutual. Housing prices were starting to ebb, but they hadn't cratered. The unemployment rate was 4.7 percent, meaning jobs were abundant.

The benchmark is not far from its all-time high, 14,164.53, which it reached on Oct. 9, 2007. A year later, in the depths of the financial crisis, it had shed nearly 40 percent of its value.

The Dow is an index of 30 big companies, and its purpose is to represent how the broader stock market is faring. And while hitting 14,000 would be an important psychological milestone, it wouldn't be much else.

The stock market is more a representation of how traders are feeling about the economy than the economy's underlying fundamentals. And many investors don't even think the Dow is the best way to track the market: They prefer the much bigger Standard & Poor's benchmark index, which follows 500 companies, because they think it represents a more accurate view of the economy.

"You can hit these milestones, but then it can always end badly," said Joe Gordon, managing partner at Gordon Asset Management in North Carolina. The fact that small investors are finally getting back in the stock market, he said, makes him think that stocks are due for a downturn.

"It's meaningless to the average professional," said Gordon, referring to the 14,000 benchmark. And for workers still unemployed by the financial crisis, he said, "it really means nothing to them."

At midmorning, the Dow was up 119 points to 13,980. The Standard & Poor's 500 rose 10 to 1,508. The Nasdaq composite index was up 19 to 3,161.

Overall, the government jobs report that pushed stocks forward was mixed, but traders chose to focus on the positive. The U.S. said it added 157,000 jobs in January, which was in line with what traders had been expecting. Unemployment inched up to 7.9 percent from 7.8 percent in December. But, encouragingly, the government also reported that hiring over the past two years has been higher than it originally thought.

The jobs number is based on a survey of employers, and the unemployment rate is based on a separate survey of households, which is why they can diverge.
In Europe, tentative and incremental signs of a recovery were enough to push up stocks in France, Britain and Germany. December unemployment in the European Union was lower than analysts had feared, inflation unexpectedly fell, and a survey raised hopes of some growth in the manufacturing sector.

But there were also reminders that the debt problem is far from solved. The Netherlands was also forced to take over one of its major banks, to try to stave off a collapse. In Greece, dock workers extended a strike over the government's spending cuts.

Among companies making big moves:

-- Drugmaker Merck fell nearly 3 percent, down $1.22 to $42.02. Its fourth-quarter profit suffered because of competition from generic medicines against its blockbuster allergy drug Singulair.

-- Insurance company MetLife rose more than 1 percent, up 52 cents to $37.86, after saying it plans to buy the largest private pension fund administrator in Chile.

-- Zoetis, an animal health business that Pfizer just spun off, made its debut on the stock market. It was up 18 percent, rising $4.63 to $30.62.

By Christina Rexrode
Associated Press

Five Good Reasons to E-file Your Tax Return

2013-01-31T21:49:00.000-05:00

If you haven’t tried IRS e-file before, now is the time. Most taxpayers – more than 80 percent – file electronically. The IRS has processed more than 1 billion individual tax returns safely and securely since the nationwide debut of electronic filing in 1990. Fewer people file a paper tax return every year. Here are five good reasons to e-file your tax return:

Accurate and complete. E-file is the best way to file an accurate and complete tax return. Tax returns that are incomplete or include errors take longer to process.
Safe and secure. Tax preparers and software companies who e-file must meet strict guidelines and provide the best in encryption technology. You receive an acknowledgement within 48 hours that the IRS received your tax return. If the IRS does not accept your tax return, you will receive notification and can quickly correct your return and resubmit it.
Faster refunds. An e-filed tax return usually means a faster refund compared to a paper return. The IRS issues most refunds in less than 21 days. If you choose direct deposit, your refund goes directly into your bank account. Combining e-file with direct deposit is the fastest way to get your refund. About three out of four taxpayers who file receive a tax refund. Last year the average refund was about $2,700.
Payment options. If you owe tax, you can e-file early and set an automatic payment date anytime on or before the April 15 due date. You can pay by check or money order, by debit or credit card, or by transferring funds electronically from your bank account.
It’s easy. You can e-file on you own through the NFS Do-It-Yourself filing or we can e-file the completed return form our office.

For more information about IRS e-file, please contact our office today.

Tax Filing Season is Here! Free Organizers & Discounts from NFS!

2013-01-30T08:55:00.000-05:00

WRENTHAM, MA - Tax Season is HERE!! Some people hire a tax professional and some people choose to do it themselves - either way - NFS has an option for you!!

No matter where in the world you are, NFS can help you to prepare your US Federal and State Income Tax Returns. In person, by mail or email, we are here to help! With pricing less than most national chains, we can prepare your taxes and maximize your refund or minimize your balance due if you are one of those folks who has to pay.

All new clients receive a $30 DISCOUNT and existing clients should inquire about other discounts that may be available to them. NFS also offers free Income Tax Organizers for you to save time & money!

For those deciding to do it themselves, we offer an option to prepare your own returns directly from our Do It Yourself Online Tax Prep Website with FREE (1040EZ) & Affordable options & in most cases less than the "Boxed Software" or other popular online tax prep websites!!

If you have any questions or want to set up an appointment, feel free to drop me an email jeff@nfsnet.com or give me a call toll free at 800-560-4NFS x 14.

IRS To Accept Returns Claiming Education Credits by Mid-February

2013-01-28T16:25:00.000-05:00

WASHINGTON - As preparations continue for the Jan. 30 opening of the 2013 filing season for most taxpayers, the Internal Revenue Service announced today that processing of tax returns claiming education credits will begin by the middle of February.

Taxpayers using Form 8863, Education Credits, can begin filing their tax returns after the IRS updates its processing systems. Form 8863 is used to claim two higher education credits -- the American Opportunity Tax Credit and the Lifetime Learning Credit.

The IRS emphasized that the delayed start will have no impact on taxpayers claiming other education-related tax benefits, such as the tuition and fees deduction and the student loan interest deduction. People otherwise able to file and claiming these benefits can start filing Jan. 30.

As it does every year, the IRS reviews and tests its systems in advance of the opening of the tax season to protect taxpayers from processing errors and refund delays. The IRS discovered during testing that programming modifications are needed to accurately process Forms 8863. Filers who are otherwise able to file but use the Form 8863 will be able to file by mid-February. No action needs to be taken by the taxpayer or their tax professional. Typically through the mid-February period, about 3 million tax returns include Form 8863, less than a quarter of those filed during the year.

The IRS remains on track to open the tax season on Jan. 30 for most taxpayers. The Jan. 30 opening includes people claiming the student loan interest deduction on the Form 1040 series or the higher education tuition or fees on Form 8917, Tuition and Fees Deduction. Forms that will be able to be filed later are listed on IRS.gov.

Updated information will be posted on IRS.gov.

Free Income Tax Preparation Giveaway - This Weekend!!

2013-01-25T08:56:00.000-05:00

Free Income Tax Preparation Giveaway

Stadium Fitness Foxboro MA - Open House & Grand Opening

Saturday, January 26th, 2012
8:00am to 2:00pm

NFS is giving away FIVE (5) FREE INCOME TAX PREPARATION Certificates!!! Other Door Prizes, Free Food, Free Drinks, Free Workouts, Kids Activities, Jumpy House, Face Painting & MORE!!! Come Join in the FUN!!

VOTE NFS for Best Insurance Agency in Wicked Local Polls

2013-01-16T09:49:00.001-05:00

The 2013 Polls are open and NFS needs your vote!! Visit wickedlocalfavorites.com and vote for your Wicked Favorites today!

Remember, you have to cast a vote in at least 10 categories for your votes to be valid. You can find the "Insurance Agency" slot under "Local Services" and we would appreciate your vote for NFS - Northeast Financial Strategies Inc. in Wrentham.

THANKS for your continued support.