Thursday , October 21 2021
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Bob Williams

Articles by Bob Williams

Medical Expenses Retirees Can Deduct

21 hours ago

Like most people, I don’t want to pay more taxes than necessary. That common-sense approach to money began when I got my first job at the age of 13. I was paid $1.50/hour, slightly above the $1.30 minimum wage. I calculated exactly how much my first paycheck would be. But when I got it, somebody must have used new math, because the check was less than it was supposed to be. Why? My boss calmly explained, “We have to withhold federal income taxes.”
Now, many years and many paychecks later, I’ve learned to look for every legitimate tax deduction available to me. For retirees who itemize on Schedule A, medical expenses are a great place to look for deductions. You can deduct qualifying medical expenses that exceed 7.5% of adjusted gross income. Here are some specifics.
Long Term Care
If you

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The Medicare Star Rating System—Help to Choose the Right Plan

2 days ago

Talk to anyone who’s about to go on Medicare and they’ll tell you that figuring out what plan to choose will make you pull your hair out (which is probably not covered by Medicare). There are so many things to consider, from drug coverage, to copays and coinsurance, emergency room visits, hospital stays, the network of available doctors, the network of available pharmacies, and whether a plan provides any form of dental, vision, or hearing coverage. It can be very confusing.
While you’re doing your own research, you’re also bombarded with a blizzard of mail from every company that wants to sell you a Medicare plan, not to mention all those painfully long TV Commercials telling you that THEY know what’s right for you.
Wouldn’t it be nice if there was a way to compare plans? Well, there is.

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Estate Planning Review

10 days ago

We’ve been focused on Covid for so long that a lot of things have taken a back seat. We’re still regrouping, trying to find the new normal. Estate planning is one of the things that’s easy to forget in this new normal. Why not? You did the estate planning, you listed your wishes, and you put the document in a safe place to be pulled out when the inevitable happens.
But if there’s one thing Covid taught us—the unexpected can happen and things change. That’s why now is a great time to pull your plan out of the dusty archives and review it. Have there been significant life changes such as marriage, divorce, new kids, or grandkids? Have you moved? Have estate laws changed? Do you want your assets distributed differently than when you created the estate plan? Do you need to change beneficiaries

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The Sunny Side of Inflation – Maybe

22 days ago

It may not be public enemy number one, but inflation is certainly near the top of the list. Since the beginning of 2021, prices of almost everything have gone into orbit. Energy prices are up an average of 56%. Airline tickets are up almost 25%. Used car prices have jumped more than 45%. And it seems there’s no slowdown in the accelerating prices of groceries, real estate, rents, health care, and lumber. Inflation is pulling money out of consumer pockets at a faster rate than their income is growing.
For Social Security recipients, a little help is on the way. By all estimates, next year’s Social Security cost-of-living adjustment (COLA) may be the highest since 1983. Based on consumer price index data from the Bureau of Labor Statistics, Moody’s Analytics estimates an increase of 4.5%

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Paying More Taxes Because Your Spouse Dies

24 days ago

It’s one of the most obscure taxes in the IRS code, but it can be one of the most devastating at a time when you can least afford it. It’s called the Widow’s Penalty Tax—a stealth tax you never see coming—that can cause a widow or widower to struggle financially.
When one spouse dies, the surviving spouse is now responsible for all the bills and has to maintain the household with less money. The household begins receiving only one Social Security check instead of two. If the deceased spouse was receiving a pension, it may disappear or change to a reduced amount.
On top of that, the surviving spouse is pushed into a higher tax bracket. When both spouses are alive, the couple’s tax return filing status is married filing jointly. But after one spouse passes away, the surviving spouse’s filing

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Medicare Planning and How to Pick the Right Plan for You

September 7, 2021

Medicare is a veritable alphabet soup of choices. There’s Part A, Part B, Part C, Part D, and when you get into Medicare Supplements, there are 10 options—A, B, C, D, F, G, K, L, M, and N. Make the wrong choices and you could be hit with lifetime penalties that drive up your Medicare premiums and a Medicare plan that doesn’t give you all the benefits you could have. Constructing a Medicare plan that’s right for you requires research, planning, and asking the right questions.
When Medicare was signed into law on July 30, 1965, there were just two parts, Part A and Part B. They are referred to as Original Medicare and still exist today. Parts A & B cover approximately 80% of your healthcare costs. Anything above that comes out of your pocket.
Medicare Part A
Medicare Part A is hospital

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Fiduciary vs Suitability Standard

August 30, 2021

Today we hear the word fiduciary tossed around as some concept that means the same thing by everyone who utters it. Nothing could be further from the truth. A fiduciary, according to Investopedia is:
… a person or organization that acts on behalf of another… putting their clients’ interest ahead of their own, with a duty to preserve good faith and trust. Being a fiduciary thus requires being bound both legally and ethically to act in the other’s best interests.
Well, you say, shouldn’t anyone who handles my money act in my best interest, whether they carry the title of advisor, adviser (yes one letter makes a difference), manager, or representative? Of course, they SHOULD, but not everyone does.
There are two terms in the world of investing that often get confused; the suitability

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Spousal Lifetime Access Trusts—a Treasure Chest for Married Couples

August 16, 2021

There’s an old axiom that says, “All good things must come to an end.” And unless Congress makes some changes, that’s what will happen to the current level of the federal estate tax exemption. As it stands now, every individual can give away $11.7 million of their estate free of inheritance and gift taxes. Married couples have a combined exemption of $23.4 million. The gifting can happen during their lifetime or at their death.
The current exemption amount is at an all-time high, but it’s set to decrease to $5.5 million on December 31, 2025, when the sunset provision of the law kicks in. It may fall even further, to $3.5 million if the current administration gets its way. Additionally, there is talk about increasing the inheritance tax rate above its current level of 40%.
But all is not

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Embracing Social Security Online

July 19, 2021

Customer service is mostly dead. It’s probably housed in the Smithsonian along with the T-Rex and TV rabbit ears. As technology has progressed and Millennials have come of age, we have been pushed, sometimes kicking and screaming, to conduct personal business online.
The Social Security Administration is no exception. Call the SSA and you will hear, “Offices are open to provide limited in-person services by appointment only. We continue offering services by phone and online. You can find the Social Security Administration online at”
The number of Senior Citizens without computers is dwindling. More Americans entering their senior years have at least a modicum of computer know-how. And for all my ranting here, it’s certainly less frustrating conducting Social

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4 Potential Pitfalls of Working During Retirement

July 15, 2021

Mom and Dad told us working was a good thing. It may not have seemed like it as kids when they were trying to turn us into fully functioning, responsible adults. But later in life, we discovered it was true.
Working gives a sense of pride and accomplishment. It makes us independent. Many older Americans continue to work during retirement for those reasons, as well as being able to contribute from a lifetime of experience, having social interaction with other people, or just having something to do. But without advance knowledge and planning, that paycheck may create some unpleasant consequences.
Taxes on Social Security
There is a long-standing myth that Social Security benefits are not taxed. And that’s what it is—a myth. If you work during retirement and the amount you earn along with

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The SECURE Act Retirement Plan Rules

June 29, 2021

Why make it simple when difficult will do. That seems to be the motto of the Setting Every Community Up for Retirement Enhancement (SECURE) Act, even in its title. The SECURE Act has been the law of the land since January 1, 2020, and the 125 pages of reforms were, allegedly, supposed to make saving for retirement easier and more accessible for many Americans.
The SECURE Act makes changes to defined contribution plans such as 401(k)s, defined pension plans, IRAs, and 529 college savings accounts. Some of the changes are an improvement while others seem like nothing more than forcing people to pay taxes more quickly, specifically inherited IRAs.
Among the positives:

Required Minimum Distributions (RMD) now begin at age 72, not 70 ½ as before. Currently, there is a bill before Congress

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How the Social Security Earnings Test Can Work Against You

June 7, 2021

The checklist when preparing for retirement is a long one. But you need to be aware of one item in particular if you intended to start taking Social Security before your Full Retirement Age (FRA) and continue working—the Social Security Earnings Test. It can suck Social Security dollars out of the pockets of unsuspecting retirees. To paraphrase a familiar old adage, the government giveth and the government taketh away if you earn too much.
Annual Social Security Earnings Test
Until you reach Full Retirement Age, your Social Security benefit will be reduced if you are working and earn more than a government-set threshold, which generally increases every year.  In 2021, that threshold is $18,960. Earn more than that and Social Security takes back $1.00 for every $2.00 you earn above the

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Getting The Estate in Order

April 19, 2021

Covid-19 has changed life forever in more ways than we can count. It has also changed end-of-life estate planning and estate modification. It can be very difficult having that conversation with a spouse who’s dying.
Estate planning conversations are often put off because they are a reminder of the inevitable for every mortal on the planet. But when one spouse is dying, the other spouse often realizes that estate issues need to be addressed before death occurs. What should you do?
Review estate plans currently in place
You may have forgotten some of the details of the current estate plan. Read through the documents and refresh your memory so you know exactly what needs to be done. You may want to review the current plan with your advisors and get their input on whether changes need to be

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New IRS Rule Helps Protect Your Tax Refund from Scammers

April 12, 2021

Identity theft is one of the major plagues of modern society costing its victims billions of dollars and untold man-hours to recover from it. In 2020, 1.4 million Americans were successfully attacked, which translates into a victim every 3 seconds.  That’s more than double the number from the year before. Sophisticated scammers are breaching the walls of major corporations and individuals alike, and the information they steal gets traded on the dark web like pieces on a monopoly board.
Armed with stolen identities, digital thieves have found a lucrative market at the IRS, stealing tax refunds. Imagine waiting and waiting on your tax refund only to be told that it’s already been sent and the check cashed—by someone else! In 2020 the IRS discovered $2.3 billion dollars in tax fraud schemes.

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10 Social Security Mistakes That Can Devastate Retirement Income

March 23, 2021

Social Security, even with all its problems, is unquestionably an important component of retirement income for millions of American retirees. For about half of seniors, Social Security is 50% of their income, and 1 in 4 seniors say it makes up at least 90% of their income.
There are more parts to Social Security than most people realize. Only in the last 10 years, Social Security planning has become widely discussed. And even with all the information available, retirees are making common mistakes that can cost them more than $100,000 or more in lifetime Social Security benefits.
Married couples often leave Social Security money on the table because they fail to coordinate, their benefit decisions. They decide individually when to begin receiving benefits without thinking about what happens

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6 Tax Breaks Retirees Often Don’t Think About

March 15, 2021

Let’s update some two-thousand-year-old tax advice—Give to Caesar what belongs to Caesar, but don’t give him more than that. Today, tax deductions and credits help determine how much Caesar gets. As an old guy told me a long time ago, “If it’s in the IRS code, it’s there to be used.”
Unfortunately, there are tax breaks available to retirees that get overlooked. Here are some of the most common.
Higher standard deduction
For years, the IRS has provided a higher standard deduction for people who reach and exceed the age of 65.
For the 2020 tax year, the standard deduction for people who don’t itemize is $12,400 for single taxpayers and $24,800 for couples filing jointly. But if you’re over the age of 65, singles get an extra $1650 making their standard deduction $14,050 and married couples

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4 Social Security Planning Steps BEFORE You’re Ready to Retire

March 9, 2021

Social Security is an important part of almost every retirement plan, whether you’ve saved enough or not. That’s why it’s important to know as much about your Social Security situation as possible. And you don’t want to wait until you’re about to retire to gather the facts and take appropriate steps. Social Security planning needs to start 5 years before your target retirement date.
Check your estimated benefit amount
The easiest way to check Social Security’s estimate of how much you’ll receive is to check online. Go to and create a My Social Security account. This is where you can find:

Estimates of how much you’ll receive if you claim benefits early, at your Full Retirement Age (FRA) or at age 70.
Your most recent Social Security statement
Your eligibility for Social

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Don’t Forget the Health Care Power of Attorney

March 9, 2021

The mention of estate planning usually evokes thoughts of a will or trust. But there are other documents that should always be part of any estate planning package, such as a living will, a durable power of attorney, and a health care power of attorney.
Planning for the distribution of your assets after you’re gone is certainly important. But what happens if you become incapacitated and can’t care for yourself or make decisions about your health and the treatments you need? That’s why a Health Care Power of Attorney (HCPOA) should always be included in your estate planning.
Brad Henry is an estate and elder law attorney at Strauss Attorneys PLLC. Here is his primer on HCPOAs.
The Health Care Power of Attorney (HCPOA) is a document where the client appoints someone else to make medical

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States with the Biggest and Smallest Retirement Tax Bite

March 1, 2021

Remember that sage financial warning, “It’s not how much you make. It’s how much you keep.” Truer words were never spoken when it comes to retirement income. And taxes, federal and state, are one of the biggest determinants in just how much retirees have to live on.
Here are some taxes you’re likely to see in retirement, who’s doing the taxing, and how friendly—or unfriendly—they are to you.
Social Security
For many, Social Security is a major portion of retirement income. The myth is that Social Security benefits are not taxed. Not true! In fact, more than 55% of retirees who receive a Social Security payout have to pay federal taxes on 50% to 85% of their benefit.
The IRS will tax your Social Security:

If you’re single and your combined income is between $25,000-$34,000 you’ll have to

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The Biggest Mistake of Having a Living Trust

February 22, 2021

Your estate planning is complete. A living trust was created because it was the best vehicle to accomplish what you want to do. Now you can breathe easily. Or so you think.
Over the years, I’ve had new clients come to me who had invested lots of time and money to set up a trust. But when I asked if everything had been put into the trust, I got one of two reactions. The first was a quizzical look because they didn’t know what I was talking about. The other was a sheepish look because they knew what they were supposed to do and just hadn’t done it.
The biggest mistake of having a living trust is having an empty trust. If you don’t put anything in, the benefit of the trust is wiped out. That can be costly to you and the people you want to benefit. Funding a trust is simply transferring

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Medical Expense Deduction Tax Relief

February 19, 2021

It’s only taken Congress 34 years, but the threshold for claiming a medical expense deduction has finally been made permanent. For 2021 and forevermore, medical expenses above 7.5% of Adjusted Gross Income (AGI) is the law of the land if you itemize on your federal tax return and your total itemized deductions are greater than the standard deduction.
For the last ten years, like a ping pong ball in an Olympic match, the threshold has bounced back-and-forth between 7.5% and 10%. Congress voted on the medical deduction every year.
But the history of the federal medical expense deduction goes way back. It began with the United States Revenue Act of 1942. The law said the deduction was for extraordinary medical expenses that exceeded 5% of AGI. There were no specifics of what “extraordinary”

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Retirement Exit Strategy Checklist

February 10, 2021

Retirement. It’s a magic word and it’s supposed to be a magic time in your life. You’ve planned for it, worked for it, anticipated it, and expected a great life that comes after it.
Today, people are retiring at a rate 27% higher than 10 years ago. Much of the increase is because of unplanned, early retirement due to declining health of the worker, leaving the workforce to care for a family member, taking an early retirement package because of worry about future employment, or they’re being laid off or fired because of current economic conditions.
Whatever the reason for retirement, you need to be prepared with an exit plan, or as the old farmer philosophers used to say where I grew up, you need to have your ducks in a row. The decisions you make or don’t make before retiring can impact

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The Insatiable Appetite to Tax Social Security Benefits

February 8, 2021

First, it was 10%, then 20%, and today more than 50% of U.S. retirees pay taxes on their Social Security benefits, and the number is expected to go even higher. The cause seems to be that one government hand doesn’t know, or care, what the other government hand is doing.
The rub comes because income tax brackets are adjusted for inflation each year. But income thresholds determine if you pay taxes on Social Security, and how much, haven’t been adjusted for inflation since 1984 when benefits first became taxable. That’s why, over almost four decades, the number of retirees forced to pay taxes on their Social Security has gone from 10% to almost 56%.
Here are the rules that determine if you have to pay taxes on your Social Security benefit?

If you’re single and your combined income is

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5 States Lowering Taxes in 2021

January 25, 2021

To modify an old journalism adage, “When a state raises taxes, that’s expected. But when a state lowers taxes, that’s news!” And, believe it or not, there are some states doing just that in 2021.
Yes, across the United States taxes are still going up in lots of places. According to the Tax Foundation, 26 states and the District of Columbia are making substantial changes to their tax codes. Estate tax rules are changing in Connecticut and Vermont. Colorado, Georgia, and Oregon will charge more taxes on cigarettes and vaping. And Arizona and New Mexico are adding new higher tax brackets.
But who are these renegade states who have the audacity to give more of the people’s money to the people? There are five.
Tennessee has had no state income tax for decades. But, since 1929, it’s

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