MONEYMONEYSOLUTIONSSOLUTIONS

TAXDEDUCTIONS:THOSE YOU SHOULDN’T MISS

All aboutSocial Security

OBAMA’S HEALTHCARE REFORMhow it affects

your taxes

Copyright 2013 The Valley News & The Herald-Journal

January 2013

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3

By DENISE JONESSocial Security Manager

in Council Bluffs, IA

A “RAISE” FOR PEOPLEWHO GET SOCIAL SECURITY

As we ring in a new year, we can expectto see a number of changes. Social Securityis no exception: in 2013, people whoreceive Social Security or SupplementalSecurity Income (SSI) payments will seetheir benefits increase.

Beginning in 2013, a 1.7 percent cost-of-living adjustment (COLA) was applied toall Social Security and SSI payments. Theaverage monthly Social Security benefit fora retired worker in 2013 is $1,261 (up from$1,240 in 2012) and the average monthlySocial Security benefit for a disabled work-er in 2013 is $1,132 (up from $1,113 in2012). These changes were reflected in SSIpayments dated December 31, 2012 andSocial Security payments dated in January2013.

For people who receive SSI, the maxi-mum federal payment amount has risen to$710 (up from $698).

Other Social Security changes in 2013are worth noting. For example, a workernow pays Social Security tax on up to$113,700 of annual income (up from$110,100 in 2012). A worker earns onecredit after paying taxes on $1,160 in earn-ings in 2013 (up from $1,130). As always, aworker may earn a maximum of four cred-its each year and a person generally needsforty credits (or ten years of work) to be eli-gible for retirement benefits.

To learn more about these and otherchanges for 2013, visit the Social Security

website at www.socialsecurity.gov, andread our fact sheet about the changes atwww.socialsecurity.gov/pressoffice/fact-sheets/colafacts2013.htm.

FINANCIAL WELLNESS CANBE YOURS IN 2013

January is Financial Wellness Month — agreat time to think about your own financialfuture. It also happens to be at this time thatmany people make resolutions for the NewYear. Why not combine the two and makeyour own financial wellness a resolution for2013?

Here are our suggested resolutions foryour financial wellness.

Start your financial plan with yourSocial Security Statement. The onlineStatement is simple, easy to use, and pro-vides estimates you should consider inplanning for your retirement. It providesestimates for disability and survivors bene-fits, making the Statement an importantfinancial planning tool. Your Statementallows you to review and ensure that yourearnings are accurately posted to yourSocial Security record. This feature isimportant because Social Security benefitsare based on average earnings over yourlifetime. If the information is incorrect, oryou have earnings missing from yourrecord, you may not receive all the benefitsto which you are entitled in the future.www.socialsecurity.gov/mystatement

Work the numbers. Once you get youronline Statement, you can use the other freeresources provided by Social Security. Useour Retirement Estimator, where you canget a personalized, instant estimate of yourfuture retirement benefits using differentretirement ages and scenarios. Visit theRetirement Estimator at www.socialsecuri-ty.gov/estimator

Once you are in the know, choose tosave. The earlier you begin your financialplanning, the better off you will be. SocialSecurity replaces about 40 percent of theaverage worker’s pre-retirement earnings.Most financial advisors say that you willneed 70 percent or more of pre-retirementearnings to live comfortably. You also willneed other savings, investments, pensionsor retirement accounts to make sure youhave enough money to live comfortablywhen you retire. Visit the BallparkEstimator for tips to help you save.www.choosetosave.org/ballpark

Do some light reading. Learn moreabout Social Security, the benefit programs,and what they mean to you and your fami-ly, by browsing through our online libraryof publications. In particular, our publica-tion entitled “When To Start ReceivingRetirement Benefits” provides helpfulinformation regarding the things youshould consider when making a decision onwhen to collect retirement benefits. Manyof our publications also are available inaudio format and other formats. Our libraryat www.socialsecurity.gov/pubs is alwaysopen.

Help someone you love. Sometimes weget the most satisfaction out of helpingsomeone else. If you have a grandparent,parent, relative, or friend who could benefitfrom Social Security, share our website andthe features of our online services withthem. You can even help a loved one applyfor Social Security benefits in as little as 15minutes — or for Extra Help with Medicareprescription drug costs. Whether you for-ward a publication or sit down to helpsomeone apply for Social Security, theplace to go is www.socialsecurity.gov.

There are a number of ways you can cel-ebrate Financial Wellness Month, so startoff the New Year by looking out for yourown financial wellness at www.socialsecu-rity.gov.

SOCIAL SECURITY CARDSAND NUMBERS

Do you know where your SocialSecurity card is located? Hopefully, it’s ina safe place, tucked away securely withyour other important papers. It certainlyshould not be in your purse or wallet andshould not be carried with you every daysince it can be more valuable than cash toan identity thief.

Do you know your Social Security

number? Chances are you have it memo-rized. If you know your number, you maynever need your card again. It is the num-ber, not the card, that is most important.

In the event that you lose your SocialSecurity card and really need a replace-ment, you can find out all the details onhow to obtain a replacement card and whatspecific documents you need to provide atwww.socialsecurity.gov/ssnumber. Eachsituation is unique, but in most cases yousimply need to print, complete, and eithermail or bring the application to SocialSecurity with the appropriate documenta-tion (originals or certified copies only).

If you need to apply for a Social Securitycard and number for your child, you can dothat the same way, and get the specificinformation at the same website. In almostall cases, though, an application for yourinfant’s Social Security card and number istaken in the hospital at the same time thatyou apply for your baby’s birth certificate.

Why does a baby need a SocialSecurity number? There are a number ofreasons, but the main one is so that you canclaim your child as a dependent on your taxreturn. Social Security numbers are alsoneeded for children to apply for certaingovernment and social service benefits.

As you prepare for tax season, justaround the corner, make sure the kids (andall the dependents) that you list on yourannual tax return have Social Security num-bers. If you want to claim your child as adependent on your tax return (and whodoesn’t?) your child will need a SocialSecurity number. Note that all dependentslisted on your federal tax return will needSocial Security numbers, including adependent parent who lives with you andreceives support from you.

Learn more about Social Security atwww.socialsecurity.gov. And learn moreabout your Social Security card and numberat www.socialsecurity.gov/ssnumber,where you can print out an application andfind out everything you need for your spe-cific situation.

MYTHS ABOUTSOCIAL SECURITY

Like any other successful and long-stand-ing program or organization, there are a

All about Social Security

see SOCIAL SECURITY, Page 4

SOCIAL SECURITYContinued from Page 3

number of myths surrounding SocialSecurity. Some of them are grounded intruth but just slightly misconstrued. Othersare completely out of line with the truth.Let’s take a look at a few.

Myth 1: Social Security is just a retire-ment program.

Social Security is more than a retirementprogram. It provides benefits to retirees,survivors, and people with disabilities whocan no longer work. In fact, almost sevenmillion disabled workers and nearly twomillion of their dependents get SocialSecurity disability benefits. Six and a halfmillion dependents of deceased workers(including two million children) get SocialSecurity survivors benefits. Social Securityis more than just retirement.

Myth 2: I don’t need to save becauseSocial Security will take care of me whenI’m retired.

Social Security was never intended to bea person’s sole income in retirement; itshould be combined with pension incomeand personal savings and investments. YourSocial Security Statement, available atwww.socialsecurity.gov.mystatement, is agreat place to get an idea of what to expectduring retirement. You can also visit our

Retirement Estimator at www.socialsecuri-ty.gov/estimator.

Myth 3: If I work after I retire, I’ll bepenalized.

Once you reach your full retirement age,there is no penalty and no limit on theamount you can earn. You can determineyour full retirement age by visitingwww.socialsecurity.gov/retirecharted.htm.The earnings limit for workers who areyounger than "full" retirement age (age 66for people born in 1943 through 1954) is$15,120 in 2013. (We deduct $1 from ben-efits for each $2 earned over $15,120.) Theearnings limit for people turning 66 in 2013is $40,080. (We deduct $1 from benefits foreach $3 earned over $40,080 until themonth the worker turns age 66.) Keep inmind that if we withhold some of your ben-efits due to work, we will re-compute yourmonthly benefit amount when you reachfull retirement age to account for thosemonths that we withheld your benefit.There is no limit on earnings for workerswho are full retirement age or older for theentire year.

Myth 4: To apply for benefits or do busi-ness with Social Security, I need to go to anoffice.

Not only is this false, but we encourageyou to do business with us the most conven-ient and fastest way: at www.socialsecuri-ty.gov. At our website, you can apply for

benefits, use our Retirement Planner, get anestimate of your benefits, request a replace-ment Medicare card, and much more. You’llfind it all — along with answers to yourquestions — at www.socialsecurity.gov.

QUESTIONS AND ANSWERSGENERAL

Question:I applied for my child's Social Security

card in the hospital but have not received it.How long must I wait?

Answer:On average, it takes about 4-5 weeks

from the time you apply in the hospital untilyou receive your child’s Social Securitycard in the mail. However, it can varydepending on the State where you live. Ifyou have not received your child's cardwithin six weeks, please visit your localSocial Security office. Be sure to take withyou proof of your child’s citizenship, ageand identity as well as proof of your ownidentity. And remember, we cannot divulgeyour child’s Social Security number overthe phone.

Question: Is it illegal to laminate your Social

Security card?

Answer: No it is not illegal, but it’s best not to

laminate your card. Laminated cards makeit difficult, if not impossible, to detectimportant security features. Also, youremployer may refuse to accept it. TheSocial Security Act requires Social Securityto issue cards that cannot be counterfeited.We incorporate many features to protect thecard’s integrity. That includes highly spe-cialized paper and printing techniques —some visible to the naked eye and some not.Further, we continue to explore and adoptnew technologies that hamper duplication.Keep your Social Security card in a safeplace with your other important papers. Donot carry it with you. Learn more atwww.socialsecurity.gov/ssnumber.

RETIREMENTQuestion: I’m planning to retire next year. I served

in the Navy back in the 1960s and need tomake sure I get credit for my military serv-ice. What do I need to do?

Answer:You don’t need to do anything to apply

for the special credit for your military serv-ice—it is added automatically. For servicebetween 1957 and 1967, we will add theextra credits to your record at the time youapply for Social Security benefits. Forservice between 1968 and 2001, those extramilitary service credits have already beenadded to your record. So you can restassured that we have you covered. Read ouronline publication, Military Service andSocial Security, at http://www.socialsecuri-ty.gov/pubs/10017.html. And when the timecomes to apply for retirement, you can do itconveniently and easily at www.socialsecu-rity.gov/retireonline.

Question:I have young children at home and I plan

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Lester never finished school, but he learned a lot mopping classroom floors. “You kids can be anything you want,” he’d say. Lester wasn’t rich, but because he included a gift to support the school’s tutoring program in his will, things will add up for a few more students.

Include your favorite cause in your will or estate plan.

What will your Legacy be?

Consider including your favorite charity or charities in your will or estate plans.

Contact your attorney, financial advisor or favorite charity to

learn more.

Sponsored by these local Leave A Legacy® members:

Clarinda FoundationClarinda Medical FoundationClarinda Public School DistrictClarinda Youth CorporationGrandma’s House Day Care

Iowa Western Community CollegePage County Federal Savings AssociationShenandoah Healthcare Foundation

Southwest Iowa Families, Inc.Greater Shenandoah Foundation

Jennie Edmundson Hospital

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SOCIAL SECURITYContinued from Page 4

to retire next fall. Will my children be eligi-ble for monthly Social Security checks afterI retire?

Answer:Monthly Social Security payments may

be made to your children if they are:·Unmarried and under age 18; ·Age 19 if still in high school; or·Age 18 or over, who became severely

disabled before age 22 and continue to bedisabled.

In addition to biological children, legallyadopted children, dependent stepchildren,and grandchildren could be eligible. Formore information, please read our publica-tion Benefits for Children at www.socialse-curity.gov/pubs/10085.html.

SUPPLEMENTAL SECURITYINCOMEQuestion:I thought I'd be eligible for Supplemental

Security Income (SSI) and I was going toapply until I talked to my neighbor. She saidI would be turned down because I have chil-dren who could help support me. Is thistrue?

Answer:Whether you can get SSI depends on

your own income and the things you own. Ifyou have limited income and few resources,you may be able to get SSI. However, ifyou are receiving support from your chil-dren or from anyone else, it could affectyour monthly benefit amount. Supportincludes any food or shelter that is given toyou, or is received by you, because some-one else pays for it. For more information,visit our website about SSI atwww.socialsecurity.gov/ssi.

Question:I got a notice from Social Security that

said my Supplemental Security Income(SSI) case is being reviewed. What does this

mean?Answer:Social Security reviews every SSI case

from time to time to make sure the individ-uals who are receiving payments are stilleligible and should continue to receivethose payments. The review also will makesure you are receiving the correct amount inbenefits. We could be paying you too muchor too little. To learn more about SSI, visitwww.socialsecurity.gov/ssi.

DISABILITYQuestion: What is the difference between the dis-

ability application and the disability report?Do I have to complete both?

Answer:The Disability Application is an applica-

tion for Social Security disability benefits.To receive Social Security disability orSupplemental Security Income disabilitybenefits, you must file an application. TheDisability Report, meanwhile, is a form thatprovides Social Security with informationabout your current medical condition. Weneed this information to process your dis-ability application. To start a claim for dis-ability benefits, you need to complete a dis-ability application, a disability report, andan authorization release form that allows usto obtain your medical records. You can getthe disability application process started atwww.socialsecurity.gov/applyfordisability.

Question:I’ve been turned down for disability ben-

efits. How do I appeal?Answer:Visit www.socialsecurity.gov and click

on the “Appeal a disability decision online”link in the left-hand column. This is thestarting point. There you can ask us toreview our medical decision. There are twoparts to the Internet appeal process:

1) An Appeal Request Internet form; and 2) An Appeal Disability Report, which

gives us more information about your con-dition.

You can complete both forms online. Toappeal online, the only form you arerequired to submit is an appeal request (Part1). However, we encourage you to submitan Appeal Disability Report (Part 2)because it will give us more informationabout you and help us process your appealmore quickly. The place to start iswww.socialsecurity.gov.

MEDICAREQuestion:

see SOCIAL SECURITY, Page 6

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SOCIALSECURITYContinued from Page 5

In talking with my son, Ifound out that he submittedincorrect information aboutmy resources when he com-pleted my Application forHelp with MedicarePrescription Drug PlanCosts. How can I get myapplication changed now toshow the correct amount?

Answer:You can call 1-800-772-

1213 and let us know. Or,you can contact your localSocial Security office. (Findit by going to www.socialse-curity/locator/.) Data onyour application will bematched with data fromother federal agencies. Ifthere is a discrepancy thatrequires verification, we willcontact you. Learn more atwww.socialsecurity.gov/extrahelp.

Iowa Department of RevenueBeginning Jan. 1, a new E911 surcharge was

imposed on the purchase of prepaid wirelesstelecommunication service. The surcharge iscollected from the consumer by retailers.

Prepaid telecommunication service includes:Prepaid wireless telephone minute cards; Prepaid phones that include minute plans; or Prepaid wireless service in any other form. If you sell prepaid wireless telecommunica-

tion service, you will be required to collect 33cents per retail transaction. “Retail transaction”means the purchase of prepaid wirelesstelecommunications service from a seller forany purpose other than resale. If more than oneseparately priced item of prepaid wireless call-ing service is purchased by an end user, eachitem purchased constitutes a separate retailtransaction. For example, if a seller sells twoprepaid wireless phone calling cards to one con-sumer, two retail transactions have occurred.

There are limited exceptions to this require-ment. If a minimal amount of prepaid wirelesstelecommunications service is sold with a pre-

paid wireless device for a single, nonitemizedprice, the seller may elect not to apply the pre-paid wireless surcharge to the retail transaction.A minimal amount of service is denominated asten minutes or less, or five dollars or less.

Retailers are permitted to keep 1 cent from

each retail transaction.The remaining 32 cents per transaction must

be paid to the Iowa Department of Revenuewhen filing the Iowa sales tax return througheFile & Pay at: www.iowa.gov/tax

Surcharge on prepaidtelecommunication services begin

7

By TESS GRUBER NELSONManaging Editor

When it comes to taxes, unlessyou are an accountant, things canget real confusing, real fast.Regardless, CPA David Lashier,of Miller, Shearer and Lashier, inShenandoah said there’s no reasonwhy someone can’t file their owntaxes. However, he added thereare a few common tax deductionsone should take advantage of inthe adjusted gross income section,as well as some that are availableif you choose to itemize yourdeductions.

■ A student loan interestdeduction will allow you todeduct the interest you pay, if youare a current or former studentpaying on a qualified student loan.But Lashier said if you are mar-ried, and you file separately, youcan’t take advantage of thisdeduction.

■ Moving expense tax deduc-tion allows you to deduct yourmoving expenses from yourincome. In order to qualify for thisdeduction, one’s new job must bea minimum of 50 miles fartheraway than the old job location,and it must be a full-time job – atleast 39 hours during the first 12months right after you start thenew job.

■ A tuition and fees deductionwill allow a taxpayer to deduct thecost of college tuition, and othermandatory school fees, if current-ly a college student. Lashier saidthis is a deduction you don’t haveto itemize to utilize. Instead, onecan use it as a way to adjust yourincome or take a college fees cred-it. Additonally, in Iowa, Lashier

said there is a Iowa Tuition andTextbook Credit that will allowyou to deduct workbook fees orother specific supplies Taxpayerswho have one or more dependentsattending Kindergarten through12th grade in an accredited Iowaschool are eligible. The creditamount is 25 percent of the first$1,000 paid for each dependent

for tuition and textbooks. To readwhat is eligible to deduct andwhat isn’t, go tohttp://www.iowa.gov/tax/1040EI/Line/10Line48.html. For exam-ple, Lashier said football, soccer,and golf shoes, as well as trackspikes are eligible, but basketballshoes are not – because they arealso suitable for everyday wear.

■ Health Savings Accountcould be a deduction, but only ifyou are covered by a high-deductible health insurance planand can’t be covered by any otherhealth insurance plant.

■ Did you know you candeduct mileage for medical pur-poses? Lashier said 23 cents permile can be deducted from yourtaxes if you are driving to andfrom a medical treatment facilityfor a medical condition.

■ Like to help out your churchor a charitable organization?Lashier said you can also deductmileage, if using your personalvehicle for charitable work – 14cents per mile to be exact. On topof that, if you incur out of pocketexpenses in helping a charity, thatcost can be deducted as well.

■ Lastly, Lashier said givingaway items you no longer want,lets say to West CentralDevelopment, or Goodwill, youcan deduct what you gave away, ifgiven a receipt from the organiza-tion that is detailed with what wasgiven away, and the dollaramount.

“It’s too bad it has to be compli-cated,” said Lashier, “But fortu-nately, it’s a little bit easier to findsome extra money on your returnswith the deductions above. “

The Internal Revenue Serviceencourages individuals and busi-nesses to safeguard themselvesagainst natural disasters by takinga few simple steps.

Create a Backup Set ofRecords Electronically

Taxpayers should keep a set ofbackup records in a safe place.The backup should be stored awayfrom the original set.

Keeping a backup set of records–– including, for example, bankstatements, tax returns, insurancepolicies, etc. –– is easier now thatmany financial institutions pro-vide statements and documents

electronically, and much financialinformation is available on theInternet. Even if the originalrecords are provided only onpaper, they can be scanned into anelectronic format. With docu-ments in electronic form, taxpay-ers can download them to a back-up storage device, like an externalhard drive, or burn them to a CDor DVD.

Document ValuablesAnother step a taxpayer can

take to prepare for disaster is tophotograph or videotape the con-tents of his or her home, especial-ly items of higher value. The IRS

has a disaster loss workbook,Publication 584, which can helptaxpayers compile a room-by-room list of belongings.

A photographic record can helpan individual prove the marketvalue of items for insurance andcasualty loss claims. Photosshould be stored with a friend orfamily member who lives outsidethe area.

Update Emergency PlansEmergency plans should be

reviewed annually. Personal andbusiness situations change overtime as do preparedness needs.When employers hire new

employees or when a company ororganization changes functions,plans should be updated accord-ingly and employees should beinformed of the changes.

Check on Fiduciary BondsEmployers who use payroll

service providers should ask theprovider if it has a fiduciary bondin place. The bond could protectthe employer in the event ofdefault by the payroll serviceprovider.

IRS Ready to HelpIf disaster strikes, an affected

taxpayer can call 1-866-562-5227to speak with an IRS specialist

trained to handle disaster-relatedissues.

Back copies of previously-filedtax returns and all attachments,including Forms W-2, can berequested by filing Form 4506,Request for Copy of Tax Return.

Alternatively, transcripts show-ing most line items on thesereturns can be ordered on-line, bycalling 1-800-908-9946 or byusing Form 4506T-EZ, ShortForm Request for Individual TaxReturn Transcript or Form 4506-T, Request for Transcript of TaxReturn.

Tax deductions one shouldn’t miss

Prepare for disasters by safeguarding tax records

8

We look forward to your continued business in 2013.

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Every day, locals look to us for the latest shoppingnews, sales and coupons. Put your business in thespotlight with professionally designed print and onlineadvertising, or pinpoint your market in one of our themedspecial sections. Research shows that 79 percent

of readers acted on a newspaper ad in the past month,and newspaper advertising is still the number-oneresource consumers use to plan shopping and purchasingdecisions. So why are you still waiting? Put newspaperadvertising to work for you today!

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By KRISTAN GRAYStaff Writer

Everyone who files their taxeswill see financial changes fromPresident Obama’s comprehen-sive health care reform, and as taxday approaches, H&R Block isanswering questions.

“March 23, 2010, PresidentObama signed the comprehensivehealth care reform, known as the‘Patient Protection and AffordableCare Act’ into law,” said H&RBlock’s Senior Tax Advisor 5Tammie Carpenter. “The lawtakes affect in several phases. Itmandates that individuals obtainhealth insurance and createshealth care exchanges to helpthose who don't have health insur-ance to purchase it.” Carpenterdetails the changes and effectivedates below:

Tax season 2013 and health carereform: Beginning January 1,2013, the Affordable Care Actrequires virtually all US citizensand legal residents to have health

insurance or pay a tax penalty.Based on a family's householdincome and family size, they maybe eligible for the cost of healthinsurance premiums. The federalgovernment now uses the house-hold income and family size fromthe 2012 federal tax return as theprimary source to determine eligi-bility and potential penalty. The

2012 tax return is filed and basicqualification information is pro-vided to the health care exchangethat opens October 1, 2013.

Health Care Reform time line: 2012 - tax return filed and used

to determine eligibility for cover-age

2013 - Employer sponsoredcoverage recorded on W-2

2014 - 2013 tax return filed andused to determine eligibility forcoverage. Americans must obtaininsurance coverage or face taxpenalty on their 2014 tax return

2015 - 2014 tax return requiredfor those who took a subsidy

2014 - tax return filed and usedto determine eligibility for cover-age; reconciliation via 2014return: Subsidy adjustment inform of credit or additional tax;2014-Penalty assessed for non-compliance

Tax Specific Implications ofHealth Care Reform:

1) 2012 Federal Tax Return-Primary and most efficient meansfor the government to determineHealth Care Coverage and/or sub-sidy. 2014 household income isestimated based on the 2014return. The greater the subsidy,the less an individual will pay forinsurance.

2) W-2 documents are used toflag employer Health Care cover-age.

3) 2014 Federal Tax Return:

When filed in calendar year 2015,those subject to the mandate whodon't have coverage may pay apenalty. Penalty will be low tostart and increase over the years.

4) Tax Penalty: Citizens who donot comply with mandate to haveHealth Care coverage will bepenalized in the form of a tax onthe Federal Tax Return (via 1099type form).

5) Reconciliation/Adjustments:Tax Return will be used for recon-ciliation/adjustments for overpay-ment or underpayment of subsidybased on individual changes in theprior year.

6) Other tax impacts: Changesto Medicare tax, Health SavingsAccount and Flexible SpendingAccounts, and medical expensededuction.

“A tax service that aids in navi-gating the health care reform as itrelates to taxes would be helpfulto people,” Carpenter added. “Anynon-tax questions should bereferred to insurance experts.”

Here’s how Obama’s Health Care Reform affects your taxes