Archives for February 2013

2012 RESIDENTIAL ENERGY CREDIT

February 19, 2013 by Frank

The rules regarding residential energy credits are continuously changing. Homeowners who make improvements in one year may not be eligible for the tax credit, whereas they may have been entitled to the credit in either the preceding or following tax year. The American Taxpayer Relief Act of 2012 (2012 Taxpayer Relief Act) provides benefits to homeowners by extending the Credit for Non-business Energy Property (CNEP) for 2012 and 2013.

The CNEP can be taken when qualified energy efficient improvements or expenditures are made to a taxpayer’s principal residence, including [Read more…] about 2012 RESIDENTIAL ENERGY CREDIT

IS THE LIFE INSURANCE DEATH BENEFIT PAID TO A BENEFICIARY FROM YOUR EMPLOYER-OWNED LIFE INSURANCE (EOLI) POLICY TAXABLE?

February 12, 2013 by Frank

The death benefit proceeds from a life insurance policy are generally excluded from income tax. At the same time, no tax deduction is allowed for premiums paid on any life insurance policy if one is directly or indirectly the beneficiary of the policy.

Businesses find life insurance attractive because it allows for the inside buildup of cash value and the death benefit to be free of income tax. Life insurance owned by a business is commonly referred to as company-owned life insurance (COLI). Life insurance is an efficient approach to addressing the business’s future obligations, which can include:

Protect against the death of key employees;
Accumulate cash to fund future obligations under employee benefit plans; and
Fund buy-sell agreements.

What many business owners do not realize is that IRC Sec. §101(j) (enacted with the Pension Protection Act of 2006 with respect to policies issued after Aug. 17, 2006) subjects death benefit proceeds of an EOLI to income taxation [Read more…] about IS THE LIFE INSURANCE DEATH BENEFIT PAID TO A BENEFICIARY FROM YOUR EMPLOYER-OWNED LIFE INSURANCE (EOLI) POLICY TAXABLE?

WILL SOCIAL SECURITY AND 401(K) MONIES BE AVAILABLE WHEN YOU RETIRE?

February 5, 2013 by Frank

Employers have been transitioning from defined benefit pension plans to defined contribution plans for several years. In 1980, four out of five private-sector workers were covered by traditional pensions that paid them a fixed benefit based on their salary and length of service once they retired. Now, just one in five workers has a pension. So when planning for retirement, many working Americans today will not have a monthly pension income for their lifetime as their parents did.

Ah, but there is social security. However, Social Security is a big unknown. While politicians will unlikely take this benefit away, who knows what you will receive when you retire. The SSA website even states “The law governing benefit amounts may change because . . . the payroll taxes collected will be enough to pay only about 75 cents for each dollar of scheduled benefits.”

If pension plans and social security are not sufficient to fund a retirement, it brings us to the question: “Will the American worker be able to depend upon his/her 401(k) or similar retirement benefit to supplement their Social Security benefit?”

It has been reported that a large and growing number of American workers (over one in four) are tapping their retirement savings accounts for non-retirement needs (e.g., mortgage, credit cards, other bills), raising broad questions about [Read more…] about WILL SOCIAL SECURITY AND 401(K) MONIES BE AVAILABLE WHEN YOU RETIRE?