Federal Income Tax and Social Security Disability

Posted on: December 6th, 2014 | Comments Off

uncle samDo I have to pay taxes on my Social Security disability benefits?  This is a common question this time of year.  D. Michael Carmody, CPA, gave me an overview of the rules.  Some people have to pay federal income taxes on their Social Security benefits.  This usually happens only if you (and your spouse) have other substantial income.  This could include wages your spouse earns from working, income from rental properties or investments. 

 If you file a federal tax return as an “individual” and your total income is at least $25,000, then you may have to pay income tax on a portion of your benefits.  For persons filing jointly, $32,000 or more is the amount that can make your benefits taxable.

 Maybe your Social Security claim was approved during the year 2013 and you received a lump sum retroactive payment that covered prior years.  In that event you can apportion past-due benefits to previous years, thus lowering or eliminating the taxable amount of the lump sum per year, without having to file amended tax returns.  The formula for calculating your tax liability is highly technical and confusing.  It is recommended that you contact a tax professional to prepare your return. 

 If you do have to pay taxes on your Social Security benefits, you can make quarterly estimated tax payments to the IRS or have federal taxes withheld from your benefits.

 It should be noted that SSI (Supplemental Security Income) is not taxable.  For professional preparation of your tax return, contact D. Michael Carmody, CPA in Haddon Heights (856-310-0717)

Drowning in Debt? Can bankruptcy be the answer?

Posted on: December 10th, 2013 | Comments Off

Disability and debt often go hand in hand unfortunately.  Those who are sick and out of work will face a pile of bills, collection phone calls, and threatening letters.  I sat down with attorney Barbara Snavely to discuss how bankruptcy may help my clients.

There are two types of bankruptcies for individuals, Chapter 7 and  Chapter 13.   A Chapter 7 works best for those who:

-       have lots of unsecured debt (for example, credit cards, utility bills, unsecured personal loans);

-        do not own much property;

-       do not have much income.  The maximum income for an individual is approximately $60,000 per year; for a family of four, it’s around $100,000.

In a Chapter 7, a trustee who is appointed by the court gathers and sells your non-exempt property.  The proceeds from the sale are used to pay your creditors  according to the priority of the claims.

A Chapter 13 is a good option for those who:

-       owe debt that is the result of a temporary financial setback;

-       own lots of property, such as houses, land, cars, that you want to

entirely protect;

-       have steady, regular income with which to make payments to a trustee;

-       are behind in rent, mortgage or car payments.

A Chapter 13 works to consolidate, order and, in some cases, reduce your debts.  Then, instead of juggling your bills and creditors, you will make one monthly payment (except for home mortgage and car payment loans) to your court-appointed trustee who will handle your creditors.  No more calls from creditors!

Once your bankruptcy case is filed with the court, your creditors cannot collect on your debts because of what is call and “automatic stay.”

Social Security Disability payments are protected in bankruptcy in most cases.  Since SSI payments are intended to provide basic living expenses, they may never be taken in a bankruptcy.

The prospect of filing bankruptcy can be frightening.  Just talking to a bankruptcy attorney does not necessarily mean you have made a decision.  It can just be part of an information-gathering process.  Don’t wait until your circumstances are desperate and you only have days in which to stop foreclosure, vehicle repossession or other collection actions.  Consultations are usually free.

This is a simplified overview of the options.  There are numerous guidelines for each type of bankruptcy.  Get professional advice from an attorney who concentrates in the area of bankruptcy.   Barbara Snavely is an associate in the Law Office of Joseph Rogers in Turnersville.  She can be reached at (856) 228-7964.

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Categorised under: Financial assistance

Can’t Pay Your Mortgage? There are options (part 1)…

Posted on: June 2nd, 2013 | Comments Off

If you’re sick and out of work, you may fall behind on your mortgage before long. Approval of your disability claim can take six months to two years or more. Indeed, approval of your disability claim is not guaranteed.  I sat down with Rich Bradford of Re/Max Connection Turnersville to discuss the options for those who find themselves unable to keep up their mortgage payments.

1. Lender programs. There are programs that your lender may want to put you in; however, the requirements for these are very specific. Be aware that the lender has its own best interests in mind, not yours, but they may have a program that works well for your situation.

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Categorised under: Financial assistance

Help with Heating Bills

Posted on: June 2nd, 2013 | Comments Off

New Jersey residents may have to dig deeper into their pockets to heat their homes this winter. Temperatures are predicted to be 18 percent colder than last winter, resulting in higher heating bills. The following programs are designed to assist disabled and low income persons with heating costs.

Low Income Home Energy Assistance Program (LIHEAP). This is a federally funded program. There are income requirements, and the benefit amount is determined by income, household size, fuel type and heating region. For more information call (800) 510-3102.

Universal Service Fund (USF).  The USF will provide a fixed-credit percentage-of-income payment plan where participants will have to pay no more than six percent of their annual income toward heating, electric and gas bills. Credit will be provided to qualified low-income customers, senior citizens, and the disabled. You can apply for USF and LIHEAP with a single application.

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Categorised under: Financial assistance