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If you’re approaching the later years of life and do not have a life insurance policy in place, it will be difficult to qualify for affordable coverage. The good news? There are still available options to keep your loved ones financially protected if you were to pass away, one of which is final expense insurance. Here we take a closer look at the benefits of purchasing this type of coverage.

What is Final Expense Insurance?

Final expense insurance is a type of insurance used to provide coverage to your loved ones for any debt or bills that you leave behind after you have passed away.

5 Reasons to Purchase Final Expense Insurance

It covers funeral expenses. Did you know the average cost of a traditional funeral is between $8,000 to $10,000?! Cremation is less expensive, however, it can still cost upwards of $5,000. Final expense insurance would provide coverage for funeral expenses which would undoubtedly be a huge relief for your loved ones.  

It will help pay for medical bills. If there are any outstanding medical bills after your death, your loved ones will be responsible for the payments. A final expense insurance policy will provide the necessary funds to either cover your medical bills or help with making payments towards the debt.

It gives your loved ones a financial cushion. During the time after your passing, loved ones will benefit from having a financial cushion to rely on. Perhaps, they need to take time off from work to get things in order or simply need time to mourn your passing. Funds that are received from final expense insurance can be applied to anything your loved ones need financial assistance with.

It allows you to purchase a business partner’s shares. If you are in a business partnership, it is a good idea to purchase final expense insurance should your business partner pass away. The money received from this coverage can be used to pay off his or her share of the company’s obligations.

It can be put towards paying estate taxes. As of 2020, if your estate is valued over $11.58 million ($23.16 million for couples), the remaining value is subject to taxation (a.k.a. estate tax). With final expense insurance coverage, your loved ones can use the benefit to pay any estate taxes, and therefore, will not be forced to sell off any assets.  

Maggi Tax Advisory & Financial Group can help you protect your loved ones.

With careful preparation, end-of-life planning doesn’t have to break the bank. At Maggi Financial Tax Advisory & Financial Group, we recommend that our clients who are approaching retirement or have already retired, include end-of-life expenses in their retirement planning package. One of the best ways to prepare is to purchase final expense insurance. To learn more about how you can protect your loved ones, call our Hillsborough office at (813) 850-0131 and our Pinellas/Pasco office at (727) 351-6168.

Navigating through social security benefits is not easy! That is why it is helpful to have an experienced financial advisor on your side who can help navigate you through the process. Here we take a moment to answer some of the most common questions we receive about Social Security benefits.

1) What is social security?

In 1935, social security was introduced as an effort to provide retirement income for certain American workers. The program quickly extended to cover most of the American workforce. Today, it remains “America’s Pension Plan” and the financial lifeline that many people rely on well into their old age.

2) When will I become eligible for Social Security benefits?

Eligibility for full retirement benefits can start as early as age 65 or as late as age 67, depending on the year you were born. You can receive Social Security benefits as early as age 62, however, your monthly benefits will be reduced. For example, if you start taking benefits at 62 and your full retirement age is 66, you will receive 25% less in monthly benefits. On the other hand, if you postpone taking benefits past your full retirement age, you will receive higher benefits (8% for each year up to age 70).

3) How is my eligibility determined?

Your Social Security eligibility is based on the credits earned during your working years. As of 2021, for every $1,470 you make, you earn one credit and up to a maximum of four per year. For individuals born in 1929 or later, 40 credits (or 10 years of full-time work) are needed to receive Social Security benefits at retirement.

From there, your benefits will be based on your highest 35 years of averaged earnings. If you didn’t work the full 35 years, your unemployed years will show zero income and would create a significant disadvantage to your earnings formula.

4) How much am I required to pay into Social Security?

As of 2021, American workers are required to contribute 6.2% of up to $142,800 of their income into Social Security with employers required to pay another 6.2%. Self-employed individuals must pay both portions or 12.4%.

5) Can I receive Social Security benefits if I’m still working?

Yes, if you’ve reached full retirement age and are still working, you can earn as much as you’d like and still receive full benefits. If you choose to receive benefits before your full retirement age, those benefits will be reduced temporarily. But don’t worry. Social Security will credit the money that is held from your reduced monthly benefits and pay out when you finally reach full retirement age.  

6) Will I owe taxes on Social Security benefits?

Most likely, however, how much you owe is based on your income. As of 2020, the amount of Social Security benefits subject to taxation is based on the following:

  • For couples who file jointly and have a combined income between $32,000 and $44,000, 50% of Social Security benefits will be taxed.
  • For couples who file jointly and have a combined income of more than $44,000, 85% of Social Security benefits will be taxed.
  • For singles with an income between $25,000 and $34,000, 50% of their Social Security benefits will be taxed.
  • For singles with an income of more than $34,000, 85% of their Social Security benefits will be taxed.

Maggi Tax Advisory & Financial Group can help maximize your Social Security benefits!

Want to make the most of your Social Security benefits? Maggi Tax Advisory & Financial Group can help! To learn more about our financial services, please call our Hillsborough office at (813) 850-0131 and our Pinellas/Pasco office at (727) 351-6168.

The pandemic has complicated everything, so why shouldn’t your taxes be any different? This year, the deadline to file 2020 taxes is May 17, 2021, but even with the extra month, filing on time may be a challenge.

So, what’s next if you miss the tax deadline? First thing is, don’t worry. It’s not the end of the world, however hefty penalties could apply if you don’t take the necessary steps to filing your taxes. Here are different ways you can minimize the penalties and interest if you file your taxes after the deadline.  

E-File Your Return

If you miss the deadline, the most important thing you can do is file your tax return quickly, and e-filing is the way to make that happen. Typically, e-filing services are available through October 15 which is also the deadline for filing late if you requested an extension.

If you don’t file for an extension by the tax filing deadline, you will have to pay a “failure-to-file” penalty (5% of the amount of taxes you owe for every month your return is late, up a to maximum of 25%). The penalty for filing late is ten times higher than the penalty for paying late, so you want to get your return filed as soon as possible!

Pay What You Can

If you are unable to pay your tax bill in full, pay as much as you possibly can to minimize the penalties and interest. Need additional time to pay? The IRS has different payment plans available for both individuals and business owners; your eligibility based on the amount you owe. Penalties and interest will still apply until the tax bill is paid in full, but if you’re making payments, you will not be subject to any additional collection actions.

Special Circumstances

The IRS wants their money, but they’re not heartless and recognize that special circumstances may prevent you from filing your return on time. For example, if you’re a U.S. citizen and have been out of the country during the filing deadline, you are automatically granted an additional two months to file your return without having to pay penalties. If you still need more time to file, you can request a four-month extension.

Penalties may also be waived if you couldn’t file your taxes on time because of a situation that was beyond your control, i.e., you had major surgery or an emergency that required you to travel.

You Just Don’t File

Under no circumstances is not filing your taxes a smart move. Period. While it may take several months or even years for the IRS to notice that you didn’t file your taxes, the tax man will eventually come calling.

Typically, you will receive a notification letter that you have an outstanding tax liability. However, at this point, you may have already racked up significant penalties, interest, and late fees. Other consequences may include a lien on your property, target of a tax audit, even jail time.

Maggi Tax Advisory & Financial Group is here to help with your 2020 tax return!

Need help filing taxes this year? Contact the financial advisors at Maggi Tax Advisory & Financial Group today to schedule a consultation. We can be reached at our greater Tampa Bay locations: Hillsborough at (813) 850-0131, Pinellas at (727) 351-6168, and Pasco at (727) 351-6168.

Covid-19 affected every aspect of our everyday lives last year, so, why wouldn’t it impact the 2020 tax season as well? If you’re starting to file your taxes and are curious to know how the pandemic will impact your tax bill, here are a few key points to consider.

The Tax Season Start Date

Typically, the IRS begins processing tax returns in mid-January, but this tax season didn’t officially kick off until February 12, thus pushing the tax deadline to May 17. At first thought, you may think this buys you time to file your taxes. It does, however, if you’re expecting a refund, you should file your return ASAP and do it electronically with a link to your bank account for a direct deposit.

More food for thought? If your 2019 income didn’t qualify you for economic stimulus payments but your 2020 income did, filing your 2020 taxes sooner could enable you to receive stimulus payments.

Stimulus Payments and Taxes

If you received Covid-19 Economic Impact Payments, a.k.a. stimulus checks, here are important facts to know regarding your taxes:

Covid-19 stimulus payments are not taxable. If you received stimulus checks, they will not have any impact whatsoever on your taxes.

Stimulus money does not have to returned. If your 2020 tax return ends up showing that your income exceeded the eligibility limits for the stimulus ($75,000 or less for an individual, $112,500 for the head of household, $150,000 for a married couple), there’s no need to worry. As long as your 2018 and 2019 income qualified you, you can keep the money.

If you are eligible for a stimulus check but haven’t received one, you can still file for it. If you file for the Recovery Rebate Credit on your 2020 tax return, you can receive a stimulus payment in the form of a tax credit. Depending on your situation, this will reduce the amount you owe or increase your refund payment.

Special Rules for Retirement Withdrawals and Medical Expenses

Covid-19 created a financial burden for many people, thus requiring unusual actions to help cover expenses. Here’s how your taxes may be affected…

Tax penalties to withdraw from retirement accounts have been voided. If you had to withdraw money from your 401(k) or IRA to cover expenses in 2020, there’s good news. The IRS allowed taxpayers to take up to $100,000 from retirements accounts such as a 401(k), 403(b), or IRA between January 1, 2020 and December 30, 2020 without having to pay a 10% additional tax on early distributions. It gets better. You have three years to report the distribution, and if you repay the distribution within that time frame, you can file amended tax returns to recoup the taxes you paid.

Additional medical expenses can be deducted. If you paid more than 7.5% of your adjusted gross income for medical expenses in 2020, that amount can be deducted from your taxes. If you have a qualifying high-deductible health plan, you can also self-fund your HSA (health savings account) before the tax deadline and use those funds to pay outstanding medical bills or future medical expenses.  

Maggi Tax Advisory & Financial Group Can Help with Your 2020 Taxes

Taxes are confusing, and this year, they’re more confusing than ever! Maggi Tax Advisory & Financial Group can help! To learn more about our financial services, please call our Hillsborough office at (813) 850-0131 and our Pinellas/Pasco office at (727) 351-6168 

When it comes to money every penny counts, especially when you’re retired! Fortunately, there are plenty of ways to save money in retirement by minimizing your tax bill. The financial advisors at Maggi Tax Advisory and Financial Group offer tips on how to do just that…

Diversity your accounts. When you withdraw funds from accounts such as traditional IRAs and 401(k)s, it is considered taxable income. With a Roth IRA, you do not have to pay taxes on withdrawn funds. To help with tax planning, we advise our clients to invest in a mix of traditional and Roth accounts and to withdraw money from each account in a way that will minimize your tax bill the most.

Strategize your Social Security earnings and outside income. Rule of thumb…if the sum of your outside income and one-half of your Social Security add up to more than $25,000 for singles and $32,000 for joint filers, then a portion of your benefits will be subject to tax. When possible, keep your outside income at a certain level so you don’t have to pay taxes on Social Security earnings.

Take advantage of low rates on dividends and long-term capital gains. Because qualified dividends and long-term capital gains get taxed at lower rates, smart investors take full advantage of these breaks, especially in retirement. If you are in the 10% or 15% tax bracket, your dividends and capital gains are tax-free! The point is, when you sell investments, be mindful of whether the stock dividends are qualified or not. The net results could lead to some hefty tax savings.

Educate yourself on senior tax breaks. Did you know the standard deduction for individuals 65 years and older increases by $1,650 for singles and $1,300 or joint filers?! There are tons of tax perks for seniors! Want to take full advantage? Contact Maggi Tax Advisory and Financial Group to learn about the other tax provisions available to seniors.

Relocate to a tax-friendly state. If you are looking to relocate in retirement, choose a state that (a) doesn’t impose taxes at all or (b) a state that has low-income tax levies combined with reasonable rates for sales tax and property tax.

Donate money is a tax-favorable way. Whether you wish to make a charitable donation to your favorite cause or gift money to children and grandchildren, you will benefit from positive tax ramifications by using tax-free contributions from an IRA account. Just be mindful of the amount! In the state of Florida, $12,500 (???) is the cap on monetary gifts that will not be subject to income tax.

Maggi Tax Advisory and Financial Group can help tax planning in retirement!

To learn more about our established financial services firm or to schedule an appointment, please contact our Hillsborough office at (813) 850-0131 or our Pinellas/Pasco location at (727) 351-6168.

Locations

Palm Harbor

4114 Woodlands Pkwy,
Ste. 303B
Palm Harbor, FL 34685

(727) 799-1701

Tampa

212 Crystal Grove Blvd
Lutz, FL 33548

(813) 909-0022

St. Petersburg

3663 Central Avenue
St. Petersburg, FL 33713

(727) 799-1701

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