Electronic Age

[kathyc2]

IN allows an extra over 65 deduction for RE tax if their AGI and house value is low enough. It has absolutely nothing to do with preparing their income tax return. If clients AGI is low enough I'll take the extra minute to look up their RE bill to see if they receiving the deduction or not. If not, I advise them to take return to county offices to file for the deduction. When I talk with other local preparers I've not found anyone who does so and most are not even aware of it.

MI allows a refund of some RE tax to be claimed on their income tax return for low income. It's a regular PIA to claim, but worth it.

[Snaggletooth]

[QUOTE.[/I]"Snaggletooth, you seem to have a distorted view of your role in this process.[/QUOTE]

I probably do - or at least that is the consensus of those who are responding. But it is my view. If it was intended to be an insult - I'm immune.

I will say this - I have learned much from the discussion. I gleaned quite a new perspective from Kathy's discussion about the benefits of interacting with different taxes in her own state. And I'm not a CPA so I can't grasp the auditing problems created by Sarbanes/Oxley (on steroids) discussed by Uncle Sam. Those of you who are CPAs should take note. I had heard that a number of companies retracted their IPOs (Initial Public Offerings) when Sarbanex/Oxley came out and was going to require the stockholders to take their clothes off for the public. I don't know this for a fact but this was being tossed around in the rumor mills.

Hasn't been mentioned before but I do get sucked in by a non-income tax issue. And that is Social Security. And I hate it because invariably they ask me when they should start drawing, most commonly whether they should draw at 62 or wait. The calculation of benefits is such that it is a coin-flip with actuaries' math at any age, but I will always take the time to advise them of the earned income penalty SS will recover if they begin drawing between ages 62 and 66+.

[kathyc2]

Hasn't been mentioned before but I do get sucked in by a non-income tax issue. And that is Social Security. And I hate it because invariably they ask me when they should start drawing, most commonly whether they should draw at 62 or wait. The calculation of benefits is such that it is a coin-flip with actuaries' math at any age, but I will always take the time to advise them of the earned income penalty SS will recover if they begin drawing between ages 62 and 66+.

For me, that's the fun part. When to draw depends more on their overall financial picture rather than try to guess when they will die which is really what you need to know if the goal is maximizing SS benefits.

One couple retired at 63 and had enough put back that they will be fine in retirement years. As she was a stay at home mom for a number of years, her benefits were quite a bit less than his. I came up with a plan in which she take benefits and he delayed. In those years they converted close to 500K from traditional to Roth paying less than 50K in tax. Their RMD's will now be low enough that they likely will never pay FIT again.

At the other end of the spectrum a single gal turns 70 and it would be very tight to retire. Advised her to start SS and work one more year and max out her 401K. Her lower paycheck money will be replaced by SS checks. She will also save several thousand in tax using this plan. After she retires the amount she will need to take from 401K to supplement SS will be low enough that she also will likely never pay FIT again. She earns around 45K so tax on just W2 is 3.3K Adding 28K in SS benefits increases that to 7K. The 28K SS plus the 15K W2 after 30K in 401K results in maybe a couple hundred in tax.