Jan Neal Law Firm LLC

Alabama Estate, Elder and Special Needs Law


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Stimulus Payments for Seniors

Pursuant to the CARES ACT (Coronavirus Aid, Relief, and Economic Security Act), individuals with income up to $75,000 for a single person or $150,000 for married and filing jointly are eligible to receive $1,200 for a single person or $2,400 for a married couple filing jointly. An additional $500 per qualifying  dependent child  under the age of 17 will also be provided to families.

For individuals who filed federal income tax returns in 2018 or 2019, you do not need to take any further action at this point. You will either receive the stimulus via direct deposit based on the information the IRS has on file or you will receive a physical check in the weeks to come.

More than 20 million taxpayers over the age of 65 do not file a federal income tax return each year – likely because their only source of income is Social Security benefits. For persons who may not have filed a 2018 or 2019 tax return, there does not appear to be clear directions at this time on how to ensure that they receive the stimulus. According to the CARES Act the filing of a tax return should not be necessary, and the payment could be direct deposited along with monthly benefit payments.  However the IRS has issued a notice that appears contrary to the actual CARES Act indicating that seniors on Social Security will need to file a simple tax return (which has not been made available at the end of March). There is also discussion of a web based portal at the Treasury Department through which people could enter their information (this has yet to be designed or implemented).

Regardless of the mechanism which will be used for “non-filers” the IRS will have to have the Social Security numbers of all parties to include any dependent children in order to generate the stimulus payment as well as information on bank accounts for direct deposit.

At this point, if you did not file in 2018 or 2019 you may want to  file a return either by hard copy or e-file. If you do not want to file the tax return for 2018 or 2019 you have the option to wait and see what action will be required of you. The stimulus payment is available through 2020, and tax payments for 2019 have been delayed until July, so you do not have to rush to file a tax return.

Be advised that the receipt of the stimulus payment will not be treated as a resource for one year and will not affect eligibility for federal means tested programs such as Medicaid, SSI or SNAP.

We will stay on top of this issue and continue to provide information as it develops in an effort to assure that all eligible seniors obtain their stimulus payments.    


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Social Security Tools Online

Social Security Administration (SSA) has made available many online services. From applying for Social Security benefits to replacing a card, SSA has online tools to help, and if you can get the information you need online you can avoid calling 1-800 Medicare or going to a SSA office where you may have to wait to get help.

To access most of the online services, you need to create a mySocial Security account.  This account allows you to receive personalized estimates of future benefits based on your real earnings, see your latest statement, and review your earnings history. You can also request a replacement Social Security or Medicare card, check the status of an application, get direct deposit, change your address. If you are a representative payee, you can use mySocial Security to complete representative payee accounting reports.  The graphic above provided by Social Security gives you an overview of all the online services available.

 


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Social Security and Medicare Solvency

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I watched the debate last night and was particularly interested in the segment concerning Social Security and Medicare.  I was disturbed to hear the prophecy of doom posed to the candidates by this question:

WALLACE: “All right. The one last area I want to get into with you in this debate is the fact that the biggest driver of our debt is entitlements, which is 60 percent of all federal spending. Now, the Committee for federal — a Responsible Federal Budget has looked at both of your plans and they say neither of you has a serious plan that is going to solve the fact that Medicare’s going to run out of money in the 2020s, Social Security is going to run out of money in the 2030s, and at that time, recipients are going to take huge cuts in their benefits.

So, in effect, the final question I want to ask you in this regard is — and let me start with you, Mr. Trump, would President Trump make a deal to save Medicare and Social Security that included both tax increases and benefit cuts, in effect, a grand bargain on entitlements?”

Candidate responses and proposals can be found at The New York Times transcript of the debate.

Wanting to know the truth about Social Security and Medicare solvency,  I went looking and found the reports.  The Social Security forecast can be read at the 2016 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.  And the Medicare forecast can be read at the 2016 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds.

The best summary of these reports I have read can be found at Forbes who says:

Social Security isn’t running out of money, and it is not going bankrupt, but the program will face a shortfall in 2034.

The Trustees now predict Medicare will exhaust its reserves by 2028, two years sooner than last year’s estimate.

There are manageable solutions to these problems, but action does need to be taken.

The full Forbes article can be read here.

Aging related issues and the relative positions of the presidential candidates can be read at Next Avenue, a web site produced by PBS.


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Social Security Spousal Strategies Eliminated

shutterstock_277089179Once upon a time a married worker could file for Social Security benefits at full retirement age and then suspend the benefits, allowing the worker’s spouse to begin drawing spousal benefits while the worker postponed receiving benefits until a later date resulting in higher benefits due to the delay in drawing.  The strategy was known as “File and Suspend,” and it resulted a substantial monetary gain for couples who used it.

But “File and Suspend” is a thing of the past as a result of the budget signed into law November 2, 2015.  Under the new rules, effective April 30, 2016, a spouse cannot begin receiving benefits until the worker is actually receiving benefits, too. Workers can still file and suspend, but the spousal benefit suspends along with worker’s benefit.

The law does not affect those already electing “File and Suspend” or those who turn 66 prior to the effective date who elect to “File and Suspend” before April 30, 2016.

Another strategy known as “Claim Now, Claim More Later” has been eliminated.  That strategy allowed a spouse who takes benefits at full retirement age to choose whether to take spousal benefits or benefits on his or her own record.  This allowed a higher-earning spouse to claim a spousal benefit at full retirement age and then switch to draw his or her own retirement benefit instead at age 70.  Under the new law the worker cannot take spousal benefits and let his or her benefits continue to increase.  An exception to this is the election allowed by a surviving spouse who will still be able to choose to draw on the deceased spouse’s account first and later switch to a larger retirement benefit.