Tax Refunds May Be Delayed in 2017

The IRS announced yesterday that some tax refunds may be delayed next year for the 2016 tax filing season.  What does that mean for you?  If you are expecting a large refund of your federal taxes, you may want to increase your deductions on your federal W-4 so that you get more of your money now instead of possibly having to wait extra time for your refund.

Who is affected by the refund delay?  According to the IRS:

• Filers who claim the Earned Income Tax Credit (EITC) or Additional Child Tax Credit (ACTC) will not see their refunds before February 15th.  This is now a law.
• And pretty much everyone else can potentially be affected by delays due to the IRS attempting to be more vigilant about screening tax returns for fraud and identity theft.

The IRS does state that most taxpayers will see their refunds within 21 days after filing their taxes.

Below are some resources to assist you with checking your 2016 withholding:

• IRS Withholding Calculator
• IRS Publication 505 - Tax Withholding and Estimated Tax
• Tax Withholding - Complete information on withholding, estimated taxes, FAQs and more

Regardless of whether you think you will be affected by a refund delay, it is never a bad idea to check your tax withholding.  I did that myself recently and discovered we would probably owe money for 2016.  I quickly reduced my withholding to help ease the pain of sending the IRS a check.

For more information on this IRS announcement, go to this link.

It's Year End Donation Time! (aka time to clean out your closets)

Along with the end of the year comes your last chances to make any kind of donations, including the non-monetary kind.  If you have a few minutes here and there at home, start poking around your closets or other areas where "stuff" accumulates (hello, garage).  Look for things that you haven't used in years and wouldn't miss.  Be sure to take your donations to your favorite local non-profit before 12/31.  Actually, take them to your non-profit at least a week before 12/31 (which would be next week).  I have actually shown up to my favorite charity on 12/30 with a bag of donations and was turned away because they were already overloaded with too many donations.

Many people just turn to the normal default of taking their donations to Goodwill.  Have you ever actually looked to see what other non-profits are in your area that take donations?  Once I started looking around, I immediately stopped taking my donations to Goodwill and now take them to a non-profit that directly helps the homeless population in our town.  Unfortunately, there are a lot of people in our immediate area that need help, and this organization does an amazing job providing food and shelter for those people, helping them to recover from any addictions, and giving them job training so they can get off the streets.  You might find a non-profit that you feel similarly passionate about that accepts donations as well.

Here are some things to think about donating:

• Was there any yard equipment that you didn't use this past year that you don't need anymore?
• Do you have clothes that are no longer the size you currently wear?  If you have consistently been the same size for at least two years but have clothes in other sizes, you should probably consider donating the clothes that aren't your size.
• As the weather is turning colder, you probably have jackets and coats coming out of the closets.  Try each of them on in front of the mirror.  Also try to get a second handheld mirror so you can view the coat from the back.  If there are any coats you don't like any more, donate them.
• Glance through your book, CD, DVD, or cassette (yes, some of us still have those) library.  Do you have any items that you don't like anymore?  Was there any item that you had full intention of reading or listening to that you never did? 
• Likewise, do you have any cookbooks that you never used any recipes from?
• Are there any decorative household items that you don't really like or just create clutter for you to dust?  Maybe it's time to donate those.
• If you receive any presents during the holidays that replace things you already use, donate the item being replaced.

Go through your house a little at a time and you'll be sure to find things to donate.  But be sure to do it before 12/31!

Dec. 31 is almost here - is your flex spending account zero yet?

It's already the beginning of December.  Didn't we just come back from Labor Day vacation yesterday?  At any rate, with the end of the year comes deadlines that you don't want to miss.  One of those is the deadline to spend your Flex Spending Account and Dependent Spending Account money.  If your balance is still above zero, here are some steps you can take:

1. Double-check and make sure you paid for all of your medical or dependent care expenses with your spending account.  I have never heard of a provider who doesn't let you submit expenses you paid out of pocket for reimbursement later.
2. If you truly haven't spent the money you set aside on medical expenses, you probably have a grace period.  The IRS allows $500 from 2015 flex spending accounts to be used in 2016 for medical expenses.  However, check the fine print on your plan; your employer does not have to allow this since it is optional.
3. If you can't roll over the money or if your balance is more than $500, then spend that money!  See if you can squeeze in an appointment with your doctor or dentist if anything is bothering you.  Refill any maintenance prescriptions if your insurance lets you.  Order more glasses or contacts.   

One thing you might not want to do is to try to spend your flex spending money on over the counter medications.  Even though the IRS rules specifically state that over the counter medications that you have a prescription for are eligible expenses, I have had flex spending plans deny my claim when I presented that same evidence for my claim.  I was never able to convince the plan administrator to allow my claim, which really annoyed me.  (I had other medical expenses to spend my FSA money on anyway.)

Remember, the above does not apply to Health Spending Accounts (which are used with High Deductible Health Plans).  The money in H.S.A.s is completely yours and can be held indefinitely.

Don't let your money go to waste!

It's almost benefit enrollment time!

For most employees who work for large corporations, annual benefit enrollment time is almost here.  Whether you like the benefits you had in the past year or want to make a switch, you can do yourself a favor by doing some preparations now in order to evaluate the packages being offered for next year.

Many benefit enrollment periods offer these items:

• Medical insurance
• Dental insurance
• Vision insurance
• Tax-advantaged accounts 
• Dependent care flex spending account
• Health care flex spending account for employees without a High Deductible Health Plan
• Health spending account for employees with a High Deductible Health Plan
• Life insurance
• Retirement plans
• And there are many other possible benefits that could be offered.

Take a look at the benefits that you are currently enrolled in and ask yourself if they really met your needs.  For many people, vision or dental insurance isn't worth the premiums paid because the insurance being offered just isn't very good.  For example, if you only wear contacts is it really worth the premium for vision insurance to cover a portion of the cost of the contacts and the contact fitting visit?  Most people would say no. 

Dental insurance sometimes isn't worth the premiums paid either.  True, you never know when a cavity or root canal could hit and you need the insurance.  But did you max out your dental insurance this year and hit the threshold where the insurance company refused to pay any more money?

If you feel like your insurance company isn't working for you, take some time to evaluate the plan in question.  Compare the amount of the premium you are paying from each paycheck for 2015 against how much the insurance company is saving you (either through their "provider discount" or what they paid the provider directly; these amounts should be listed on the Explanation of Benefits that you should have received for every doctor and dentist visit).  If your total premium is close to what insurance is saving you, it could be worth calling your provider(s) directly and asking them what they would charge you if you did not have insurance and were paying them out of pocket.  You may be surprised to find that you can get the services you need during a typical year for less than the total annual premium of the insurance.

The other alternative would be to enroll in an insurance plan that was considered a "better" plan, but those plans usually charge a higher premium directly from your paycheck.  Again, you need to weigh the annual cost of the premium against the amount the insurance plan is saving you.  Unfortunately many times you can't find out details about a different plan unless you are actually enrolled in the plan, so you may have to take the enrollment literature and make some assumptions.

Let's take dental insurance as an example.  The first step in this process is to locate all of the Explanation of Benefits (these should be mailed to you or available electronically through your insurance company's website) for 2015 for you or your family (whoever is covered through the premium that you pay).  For each visit, look at how the insurance is being calculated.  If you only went to the dentist twice during the year (for two cleanings), one Explanation of Benefits could look like this (in summary):

• Total charges submitted by provider = $187 
• Amount covered by plan = $187 (cleanings are covered at 100%)
• Amount you owe provider = $0

So, over the course of a year if you have excellent dental health the insurance company would be paying $374 total on your behalf for two cleanings.  Compare that amount to how much you are paying for the entire year for dental premiums from your paycheck.  In this example, an individual is paying $41 a month ($492 a year) for this insurance.  Is the premium paid worth the insurance?  In this case, it is not since the $492 premium paid during the year far exceeds the $374 amount the insurance company is paying to the provider.  Of course, this example works since the individual in question has good dental health with no issues and only needs two cleanings a year.  Also, if you are considering dropping the insurance you may want to call your provider and ask how much a cleaning would cost without insurance to make sure they would not charge you more than what is listed on the Explanation of Benefits.  This is a real-life example from the company that I work for.

If you are on the fence about your dental or vision plan, take a little time to evaluate if your insurance really is working for you.