Don’t Forget The Health Insurance Special Enrollment Period

Did you know with the end of open enrollment on March 31^st, you may still be eligible to sign up for Health Insurance through the special enrollment period?

With Obama recently citing 8 million sign ups under the new healthcare system, I’m sure not too many people missed out, but in case you did it doesn't mean you can’t sign up through one of the following qualifying events in your life:

• Getting Married
  
  
• Having a baby or adopting a child
  
  
• Permanently moving to a new area that has different health plan options. This includes moving to California from another state. This also applies to individuals who are released from jail or prison.
  
  
• You lose your health coverage. For example, you are no longer eligible for Medi-Cal, you lose health coverage through your job, or you have exhausted your COBRA continuation coverage. (Note: Not paying your COBRA premium does not qualify you for special enrollment.)
  
  
• Your income changes so much that you become newly eligible or ineligible for help paying for your insurance. For example, if you are already getting help paying for your insurance premium, and your income goes down, you may be able to get extra help.
  
  
• You applied for health coverage before March 31 and got a denial for Medi-Cal after March 31. If you were incorrectly denied Covered California or Medi-Cal coverage, you can also file an appeal.
  
  
• Your enrollment was wrong, due to the misconduct or misrepresentation of your health insurance company, Covered California or a non-Covered California entity (such as a Certified Enrollment Counselor).

Source Coveredca.com

You have 60 days from the time of one of the above events to sign up through the special enrollment period on the state or government websites.

Need help? Talk to us and we can help walk you through the process.

Who Should Be Afraid Of An Audit?

By Nick Bautista

I can’t help but wonder why there are so many articles about what to do so that you don’t get audited. So much so that it is laughable.

At the very core of being fearful of an audit are common misconceptions. There is a misconception that even though you are being honest with the reporting on the tax return something bad will happen. If you are scared of being audited then you have something to hide, plain and simple. If you don’t have anything to hide then have no fear.

Mistakes

The most basic reason someone gets audited is that things don’t match up. Meaning there was wrongly reported information within the IRS tax database. For instance if your employer reports he paid you $10,000 and you put he paid you $9,999 then that is a red flag. The IRS has checks and balances within their systems that tell the two numbers don’t match up even though they are only $1 off. The solution is to be more careful and if you do get a letter from the iRS find your mistake and have it corrected.

Odds

Your chances of getting a real, full blown audit are 1%. “Last year the IRS audited about 1 percent of those earning less than $200,000, and almost 4 percent of those earning more, according IRS data” (Turbotax).Enough said. Why are you wasting your time worrying about being in the 1%-4%?

Honesty

Stop taking chances. If you keep trying to get those office deductions or charity donations without receipts, then stop marking them down on your tax return. If you are scared of an audit don’t use them.
I hear the excuse of well we make a lot of money or we run our own business we are at a huge risk of being audited.

Hire a Professional

If you truly are still scared after all the above, then hire someone to do your taxes for you. Ask your friends for recommendations and consult with the tax professional yourself before making a concrete decision.

To reiterate, if you are honest have none of the audit triggers, or even if you do, keep receipts, proof of what you have reported and hire a professional there is nothing to fear. The IRS is a reasonable bunch, they just want the numbers to be right, Uncle Sam has to get paid and for the right amounts before he hands your hard earned money back to you.

Stop Loaning The Government Interest Free Money, Fix Your Withholdings

By Nick Bautista

Have you ever wondered why you get that tax refund after filing your taxes? If you do then here are a couple different ways to calculate and adjust your W4 withholding.

First, you must understand why this is happening. Every year if you work and earn a living you will owe taxes, some percentage paid to the government. If you are a W-2 employee you will see the taxes taken out of your paycheck usually under the taxes withheld section under federal income tax.

The amount that is coming out of your paycheck was set up by you. When you were first hired at your job you were required to fill out what is called a W4. The selection you chose on that form set up the amount of withholding you wanted your employee to take out of your paycheck. For example, below is a fake check, but it displays the taxes taken out. (See blue arrow) In this example 10.7% is being withheld from Jane’s paycheck. Whether this is good or bad depends on her specific tax situation.

 

The key is being able to understand then project out what your income will look like for 2014.
There are several ways for determining what to claim on your W4.

On our site we have a calculator called the 1040 Tax Calculator that helps you to see how much you could potentially owe in taxes. In conjunction with this calculator you will be able to see the average tax you potentially could owe. For example if I input $100k for myself and $20k for my spouse in earnings for 2014, we would owe $16k in taxes, while using the standard deduction.

 

As you can see above our average tax rate is 14.05%. This would be the amount I would want to have withheld from my paycheck.

Now if that seems too confusing there are two separate options that might be easier.

The first is a shorthand version. Take a look at your tax return for 2013. Go to page 2 and look at your deductions found on line 40. Take that number and divide by the number personal exemptions you are claiming on the first page under exemptions. Using the same example above I would take 20,000/7,800 = 2.6. This would be the number of exemptions I would claim on my W4. The 7,800 correlates with the number of exemptions I am claiming.

For instance if you’re single divide by the standard exemption which for 2013 is 3,900. If you’re married you would just multiply 3,900×2. If you have kids you just multiply the exemption by 3 or 4 depending on how many.

The second option is to use another calculator found through Turbo Tax:

https://turbotax.intuit.com/tax-tools/calculators/w4/

This calculator will help walk you through a number of steps much like the way I showed you how to project out your 2014 income/taxes. Turbo tax makes it into a simpler more intuitive version for you.

You now have tools to use to stop loaning the government money tax free. If you continue to receive refunds every year you are letting the government make use of your money for almost 12 months. Think about it, every paycheck you give to the government more than you should then they refund it back to you at the end of the year. I hear the excuses of not wanting to owe anything or it’s nice to get money back.

Why wouldn’t you want to use your money now, rather than waiting a year?

Do you like giving your hard earned money to the government to use then give back to you?

What action can you take now to make sure you get the right amount taken out of your paycheck?

All the above are ideas and should be replaced by the advice given to you by your tax professional. Each case is unique and should be treated as such. Commonwealth does not provide legal or tax advice.

Be Smart with Your Smartphone!

Presented by Eric Figarsky

 As more and more people use their mobile devices for data storage and business transactions, smartphones are fast becoming a prime target of cybercriminals. We recommend taking the steps outlined here to protect yourself and your phone against data thieves.

Guarding against bad apps

Many cyber crooks attempt to trick victims into downloading apps that infect their phones with viruses and malware. To help ensure that you don’t download a malicious app:

1. Check the app’s rating and comments from previous users before you download it. If an app doesn’t have a great rating, there’s probably a substitute that does. And don’t forget to review comments from previous downloaders; if there are only a few comments and they’re all extremely positive, it’s best to be wary.
2. Check the information the app requires. Before you buy or download an app, you’ll be informed about the kind of information the app needs to function properly. This is where common sense comes into play. If you’re downloading a game of Scrabble, for example, and the app asks to view your contacts, it may not be wise to continue. Read the permissions carefully to ensure that nothing in the document raises a red flag.
3. Check out the app developer’s website. This can be a good indication of quality and security. If the developer is legitimate, it most likely will have a professional-looking website.

 Beefing up your phone’s protection

Mobile phone companies are fighting cybercriminals by creating new security updates and applications. Be sure to:

1.       Keep current. Don’t wait to install security updates or patches that your phone company provides.

2.       Set up a screen-lock passcode. Almost all smartphones let you lock the screen after a certain amount of time or, if you prefer, every time the phone turns off or goes to sleep. It may take you a few seconds to type in a passcode, but this is a key security feature if the phone is ever lost or stolen.

3.       Look for a mobile security app. Would you leave your computer unencrypted or without an antivirus tool to protect it? Of course not. So be sure to take the same precautions with your smartphone. Many companies package these security features together in a mobile security app.

 Getting wise to smishing and vishing

Smishing and vishing are fraudulent schemes carried out via cell phone. Smishing attacks attempt to collect your personal financial information through SMS texts sent to your phone, while vishing scams use prerecorded messages asking victims to respond with their sensitive information. To stay safe:

 

1. Never respond to suspicious, unsolicited e-mails, texts, phone calls, or voicemails that request personal information. If you are unsure of the validity of the message or call, go to the company’s website directly.
2. Do not click on any link or attachment within a suspicious text or e-mail message.
3. Do not respond to text messages or automated voice messages from unknown or blocked numbers on your mobile phone.
4. Don’t download anything unless you trust the source.
5. Delete text messages and voicemails from “5000.” Many smishing and vishing attempts come from this number, indicating that the message was sent from an e-mail address rather than another cell phone. 

A smart future
With smartphone use on the rise, it’s increasingly important to be proactive in thwarting mobile-based cyber attacks. If you have any questions about the information presented here, please don’t hesitate to contact us.

Do You Save Money With A Purpose?

By Nick Bautista

Saving is a really great thing. Most people have trouble saving their money because it’s delayed gratification. But, if this first step is hard, the second can be equally so; saving for a goal.  Setting the saving goal can also be the worst offense, as we save to save. You know who you are…. You put your money in the bank and never spend it. If you ever do spend it, it will usually be impulsive because you didn’t know what you were saving for.

The point of saving, is to save for a purpose. Let me preface this first, I used to be like this. I was raised to just save money for the sheer comfort that if something I wanted came up I could buy it. Nine out of 10 times it wasn’t something that I intended to buy, because it was an impulse purchase. I would literally search for things to buy because I had money saved up with no purpose.  A very terrible thing in hindsight.

I never thought about saving for a purpose until I was in my twenties. I realized the money I had saved as a kid, which I still had, actually lost value. I put it in a savings account because my money would be safe and grow. Let’s just say inflation won that battle and I now decide with my wife what each penny is being saved for so I can maximize the value in different ways. We sit down and define our goals either by ourselves or with the help of a financial advisor. Sometimes outside perspective give us new ways to look at things and more importantly how to be efficient for what we intend to save for. Once we started saving for a purpose, the goals became real and gave us incentive to be consistent with our savings.

So I urge you, develop a purpose for why you are saving. Is it for a house down payment, a new car or your retirement? It could even be small scale items, a new TV, a new shirt, date nights or whatever it is you enjoy. Without an end goal in mind we lose focus and either stop saving or forget what it was we wanted.
For simplicity sake, think of a goal, save for it and then do it!

Why Buying Life Insurance at A Young Age May Not Be Practical

By Nick Bautista 

You gotta love the insurance industry. Young life insurance agents going out trying to sell life insurance to young professionals. New agents who pass a simple exam giving advice with no prior experience. Sure there are many who need life insurance but at an age (younger than 30) when young professionals are barely making a living there are more practical things that need attention, just a few include; trying to pay off student debt, saving for a house, and building an emergency fund.

Although there are many reasons most young professionals don’t need life insurance there are 3 circumstances where it might make sense for you:

1. A Personal need – Funeral expenses, so others around you don’t suffer to come up the funds in case you were to die. The average cost of a funeral is $7,000 (nfda.org).

2. Family/Our dependents – Living expenses, would be education savings and would be retirement savings/income. How much do they need if something were to happen to you? Could they live comfortably or will your dependents need to work an extra job to cover expenses and have the same lifestyle they were living?

3. Business needs – You can’t leave your partner out of luck if something were to happen to you. Consider setting up a plan for insurance on each other so he can at least get back what he invested in the company.

If you do have any of the above, then you can find some help from an independent agent and look at how much you can afford. This will be a big factor into the types of life insurance products you should purchase. It is not advisable to go to anyone who is paid to sell you one specific product.

If you are young, not married and have no dependents, then investing your money on life insurance may not be appropriate. Instead, you might consider saving your money for more practical things like, retirement or that first house you’ve wanted. Your money may be better spent in other ways.

3 Reasons Why I’m An Insurance Agent Who Dislikes Insurance Agents

By Nick Bautista

I’ve heard the pitch a hundred times and seen firsthand why we can get a bad name. “I can provide the best service along with competitive prices. Not only will I always be there for you but you can count on me, here’s my cell number. It’s guaranteed, or this is the best price around.” These lame attempts share these three things in common:

1. Pushy – Agents constantly press you to buy something you still don’t completely understand. Most agents aren’t independent and can only offer products from their provider. For example, think about if you only went to Verizon to look at your options for a new cell phone contract. Would you look into At&t or Sprint to see your options, compare coverage and price? Or would you just make a blind decision without shopping around and go with Verizon?

What to do: Ask your agent what other options are available. If he continues to pitch one or the same product then find someone else.

2. Ignorant – As an insurance agent I see other agents selling products that make no sense. They are ignorant to the fact that the products they are encouraged to sell (from top management) are not what is best for you, the client. As consumers don’t know any better and are forced to blindly trust the agent is using his/her judgment to recommend a good product it can leave them in a bad position.

What to do: Ask the agent why he is recommending this product. If it sounds confusing find someone else, period. If it sounds too good to be true find someone else. A good insurance agent should be able to explain things in terms you understand.

3. Talkers – My biggest pet peeve are agents who don’t listen to you. They don’t address your concerns or questions. They are really just about the sale and continue to talk over you or never ask if you understand what they are recommending. Once the sale is closed they completely leave you hanging. It’s more about them showing how smart they are rather than listening to your needs or concerns.

What to do: Definitely find someone else. No need to ask anymore questions, if your agent talks over you he will never truly listen to you. You can tell a talker by an agent who doesn’t ask more than 1 follow up question after you are voicing your concerns. (It takes more than 1 question to be active listening)

So remember, insurance can be shopped around and if your agent is any of the above then it’s time to find a replacement.