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Andrew D. Schwartz CPA Was
Invited to Participate in Quote.com's University on 8/1/00 and 8/2/00
Andrew D. Schwartz CPA, the editor
of the mdtaxes.com website, will participate as one of the experts
for the 8/1 "Beyond the Honeymoon" session where he will
answer questions posted during the day on Quote.com, and the 8/2 CHAT
"Beyond the Honeymoon" session where he will be present in
the chat room from 9 - 10 pm, ET.
Andrew was asked to participated in Quote.com's University because of
the fun and informative website
www.newlywedfinances.com that he has put
together. If you are a newlywed, this website will help you and
your spouse work through an initial financial plan.
How Does Social Security Work?
Call me naive, but I believe that social security will be around for
a long, long time. I don't think that people will (or should) be able
to rely on their monthly social security check as their only source
of retirement income, but I do think that even the youngest of
workers can count on receiving at least a small monthly check upon
reaching retirement age.
That being said, the basic rules for social security, as they
currently stand, are as follows:
To be eligible to collect social security, you need to pay into
the system for at least ten years. You pay into the system if you
are an employee and have the 6.2% social security tax withheld from
you salary each pay period, or if you are self-employed and pay the
15.3% self-employment tax as part of your federal income tax return.
When the Social Security Administration calculates your benefit
when you retire, your benefit will be based on your 35 years of
highest earnings. If you work less than 35 years, each
non-working year will still be factored in, thus reducing the benefit
that you will be entitled to receive.
If you were born after 1959, your full retirement age will be 67. Full-retirement
age has been 65 for many years. However, beginning with people born
in 1938 or later, that age will gradually increase until it reaches
67 for people born after 1959.
Even though the full retirement age is increasing to age 67, you
can still begin to collect your social security retirement benefits
upon turning age 62. A person born after 1959 who starts taking
benefits at age 62 will forfeit 30% of his annual retirement benefit
for life. If you start collecting social security before reaching
full retirement age, you will forfeit approximately 0.5% of your
benefit for every month you retire early.
Once you reach full retirement age (age 67 if you were born after
1959), you can earn any amount of income without giving up any of
your social security benefit. Prior to reaching full retirement
age, a person collecting social security will forfeit $1 of benefit
for every $2 of earned income over a certain threshold ($10,080 in 2000).
If you delay collecting from social security until after reaching
full retirement age, your annual benefit will actually increase by as
much as 8% per year until you reach age 70. Once you reach 70,
your benefit will no longer increase, even if you continue to delay collecting.
If you are married, you will receive the greater of your earned
benefit, or 50% of your spouses full retirement benefit, subject to
A great place to get more information about your projected social
security benefit is from the Social Security Administration's website
which can be found at http://www.ssa.gov.
In addition to containing plenty of easy to understand information,
their site contains a calculator which enables you to calculate your
projected benefit based on whatever criteria you enter.
TO DO LIST FOR JULY, 2000
Saving and Investing
If you changed jobs, give us a call to discuss filling
out new W-4 Forms
Send us the requested information for us to work
through your 2000 income tax projection
Update your monthly cash flow budget
If your Keogh accounts are worth more than $100,000,
Form 5500-EZ due by 7/31/00
1999 & 2000 TAX FACTS
For 1999, the standard deduction for a single individual is $4,300
and for a married couple is $7,200. A person will benefit by
itemizing once allowable deductions exceed the applicable standard
deduction. Itemized deductions include state and local income taxes,
real estate taxes, mortgage interest, charitable contributions, and
unreimbursed employee business expenses. For 2000, the standard deduction for a single person
will be $4,400 and for a married couple will be $7,350.
- For 1999, the personal exemption is $2,750. Individuals
will claim a personal deduction for themselves, their spouse, and
their dependents. For 2000, the personal exemption has been
increased to $2,800.
- The maximum earnings subject to social security taxes
has been increased to $76,200 in 2000 from $72,600 in 1999.
- The standard mileage rate has been increased back to
$.325 per mile as of January 1, 2000 from a rate of $.31 per
mile as of April 1, 1999.
- The maximum annual contribution to a 401(k) plan or
a 403(b) plan has been increased to $10,500 in 2000 from
$10,000 for 1999.
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