Insurable Interest Canadian Insurance Blog

What You Need to Know Most clients can deduct the premiums only if they can itemize their medical expenses. The threshold is 7.5% of adjusted gross income. Self-employed clients can do more. As tax season approaches, Medicare beneficiaries often think about how their health care costs will affect their tax returns. Sarah and Tony are examples of Medicare beneficiaries who have two fairly common situations. Sarah is a beneficiary over 65 who has stopped working for pay and has diabetes. Tony, Sarah’s neighbor, is a beneficiary over 65 who’s self-employed as a graphic designer. The Question Can older, self-employed Medicare beneficiaries like Sarah and Tony deduct the Medicare premiums from their taxable income, and, if so, how does that work?” The Answer Yes, Medicare premiums can be tax-deductible under certain conditions. To do that, most clients must itemize their deductions. Only medical expenses exceeding 7.5% of a client’s adjusted gross income, or AGI, will be deductible. For example, if Sarah’s AGI is $50,000, she can deduct the total amount of Medicare premiums and other medical expenses over the $3,750 threshold. Of course, consult with your compliance advisors before discussing topics related to taxes with clients. Encourage your clients to talk...

What You Need to Know The age for required minimum distributions to commence remains at 73 for 2024. Planning should include strategy for this tax year and for future years as applicable. In some cases it might pay to transfer assets from other plans such as old 401(k)s or individual retirement accounts. Many advisors are already in the midst of planning for clients for 2024 and in some cases beyond. A key part of planning is required minimum distributions for both 2024 and years ahead. Here are some issues to consider for clients who are affected by RMDs. RMD-Related Changes Under Secure 2.0 There are three significant changes arising from the Setting Every Community Up for Retirement Enhancement (Secure) 2.0 Act that could influence clients’ RMD planning for 2024 and beyond. Maximum amounts for qualified charitable distributions will be indexed to inflation beginning in 2024. Those who are at least age 70.5, can now take up to $105,000 in these distributions in 2024, up from the prior limit of $100,000. Surviving spouses are now allowed to calculate RMDs on their late spouse’s accounts using the deceased spouse’s age and the more favorable Uniform Lifetime Table. RMDs are no longer required...

What You Need to Know Employee clients can add to retirement accounts. They may be able to add to health accounts. Business owners have a third, great option. Do you ever have a déjà vu feeling? Like you’ve done this very thing before? For me, it happens every year when I prepare my taxes. I start going through everything and determine what I owe the federal government in taxes. As I complete this process, I think to myself, are there strategies that would help me maximize my tax efficiency? But what can I do now? Once the calendar year turns over, there is very little clients can do to increase their deductions and lower their tax bills. They can contribute 2023 payroll income to a SIMPLE or 401(k). Still, that option is based on 2023 payroll taxes and is primarily gone after the end of January. So, what options are there? There are a few, and they are limited. Of course, as always: You should understand all of the options, and you should consult with your own compliance advisors about whether and how to talk about the options with clients. 1. Traditional IRAs If a client hasn’t reached the maximum...

Members of the House Education and the Workforce Committee voted this week to advance their version of a bill that seeks to invalidate the independent contractor classification and reporting rules recently adopted by the Biden Labor Department. As detailed on Congress.gov, the Republican-controlled committee voted 21 to 13 to advance House Joint Resolution 116 to the full House. A similar bill remains in committee in the Senate, congressional records show. According to the House and Senate bills’ backers, the legislation is intended entirely invalidate the rulemaking under chapter 8 of title 5 of the United States Code, which grants Congress the authority to review and potentially block agency rulemaking. Supporting lawmakers say the rules are arbitrary and capricious under the Administrative Procedure Act and that they also violate the Regulatory Flexibility Act. Similar arguments have also been raised in litigation filed by a variety of industry groups representing trucking companies, retailers, chambers of commerce and other interested parties — including trade groups in the financial services industry, where advisors commonly work as independent contractors.