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How do I kill fire ants inside my house?

By Contributors from eXtension Faqs- All. Published on May 13, 2017.

Fire ant colonies can migrate into homes and other structures in search of food, water, and nesting sites, especially during periods of extreme outdoor heat, drought, or flooding rains.They can enter through any cracks and crevices.

 

How to get rid of fire ants in your house:

  • One method of preventing fire ant problems in structures is to eliminate points of entry. Several weep hole covers have been marketed for use to exclude ants from entering structures. A study has shown that some of these covers effectively exclude the red imported fire ant (Drees, 2002).  An aperture of 0.5 mm should exclude red imported fire ants. However, achieving exclusion using spackling, caulk, or other sealants can be difficult or impractical.
  • Another method is to treat fire ant nests with an insecticide or fire ant bait. If the ants are nesting outside and coming into the house for food, the best way to control them is to treat the nest outside directly with a pesticide.
  • The situation is more complicated if the ants are nesting inside the house. Baits formulated for indoor use can be used.The workers will take these back to the colony and feed them to the queen.
  • Trails of foraging ants can be sprayed with a contact insecticide, but these treatments do not directly affect the colony.
  • If the ants are nesting in a wall, an outside perimeter treatment may actually make things worse by acting as a repellent and keeping ants indoors. For ants nesting in walls, a contact insecticide should be used. You may need assistance from a professional pest control operator to apply this product. Make sure the product you select is labeled for use indoors.
  • Always read and follow the directions on the label.

Related Content

Citations

Drees, B. M. 1995. Red imported fire ant multiple stinging incidents to humans indoors in Texas. Southwestern Entomol. 20(3):383-385.

Drees, B. M. 2002. Evaluation of Guest Control, Inc. weep-hole screens for brick veneer structures in Red Imported Fire Ant Management Applied Research and Demonstration Reports 200-2002, Texas Imported Fire Ant Research & Management Project. Texas A&M University System. College Station. P. 17.


Find more information about fire ants in eXtension's Imported Fire Ant Resource Area.

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Will Pseudacteon phorid flies (decapitating flies) sting or bite? Are decapitating flies harmful?

By Contributors from eXtension Faqs- All. Published on Feb 22, 2017.

A Pseudacteon phorid fly approaches a fire ant for landingNo, Pseudacteon phorid flies cannot sting or bite, because they do not have stingers or biting mouthparts, nor are they attracted to humans or pets.

Pseudacteon phorid flies, also known as decapitating flies, were imported from South America as biological control agents of imported fire ants.

  • They are very small, about the size of a fire ant head, and are hardly noticeable.
  • They cannot sting or bite, because they do not have stingers or biting mouthparts.
  • Pseudacteon phorid flies are not attracted to humans or pets, only to fire ants.

Before they were initially released, tests were conducted to determine if they were attracted to other insects or food items including raw vegetables, fresh fruit, raw meat, prepared foods, and even carrion. Pseudacteon phorid flies are attracted only to Solenopsis fire ants. In fact, several native species of Pseudacteon phorid flies attack native fire ants.

Pseudacteon phorid flies should not be confused with other phorid fly species. At least 3,000 described species exist in the family Phoridae, all of which are known as phorid flies even though they have very different life histories.  In January 2012, it was reported that the phorid fly Apocephalus borealis  attacks honeybees.  Pseudacteon phorid flies will not attack honeybees. 

Related Content

References

Porter, S. D., and L. E. Gilbert. 2004. Assessing host specificity and field release potential of fire ant decapitating flies (Phoridae: Pseudacteon), pp. 152–176. In R. G. Van Driesche, T. Murray and R. Reardon [eds.], Assessing host ranges for parasitoids and predators used for classical biological control:  a guide to best practice. FHTET-2004-03, USDA Forest Service, Morgantown, West Virginia. PDF


Find more information about fire ants in eXtension's Imported Fire Ant Resource Area

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Where can I buy Pseudacteon phorid flies (decapitating flies) to release in my yard?

By Contributors from eXtension Faqs- All. Published on Feb 22, 2017.

A fire ant decapitated by a phorid flyThese natural enemies of fire ants are not commercially available.  You will not need to purchase them because the natural enemies are expected to spread on their own. It would be too expensive for the typical homeowner to purchase the natural enemies, even if the enemies were commercially available.

For example, it costs several thousand dollars to get a decapitating fly population started in a particular area. Phorid flies in the genus Pseudacteon, also called decapitating flies, and Kneallhazia, a fungus, have been released in most southern states. These natural enemies have spread rapidly from the point of release.

 

Related Content

 


Find more information about fire ants in eXtension's Imported Fire Ant Resource Area.

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What Are the Minimum and Maximum Amounts That Can be Saved Each Year in an IRA?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Federal tax law limits 2017 contributions to a traditional and/or Roth IRA to $5,500 for a worker with earned income ($6,500 for those who are age 50 or older before the end of the year). An additional $5,500 can also be saved for a worker’s spouse, regardless of whether or not the spouse is employed. In addition, spouses who are age 50 or older can contribute an additional $1,000 ($6,500 total) for a total of $13,000 of contributions if both individuals are age 50 and older.

If you don’t have this much money available to contribute, that’s okay. Simply save whatever you can, subject to minimum deposit amounts required by an IRA custodian (e.g., bank or mutual fund). Any savings is better than no savings! Minimum deposits required to set up an IRA vary with the financial institution and type of investment. For example, a bank may require a minimum of $500 to purchase a CD for an IRA and a mutual fund may require a $1,000 minimum deposit or higher.

We would like your feedback on this Personal Finance Frequently Asked Question.

Are Accounts at a Bank Combined for FDIC Insurance?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The Federal Deposit Insurance Corporation (FDIC) guarantees that bank deposits up to $250,000 are safe. All of your single accounts at the same FDIC-insured bank are added together, and the total is insured for up to $250,000. For retirement savings accounts, the limit for FDIC insurance is also $250,000. All of your self-directed retirement savings accounts at the same insured bank are added together and the total is insured for up to $250,000.

This FDIC fact sheet explains the maximum insurance coverage available for various types of accounts: http://www.fdic.gov/deposit/deposits/dis/

We would like your feedback on this Personal Finance Frequently Asked Question.

How Long Can Negative Information Remain in a Credit Report?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

A consumer reporting company can report most accurate negative information for seven years and bankruptcy information for up to 10 years.

There is no time limit on reporting information about criminal convictions; information reported in response to your application for a job that pays more than $75,000 a year; and information reported because you’ve applied for more than $150,000 worth of credit or life insurance.

Information about a lawsuit or an unpaid judgment against you can be reported for seven years or until the statute of limitations for your state of residence runs out, whichever is longer.

We would like your feedback on this Personal Finance Frequently Asked Question.

Can You Make a Tax-Free 529 Plan Contribution Larger Than the Annual Gift Tax Exclusion?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Although the IRS typically allows people to gift no more than $14,000 a year (2017 figure) to another person without a federal gift tax, you can contribute up to $70,000 to a 529 plan in one year. A special tax law allows you to aggregate five years of the allowable $14,000 annual gift-tax exclusion (5 x $14,000 = $70,000) to jump-start a 529 plan.

While you will not be able to make any further gifts to the 529 plan for the next five years, this strategy often has merit for donors who can afford it. Depending on the investment options that are selected, compounding can potentially make the earnings on a 529 account grow faster than if a donor invested $14,000 annually in each of the next five years.

We would like your feedback on this Personal Finance Frequently Asked Question.

When Can Someone Withdraw Money from a Roth IRA Without Owing Income Taxes?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

You can withdraw money that you have contributed to a Roth IRA (i.e., your own money) at any time because the account was funded with after-tax dollars on which income taxes were already paid.

You can withdraw the earnings from a Roth IRA tax free in the following situations:

1. You have reached the age of 59½, and at least five years have passed since your Roth IRA account was opened. Earnings can be withdrawn tax-free beginning on the first day of the fifth taxable year after the year the Roth IRA was established. That means January 1, 2022 for Roth IRAs established in 2017.

2. You want to use the money to become a "first-time homeowner," which means someone who has not owned a house during the past two years. Withdrawals of up to $10,000 are allowed.

3. You are disabled. In addition, if a Roth IRA owner dies, his or her named beneficiaries can make tax-free withdrawals.

For more information about Roth IRAs, see http://www.irs.gov/Retirement-Plans/Roth-IRAs.

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What is the Required Minimum Distribution (RMD) Rule for Tax-Deferred Retirement Plans Like IRAs and 401(k)s?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

“RMD” is an abbreviation for “required minimum distribution.” This is the amount of money that retirees age 70½ and older are required to withdraw from their tax-deferred plans such as IRAs and 401(k) and 403(b) plans. RMD rules are serious business. The penalty for not withdrawing the proper amount is a 50% excise tax on the amount not distributed as required.

For example, if you don't withdraw a required $1,000 from your traditional IRA or tax-deferred employer plan, the tax penalty is $500. For a taxpayer in the 25-percent income tax bracket, that's twice what you would have paid in taxes if you'd followed the distribution rule.

If you don’t understand the tax law regarding calculating required minimum withdrawals, you might want to consult an accountant or other professional tax adviser. The only exception to the RMD beginning at age 70½ is for those who are still working for the company where they have a retirement savings account (e.g., 401(k) or 403(b) plan). They can delay their beginning withdrawal date until April 1 of the year following the year that they retire. This is called the “still working exception.” For all others, the first RMD can be taken as late as April 1 of the year following the year that someone turns 70½.

For example, if you turned 70 on November 1, 2016, and 70½ on May 1, 2017, you must take your first RMD no later than April 1, 2018. If you postpone your initial RMD until the following year, however, you will have to take two distributions during that first year. Therefore, for most people (unless you expect a big drop in income), it is preferable to take the first RMD at age 70½ so that the withdrawals are spread over two tax years rather than being bunched up into one.

How do you determine your RMD so you are sure to withdraw enough money to comply with IRS rules? Follow these five steps:

1. Determine the distribution year. The account balance used to compute the RMD is based on the balance in a person’s retirement account on December 31 of the previous year.

2. Calculate the account balance. Begin with the balances in all retirement accounts. An exception is Roth IRAs, where withdrawals are tax-free if an account has been open for at least five years.

3. Look up the life expectancy factor on which RMDs are based. A copy of the IRS Retirement Plan Uniform Distribution Table can be found at  http://njaes.rutgers.edu/money/ira-table.asp

4. Divide the account balance by the life expectancy factor. An example is that the life expectancy factor for a 70-year-old is 27.4. If a retiree has a $100,000 IRA balance the previous December 31, the RMD would be $3,649.64 ($100,000 divided by 27.4). A separate table is used for married couples with more than a 10-year age difference between spouses.

5. Take the RMD. Retirees must make their RMD withdrawal by the end of the distribution year. If they have multiple IRAs, they must aggregate the balances in each. The actual withdrawal can come from any one, or a combination, of their accounts as long as at least the required minimum amount is taken.

One final note: The answer to this question referred specifically to required minimum distributions. Retirees can always withdraw more than the RMD. After age 59½, retirement plan owners can withdraw as much money as they want from tax-deferred accounts without penalty. Taxes are due on the withdrawn amount, however, so advance planning?perhaps with a professional tax adviser?is in order.

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What Are the Tax Laws About Giving Gifts?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

If you gave any one person gifts valued at more than $14,000 (2017 figure), it is necessary to report the total gift to the Internal Revenue Service. You may even have to pay tax on the gift. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

You make a gift when you give property, including money, or the use or income from property, without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.

There are some exceptions to the tax rules on gifts. The following gifts do not count against the annual limit:

* Tuition or medical expenses that you pay directly to an educational or medical institution or health care provider for someone's benefit

* Gifts to your spouse

* Gifts to a political organization for its use

* Gifts to charities

If you are married, both you and your spouse can give separate gifts of up to the annual limit to the same person without making a taxable gift. That means that both you and your spouse could each have given up to $14,000 to the same person ($28,000 total) in 2017 without being liable for gift taxes.

For more information, get the IRS Publication 950, "Introduction to Estate and Gift Taxes," IRS Form 709, "United States Gift Tax Return," and "Instructions for Form 709." They are available at the IRS Web site at www.irs.gov under "Forms and Publications" or by calling toll free 1-800-TAX-FORM (1-800-829-3676).

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Is There a Good "One-Stop" Source of Information About Tax and Social Security Limits That Change Every Year?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Yes. The College For Financial Planning publishes "Annual Limits Relating to Financial Planning" at the beginning of each year. For the 2017 version of this publication, as well as previous years, see http://www.cffpinfo.com/annual-limits/.

 

 

What is the Cost of Raising a Child?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The United States Department of Agriculture (USDA) has an online calculator that provides this information. Their Cost of Raising a Child Calculator provides an annual estimate of child-rearing costs and they update it annually. The Web site address is: http://www.cnpp.usda.gov/calculator.htm.

For more information, refer to cnpp.usda.gov/calculatorintro.htm.

What Are Some Key Details About Thrift Savings Plan (TSP) L Funds?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The Thrift Savings Plan (TSP) Lifecycle (L) Fund option became available in 2005 and is now widely used by plan participants. The funds make portfolio weighting (or asset allocation) decisions based on a designated target retirement date. In fact, similar non-TSP accounts of this kind are often referred to as “target date funds.”

From a TSP plan participant’s standpoint, the Lifecycle (L) fund is “low-maintenance.” The fund automatically becomes more conservative, with less stock and more fixed-income securities in its portfolio as the target date approaches. This gradual shift in portfolio composition, often referred to as a “glide path,” reduces the risk of the Lifecycle (L) fund as TSP participants approach retirement.

Lifecycle (L) funds are available in 10-year increments. When TSP participants invest in the Lifecycle (L) fund, they are advised to select the Lifecycle (L) fund that best coincides with their planned retirement date. For example, the Lifecycle (L) 2020 fund would be appropriate for people retiring between 2015 and 2024, and the Lifecycle (L) 2030 fund for retirement dates between 2025 and 2034, etc.

More aggressive investors might want to select the next highest 10-year Lifecycle (L) fund (e.g., 2040 when they really qualify for 2030), and less aggressive investors may want to go down a notch (2020 when they really qualify for 2030). To help keep a plan participant’s asset allocation in check with their investment goals, many financial advisers recommend placing a plan participant’s entire TSP account balance into a designated Lifecycle (L) fund and not “commingling” it with one or more other TSP funds.

What Are the Long-Term Average Annual Returns on Investments?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

According to the investment research firm Ibbotson Associates, these were the annual returns on various types of investments from 1926 through 2015:

* Small company stocks: 12.0%

* Large company stocks; 10.0%

* U.S. Government bonds: 5.6%

* U.S. Treasury bills: 3.4%

We would like your feedback on this Personal Finance Frequently Asked Question.

At What Age Can I Avoid the Social Security Earnings Limit?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The earnings limit for Social Security benefits no longer applies once you reach your full retirement age (FRA). For people born between 1943 and 1954, FRA is age 66. Therefore, the earnings limit will no longer apply to you once you reach age 66. FRA for those born in 1960 and later is age 67. The 2017 earnings limit for Social Security beneficiaries who have not reached their FRA is $16,920.

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How Long do Taxpayers Have to Claim a Tax Refund?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Tax law provides most taxpayers with a three-year window of opportunity for claiming a tax refund. If no return is filed to claim a refund within three years, the money becomes the property of the U.S. Treasury. The three-year limit begins on the date that the tax return was originally due.

For example, for 2016 returns due on the tax filing date in April 2017, the window of opportunity ends three years later in April 2020. The law requires that the tax return be properly addressed, mailed, and postmarked by that date. Since you don't owe the government any money, there is no penalty for filing a late return that qualifies for a refund.

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If You Have Not Earned the Maximum Amount Allowed to be Contributed to an IRA, Can You Still Contribute That Amount?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

You are allowed to contribute the greater of 100% of your earned income (salary or wages from a job or self-employment income) or $5,500 to a Roth and/or traditional IRA in 2017. If you are age 50 by year's end, or older, you can contribute up to an extra $1,000 ($6,500 total).

However, if you earn less than $5,500 by the end of the calendar year, you can only contribute up to the amount of your annual earnings.

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Can You Split Your IRA Contribution Between Both a Traditional and a Roth IRA?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Yes, as long as the total amount of your contributions to more than one IRA does not exceed the maximum annual contribution limit which, in 2017, is $5,500 for workers under age 50 and $6,500 (with an additional $1,000 catch-up amount) for workers age 50 and over by year-end.

Be sure to check the administrative fees and minimum deposit requirements of your IRA plan custodian(s), however. Multiple accounts could mean that you'll be charged multiple fees to administer your IRA accounts. You may also receive multiple account statements and more paperwork during tax season.

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How Does Your Age Determine the Amount of Your Social Security Benefit?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Basically, the longer you wait to claim a Social Security benefit, the more money you will receive. Under current Social Security guidelines, the earliest age that you can collect benefits is age 62. However, benefits at age 62 are permanently reduced by 25%. For example, if your monthly benefit at age 66 is $1,000, you would receive only $750 at age 62.

If you wait until age 70 to start collecting benefits, the amount you will receive is 132% of the full retirement benefit at age 66. For example, that $1,000 benefit at age 66 would rise to $1,320 at age 70.

Obviously, many personal factors need to be considered in addition to these mathematical calculations. Key factors include a need for income, health status, and a spouse's need for income, if married.

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Can Money Withdrawn From a 403(b) Plan in Retirement Be Put Into a Roth IRA?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

It depends. You must have earned income to contribute to an IRA of any type, including a Roth IRA. This means that you must have a salary, hourly wage, or net earnings from consulting or a small business.

If you have earned income, the maximum amount that a person over age 50 can deposit in 2017 in a Roth IRA is the larger of 100% of earnings or $6,500 (the regular $5,500 contribution plus an additional $1,000 catch-up contribution). Roth IRA contributions are not tax deductible. Instead, they are funded with after-tax dollars (i.e., income that has already been taxed).

There's no age limit for contributions to Roth IRAs. For regular IRAs, you lose the ability to make contributions in the year you turn age 70½ but not for Roth IRAs. If you have earned income, you can contribute to Roth IRA at age 80, 85, or 90.  There's also no lower age limit. A minor with earned income that can be documented can set up a Roth IRA and contribute to it if a plan custodian allows.

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What Are the Income Restrictions to Qualify for a Deductible Traditional IRA?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

People with earned income who are not in an employer-sponsored retirement plan, regardless of income level, may qualify for a tax deductible traditional IRA. Another group of taxpayers who can deduct a traditional IRA contribution in full are those with an employer-sponsored plan who have incomes in 2017 under $62,000 (single) and $99,000 (married couples filing jointly). The phase-out ranges (where contributions are limited in gradual steps as income increases) for singles and couples are $62,000 to $72,000 and $99,000 to $119,000, respectively.

Above these amounts, taxpayers can make a non-deductible, tax-deferred traditional IRA contribution. A working spouse who is not covered by an employer-sponsored plan may have a fully deductible traditional IRA even if the other spouse is in an employer-sponsored plan if the household adjusted gross income is less than $186,000 in 2017. The phase-out range for deductible contributions is from $186,000 to $196,000.

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What Are the Income Restrictions to Qualify to Contribute to a Roth IRA?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Below are the income restrictions for 2017 Roth IRA contributions:

• Roth IRAs are fully available to single filers whose adjusted gross income (AGI) is less than $118,000. No participation is allowed if your AGI is more than $133,000. Thus, the phase-out range, where contributions are limited in gradual steps as income increases, is between $118,000 and $133,000.

• Roth IRAs are fully available to joint filers whose AGI is less than $186,000. There is a phase-out range between $186,000 and $196,000. Married couples cannot contribute to a Roth IRA if their AGI is more than $196,000.

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What were Traditional IRA and Roth IRA Contribution Limits in the Past?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Individual retirement accounts (IRAs) were introduced in 1974. Anyone with earned income can make the maximum traditional IRA contribution as long as they had at least that much income in a given year. A non-working spouse can establish his/her own traditional IRA if the earned income of the working spouse equals or exceeds the total contributions to both partners’ IRAs.

From 1974 until 1980, the limit for contributions was $1,500 per individual. From 1981 until 2001, it was $2,000. The IRS raised the contribution limit for individuals under 50 years old to $3,000 in 2002 through 2004, then to $4,000 in 2005 and 2006, and $5,000 in 2008 through 2012. In 2013, the maximum IRA contribution limit was raised to $5,500. It is still $5,500 in 2017.

Starting in 2002, individuals 50 years old and older were allowed to make higher "catch up" contributions to their traditional IRAs. In 2002, the IRS established "catch up" contributions for traditional IRAs at $3,500. In 2005, it was raised to $4,500, $5,000 in 2006, and $6,000 in 2008, which was the limit through 2012. In 2013, the maximum contribution limit for older workers was raised to $6,500 (2015 limit).

Individuals can no longer make contributions to traditional IRAs once they reach the age of 70½ years. This differs from Roth IRAs that allow contributions at any age as long as someone has earned income. Roth IRAs were established by the Taxpayer Relief Act of 1997 and first available in 1998. The total contributions allowed per year to all IRAs cannot exceed the amounts previously mentioned. For more information on IRAs, see Publication 590 on the IRS Web site at www.irs.gov.

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How Does Losing a Job Affect Your Income Taxes?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

There are a number of ways that income taxes can be affected by the loss of a job. Below are descriptions of three common situations and information from the IRS about how they affect federal income taxes:

  1. You get a new job but earn less than you did before: If you had a high income previously, where certain tax deductions were limited, you may no longer be subject to income-based phase-outs. If your income was more moderate before and is now reduced even further, you may be able to qualify for the earned income tax credit.
  2. You lose your job and receive severance pay: Severance pay is taxable income, as are payments for accumulated vacation or sick time. You should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time and possible tax penalties.
  3. You lose your job and receive unemployment compensation: Like severance pay, unemployment compensation payments are taxable. As with severance pay, you should ensure that enough taxes are withheld from these payments or make estimated tax payments to avoid a big bill at tax time and possible tax penalties.

Other possible ways that unemployment can affect income taxes include tax deductions for job search expenses, tax deductions for moving to a new job at least 50 miles from your home, and taxes on early withdrawals (prior to age 59½) from an IRA or 401(k). For additional information on tax topics, see the IRS Web site at www.irs.gov.

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What is the Final Deadline to Make an IRA Contribution?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The IRS is firm on the tax filing deadline. An IRA contribution for the prior calendar year must be made by the tax filing deadline, which does not include extensions. Contributions made after April 15th (or an alternate date if this date falls on a holiday or a weekend) will count as a contribution for the current tax year. For example, a contribution made after the 2017 tax filing deadline will be considered a 2018 IRA account contribution.

Also, when you make an IRA contribution on or before April 15th, be sure to advise the custodian that it is a contribution for the prior tax year if this is your intent.

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What is FICA Tax and How is it Calculated?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

FICA is an acronym for "Federal Insurance Contributions Act." FICA tax is the money that is taken out of workers' paychecks to pay older Americans their Social Security retirement and Medicare (Hospital Insurance) benefits. It is a mandatory payroll deduction. Two separate taxes are added together and treated as one amount that is referred to as "payroll taxes" or FICA. These two taxes, individually, pay for both Social Security retirement benefits and Medicare health insurance.

FICA tax deductions also provide benefits to widows and widowers, children who have lost working parents, and disabled workers who qualify for benefits. The amount paid in payroll taxes throughout one's working career is linked to the Social Security benefit that one receives as a retiree or one's family receives if a covered worker dies. FICA tax is paid by both workers and their employers.

 FICA tax is typically 7.65% of earnings up to $127,200 (2017 figure). Employees pay 6.2% of their earnings for Social Security retirement benefits and their employer pays 6.2% for a total of 12.4% of a worker's income. An additional 1.45% tax is also collected to fund Medicare benefits and this, too, is matched by employers.

Self-employed persons pay both halves of both taxes for a total of 15.3% of their net business earnings. These taxes are reported on Schedule SE with their income tax returns.Self-employed persons can deduct the employer-equivalent portion of self-employment tax in figuring their adjusted gross income (AGI).

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How is the Five-Year Look-Back Period for Medicaid for Long-Term Care Calculated?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Regulations exist to prevent people from transferring assets that could be used to pay their long-term care expenses. This eliminates, or at least postpones, the possibility of the government having to finance their long-term care through the Medicaid program. The look-back period for asset transfers with respect to an application for Medicaid is currently five years. Government officials can look at any gifts made as long as five years before the date that an application for assistance is made.

If someone who is applying for assistance has made gifts within the look-back period, a penalty period is triggered during which that individual is ineligible for government aid. The penalty period is calculated by dividing the average cost of nursing home care in the area where the individual lives into the amount given away. For example, if someone gave away $75,000 within five years of the date of application and area nursing homes cost $7,500 a month, he or she can't qualify for Medicaid for 10 months.

One strategy that is often used in Medicaid planning is to purchase long-term care insurance to cover long-term care expenses for at least the duration of the look-back period. With insurance benefits paying for at least part of the cost of care, someone may be able to postpone the date of Medicaid application beyond the look-back period and not trigger a penalty period.

Professional assistance by an elder law attorney who specializes in Medicaid planning is recommended for estate planning strategies related to the look-back period. Specific Medicaid regulations vary somewhat from state to state, so it is important to be aware of the rules that apply in the area where the elderly person who might require care lives.

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Can Workers' Income Reduce Their Spouse's Social Security?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

No. The earnings limit ($16,920 in 2017 for beneficiaries who are age 62 through full retirement age) applies only to the income of the person who is collecting a monthly Social Security benefit check. It is that person's income that determines whether benefits are reduced. One dollar in benefits is withheld for every $2 in earnings above the earnings limit amount.

Where a working spouse's income will have an effect, however, is in the taxation of Social Security benefits if a joint federal income tax return is filed. Therefore, it might be wise to calculate your taxes as both a married couple filing jointly and two spouses filing separately. An individual or couple’s marginal tax bracket affects the amount of Social Security benefits received on an after-tax basis.

Before 1984, Social Security benefits were not taxed on federal income tax returns. Since then, if the total of taxable pensions, wages, interest, dividends, and other taxable income, tax-exempt interest income, plus one-half of Social Security benefits (referred to collectively as “provisional income”) are more than $25,000 for singles and $32,000 for married couples filing jointly, up to 50% of Social Security benefits are taxed.

If income exceeds $34,000 for singles and $44,000 for joint filers, up to 85% of benefits are taxed. Unlike Social Security benefits themselves, these dollar amounts are not indexed for inflation and thus affect increasing numbers of beneficiaries over time.

Taxes on Social Security benefits are especially problematic for married couples when one spouse collects benefits while the other remains employed with a good salary, thereby pushing household income over the taxable limits. In this case, it will be necessary to withhold money for taxable Social Security benefits either by overwithholding through the working spouse's employer or by making quarterly estimated tax payment for the Social Security beneficiary.

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How Do You Purchase Stock From a Company That is Going Public?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

You are talking about an IPO (initial public offering). You should be able to get information (e.g., company research) from a stockbroker. Also, visit an online search engine (e.g., Bing or Google), type in the company name, and see what information you get. If there is an address or toll-free telephone number for the company's "shareholder relations" department, call it. As for purchasing an IPO stock, you may or may not be able to buy shares directly from the company. You will need to ask. You might need a broker to purchase shares.

Online purchasing may be cheaper than a broker, but you will get no personal advice beyond what is on an online brokerage firm's Web site. Beware of IPOs in their initial "hype" phase. Often, prices cool dramatically by the time small investors are able to buy shares. You may want to wait until the initial buying frenzy cools down.

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What Types of Records Should You Keep for Tax-Deductible Mileage?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Some people record all their mileage on a calendar, planner, or business diary that they keep in their car. Be sure to jot down the date, the purpose of the trip, the starting and ending odometer readings, and the total number of miles driven. Another good source of documentation is a copy of the forms that you provide to your employer for expense reimbursement.

Remember, you are entitled to deduct the difference between the IRS business mileage reimbursement rate (54 cents in 2017) and the mileage reimbursement rate provided by your employer. Mileage expenses are also deductible for charitable, moving, or medical purposes. In 2017, the mileage rate for medical or moving purposes is 19 cents per mile driven. The mileage rate for driving related to service to a charitable organization is 14 cents per mile. As in the case of business mileage, written documentation should be kept of length and purpose of each trip.

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Can You Direct Deposit a Refund From an Amended Tax Return?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

You cannot even have the refund amount direct deposited into any financial account. At the present time (2017), the IRS does not offer a direct deposit option for refunds on amended returns. In fact, there is no place on the form to designate a place for direct deposit.

In addition, only an original tax return can be electronically filed. You must file Form 1040X for an amended return on paper and mail it to the IRS.

The IRS will mail a check for the amount of your additional refund to the address shown on your amended tax return. If you are due an additional refund, expect a check to arrive in approximately 8 to 12 weeks.

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Can You Split a Federal Income Tax Refund Between a Direct Deposit and a Paper Check?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

No. You cannot split your refund between a direct deposit and a paper check. According to IRS tax refund procedures, you can either opt for the safety, security, and speed of direct deposit to one, two, or three different accounts, or you can request your refund via a paper check, but you cannot combine the two refund methods.

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Am I Locked Into an Investment Option for My 529 Plan?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

In the early days of 529 plans, once you selected an investment option within a college savings plan, you could not change that option. Only new contributions could be invested in different investment options.

Under current rules, however, the IRS allows you to change your investment options in a college savings plan once every calendar year.

For more information, see http://www.sec.gov/investor/pubs/intro529.htm.

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How Long Do You Need to Work to Receive Social Security Retirement Benefits?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

To qualify for Social Security retirement benefits, you must generally have "40 quarters of coverage." This means that you must have been working for 10 years and earning at least the minimum income (adjusted annually for inflation) required to receive a quarter of coverage.

For example, in 2017, you can receive one quarter of coverage for each $1,300 of earnings, up to the maximum of four quarters of credit per year. Thus, the maximum amount of income needed to earn four quarters of coverage in 2013 is $5,200 ($1,300 x 4).

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What is the Capital Gains Exclusion for the Sale of a House?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Single taxpayers can exclude up to $250,000 of capital gains on the sale of a home, and married taxpayers filing jointly can exclude $500,000.

Taxpayers are eligible for the exclusion if they have owned and used a home as their main home for a period aggregating at least two years out of the five years prior to its date of sale. The exclusion is allowed each time that you sell a primary residence but no more than once every two years.

For more information, see http://www.irs.gov/taxtopics/tc701.html

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How Much of Someone's Social Security Benefit is Taxed?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

First, individual taxpayers or taxpaying married couples must add up their "modified adjusted gross income." This is their taxable income, plus their tax-exempt income, plus half of their Social Security benefits. If this figure exceeds certain income levels, a portion of Social Security benefits is taxed.

Next, a worksheet is completed to determine the amount of Social Security benefits that is taxable. This worksheet can be found in the annual instructions package for tax forms available online in the "Forms and Publications" section of www.irs.gov. Under current law, in 2017, the income levels where income taxes on Social Security benefits apply are as follows:

• 50% of Social Security Benefits Taxed - $25,000 to $34,000: Single and Head of Household and $32,000 to $44,000: Married filing jointly

• 85% of Social Security Benefits Taxed - Over $34,000: Single and Head of Household  and over $44,000: Married filing jointly

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How Do I Take a Charitable Income Tax Deduction??

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

While a specific charity may qualify with the IRS as a charitable organization for tax purposes, a taxpayer still needs to be able to itemize his or her tax deductions to deduct a charitable contribution. Charitable contributions are an itemized deduction.

Schedule A is the tax form used to tally itemized deductions. These deductions include out-of-pocket health-related expenses, mortgage interest, property taxes, charitable contributions, and other qualified expenses.

In order to use Schedule A, you would need to use IRS tax form 1040 and not 1040 EZ. Using the Schedule A form will let you determine whether your total itemized deductions are greater than the standard deduction in effect for that tax year. If they are not, you cannot subtract the charitable contribution.

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What is the Federal Estate Tax Exemption and Federal Estate Tax Rate?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The top estate tax rate for 2017 is 40% and there is a $5,490,000 exemption amount. Individuals can transfer up to $5,490,000 (indexed for inflation in the future) to heirs free from estate tax.

In addition, for married couples, if one spouse dies without using the full exclusion, the remainder can be added to the surviving spouse's own exclusion. This provision provides a way for couples to take advantage of each other’s exemption, without having to create complicated trusts or wills. Since widows and widowers can add any unused exclusion of the spouse who died to their own, they can effectively, together as a couple, transfer up to $10.98 million tax-free.

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How do Spousal IRAs Work?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Spousal IRAs are a type of individual retirement account designed for married couples where one spouse is not employed. The working spouse may contribute up to $5,500 per year (2017 figure) to an IRA, in the name of the non-working spouse, and up to $5,500 per year to his or her own IRA. As a result, a couple may contribute 100% of their income up to a total of $11,000 per year (2017 figure).

In addition, if you are age 50 or over by year-end, you may contribute an additional $1,000 (for a total of $6,500) to an IRA. This is called a catch-up contribution. If both individuals are 50 years of age or older, the total amount that can be contributed to their two IRAs (worker and spousal) is $13,000.

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What is a Person's Marginal Tax Rate?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

A marginal tax rate (also known as marginal tax bracket) refers to the percentage of the last dollar that someone earns (from their total annual income) that goes to taxes. There are currently seven federal marginal tax rates: 10%, 15%, 25%, 28%, 33%, 35%, and 39.6% in 2017.

For further information on marginal tax rates, based on taxable income and tax filing status, visit http://njaes.rutgers.edu/money/taxinfo/.

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What is the Standard Deduction for Income Taxes?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The standard deduction is the amount that taxpayers can subtract from their adjusted gross income if they choose not to itemize deductions. The amount of the standard deduction is indexed annually for inflation. In 2017, the standard deduction is $6,350 for single tax filers and $12,700 for married couples filing jointly.

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Why Should I File an Income Tax Return if I Don't Owe Any Money?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Even if you don't owe any taxes, you may qualify for tax credits that would result in a refund.

For example, the Earned Income Tax Credit (EITC) and Child Tax Credit both provide refundable tax credits. This means that, if the amount of a refundable tax credit is more than the amount of taxes due, the difference will be given back to you as a tax refund.

By not filing a tax return, an individual is missing out on the opportunity to receive "free money."

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What is the Difference Between Progressive and Regressive Taxes?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

A progressive tax is a type of tax that takes a larger percentage of income from taxpayers as their income rises. An example is the federal income tax, where there are six marginal tax brackets ranging from 10% (lowest-income taxpayers) to 39.6% (highest-income taxpayers). Most state income taxes have a similar progressive structure.

A regressive tax is the exact opposite. Higher-income taxpayers pay a smaller percentage of their income than lower-income taxpayers because the tax is not based on ability to pay. An example is state sales tax, where everyone pays the same tax rate regardless of their income.

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What is Long-Term Care?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

The phrase "long-term care" describes a variety of services that provide medical and non-medical care to people who have a chronic illness or disability. Long-term care helps meet health or personal needs. Most long-term care is to assist people with support services such as activities of daily living like dressing, bathing, and using the bathroom.

Long-term care can be provided at home, in the community, in assisted living, or in nursing homes. It is important to remember that people may need long-term care at any age. It is also possible that they may never need long-term care.

 

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Where Can I Find My FICO Credit Score for Free?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

FICO credit scores are not required by law to be made available free of charge like credit reports are. They may be purchased from the company that calculates the score or at www.myFICO.com.

Sometimes you can get your credit score for free as part of the process of applying for a loan. Ask the creditor that you have applied for a loan from to provide you with this information, especially if you have paid a fee for a credit check.

In addition, credit card companies are increasingly providing access to credit scores to attract and maintain customers. Credit scores may be printed on billing statements or available online. You may be able to get a free credit report this way.

 

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What are Health Savings Accounts?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

Health Savings Accounts (HSAs) were designed by Congress to provide tax advantages to individuals enrolled in high deductible health care plans. Deposits to an HSA are used to pay qualified medical expenses.

The 2017 maximums for annual contributions to HSAs are $3,400 for individuals and $6,750 for a family. Money in the account grows tax deferred, so an HSA serves as a type of savings account to pay future health care expenses.

For more information, see http://njaes.rutgers.edu/healthfinance/health-savings-accounts.asp.

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How Does a Target Date Mutual Fund Work?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

With a target date mutual fund, investors simply need to pick a fund with a date at or near the year that they expect to retire. For example, there are funds with dates such as 2020, 2030, 2040, and 2050 in their title.

The fund manager will gradually change the asset allocation of the fund as time goes by so that, eventually, there will be a smaller percentage of the portfolio in stocks and a higher percentage in bonds and cash assets.The closer the fund gets to the target date, the more conservative the fund becomes.

Target date mutual funds are increasingly being offered as an option in 401(k) and 403(b) employer retirement savings plans plans and are often the "default option" when workers are enrolled automatically.They are also available from major investment companies for purchase in accounts outside of tax-deferred plans.

Investors should compare different target date funds, however, because funds vary their asset allocation weightings at different dates.

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If I Work While Receiving Social Security, Will my Benefit be Reduced?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

If you are under full retirement age, there is a $1 loss in benefits for every $2 earned in excess of a threshold ($16,920 in 2017) that is adjusted for inflation every year. A modified test applies for the year an individual reaches full retirement age.

If earnings for the months prior to reaching full retirement age are $44,880 or more (2017 figure), one dollar in benefits will be withheld for every $3 in earnings above the limit. Starting with the month you reach full retirement age, you can get your benefit with no limit on your earnings.

Full retirement age is determined by the year of your birth and is gradually increasing from age 65 to age 66 for those born from 1943 to 1954 and age 67 for those born in 1960 and later.

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What are "Teaser Rates" on a Credit Card?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

"Teaser rates" (also known as "introductory rates" and "promotional rates") are just that: low annual percentage rates (APRs) that are used to entice people to apply for a certain credit card. Unfortunately, these rates may not last long.

Most teaser rates expire and revert to a higher rate after six to 12 months. Specific policies are set by a credit card issuer. As a result of the 2009 CARD Act, teaser rates must be in effect for at least six months.

It is important to read the disclosure box on credit card applications to determine what the interest rate will be after the teaser rate expires. Teaser rates are also contingent upon timely bill payment. If a payment is late, a teaser rate will often be replaced immediately by a higher interest rate.

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What Are the Contribution Limits for Tax-Deferred Employer Retirement Plans?

By Contributors from eXtension Faqs- All. Published on Feb 07, 2017.

In 2017, employees younger than age 50 may contribute up to $18,000 to the following salary reduction retirement savings plans: (401(k), 403(b), 457, and Thrift savings Plan (TSP). Individuals 50 and older may contribute up to $24,000, which includes the maximum annual catch-up contribution of $6,000.

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