Social Security Tax drops from 6.2 to 4.2 Percent

For 2011, the Social Security tax rate is 4.2 percent for employees, 6.2 percent for employers, and 10.4 percent for self-employed people. These rates apply to earnings up to the maximum taxable amount ($106,800 in 2011).

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 reduced 2011 Social Security tax rates for employees and self-employed people by two percentage points.

Learn more about the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 at the White House website.

www.whitehouse.gov/taxcut

Any questions may be directed to: rsi5@srt.com

FAQ's About Taxes and SSA Disability Benefit Programs

These common questions about taxes and disability benefits that we hear as CWIC's around this time of the year are worth a lengthy post.

The text below was produced by our National Training Center at Virginia Commonwealth University and, although a bit lengthy - it is quite thorough.

If you have a question about taxes and SSA disability benefits, there's a good chance you'll find it here. If you can't find it here, please feel free to contact me.
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QUESTION: I have been getting services from my local Work Incentives Planning and Assistance (WIPA) project – can my CWIC help me with tax issues related to my disability benefits?

Your CWIC can offer you some very general information about certain tax issues related to SSA disability benefits, but the assistance provided will be very limited. CWICs are not qualified tax professionals and are not trained to assist with tax issues – even those related to SSA disability benefits. Your CWIC will probably refer you to either the IRS or a local tax professional if you have questions requiring a response beyond what is contained in this document.

QUESTION: Are my disability benefits taxable?

Well, that depends on which benefits you get and how much your total income is. If you receive Supplemental Security Income (SSI), you will owe no Federal or State taxes on this benefit. If you have other forms of income in addition to your SSI (such as wages) you may owe taxes on that income.

If you receive a title II disability benefit (SSDI, CDB or DWB), then you may have to pay taxes on your benefits, depending on how much your total income is. SSA reports that about one-third of their current beneficiaries do pay taxes on their benefits. Here are the situations in which taxes may be due:

· If you file a federal tax return as an “individual” and your income is more than $25,000, you have to pay taxes.

· If you file a joint return, you may have to pay taxes if you and your spouse have a combined income that is more than $32,000.

· If you are married and file a separate return, you will probably pay taxes on your benefits.

Beneficiaries who are unsure about whether or not they have to pay taxes should contact the Internal Revenue Service (IRS) or seek the services of a qualified tax professional.

­­­­­­­­­­­­­­­QUESTION: I am getting a Federal income tax refund this year. Do I need to report this to SSA?

No, you do not need to report this no matter whether you are on SSI or a title II disability benefit.

Federal and/or State income tax refunds are specifically disregarded as a form of income by the SSI program. This is because SSI counts your gross income when it is received so your SSI check has already been adjusted without regard to any taxes withheld. However, if you retain your income tax refund and your countable resources exceed the limit ($2,000 for an individual or $3,000 for a couple) you could become ineligible for SSI and Medicaid.

NOTE: Income tax refunds are not income for SSI purposes even if the income taxes were excluded from countable income as Blind Work Expenses.

In the title II program, SSA is only interested in earned income – money you receive in exchange for work performed. Income tax returns would not be considered earned income. Since the title II program is a form of insurance which is not means-tested in any way, resources are never considered. Putting your refund in the bank would have no affect on your benefits.

QUESTION: I will be getting an Earned Income Tax Credit payment this year – is that something I need to report to SSA?

The earned income tax credit (EITC) is a special tax credit that reduces the Federal tax liability of certain low income working taxpayers. This tax credit sometimes results in a payment to the taxpayer, either as an advance from an employer or as a refund from IRS. For more detailed information about the EITC go to the IRS website at: http://www.irs.gov/individuals/article/0,,id=96466,00.html

The Earned Income Tax Credit (EITC) is not counted as income for either the SSI program or the title II disability benefits and does not need to be reported to SSA. In addition, for the SSI program, any unspent Federal tax refund or payment made by an employer related to an EITC that is received on or after 3/2/04 is excluded from resources for the 9 calendar months following the month the refund or payment is received. For more information, refer to POMS SI 01130.675 Tax Advances and Refunds Related to Earned Income Tax Credits and Child Tax Credits.

NOTE: These same rules apply to the Child Tax Credit (CTC). The child tax credit (CTC) is a special refundable Federal tax credit that is available to certain low income taxpayers with earned income. They must be parents, step-parents, grandparents or foster parents with a dependent child. This child tax credit may provide a refund to individuals even if they do not owe any tax. The CTC may result in a tax refund payment to the taxpayer from IRS beginning with tax year 2001. There is no advance payment with the CTC.

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QUESTION: Is it possible for the IRS to take some of my disability benefit check if I owe money for delinquent taxes?

Yes, this is possible – but only with title II disability benefits. The SSI program does not permit garnishment, attachment or levies against payments for any reason since the assumption is that persons on SSI have very little income or resources. Effective 7/1/89, the Taxpayer's Bill of Rights (P.L. 100-647) specifically prohibits IRS levies against SSI payments.

In the title II program, the IRS may take a portion of your monthly benefit payment to recover delinquent taxes. IRC Section 6331 states that individuals and businesses with delinquent tax liabilities may be subject to a continuous 15% levy against funds owed them by the federal government (including SSA benefits) beginning in July 2000. To do this, the IRS has to file something called a “Notice of Levy” with the SSA. A Notice of Levy is continuous until the IRS tells SSA to stop levying. In processing levies, SSA is merely acting to assist IRS in its duty to collect delinquent taxes. Except for seeing that the processing requirements are met, SSA has neither the authority nor obligation to question the correctness of an IRS levy.

If a levy is received for an individual who is receiving benefits on behalf of someone else as a representative payee, it will be returned to the IRS. SSA can only levy an individual’s own benefits.

A taxpayer whose title II disability payments are subject to levy may contact the IRS to resolve the issue by paying the tax bill, entering into an installment agreement or proposing an offer in compromise. For more information about SSA’s role in processing IRS levies, refer to POMS GN 02410.100 - Internal Revenue Service (IRS) Levy.

QUESTION: Can I have taxes withheld from my Social Security Disability Benefits?

Yes, this is possible. Public Law No.103-465 amends the Internal Revenue Code (IRC) to allow individuals to request that monies be withheld from certain Federal payments to satisfy their Federal income tax liability. An amendment to Section 207 of the Act allows this withholding from title II benefits. SSA refers to this process as “Voluntary Tax Withholding” or VTW. All title II beneficiaries (adults as well as children) are eligible for VTW. However, only the beneficiary or his/her representative payee can request VTW. Voluntary Tax Withholding does NOT apply to SSI payments and there is no way to have State income taxes withheld from any SSA benefit.

Beneficiaries (or their representative payees) need to complete and sign IRS form W-4V (Voluntary Withholding Request) for a VTW request to be valid. This includes a request to stop and as well as start VTW. The withholding rates set by IRS are 7%, 10%, 15%, and 25%. Only these percentages can be used. No other percentages or flat dollar amounts are acceptable. Beneficiaries can start or stop VTW at any time. For more information on VTW processes, refer to POMS GN 02410.015 - Voluntary Tax Withholding (VTW).

QUESTION: Are there special tax deductions that people with disabilities can claim?

Yes, the IRS rules contain myriad deductions and exemptions related to disability and these would apply equally to SSI recipients and title II disability beneficiaries. There are far too many special rules for people with disabilities to describe in this document, but a helpful overview may be found in IRS Publication 907 – Tax Highlights for Persons with Disabilities. This pamphlet can be found online at: http://www.irs.gov/pub/irs-pdf/p907.pdf.

In addition to these IRS rules, many States offer additional income tax deductions and some city and county governments offer discounts on property taxes or special taxes such as fees charged for fishing or hunting licenses. Beneficiaries are encouraged to search online for State and local deductions related to disability, or to seek the assistance from a qualified tax professional.

QUESTION: I will be receiving the first-time homebuyer’s tax credit at the end of the year- Is that something I need to report to SSA?

Homebuyers who purchased a home in 2008, 2009 or 2010 may be able to take advantage of the first-time homebuyer credit. The credit applies only to homes used as a taxpayer's principal residence, reduces a taxpayer's tax bill or increases his or her refund, dollar for dollar, and Is fully refundable, meaning the credit will be paid out to eligible taxpayers, even if they owe no tax or the credit is more than the tax owed. For more information, see http://www.irs.gov/newsroom/article/0,,id=204671,00.html.

Yes, for the purposes of the SSI program, this tax credit is considered to be countable income. It would also count as a resource in the month after it was received.

In the title II program, SSA is only interested in earned income – money you receive in exchange for work performed. Tax credits would not be considered earned income. Since the title II program is a form of insurance which is not means-tested in any way, resources are never considered. Putting your tax credit in the bank would have no affect on your benefits.


Any questions may be directed to: rsi5@srt.com

Earned Income Tax Credit

The Earned Income Tax Credit is a tax credit designed to put money back in the pockets of working people with low-to-moderate incomes. This tax credit can reduce your taxes and help you keep more of what you earn. Filing for the Earned Income Tax Credit means that you could receive a refund payment from the Internal Revenue Service.

To get the EITC, you must meet certain requirements and file a tax return, even if your income from working is low enough that you are not required to file a return.

The EITC income limits for Tax Year 2009 are as follows:

Earned Income and adjusted gross income (AGI) must each be less than:

· $43,279 ($48,279 married filing jointly) with three or more qualifying children

· $40,295 ($45,295 married filing jointly) with two qualifying children

· $35,463 ($40,463 married filing jointly) with one qualifying child

· $13,440 ($18,440 married filing jointly) with no qualifying children.

Filing for and receiving a refund payment from the Earned Income Tax Credit has no effect on many other public benefits you may get. In most cases, the Earned Income Tax Credit payment will not be counted against your eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing, Workers with Disabilities (WWD) Medicaid Buy-In or Temporary Assistance for Needy Families (TANF).

Because the income is a federal return it will not impact any federal programs you participate in, but it is possible that it could impact some of the state funded programs you participate in.

Any questions may be directed to: rsi5@srt.com

Housing Information: Stimulus Bill and Low-Income Housing Tax Credits

Until Congress recently enacted the Stimulus Bill, the IRS had taken the position that Low-Income Housing Tax Credits were not "federal financial assistance" and therefore the requirements of Section 504 of the Rehabilitation Act of 1973 did not apply. HUD had tacitly deferred to IRS. As a consequence, people with disabilities were frequently discriminated against in one of the largest housing programs in the country.

With the recently enacted Stimulus Bill, people with disabilities now have the same Section 504 rights and protections as they have in other "federal financial assistance" programs.

The recently enacted Stimulus act has two important provisions with regards to the Low-Income Housing Tax Credit program that disability advocates should be aware of.

First, Congress enacted a "housing credit exchange program." Your State Housing Finance Agency (HFA) is authorized to "exchange" 100% of unused 2007 and 2008 LIHTC and 40% of their 2009 allocation to developers. In return, your State Housing Finance Agency will receive 85 cents on the dollar.

This is very important because if a housing developer had applied and received a LIHTC allocation but then could not, given the economy, find an investor that would "buy" the credit, with the Stimulus Bill the developer could turn in the credits and receive cash (85 cents on the dollar) from your HFA.

With these funds, your State will be able to continue funding programs for qualified low-income housing residents. Disability advocates must make sure that your HFA requires developers (for housing developments from 2007-2009) comply with Section 504 (see below).

Second, Congress allocated HOME funds to HFAs to fill gaps in tax credit deals. Developers will have to apply for these funds and these HOME funds will fill "gap financing" for tax credit developments. Housing developers must show that the use of such funds will increase the total funds available for the construction or rehabilitation of the affordable housing.

Third, funds provided from both of these programs must be used before January 1, 2011 or the funds will be returned to the Treasury.

What does this mean for advocates?

Funds from these two programs must be used and allocated in accordance with the HFA's allocation plans. However, in many states, these plans in the past did not require compliance with Section 504. You must address this and make sure that before your HFA uses any of these funds, there is
an amendment to the allocation plan so that developers know they must comply with Section 504.

There is no doubt that these funds are "federal financial assistance" and therefore Section 504 of the Rehabilitation Act is applicable. While there had been some dispute whether "tax credits" were "federal
financial assistance," there is no issue with the two funds. This gives advocates a new opportunity to make sure there is compliance with 504.

Therefore, 24. C.F.R. section 8.22 requires that at least five percent of the units be fully accessible to people with physical disabilities and another two percent for people with visual and hearing impairments. Not only must these units be accessible, but they must be targeted to people who require these accessible features.

Any HFA accepting these funds MUST reopen their allocation plans to make sure they require AT LEAST FIVE PERCENT of the new construction must be fully accessible.

At least for the funds in the two Stimulus Bill, we should also be demanding that the HFA target or change allocation plans to target a large portion of these funds to the lowest-income people - people at the SSI income level/18% of the average median income, something most HFAs throughout the country have not done with the LIHTC in the past.

Nationally, we should be looking at how the new Secretary of HUD implements the Stimulus Bill. This is an important opportunity for HUD to take the lead and address the shameful housing crisis people with
disabilities face.

Steve Gold, The Disability Odyssey continues

Back issues of other Information Bulletins are available online at
http://www.stevegoldada.com
with a searchable Archive at this site divided into different subjects.


Any questions may be directed to: rsi5@srt.com

Tips on Choosing a Financial Institution & Getting a Bank Account

Having your own bank account is an important step in maintaining financial independence. While the process of opening an account is a simple one, the decisions involved in choosing a financial institution and an account that meets your needs require careful analysis of your situation and your options.

How do I know what type of financial institution I should use?

To help you decide whether a bank or credit union is right for you, consider their differences:

· Both can offer free or low-cost checking, but credit unions often offer higher interest rates on their savings accounts, potentially earning you more money.

· Because banks are often bigger, they can have more locations and offer more financial services than credit unions including things like: retirement planning and investor services.

· Both have ATM services, but banks often have more ATM branches than credit unions.

· Banks are owned by stockholders, while credit unions are owned by their members – those using their services.

What should I consider when I choose a financial institution for the first time?

Consider these questions to determine if a bank or credit union will meet your ongoing needs:

· Does the bank or credit union have locations that are convenient to your home and/or work?

· Will their business hours fit into your schedule?

· Are there fees and/or penalties associated with their different accounts? If so, what are they?

· Which accounts pay interest and what are the interest rates associated with those accounts?

· Will you receive checks or an ATM card so that you can access money when you need it?

· How many ATM locations do they have and are there any fees for ATM transactions?

· Do they have telephone or online banking available if you want to manage your money without going into the bank or credit union?

· Which banks do your friends and family use, and what do they like or dislike about them?

What type of account is right for me?

Most financial institutions offer basic checking and savings accounts.

· Checking accounts offer easy access to your money by writing checks or using an ATM card for withdrawals at an ATM machine. They may require a monthly fee and usually don’t earn interest.

· Savings accounts help you save the money you earn while paying small amounts of interest on your account. They have no monthly fees, but only allow access to your money through a few transactions each month and generally require keeping a minimum account balance.

Many financial institutions will link your checking and savings accounts for overdraft protection. So, if you accidently write a check for more money than your checking account contains, the bank or credit union will automatically move money from your savings account to cover the difference.

For more information about choosing financial institutions and other economic opportunities, go to the CFED website at www.cfed.org.

Any questions may be directed to: rsi5@srt.com

Pinch Those Pennies - Avoid "Fast Cash"/"Quick Refunds"

Beware of refund anticipation loans, sometimes called ‘Fast Cash’ or ‘Quick Refund’. These services may get you a quick refund, but they have very high interest rates and can end up costing you hundreds of dollars and are often considered predatory lending. Having your own checking account in a financial institution will allow you to cash checks for free as well as having the option to take a loan if needed. Avoiding Fast Cash/Quick Refund services will go a long way in saving you money. This is also true regarding your day to day financial needs. Using your credit union or bank for a loan or for cashing checks instead of Fast Cash/Quick Refund services will save you a large amount of money over time.

Any questions may be directed to: rsi5@srt.com

How can I get my tax refund quickly?

Filing your taxes electronically is the best way to get your refund quickly. Many Volunteer Income Tax Assistance program sites offer free electronic filing. Also, having the IRS deposit your refund directly into your bank account can also help you get your refund faster. You can also use the IRS Free File website to file your taxes. Free File is a free federal income tax preparation and electronic filing program for eligible taxpayers. You may access free commercial online tax preparation and electronic filing services through the IRS.gov website. Eligible taxpayers may prepare and file their federal income tax returns using commercial online software provided by the Free File Alliance companies. Free File is only available to taxpayers who have less than roughly $54,000 of gross income in 2008. Individual company offers may be limited to specific states and include other criteria. Carefully review the Free File offer criteria before selecting the company. Each participating software company sets its own eligibility requirements. You can find a Free File service that best meets your needs at http://www.irs.gov/efile/article/0,,id=118986,00.html.

Any questions may be directed to: rsi5@srt.com

What if I need help filing a tax return?

You may qualify for FREE help to file a tax return and claim the Earned Income Tax Credit through the Volunteer Income Tax Assistance Program. This program offers help to people with low-to-moderate income (generally those earning about $40,000/year or less) who cannot prepare their own tax returns. Certified volunteers receive training to help prepare basic tax returns and are then available to help at community and neighborhood centers, libraries, schools, shopping malls, and other convenient places. To find the Volunteer Income Tax Assistance program site nearest you, call 1-800-829-1040.

Any questions may be directed to: rsi5@srt.com

How do I claim the Earned Income Tax Credit?

You can claim the Earned Income Tax Credit when you file your annual tax return. You can also choose to receive part of your refund payment sooner by participating in the Advance Earned Income Tax Credit program. To enroll in the Advance Earned Income Tax Credit program, you will need to complete a W-5 form, which you can get from your employer, or, from this website: http://www.irs.gov/pub/irs-pdf/fw5.pdf. If you participate in the Advance Earned Income Tax Credit program, you still need to file an annual tax return and claim the Earned Income Tax Credit.

Any questions may be directed to: rsi5@srt.com

What is the Earned Income Tax Credit?

If you’re like millions of Americans, you work hard but you don’t earn a high income. The Earned Income Tax Credit is a tax credit designed to put money back in the pockets of working people with low-to-moderate incomes. This tax credit can reduce your taxes and help you keep more of what you earn. Filing for the Earned Income Tax Credit means that you could receive a refund payment from the Internal Revenue Service.

To get the Earned Income Tax Credit, you must meet certain requirements and file a tax return, even if your income from working is low enough that you are not required to file a return.

Filing for and receiving a refund payment from the Earned Income Tax Credit has no effect on many other public benefits you may get. In most cases, the Earned Income Tax Credit payment will not be counted against your eligibility for Medicaid, Supplemental Security Income (SSI), food stamps, low-income housing, Workers with Disabilities (WWD) Medicaid Buy-In or Temporary Assistance for Needy Families (TANF). Because the income is a federal return it will not impact any federal programs you participate in, but it is possible that it could impact some of the state funded programs you participate in. Generally the money cannot impact you at all in the month you received it. It is only in the following months that the gross amount of income may impact your benefits.

A Community Work Incentives Coordinator (CWIC) can tell you if and how you might be impacted. CWICs provide a free service to Social Security beneficiaries. You can talk to a CWIC if you are unsure of what public benefits you get, or if you need more information about the impact income will have on the benefits you receive. You can find the nearest CWIC at https://secure.ssa.gov/apps10/oesp/providers.nsf/bystate or by calling the Social Security hotline at 1-800-772-1213 and asking for the closest Work Incentive Planning and Assistance center.



Any questions may be directed to: rsi5@srt.com

Mathern Co-Sponsors Disability Bill in North Dakota

State Senator Tim Mathern once again shows his commitment to people with disabilities in North Dakota by introducing Senate Bill 2383. The bill affords to an employer, a $5,000 and $2,000 tax credit for hiring a full-time or part-time (respectfully) person with a disability.

BILL

The bill was also supported by: Senators Fiebiger,Oehlke and Representatives N. Johnson, Onstad

Any questions may be directed to: rsi5@srt.com

A Checklist of Tax Benefits for Parents of Special Needs Children

http://www.specialneedsanswers.com/resources/article.asp?id=5678&section=4