The Centers for Medicare & Medicaid Services (CMS) posted a “Fact Sheet” in November detailing the changes we can expect in the New Year. As anticipated, Medicare premiums are going up next year. Unfortunately if you pay Part B premiums through Social Security and experienced a significant drop in income this year, you might be surprised by an increase in 2021. This is because the calculations for 2021 are actually based on your income from last year (2019) rather than your 2020 income.
In general, most people’s income tends to increase from one year to the next. COVID-19 reversed that trend for millions of people this year, and for those collecting Social Security, it may work against you in 2021.
For example:
Mary is single.
She made $103K in 2019, but only $62K in 2020.
The first-tier threshold for a single filer to see an increase in 2021 is $88,000.
Even though Mary was well below the threshold in 2020, her premiums will go up in 2021 because she was above it in 2019.
The chart below shows how to calculate the upcoming premium increases for Part B taxpayers.
Beneficiaries who file individual tax returns with income:
Beneficiaries who filejoint tax returns with income:
Income-related monthly adjustment amount
Total monthly premium amount
Less than or equal to $88,000
Less than or equal to $176,000
$0.00
$148.50
Greater than $88,000 and less than or equal to $111,000
Greater than $176,000 and less than or equal to $222,000
59.40
207.90
Greater than $111,000 and less than or equal to $138,000
Greater than $222,000 and less than or equal to $276,000
148.50
297.00
Greater than $138,000 and less than or equal to $165,000
Greater than $276,000 and less than or equal to $330,000
237.60
386.10
Greater than $165,000 and less than $500,000
Greater than $330,000 and less than $750,000
326.70
475.20
Greater than or equal to $500,000
Greater than or equal to $750,000
356.40
504.90
According to CMS, the income-related monthly adjustments will affect roughly 7% of taxpayers with Medicare Part B. And while 7% may not sound like a lot, it is still a significant number of people,amny of whom are still trying to recover from this year’s loss of income.
If you are interested in learning more, you can access the CMS Fact Sheet on their official site here.
Any rate lower than what you are currently paying can save significant interest over time.
Refinancing can lower your monthly payment and/or reduce the years left on the loan as well!
We are always looking for ways to help you save money and plan for a comfortable retirement, and depending on the terms of your current mortgage, taking advantage of historically low interest rates can be a great way to reduce your long-term debt.
Whenever interest rates are low, there is an opportunity for homeowners to save money which can add up to tens or even hundreds of thousands of dollars over the life of your loan. Getting the information you need to decide is easy these days. Typically, all you’ll need to do is send a copy of your current mortgage statement via text or e-mail, and you’ll get back a number of different terms and rates to consider.
If you are interested in finding out the refinancing options that are available to you, I’d like to recommend Rob Matthews at PrimeRate Mortgage. I have known Rob for more than 20 years, and he has consulted for and handled mortgage loans for many mutual clients. Even if you currently have a good rate, it might be worth your time to contact Rob to see if you could save some money by refinancing.
As a reminder, in the interest of data privacy and security, we will be removing all files from the portal on Monday, December 7, 2020. As with any personal information, you should maintain and store your financial and tax records in a secure and accessible location, whether digitally, in hard copy, or both. If you wish to retrieve any of the information that is currently in your folder(s) on the client portal, you will need to download it to your home computer before Monday, December 7th.
As we mentioned in our previous newsletter, the company that hosts our client portal made some software updates that affected our login link. We corrected the link on our website, but if you try to login through a bookmark that was created before the update you will land on the following site error message:
The resource cannot be found.
Description: HTTP 404. The resource you are looking for (or one of its dependencies) could have been removed, had its name changed, or is temporarily unavailable. Please review the following URL and make sure that it is spelled correctly.
Requested URL: /portal/login.aspx
To correct this you just need to delete any information that appears after “.com” in the website address and re-save the bookmark. For example:
This reminder is for everyone—especially joint filers who ended up owing money in recent years—to make sure your withholding choices don’t leave you with another big tax bill in years to come. Strange as it may sound, for working couples filing jointly who make more than $150,000 year, it might make sense to change one (or both!) of your W-4s to Single status with 0 dependents. The basis is simple: The more money that is withheld in taxes throughout the year, the more likely you are to get a refund, rather than owe, when it’s time to file.
If you’re like most people, you filled out a W-4 form when you started working. It was part of the paperwork, like your I-9 and health insurance forms, and you haven’t thought about it since. In fact, it’s not unusual to think that making changes to your W-4 is only possible—or necessary—in two circumstances:
When you are newly hired or are changing jobs; or
When you have a life event, such as the birth or adoption of a child, a divorce, or the death of a spouse.
But the truth is that you can make changes to your W-4 at any time. And there is often good reason to do so. For instance:
You and your spouse’s combined incomes put you over an income threshold that affects your tax burden.
You have a second or part-time job, but your W-4 withholdings don’t take this into account.
You are making more money and your tax bracket has changed.
Changes to tax laws unexpectedly put you in a higher tax category.
This last one is what many of our clients experienced as a result of the Tax Cuts and Jobs Act that was passed in 2017. And that is why we suggest checking that your withholding makes sense for your current situation.
Though it’s too early to speculate on what changes we are likely to see at the beginning of the new year, we’re still encouraging everyone who has owed money the last two years to consider contacting your employer to change your W-4 allowances and/or status before your first paycheck of 2021.
We reported in a previous newsletter about criminals taking advantage of an overwhelmed system to file fraudulent unemployment claims. And the thieves are literally banking on you not paying attention.
The issue was identified as a nationwide problem back in May. Governor Baker addressed the state’s response at that time in light of the thousands of cases that were reported in the Commonwealth. That seemed to stem the tide for a time, but more recent news reports have noted an uptick in these cases that seems to coincide with the rise in legitimate jobless claims. The latest scams are using e-mails that require you to respond or click through to a form to provide personal information. Data breaches can also be a source for criminals to mine for personal information.
How do they do it? Here’s a step by step breakdown:
Once an identity thief gets your personal information—maybe through a data breach or sophisticated phishing e-mail—they simply file an unemployment claim in your name.
You then receive a legitimate notification from the Department of Unemployment Assistance informing you that “your” claim has been approved.
Unless you open that letter and report it as fraud, the money that is approved can be issued via a Massachusetts Unemployment Insurance Debit Card to anyone claiming to be you.
In late January you receive a W-2 showing that you received thousands of dollars in unemployment benefits that you are expected to report as income.
You’ll need to start the process of proving you never received that money and unraveling what other damage may have been done.
As with most scams of this type, the likelihood that you’ll be a victim is small, but as legitimate jobless claims are on the rise again, so too, are the opportunities for thieves to take taxpayer money and ruin your credit.
So how can you avoid being a victim?
Open your mail! If it looks like a duck…you know the rest.
Never reply to or click links in an unsolicited e-mail, or one from an unknown sender.
Report suspicious communication to the state, the IRS, or both.
It’s true that criminals will continue to look for new ways to trick people out of their money, so we all need to continue to be vigilant in our efforts to stop them.
