Unless you work for a company that has a group insurance plan, health care insurance can be astronomical. In fact, more and more people do not have insurance at all because smaller businesses cannot afford the benefit, and getting insurance on your own becomes a choice between keeping a roof overhead or having a health coverage.

For the self-employed, the problem can be even more pronounced, since you are already struggling to make enough to pay the bills, without the guarantee of a regular paycheck. So, how to get insurance for the self-employed is a stressful issue.

I am sad to say, I do not have any cheap answers to suggest, but I may have one that is less expensive than other options.

My brother started his own business a couple of years ago. One of their main concerns from the beginning was health insurance. Both are middle aged with pre-existing health issues. Ouch! Right there, the insurance premium is going to go way up. Plus, they wanted full coverage, so they did not have to worry about dental and eye care.

When I asked what they decide to do, my brother told me about NASE (National Association for the Self-Employed). Through this association, my brother and his wife can get full coverage insurance at group coverage premium prices. While it is still not cheap, because an employer is not subsidizing the amount, it is far better than full coverage, if he were to get it on his own.

As a member of NASE, my brother also has access to medical advice from qualified physicians, before he spends money to go to the doctor. He can also save money on other health care costs; and he can get a list of doctors throughout the country, if he has to be away from home on a business trip or vacation.

Personally, as I began exploring the issue, I must admit I am flabbergasted at the cost of health insurance today. Even with an employer and a full-time job, the family premiums take a big chunk out of every paycheck. But, I also know the alternative is worse.

A few months ago, my neighbor had a stroke. Lean and seemingly fit, who would ever guess he would soon be paralyzed on one side. He has no health insurance through his company. He was in the hospital for two months and now he has ongoing health care concerns, maybe for the rest of his life. Plus, I believe his wife had to quit her job, because he needs around-the-clock care.

So, if you think you can get by without health insurance because you are young and healthy, think again. Today, you have the gift of good health. Tomorrow, who knows?

Do you have any other advice for self-employed people looking for health insurance?

Tina

Do you have a list of financial to do’s that you want to get done but just haven’t made time to complete? I’ve had a growing list for a while now that I finally sat down and tackled yesterday instead of going to work.

I was actually at home sick but not ill enough that I couldn’t man the phone and computer for a few hours to take care of some financial housekeeping that I’ve been putting off.

Flexible Spending Reimbursements
We have both flexible spending account and dependent care spending account balances from 2007 that I need to file claims for.  It’s a pretty silly thing not to do this right away since they have my money sitting in their account, not earning me any interest.  I like to kind of batch a bunch of receipts together and submit them all at once but I let these slide for too long.  Turns out, we haven’t actually spent all the pre-tax money we put aside for 2007 yet so I’m glad that our plan gives us until March for a grace period to use up the funds for last year.

Emergency Fund Tax Strategy
One of my good friends let me know about the kiddie tax in 2007, basically reporting income in your kid’s name in order to pay lower taxes on it. Unfortunately the rules were changing so the available tax savings weren’t as good but there was still an opportunity to reduce taxes on interest, dividends or capital gains up to a certain amount. 

Our emergency fund is in an account with ING Direct and brings in hundreds of dollars in interest each year. Yesterday I added a joint ING account in our son’s name, under his SSN, and transferred the balance into his account.  As a joint owner, I can transfer money back into our account when needed.  It was pretty easy to setup, well worth the time if some of that interest income will see a tax savings. I actually thought I had done this a while back but things didn’t work out with the application process so I needed to address it again. I’m not sure what the rules are for 2008 but hopefully I didn’t miss the boat entirely.

529 Plan Changes
The 529 Plan that we have for our son was setup with a conservative investment option, which doesn’t really make sense for someone who won’t be going to college for at least 17–18 years.  I’ve been meaning to change the election and move the balance into a more aggressive plan for some time now but just haven’t gotten around to it. 

Yesterday was the day, now it’s setup for a growth strategy instead of a capital preservation plan.  Hopefully we can take advantage of any growth in the market over the next two decades to help alleviate the cost of higher education. Maybe with the S&P 500 at a point where is hasn’t been since the fall of 2006, we were buying cheap as I moved the balance out of fixed income investments into a majority of stocks.

All in all, it was a very productive afternoon for a sick day. It feels nice to get those things off of my list. Now I can start thinking about my 2007 taxes : )

A couple of years ago, I did my taxes and mailed it to the IRS. Fortunately, I was going to get a refund. Any amount is better than having to send Uncle Sam an additional check. However, when the check came in the mail, I was shocked to discover the refund was even more than expected. What? The IRS actually gave me more money! I must be dreaming! Then, I pulled out a note that said I qualified for Earned Income Credit. Okay. Great! But, how did I qualify?

Well, like everything else with the IRS, nothing is stated in two sentences or less. Everything takes a few trees to explain-if you know what I mean. Briefly speaking, EIC is for parents or guardians who have a minor or college student who lives with them for the majority of the year, who also qualifies as a dependent. Plus, they have an upper income limit and actually have to be earning an income, not just living off of pensions, social security, or other forms of income that do not require you to have a job.

Since my ex-husband makes too much to qualify, and my children live with me for at least 6 months out of the year, I get to claim Earned Income Credit. Curious, I did some checking and found out I can make almost $37,000 a year and still be able to claim EIC. If I were married, the amount is increased by about $2,000.

The pages of information also state that you can actually get more money returned than actually paid in, if your EIC on your adjust gross income is low enough. So, if you are struggling with a low-paying job, or you are self-employed and do not make over the limit, you may qualify to get a major tax break, if you still have children living at home.

Especially in these hard economic times, it is difficult to afford raising a family. Kids grow out of their clothes almost before you get them home from the store; growing spurts mean lots of food to pour down seemingly hollow legs; and providing health care can be a challenge. So, parents need all the help they can get. If you think you may qualify for Earned Income Credit, check it out! It can make a big difference in taxes this year.

Tina

As the tax forms for last year’s investment income start to arrive in the mail we’re rudely reminded of the effect that taxes have on our investment earnings.  Especially when we lose money and still have to pay taxes, my Oakmark International fund was down about $100 for the year but generated over $1000 in capital gains, yikes!

One thing we can do to reduce the tax bite is to be aware of the tax deductions that are available for investing expenses. J.K.Lasser offers the following checklist of deductions for investors. Just make sure any investment expense deductions you take are well documented. Dont Mess With Taxes recently warned us that IRS audits are on the rise.

Expenses You Can Deduct

• Legal fees: If you sought legal advice regarding your investments, you can deduct those fees.
• Professional fees: You can deduct fees you paid to your accountant in compensation to provide you with advice about the tax effects of certain investment transactions.
• Fees for investment advice: You can deduct payments to a broker or an investment manager to manage your stocks and other investments.
• Books and magazines regarding investments.
• Safe deposit box fees, to the extent that you store your securities or other investment paperwork in the box.
• Fees you pay directly to your IRA or Keogh custodian.
• Traveling costs related to your investments, such as trips to your broker’s or investment advisor’s office and trips to look after investment property.
• Home computer costs if you use the computer to manage your investment activities. You generally must depreciate the computer using the straight-line method.
• Cost of software you use to manage your investments. In certain circumstances you may need to depreciate the software.
• Service charges you pay as part of a dividend reinvestment plan.

Expenses You Cannot Deduct

• Broker’s commissions that you pay for buying and selling securities. These affect your tax cost and the ultimate gain or loss on their eventual sale.
• Fees charged by your bank for check writing.
• Seminars on investments and investing strategies.
• Expenses of attending a stockholders’ meeting, even if you own stock in the company and the meeting would be useful toward making further investments.
• Any expenses you incur toward generating investment income that’s exempt from taxes (such as municipal bonds).

Where Can You Take These Deductions?
 
You deduct these expenses as miscellaneous expenses on Schedule A. Altogether, these miscellaneous expenses must add up to more than 2% of your Adjusted Gross Income (AGI) before you can take the deduction. And even then you only get to deduct the amount above the 2% limit.  You should keep track of your investment expenses, because they can add up quickly, and they may help reduce your taxable income.

I was a little hasty in announcing free money for all earlier in the week, I guess I’ve forgotten my classes on US government.  The tax rebate was passed by the House of Representatives but still has to make it through the Senate, where it may see some changes.

Anyhow, the economy, how to stimulate growth, and avoid a recession are all over the news this week so I thought I’d share some thoughts from around the blogosphere:

-Suns Financial Diary asks What’s Your Top Concern in Case of a Recession? and Generation X Finance wants your thoughts on whether an Economic Stimulus Package Will Help the Markets/Economy?

-The Digerati Life takes a look at how the falling dollar has made US companies a good buy around the world.

-Free Money Finance has some tips on What to Do with Your Economic Stimulus Check

-No Credit Needed looks at the Tax Rebate And Economic Stimulus Plan - What Will You Do With Your $300 - $1200 Check?

–Five Cent Nickel covers the Tax Rebate Details Announcement and has a Tax Rebate Followup

-Blueprint for Financial Prosperity talks about Getting Your Tax Stimulus Check and offers the 2008 Tax Rebate Stimulus Package Explained

The Simple Dollar and My Money Blog both take a look at what the recent changes mean to you with: The Fed Cuts Rates - What Does That Mean For Me and Stimulus Package - What Does It Mean For You?

In other news, the Mighty Bargain Hunter discusses the low-fat latte factor and Lazy Man & Money covers the latest peer to peer lending articles.

For my personal needs, tax preparation software works fine. I answer the questions; plug in some numbers; and presto, I send my taxes off into cyberspace. But, when tax issues are complicated, you might want to seek the aid of a professional. Here are some tips that have been shared with me over the years:

Service Guarantee
First, when you choose someone to help prepare your taxes, get some kind of guarantee that they will back you up, if you should ever get audited. Now, it may never happen. But, you do not want a tax preparer that holds up his/her hands and leaves you high and dry, if they make a mistake. If they can’t guarantee their work, walk away. If they know the tax laws, and are confident in their work being correct, it should not be a problem to stand behind you.

Size Matters
Second, bigger does not always mean better. With bigger companies, you can get lost in the shuffle and become a number, rather than a name. Personally, I would rather go with a small firm that will treat you as an individual. The benefit is being able to ask your tax professional, if you have a problem or a question later. Don’t you just hate having to explain something 3 different times because you have had to talk to 3 different people?

Consistency
Also, when next year rolls around, having the same accountant is great. He/she has already done your taxes before, they are more likely to recollect you and your financial circumstances, which mean: less questions and expeditiously getting your taxes done.

In short, I can only recommend finding an accountant that will make the process easier for you, and stand behind their calculations. If you are not comfortable with the person, trust your gut. When it comes to your finances, you definitely want someone in whom you can feel confident will do the job correctly and treat you right. Here’s hoping for a refund!

Tina

Have you ever faxed over a copy of your name, address, and social security number to an identity thief?  I thought for a brief moment today I might have fallen victim to a savvy phishing/fax scheme that originated with the email below:

2nd Notice! - Important! - W-9 tax form

This is just a reminder. We request that you assist us in updating our records, therefore expediting the delivery of your 1099-MISC (Statement of Earning for Non-Employees) for 2007.  Please print out the W-9 form then complete and sign it.  Please fax completed form into our office ASAP at xxx-xxx-xxxx. Please make sure that the name, address, and Tax ID Number are the same which are used when filing your tax return.

If this form is not completed and faxed back to us by the end the business day Thursday 1/24/2008, the Internal Revenue Service requires us to begin backup withholding at the current applicable rate allowed.

Internal Revenue Service! Backup withholding!  I faxed that W-9 over as fast as I could.  As I replied to the email to confirm receipt of the fax I had a sinking feeling in my stomach.

Was this a legitimate email?  Had I just sent my information to a scammer?  Luckily, it turns out it was all above board but the more I thought about it, the more I realized how a technically savvy person could pull off a scam like that.

Misrepresenting a Legitimate Company
I won’t go into detail but a person could find enough information on most any personal blog to spoof an email that would appear legitimate but actually contain a fax number with an identity thief waiting on the other end.  Revealing your social security number, name, and address could leave you vulnerable to identity theft, especially combined with the information revealed on some blogs.

Of course many people would probably sense something wasn’t right for a variety of reasons. But all it takes is for one person to fall for it and their personal information could be compromised and exploited.  The reason I bring this up is that this approach is a sneaky derivative of the standard phishing emails many people have come to ignore.  We’ve seen enough phishing emails that we can mouse over the link and see it doesn’t go to paypal.com but instead some obscure web domain so we simply delete the email.

Phishing with a Fax Number
In this hypothetical instance, instead of listing a disguised link the scammer simply lists a fax number and creates a sense of urgency with the recipient.  With no hyperlink to trigger my internal scam filter, I didn’t pick up the potential danger of this one until after the information had been sent.  I’m fortunate that it was a legitimate request and will be more careful in the future. 

Identity Theft Evolving
What this reminded me of is that identity thieves and scammers will continually come up with ways to defraud people of their hard earned money.  Fraud awareness, education, and a common sense filter have served me well so far to date, knock on wood, but “they” will always be out there looking for ways to get into my wallet.  Of course I don’t lose sleep over it but I do hear horror stories about people whose identity was stolen and I definitely don’t want to go through the mess they have. 

Protecting Yourself Against Identity Fraud
For now, I continue to rely on common sense but lately I’ve been giving thought to signing up for a program like LifeLock that helps protect your identity and also provides you money to help clean up the mess in the event someone does take your information and abuse it.  I haven’t done a cost/benefit analysis yet on the price of the service vs. the value of protection & cleanup coverage but it’s on my to-do list.  Has anyone had any experience with the LifeLock service?

However you decide to protect your identity, make sure to think twice before clicking that link, sending that fax, or giving out information over the phone.  It may be a legitimate request like it was for me today but you certainly don’t want to find out down the road that you’ve been scammed.

It’s official, we’re getting tax rebates. Will it be enough to jumpstart the economy, who knows……

House Speaker Nancy Pelosi said Thursday 117 million U.S. families would receive a tax rebate check under a deal reached to provide stimulus to the U.S. economy.

Individuals who pay income taxes would get up to $600, working couples $1,200 and those couples with children an additional $300 per child under the agreement. Workers who make at least $3,000 but don’t pay taxes would get $300 rebates.

The rebates would phase out gradually for individuals whose income exceeds $75,000 and couples with incomes above $150,000, aides said. Individuals with incomes up to $87,000 and couples up to $174,000 would get partial rebates. The caps rise higher for individuals and couples with children.

The rebate part of the plan would cost about $100 billion, aides said. The package also includes close to $50 billion in business tax cuts.

How will you spend yours?

Last week I mentioned how to earn extra money in 2008. Now, you might want to know how to keep track of the extra money you earn.

After two kids and a divorce, I went back to college to get an English degree. I got the diploma, but I also acquired a LOT of debt. Now, I am trying to dig myself out of a financial hole, one teaspoon at a time. Just when I think I am making a dint, something comes up. So, I also want to earn a little extra money, and I want to work from home, so I can be home with the kids.

But, unlike substitute teaching, I will not get a paycheck to keep track of my earnings. I bought a Microsoft Money program, but I guess I am not as smart as I thought, or it needs a makeover. In working with the program, I found that if I enter an invoice amount and then a customer pays, it will automatically dump the amount in my check register. Not good! Probably the majority of people on the Internet use PayPal. So, if I then deposit the money from PayPal, it will record the amount twice!

If I am going to get serious about making money for myself, I need something that will keep track of my earnings and give me something to send to potential clients. So, I went online, being the thrifty person I am, and downloaded free accounting software. UGH!

I tried several, either they were too simple, or they have what I need, but will not put the information where it needs to go. For instance, if a client pays, it should show up in the clients account and on invoices, or the overall total of my earnings, right? Not! I would have to go in and enter one transaction in several places. What a pain!

Finally, last night, or should I say early this morning I found a good program that works for small home-business needs, without messing up my personal checking account, or entering one transaction several times. Microsoft Office Accounting 2008- the Express version is FREE!!! Eureka! has a 6 month free trial.

So, if you are also seriously considering earning extra money at home this year, you will definitely need some way to keep track of your money. Maybe you will only earn a few bucks a month, or may you will be like those entrepreneurs that get to stay home and get rich. Who knows? Either way, you might find this program helpful.

Markets are down, what should we do?  My best advice is to tune it out.  It may be hard to do since it’s all over the news but for my part I’m just going about business as usual.  Let’s look at what others are saying about the tough economic times:

The Digerati Life has a video on the stock market ruining your life and Generation X Finance asks whether an economic stimulus package will help the markets.

Free Money Finance is buying all the way down, Five Cent Nickel reports on the Fed’s major rate cut, and Blueprint for Financial Prosperity asks should you refinance?

If you’re wondering which type of investments are best to have during market uncertainty, read Sun’s comparison of active & Passive mutual funds.

As things get nasty, make sure you’re building an emergency fund like No Credit Needed and check out 21 money-saving sites listed at Get Rich Slowly.  You could also look into taking a second job or starting a side business over at the Mighty Bargain Hunter.

If you’re short on cash, don’t put it on your credit card, instead get a loan at Lending Club, who Lazy Man reports recently made some updates to their lending site.  When money is tight, be sure not to waste it like Golbguru did recently.

If you’re looking for some ways to take your mind off of the down market check out the 2^nd edition of the Carnival of Peer Lending or the latest edition of the Carnival of Personal Finance.