Archive for the ‘Taxes’ Category


Looking For Another Income Tax Deduction? You Might Qualify For An Ira And Not Know It}

Submitted by: Robert D. Cavanaugh, CLU

An additional income tax deduction may be available by contributing to an IRA. However, many people may not realize they qualify to have an IRA. So lets take a look at the contribution rules.

One of the things that makes IRAs so complicated is trying to understand the eligibility, maximum contribution limits, contribution phaseouts, etc. of all the types of IRAs at one time. Technically, there are five types of IRAs: Traditional, Roth, SEPs, SAR-SEPs and SIMPLE. So we are going to limit the discussion here to the traditional IRA.

In this article, all of the rules pertain to 2007. Some of the numbers used in the calculation of how much you can contribute to an IRA are subject to indexing. So you need to obtain the proper figures for any year in question.

The determination of your eligibility for a traditional IRA, and the ability to calculate how much you could contribute, are dependent on several things:

1. Your age

If you are under 50, you can contribute a maximum of $4,000 to a traditional IRA. If you turn 50 during the year or are over 50, you can add another $1,000 which is called a catch-up contribution. If you turn 70 during the year, you can’t make any contribution.

2. Were you an active participant in an employer sponsored plan during the year?

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If so, you still may be able to contribute to an IRA. The amount depends on how much money you made and your tax filing status (single, joint or separate).

Having modified adjusted gross income (MAGI) of certain levels requires applying a formula which calculates a gradually decreasing permissible deductible contribution. If your MAGI exceeds certain thresholds, you can’t contribute anything. These thresholds depend on how you file your taxes. Here they are:

Married filing jointly: Up to $83,000 of MAGI allows for a full contribution. Then a phrase out begins as income increases. For MAGI of $103,000 or above, no deductible contribution is allowed.

Single or Head of Household: If your MAGI is $62,000 or above, no deductible contribution is possible. The phase out starts at $52,000, so anything lower allows for a full contribution.

Married filing separately: For a MAGI of $10,000 or more, no contribution is permitted and the phase out starts at $0.

3. Do you live with your spouse or file a joint return and your spouse is a participant in a qualified plan, but you are not?

In this instance, your ability to make a contribution is reduced to zero if you have a MAGI over $166,000. Up to a MAGI of $156,000, you can take a full deductible contribution.

4. Did you receive compensation during the year?

Contributions must be made from compensation received. Sorry, if you were unemployed all year, sheltering that big day at the track is not permitted.

5. Do you have cash?

Contributions must be made in cash. You can’t contribute stock or any other type of asset.

6. Do you file a joint tax return and make less than your spouse?

If so, you may be eligible to make a contribution. This rule was originally intended for a spouse who did not work; however, it may apply to a spouse who works as well.

You will need to apply the rules and work through the math. You may find a spouse has no compensation for the year can make the maximum (i.e. under age 50: $4,000) contribution.

7. Did your employer go bankrupt?

The rules here are pretty narrow, but if you qualify you could be in for a nice surprise. You would have to have been a participant in a 401(k) plan with specific attributes and your employer filed Chapter 11. If you qualify, you would be eligible for catch-up contributions of $3,000 for years 2007-2009. And these catch-up provisions apply to all ages-you don’t have to be 50 or older.

Armed with this information, you should be in a position to determine if an additional deduction is available to you by contributing to an IRA.

About the Author: Robert D. Cavanaugh, CLU is a 36 year financial and estate planning veteran and author of the free newsletter, The Estate Preservation Advisor. To subscribe and get the free video, How to Sell Your Life Insurance Policy for More Than the Cash Value, go to


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Term Life Insurance For Final Expenses}

Submitted by: Dennis Jarvis

Term life insurance is a great way to address the needs commonly know as “final expenses”. This is inherently different from commonly thought-of uses for life insurance such as income replacement or larger debt payment (such as mortgages). Final Expenses are those associated more or less directly with a person’s death. Term life, in addition to addressing other life insurance needs, is an inexpensive way to deal issues that most people aren’t even aware of. Let’s look a little closer at final expenses and their final solution…term life insurance.

Unless you have been intimately involved in the funeral or passing of a loved one, you may not even know what the term final expenses means. There are many expenses that arise from a person passing away. Some are obvious while others are not. First, let’s at the fact that the last thing you want to deal with during such a tumultuous period are financial issues that arrive. It’s hard enough to just handle the loss without the day to day paying of things. As a benefit for your loved ones, final expense insures that the stress of addressing these financial matters do not overly burden them down.

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The obvious and sometimes most expensive final expense is that of the funeral. Regardless of whether it’s a burial, cremation ,or some other service, the cost these days can quickly run 10’s of thousands of dollars. You may have specific requirements (ashes over Golden Gate Bridge). A great way to insure your wishes are respected without putting hardship on your loved ones is to provide for the payment of these expenses with term life insurance. Term life insurance allows them to pay for these expenses without the taxation or risk or creditors that money might attract when it’s not a life insurance benefit.

There can be other bills that are outstanding or small personal debts which term life insurance can pay for in an in-expensive manner. This can be the people that keep your house, yard up to gifts for caregivers that provided care to you.

It is often very expensive for family members and friends to fly or travel last minute to a funeral. How nice would it be to leave an amount through a term life benefit to pay for the travel arrangements of those close to you. Some loved ones may need to take time off from work to help organize and arrange the funeral and all that follows. Part of the term life benefit could be used in this way as well.

Final expenses are unique to each person as they are based on what’s important to you but is important to consider these expenses as a part of your total term life insurance strategy. It’s same to assume $20-50K of coverage just for these expenses. Luckily, term life insurance rates are very inexpensive on the market so the cost of final expenses as part of the total mix of life insurance protection can be dollars per month.

About the Author: Dennis Jarvis is a licensed insurance agent concentrating on

term life insurance

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