Facing down another government shutdown, the House and Senate passed a new budget deal last week that suspends the debt limit until 2017 and increases funding levels for a number of federal programs. President Obama is expected to sign the deal into law early this week.
Unfortunately, though the deal averts a debt default and reduces the risk of a December government shutdown, it includes provisions that may cut into Social Security benefits for millions of Americans. By negotiating the deal in secret, lawmakers have prevented affected retirees from having their say. To say that we’re disappointed is an understatement.
The new regulations will prevent retirees from using two advanced Social Security claiming strategies: file-and-suspend and applying for a restricted claim for spousal benefits. Both of these strategies are designed to increase lifetime income for retirees and are being counted on by many Americans.
Here’s what we know so far:
As of May 1, 2016, spousal or child benefits will no longer be payable unless the primary earner is also collecting Social Security benefits. Spouses will also no longer be able to file restricted claims for spousal benefits at their full retirement age.
Workers and spouses who are currently using these strategies (e.g. have already filed and suspended claims) are grandfathered in under the deal and will not be affected.
Retirees who will be age 62 or older by December 31, 2015 may still be able to file a restricted application for spousal benefits.
Retirees who will be age 66 or older before May 1, 2016 may still have time to file and suspend and trigger benefits for their spouse or dependents.
If you are eligible to file and suspend before May 1, 2016, please contact us to discuss your situation.
As always, we will update you as we know more in the coming weeks.
Monday: PMI Manufacturing Index, ISM Mfg. Index, Construction Spending
Tuesday: Factory Orders
Wednesday: ADP Employment Report, International Trade, Fed Chair Press Conference 10:00 AM ET, ISM Non-Mfg. Index, EIA Petroleum Status Report
Thursday: Jobless Claims, Productivity and Costs
Friday: Employment Situation
- Q3 GDP shows slow growth. Our first look at third-quarter economic growth showed that Gross Domestic Product grew a paltry 1.5%. This is just a preliminary report, and economists will revise the data several more times; however, we can see that weak business spending affected growth last quarter.
- Consumer spending misses in September. Personal spending data showed that Americans increased their spending at the slowest rate since January, indicating they may be cautious about economic turmoil.
- Consumer confidence rebounds in October. After a weak September reading, consumer confidence jumped in October as lower-income households grew more optimistic. Wealthier households were less confident due to concerns about financial markets.
- Pending home sales drop in September. The number of contracts on previously owned homes fell unexpectedly in September in a potential warning sign about the housing market.
QUOTE OF THE WEEK
“I skate to where the puck is going to be, not where it has been.” – Wayne Gretzky
TAX TIP: Tips for Charity Donations
The end of the year is approaching and there’s still time to make donations to the causes close to your heart. If you intend to make 2015 donations (and deduct them on your taxes), here are a few things you should know:
If you plan to deduct charitable donations on your federal taxes, make sure your charities count as qualified under IRS rules. Donations to churches, synagogues, temples, mosques, and government agencies are also deductible.
Keep written records of all donations. The IRS requires you to have a bank record or written documentation from the charity that show the amount, date, and name of the charity. If the gift is over $250, you will also need a written acknowledgment from the charity that documents the donation and shows any consideration you received in exchange for the gift.
If you want your donation to count for the 2015 tax year, make sure that your credit card is charged or the check mailed by December 31.
In-kind goods like household items, furniture, and electronics must be in good used condition to qualify for a deduction. For big-ticket items, you can include a qualified appraisal with your tax return. Special rules apply for donations of cars, boats, or airplanes.
For more information about charitable gifts and other tax deductions, please contact a qualified tax professional.
Tip courtesy of IRS.gov
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