What is the Benefit of Umbrella Insurance & How Do I Get It?

Editor’s Note: This post was originally published March 29, 2016. The information is still current as of this date.

A 60-second read by the Baron Team: You probably have homeowner’s insurance for your home and car insurance for your vehicle, but do you have umbrella insurance? In a society where many of us are concerned about personal liability and the possibility of being sued rightly or wrongly, the more assets you accumulate the more important personal liability protection becomes.

Continue reading “What is the Benefit of Umbrella Insurance & How Do I Get It?”

Nanny Tax: What You Need to Know When You Hire a Household Employee

A 60-second read by the Baron Team: 

  • Nanny taxes are taxes paid to the government from a person working in and/or around your home. These jobs can include nanny, housekeeper, gardener, chef, personal assistant or caregiver.
  • The worker is considered a household employee if the employer controls what work is done and how it is done and can be full time or part time work.
  • If you pay someone that works in your home $2,100 or more a year or $1,000 in a quarter they are considered a household employee.
  • The employer must obtain the employee’s name and social security number.
  • The employer must withhold a certain amount of compensation from a household employee for FICA and Medicare.
  • As well as withholding a certain amount of money from your household employee, you must also pay your share of FICA employer taxes and federal and state unemployment taxes.
  • The employee, as well as the employer, can benefit from filing these taxes. The employee can prove she/he was working for a set amount of time and qualify for certain government benefits, such as social security and unemployment.

  • Forms Required to file:
    1. Form SS-4 to obtain your federal Employer Identification Number, which is needed for the other forms.
    2. Form I-9 is needed to be filled out by your employee to verify she/he is eligible to work in the United States.
    3. W-4 Forms are used to determine what taxes are needed to be deducted from the household employee’s wages and sent to the IRS.
    4. Schedule H Form is part of your personal return with Form 1040 & an accountant can help determine the amount the employer is taxed for FICA and unemployment.

  • Insurance requirements:
    1. You must register for unemployment insurance in your residing state.
    2. You also need to have workers compensation insurance, which is very important.
      • If you reside in NY, you will also need to purchase a separate disability policy.

  • State taxes are generally paid quarterly while Federal taxes are paid annually.
  • If you refuse to file the proper tax documents you may be subjected to an audit from the IRS leading to tax evasion. Trying to classify your household employee as an “independent contractor” is a red flag to the IRS and should be avoided.

For more information on hiring household employees visit:  https://www.irs.gov/businesses/small-businesses-self-employed/hiring-household-employees

For more information on what forms are needed for hiring employees visit: https://www.irs.gov/businesses/small-businesses-self-employed/hiring-employees

If you have more specific questions on this matter, we recommend speaking with a tax professional.

If you have any other questions, please reach out to your Baron Financial Group team.

 

 

Why You Should Review Your “Digital Estate” Plan

A 30-second read by Nicholas Scheibner:  When a family member passes away, it is of course an emotional and stressful time.  For most, a significant portion of the stress can stem from the financial decisions the deceased made, or did not make, during their life, and what needs to be carried out by the loved ones left behind.  In many instances, a will is constructed to help direct some of the financial assets, per the request of the deceased.  However, financial accounts are not the only stress inducers.  Online and social media accounts are increasingly becoming more important to people. There are things you can do now to help your family put in order your “online life”, often referred to as a “Digital Estate”, when you are no longer around.

We suggest keeping a separate document with your will, containing any usernames and passwords to your online accounts.  The most important item will be your list of email accounts.  With access to your email accounts, a trusted family member can “reset/forgot password” most of your financial and social media accounts in order to close, or manage the accounts.  Also – this can sometimes be a quicker way to stop any recurring payments for online services, instead of calling the company and proving the person has passed away.

If you are uncomfortable writing out all of your usernames and passwords, you can begin to use a “password manager” that will store all of your information in a secure digital vault.  The only information your trustee will need is the username and password for the “password manager”.

Keep in mind, it is extremely important to watch over a deceased family member’s financial assets and credit, as a deceased person has a very high risk of becoming a victim of financial fraud and identity theft.

In order to prepare your family for what needs to be done towards end-of-life and once you have passed, we recommend reading some of our other estate planning posts.  And again, do remember to consider all of the online, financial, billing, and social media accounts that will continue if you were to pass on. 

Please reach out to your Baron Team with any estate planning questions.

College and Financial Aid When Parents are Divorced

Editor’s Note: This post was originally published December 1, 2016. The information is still current as of this date.

A 30-second read by the Baron Team: For students with divorced parents who live separately, the FAFSA (Free Application for Federal Student Aid) asks that you fill out financial information in regards to the custodial parent. For FAFSA, the custodial parent is the parent who the child has lived with the most over the last twelve months.

Provided that the ex-spouse is the non-custodial parent:

  • Many private colleges assume that the non-custodial parent could be a possible source of funding, and therefore require that they fill out a supplemental financial aid document.
  • In that case, any financial support the non-custodial parent may give would only affect financial aid provided by the school, not the student’s federal and/or state aid benefits.

For more information, you can go to FinAid.org and StudentAid.gov.

If you have any questions, don’t hesitate to contact the Baron Financial Group team.

Baron Financial Group is an Independent, Fee-Only Fiduciary

Fee-Only, Fiduciary, Independent: Three Important Criteria to Consider When Choosing a Financial Advisor.

Click on the video below to learn more.

For more information on Fee-Only Advisors, read our “What Does Working with a Fee-Only Advisor Mean for You?” blog post.

For more information on NAPFA (National Association of Personal Financial Advisors), click here.

If you are looking for an independent, Fee-Only Advisor, that acts as a fiduciary,  reach out to the Baron Financial Group Team.