APRIL 2012
Khaas Baat : A Publication for Indian Americans in Florida



By Kamlesh H. Patel, CPA

If you’re due an income tax refund, there are a few things the IRS would like you to know.

1. You can receive your refund in any of three forms: paper check, direct deposit or U.S. Series I Savings Bonds (in multiples of $50).
2. If you elect the direct deposit option, you can use Form 8888 (Allocation of Refund) to allocate your refund to as many as three separate accounts. You can use the same form to buy U.S. Savings Bonds.
3. Due to technology improvements, the IRS expects to issue more than 90 percent of its refunds within 21 days.
4. There are three ways to inquire about your current year refund. You’ll need your Social Security number, filing status and the exact amount of the refund shown on your return. Note: The refund date provided will be an estimate and not a guarantee.
a. Go online to irs.gov and click the “Where’s my refund?” link.
b. Use the free IRS2Go smartphone application, available at the Apple App Store or the Android Marketplace.
c. Call the IRS Refund Hotline at 1-800-829-1954.
5. Your refund could be slowed down for several reasons, including errors on the return, a balance due on a related account, or (for paper remittances) postal delays.
6. If your refund is larger than expected (or entirely unexpected), don’t spend the money until you receive a written explanation. If it’s smaller than expected, you can cash the check, but call 1-800-829-1040 if you haven’t received an explanation within two weeks.
7. The IRS will help you obtain a replacement check for a refund that is lost or stolen. You can contact them at 1-800-829-1040 or online at irs.gov

After you file your tax return, the last thing that you want to see is a notice from the IRS questioning your return. But if it happens to you, here are a few things to keep in mind.

Don’t panic. Many of these notices ask only for additional information to clarify the return that was filed. You have likely received the notice because something on the tax return doesn’t match IRS records.

Review the notice. Don’t just assume that the IRS is correct in what they propose in their notice. Many of these notices are simply incorrect for any number of reasons. Make sure that what the IRS is asking for wasn’t reported on another part of the return. And be sure that you protest the notice if you believe it to be incorrect.

Respond timely. Don’t ignore the notice under any circumstances. The IRS will generally deal with you fairly as long as you respond to the notice in a timely fashion. However, if you ignore the notice, you can expect the IRS to become more aggressive in future letters, even to the point where they will institute collection actions. Most issues can be handled through the mail, without the frustration of a telephone call.
Maintain your records. Your records are your ultimate defense against any type of adjustment that the IRS might propose. Keep good records and maintain them long after the return is filed in order to prove your deductions to the IRS.

What’s your tax bracket? With the numbers from your federal income tax return fresh on your mind, you probably know the answer or can find it easily. Are you as familiar with your effective tax rate?

You may be thinking tax bracket, tax rate – what’s the difference?

The main difference is that a tax bracket is a range of income to which a specific tax rate applies, while your effective tax rate is the percentage of your income that you actually pay in tax. Put another way, not every dollar is taxed at the same rate. Your tax bracket shows the rate of tax on the last dollar you made during the tax year. Your effective tax rate reflects the actual amount you paid on all your taxable income.

For example, say you’re single and in the 25 percent bracket for 2011. That means your taxable income is between $34,501 and $83,600.
Yet the tax you pay is less than 25 percent of your income.

Why? Because the 25 percent tax rate only applies to the amount of taxable income within the 25 percent bracket. The tax on income below $34,501 is calculated using the rate that applies to income in the 10 percent and 15 percent brackets.

So if your 2011 taxable income is $40,000, only $5,500 is taxed at 25 percent. The remainder is taxed at 10 percent and 15 percent, leading to a “blended” overall rate. The result: a tax bracket of 25 percent, and an effective tax rate of less than that.

Knowing your tax bracket is useful for planning purposes. For instance, you may want to spread a Roth conversion over several years in order to stay within the income limits of a particular tax bracket.

Kamlesh H. Patel, CPA, can be reached at (813) 949-8889 or e-mail kpaccounting@verizon.net or kpinsurance@verizon.net.


The Secret Threat to Your Retirement


No one wants to think about a time when they might need care for an extended period; it is an uncomfortable situation to contemplate. Yet with a population living longer than any generation before them, it’s important to plan for that possibility. Approximately 70 percent of Americans over the age of 65 will need some form of long-term care during their lifetime¹ ? but many people first learn about long-term care when they or a loved one need care. By that time, their options are typically limited due to lack of information, the immediate need for services or insufficient resources to pay for services. Planning ahead allows you to have more control over your future.

The Cost of Long-Term Care

Long-term care costs have soared in recent years and are expected to continue to rise. While there are several options to consider for funding long-term care ? government-sponsored programs such as Medicare and Medicaid, for example ? the reality is that many people will end up paying for long-term care expenses with their own resources. In 2010, 56 percent of individuals used their own savings to pay long-term care costs; another 32 percent relied on money from family and friends to supplement those expenses.² With the median annual cost of home care assistance at $43,472³ today, if you need long-term care the cost of it could easily deplete your savings.

The Cost of a Private Room in a Nursing Home




Cost today




In 10 years




In 20 years




Figures in the table were computed by Genworth based on the information from the 2011 Cost of Care Survey and represent private room costs for an individual in a nursing home, assuming a 5% annual increase.

Long-term Care Defined

Long-term care is service provided to anyone with a chronic disease, disability or sudden illness who requires assistance with Activities of Daily Living (ADLs) such as eating, bathing, dressing or moving from a bed to a chair. It also includes supervision of people with severe cognitive impairments, such as Alzheimer’s disease or other mental illnesses that can limit a person’s ability to think or reason.

Understanding Long-term Care Insurance

Many people purchase long-term care insurance to help protect their assets from depletion in the event they ever need the services previously discussed. Long-term care insurance generally provides coverage to those who are unable to perform two or more ADLs or require substantial supervision due to a severe cognitive impairment for at least 90 days. The long-term care services can be received at home, in a nursing home, in an assisted living facility or in a community facility — as long as it is provided in accordance with a plan of care prescribed by a licensed health care practitioner.

Questions to Ask When Considering Long-term Care Insurance

When shopping for long-term care insurance, compare the features of policies and consider the following questions.


  • What services are included in the coverage?

  • Does the policy cover nursing home, custodial care or personal care, or a combination of these services?


  • Are benefits paid monthly or daily?

  • Does the policy have a maximum lifetime limit?

  • Do I have to meet eligibility requirements before I can collect benefits? Requirements could include assistance with daily living activities, cognitive impairment, or a prerequisite hospital stay before you are eligible to receive nursing home benefits.

Elimination Period

  • How long will I need to wait before I can begin receiving benefits? Typically the longer the period, the lower the cost of the policy.

  • Can I afford to pay for long-term care services out of pocket until the elimination period ends?

Benefits protection

  • Does the policy have benefit protection features? Some policies have inflation-protection riders (available for an additional cost) that can help keep the value of your coverage in pace with the rising cost of care.


  • Are there tax implications when purchasing a long-term care insurance policy or receiving benefits? Consult a tax advisor to learn more about the tax implications of long-term care insurance.

Protect Your Family and Your Assets

Understandably, there are some difficult decisions that come with long-term care planning. However, a long-term care insurance policy can be a valuable extension of your existing risk management strategy. By owning a long-term care insurance policy, you provide your loved ones with greater options for your care while relieving them from full-time caregiver responsibilities. Plus, with a bit of foresight, you can help protect your savings against the potential risk of long-term care expenses so that you can focus on your other financial goals. Start the discussion with your loved ones today.

¹National Clearinghouse for Long-term Care Information website, 2011
²Genworth 2011 Cost of Care Survey conducted by CareScout, April 2011. Annual cost computed based on $19 per hour and 44 hours of help per week.
³Lincoln Financial Life Stages Survey: Long-Term Care, September/October 2010, www.LincolnFinancial.com

Seema Ramroop, financial advisor, Morgan Stanley Smith Barney, can be reached at Seema.Ramroop@morganstanleysmithbarney.com or call (727) 773-4629.

homeeventsbiz directorysubscribecontentclasses/places of worshipnewseditorialhealthimmigrationfinance •  ayurveda
techno cornermoviesfashionmusic/dancebooksyogahome improvementastrologycuisinemotoringgetawayclassifiedsARCHIVES
Read the Editor's Blog. By Nitish Rele Classifieds Getaway Motoring Cuisine Astrology Home Improvement Books Yoga Music and Dance Fashion Movies Techno Corner Finance Immigration Health Editorial News Classes/Places of Worship Content Find us on Facebook!