Is Disability Income Taxable

The question, ‘is disability income taxable’, is a common one and due to several origins and permutation and combination of disability incomes, there is no exact answer to this query. The Publication 907 by the Internal Revenue Service (IRS), explicitly states that income from any benefit received in the form of disability insurance compensation becomes taxable depending upon the person’s income, the provider or contributor of the premium of the insurance and insurer or the insurance company. The following is a small summary of the tax laws, norms and rules of IRS that can come in handy while you file your income tax returns and avail some or the other deduction. Here is an answer to the query, ‘is disability income taxable’…

Taxing Disability Benefits

To get to know the answer to the query ‘is disability income taxable’, we need to get to the different types of disability incomes that are prevalent with employers, insurance companies and such other sources providing for the disability benefits. Have a look at some of the common norms…

The first type of disability benefit that is mentioned by the IRS is dependent care benefit. Here the value of dependent care at a fair market value, or the allowance tiredly paid to you for the same or any pre-tax contribution made by you in such a case is included in your annual income. In case where the care plan is a qualified dependent care plan then, Part III of the 2441 us to be filled for the claimed exclusion which is often granted. In cases where you are self-employed then you can get a deduction for a qualified program. Any amount that you exclude, under the law of exemptions on tax return, as in the first case or deduct as in the second case, is limited to the smallest of either:

  • the total sum that you spend on dependent care, for the year, or
  • the total amount of qualified expenses that you incurred, or
  • the total income that you earned in the year or the income of you spouse, or
  • simply $5000

So basically if you are receiving any unrecognized benefit, allowance or direct provision for disabled dependent care, then you will need to include it into the income, however if you have a recognized or qualified plan, then you can avail exclusion. You will have to check the qualifying conditions for the person and will also have to submit some specified forms.

In the second case, that is a Social Security benefit (also known as Social Security Disability Insurance) or a Railroad Retirement Benefit, a part of the income is taxed. In cases where you received the Social Security benefit (sometimes also known as only social security) or the Railroad Retirement Benefit, as your only income and nothing else, then you will not have to file a return. There are exceptions to this rule. In cases where you receive an income apart from the Social security benefit or the railroad retirement benefit then there are some compliance which you will have to go through. In such a case if your income (not including the benefit) plus the tax exempt interest plus, half of your benefits exceed anything as follows:

  • $25,000 in case of you are single and head of the household and a widow or widower, or
  • $25,000 in cases where you are married, but filing separately and are also living apart from your spouse for the past year, or
  • $32,000 if you are married and filing jointly

,then your benefit is partially taxable. In case if you are receiving Supplemental security income (SSI), then they are totally tax-free and are not to be included in the income.

In cases where you have retired on a disability, then the pension that you receive as Disability pension is included in your income. Further more, your taxable disability payments, need to be included in the wages column on the Form 1040, till you reach the minim retirement age. In regard to pension included as income, note that Publication 525 of the IRS gives certain pensions provided by the military or government pensions as wages or incomes. The veteran’s benefits are also not to be included in any income irrespective of their nature. Hence the reaming disability income taxation rules are not applicable to the veteran’s benefit, provided by the military or the government.

There are certain disability benefits that one may receive. The following ones are thoroughly non taxable:

  • Benefits received from a public welfare fund
  • Workers compensation as per the occupational sickness.
  • Damages for any physical injury, that is not punitive
  • The benefits received as per the no fault policy of a car insurance against a loss of earning capacity, for the time being
  • Compensation provided against permanent disfigurement

There are several other such terms and conditions that may apply to you. Hence it is best to take a look at all the classifications and taxation elements of the compensation, benefits and all other allowances or reimbursements that you receive against a disability. When in doubt contact the helpline of the IRS or see a recognized attorney or accountant. Apart from the aforementioned deductions, itemized deductions and additional deductions apply to the disability income. In a short term disability you can make use of itemized deductions as they are considerably advantageous. I hope that you have the answer to the query, ‘is disability income taxable’. Good luck.


Posted in: Finance and Tax

US Economic Crisis: Impact on Automobile Industry

Economic recession worldwide has redefined many a modern economy, including the bigwigs like the United States of America and Russia. The down-trend exhibited by the US economy is hemorrhaging at a rate that is alien to the previous five decades. With nearly four million jobs on the line, revival seems a distant dream, but not impossible.

Highlights of the Current Economic Crisis

The US economic crisis has hit the common man the most, reducing the quantum and quality of lifestyle greatly. Homes and investments have plunged, tagging along labor market statistical pressure. The main features of the current US economic crisis include:

  • Steep payroll decline
  • Loss of more than 4.4 million jobs
  • Sharp contraction within the labor market
  • Increase in involuntary part-time job slots and underemployment
  • Drop in average hourly earnings
  • Reduced consumer spending

The US Economic Crisis is most affected by the steep and unstable gross domestic product. Consumers and businessmen are considering cessation to spending. The monetary policy official rates are suspended at a near zero. In spite of the credit programs to stimulate consumer lending, the shedding of labor renders the remedial measure a shot in the dark. Construction-based and related employment has also dropped considerably. Retail trade and the hospitality segment has been hit by a ‘non-essential’ spending habit nurtured by regular patrons. Even within the automobile industry, temporary employment and labor intensive processing cannot salvage the aggregate earnings or input.

Impact on Automobile Industry

The effect of the downside associated with the recession in the US since 2007 is easy to recognize within the automobile industry. The industry has already shown more than half a million workers the door, to meet the challenges of the suppressed market. The US economic downturn felt within the automobile industry indicates a steep drop in payrolls corresponding to a rise in the unemployment rate.

The cut in employment has in turn affected the buying capacity of the consumer and the production line result of the manufacturing process. The consistent employment contraction results are dual. It adversely affects the individual’s investment capacity as well as global market for the automobiles manufactured, processed and marketed within the US. The automobile industry in the US is staggering under the vicious cycle of drooping revenue, job cuts and a deflated fuel economy.

General Motors is battling huge losses amidst the slack money market and sales slump. The not-so-attractive statistics are doubled in impact with the weakened labor market and subsequent and natural consumer demand. Within the automobile industry, even the output in manufacturing has deteriorated. The impact of the recession is taking a heavy toll on the automobile industry, which is facing the perils associated with lowered buying capacity of individuals and international clientèle. This is spreading aggressively, bringing on manufacturing setbacks and cut off from the overseas retail processing and car shopping arenas.

Current data on the automobile industry indicates rapidly shrinking business-spending. There is a huge drop in orders, due to the collapse of capital spending, worldwide. Failing inventories and a highly volatile employment gauge has escalated the impact of the recession within the industry. Decline in productivity has resulted in less output and a shrinking workforce, within the automobile industry. Delinquent car loans and mortgages are not helping in any way.

Modifications in the market-wide lender standards and processing strategies have not helped the catastrophic drop in sales. The ‘over-capacity’ feature of the auto manufacturing industry in the US has not only reduced car buying, but also stagnated the productive capacity. Slack consumer demand is rippling on, in the form of expensive productive infrastructure, expensive and fragile supply-chain and fatal collateral damage.


Posted in: Economics

How To Start Your Own Online Business With Email Marketing

Email marketing is one of the most innovative ways that you can market your wares to people who are likely to buy them. It does, however, take some know-how to build an effective email list. This article will show you some things you can do that will help you be successful with email marketing.
Inform your customers what happens when they subscribe to your email list. Let them know the frequency of emails and the types of information they will receive. If it is possible, provide an area for them to check how many emails they want to receive each month. An example would be once a week or several times a month.
When you ask people to opt-in, let them know what to expect. Tell them what you will be sending and how often you will send it. People will be more likely to sign up if they know that you are not going to flood their inboxes with wordy emails that they have no intention of reading.


Business

Use colors and fonts that reflect your business and are easy to view. Even if the content is interesting, difficult to read fonts and harsh colors can cause some customers to reject the email, and possibly future ones as well. Use the same color scheme and fonts for all of your emails.
Be sure to put the logo of your product or business in the email. This way, customers will become familiar with the logo and associate it with your company. It is best if the logo is something that will catch the reader’s eye and be easy for them to remember it.
E-mail marketing can be an effective way to receive feedback, and improve your business. Each of your e-mails should contain a link that allows the reader to submit feedback. You can also send e-mail surveys that ask readers what they like or do not like about your business. The information that you receive can be extremely valuable for improving your business, and your e-mail marketing strategies.


Marketing

A great email marketing tip that everyone would be wise to use is to take advantage of the holidays. Make emails more festive by creating a holiday theme whenever appropriate. Your readers are sure to enjoy the extra effort you put into your holiday emails and this can greatly increase your success.
To get people to opt-in and give permission for you to send email marketing messages to them, offer an incentive. Offer a discount or a coupon on one of your products or services. Include a whitepaper or newsletter about your niche or market. Give your prospect something in return for access to their inbox.
Email is a great marketing tool, but it is not an arena where the hard sell is appreciated. Never pressure your subscribers into buying. Put sales pitches at the tail end of your emails, especially if your readers signed up with expectations of informative content. Consider email as a tool to cultivate interest, not instant sales.
When it comes to sending out effective marketing emails, you need to be your biggest critic. You should read every single email that you add to the rotation. If you find it hard to finish an email, then how can you expect potential customers to be inspired by it? Also, keep longtime readers engaged by adding and updating your emails often.
Now that you’ve read the entire article, you should have some good ideas of how to go about email marketing. Use the tips that you’ve just learned and start building a list right away. Keep learning about email marketing, and eventually you’ll have a huge list that will increase your customer base.

 


Posted in: Business

Economic Problems in the United States

Is the United States headed for another great depression? The US economy has showed a gradual decline since 2007. Job cut is one of the most important economic issues in the United States of late.

No doubt the market has improved to a certain extent, but things have still not stabilized as desired. There were several signs which indicated that things were not what it used to be in the glory days, but we didn’t pay heed. And this responsibility falls right at our doorsteps. We have taken loans to maintain the kind of lifestyle which we can’t afford, which in turn has put tremendous pressure on the financial institutions in the form of unpaid debts.

Due to this reason even sustaining oneself has become very difficult, and therefore banks have gone bankrupt. The number of items imported from other countries has increased over the years and the exports have dwindled. The following paragraphs will give you an idea of the causes of economic problems in the United States in detail.

United States Economic Problems

Problems with the world economy started long before they actually began in the United States. There are several countries in Europe and Asia which faced severe economic recession and depression, which has affected the economy of the United States.

When the economy of the United States was at its peak during the 1990s and early part of this decade, some major economies of the world were facing problems with their economy. This resulted in people from these countries investing in several sectors of the US economy like the real estate. At that time, the lending rates were low and inflow of foreign funds were quite high, which made the credit condition of financial institutions easy.

Since lot of funds were infused into the real estate sector, there was a boom in real estate, resulting in the prices of houses increasing. Due to the low interest rates, banks started financing people to buy such high-priced houses, even though a person did not have good credit history.

Over a period, there was a decline in the prices of houses, and as such foreign investors accumulated huge losses. The prices of houses fell to such an extent that they were less than the borrowed amount. This lead people to opt for foreclosures, rather than paying off the loan, which left the banks accumulating significant losses. This can be said to be one of the main starting points of economic problems in the United States. There are several other causes of economic recession in the United States, which has caused a rippling effect of several major economies of the world.

Due to the effects of economic recession, unemployment has increased, which has led to decrease in demand of several products. Due to the decreasing demand, manufacturers have started producing less, so as to sustain their profits. And to sustain profits, they had to reduce the number of people working in their plants, leading to further reduction in demand.

Decreasing demand meant that the profit margins of companies reduced to a great extent due to which they had to downsize their workforce, leading to loss of jobs. Today, the federal government has taken steps to boost production so as to help organizations to create jobs, and in the process increase consumption.

In the recent past, the amount of commodities exported by United States has lessened considerably. Not only in the United States but also in several major European and Asian countries, the number of baby boomers have increased, and as such there has been an increase in the social security benefits for such people and decrease in consumption. This has decreased demand, and because of that US economic crises aggravated. You may like to know about what happens during a recession, so that you know the consequences of a recession.

The Obama administration has proposed, and in some cases has also implemented certain changes in the legal, economic and fiscal systems of the United States. The prominent example is that of ‘Credit Card Reform Act 2009′, which was passed in order to implement certain accountability related changes in the working of credit card companies and their billing cycles.

In addition, sub-prime lending and property rate appraisals are also being discouraged and proper, mature mortgage and loan underwriting process is being implemented. The labor policies are also being changed in order to cover up distortions in the systems such as lay-offs and merciless ‘firings’.

The Obama administration has further advocated different policies regarding outsourcing of work. As of today, the aim of the government is to reduce the total debts that are owed by public at large, and rectify the distortions in the economy. Increasing the GDP and exports, encouraging small businesses and reducing debt-based production are some ambitious motives that are being put into force. As per Bush it may seem that ‘capitalism rocks’ but by the grace of President Obama we can say that ‘accountability and improvements rock even more’.


Posted in: Economics