Businesses: Prepare for the lower 1099-K filing threshold

Businesses should be aware that they may be responsible for issuing more information reporting forms for 2022 because more workers may fall into the required range of income to be reported. Beginning this year, the threshold has dropped significantly for the filing of Form 1099-K, “Payment Card and Third-Party Network Transactions.” Businesses and workers in certain industries may receive more of these forms and some people may even get them based on personal transactions.

Background of the change

Banks and online payment networks — payment settlement entities (PSEs) or third-party settlement organizations (TPSOs) — must report payments in a trade or business to the IRS and recipients. This is done on Form 1099-K. These entities include Venmo and CashApp, as well as gig economy facilitators such as Uber and TaskRabbit.

A 2021 law dropped the minimum threshold for PSEs to file Form 1099-K for a taxpayer from $20,000 of reportable payments made to the taxpayer and 200 transactions to $600 (the same threshold applicable to other Forms 1099) starting in 2022. The lower threshold for filing 1099-K forms means many participants in the gig economy will be getting the forms for the first time.

Members of Congress have introduced bills to raise the threshold back to $20,000 and 200 transactions, but there’s no guarantee that they’ll pass. In addition, taxpayers should generally be reporting income from their side employment engagements, whether it’s reported to the IRS or not. For example, freelancers who make money creating products for an Etsy business or driving for Uber should have been paying taxes all along. However, Congress and the IRS have said this responsibility is often ignored. In some cases, taxpayers may not even be aware that income from these sources is taxable.

Some taxpayers may first notice this change when they receive their Forms 1099-K in January 2023. However, businesses should be preparing during 2022 to minimize the tax consequences of the gross amount of Form 1099-K reportable payments.

What to do now

Taxpayers should be reviewing gig and other reportable activities. Make sure payments are being recorded accurately. Payments received in a trade or business should be reported in full so that workers can withhold and pay taxes accordingly.

If you receive income from certain activities, you may want to increase your tax withholding or, if necessary, make estimated tax payments or larger payments to avoid penalties.

Separate personal payments and track deductions

Taxpayers should separate taxable gross receipts received through a PSE that are income from personal expenses, such as splitting the check at a restaurant or giving a gift. PSEs can’t necessarily distinguish between personal expenses and business payments, so taxpayers should maintain separate accounts for each type of payment.

Keep in mind that taxpayers who haven’t been reporting all income from gig work may not have been documenting all deductions. They should start doing so now to minimize the taxable income recognized due to the gross receipts reported on Form 1099-K. The IRS is likely to take the position that all of a taxpayer’s gross receipts reported on Form 1099-K are income and won’t allow deductions unless the taxpayer substantiates them. Deductions will vary based on the nature of the taxpayer’s work.

Contact us if you have questions about your Form 1099-K responsibilities.

Could your business benefit from a PEO?

Keeping up with employment regulations and health care benefits can be a struggle for many small to midsize businesses. One potential solution is engaging a professional employer organization (PEO).

PEOs employ experts who understand the minutiae of many HR functions. Moreover, these firms can handle difficult, recurring tasks such as managing employment taxes and administering payroll and benefits.

According to the National Association of Professional Employer Organizations, PEOs work with more than 173,000 small and midsized companies in the United States. They represent 15.3% of employers with between 10 and 99 employees.

Pros and cons

Why not simply hire or add HR staff rather than engage a PEO? For one thing, even an experienced HR professional might struggle to keep up with the ever-changing trends and regulations related to employment. The built-in expertise of a PEO can help ensure compliance and prevent costly penalties.

Further, because PEOs typically work with multiple clients, the cost to engage one can be lower than hiring HR staff. Partnering with a PEO enables a business to focus on its core operations while it gains access to HR know-how and administrative services.

In addition, many PEOs can recommend best practices for functions such as onboarding new employees. Some even provide an HR information system that allows your company to use the latest technology to track recruiting, payroll and benefits data.

Finally, long-standing PEOs often have established relationships with multiple health insurers. This allows you to shop for a greater number of policies at more competitive rates than you might be able to obtain on your own. A good PEO can also educate employees about the benefits available to them, which tends to boost participation, morale and retention.

All that said, a PEO isn’t right for every company. Some PEOs work with a limited number of health insurers whose policies might be no better than coverage you can find on your own. It’s also possible that your in-house expertise isn’t that far off from a PEO’s. A little more training or continuing education could get your HR staff up to speed and negate the need for investing in outside help.

It’s all about the contract

When you partner with a PEO, your business and the PEO enter into a co-employment arrangement. Your company typically remains responsible for strategic planning and business operations, while the PEO takes on specific tasks outlined in the contract. These typically include HR-related tax, legal and other administrative responsibilities.

It’s important to thoroughly understand the co-employment agreement. Often, the business engaging the PEO remains responsible for paying employment taxes and filing tax returns. Under some agreements, however, this responsibility shifts to the PEO. Read the contract carefully and ask your attorney to review it.

Thorough analysis

Deciding whether to work with a PEO calls for a thorough analysis of your company’s operations, HR needs, and the short- and long-term costs involved. We can help you determine whether the approach makes sense for your business and assist you in assessing providers.

Tighten up billing and collections to mitigate economic uncertainties

While many economic indicators remain strong, the U.S. economy is still giving business owners plenty to think about. The nation’s gross domestic product unexpectedly contracted in the first quarter of 2022. Rising inflation is on everyone’s mind. And global supply chain issues persist, spurred on by events such as the COVID-19 lockdowns in China and Russia’s invasion of Ukraine.

Obviously, these factors are far beyond your control. However, you can look inward at certain aspects of your own operations to see whether there are adjustments you could make to mitigate some of the financial challenges you might face this year.

One fundamental aspect of doing business is billing and collections. Managing accounts receivable can be challenging in any economy. So, to keep your company financially fit, you should occasionally revisit and tighten up billing and collections processes as necessary.

Resolve issues quickly

The quality of your products or services — and the efficiency of order fulfillment — can significantly impact collections. You literally give customers an excuse not to pay when an order arrives damaged, late or not at all, or when you fail to timely provide the high-quality service you promise. Other mistakes include incorrectly billing a customer or failing to apply discounts or fulfill special offers.

Make sure your staff is resolving billing conflicts quickly. For starters, ask customers to pay any portion of a bill they’re not disputing. Once the matter is resolved, and the product or service has been delivered, immediately contact the customer regarding payment of the remainder.

Depending on the circumstances, you might request that some customers sign off on the resolution by attaching a note to the final invoice. Doing so can help protect you from potential legal claims.

Bill on time, use technology

Sending invoices out late can also thwart your collection efforts. Familiarize yourself with the latest industry norms before setting or changing payment schedules. If your most important customers have their own payment schedules, be sure they’re officially set up in your system, if possible, so invoicing doesn’t go awry if a new employee comes on board.

Of course, technology is also important. Implement an up-to-date accounts receivable system that, for example:

  • Generates invoices when work is complete,
  • Flags problem accounts, and
  • Allows you to run various useful reports.

Look into the latest ways to transmit account statements and invoices electronically. Emphasize to customers that they can safely pay online, assuming you allow them to do so.

Last, regularly verify account information to make sure invoices and statements are accurate and going to the right place. Set clear standards and expectations with customers — both verbally and in writing — about your credit policy, as well as pricing, delivery and payment terms.

Set the ground rules

Sometimes you might feel at the mercy of your customers when it comes to cash inflows. Yet businesses get to set the ground rules for incentivizing and pursuing timely payments. We can help assess your accounts receivable processes, suggest key metrics to track and explore actions you might take to help ensure customers pay on time.

Putting the finishing touches on next year’s budget

By now, some businesses have completed their 2021 budgets while
others are still crunching numbers and scrutinizing line items. As you put the
finishing touches on your company’s spending plan for next year, be sure to
cover the finer points of the process.

This means not just creating a budget for the sake of doing so
but ensuring that it’s a useful and well-understood plan for everyone.


Management teams are often frustrated by the budgeting process.
There are so many details and so much uncertainty. All too often, the stated
objective is to create a budget with or without everyone’s buy-in for how to
get there.

To put a budget in the best position for success, every member
of the leadership team needs to agree on common forecasting goals. Ideally,
before sitting down to review a budget in process, much less view a
presentation on a completed budget, you and your managers should’ve established
some basic ground rules and reasonable expectations.

If you’re already down the road in creating a budget, it may not
be too late. Call a meeting and get everyone on the same page before you issue
the final product.

for variances

Many budgets fail because they rely on purely accounting-driven,
historically minded budgeting techniques. To increase the likelihood of
success, you need to actively anticipate “variances.” These are major risks
that could leave your business vulnerable to high-impact financial hits if the
threats materialize.

One type of risk to consider is the competition. The COVID-19 pandemic
and resulting economic impact has reengineered the competitive landscape in
some markets. Unfortunately, many smaller businesses have closed, while larger,
more financially stable companies have asserted their dominance. Be sure the
budget accounts for your place in this hierarchy.

Another risk is compliance. Although regulatory oversight has
diminished in many industries under the current presidential administration,
this may change next year. Be it health care benefits, hiring and independent
contractor policies, or waste disposal, factor compliance risk into your

A third type of variance to consider is internal. If your
business laid off employees this year, will you likely need to rehire some of
them in 2021 as, one hopes, the economy rebounds from the pandemic? Also,
investigate whether fraud affected this year’s budget and how next year’s
edition may need more investment in internal controls to prevent losses.

Eyes on
the prize

Above all, stay focused on the objective of creating a feasible,
flexible budget. Many companies get caught up in trying to tie business
improvement and strategic planning initiatives into the budgeting process.
Doing so can lead to confusion and unexpectedly high demands of time and

You’re looking to set a budget — not fix every minute aspect of
the company. Our firm can help review your process and recommend improvements
that will enable you to avoid common problems and get optimal use out of a
well-constructed budget for next year.

© 2020

Taking distributions from a traditional IRA

Although planning is needed to help build the biggest possible
nest egg in your traditional IRA (including a SEP-IRA and SIMPLE-IRA), it’s
even more critical that you plan for withdrawals from these tax-deferred
retirement vehicles. There are three areas where knowing the fine points of the
IRA distribution rules can make a big difference in how much you and your
family will keep after taxes:

What if you need to take money out of a
traditional IRA before age 59½? For example, you may need money to pay your
child’s education expenses, make a down payment on a new home or meet necessary
living expenses if you retire early. In these cases, any distribution to you
will be fully taxable (unless nondeductible contributions were made, in which
case part of each payout will be tax-free). In addition, distributions before
age 59½ may also be subject to a 10% penalty tax. However, there are several
ways that the penalty tax (but not the regular income tax) can be avoided,
including a method that’s tailor-made for individuals who retire early and need
to draw cash from their traditional IRAs to supplement other income.

The decision concerning who you want to
designate as the beneficiary of your traditional IRA is critically important.
This decision affects the minimum amounts you must generally withdraw from the
IRA when you reach age 72, who will get what remains in the account at your
death, and how that IRA balance can be paid out. What’s more, a periodic review
of the individual(s) you’ve named as IRA beneficiaries is vital. This helps
assure that your overall estate planning objectives will be achieved in light
of changes in the performance of your IRAs, as well as in your personal,
financial and family situation.

minimum distributions (RMDs). 
Once you attain age 72,
distributions from your traditional IRAs must begin. If you don’t withdraw the
minimum amount each year, you may have to pay a 50% penalty tax on what should
have been paid out — but wasn’t. However, for 2020, the CARES Act suspended the
RMD rules — including those for inherited accounts — so you don’t have to take
distributions this year if you don’t want to. Beginning in 2021, the RMD rules
will kick back in unless Congress takes further action. In planning for
required distributions, your income needs must be weighed against the desirable
goal of keeping the tax shelter of the IRA going for as long as possible for
both yourself and your beneficiaries.

versus Roth

It may seem easier to put money into a traditional IRA than to
take it out. This is one area where guidance is essential, and we can assist
you and your family. Contact us to conduct a review of your traditional IRAs
and to analyze other aspects of your retirement planning. We can also discuss
whether you can benefit from a Roth IRA, which operate under a different set of
rules than traditional IRAs.

© 2020

Health Savings Accounts for your small business

Small business owners are well aware of the increasing cost of
employee health care benefits. As a result, your business may be interested in
providing some of these benefits through an employer-sponsored Health Savings
Account (HSA). Or perhaps you already have an HSA. It’s a good time to review
how these accounts work since the IRS recently announced the relevant
inflation-adjusted amounts for 2021.

basics of HSAs

For eligible individuals, HSAs offer a tax-advantaged way to set
aside funds (or have their employers do so) to meet future medical needs. Here
are the key tax benefits:

  • Contributions that participants make to an HSA are
    deductible, within limits.
  • Contributions that employers make aren’t taxed to
  • Earnings on the funds within an HSA aren’t taxed, so
    the money can accumulate year after year tax free.
  • HSA distributions to cover qualified medical expenses
    aren’t taxed.
  • Employers don’t have to pay payroll taxes on HSA
    contributions made by employees through payroll deductions.

Key 2020
and 2021 amounts

To be eligible for an HSA, an individual must be covered by a
“high deductible health plan.” For 2020, a “high deductible health plan” is one
with an annual deductible of at least $1,400 for self-only coverage, or at
least $2,800 for family coverage. For 2021, these amounts are staying the same.

For self-only coverage, the 2020 limit on deductible
contributions is $3,550. For family coverage, the 2020 limit on deductible
contributions is $7,100. For 2021, these amounts are increasing to $3,600 and
$7,200, respectively. Additionally, for 2020, annual out-of-pocket expenses
required to be paid (other than for premiums) for covered benefits cannot
exceed $6,900 for self-only coverage or $13,800 for family coverage. For 2021,
these amounts are increasing to $7,000 and $14,000.

An individual (and the individual’s covered spouse, as well) who
has reached age 55 before the close of the tax year (and is an eligible HSA
contributor) may make additional “catch-up” contributions for 2020 and 2021 of
up to $1,000.

on an employee’s behalf

If an employer contributes to the HSA of an eligible individual,
the employer’s contribution is treated as employer-provided coverage for
medical expenses under an accident or health plan and is excludable from an
employee’s gross income up to the deduction limitation. There’s no
“use-it-or-lose-it” provision, so funds can be built up for years. An employer
that decides to make contributions on its employees’ behalf must generally make
comparable contributions to the HSAs of all comparable participating employees
for that calendar year. If the employer doesn’t make comparable contributions,
the employer is subject to a 35% tax on the aggregate amount contributed by the
employer to HSAs for that period.

for eligible expenses

HSA distributions can be made to pay for qualified medical
expenses. This generally means those expenses that would qualify for the
medical expense itemized deduction. They include expenses such as doctors’
visits, prescriptions, chiropractic care and premiums for long-term care

If funds are withdrawn from the HSA for any other reason, the
withdrawal is taxable. Additionally, an extra 20% tax will apply to the
withdrawal, unless it’s made after reaching age 65, or in the event of death or

As you can see, HSAs offer a flexible option for providing
health care coverage, but the rules are somewhat complex. Contact us with
questions or if you’d like to discuss offering this benefit to your employees.

© 2020

How Series EE savings bonds are taxed

Many people have Series EE savings bonds that were purchased
many years ago. Perhaps they were given to your children as gifts or maybe you
bought them yourself and put them away in a file cabinet or safe deposit box.
You may wonder: How is the interest you earn on EE bonds taxed? And if they
reach final maturity, what action do you need to take to ensure there’s no loss
of interest or unanticipated tax consequences?

Fixed or
variable interest

Series EE Bonds dated May 2005, and after, earn a fixed rate of
interest. Bonds purchased between May 1997 and April 30, 2005, earn a variable
market-based rate of return.

Paper Series EE bonds were sold at half their face value. For
example, if you own a $50 bond, you paid $25 for it. The bond isn’t worth its
face value until it matures. (The U.S. Treasury Department no longer issues EE
bonds in paper form.) Electronic Series EE Bonds are sold at face value and are
worth their full value when available for redemption.

The minimum term of ownership is one year, but a penalty is
imposed if the bond is redeemed in the first five years. The bonds earn
interest for 30 years.

Interest generally
accrues until redemption

Series EE bonds don’t pay interest currently. Instead, the
accrued interest is reflected in the redemption value of the bond. The U.S.
Treasury issues tables showing the redemption values.

The interest on EE bonds isn’t taxed as it accrues unless the
owner elects to have it taxed annually. If an election is made, all previously
accrued but untaxed interest is also reported in the election year. In most
cases, this election isn’t made so bond holders receive the benefits of tax

If the election to report the interest annually is made, it will
apply to all bonds and for all future years. That is, the election cannot be
made on a bond-by-bond or year-by-year basis. However, there’s a procedure
under which the election can be canceled.

If the election isn’t made, all of the accrued interest is
finally taxed when the bond is redeemed or otherwise disposed of (unless it was
exchanged for a Series HH bond). The bond continues to accrue interest even
after reaching its face value, but at “final maturity” (after 30 years)
interest stops accruing and must be reported.

Note: Interest on EE bonds isn’t subject to state income tax.
And using the money for higher education may keep you from paying federal
income tax on your interest.

final maturity

One of the main reasons for buying EE bonds is the fact that
interest can build up without having to currently report or pay tax on it.
Unfortunately, the law doesn’t allow for this tax-free buildup to continue
indefinitely. When the bonds reach final maturity, they stop earning interest.

Series EE bonds issued in January 1990 reached final maturity
after 30 years, in January 2020. That means that not only have they stopped
earning interest, but all of the accrued and as yet untaxed interest is taxable
in 2020.

If you own EE bonds (paper or electronic), check the issue dates
on your bonds. If they’re no longer earning interest, you probably want to
redeem them and put the money into something more profitable. Contact us if you
have any questions about savings bond taxation, including Series HH and Series
I bonds.

© 2020

Do you want to withdraw cash from your closely held corporation at a low tax cost?

Owners of closely held corporations are often interested in
easily withdrawing money from their businesses at the lowest possible tax cost.
The simplest way is to distribute cash as a dividend. However, a dividend
distribution isn’t tax-efficient, since it’s taxable to you to the extent of
your corporation’s “earnings and profits.” And it’s not deductible by the


Fortunately, there are several alternative methods that may
allow you to withdraw cash from a corporation while avoiding dividend
treatment. Here are five strategies to consider:

  • Capital repayments. To the extent that you’ve capitalized the corporation
    with debt, including amounts that you’ve advanced to the business, the
    corporation can repay the debt without the repayment being treated as a
    dividend. Additionally, interest paid on the debt can be deducted by the
    corporation. This assumes that the debt has been properly documented with
    terms that characterize debt and that the corporation doesn’t have an
    excessively high debt-to-equity ratio. If not, the “debt” repayment may be
    taxed as a dividend. If you make future cash contributions to the
    corporation, consider structuring them as debt to facilitate later
    withdrawals on a tax-advantaged basis.
  • Compensation. Reasonable compensation that you, or family members,
    receive for services rendered to the corporation is deductible by the
    business. However, it’s also taxable to the recipient(s). This same rule
    applies to any compensation (in the form of rent) that you receive from
    the corporation for the use of property. In both cases, the compensation
    amount must be reasonable in terms of the services rendered or the value
    of the property provided. If it’s considered excessive, the excess will be
    a nondeductible corporate distribution.
  • Loans. You can withdraw cash tax free from the corporation by borrowing
    money from it. However, to prevent having the loan characterized as a
    corporate distribution, it should be properly documented in a loan
    agreement or note. It should also be made on terms that are comparable to
    those in which an unrelated third party would lend money to you, including
    a provision for interest and principal. Also, consider what the
    corporation’s receipt of interest income will mean.
  • Fringe benefits. You may want to obtain the equivalent of a cash
    withdrawal in fringe benefits, which aren’t taxable to you and are
    deductible by the corporation. Examples include life insurance, certain
    medical benefits, disability insurance and dependent care. Most of these
    benefits are tax-free only if provided on a nondiscriminatory basis to
    other corporation employees. You can also establish a salary reduction
    plan that allows you (and other employees) to take a portion of your
    compensation as nontaxable benefits, rather than as taxable compensation.
  • Property sales. You can withdraw cash from the corporation by selling
    property to it. However, certain sales should be avoided. For example, you
    shouldn’t sell property to a more than 50%-owned corporation at a loss,
    since the loss will be disallowed. And you shouldn’t sell depreciable
    property to a more than 50%-owned corporation at a gain, since the gain
    will be treated as ordinary income, rather than capital gain. A sale
    should be on terms that are comparable to those in which an unrelated
    third party would purchase the property. You may need to obtain an
    independent appraisal to establish the property’s value.


If you’re interested in discussing any of these ideas, contact
us. We can help you get the most out of your corporation at the lowest tax

© 2020

Should you go phishing with your employees?

Every business owner is aware of the threat posed by
cybercriminals. If a hacker were to gain access to the sensitive data about
your business, customers or employees, the damage to your reputation and
profitability could be severe.

You’re also probably aware of the specific danger of “phishing.”
This is when a fraudster sends a phony communication (usually an email, but
sometimes a text or instant message) that appears to be from a reputable
source. The criminal’s objective is either to get recipients to reveal
sensitive personal or company information or to click on a link exposing their
computers to malicious software.

It’s a terrible thing to do, of course. Maybe you should give it
a try.

upfront investment

That’s right, many businesses are intentionally sending fake emails to their
employees to determine how many recipients will fall for the scams and how much
risk the companies face. These “phishing simulations” can be revealing and
helpful, but they’re also fraught with hazards both financial and ethical.

On the financial side, a phishing simulation generally calls for
an investment in software designed to create and distribute “realistic”
phishing emails and then gather risk-assessment data. There are free,
open-source platforms you might try. But their functionality is limited, and
you’ll have to install and use them yourself without external tech support.

Commercially available phishing simulators are rich in features.
Many come with educational tools so you can not only determine whether
employees will fall for phishing scams, but also teach them how to avoid doing
so. Developers typically offer installation assistance and ongoing support as

However, you’ll need to establish a budget and shop carefully.
You must then regularly use the software as part of your company’s wider IT
security measures to get an adequate return on investment.


As mentioned, phishing simulations present ethical risks. Some
might say that the very act of sending a deceptive email to employees is a
betrayal of trust. What’s worse, if the simulated phishing message exploits
particularly sensitive fears, you could incur a backlash from both employees
and the public at large.

A major media company recently learned this the hard way when it
tried to lure employees to respond to a phishing simulation email with promises
of cash bonuses to those who remained on staff following layoffs related to the
COVID-19 pandemic. Users who “clicked through” were met with a shaming message
that they’d just failed a cybersecurity test. Angry employees took to social
media, the story spread and the company’s reputation as an employer took a
major hit.


Adding phishing simulations to your cybersecurity arsenal may be
a good idea. Just bear in mind that these aren’t a “one and done” type of
activity. Simulations must be part of a well-planned, long-term and broadly executed
effort that seeks to empathetically educate users, not alienate them. Contact
us to discuss ways to prudently handle IT costs.

© 2020

Disability income: How is it taxed?

Many Americans receive disability income. You may wonder if —
and how — it’s taxed. As is often the case with tax questions, the answer is …
it depends.

The key factor is who paid for the benefit. If the income is
paid directly to you by your employer, it’s taxable to you as ordinary salary
would be. (Taxable benefits are also subject to federal income tax withholding,
although depending on the employer’s disability plan, in some cases aren’t
subject to the Social Security tax.)

Frequently, the payments aren’t made by the employer but by an
insurance company under a policy providing disability coverage or, under an
arrangement having the effect of accident or health insurance. If this is the
case, the tax treatment depends on who paid for the coverage. If your employer
paid for it, then the income is taxed to you just as if paid directly to you by
the employer. On the other hand, if it’s a policy you paid for, the payments
you receive under it aren’t taxable.

Even if your employer arranges for the coverage, (in other
words, it’s a policy made available to you at work), the benefits aren’t taxed
to you if you pay the premiums. For these purposes, if the premiums are paid by
the employer but the amount paid is included as part of your taxable income
from work, the premiums are treated as paid by you.

A couple
of examples

Let’s say your salary is $1,000 a week ($52,000 a year).
Additionally, under a disability insurance arrangement made available to you by
your employer, $10 a week ($520 for the year) is paid on your behalf by your
employer to an insurance company. You include $52,520 in income as your wages
for the year: the $52,000 paid to you plus the $520 in disability insurance
premiums. In this case, the insurance is treated as paid for by you. If you
become disabled and receive benefits, they aren’t taxable income to you.

Now, let’s look at an example with the same facts as above.
Except in this case, you include only $52,000 in income as your wages for the
year because the amount paid for the insurance coverage qualifies as excludable
under the rules for employer-provided health and accident plans. In this case,
the insurance is treated as paid for by your employer. If you become disabled
and receive benefits, they are taxable income to you.

Note: There are special rules in the case of a permanent loss
(or loss of the use) of a part or function of the body, or a permanent

Security benefits 

This discussion doesn’t cover the tax treatment of Social
Security disability benefits. These benefits may be taxed to you under
different rules.

How much
coverage is needed? 

In deciding how much disability coverage you need to protect
yourself and your family, take the tax treatment into consideration. If you’re
buying the policy yourself, you only have to replace your after tax,
“take-home” income because your benefits won’t be taxed. On the other hand, if
your employer pays for the benefit, you’ll lose a percentage to taxes. If your
current coverage is insufficient, you may wish to supplement an employer
benefit with a policy you take out.

Contact us if you’d like to discuss this in more detail.

© 2020