Posts Tagged "children"

Do you need life insurance on your children

Posted on Apr 3, 2014

Ask whether you should carry life insurance on your children and you’ll receive a variety of answers. Here’s a look at the arguments for and against. * Financial security. Traditionally, you take out life insurance to provide for the financial security of dependents. The policy should provide funds to replace the insured’s income and to pay off debts. Neither of these reasons applies to young children. They don’t generally have any significant income, and they don’t usually have any debts. Some parents might want to carry a modest amount of insurance to cover funeral costs for their children in case the unthinkable happens. * Insurability. Another argument is that by taking out a policy at a young age, you help to guarantee insurability as the child grows older. This could be important if the child develops a major illness later in life. The problem is that if the child does develop a serious illness, insurance could then become very expensive or limited in amount. * Insurance as an investment. Some advisors suggest that parents should take out a whole life policy on their children. These policies include a savings component to build up cash value in the policy. You could then use that value for education expenses or other needs. But others say that there are cheaper and more efficient ways to save than by using life insurance. For example, putting money into a tax-advantaged Section 529 plan might be a better way to save for college tuition costs. * The bottom line. Although a majority of financial advisors might argue against life insurance for children, there may be some situations when it makes sense. One thing is clear. You shouldn’t take out a policy just because it is offered to you or because others are doing it. Insure your kids only if you’ve done your homework and know exactly why you need the insurance. Please contact our office if you’d like help reviewing the advantages and disadvantages as they apply to your particular situation. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ <https://plus.google.com/108764776146415485651/posts> , LinkedIn <http://www.linkedin.com/in/gillilandcpa> , Facebook <https://www.facebook.com/gillilandcpa> , and Twitter...

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Guide your children to financial maturity

Posted on Oct 1, 2013

Teaching your children about money and finances is easiest when you start early. Here’s a quick review of what you should teach your children at each age if you want them to become financially competent adults. Preschool – Skills to Teach * Identify coins and bills; learn what each is worth. * Understand that you can’t buy everything; choices are necessary. * Save money in a piggy bank. Grade School – Skills to Teach * Read price tags; learn comparison shopping. * Do money arithmetic; make change. * Manage an allowance; use it to pay for some of child’s own purchases. * Open a savings account and learn about interest. * Participate in family financial discussions about major purchases, vacation choices, etc. Teens – Skills to Teach * Work to earn money. * Budget for larger purchases. * Learn to use a checking account. * Learn about investing – stocks, mutual funds, CDs, IRAs, etc. * Share in financial planning (and saving) for college. College/Young Adult – Skills to Teach * Learn about borrowing money (interest, default, etc.). * Use credit card judiciously. * Participate in family estate planning discussions. Knowing about money – how to earn it, use it, invest it, and share it – is a critical life skill. It’s never too early to start teaching your children about financial matters. Gilliland & Associates, PC is a full-service CPA firm specializing in tax planning for individuals and businesses in the Northern Virginia area. We are based in Falls Church, VA and also service clients in the McLean and Tysons Corner, VA. Gilliland & Associates specializes known for our superior knowledge and aggressive interpretation and application of tax laws, we help you keep more of your earnings by finding you the lowest possible tax on your business or personal tax return. You can connect with us on Google+ , LinkedIn , Facebook, and Twitter.  ...

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Decide when to pay tax on U.S. savings bonds

Posted on Nov 20, 2012

When you own Series EE or Series I savings bonds, you have a tax decision to make. Both types of bonds earn interest monthly. Usually, you’ll choose to defer paying any taxes on the interest until the bond reaches final maturity or you redeem it, whichever comes first. At that time, you would report and pay taxes on the total interest earned over the life of the bond. (If you meet certain requirements, you might avoid paying any taxes by using the bond proceeds to pay for higher education expenses.) The alternative method is to report the interest earned each year as part of your taxable income. Most people choose the first method because it lets you delay paying taxes for as long as possible. But sometimes the annual method makes sense — for example, if a young child has been given a savings bond in his or her own name. The tax rate on investment earnings of a child under age 19 (under age 24 for full-time students) is the parent’s marginal rate when the “kiddie tax” applies. The kiddie tax is intended to stop parents from shifting income to their children. But even under the kiddie tax rules, the first $950 of a child’s investment income in 2012 is tax-free and the next $950 is taxed at your child’s lower tax rates. So if your child expects to earn less than $1,900 from savings bonds and other investments, reporting the interest as income each year could make good tax sense. For further details on this and other tax-saving strategies, please give us a...

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Do your children need to file a 2011 tax return?

Posted on Jan 24, 2012

Check your children’s need to file a 2011 tax return. A return is needed if wages exceeded $5,800, the child had self-employment income over $400, or investment income exceeded $950. If the child had both wages and investment income, other thresholds apply. Contact us for any filing assistance you may...

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Your child may have to file a return

Posted on Apr 5, 2011

Your child may have to file a 2010 income tax return. Generally, a return is required if the child had wages of more than $5,700, self-employment earnings over $400, or investment income (such as dividends, interest, and capital gains) over $950. If your child had both earned and investment income, other thresholds apply. Also, if your child is due a refund, a return must be filed to get it. Contact us if you need more information or filing...

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