Thursday, May 23, 2013

Federal credit for IRA contributions

If your annual income is more than about $10,000 but less than $28,750 (single) or $57,500 (married filing jointly), the U.S. Government will give you up to $1,000 per year to help defray your retirement contributions. Here's how.

Congress adopted the "savers credit" in order to encourage people to contribute to retirement plans. If your employer offers a retirement account that you contribute to (such as a 401k plan), your contributions are eligible. If not, you can make the contributions to a separate IRA.

Under this plan, you can claim up to 50% of your retirement contributions as a credit against your Federal tax liability, up to $1,000 based on a contribution of $2,000. The full 50% is available to persons with an adjusted gross income under $16,750 single / $33,500 married filing jointly. At higher levels of income, the credit is reduced.

Unlike a deduction, which reduces income and thus partially reduces taxes, a credit is a full offset of a tax liability. If the government gives you a tax credit for a particular activity, this means that the government is paying for it fully, with money you would otherwise have to send to the IRS. This applies even if you get a refund at tax time.

This is a nonrefundable credit, meaning that you will have to have a tax liability that this credit will offset. It is not available to those who will pay no taxes - i.e., single people whose income is less than about $9,700. And the largest credit, 50% of contributions up to $2,000, is available only to persons whose income is quite low - $17,250 for a single person. Of course, someone making that little is very unlikely to be willing, or able, to direct as much as $2,000 to a retirement account.

Those making between $17,250 and $28,750 will be able to claim a credit of only $200-400 based on a $2,000 contribution.

See IRS Publication 590, page 79, for more information.

Sunday, May 5, 2013

New statute on reporting unsafe drivers

Effective January 1, 2013, Michigan now has a law that permits physicians and optometrists to notify the Secretary of State or to warn third parties (such as family members) of a patient's physical or mental condition that may affect his or her ability to drive safely. The new statute, found at MCL 333.5139, provides:
  • The report must be based on an "episode," not just the patient's overall condition. The word is defined by reference to "loss of consciousness, blackout, seizure, a fainting spell, syncope, or any other impairment of the level of consciousness" arising from a medical condition.
  • The physician or optometrist may make the report, but is not required to do so.
  • If he does not do so, the statute grants immunity from any claim founded on negligence or professional negligence for failing to do so.
  • If he does make the report, the statute grants immunity from any claim founded on breach of privacy or physician-patient relationship, provided he acts in good faith and documents the basis for his report.
  • The report must be accompanied by a recommendation for a period of suspension of the patient's driver's license. (We can predict that many practitioners will balk at this requirement.)
The wording of the statute:
Sec. 5139.

(1) A physician or an optometrist has no affirmative obligation to but may voluntarily report to the secretary of state or warn third parties regarding a patient's mental and physical qualifications to operate a motor vehicle in a manner as not to jeopardize the safety of persons and property due to an episode. A physician or an optometrist who chooses not to make a report to the secretary of state or warn third parties as provided for under this subsection is immune from any criminal or civil liability to the patient or third party that may have been injured by the patient's actions.

(2) A physician or an optometrist may make a report under this section and submit that report to the secretary of state for the purpose of initiating or contributing to an examination of an applicant's physical and mental qualifications to operate a motor vehicle in a manner as not to jeopardize the safety of persons and property pursuant to section 309 of the Michigan vehicle code, 1949 PA 300, MCL 257.309. In making that report, the physician or optometrist shall recommend a period of suspension as determined appropriate by the physician or optometrist as follows:

(a) In the case of a patient holding an operator's license, that the suspension be for at least 6 months or longer.

(b) In the case of a patient holding a commercial license, that the suspension be for at least 12 months or longer.

(3) A physician or an optometrist making a report under subsection (2), acting in good faith and exercising due care as evidenced by documenting his or her file or medical record regarding an episode, is immune from any civil or criminal liability resulting from the report to the patient or a third party that may have been injured by the patient's actions.

(4) As used in this section:

(a) "Episode" means any of the following:

(i) An experience derived from a condition that causes or contributes to loss of consciousness, blackout, seizure, a fainting spell, syncope, or any other impairment of the level of consciousness.

(ii) An experience derived from a condition that causes an impairment of an individual's driving judgment.

(iii) An experience derived from an impairment of an individual's vision.

(b) "Optometrist" means that term as defined under part 174.

(c) "Physician" means that term as defined under part 170 or 175.