Monthly Archives: July 2015

NC Adult Care Home Update

by Rachel Owens

The NC Department of Health and Human Services sent out a memo dated July 15, 2015 with the latest information regarding General Statute 131D-4.2 – the Adult Care Home providers and their reporting requirements.  To comply with these requirements ALL facilities that receive State/County Special Assistance funds are required to file a cost report.  Those facilities that have 7 beds or more are additionally expected to have Agreed-Upon-Procedures performed.  dhhs

For facilities licensed under Chapter 122C (mental health supervised living facilities) the reporting period is July 1, 2014 – June 30, 2015.  All other facilities are required to use the year end September 30, 2015 regardless of their fiscal year end.  These cost reports are due December 31, 2015.

More information is forthcoming about AUP instructions, and software.  Please continue to check our website and blog for additional information.

Langdon & Company LLP has extensive history working with the long-term healthcare industry. We offer a high degree of expertise and experience with the needs of Adult Care Home providers and would be happy to assist you in the timely filing of the Cost Report.  If you have questions, we will be happy to help you.  Contact [email protected] or [email protected]!

When Should I Start Receiving My Social Security Benefits?

by Leonora Bowman

Like all financial questions, the answer to this question is, “it depends.” social security

You can start drawing social security benefits based on your own work history as early as 62 and as late as 70. Currently, those of us, who are baby boomers, born between 1943 and 1954, 66 is our full retirement age.  The full retirement age increases 2 months each year until it reached 67.

There are several factors, which will help to determine when you should start drawing social security, the most important being if you and your family can financially afford to delay drawing social security until a later date.  For each month, after you reach your full retirement age, you will earn 2/3 of 1% delayed retirement credits, or 8% per year. You can only earn delayed retirement credits based on your work history.  By suspending receipt of your social security between 66 and 70, your monthly benefit will increase by 32%.  Obviously, if you can afford to do so, this is your best option.  Spouses and widows do not earn delayed retirement credits.

If you are married and the family can financially afford to do so, there are some choices you can make to optimize your family’s social security monthly benefit.

The first choice that can be made, once full retirement age is reached, is for the higher earning partner to file and suspend collection of his/her benefit.  This will allow two things to happen.  1) the spouse filing and suspending collection will begin to earn delayed retirement credits and 2) the lower earning spouse can begin drawing a spouse benefit, which may be higher than the amount he/she may have received based on his/her own work history.

File and restrict your benefit is another option that married couples can do if they are both over 62 and one is already drawing benefits.  The partner not already receiving benefits can file and restrict the benefit he/she receives to 50% of the spousal benefit to which he/she is entitled and allow his/her own benefit to continue to earn delayed retirement credits until he/she reach 70.  The partner choosing to file and restrict must have reached his or her full retirement age to choose this option.

Those who are divorced and were married to their former spouse for at least 10 years, are at least 62 and have not remarried, can elect to receive the divorced spouse benefit provided it is greater than the amount he/she would have received based on their own work history.

The Social Security Administration is a great resource if you have specific questions.  To determine which social security benefit path is best for you and your family, please contact Langdon & Company LLP or your financial advisor.

Leonora “Lee” Bowman ([email protected]) is a Manager in our Accounting Services practice.  She has over 25 years of experience in taxation and also specializes in multi-dimensional corporate accounting across various states.

Planning for College? Benefits of a 529 Plan

by Kendall Tyson

Most parents and many grandparents often worry about the increasing college costs for their children and grandchildren.  According to a recent article in USA Today, college tuition and fees have increased 1,120% since 1978.  Edvisors reports 70% of students borrow to go to college and take on an average $33,000 in student loans.

One way to help plan for upcoming college costs is to open a 529 plan.  A 529 plan is a qualified tuition program operated by a state or educational institution designed to help set aside funds for future college costs.  Under IRC Section 529, a qualified tuition program is exempt from income tax.  The earnings grow tax-free, and as long as the contributions and earnings are used for qualified educational expenses then the beneficiary does not report or pay tax on any distributions.

Almost every state now offers a 529 plan and the plan’s fund can be used to meet costs of qualified colleges nationwide.  A North Carolina resident can invest in a Virginia plan for a beneficiary who attends a Tennessee college, as long as the college is an eligible institution.  (Eligible institutions have been assigned a federal school code by the Department of Education).

Anyone can contribute to a 529 plan; the plan just needs a beneficiary.  While the contributions are not deductible for federal tax, the contributor is not subject to AGI limitations and contributions are considered a completed gift, which is excluded from the contributor’s estates.  The IRS even allows for contributors can elect to take contributions larger than the annual gift exclusion into account ratably over five years.

All distributions from the 529 plan must be used for qualified higher education expenses.  Qualified higher education expenses include the following:

  • Tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a designated beneficiary at an eligible educational institution;
  • Expenses for special needs services incurred in connection with enrollment or attendance
  • Room and board included for students who are at least half-time
  • Internet access or related services used by the beneficiary while enrolled at an eligible educational institution

Distributions from the plan will be reported a Form 1099-Q, Payments from Qualified Education Programs, showing the earnings and basis related to the distribution.  Any distributions not used for qualified expenses are included in income and subject to a 10% penalty.  Many individuals confuse the idea of using 529 funds to repay student loans.  Unfortunately, the repayment of prior year student loans does not meet the IRS definition of “qualified education expenses”.  Any distributions used to repay student loans are included in income and subject to the 10% penalty.

529 plans can also be rolled into another qualified tuition program for the same beneficiary or transferred to another beneficiary within the same family with no adverse tax consequences.

With the proper planning, a 529 plan can help ease the burden of increasing college costs with relatively low maintenance for the contributor.  For more information or help in finding a 529 manager or financial adviser, please contact our office.

Kendall Tyson ([email protected]), a Tax Manager at Langdon & Company LLP.  She specializes in physician/dentist practices, multi-state and nonprofit returns.