You can start collecting Social Security as early as age 62, however, this is not the most financially savvy move to make.  You could suffer a reduction of benefits of 25% or more for the rest of your life.  But if you continue to work past the normal age of retirement, you could be running up against the cap in which you can be penalized for earning too much.  You should try to retire at the normal age, as provided by the Social Security Administration, which, at this point in time is 66.

Second, marriage has its perks.  If, for example, your husband has higher lifetime earnings than you and you are ready to retire, but he’s not, all he has to do is file and suspend.  This means that you can collect your share, while he waits to collect benefits until later, when they will be worth more.  If the you have comparable incomes, though, there is another strategy that you can employ to boost your household income.  If one spouse wants to stop working earlier than the other, one spouse can retire and the other can claim spousal benefits only on the retired spouse’s record and wait until normal retirement age to collect their own, qualifying for the maximum benefits.

You also may be able to collect on your former spouse’s benefits as long as you were married at least 10 years and are 62 or older.  If your ex-spouse dies, you are entitled to a monthly survivor benefit (even if he or she remarried) equal to 100% of what your ex received during his or her lifetime (assuming that it is higher than your benefit amount, as you cannot collect 2 checks).

Lastly, if you started collecting Social Security and wish you had waited in order to get a higher benefit, the government will allow you to hit the re-do button.  You just have to pay back everything you have received, the government won’t charge you interest, and request a refund on the taxes you paid on that money (I recommend speaking to an accountant if you do this).  In essence, this strategy is allowing you to take an interest-free loan from the government.  Once you have paid the money back, the SS Administration will restart your benefits at a new, higher rate.  Speaking to a financial adviser before doing this is advisable because it could take up to 8-10 years to recoup your investment.

Hiring your kids can actually help increase your family’s wealth by decreasing your income tax bill.  The keys to this being successful, however, is that your business must not be incorporated and you pay them reasonable wages.  That will allow you to deduct their wages from your income and shift the money to your children, who will be in a much lower tax bracket.

If your children are under 18, you will have to pay no Social Security or Medicare tax and, usually, no state unemployment or disability taxes either.  The courts have already rules that you can deduct taxes for any “reasonable wages” that you pay your children ages 7 and older to perform for your business.  The key is to show a profit objective though; as long as you can establish a profit objective, you don’t have to actually make a profit to claim the deductions.

Your CPA will strongly advise that you do everything in your power to substantiate every little deduction.  You may want to consider putting your kids on a time clock or writing down their times on a time sheet.  Pay them with a check.  They can always endorse the check over to you for cash.  And finally, make sure that you issue them W-2s at the end of the year.  This will provide them with a copy of what they have earned as well as a copy for the government.  If you need help with setting up any of this or questions concerning the appropriate hiring of your kids, please contact your local accountant.

CPA Rockville – A large number of individuals hire the services of a CPA all year round to ensure that their finances are in order.  Although most accountants are hired on a long-term basis, there are a few accountants that are only hired to professionally prepare tax returns.

Many individuals or business owners are often encouraged to seek a local accountant for the sole reason that should a problem/situation arise, it is more convenient to resolve.  But since accountants are often versed in the tax laws of multiple states, it is not always a bad idea to seek out the accountant with the best reputation, most experience, and most personal service.  Personal service is very important because you know that the person you have hired is looking out for your best interest.  Even though a firm may be local, you may not even know who is performing the service to you.

So the answer is quite simple: Because it is an easy way to have your financial records in order or your tax returns professionally completed.  The job of the CPA is to know how to get their clients the maximum number of tax deductions and know how to accurately organize receipts and other document verifications for those tax deductions.  So, instead of spending hours reviewing and sorting through your finances, you should contact a CPA firm in Rockville and get a consultation to determine if hiring an accountant is the right move for you.