Top 10 Mistakes Made by Federal Employees — Expanded

3.27.26: Audio automatically transcribed by Sonix

3.27.26: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski with American Benefits Exchange. And as always, I really appreciate you taking the time out of your busy schedule to join us to view our content. That's what we're here for. We're here for you, the federal employee that's looking for accurate information when it comes to your benefits and retirement situation. And if you've been following us, we're in the middle of a series. We're at the end, the very tail end of a series where we're we're reviewing the top ten mistakes made by federal employees. And last week we talked about number ten and we rounded out the top ten. But I told you we'd have a few extra that we're going to talk about. And there's look, there's not only ten. There's a lot of different mistakes that you can make along the way. We try to help you avoid those things as you're going through your working career. So you could be in the best position possible, right where you're currently at. And also as you're getting closer and closer to retirement. But we're going to talk about two extra mistakes that I see federal employees make in addition to the top ten. Now, if you like today's video, I highly recommend go back and view the previous ten episodes where we went over the top ten mistakes with a fresh new lens, a fresh new look. This is a pamphlet that I created years ago and just wanted to give you a fresh take on these top ten mistakes.

Speaker 1:
So let's dive into today's content. We're going to talk about a couple extra mistakes that federal employees make. Now, as I mentioned, this is a pamphlet that we created years ago. You can get a physical copy of it. We can get a digital copy if you'd like to see that. Number one, you can go and view all of the other episodes that we have. And two, you can reach out to us by going to our website, Federal Retirement Show.com fill out the form. One of our experts across the country. If it's not me personally, we'll be reaching out to review your benefits, answer your questions, and to get this in your hands. So we're talking again about extra mistakes. And this is the first one. It's failure to have a proper and up to date estate plan. This originally when I first created the pamphlet, was in the top ten mistakes. But just with with things going on and things changing, we altered it slightly. But I want to bring this back up. Not having one at all or an up to date estate plan. And what is this talk about? This talks about what happens to you if you pass away. What happens to you if you become incapacitated and can no longer make decisions for yourself? I can tell you personally, in our family, we're going through some things right now, um, with my wife's father and we're just, we're, we're having a plan properly.

Speaker 1:
We're having to, you know, uh, exercise his wishes and try to think about what would he want us to do if he's incapable of making decisions himself? And there was not a direct plan in place. We were actually in the process of getting that plan fully and completely in place by setting up a living trust and, and making sure all of these decisions could get made. Except now we'd have to do it on the back end, and we had to go and jump through some hoops in order to secure those, uh, those directives so we can make decisions on his behalf because he's unable to make those decisions himself. So why is this important? Because if something did happen to you, do you have that plan in place? If something if you passed away or if you become incapacitated, do you have that plan in place for somebody to just pick up and say, these are my directives, this is what I want to have happen. These are my wishes and all. It's all written down. It's all official, it's all documented. And now that person just follows through with the plans instead of having to guess. Now, another thing that this does is it makes sure that your property, if you own property, and that's just not as, uh, meaning physical property, like a house or land. We're talking about assets. If you have assets, your assets can go into this plan and get distributed how you see fit when something happens to you.

Speaker 1:
So we're talking about your residences, your life insurance for federal employees, your TSP, if you have IRA money, if you have bank account money, you have any kind of assets whatsoever that you want to distribute to your loved ones. In the event that you die. This plan would take care of that. A lot of people do use living trusts, right? Revocable living trust to set this up so that all of the assets, once somebody passes the beneficiaries of all those assets, uh, is the trust that all the assets go into the trust and then the trustee will distribute them in accordance to the wishes outlined in the trust, the directives that are outlined in the trust. And this can help secure and avoid issues like probate or avoid other things. Uh, other people trying to come in and, and collect on stuff, right? And this is not my area of expertise. I'd highly recommend talk to a trusted attorney, talk to somebody that can handle this. We do employ a trusted attorney that we go to if you need help with this stuff, but it allows you to to make sure that your final wishes, your directives, whether you pass away or you're incapacitated, Fascinated are carried out in accordance to your wishes and your wishes while you're clear thinking, right. While you're able to plan about this, and it just, it makes sure that your assets go to the right folks and there's no, there's no argument, there's no disputes.

Speaker 1:
You'll be surprised. Families are very, very kind to each other until there's money and assets involved. And to take all of the guesswork and things out of it, this is a way to do it. You make sure that your estate plan, whether it's it's a will or a trust or any directives that you have, something is better than nothing. We happen to, to like living trust better than just a will, but it, it allows and it ensures that your directives, your assets are going to be properly taken care of in the event something happens. So that's an extra mistake that we see federal employees make is not having that plan in place. We don't want to. We know we're not going to live forever. So when that day comes, we want to ensure that everything is taken care of proper. Number two on the extra mistakes is Social Security, election timing and the options that are available. I'm not expecting every federal employee to be a Social Security expert, but since Social Security is one of your three main income sources in retirement along with your pension and TSP, that's what Social Security is. Therefore, it's one of your three main retirement income sources. You want to know all of the options. You want to know all of the distribution and election options. You want to ensure you're making the right choice for your family, for you and your spouse, especially because the timing of when you take Social Security, um, could impact the rest of your, your retirement.

Speaker 1:
Once you lock in that rate, you will get cost of living adjustments over time, but it won't be as big as those jumps by delaying your payment. You want to know how things factor in like your earnings and retirement. Are you going to work once you're retired? Because that will have, uh, or be a factor of when you take Social Security, but also what are your options when it comes to spousal benefits? Does your does your spouse understand all the options that they're afforded? When it comes to taking Social Security so you can have a plan in place. Put a proper plan in place. Go over as many options as possible. Run all the scenarios. It's not as simple as you turn 62 and boom, I need to take Social Security because now I'm eligible. Wait, hold on a second. Map out all the options in the same way that we map out your benefits and retirement information when we do a full review and analysis. You want to ensure that you know all of the benefits and the pros and cons of the Social Security timing and what you're going to be doing in retirement if it is working and earning additional income, how is that going to affect your Social Security if you take it? What can your spouse do? What are the options there when it comes to Social Security? How does Social Security work? If you were to pass away or your spouse passes away, what does all that look like? You can make sure you're you're choosing an appropriate decision.

Speaker 1:
Now, there's no exact science when it comes to Social Security, especially when it comes to timing, because the only way to know which timing works out in your favor. And what do I mean by that? I mean total benefits collected in your lifetime, right from the time you elect Social Security to the time you die, which strategy would pay you the most amount of benefits? The only way to know that is to know exactly when you're going to die. And we don't have that crystal ball. We don't know that. So we make the best guess based on life expectancy or family history or whatever, or need also need factors in if you need to take the money. Well, maybe you need to take it right away. But every situation is different. So it's not a blanket statement of when you need to take Social Security. I mentioned the options when it comes to spousal benefits and spousal options. It also factors into your Medicare decision because the Medicare Part B premium comes out of Social Security. Understand also part of of that is perma which affects your Medicare Part B premium depending on your earnings. So there's a lot that goes in. I'm just I'm mostly talking about just Social Security in general collecting that benefit. But why not map everything else out and see what is best for you and your family? If it is, hey, take Social Security at 62 or right when you retire, then fine.

Speaker 1:
But at least you ran through all the different options so you can see what's best for you. So a mistake that we see is not properly understanding how Social Security works. The timing of it and all the options that are available for you. So in the meantime, um, you know, if there's other mistakes you think you're making your other options that you want to talk to us about, reach out to us. Please go back and view the other top ten mistakes that we talked about one through ten. Get a great education on that. And then if you do enjoy our content, go back and view all the 170 plus episodes that we have available for you. It is for you. Last thing I'll recommend and I'll suggest and actually I'll, I'll ask you to do as a favor, refer us to another colleague of yours. If you love our content, you love what we're about. You like the information. We want to help as many federal employees as possible. So do me a favor and refer us to a colleague, share the federal retirement show with somebody you work with. So I really appreciate you taking the time to view our content again. My name is Val Majewski with American Benefits Exchange. You've been watching the Federal Retirement show, and I look forward to seeing you on a future episode.

Speaker 2:
Well, it being the beginning of 2026, here it is, tax season once again. And this year is going to be pretty different for a lot of Americans. Joining me to talk more about that is Mark Steber. He's chief tax officer of Jackson Hewitt Tax Service. Hey there Mark. How are you.

Speaker 3:
Hey Matt. Very excited. Very exciting time. Here it is. Tax season go. Time to get those tax refunds.

Speaker 2:
That's right. I mean you you are always the most excited when tax season comes around. And I that's why I always love talking to you around tax time because you're very passionate about it. You know the ins and the outs. And speaking of which, share those ins and outs with us this time around. What are some of those big changes that we're seeing for tax filing season this year?

Speaker 3:
Well, like taxes or don't like taxes, 300 billion with a B dollars are getting ready to move into the pockets of taxpayers. And those people that file early and file correctly will get more than their fair share of the 300 billion. And that's about 100 million Americans. So paying attention to your taxes, you know, it's a good job in 2025 is going to be one for the record books of good news for taxpayers. We had a big tax legislative, legislative change back there in the summer, which put a whole bunch of new stuff which can be confusing, intimidating and daunting, but new stuff that can put more money in your pocket. So you say excited. I say it's getting ready to be the giving cash to taxpayers time, and that's always a good thing. So I'll start off with a few of the big things that people have probably seen, but get into a little bit of the specifics. There's a new deduction if you get money through tips, if you're earning money through tips. And that's a lot of people think if you're a Starbucks worker, your bartender, your food service, hospital, it list goes on and on, a new deduction up to $25,000 of deductible tips that are not taxable this year. That's a that's a big one and a new one. Over time, if you earn overtime in your job and a lot of people have overtime and you can get a new deduction of up to $12,500 of qualified overtime deduction on your tax return, not taxable.

Speaker 3:
The big one though for seniors this year there's a new $6,000 per person tax deduction. If you're simply 65 or older on December 31st 2025, you get a brand new $6,000 per person deduction. And that's not to be confused with the prior senior taxpayer deduction or the larger standard deduction available for seniors. This is a new new new senior deduction 6000 intended to help offset some of the tax ability on Social Security, which is where some of the confusion is. You do not have to be drawing or even eligible for Social Security. You just have to be 65. And if you bought a car, 20 million people buy a car every year. You borrowed money. There's a brand new deduction of up to $10,000 on automobile loan interest expense. And again, you don't have to itemize. You just have to have qualified, manufactured and assembled in the in the assembled in the United States. And you get that deduction. And there's a host of others. They raise the state and local threshold of 40,000. If you if you have that in, you itemize. And several states do have that higher standard deduction, higher child credit, higher refundable credit. You know, there's a lot of other stuff, but those big four including that new senior deduction, those will put more money in the pockets of taxpayers. There's just no question.

Speaker 2:
Yeah. There you go. And and of course a lot of new stuff there that you just mentioned and and more. So how can folks really, uh, be prepared and prepare those documents, get organized to file this year?

Speaker 3:
Well, you start off by saying, I'm excited. I hope other people are excited about going and getting some of that $300 billion that starts with not dreading tax day, not waiting till April 15th, but getting a plan to be organized. And that starts right now. Those tax documents are coming in even as we speak. W-2 1099. You know. Retirement distributions, Social Security statements and all the rest. You need to have a very simple plan to start being organized around those. The brown envelope in the the household works, the shoebox works, but whatever works for you, but start accumulating those documents because it's critical you be accurate. Also know that not everything comes in the mail anymore. Some things come through electronic transmission. So if you're waiting on a document and it hasn't come, check your email, check your spam folder. Because if it hasn't come by January 31st, the deadline for those types of things. Hope is not a strategy. You need to take some action and you don't need to wait on that because you might have questions from your tax pro on this and other things, and you don't want to wait up to the last minute. So get a plan for organization that includes the envelope or whatever it is to collect your documents, start to locate your tax professional. That's not an easy task these days. You want somebody trusted, trained, experienced, branded. That'll be here when you have questions later. Not some of the pop up people that might not have your best interest. So find your tax docs, find your tax pro, and then get a plan on your calendar to get it done and go get that money and start that process and start planning for next year.

Speaker 2:
Yeah. And of course, you know, working with a tax pro, I think for, for most people, it sounds like this time around, or at least, at least for more people maybe than in years past, it's pretty important to do that because you might miss something, especially with all of these sort of wholesale tax law changes that we're seeing this year. You might miss some of those new, uh, credits or deductions or things like that that could really benefit you come tax time.

Speaker 3:
Yeah. And here's an important point on that. I know I sound like I'm pedaling pro tax prep, but I've seen more mistakes by people who pay false attention to some mistaken understanding or Uncle Bob's tax tip because he watched Tic TAC or whatever. But the reality is simply this, and this is what your listeners need to know. If you leave off one of these many benefits that I talked about and a myriad of others that we didn't talk about that are time tested and in place if you leave it off. The IRS does not say, oh, hey Matt, here's 5000 more dollars. You leave it off. It stays off forever until you go and fix it or somebody finds it and fixes it. But the point is, if you hurry through this and you wait till the last minute and you leave off that new senior deduction, 6000 or 12,000 if you're married, the IRS is not just simply going to mail you 3000 more dollars and say, oh, you left off the senior deduction, Matt. Too bad we caught that for you. That's not how it works. Leave it off. It stays off. And if you're not prepared to put in the legwork to learn about it, to answer the questions correctly or to do it properly, you could cost yourself more than enough money to pay a tax professional to help you, if not this year, in some other years. So it always makes sense. And the more complicated, the more sense. But this year, just due to the changes, it's probably a good idea to get some help.

Speaker 2:
Yeah, I think so as well. Well, Mark, just about time for us to wrap up here, but anything else that you wanted to touch on that we haven't mentioned here or maybe, you know, some resources for folks online?

Speaker 3:
Yeah. I'll give you two final points in a quick moment. Uh, $300 billion in refunds are coming. 100 million people that will draw in some bad people, bad practices, bad promises. So pay attention when somebody offers you something too good to be true, whether it's a deduction or a credit or they won't sign it. It's what your mama always said. If it sounds too good to be true, it's probably not true. Use a trusted tax helper and do a little work on that. And if you need more information, our website at jackson.com where they use Jackson Hewitt or not a lot of information on their calculators, tax tips, frequently asked questions, how to find an office. Just put your zip code in the box, but use a trusted professional this year and every year and go to Jackson hewitt.com just to get your questions answered or to debunk uncle Bob at the table.

Speaker 2:
Uncle Bob and his tax tips. Sometimes they are just kind of out of out of thin air and just don't make sense. So yeah, make sure that you debunk uncle Bob. Mark Steber with Jackson Hewitt. He's chief tax officer there. Mark, thanks so much. Really do appreciate it.

Speaker 3:
Thank you Matt, go get that money. It's not automatic.

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