Kiplingers Personal Finance

42 KIPLINGER’S PERSONAL FINANCE^ 05/2017

MONEY

If you don’t qualify for a subsidy, your

cheapest option may be a short-term

policy, says Anthony Kavouras, of

eHealth (where premiums averaged

less than $120 per month in 2016). But

these policies don’t typically cover pre-

existing conditions, preventive care or

maternity care, and most don’t cover

prescription drugs, he says.

Calculating equity in a car lease. I’m about

to turn in my leased Mazda. My three-

year lease allowed 10,000 miles per year,

but I’ve driven the car a total of only

16,000 miles. Does this give me any

negotiating leverage?

M.S., Washington, D.C.

It might, says Ron Montoya, senior con-

sumer advice editor for Edmunds. Ask

your leasing company for your payoff

amount, then get the car appraised by

a third party, such as Carmax. If the

appraisal is more than the lease’s pay-

off amount, you could sell the car and

make a small profit on the difference.

Or you could take the appraisal to the

dealer and see if it will match the offer,

then use the extra money as a down

payment on another car.

Social Security survivor benefits. My

husband and I were both receiving

Social Security benefits when he died

recently. Do I need to apply for survivor benefits, or will I

get them automatically?

N.D., Dallas

If you’re already getting benefits on your husband’s record,

you generally don’t need to apply for survivor benefits;

Social Security automatically makes the change. But if you

are receiving benefits on your own record, you’ll need to

file in order to switch to survivor benefits. You can get them

as early as age 60, but they’re reduced if you’re not yet full

retirement age (now 66). See http://www.ssa.gov/survivors. ■

LISE METZGER

KIMBERLY LANKFORD Ask Kim

How Long to Hang on to Tax Records

It’s a good idea to keep your returns

indefinitely, but you can generally toss

supporting tax records three years

after the tax-filing deadline, which is

the time the IRS generally has to initi-

ate an audit. The audit period extends

to six years if you underreport your

income by 25%, so Jeffrey S chneider,

an enrolled agent in Port St. Lucie, Fla.,

recommends holding on to your records

for at least seven years.

Keep any investment purchase re-

cords at least three years after you sell

the investment. Hold on to Form 8606,

for nondeductible IRA contributions,

until all your IRA money is withdrawn.

For future tax seasons, check out

H&R Block, TaxAct and TurboTax, all

of which have tools to help you upload

and organize your tax records digitally

during the year.

Short-term health coverage. I’m switching

jobs and won’t have health insurance for

two months. How can I get coverage?

S.M., New York City

You can continue your coverage

through the federal law known as COBRA for up to 18

months, but you’ll have to pay the full premiums, including

the employer’s share (often 70% of the cost), plus up to 2%

extra. You have 60 days to sign up for COBRA, so you could

wait to see if you need it and get the coverage retroactively

if you do; in that case, you’ll have to pay all of the premi-

ums due since you left your job.

You also have up to 60 days after leaving your job to buy

coverage on your state insurance exchange (find links at

Healthcare.gov). That coverage is not retroactive. Estimate

your annual income (including the two months without a

job); if it’s less than $47,520 for an individual or $64,080

for a couple, you’ll get a subsidy to help with premiums.

The IRS generally

has three years

after the tax

deadline to initiate

an audit, but it’s

six years if you

underreport

income by 25%.

GOT A QUESTION? ASK KIM AT [email protected]. KIMBERLY LANKFORD ANSWERS MORE

QUESTIONS EACH WEEK AT KIPLINGER.COM/ASKKIM.

HOW LONG DO I NEED TO KEEP

my tax records in case I get audited?

What can I do to start organizing my

2017 tax records now?

R.Y., Tucson, Ariz.