You have a lot to do, and which you'd rather be doing, this month. But also take some time to check out a few December tax moves. (Photo via Unsplash+ in collaboration with Getty Images) It's December! Are you ready for all the decorating and shopping and cooking and parties and tax moves to make? Me neither. Although I love the holidays and Christmas decorating, my time and patience get shorter this time of year as my seasonal to-do list gets longer. So I understand if you are rolling your eyes right now as I suggest adding some tax moves... Read more →
Retirement
Are you enjoying Thanksgiving? I hope so. And if your Turkey Day celebration extends, like it does for most of us, into Friday and the weekend, Happy Beyond Thanksgiving! But when you're ready (or forced) to get back to your regular routine, you might want to make time to consider the items in the box below: five tax turkeys and how to avoid them. A few relatively easy tax moves in these areas could help make your tax life easier. 2023's Tax Turkeys 🦃 🍗 🦃 to Avoid Not adjusting your incorrect withholding Not collecting your employer's maximum 401(k) match... Read more →
Photo by Jon Tyson on Unsplash Taxes are all about the numbers, and this past week I've been posting inflation-adjusted figures that apply to a variety of tax provisions. Long-time readers know I parcel the numbers out in a 10-part series. But one of those posts, Part 3 on cost-of-living boosts in 2024 for tax-favored retirement savings plans, was published first because the Internal Revenue Service typically issues those adjustments first. Since that earlier Part 3 post hasn't gotten a sequential mention during this recent run of inflation series posts, I'm boosting it today. And I'm pulling out an item... Read more →
Taking advantage of these inflation-adjusted tax breaks could put more money in your pocket instead of Uncle Sam's bank account. (Photo by Sasun Bughdaryan on Unsplash) Each of our tax situations is unique. But every taxpayer can agree on one thing. We all want to pay the least amount of tax as possible. That universal goal can be reached by taking advantage of tax deductions, tax credits, and income exclusions. Deductions, like the standard amounts discussed in Part 2 of the ol' blogs annual tax inflation series, are a relatively easy, and popular, way to reduce a tax bill. Deductions... Read more →
Substitute a cat for the dog, and that's pretty much how the hubby and I envision retirement! (Photo: Unsplash+ in collaboration with Getty Images) OK, boomer. When that catchphrase meme went viral a few years ago, it marked the end of friendly generational relations. It also could be seen as a wake-up call to retirement savers. With Social Security already facing financial challenges, many point to the added challenges that Uncle Sam's retirement program faces as even more of the Baby Boom generation retires. Congress has yet to address Social Security's future. Of course, the House and Senate seem to... Read more →
Getting your tax ducks in a row takes on a different meaning, and bird, in November. But whatever fowl you choose for the metaphor, make some time this month to complete tasks that will prevent tax turkeys. (Photo by Mohan Nannapaneni) Hello, November! We welcome cooler (but not cold!) temperatures, holiday feasts (yes, I love pumpkin pie), and seeing family and friends for the first time in, well, months. This penultimate month of the year is also a good time to tackle some tax tasks. I know, you already have a lot on your November to-do list. But check out... Read more →
Confused about your workplace benefits options during open enrollment? Your answers to the following questions could help. (Photo by Priscilla Du Preez 🇨🇦 on Unsplash) Millions of U.S. workers are now deciding what workplace benefits they want in 2024. Many during this annual open enrollment period simply re-up the options they chose last year. I get it. It's easy. But you could be costing yourself, both in out-of-pocket cost and tax savings. So, before you make a final decision, ask yourself the following questions. 1. Will your company help your repay your student loan? College costs and the debt that... Read more →
The coming wage base bump also means more FICA taxes for higher earners. It looks like this man got the good news that his Social Security benefit will be larger next year. However, the tax news for high earners who are still working isn't as welcome. (Unsplash+ in collaboration with Getty Images) The Social Security Administration (SSA) gave 71 million benefits recipients good news today. Next year, they'll get a 3.2 percent increase in their Social Security retirement benefits and Supplemental Security Income (SSI) payments. The cost-of-living (COLA) bump means that retirees will, on average in 2024, see more than... Read more →
You have a lot of responsibilities when you're self-employed. One includes making contributions to your retirement plan, which in some cases can be done as late as your filing extension deadline. (Unsplash+ in collaboration with Getty Images) Most IRA contributions must be made by Tax Day. For the majority of taxpayers this year, that deadline was April 18. But if you're self-employed and got an extension to file your 2022 tax return, you also got an extension to contribute to your entrepreneurial endeavor's retirement plan. That deadline, in case the days have slipped by you, is this coming Monday, Oct.... Read more →
Relax! An IRS change should help those 50 and older who make catch-up contributions to their workplace retirement savings plans. (Photo: Unsplash+ in collaboration with Getty Images) The second version of the Setting Every Community Up for Retirement Enhancement, or SECURE 2.0, Act was lauded for its many retirement-saving positive provisions. But as often happens with tax-related legislation, especially when it becomes law at the very end of a year, there were some not so good changes. That was the case with SECURE 2.0, which was enacted on Dec. 29, 2022, as part of the much larger Consolidated Appropriations Act.... Read more →
Photo by Shubham Sharan on Unsplash Public schools in my part of Austin will welcome students on Aug. 16. Yeah, that's next week. Many universities also will begin classes this month. That leaves a small window now for some school-related tax lessons. So here's a crash course on eight educational tax breaks. Some help cover kindergarten through high school graduation costs. Others apply only to higher education expenses. There's even some federal tax help for post-graduation folks looking to improve their work skills. Let's start with two popular tax credits, since they offer dollar-for-dollar tax savings. American Opportunity Tax Credit:... Read more →
Retirement finances are looking better for many older Americans, according to a recent investment company survey. However, they still haven't stashed the amount they say they expect to need to turn their post-work time into truly golden years. The average amount U.S. adults have saved for retirement reached $89,300, according to Northwestern Mutual's 2023 Planning & Progress Study. That's a 3 percent increase from 2022's average retirement savings level of $86,869. Survey participants, however, said they will need much, much more to retire comfortably. The amount to live like they want is $1.27 million. That was up from the $1.25... Read more →
Three years ago, the COVID-19 pandemic shut down summer. It wasn't just recreational activities that took a hit. Lots of people lost income, even their entire jobs, as businesses closed to help slow the coronavirus spread. Several laws were enacted to help companies and individuals deal with the financial problems created by COVID and our response to it. One of the early ones was the Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion relief package that took effect on March 27, 2020. Now, many people are facing a deadline in connection with one of the CARES Act's... Read more →
Grandparents attending graduation ceremonies are a wonderful family tradition. Now a coming tax law change will create another meeting of education and retirement, this time affecting two tax-free savings plans. (Photo by RDNE Stock project) Many of us face a dilemma when it comes to two of the biggest reasons for saving, retirement and education. Do we split our extra income between the two? If so, evenly or with one account getting a boost? Or do we defer one for the sake of the other? The answers will depend on your personal financial and family situations, as well as your... Read more →
Photo by Juan Ramos on Unsplash May is graduation month. It's also graduate gift giving time. Money is always tight for the new diploma recipients (and their families), regardless of whether they've completed high school or college. That's why financial gifts are always welcome. One of those graduate gifts for students looking to continue their school days is a contribution to their 529 plans. And one source of those contributions could be, for older savers, their required minimum distributions. Quick 529 overview: These savings plans, named from the Internal Revenue Code that created them, originally only covered higher education expenses.... Read more →
Photo by Gustavo Fring Millions of Americans are worrying about the damage to their retirement accounts if the United States (aka Congress) defaults on the country's debt. But there's another retirement fear that could put federal and state governments on the hook for trillions more dollars. Many Americans aren't saving enough for retirement, and new research says that if the trend continues unabated, the country could by 2040 face a retirement savings gap and resulting economic burden of almost $1.3 trillion. The federal government would bear the bulk of the saving shortfall, $964 billion. The remaining $334 billion burden would... Read more →
Image by www.epictop10.com via Flickr CC Now that Tax Day is over for many of us, it's time to make some moves for the 2023 tax year and beyond. Well beyond for many is retirement. The Internal Revenue Code offers a variety of tax breaks for savings designated for post-work years. One of the most popular is the individual retirement arrangement, or IRA. IRAs come in two versions, traditional and Roth. Pre-tax money goes into a traditional IRA, and in some cases the contribution is tax deductible. But when you get into your 70s, you must take required minimum distributions... Read more →
Photo by Nicola Barts If you turned 72 last year and didn't take your first required minimum distribution (RMD) by Dec. 31, 2022, you have a few days to take the mandatory withdrawal. April 1 is your deadline to take out the specified amount from your tax-deferred retirement savings account(s). This year, however, is the last one for the age 72 RMD trigger. The latest retirement law changes in the Setting Every Community Up for Retirement Enhancement (SECURE) Act 2.0 changed the RMD starting age to 73. However, there's been a bit of confusion about the change. Some people have... Read more →
Blinders may work for horses, but they're terrible for taxpayers who might miss out on some tax savings. (Photo by Graham Ruttan on Unsplash) The Tax Cuts and Jobs Act's expansion of the standard deduction amounts means even more taxpayers are using that filing method. Most think that since they don't itemize, they don't need to worry about tax breaks. They're wrong. There are the above-the-line deductions, officially known as adjustments to income, that anyone can take (if they qualify), regardless of whether they take the standard deduction or use Schedule A. Then there are some tax credits, again available... Read more →
If you're in your seventies, it's time to start preparing for nest egg withdrawals, some of which are required by federal tax law. A couple of new retirement laws over the last few years, collectively known as the Setting Every Community Up for Retirement Enhancement (SECURE) Acts, have made a lot of changes to retirement plans and the collection of associated taxes. One revision was the bumping up the date when most older owners of tax-deferred retirement accounts must start taking some money from these savings. Starting in 2023, required minimum distributions, known by the acronym RMDs, don't kick in... Read more →