The Internal Revenue Service's delivery of the second round of COVID-19 relief money shouldn't hamper its handling of 2020 returns, which should officially start later this month. So if the IRS can be ready, so can we. So here are a few tax things to think about and take care of. These four tax suggestions are just a few of the things to think about this first month of this brand-spanking-new New Year. You can find more in the January Tax Moves over in the ol' blog's right column.
One such bauble that's getting some attention right now is a proposal to increase next year's cost of living (COLA) bump for Social Security beneficiaries. Earlier this year, the Social Security Administration announced that older folks getting these monthly retirement checks would see them go up by 1.3 percent. On the heels of that announcement was word that the cost of Medicare's Part B coverage, paid by those program's recipients, would go up 2.69 percent in 2021 That government medical coverage for retirees cost increase effectively eats up the small Social Security COLA hike.
In early 2020, 61% of U.S. workers surveyed said that retirement planning makes them feel stressed.1 Investor confidence was continually tested as the year wore on, and it's likely that this percentage rose — perhaps even substantially. If you find yourself among those feeling stressed heading into the new year, these tips may help you focus and enhance your retirement savings strategy in 2021.
Millions of folks who used to go to offices are now working from home. And they, too, are turning some of their attention to home repairs, maintenance and, where they're fortunate enough to have some disposable income, remodeling. Homeownership means maintenance: My project today focused on backyard landscaping. We have a water feature that is, for me, an aquatic Zen garden. I like to go out and clean debris from the disappearing stream and rearrange the rocks that guide its flow. And it's not always just for fun. The key here is the difference, in the eyes of the IRS, between home improvements and home maintenance.
One thing is the same as in previous Decembers. We still need to make some tax moves before Jan. 1. Some December tax moves will demand a little homework and financial calculations. Others will require you to dust off your crystal ball and make some political predictions. All these ancillary actions are necessary to determine what affect certain tax moves will have and whether you want to make them at all.
In 2020, 74% of workers said they expected to work for pay after retiring from their regular jobs, but only 27% of retirees said they had actually done so. This large gap between expectation and reality has been fairly consistent in surveys over the past 20 years, and there is no reason to expect it will change. So it may be unwise to place too much emphasis on income from work in your retirement strategy. Most retirees who worked for pay reported positive reasons for doing so; however, there were negative reasons as well.
If you find you're staying home this year as a health precaution, don't despair. Remember that it's for everyone's good. And there's always Facetime or Zoom if your family is large and really socially distanced. On the tax side, a stay-home holiday means you'll have more time to get started on year-end tax moves. Here are 10 tax matters to consider and, wherever applicable, complete this November.
Market turbulence in 2020 may have wreaked havoc on your investment goals for the year. It probably also highlighted the importance of periodically reviewing your investment portfolio to determine whether adjustments are needed to keep it on track. Now is a good time to take on these five year-end investment tasks.
Medical costs are always a concern, even when you have insurance. And with potential new treatments for COVID-19, it's important to know what your medical policy will cover. It's also good to know how, and how much, some tax breaks can help you meet what seems to be ever-increasing health care expenses. Many medically-related tax laws also are adjusted each year for inflation.
If you earn a decent income but have trouble saving, the culprits could be the roof over your head and the car in your driveway. Retirement savers who contribute more to their 401(k)s often spend less on housing and transportation than their peers, according to a study by the Employee Benefit Research Institute and J.P. Morgan Asset Management.
Tax revenue is critical. It's even more important during a global pandemic when governments worldwide are facing shortfalls due to COVID-19 economic effects. So it's no surprise that tax officials are taking closer looks at possible tax scofflaws. And in many instances, they're getting help from their citizenry.
Recent cases in point come from across the pond. Irish tax officials are getting record numbers of so-called good citizen reports of tax evaders. The United Kingdom's HM Revenue & Customs has boosted payments to those tipping it off about tax dodgers. Part of the reason for Ireland's impressive increase in tax evasion reports is that it makes it easy. The process is electronic, via a website or mobile device. It's not that simple here in the United States. But as in Great Britain, U.S. tax whistleblowers can get paid — and in some cases, handsomely — for their tax cheat reports.
Bridezillas are back. I never watched the show. I get enough of people behaving badly from news programs. But the television ad reminded me of all the weddings that were postponed or reworked to accommodate COVID-19. And that, of course, reminded me of all the tax matters that happy couples need to take care of whenever they finally tie the knot. Below are 10 tax tips for all newlyweds in coronavirus time and beyond.
Whether it's something they've been doing for years or something they just started to make extra money, taxpayers must report income earned from hobbies in 2020 on next year's tax return. What the difference between a hobby and a business? A business operates to make a profit. People engage in a hobby for sport or recreation, not to make a profit.
Here are nine things taxpayer must consider when determining if an activity is a hobby or a business.
Although 76% of U.S. adults say having a will is important, only 40% actually have one. The most common excuse is, "I just haven't gotten around to it." It's probably not surprising that older people are more likely to have a will, but the percentage who do is relatively low considering the importance of this legal document.
Think of a will as one of your final gifts to your loved ones. Yes, it’s not fun to think about your own mortality but you can’t control it: it will happen. What you can control is what happens to your assets. Without a will and other important estate documents, the state in which you die will decide who gets what whether you would have wanted it that way or even if it is prudent (giving a large sum of money to a child who has a drug problem).
Click here to read up on planned giving through wills.
The best state for retirees to live these days is also one many Americans might want to avoid — at least for now. Florida topped the list of the best states for retirees to live, in a recent study from Blacktower Financial Management Group. A quarter of the state’s population is age 60 or older, and it boasts sandy beaches and warm temperatures. The average home price is $252,000, and life expectancy is just shy of 80 years old there, the analysis found. The sunshine state jumped nine places from where it ranked in 2019.
As tax season rolls around, businesses across the country are wondering what deductions they can itemize before they file. Certain businesses have come up with some surprising, creative deductions that have been accepted by the IRS or U.S. Tax Court. Some of these may not apply to your business, but as tax deadlines approach, let's take the opportunity to enjoy the creativity and absurdity of business law. While these are interesting and amusing, be sure to consult your accountant or a tax professional before actually claiming them as deductions.
The Internal Revenue Service today announced that anyone who already took a required minimum distribution (RMD) in 2020 from certain retirement accounts now has the opportunity to roll those funds back into a retirement account following the CARES Act RMD waiver for 2020. The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity.
The longest bull market in history lasted almost 11 years before coronavirus fears and the realities of a seriously disrupted U.S. economy brought it to an end. Bear markets are typically defined as declines of 20% or more from the most recent high, and bull markets are sustained increases of 20% or more from the bear market low. But there is no official declaration, so often there are different interpretations and a fair amount of debate regarding when these cycles begin and end.
though, such as Idaho, have different due dates for state taxes. For federal returns that means June, whose start today is around six weeks from the filing deadline, is essentially March as far as tax moves if you've yet to file your federal taxes. That's why the first of the five tax moves highlighted in this post reverts back to our happier — OK, not necessarily happier, but more predictable — pre-coronavirus tax days.
The American Council on Gift Annuities (ACGA) announced that it will be reducing its suggested maximum annuity rates, effective July 1, 2020. The new rates will be based on a net investment return assumption of 2.75%, a decrease of 0.5% from the current 3.25% net investment return assumption. The ACGA anticipates that, in general, the suggested maximum payout rates will decrease 0.3% - 0.5% at most ages as a result. For example, the annuity for a $10,000 donation is expected to go down $30 to $50 per year.
By now you know that Congress has passed a $2 trillion relief bill to help keep individuals and businesses afloat during these difficult times. Here are five provisions of the CARES Act that may benefit you or your business.
The COVID-19 economic relief payment checks really are in the mail. That means a whole new slew of coronavirus scams also are showing up via phone calls, as well as in people's mail boxes, both electronic and real-life curbside ones. Andrea Avery, a Postal Inspector and National Public Information Office for the agency, tells us more. Here are four common coronavirus scams that Avery and the Postal Service are seeing.