Earthquake insurance is not just for people that live on a known fault line. Here is what you should be doing to evaluate whether or not you need this separate policy for your home.
Read MoreYes - you can still save for retirement when you are self-employed. From SEP IRAs to Single 401ks, I break down all of your options along with the pros and cons.
Read MoreDisability insurance is necessary for anyone who depends on their income to cover their expenses and savings goals, and would be presented with a hardship if their income was lost.
Read MoreAs someone in a dual-income household with 4 young children, I can't help but chuckle whenever I see lists of things we can be doing while in social isolation. Personally, my husband and I are taking it one day at a time - trying to balance our two jobs, home schooling, and life's continual uncertainties. If, however, you find that you do have time on your hands and enjoy checklists, here are the 5 money tasks that are most often overlooked.
Read MoreMany people are facing pay cuts during this time. The most common that I've heard is a 20% pay cut across the board and a loss of the 401K match. If you are in a similar position, this is what I'm telling my clients.
This is exactly what an emergency fund is for - use it. We will rebuild that savings account when things turn around, and they will turn around. The clients I have spoken to have been hesitant to dip into this because we are disciplined about not touching it, but now is the time. Use it if you need to.
Core savings are your 401k or retirement savings. Continue saving to those accounts. This is a great time to be investing and buying into the market, but for extra mortgage payments, for example, you can scale back. I have quite a few clients that are paying down their mortgage at a faster rate. They want to be debt-free at retirement. Even if you can afford a 15-year mortgage, I recommend you get a 30-year mortgage and then make the extra payments as if you have a 15-year loan to get it paid off earlier. That gives you the flexibility where if something like this happens, you can stop those extra payments and you will not be penalized. So that is an option - to stop those additional savings and additional debt payments that you're making just to free up some cash.
Interest rates are at all-time lows so any debt that you have you can call your service providers. Make sure you understand all of your options. For example the CARES Act that just came through requires all federally backed mortgages to offer forbearance options. Forbearance is not going to penalize you. It's not going to hurt your credit. It's not forgiveness either. It's really just pausing the mortgage. So you can stop paying the mortgage payment, the federally backed student loan payments. You will still owe the same amount, but you do not need to make those monthly payments until a period of time. So make sure you call them - your mortgage provider, student loan provider, auto loan provider, and any other debt service providers.
That will tell us if we need to be reducing expenses further. So if you haven't been tracking your expenses, now is the perfect time to do it. Let's check that cash flow every month. If you're running a deficit, then we need to see where else we need to be cutting.
You still have a job and health insurance. You are very lucky. 10M Americans, and counting, have lost their jobs in a very short period of time. So there is certainly is a lot to be grateful for. 80% of something is better than 80% of nothing.
If you have any questions, please let me know how I can help. Schedule a time to talk to a CFP(R) professional.
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.
Federal returns are due on July 15 instead of April 15 because of the covid-19 crisis. That being said, PWR has already wrapped up most of our returns this year and kept track of the best questions we received.
It depends. State tax refunds are taxable if you received a tax benefit for deducting state taxes last year. In other words, if you took the standard deduction last year, your state tax refund will not be taxable this year. Even if you itemized using the Schedule A and listed your state taxes paid, the refund still may not be taxable because of the $10,000 limit imposed by the TC&JA of 2017. In other words, if your itemized deduction last year would have been the same if you paid in the exact amount of state tax owed, the state refund won't be taxable.
You will receive a 1099R showing the amount distributed from a Traditional IRA. Enter that amount as you would with any 1099R. Then report the Roth conversion on Form 8606, Part II. This will help you compute the taxable amount of the conversion that will flow through to the 1040.
The IRS imposes an underpayment penalty if you do not withhold 90% of the tax due for the current year or 100% of the tax due for the previous year. That 100% becomes 110% if your adjusted gross income (AGI) is over $150,000. There are special rules and exceptions and you can request a waiver with form 2210 if you have a valid reason, such as if you live or work in a federally declared disaster area.
No - if you are eligible for the stimulus check, it will be tax-free. Checks will be issued for $1,200 to each taxpayer and $500 per child. Single filers that earn $75K or less ($150K for married filing jointly) will receive the entire check. Then there is a phase-out, with the benefit being eliminated completely for those with adjusted gross incomes (AGI) of $99K for single ($198K married filing jointly).
Linda Rogers, CFP®, EA, MSBA is the owner and founder of Planning Within Reach, LLC (PWR). Originally from New Jersey, Linda services clients throughout San Diego county and nationwide. She leads the design of PWR's investment portfolios which utilize broad, low-cost investments that integrate environmentally, socially, and governance (ESG) factors.
Planning Within Reach, LLC (PWR) is a fee-only and fiduciary wealth management firm offering one-time comprehensive financial planning, ongoing impact-focused investment management and tax preparation services in San Diego and nationwide. PWR is a woman-owned firm that specializes in busy professionals and impact investors. Planning Within Reach, LLC and their advisors do not receive commissions and do not hold any insurance licenses or brokerage relationships.
"My mutual fund lost money and I didn’t sell any shares. Why do I still have to pay tax on capital gain distributions?" Here's why.
Read MoreThinking of leaving your job to stay home with your child? Make sure you follow these steps before making the move.
Read MoreIf you have a net worth of $500K or more, consider purchasing an umbrella policy.
Read MoreSchedule an initial call to get a personalized quote and speak with one of our CERTIFIED FINANCIAL PLANNER™ professionals.
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