Money Management

You may not be obligated to file a tax return this year. But read on to see why you may want to anyway. [[{“value”:”

For many people, filing taxes is a yearly obligation. But did you know that some people actually don’t have to file a tax return?

Filers with low incomes can generally get out of submitting taxes without being penalized for it. But even if you don’t have to file a tax return, you may want to for one big reason.

Who doesn’t have to file this year?

If you were under age 65 last year, you’re exempt from filing a 2023 tax return if your 2023 income was:

Under $13,850 as a single tax-filerUnder $20,800 as a head of householdUnder $27,700 as a married couple filing jointly where both members were under 65 in 2023 or a qualifying surviving spouseUnder $5 for a married person filing separately (this threshold apples regardless of age)

If you were 65 or older in 2023, you don’t have to file a 2023 tax return if your 2023 income was:

Under $15,700 as a single tax-filerUnder $22,650 as a head of householdUnder $29,200 as a married couple filing jointly where one member was 65 or older in 2023 or a qualifying surviving spouseUnder $30,700 as a married couple filing jointly where both members were 65 or older in 2023

Why you may want to file a tax return even if there’s no obligation to do so

Although you may not be obligated to file taxes, doing so could put money in your pocket if you’re eligible for a refundable tax credit.

As a reminder, a tax credit is a dollar-for-dollar reduction of your IRS liability. Some tax credits can’t do more than reduce your tax debt to $0. But a refundable tax credit could put money in your bank account, even if you owe the IRS nothing.

One refundable credit you may want to look into for 2023 is the Earned Income Tax Credit. Here’s what it takes to qualify for it and what the credit might pay you:

So let’s say that in 2023, you were single earning $13,000. That means you don’t have to file a tax return. But if you have no qualifying children in your household, that income means you qualify for the Earned Income Tax Credit and are eligible for a $600 payday. So all you need to do to get that money is file a tax return for 2023 and claim the credit.

You should also know that filers with an income of $79,000 or less are eligible to file their taxes for free via tax software. And if you have an income that’s low enough that exempts you from filing, you may also be eligible for no-cost assistance through the Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) Programs. So don’t write off the idea of submitting a tax return this year, because it could really end up benefiting your personal finances.

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The SEC believes many cryptocurrencies are unregistered securities. Find out how potential SEC action against Ethereum could impact the industry. [[{“value”:”

The Securities and Exchange Commission (SEC) has issued subpoenas to various companies about their dealings with the Ethereum Foundation, according to Fortune and Bloomberg. The probe has sparked speculation that the SEC may want to label Ethereum as a security.

It is early days, and the SEC has refused to comment. However, this question of how Ethereum is classified could have a huge impact on the whole crypto industry.

Cryptocurrencies: Commodity or security in 60 seconds

Right now, most cryptos are classed as commodities and come under the purview of the Commodity Futures Trading Commission (CFTC). The SEC insists that many cryptocurrencies — including Solana (SOL), Cardano (ADA), and Polygon (MATIC) — are, in fact, unregistered securities.

Here’s how commodities and securities differ:

Commodities: These are physical goods like oil, gold, silver, wheat, and corn. They are often traded as futures contracts on commodity exchanges.Securities: These are investment products like stocks, bonds, and mutual funds. Investors can buy and sell them at stock brokers registered as broker-dealers with the SEC.

If a product is a security, there are strict rules about what information it needs to report and how it can be bought and sold. Hence, a slew of SEC charges against top cryptocurrency exchanges for trading what it’s dubbed “crypto asset securities.”

Why the SEC may think Ethereum is a security

The SEC uses what’s known as the Howey test to determine whether a product could be classed as a security. It says, “An ‘investment contract’ exists when there is the investment of money in a common enterprise with a reasonable expectation of profits to be derived from the efforts of others.”

The SEC doesn’t consider Bitcoin (BTC) to be a security. The decentralized nature of Bitcoin means it does not meet the common enterprise requirement of the Howey test. Plus, it has an anonymous founder who is not involved in the foundation behind it.

In contrast, Ethereum’s figurehead, Vitalik Buterin, is far from anonymous. On top of this, the Ethereum Foundation takes an active role in promoting and supporting activity on the blockchain. If the SEC’s investigators decide this constitutes a common enterprise, it could check one of the four Howey boxes.

The SEC also argues that proof-of-stake (PoS) cryptos offer a reasonable expectation of profits. Staking means participants can tie up their coins and earn rewards for contributing to the network. Ethereum moved to PoS in 2022, which was an extraordinary technological feat. But the fact that investors can now expect to profit from staking their ETH could check another Howey test box.

Why Ethereum’s classification matters

All this talk of commodities and securities may feel like semantics. After all, if you own Ethereum, why does it matter who has oversight? Unfortunately, the answer could transform the crypto industry in the U.S. Here are just two potential impacts.

1. It could change how you buy or sell Ethereum

If Ethereum is classed as a security, we’d see much stricter controls on how you can buy and sell Ethereum. One crypto attorney told CoinDesk it would be “devastating” for American investors. For example, centralized cryptocurrency exchanges are not registered with the SEC. They may have to delist Ethereum, which accounts for almost 20% of the crypto market.

Moreover, it isn’t clear what it would mean for the many cryptocurrency projects and NFT markets that are built on the Ethereum blockchain. They rely on ETH for gas fees and payments. It’s hard to imagine how you’d use a registered security to pay gas fees. Securities aren’t set up to work that way. Imagine you own Apple stock and try to use a fraction of it to buy a coffee or pay a bank fee.

What crypto investors can do

If the SEC decides to pursue a case against Ethereum, be prepared for fallout in both the short and longer term.

If you are a buy-and-hold investor, consider how the regulatory issues fit with your long-term investment thesis for ETH. Not only could it make it a riskier investment, regulatory changes could affect the functionality of the Ethereum blockchain.If you want to hold your ETH, irrespective of any SEC actions, think about storage. In a worst-case scenario, your crypto exchange or broker may restrict ETH trading. How will you manage that? For example, if you’ll move your ETH to a crypto wallet that you control, make sure it is set up and you know it works.

2. Spot Ethereum ETFs look less likely

The more immediate impact of the recent news is that a spot Ethereum ETF is less likely to get the green light. The SEC recently approved several spot Bitcoin ETFs, sparking an influx of institutional money and pushing BTC to a new high. Hopes of a similar Ethereum ETF approval are fading fast.

Bottom line

This isn’t the first time regulators have shaken the security stick at Ethereum. Even so, it’s unlikely, but not impossible, that it will take further action. All we know is that the regulator is asking questions about how the foundation works. That’s a long way from bringing charges and even further from any court ruling, which could take years to play out.

The biggest takeaway for investors is that regulatory uncertainty makes cryptocurrency a more precarious investment. Don’t forget that countries like China have all but banned crypto altogether. Keep your ear to the ground and have a plan so you can act fast if anything changes.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Emma Newbery has positions in Apple, Bitcoin, Cardano, Ethereum, Polygon, and Solana. The Motley Fool has positions in and recommends Apple, Bitcoin, Cardano, Ethereum, Polygon, and Solana. The Motley Fool has a disclosure policy.

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Cruising has become significantly more expensive in the past few years. Check out some ways to try it out for less than you think. [[{“value”:”

Cruising has gotten more popular in recent years, and the cost of cruise trips has increased as well. And it isn’t just the post-pandemic demand surge. In fact, cruise prices are about 20% higher than 2019 levels, according to an analyst from Truist Securities, and pricing for 2025 sailings is even higher.

However, cruises can still be a great way to travel, and there are some effective ways you can potentially save hundreds or even thousands of dollars. Here are four of the strategies I use when booking cruise vacations for my family that you can use as well.

1. Look at off-peak times

While this isn’t a set-in-stone rule, cruises are generally cheaper in off-peak times. And while the definition of “peak” times depends on who you ask, here’s one rule of thumb: Cruises are generally much cheaper when kids are in school. The summer months, spring break, Thanksgiving week, and winter break are some of the busiest (and most expensive) times to cruise. But if you pick a time when it’s not quite as easy for families to get away, it can save you a lot of money.

As a side note, using a third-party travel agent can be a great source for low-cost cruise options. Costco offers low-cost travel options, and its cruise bookings often come with perks like onboard credit.

2. Prepay for as much as you can

If you’re planning to buy a drink package, eat at a premium restaurant, add internet access, or book a shore excursion, all these items can be significantly cheaper if you book and pay ahead of time. On a Royal Caribbean cruise I’ve booked for later this year, the Deluxe Beverage Package costs 25% less if I buy it ahead of time versus on the ship. The premium restaurants are 10% to 20% less.

I could go on, but you get the idea. Prepaying can make your cruise much more affordable, plus it can allow you to budget for things a little at a time, instead of getting hit with one large credit card bill onboard.

3. Book a “guaranteed” stateroom

When you book a stateroom on a cruise, you generally have two main ways to do it. You can choose the exact location of your room, or you can choose the category without a specific room assignment. In other words, you can book “room 7614” or you can book “balcony stateroom guarantee.”

One big tip is that the latter option can be far cheaper. When I booked a recent cruise, choosing a balcony stateroom without a specific cabin number was more than $200 less per person than choosing an exact location. Sure, you won’t have any say regarding where on the ship your room is located, but even if you’re in a bit of an out-of-the-way location, nothing is that far on a cruise ship.

4. Consider a shorter cruise

Many people think of cruises as being six to seven nights at a minimum, and this is certainly the most popular cruise duration. But you might be surprised at the abundance of three- and four-night itineraries that are available.

Royal Caribbean does a particularly great job with this, using some of its newest and largest ships for short cruises. For example, the Utopia of the Seas, Royal Caribbean’s new mega-ship that launches in July, is exclusively sailing short itineraries from Port Canaveral (near Orlando). If you want to try cruising, a shorter cruise might fit into your budget — and allow you to see if you like it before committing to spending a week or more at sea.

The bottom line

Even with the rising prices, taking a cruise can still be an excellent way to travel to several different destinations and enjoy a state-of-the-art floating resort for less than the cost of most land-based vacations. And if you use some of these suggestions, your first (or next) cruise can be more affordable than you think.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.Matt Frankel has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Costco Wholesale. The Motley Fool has a disclosure policy.

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It’s a great thing for your kids to feel empowered to tackle finances on their own. Read on for ways to set them on that path. [[{“value”:”

My husband and I are friends with a couple where both members are in their early 40s and have decent jobs, but not great ones. They also have a massive pile of debt and get loads of personal finance help from their parents.

And that’s not because their parents are wealthy. Granted, I don’t have access to their savings accounts, but my impression is that they’re comfortable enough, but not exactly rolling in dough. Rather, it’s that they know their grown kids need the help, and for the sake of their grandchildren not being raised in a financially disastrous environment, they’re willing to lend a hand as they can.

While we like these people because they’re kind souls, we’ve point blank said that we do not want our own kids to wind up like them. Even though our kids are still fairly young, we’re already doing our best to teach them certain financial lessons in the hopes of setting them up to be independent in that regard from a fairly early age. And if you want your own kids to become financially independent, then here are three moves you may want to make.

1. Encourage your children to earn money rather than ask for it

My children aren’t old enough to be hired by an outside business. But if your kids are, one of the best things you can do for them is encourage them to find work rather than hand them a pile of cash every time they need money.

Earning money can serve as a source of pride. Also, it teaches your kids the valuable lesson of spending mindfully.

Remember, it’s easier to spend $50 you didn’t have to work for. It’s not as easy to blow $50 on a whim when that’s an entire shift’s worth of work you’re giving up.

2. Teach your kids to be very careful with debt

A big reason the friends mentioned above are so financially dependent on their parents is that they’re saddled with debt. One chose an expensive college whose costs aren’t yet paid off. Another pursued a less expensive graduate degree only to not actually go into that field, resulting in additional loans that still need to be paid off. And that’s on top of the giant credit card balances I have to assume they have, since they have a tendency to go on nice vacations every year even though they talk openly about how they can’t really afford to.

If you want your children to be financially independent, teach them early on how important it is to not have to spend money on things like credit card interest. While it’s OK to borrow money for an education, loans of that nature should be taken out judiciously.

By age 18, which is around the age when many people start college, your child is old enough to understand the difference between a $100,000 degree and a $300,000 degree. Encourage them to consider the consequences of debt — including educational debt — very carefully before committing to it.

3. Have open conversations about money and finances

Talking to your kids about money may be outside of your comfort zone. But if you’re not willing to have those conversations, you may be doing your kids a disservice.

Data from Empower finds that 71% of families prioritize teaching their kids budgeting and money management skills. And while my husband and I don’t share the exact specifics of our financial situation with our kids, we do loop them in on the cost of certain things, like vacations or new electronics, so they understand that different experiences and purchases come at a price. The simple act of making your kids feel comfortable talking about money could lead to more financial independence as they venture into adulthood.

Raising children is a costly endeavor. And there should come a point in life when you no longer have to support your kids financially. If you make these moves, you may be more likely to land in that boat.

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If you have any self-employment income, you qualify for special retirement accounts. Keep reading to learn more about your investment options. [[{“value”:”

There are some big drawbacks when it comes to taxes and side hustles, such as the self-employment tax. Since you’re considered both the employer and employee when you earn freelance or gig income, you have to pay both sides of Social Security and Medicare taxes. However, there are also some major tax benefits, such as the ability to deduct business expenses.

Perhaps the best tax break available to self-employed individuals, including freelancers and gig workers, is retirement savings. And if you’re new to the self-employed retirement world, you might not be aware of the options available to you, some of which might let you set aside a lot of income on a tax-deferred basis.

Three great retirement savings options

There are three main types of retirement accounts available for self-employed individuals. Most major stock brokers offer at least one of these account types, and some offer all three.

SIMPLE IRA: The SIMPLE IRA (stands for Savings Incentive Match Plan for Employees) is designed for small businesses and their employees, but self-employed individuals are eligible as well. SIMPLE IRAs have a contribution limit of $16,000 from employees, with a $3,500 catch-up allowance if you’re 50 or older. Plus, since self-employed people are considered employers as well, you can match your own contributions dollar for dollar, up to 3% of your total income.SEP IRA: The SEP IRA (stands for Simplified Employee Pension) is also designed for small businesses and self-employed businesses, but the key difference from the SIMPLE IRA is that all contributions are from the employer, not the employee. For 2024, participants can contribute as much as 25% of their net self-employment income, up to a $69,000 maximum.Solo 401(k): Also known as a “one-participant 401(k),” the solo 401(k) has the same $69,000 contribution limit as the SEP IRA. But up to $23,000 of it can be considered an employee contribution, with the rest designated as coming from the employer, up to a maximum of 25% of net compensation. Plus, if you’re over 50, there’s a $7,500 catch-up contribution allowed.

In addition, it’s important to mention that these are designed to take the place of an employer-sponsored retirement account. So, if you qualify based on your income, you could potentially contribute to a traditional or Roth IRA in addition to one of these.

How much could you save?

To be perfectly clear, it isn’t practical or necessary for many people to completely max out their retirement savings, especially with the high contribution limits of these specialized accounts. Even if you can put $69,000 into a SEP IRA this year, for example, you might not need to contribute this much year after year. But the point is that you have these options available to you that could have a massive impact on your tax bill, and that you might be able to set aside more for retirement than you think.

For example, if you’re single and earn $100,000 in self-employment income this year, you’ll likely be in the 22% marginal tax bracket. Most financial planners (including me) suggest that 10% of income is a good amount to set aside for retirement, so if you were to contribute $10,000 to one of these retirement accounts, it could lower your taxes by $2,200.

A double benefit

As a final thought, it’s important to mention that using one of these retirement accounts isn’t just about saving on your taxes, although that can certainly be a nice benefit. Contributing early and aggressively to one of these retirement accounts, and investing wisely within the account, can have a major impact on your financial security in retirement.

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We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.

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