Money Management

Slash your New York tax bill by uncovering five essential strategies for savings. Learn how to keep more money in your pocket. [[{“value”:”

Ah, New York, the Empire State: home to the Big Apple, cascading waterfalls, and, not so proudly, some of the highest taxes in the nation. Whether you’re a city slicker dodging taxis or a country dweller enjoying the serene landscapes, one thing unites all New Yorkers: the quest to lower that pesky tax bill.

Unlike other states that may flaunt no income tax or offer generous deductions, New York tends to take a bigger bite out of your bank account, thanks to its combined state and city income taxes, higher property taxes, and various other levies that can make your financial planning a bit more, let’s say, challenging.

But fear not! With a bit of strategy and a sprinkle of know-how, you can turn the tide in your favor. Let’s dive into five meatier strategies that might just make your tax season a bit brighter.

1. Contribute to retirement accounts

Packing away money into your retirement accounts, such as a 401(k) or an IRA, is like hitting two birds with one stone: You help secure your golden years and slice your taxable income. For 2023, the IRS allows contributions of up to $19,500 to your 401(k) plan, with an additional catch-up contribution of $6,500 if you’re 50 or older.

This can reduce your taxable income dollar for dollar. In New York taxes, where the state income tax rates range up to 10.9%, lowering your taxable income can lead to substantial savings. Don’t forget about IRA contributions, which can reduce your taxable income, albeit with different limits depending on your filing status and income.

2. Harness the power of 529 college savings plans

New York’s 529 College Savings Plan isn’t just a vessel for educational dreams; it’s also a tax-saving powerhouse. Contributions to a New York 529 plan can reduce your New York State taxable income by up to $10,000 for married couples filing jointly and $5,000 for all other filers. The beauty of this plan doesn’t stop there: Earnings grow federally tax-deferred, and withdrawals for qualified education expenses are tax-free. This is especially advantageous in New York, where every deduction counts against the state’s hefty tax rates.

3. Itemize deductions

While the federal standard deduction has become more attractive to many taxpayers, New Yorkers have a unique incentive to itemize SALT (state and local taxes) deductions. Although capped at $10,000 on the federal level, itemizing can unlock deductions for substantial state and local taxes, mortgage interest, and charitable contributions.

With New York’s high income taxes and property taxes, itemizing can be a game-changer, potentially knocking thousands off your taxable income. The catch? It requires meticulous record-keeping and a bit more legwork. But the savings can be well worth the effort.

4. Capitalize on tax credits

New York offers a plethora of tax credits designed to reduce your tax bill directly. From the Child and Dependent Care Credit, offering up to $3,000 for one qualifying individual, to the College Tuition Credit, up to $400 per student, these credits can provide significant relief. Unlike tax deductions, which reduce the amount of income subject to tax, credits reduce your tax bill dollar for dollar.

Navigating the credits available can be complex, but diving into this can result in substantial savings, making a notable difference in how New York’s tax laws impact your finances compared to other states. Tax software can help you determine what you’re eligible for, as can a tax professional.

5. Invest in real estate

The New York real estate market can be as daunting as it is lucrative, but it has tax advantages. Property owners can deduct property taxes and mortgage interest on their state tax returns, similar to federal deductions.

For those considering rental properties, expenses such as repairs, maintenance, and depreciation can offset rental income, reducing taxable income. Given New York’s high property values and taxes, these deductions and the potential for income through appreciation or rental can make real estate investment a strategic move for tax-savvy individuals.

In a state as diverse and tax-complex as New York, saving on taxes requires a blend of strategy, timing, and a keen eye for detail. By leveraging these five strategies, you’re not just saving money but investing in your future, education, and potentially even your own slice of New York.

Remember, the key to maximizing these benefits lies in personalized planning and, when in doubt, consulting with a tax professional who can navigate New York’s tax labyrinth with you.

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Pets can be expensive, and buying quality food costs more than cheap food. Check out what you need to know if you decide to buy cheap pet food. [[{“value”:”

Pet lovers usually see their pets as part of the family. As such, we try to give them the best possible chance for a long, healthy life. But with so many conflicting messages bombarding us, how do we know what’s true about pet food and what’s absolute garbage? Is expensive dog food really better than cheap food, and if so, why?

Cheap pet food

From pet insurance to food, the costs of owning a pet can add up. There’s nothing cheap about being a pet owner, and it’s tempting to pick up the cheapest food you can find. However, cheaper pet food typically contains low-priced fillers, like grains.

RELATED: Insurance Tips & Resources

Here’s how you may see those grains identified on the ingredient list:

Rice flourPotato starchCerealsWheatDerivative of vegetable origin

Evidence suggests that grains cause a pet’s health to deteriorate faster and ultimately shorten its life. This evidence has led consumers to seek grain-free pet food alternatives and invited more pet food manufacturers to hop on the grain-free bandwagon. The problem is that not all grain-free pet foods are created equal. If it’s cheap, there’s probably a good reason why.

Why some pet food is cheaper than others

It’s not always about how many unhealthy ingredients a manufacturer adds to its pet food formula. Some also choose to leave out ingredients that are important to a pet’s health and well-being. These include essential proteins, fats, vitamins, and minerals. High-quality ingredients cost the manufacturer more and can seriously cut into its profits.

Formulating healthy pet food requires extensive expertise, and when a company doesn’t spend the money to hire experts, it passes those savings along to consumers in the form of lower prices.

When the price is right

If you find a pet food that looks good at first glance and the price is right, The Dog Stop suggests checking the ingredients list and avoiding any food that contains:

Butylated hydroxyanisole (BHA) and butylated hydroxytoluene (BHT): Both have been linked to health concerns.Corn syrup and other high-sugar additives: As in humans, sugar can contribute to dental problems and obesity.Artificial colors and flavors: There’s no nutritional value, but either can cause allergies or sensitivities in pets.Rendered fat and meat by-products: These are alternative names for low-quality animal parts.Grains: Can be difficult for some pets to digest and can lead to allergies or sensitivities.Excessive salt content: Can contribute to heart disease and high blood pressure.

What to look for instead

Homeward Pet says we should look for the following ingredients instead:

Meat and fat products identified by species: For example, “deboned salmon meal.”Whole fruits and vegetables: Should be high up on the ingredients list.Grain-free foods, when available: When grains are used, look for whole grains, such as whole brown rice.Organic ingredients: May help your pet lead a healthier life.

You can expect to pay more for high-quality pet food, but you don’t have to empty your bank account to provide healthy food. Ask your veterinarian about the healthiest budget-conscious food they recommend. You may also want to conduct an online search of pet owner discussion boards. No one cares more about finding the right food than a passionate pet owner.

Be careful not to put too much faith in pet food company advertisements, as some can be misleading. For example, a pet food company may claim that its product is 60% protein but fail to reveal that much of it is plant-based and difficult for pets to digest. In other words, count on the opinions of those who don’t have anything to gain by sharing a suggestion.

There’s nothing quite like being a pet owner, and when it comes to something as important as nutrition. Even if you have the best pet insurance on the market, you want to get it right.

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Single folks have plenty of opportunities to save on their taxes. Read on for some helpful tips. [[{“value”:”

Being single can be challenging from a financial standpoint. When you’re a part of a couple, you have someone else to potentially split expenses with, like rent and utilities. When you’re on your own, you pay those bills on your own.

But as a single person, there are plenty of opportunities for you to eke out savings on your taxes. Here are some tips to incorporate into your planning and strategy.

1. Reduce your tax liability by contributing to an IRA or 401(k)

The more money you put into a traditional IRA or 401(k) plan, up to the annual allowable limit, the more of your income you can shield from taxes. This year, IRAs max out at $7,000 for tax filers under age 50 and $8,000 for those 50 and older. With a 401(k), you can put in up to $23,000 if you’re under 50 and up to $30,500 if you’re 50 or older.

The amount of tax savings you reap will hinge on your tax bracket. But if you’re in the 22% tax bracket and contribute $10,000 to a 401(k) this year, it means you’ll save yourself $2,200 by not having to pay taxes on that much income.

2. Know your tax credits

Being single does not automatically mean you won’t be entitled to different tax credits. First of all, you may be single but a parent nonetheless. And in that case, you may be entitled to a number of tax credits related to your children, such as the Child Tax Credit and the Child and Dependent Care Credit, which allows you to claim a portion of your child care costs.

You may also be eligible for the Earned Income Tax Credit, a credit that’s fully refundable and available to lower-income filers. You may be more likely to qualify for the credit if you have kids, but that’s not a requirement.

What’s more, let’s say you’re going back to school in some capacity to further your career — an option that may be easier to pursue when you’re not tied down. You may be eligible for the Lifetime Learning Credit or the American Opportunity Tax Credit. Tax software generally asks questions as you proceed, to see if you’re eligible for credits like these.

3. Run the numbers to see if itemizing deductions makes sense

For the 2024 tax year, the standard deduction for single tax filers is $14,600, up an additional $750 from 2023. It can be especially advantageous to itemize deductions on your tax return as a single filer than as a married couple filing jointly, due to the lower standard deduction threshold.

Let’s say you own a home and pay $12,000 in mortgage interest this year. Let’s say your state and local tax deduction (which includes property taxes) also comes to $10,000. That’s $22,000 in itemized deductions you can take right there, versus a standard deduction of $14,600.

If you were married, your numbers would look different, because in 2024, the standard deduction for married folks filing jointly is $29,200. But if you have expenses to itemize as a single filer, it could result in a lot of savings.

While being single can be a challenge financially speaking, the upside is getting to live by your own rules and prioritize your own goals without having to worry about a partner’s. And if you do your best to maximize your tax savings, you may be able to overcome some of the financial barriers single people tend to face.

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It’s important to know the truth about 401(k) plans and how they work. Read on to learn more. [[{“value”:”

Having access to a 401(k) plan isn’t a given. If you work for a smaller company, you may not have one of these plans available to you. But if your company does offer a 401(k), you may be tempted to sign up. Before you do, make sure you understand the pros and cons of 401(k)s — and that includes getting to the bottom of these lies you may have heard.

1. A 401(k) is the best place for your retirement savings

Since 401(k) plans offer higher contribution limits than IRAs do, you may have been told that they’re your best retirement savings option. But that’s not necessarily true.

This year, 401(k)s max out at $23,000 for savers under age 50 and $30,500 for those 50 and over. But that’s a lot of money to part with. If you’re an average earner, you’re probably not contributing above the current limits for IRAs, which are $7,000 if you’re under 50 or $8,000 if you’re 50 or older.

Meanwhile, 401(k)s limit your investment choices more than IRAs do. With a 401(k), you generally cannot invest your retirement funds in individual stocks, whereas with an IRA, you can. That means you may not be able to build a portfolio that aligns well with your goals and strategy.

Now, one benefit of having a 401(k) is that many of these plans come with an employer matching incentive. You could score some free cash for your retirement by making contributions out of your own paychecks. In that case, it could make sense to fund your 401(k) up to the amount your employer will match, and then allocate subsequent dollars for retirement savings to an IRA.

2. Borrowing against a 401(k) is a great option when you need a loan

Another difference between IRAs and 401(k)s is that with the former, you generally cannot take out a loan against your balance. But many 401(k) plans allow savers to take out loans.

You might assume that taking out a 401(k) loan is a great option when you need money. That way, you don’t have to go through the process of applying elsewhere. And instead of paying interest to a lender, you can simply repay yourself.

But you should know that if you fail to repay a 401(k) loan on time, that sum will be treated as a full-fledged distribution. If you’re not yet 59 1/2 years old, that will then result in a 10% early withdrawal penalty.

Plus, while you might initially have a longer window to repay a 401(k) loan, once you separate from your employer — voluntarily or otherwise — your repayment window might shrink to just a couple of months. The specifics will depend on your plan, but the point is that taking out a 401(k) loan is risky — and it’s something you may want to avoid.

Remember, too, that if you don’t repay a 401(k) loan, you’ll have less money available for your senior self in retirement. That could hurt you financially down the line.

3. Mutual funds are the best option for investing your 401(k)

Since you can’t invest a 401(k) in individual stocks, your options are generally a mix of different funds. You may have heard that mutual funds are the best place to put your money if you have a 401(k). But the problem with mutual funds is that they tend to charge high fees, known as expense ratios, that can erode your 401(k)’s returns over time.

Instead of loading up on mutual funds, consider putting your money into index funds, which you’ll commonly find in a 401(k). Index funds are passively managed, so their fees tend to be considerably lower than what mutual funds charge. Plus, historically, index funds have managed to outperform their actively managed mutual fund counterparts, all the while saving investors money on fees.

If you’re going to save for retirement, it’s important to find the right home for your money and the right investments within that account. Don’t buy into the notion that a 401(k) is automatically your best choice, and don’t assume that within a 401(k), mutual funds are your best option. And for the sake of your future financial comfort, resist the temptation to borrow against your 401(k), even though it might seem like a savvy move at first.

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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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CDs are stable assets that appreciate without input, making them worth a second look. Read on to learn more. [[{“value”:”

These days, we have more access to information to help guide our investing decisions than ever before. There are a wide range of places to park our money. Cryptocurrencies are dramatic, stocks can be solid dividend payers, and even savings accounts are paying out a lot more than they used to.

So why would you ever choose a certificate of deposit (CD) out of all the options you have?

Certificate of deposits aren’t sexy

If you ever read my commentary at Fool.com, you already know that I am an enormous fan of the unsexy stocks. I love investments that don’t get my heart pounding, that don’t end up in the news every day, that don’t even create a blip on most people’s radars. I love unsexy stocks, but I also love other unsexy investments.

And you know, when it comes to unsexy investments, CDs are it. They’re the trash collection companies of the savings world. You put money in, money comes out at some point down the road, depending on the length of your CD term. When the federal funds rate is high like it is right now, CDs are one of your better choices.

Four advantages of CDs

The advantages of CDs are abundant, and include the following.

1. You’ll get a guaranteed pay-out at the end of your term

There’s no guesswork. You don’t have to wonder if the market will shift, changing the value of your investment. You put your money in, you’re promised a 5% CD interest rate, and at the end, you get your money back, plus a 5% return rate. It’s really that easy.

2. Your money is locked in, so you’re incentivized to not spend it

For a lot of people, saving is hard because the temptation to use that money can become overwhelming the more they manage to amass. After all, it’s only $500 against your $5,000 savings account, what harm is there? Oh, and this is only $100 against your (now) $4,500 savings account…and repeat this until you’re suddenly out of money. CDs lock your money in at your bank, where you’re encouraged to leave it alone to maturity. If you don’t, you’ll pay a penalty.

3. It takes very little to open a CD in a lot of cases

The minimum CD value at any given bank can be pretty different, but if you’re not hoping to hold your CD at a particular bank, you can find CDs with minimum deposits as low as $0 with products like the Barclays Online CD. That means if you’ve got $100 or you’ve got $10,000, you can open a CD somewhere (Barclays pays 5% APY for a 1-year CD, so you still get a nice rate of return, too).

4. CDs are truly passive investments

I deal a lot in the Exciting World of Real Estate (™), where buying portfolios of rental properties is considered to be “passive income.” There’s no way on this Earth that rental properties, or other physical real estate (REITs notwithstanding) are passive investments. You’re out there all the time helping tenants with problems, making repairs, finding new tenants, looking for new units, and so on. It’s about as anti-passive as you can get.

But a CD is nothing like that. It’s “park your money and go off and do whatever” level of passive. You have just one time per cycle that you have to even care about your CD, and that’s at maturity, when you either take your money or reinvest it in another CD. That’s the entire decision. The rest of the time, the money just sits there, growing like a financial fungus in the back of your refrigerator.

Every investor should consider CDs in their portfolio

No matter what kind of investor you are, a certain percentage of your portfolio should be entirely safe, no-lose investments. CDs can balance your risk against, say, crypto or investments you’ve made in tech startups.

But even if you don’t get into really dangerous waters with your money, CDs can still be useful tools. Because of the forced savings aspect of them, your money is locked away, safe from you, during the initial urge-to-spend period. You can’t spend what you can’t touch, and for many people, that can be a huge advantage and a way to get started with a solid rainy day fund.

When you get your tax refund, for example, putting $500 or $1,000 in a CD that’ll mature in six months or a year can not only generate a bit of a return but also stop you from frenzy buying. (This is not a judgmental statement — I gobble up Black Friday sales like Pac-Man eats dots.)

No matter how experienced an investor you are, there’s room for CDs in your portfolio. CDs are almost entirely upside. That’s it. The end.

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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.Kristi Waterworth has no position in any of the stocks mentioned. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.

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A specific savings account could help you pay the IRS less this year. Read on to see what it is and whether you’re eligible for it. [[{“value”:”

At this time of the year, a lot of people have taxes on the brain. And whether you’re looking at getting a refund or having to write a check to the IRS, you may be focused on doing what you can to save money on your taxes going forward.

RELATED: Best Tax Software

There’s one account that can help you not only shield some income from the IRS but also enjoy tax-free investment gains and tax-free withdrawals. But you need to meet certain requirements to sign up for it.

The benefits of HSAs

People tend to confuse health savings accounts (HSAs) with flexible spending accounts (FSAs). But they’re actually quite different from one another.

Both accounts let you contribute pre-tax dollars to cover qualifying medical expenses. So putting $1,000 into either account means you don’t pay taxes on $1,000 of income.

But with an FSA, you can’t invest unused funds. And you generally have to use up your balance each year or risk forfeiting some of the money you’ve saved.

With an HSA, you can invest unused funds. And you don’t have to deplete your plan balance every year. In fact, you’re actually encouraged not to tap your HSA every time medical bills arise, because if you have money in your account that stays invested, you can enjoy tax-free gains. Plus, HSA withdrawals are not taxed as long as that money is used to cover qualifying medical bills.

Are you eligible for an HSA?

Qualifying for an FSA is much easier than qualifying for an HSA. For the latter, your health insurance plan has to meet certain requirements that can change from one year to the next.

In 2024, your health plan needs a minimum deductible of $1,600 if you have self-only coverage (meaning, it’s just you on your plan), or a minimum deductible of $3,200 for family coverage (meaning, you plus at least one other family member). Your health plan also needs to have an out-of-pocket maximum of $8,050 this year for self-only coverage, or $16,100 for family coverage.

If your plan meets one of these requirements but not the other, an HSA is off the table this year. However, it may be an option in the future. It pays to check your eligibility every year.

Don’t assume that being eligible for an HSA one year renders you eligible the following year. Even if you stay on the same health plan, HSA rules can shift from one year to another, so it’s important to always check.

Take advantage if you can

HSAs are an extremely helpful and flexible savings tool. It pays to not only sign up if you’re eligible, but contribute as much money as possible.

This year, HSAs max out at $4,150 for self-only coverage if you’re under age 55, or $5,150 for self-only coverage if you’re 55 or older. For family coverage, the limits are $8,300 and $9,300, respectively.

Even if you can’t max out your HSA, putting any amount into one of these accounts can serve as a nice tax break. So it pays to enjoy that savings if you can.

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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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