Money Management

Failing to submit a state tax return could have serious consequences. Read on to learn more about what to expect in New York. [[{“value”:”

Just as it’s sometimes possible to drop the ball on filing your federal taxes, so too might you inevitably drop the ball on your state taxes. But if you’re a New York resident, you should know that the consequences there could be pretty dire. So if you’re sitting on an old tax return you know you need to submit, don’t just ignore the problem.

You don’t want to break the law

There’s a big difference between being late with a New York State tax return and simply blowing it off. If you don’t file a return at all, you could be charged with criminal tax evasion and face costly fines.

You’re generally better off filing your state tax return and not paying your associated bill than not filing at all. If you file and don’t pay because you don’t have money in your checking account to do so, you’ll incur interest and penalties on the sum you owe. But failing to file a tax return can be deemed a felony under New York law.

Being late will cost you

If you’re late filing a New York State tax return, at that point, you’re not necessarily looking at criminal charges. But you may be looking at costly penalties.

Now, one thing you should know is that you can request a tax extension for your New York State return, just as you can request one for a federal return. Doing so could help you avoid a failure-to-file penalty.

Otherwise, that penalty is worth 5% of the amount of state tax you owe per month or partial month your return is late. If your return is more than 60 days late, you’re looking at a minimum penalty of $100 unless you owe less than that based on your return. In that case, you’ll pay the smaller of the two.

Meanwhile, if you’re late paying your state tax bill, you’ll be assessed a penalty of 0.5% of your unpaid debt per month or partial month you owe that money. That’s on top of interest.

As you can see, the penalty for failing to file your state tax return is higher than the penalty for not paying your bill. So even if you can’t pay your state tax bill, at least file your return.

Do you need a tax lawyer for an old state return you never filed?

If you’re a few weeks or even months late in filing your New York State tax return, you may want to consult a tax professional. But you may not need to enlist the help of an attorney. However, if you have a years-long overdue state tax return and an associated tax payment that’s years overdue, that’s a different story.

Basically, any time you’re at risk of being charged with a tax crime, it’s a good idea to consult a tax attorney. If you have an accountant and aren’t sure whether you need further help, ask them. They’ll be able to tell you if the issue at hand is out of their realm and if it pays to seek legal advice.

All told, whether you’re talking about a federal tax return or a state tax return, it’s best to file on time. Being late could have consequences you’d probably much rather avoid.

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Saying yes to a big project helped me reach my payoff goal. Read on to find out a few ways to come up with a debt payoff strategy. [[{“value”:”

For many years, I was consistent with paying off my credit card balance every month, but over the past two years, I hadn’t been as disciplined as I was before. That led to my balance ticking higher until it reached about $7,700, which is only slightly less than the $7,932 the average American had at the end of 2023.

I was slowly paying down the balance each month, but I wasn’t making as much progress as I had wanted. Then, I got a request from a freelance client I hadn’t worked with in over 10 years, asking me to work on a significant writing project.

It was enough additional work to pay off my credit card balance and add some extra cash to my savings account. Thankfully, I can be flexible with some of my other writing projects and was able to complete all the assignments in the one-month window they gave me.

Since I paid off the debt, I’ve been thinking of what I learned and what I would do differently next time. Here are a few thoughts.

1. Say yes to extra work when it comes

I’ve been working as a freelance writer for a long time, so taking on side projects is pretty normal for me. I kept up with some other projects I had going at the same time, which made for about four weeks of long hours, but saying yes to the extra work was an easy decision.

While everyone has a different dollar figure for what’s worth their time, it’s important to evaluate opportunities when they come. Had I said no to this gig, I would have missed out on a big opportunity to improve my personal finances.

Many Americans have gotten used to the idea of working on side gigs, with 45% having a side hustle and about one-fifth of them earn $1,000 or more a month.

With so many people earning additional income from side projects, some Americans may have extra money to put toward their credit card debt, too. If you’re looking to pay down your debt faster, consider signing up for an account on a gig platform to find extra work.

2. Put savings toward debt

If I could change a few things, I would have put more money from my savings account toward my debt earlier. Most experts recommend having at least $1,000 in emergency savings to cover unexpected expenses. I could have left plenty in my account and still paid down some of the debt.

The average credit card interest rate is over 20% now, making paying off large balances difficult, and Americans spend an average of $363 toward paying down their credit card debt every month. If I put the average $363 amount toward my card each month, with a 20% interest rate, it would have taken me 26 months to pay off, and I would have spent $1,880 in interest.

Using a credit card payoff calculator to see how long it will take to pay off your credit card and how much you’ll need to spend every month can be a great tool for creating a debt payoff plan. If I had used a calculator and a debt payoff app earlier, I would have realized I needed to take some money from savings and put it toward paying down the balance earlier.

3. Rethink credit card usage

Over the past year or so, I switched from using my credit card regularly to using my debit card almost exclusively. That change kept me from accumulating even more debt, and it’s one I plan to keep.

My credit card has cash back rewards, which is useful, but I’m willing to give up some of the rewards to keep my balance low. I’m going to return to my old habit of paying off the entire credit card balance each month and keeping the balance down.

One other change I could have made was to apply for a balance transfer card. Many of these cards have an introductory 0% APR, which could have given me a year or more of zero interest. That would have saved me some high interest payments and probably shortened my payoff time.

You don’t need to do it all in one month

You don’t have to tackle your credit card debt in a short period. Putting any extra money, even $50, toward your credit card payment every month is an excellent first step.

For example, if you have $7,700 in credit card debt and put $413 per month to the payment ($50 plus the average $363 payment), you’ll pay off your debt three months faster and spend $282 less in interest than if you stuck with the $363 payment.

It’s also a good idea to contact your credit card company and ask for a lower interest rate. At least half of the people who do so get their rate reduced, and if the company says no, you can then consider a balance transfer card.

Finally, consider using a debt repayment strategy, like the debt snowball method. This strategy prioritizes paying off smaller debt amounts first to help keep you motivated. Having a plan in place will keep you on track and allow you to track your progress.

I know firsthand how frustrating credit card debt can be. And while not everyone’s payoff strategy will be the same, finding additional work and throwing any extra money you make at the balance will go a long way toward your payoff goal.

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A 75- or 100-year-old house may come with charm and beauty — but potentially also expensive problems. Here’s how an emergency fund can save your finances. [[{“value”:”

I’m officially an aspiring home buyer. As I write this, it’s very early in the process for me, and I’ve only viewed a few homes. But as spring arrives in my part of the world, I expect the number of houses on the market to pick up and with any luck, I’ll be able to find one to make my own. I live in a city with a lot of older homes, and based on my budget, I’ll likely be buying one.

As beautiful as older houses are, they also come with a big potential pitfall — higher and more frequent repair costs. Let’s take a closer look at older homes and the best moves you can make to protect your finances in the process of buying and owning one.

Older houses can come with surprises — an emergency fund can help

Why is an emergency fund a lot more crucial when you buy an older home? Simply put, the materials and components used to build them decades ago are often far different from materials used in home construction today. This can be a good thing — imagine the beauty and staying power of hardwood floors made of real wood, rather than a composite, for example. But the converse of this is knob-and-tube electrical wiring or a decades-old furnace lurking in the basement.

Having money in a savings account can help you address problems as they arise — or even take care of them once you take possession of the home (regardless of how old it is). Imagine waking up on a cold winter morning to no hot water, and learning that your old water heater has given up the ghost and needs to be replaced.

Having to put that expense (which could run you an average of $1,300, according to Angi) on a credit card could add financial stress to an already stressful situation. If you could pay for it out of your emergency fund, that would certainly be a happier circumstance. It’s a good idea to save 1% of your home’s value annually for maintenance costs — but if your house is older, saving more would be a safer bet.

A real-life example of the expenses of old homes

I know some folks in my city who bought a 150-year-old home back in 2019. It was purchased and improved by house flippers prior to them buying it, and while some of the additions are nice (new windows save them a ton of money on their energy bills), the flippers neglected to fix some serious problems that have cost my friends a lot of money.

To date, they’ve incurred almost $10,000 in costs to fix a major plumbing problem and first repair and then replace their furnace. Personally, I’m excluding flipped homes from my search for just this reason — sure, new kitchen appliances are nice, but I’d rather feel confident that I’m not buying a house with loads of untreated issues.

My plan for buying an older home

Since I know I’ll be buying an older home, I’m approaching the process strategically. While putting 20% down on a home would save me from paying for private mortgage insurance (PMI) every month, it would also likely leave me flat broke.

So instead of draining my savings account when buying a home, I’m aiming to put down just 10% of the price. This will leave me enough money to cover closing costs and any other bits and bobs along the way to closing on my mortgage. Plus, it should also leave me with a starter emergency fund for any unplanned expenses that come up once the ink is dry on my mortgage paperwork.

A home inspection is a must

I’ll also be getting a thorough home inspection once I find a house to buy and get an offer accepted. In the buying frenzy (and low mortgage rates) of 2020 and 2021, some home buyers unwisely waived an inspection contingency to improve their chances of being able to buy, but I abjectly refuse to do this. It might take me a few tries to get an offer accepted on a house (due to stubbornly low inventory that’s resulted from higher mortgage rates), but I will not be buying a house full of unknown problems — and you shouldn’t either.

If a home inspection turns up issues with a house, it doesn’t mean you can’t still complete the deal with your mortgage lender. It might mean that you should try to negotiate the price you’re paying for the house, or request that the sellers pay to fix the problem, but if you love the house and want to proceed with the purchase, you can. At least you’ll know what you’re getting yourself into.

If you’re joining me on the quest to buy a home in 2024, good luck to you. You’ll never regret having a solid emergency fund under your belt when you become a homeowner.

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It’s important to find the best home for your money. Here are three options to look at this month. [[{“value”:”

Some people are continuing to live paycheck to paycheck these days even in light of cooling inflation. And that’s truly unfortunate. But if you’re someone whose personal finances are in a better place, you may find yourself with money left over this month that isn’t earmarked for immediate bills. And if so, here are three places to consider putting it.

1. A CD

If you need the spare cash you have on hand for emergency fund purposes, then a savings account is the best place to put it. Otherwise, it’s a good time to open a CD.

CD rates remain elevated following a string of interest rate hikes from the Federal Reserve. But the central bank is expected to cut rates at some point in 2024. From there, CDs will likely start to offer lower rates. So it pays to lock in a higher one while you can.

Right now, you may find that you’re able to snag a higher interest rate on a 1-year CD than on a longer-term CD, like one with a three- or four-year term. But you may want to consider a longer-term CD because if the Fed begins cutting interest rates steadily, the CD rates available today may not resurface for a really long time.

2. An IRA

If you’re eager to save money for your retirement, an IRA is a great choice. With an IRA, you’ll get a tax break on your contributions (assuming you stick to a traditional account, rather than a Roth IRA), which can shield more of your income from taxes.

But it’s not necessarily your 2024 IRA you want to save in this month. If you didn’t max out your 2023 IRA, that account is the one worth funding in March.

In 2023, IRAs maxed out at $6,500 for workers under 50 and $7,500 for those 50 and older. And you actually have until this year’s April 15 tax-filing deadline to finish funding your 2023 IRA.

So let’s say you’re 35 years old and you only put $5,000 into your 2023 IRA. If you now have another $1,500 at your disposal, you can add it to that account to shield an additional $1,500 of income from the IRS’s reach.

Meanwhile, let’s say you fell into the 22% tax bracket in 2023. Putting an additional $1,500 into last year’s IRA could result in an extra $330 in tax savings.

3. A 401(k)

If you didn’t max out your 401(k) in 2023, it’s too late to add to that account now. But it’s also a great time to make contributions into this year’s 401(k).

Vanguard reports that 95% of employer-sponsored retirement plans, like 401(k)s, offer some type of matching contribution. So if you put money into your 401(k) this month, you might get a matching sum from your employer. That’s money you can then invest and grow into a larger sum over time.

Let’s say your employer will match up to $3,000 a year in 401(k) contributions, or $250 a month. If you get a free $250 from your employer now and keep that sum invested for 40 years at an average annual 10% return, which is consistent with the stock market’s long-term average, it could grow into over $11,300. And while that’s obviously not enough money to retire on completely, it’s a nice sum to eke out of a $250 contribution — especially one you were given for free.

You have plenty of options for finding a home for your extra money this month. But it especially pays to look at a CD before rates start to drop. And you can also reap a lot of benefits by putting your money into an IRA or a 401(k).

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Tracking your credit card APRs and rewards can help you safely use these tricky financial tools. Read on for a few solid credit card moves to make. [[{“value”:”

During the summer of 2023, American credit card debt reached a massive milestone: $1 trillion. And that balance has only grown as of the fourth quarter of 2023, reaching $1.13 trillion, according to the Federal Reserve Bank of New York.

Whether you already have credit card debt, or you’re looking to avoid taking it on, here are three new habits you should adopt ASAP.

1. Track your APRs

Most credit cards have a variable APR, so the amount that you pay in interest on each account will change over time. That’s why it’s so important to track your credit card APRs. After all, if you, like so many Americans, have credit card debt, you may prefer to prioritize your highest APR card first to save the most money.

For example, if you have a $3,000 balance on a card with an 18% APR, that would cost you $250 in interest over the course of the year, assuming you don’t charge anything else to that card. But a $2,500 balance at a 22% APR would cost $255 in interest over that same time period. While this payoff option (known as the debt avalanche method) isn’t necessarily the best path for everyone, knowing your APRs will still help you figure out the best option for getting out of debt.

2. Pay off your balance more than once per month

Avoiding credit card debt requires you to pay off your balance each month. As a general rule, credit card companies start charging interest if there’s a delay from your billing date to the date the company gets your payment. So, if it’s at all possible, you may want to consider implementing a practice of paying off your balance multiple times each month to avoid interest charges altogether.

This can also help if you already have credit card debt to pay off, since it would guarantee that you’re at least not adding to your existing debt. This is especially true because it can help shift your mindset away from credit cards as a method of instant gratification, and toward the reality that you’re spending your hard-earned money.

3. Re-evaluate the rewards cards you use every quarter

Rewards credit cards can boost your finances by giving you access to discounts on your usual purchases, or sometimes even travel. But not every rewards card is going to provide the same level of rewards, and depending on the cards you have, they can change over time. So it’s important to make sure you know what rewards you have access to in a given month so that you can get the most out of the cards you have.

For example, some cards will offer higher quarterly rewards that you have to opt into. And if one card is offering 5% cash back on groceries, that’s the card you probably want to use to save the most on your weekly grocery purchase. But the next quarter, you may get the best rewards rate from a card that offers a flat 2% cash back offer. You need to be aware of your rewards to maximize their effectiveness for your budget.

How to avoid falling into credit card debt

Avoiding debt isn’t just about paying off your balances — it also means guarding against the need to take on debt in the future. That means building a robust savings account balance. The easiest way to ensure that you’re sticking to that goal is to set up auto-transfers to a separate account that you can access in emergencies, but that isn’t so easily accessible that you’re tempted to dip into it for nonemergencies.

Tracking your credit is another key component here since it can help you secure better interest rates on loans in the future. That way, if you do end up taking out a car or personal loan, for example, you’ll be better positioned to qualify for lower interest rates and thereby save more money.

Credit card debt can be hard to avoid, and harder still to pay off. But if you adopt habits that are designed to ensure you keep up with the payments, minimize interest charges, and maximize the rewards you already qualify for, you’ll be much better off in the long term.

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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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