Money Management

Omitting income on your tax return can lead to an audit. Here’s what to do if you forget to include income. [[{“value”:”

Humans are prone to mistakes, with some mistakes seeming a bit worse than others. For example, forgetting to add dill to a cucumber salad may be irritating, but it’s no big deal. Forgetting to include income while filling out a tax return feels much larger. The good news is this: Tax-related mistakes can easily be corrected. Here’s how.

When it’s you who realizes you’ve forgotten to include income

Imagine that you’ve filed your tax return for the year, and you’re pretty pleased with yourself. You’re nearly asleep one night when you suddenly remember a small bonus or extra paycheck that you forgot to include on your return. You spend the next hour worrying about the odds of being audited and how much this little snafu will cost you.

The IRS processed more than 162 million tax returns last year. One mistake on a single return is unlikely to set off alarm bells in IRS headquarters.

Despite stories to the contrary, the IRS is not out to get anyone. The agency simply counts on taxpayers to be as honest as possible and to take care of mistakes when they’re made. As soon as you realize there’s a mistake on your return, you can make it right by using Form 1040-X, Amended U.S. Individual Income Tax Return. A full set of instructions should walk you through the process, but if you’re concerned and have questions, you can call the IRS at 800-829-1040 for answers 24 hours a day.

By the way, this advice applies to more than forgetting to add income. If you suddenly realize that you’ve left something off your return, used the wrong filing status, or claimed a credit you weren’t entitled to, filling out Form 1040-X is the best first step.

Pro tip: Your best bet is to wait until you receive all the documentation you need to file taxes correctly. For example, if you’re employed, wait for your employer to provide you with a W-2, and if you’re a freelancer, wait for those 1099-MISC forms to roll in. While it may be tempting to estimate your income based on check deposits (or memory), it’s easy to forget something without the forms you need right in front of you.

When the IRS finds the mistake

Let’s say you operate a home daycare and forgot to include income for a child you only watched for a few weeks. It’s possible the IRS will flag that error when the child’s parents file it as a child and dependent care expense. In that case, the IRS is likely to amend your return to include the income and adjust your taxes due accordingly.

Once the IRS has flagged a mistake or made an adjustment to your return, it will send you a notice letting you know what it has done. You have the right to agree with their action or to appeal the decision.

Given the fact that 16% of Americans believe it’s okay to cheat on their taxes, it’s easy to believe the relationship between the IRS and taxpayers is adversarial, but that’s generally not the case. Not only will the IRS let you know it’s caught a mistake, it will tell you what you need to do to appeal its findings. In other words, the IRS is just trying to get it right.

Pro tip: You have every legal right to appeal an IRS decision and should appeal if you believe the tax agency has gotten it wrong. However, if you’re counting on a refund, keep in mind that an appeal will slow the speed at which it hits your bank account.

The U.S. tax system is famously complicated, and the IRS is aware that we sometimes make mistakes. The best thing you can do when you’ve discovered an error is to take steps to make it right.

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Some savvy moves on your part this month could leave you richer by the end of the month. Read on to learn more. [[{“value”:”

Whether you’re feeling confident about your personal finances these days or have been just covering your bills, it’s a good thing to try to eke out savings on a monthly basis. But if you’re currently spending the bulk of your paycheck, you might assume that you’re not going to manage to save much in March. These moves, however, could leave you with a more robust savings account balance by the end of the month.

1. Do a services and subscription audit

Do you know how many different services and subscriptions you’re paying for right now? Maybe not. Recent Motley Fool research found that 47% of respondents spend more than $30 a month on video streaming services. And 46% of respondents are subscribed to more video streaming services now than they were a year ago.

If you’re currently spending, say, $35 on streaming services you aren’t really using, why not cancel ASAP and avoid losing that money this month? And while you’re at it, cancel the online magazine subscriptions you don’t really read and the monthly subscription dog toy box you receive. Chances are, your pup will be content with just a box to play with (er, destroy).

2. Shop for food yourself instead of using meal kits

Meal kits are often touted as a lower-cost alternative to restaurants and takeout. And that may be true. But it can still be a lot less expensive to grocery shop yourself, especially if you frequent discount grocers like Aldi or you’re able to strategically load up on bulk grocery items by shopping at a store like Sam’s Club or Costco.

Now you may like the convenience of getting meal kits delivered that give you all of the ingredients you need in a single box. But you can easily emulate that convenience.

Just look up a couple of basic recipes for the week online, make a concise shopping list, and stick to it. And if you like the time savings of not having to go to the store, order your ingredients to be delivered. Even with the added fee, it might still be cheaper than using meal kits.

3. Rethink your kids’ spring activities

In the coming weeks, your kids might ask to sign up for a host of spring sports and activities. But not saying yes to every single request could result in some nice savings for you.

Data shows that youth sports alone cost the average U.S. family almost $900 a year. Ouch. So maybe this spring, your kids don’t need to sign up for baseball and soccer and lacrosse. Maybe they can pick one sport to focus on at a time. Doing so might work wonders not just for your wallet, but also, your schedule.

By the time you get done covering your bills most months, there may be very little money left over for savings purposes. But you can potentially boost your cash reserves in March by auditing your subscriptions and canceling ones you don’t need, ditching meal kits, and limiting the spring activities your children sign up for.

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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.Maurie Backman 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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China is one of the world’s largest countries and it has a big problem. See how this affects your finances. [[{“value”:”

One of the biggest changes in the global economy in 2024 is something that lots of Americans might not realize: China is struggling. The Chinese economy is going through a real estate downturn, a slowdown in consumer spending, and is now experiencing deflation. Instead of experiencing high inflation like America had in 2021–2022, China is going through the opposite problem: “deflation” means falling prices.

Let’s look at why China’s deflation is happening, and what it might mean for your personal finances in 2024.

What deflation means for China’s economy

With an economy going through deflation, that means everything is getting cheaper. That might sound like a good deal at first — lower prices for all! The truth is, deflation is a big problem for economies. It means people have stopped spending because they’re afraid of the future and they want to hold onto their money.

When businesses can’t sell their products, they lower their prices. But if prices keep getting lower, people have less incentive to spend — they say to themselves, “I’ll just wait until next month when the price is even lower.” This can become a downward spiral or “deflationary spiral” that causes the entire economy to get worse.

Too much inflation can be bad, and no one likes paying higher prices for food and car insurance. But some inflation, at a manageable level, can be good. When prices go up a little, year after year, it’s like built-in fuel for the economy. A healthy amount of inflation gives consumers an incentive to keep spending, and employers an incentive to keep offering pay raises.

Deflation is not healthy; it’s a sign of weakness in the economy. If deflation continues for too long, it can make everyone’s incomes go down and make everyone poorer over time.

Why China’s economic problems could be good for your wallet

If you’re an American, unless you work for a company that does business in China, the recent deflation in the Chinese economy could potentially be good news for your bank account. That’s because lower prices in China might lead to lower prices in other countries — including America.

For example, Chinese people are buying significantly less pork during their recent economic uncertainty. This is driving down pork prices in China. Since the U.S. exports a significant amount of pork to China, lower demand for pork in China could help drive lower prices for pork at U.S. grocery stores.

Chinese car prices have gone down, Chinese companies are using less energy, and Chinese factories are also cutting the prices of their products, due to slow demand in China. This means that any manufactured goods that come to the U.S. from China might also see lower prices. Oil prices all over the world could go down a bit because of slower demand from Chinese buyers. As an American shopper, your grocery prices, gasoline prices, and the price of anything you buy that’s made in China, or has parts made in China, could get cheaper in 2024.

How China’s economy could help the Fed cut interest rates in 2024

One of the biggest debates in the U.S. financial industry in recent months has been, “When will the Federal Reserve cut interest rates?” Lower interest rates would reduce Americans’ cost of borrowing and potentially help new homeowners. Cutting interest rates in 2024 would be a signal from the Fed that America’s economy is ready to grow, that investors can take risks with greater confidence, and that the post-pandemic time of inflation and “vibecession” is over.

China’s deflation could actually make it more likely for the Fed to cut interest rates in 2024. That’s because, if everything is getting cheaper in China, China’s economy has weak demand for commodities like pork, steel, lumber, and oil, and Chinese consumers are reluctant to spend money, then China will not only be exporting manufactured goods — China’s economy will be exporting deflation.

The sheer size and power of China’s economy can create spillover effects throughout the world. When China is having trouble with deflation, this can (ironically) help undo some of the inflation that is happening in other countries. It’s like a safety valve that relieves pricing pressure, like a rebalancing of the global economy.

If China’s deflation continues into mid-2024, it could help drive down global prices enough to reduce America’s inflation — and give the Fed confidence to cut interest rates as soon as June 2024.

Bottom line

No one knows for sure what will happen next in the global economy. China’s economic troubles are painful for Chinese people and international companies that operate in China. But China’s deflation could be arriving at just the right moment to be a bit of good news for American consumers, borrowers, and stock market investors.

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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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Homeowners insurance may pay for a new roof, but only if the damage is caused by a covered peril. Here’s how to find out if a roof is covered under insurance. [[{“value”:”

A new roof is expensive, with the average cost coming in at around $10,000, and some roofs costing much more (mine cost me over $40,000 when I replaced it recently!)

With such a big price tag, many homeowners worry about how they are going to pay for a new roof unless they have a lot of money in savings. It’s common for property owners in need of a roof to wonder whether there’s a chance their homeowners insurance policy might cover it.

While homeowners insurance is designed to help people cope with huge repair and replacement costs, this unfortunately does not necessarily mean it will pay for a roof. There are situations when an insurer will foot the bill, but there are also plenty of circumstances when it won’t.

Here’s what property owners need to know to determine if their roof will be covered by their homeowners insurance policy.

Roof repair for wear and tear is never covered

The first and most important thing that property owners need to be aware of is that homeowners insurance will never cover a roof that is damaged due to age, wear and tear, or negligence.

Roofs get old and worn out. This is just a part of normal home maintenance that homeowners are responsible for. Because of that, property owners need to have a maintenance account they maintain for things like a new roof (or other wear-and-tear issues that aren’t covered, like when an air conditioner gets old).

A good rule of thumb is to save 1% of the home’s value annually in a savings account earmarked for repairs. That way, when insurance doesn’t cover a new roof, there’s money available to pay for it.

Here’s when roof repair or replacement might be paid for

The good news, though, is that roof repair or replacement is paid for in certain circumstances. Specifically, when a roof is damaged by a weather event, like a hail storm, or because a tree falls on it, or something else unexpected like that happens, homeowners insurance will usually pay for any necessary fixes.

To find out what kinds of situations would lead to an insurer paying for roof repair, property owners should take a close look at their policies. Insurance policies are divided into two types:

Open peril policies, which pay for any damages not resulting from an excluded cause.Named peril policies, which pay for damages caused by perils or problems named in the policy.

Homeowners with a named peril policy can see exactly what situations would lead to an insurer paying for roof replacement by looking at the list of covered disasters their policy protects against. Usually, this would include things like fires, vandalism, falling trees, hail storms, and other weather events. Those who have an open peril policy can look at what’s excluded (usually, things like floods) and then assume their insurer will pay for damage from any cause not specifically mentioned.

Asking an insurance agent can also be a quick and easy way to find out if a new roof would be covered. It’s best to have a conversation with an agent about what exactly the insurer will and won’t pay for before disaster strikes. So property owners who aren’t sure about their coverage should consider calling their agent today so they can better understand what risks they’re transferring to an insurer — and what they need to be prepared for on their own.

Our picks for best homeowners insurance companies

There are many homeowners insurance companies to choose from. We’ve researched dozens of options and short-listed our favorites here. Looking for a green build discount or easy bundle policies? Want an easy-to-use interface? Read our free expert review and get a quote today.

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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Swiping a rewards credit card at checkout can be a great way to get rewarded for your spending. Find out a few ways to boost your credit card rewards quickly. [[{“value”:”

Many people use rewards credit cards for everyday purchases. These cards make it easy to get rewarded when you spend money. If you’re new to earning credit card rewards or want to step up your game, you might be looking for strategies to boost your rewards potential. I’ll share a few ways credit card users can earn rewards faster.

1. Put everything you can afford on your card

First, you should only charge your credit card accounts for purchases you can afford. You could rack up expensive credit card debt if you spend beyond your means. But if you charge everything you can afford to pay with cash to your rewards credit cards and pay your bills in full each month, you can maximize the rewards you earn.

You won’t earn rewards if you pay for purchases with non-rewards credit cards or cash. Unless you’re charged a credit card processing fee to pay an expense with a credit card, use a rewards credit card as payment so you earn more rewards.

2. Choose a rewards credit card that matches your spending

It pays to be selective about the rewards cards you add to your wallet. Ensure you’re choosing cards that align with your spending habits. A travel rewards credit card likely isn’t ideal if you travel infrequently.

But if you dine out and order takeout often, you can maximize your rewards by getting a dining and restaurant credit card. Consider your top spending categories before applying for a new rewards credit card so you choose one that is best for you.

3. Shop through credit card portals

Some credit card companies have shopping portals that customers can use to earn rewards when they shop. You can earn rewards after activating offers from your favorite retailers and making eligible purchases. Then you shop like you usually do.

Using these portals could help you reach your rewards goals sooner. You can earn double the rewards by shopping through a portal and using your cash back credit card as payment. Two examples of such portals include Shop Through Chase and Barclays RewardsBoost.

4. Use the right rewards card at checkout

It’s also wise to pay attention to which card you use at checkout. You can maximize your rewards by being strategic about which credit card you use for payment.

Some credit cards offer flat-rate rewards, like 2% cash back back on all purchases. Others reward cardholders who make purchases in select categories, like 3 points per $1 on travel purchases. Use the credit card that offers the most rewards when paying for a purchase.

5. Don’t ignore valuable welcome offers

Another way to boost your rewards is to take advantage of available welcome offers. Many credit card issuers have welcome offers to attract new customers. When you apply for a new credit card and meet the minimum spend requirements, you may earn a welcome offer.

One way you could miss out on a valuable welcome offer, however, is if you upgrade your current credit card directly through the issuer rather than applying for a new card, since upgrades won’t qualify for a welcome offer.

Credit card rewards are a win for your wallet

Using rewards credit cards is a smart personal finance move. You can take a few extra steps to maximize the rewards you earn. Remember these tips the next time you swipe your favorite rewards credit card. Review our list of the best rewards credit cards to find your next card.

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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.JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Natasha Gabrielle has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool recommends Barclays Plc. The Motley Fool has a disclosure policy.

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Want to buy a cheap car in 2024? Don’t overlook the value of used EV tax credits. You could save up to $4,000 on a pre-owned EV. [[{“value”:”

Electric vehicle (EV) sales have slowed in 2024, and some people are wondering if EV tax credits are actually a good deal. After all, the list of vehicles that qualify for the full $7,500 new EV tax credit has shrunk in 2024. Combine that with range anxiety, EV car insurance costs, and recent big price declines of used EVs, and you might wonder if buying an EV in 2024 is a smart move.

But there is another EV tax credit that offers excellent value. Buying a pre-owned EV can give you a tax credit for 30% of the sale price, up to $4,000.

If you want a good deal on a used electric vehicle in 2024, here’s why you won’t want to miss out on used EV tax credits.

What are used EV tax credits?

A lot of the news coverage of EV tax credits has focused on the $7,500 credit for qualifying new vehicles. But the problem is: not all “new” EVs qualify for that full amount. Many foreign car brands are not eligible for the new EV tax credit because their EVs are not made in North America. Other popular makes and models cannot get the full $7,500 credit because of where the car companies source their EV batteries.

Fortunately, there’s another option for car buyers in 2024: used EV tax credits. The pre-owned EV tax credit is 30% of the used car’s sale price, up to $4,000.

Which used electric vehicles qualify for used EV tax credits

To get the pre-owned EV tax credit, an electric vehicle must:

Be purchased from a car dealershipHave a sale price of $25,000 or lessBe from a model year at least two years older than the current calendar year (so: 2022 model year or older, as of 2024)

The used EV tax credit is more flexible and widely available than the credit for new cars. You don’t have to worry about where a used EV was built or where its battery materials came from; you can just focus on finding a good deal on a pre-owned car — and then getting an extra discount of up to $4,000!

Which car buyers qualify for used EV tax credits

Just as not all vehicles qualify for EV tax credits, not all car shoppers may claim this special bonus discount from Uncle Sam. The IRS rules limit the used EV tax credit to people below certain income levels.

According to the IRS rules, here’s what your modified adjusted gross income (AGI) needs to be in order to get the used EV tax credit:

$150,000 for married couples filing jointly$75,000 for single filers

If you’re a higher earner, you might want to double-check to see if you qualify. Fortunately, the IRS lets you qualify based on modified AGI from “this year” (when you took delivery of your newly purchased car) or the previous year, whichever is lower.

Surprising benefits of used EV tax credits

I don’t plan to buy a new car this year, but if I was going to buy in 2024, I would buy a used electric vehicle (or a used plug-in hybrid, which also qualifies for EV tax credits). The used EV tax credit is offering significant value, especially when you consider how much prices of used EVs have declined.

Here are two big benefits of used EV tax credits.

Bigger discounts than (some) new car tax credits

Some new electric vehicles only qualify for $3,750 of tax credits, while used EV tax credits can reach $4,000. It’s impressive to realize that a $20,000 pre-owned EV can give you a bigger tax break than a more expensive new car.

More choices of electric vehicles

The used EV tax credit doesn’t have the same strict requirements about “made in North America” as the new car version. That means freedom! If you go with a used car, you can choose from a wider range of car companies, makes, and models.

For example, according to my latest count on FuelEconomy.gov, as of Feb. 24, 2024, there are a total of 27 new vehicles (EVs or plug-in hybrids) that qualify for new EV tax credits. And those qualifying new cars come from only eight auto companies.

The used EV tax credit gives you many more options. I counted 29 eligible car companies, from BMW and Porsche to Toyota and Volvo. And there are dozens of used EVs available that can qualify for the pre-owned EV tax credits, including some really fun-looking cars, like the Ford Mustang Mach-E.

Bottom line

Buying cars is like buying stocks: sometimes you have to go against the conventional wisdom. Zig where others zag. Find the undervalued opportunities. I believe that used electric vehicles are underpriced right now. Lots of people are shying away from used EVs because of range anxiety, or waiting for the next generation of new EVs with better batteries.

But the current generation of used EVs and plug-in hybrids have a lot of life left in them. What if you could find a low-mileage used EV (or plug-in hybrid) with a battery that’s still under warranty? The previous owners already took the biggest hit on depreciation, and now you can drive it at a discount. Car insurance costs for a used EV might also be cheaper than a new car. You can find out by shopping around with the best auto insurers. It’s not every day that the federal government offers to give you $4,000 to help buy a car. You might want to take this discount from Uncle Sam.

Our best car insurance companies for 2024

Ready to shop for car insurance? Whether you’re focused on price, claims handling, or customer service, we’ve researched insurers nationwide to provide our best-in-class picks for car insurance coverage. Read our free expert review today to get started.

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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