Money Management

There’s no reason to stick with a bank that’s not treating you right. Read on for a few signs it’s time to switch banks this year. 

Having the right bank account is important. Your checking account is kind of like the train depot for your money. Cash comes in there, stays for a while, and then is transferred elsewhere to wherever it needs to go (like your savings account, brokerage account, or to pay your bills).

Unfortunately, if there are problems at the depot, this can have a very negative impact on your financial life since all your money is routed through it. If that’s the case, it’s time to make a switch — even though doing so can seem like a big hassle.

So, how do you know if it’s time to break up with your bank (not to mix metaphors too much here!)? Just watch for these key signs.

1. You are paying bank fees

Banks collect billions in fees each year. That’s billions with a “B,” not millions. In just the fourth quarter of 2022, banks collected $1.6 billion in overdraft fees. And this was a huge decrease, down from $3.1 billion in the fourth quarter of 2019. And that’s just one type of bank fee — there are others, like monthly maintenance fees or ATM fees.

There is no reason for you to add your hard-earned money to the billions the banks are already collecting. Look for a free checking account that doesn’t charge you to be a customer and that has eliminated other costs like ATM and overdraft fees. SoFi is a good example of one, but there are plenty of others.

If your bank charges you and you’re sick of making bankers rich, break up with your bank now and explore your other options.

2. You are receiving poor customer service

You are a customer of your bank. If you experience poor customer service, switch to one that wants to earn your business.

Your bank should be accessible to you and willing and able to answer questions when you need help. Ally, for example, offers both online and chat support, has flexible hours for its call center, and has always responded to me very quickly on chat when I’ve needed support.

If you frequently have a hard time getting an appointment, have to wait on hold for a long time, or just find customer service to be unresponsive, then it’s time for a break-up.

3. You can’t accomplish what you want with your money

Your bank should make it easier to use your money the way you want. If it doesn’t allow you to access and use your funds when and how you prefer, it’s time to switch.

For example, some banks have very low limits for mobile check deposits, sometimes capping the amount you can put in to as low as $500 per day. If you don’t want to have to go to the bank to put your money into an account, switch to one with higher daily limits (Ally, for example, will allow you to deposit up to $50,000.)

You should also pay attention to ATM access, daily withdrawal limits, and other bank rules that could affect your ability to use your money in the way you see fit.

4. The app is a pain to use

Let’s face it — most people do their banking on their phone or other mobile device. So, if your bank has a bad app, it’s time to make a change, as there are plenty of alternatives out there.

Chase, for example, has an app that earned 4.8 out of 5 stars on the iOS store. The full-featured banking app not only makes managing your bank account easy but also allows you to create a customized budget so you can use the funds more wisely.

If you spot any of these signs, it’s time for you to initiate a split today. You don’t owe your bank your business, and there are plenty of better fish in the sea.

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

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Most people are surprised to hear that the Child Tax Credit ends when your child turns 17. Plan ahead now to avoid a $2,000 (or more) tax bill. 

They say the best things in life are free, but raising children isn’t one of them. It can cost $300,000 to raise a child from birth to age 17. From diapers and onesies to braces and cars, the costs of growing up in America just keep getting higher.

Good news: The IRS gives parents a nice tax break each year called the Child Tax Credit. For most families, this results in a $2,000-per-child reduction in taxes. A family with two children would get $4,000 subtracted from their tax bill when they file their tax return. The Child Tax Credit takes some of the financial stress out of raising kids. It can turn a small tax bill into a big tax refund, giving you a fun windfall at tax time.

But there’s a downside to the Child Tax Credit: just like the joys of childrearing, it doesn’t last forever. Children grow up and leave the nest, and the Child Tax Credit goes away with them. And if you’re not careful, the end of the Child Tax Credit could hit you with a surprise tax bill.

Let’s take a closer look at what age your child no longer qualifies for the Child Tax Credit, and how this could affect your taxes — and your take-home pay — in 2024.

At what age do children “lose” the Child Tax Credit?

According to IRS rules, to get the Child Tax Credit, your child must be under the age of 17 by the end of the tax year. So if your child is turning 16 in 2024, you can breathe a sigh of relief — you can still get the Child Tax Credit for your 2024 taxes. But if your child is turning 17 this year? Watch out — your tax bill is about to go up.

Losing the Child Tax Credit at age 17 might be surprising for many families. After all, your 17-year-old child is likely still living at home and attending school; they’re still legally a child and they can’t support themselves financially. And the costs of raising a 17-year-old are not any cheaper than any other age; if anything, teenagers are more expensive! Teenagers need a lot of expensive stuff, like braces, summer programs, fancy electronics, and clothes that they’re constantly outgrowing — they have a swanky lifestyle!

Unfortunately, these are the IRS rules, and you never want to defy the IRS — unless you want to get audited. So if your child is turning 17 in 2024, be prepared for a bigger tax bill.

Child Tax Credit limits

Along with the 17-year-old age cutoff, there are also some other rules for which children qualify for the Child Tax Credit. The child must:

Be correctly claimed as your dependent on your tax returnHave lived with you for at least half the yearBe your son/daughter, stepchild, foster child, or other qualifying relatives who depend on you financiallyBe a U.S. citizen, U.S. national, or resident alien

If you are divorced and you and your ex-spouse share custody of children, this could cause complications in deciding who gets to claim the Child Tax Credit — talk to a professional tax advisor or attorney if necessary. There are also a few rules that affect children who earn enough income to provide more than half of their annual financial support, or who are married.

The Child Tax Credit is also limited by income. If you’re married filing jointly, your modified adjusted gross income (AGI) must be $400,000 or less to get the Child Tax Credit. For all other filers (single, head of household, etc.) your modified AGI must be less than $200,000. If you’re a high earner, it’s worth checking to see if your income qualifies for the Child Tax Credit.

What to do if you’re losing the Child Tax Credit in 2024

This happened to my friend last year: his daughter turned 17, and he didn’t realize that he wasn’t going to get the Child Tax Credit anymore. So when he filed taxes, his tax bill was $2,000 higher than he’d expected. Don’t let this happen to you! If your child is turning 17 in 2024, here’s how you can prepare.

Change your W-4 tax withholdings at work

If your child is turning 17 this year, ask about filing a new Form W-4 so you can have more tax withheld from your paycheck. This way you can avoid an unpleasantly high tax bill, and avoid getting hit with an IRS underpayment penalty. But the downside is that your take-home pay will be a bit smaller than it was before. For example, if you get paid every two weeks (26 paychecks per year), and you need to withhold an extra $2,000 for the Child Tax Credit that you’re no longer getting, each paycheck’s after-tax net pay might be about $77 lower.

Save more money for taxes

Along with changing your W-4 tax withholding allowances, you might want to save some extra cash. Set up an automatic transfer on every payday to move money from checking to savings. If you save $166.67 per month for 12 months, you would have $2,000 to cover that lost Child Tax Credit. Get a high-yield savings account to help your money grow faster before tax season.

Increase your tax deductions

Make extra contributions to your 401(k) or a traditional IRA, or put extra money into a health savings account (HSA) if you have one. These simple moves can reduce your taxable income and cut your tax bill.

Bottom line: Watching your child grow up can be poignant, especially when they reach age 17 and you lose that sweet Child Tax Credit money. Plan ahead to avoid a surprise tax bill.

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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.Citigroup is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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Are you age 55 and up? You can save an extra $1,000 in your health savings account (HSA) in 2024. See how this one move can reduce your taxes. 

If you’re in your 50s, ideally you’re at a good place in your career and your personal finances. You’re likely saving and investing to be on track for a comfortable retirement. The IRS wants to help you save even more money for the future. You might have heard of catchup contributions to 401(k) plans and other tax-advantaged retirement accounts. People aged 50 and over are allowed to put an extra $7,500 per year into their 401(k), or an extra $1,000 per year into a traditional IRA or Roth IRA.

But did you know: there are also catchup contributions for health savings accounts (HSAs)? That’s right: If you are age 55 or older, and you have a qualifying high-deductible health plan (HDHP), you can use a health savings account as a tax-deductible way to save extra money for your future healthcare costs — or for your future life in retirement. You can put an extra $1,000 per year into your HSA as a catchup contribution, and get a bigger tax break on your 2024 taxes.

Let’s look at how this HSA catchup contribution works, and how it can help you have a happier 55th birthday in 2024.

How to get a health savings account (HSA)

Not everyone can get a health savings account — it depends on what kind of health insurance you have. To use this flexible, tax-advantaged account, you need to have a high-deductible health plan (HDHP), and not every health insurance plan qualifies. According to IRS rules for 2024, an HSA-eligible high-deductible health plan must have:

Self-only coverage: annual deductible of at least $1,600, and annual out-of-pocket expenses of no more than $8,050Family coverage: annual deductible of at least $3,200, and annual out-of-pocket expenses of no more than $16,100

Just because your health insurance has a deductible doesn’t mean you can use an HSA. If your deductible is too low, or your plan’s maximum out-of-pocket costs are too high, you won’t be eligible for an HSA and its tax benefits. During your benefits open enrollment period at work, you should be able to find out whether your health insurance plan qualifies for an HSA. If you get health insurance from HealthCare.gov, you can search for HSA-eligible plans using an on-page filter.

How much can you contribute to a health savings account?

Once you have an HSA-eligible health insurance plan, it’s time to start maximizing your tax benefits. The tax deduction you can get from an HSA depends on whether you have insurance coverage for just yourself, or for your spouse/family. According to IRS rules, here are the HSA contribution limits for 2024:

Self-only coverage: $4,150Family coverage: $8,300

But wait, there’s more! Those limits only apply to people under the age of 55. Once you reach your 55th birthday, you can put an extra $1,000 (or more) into your HSA and get an extra tax deduction.

HSA catchup contributions for age 55 and older: How they work

Many people might not know about this extra tax benefit, but people aged 55 and up can make an extra $1,000 per year catchup contribution to their HSAs. For 2024, that means a single 55-year-old can put a total of $5,150 into their HSA.

And married couples with an HSA can get an extra boost. Married couples who are both age 55 and older, and who have an HSA with family health insurance coverage, can both make catchup contributions of an extra $1,000 into their HSA. That means a married couple could save a total of $10,300 in their HSA for 2024.

This catchup contribution is a wonderful tax benefit, because it lets you save an extra $1,000 per person for healthcare (or future retirement), while reducing your taxable income for 2024.

How people age 55 and older can save money on taxes with HSAs

The health savings account is an especially valuable tax deduction, because it’s an “above the line” deduction. This means that your HSA money gets deducted from your income before you take the standard deduction (or itemized deductions). Above the line deductions are considered “Holy Grail” tax deductions, because they reduce your adjusted gross income (AGI). Other above the line deductions include contributions to a traditional IRA, and some education expenses.

Another advantage of the health savings account is that there are no income limits. Even if you’re a high earner in the top tax bracket, you can still use an HSA to get a tax deduction for every dollar you put in.

For example, let’s say that Bob and Joan are a married couple, ages 56 and 55, with an HSA and a combined taxable income of $150,000, which puts them in the 22% tax bracket for 2024. Bob and Joan can put this much into their HSA for 2024:

$8,300: 2024 maximum contribution$1,000: Bob’s catchup contribution$1,000: Joan’s catchup contribution

Total: $10,300 for 2024 HSA contributions

If Bob and Joan put the maximum $10,300 into their HSA in 2024, since they’re in the 22% tax bracket, they will reduce their 2024 income taxes by about $2,266. Each $1,000 catchup contribution saved them $220 on taxes.

Bottom line: If you’re not already maxing out your health savings account contributions, start in 2024 — especially if you’re age 55 and older. People in this age group can save an extra $1,000 per year in an HSA. Get great tax benefits and save more money for healthcare.

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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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Most folks join the gym for the equipment, but that’s not the only potential perk. You may also enjoy these benefits. 

Yes, the main reason we get a gym membership is to exercise. Good gyms offer a wide variety of high-quality equipment that would stretch beyond most of our personal finances were we to buy it ourselves.

But your local gym may offer more than just a good selection of weight benches and treadmills. Here are a few perks of a gym membership that you may not have considered.

1. Partner discounts

One thing I’ve noticed lately is that some gyms, particularly national brands, have started offering partner discounts. For instance, you might find a promo code for a deal on a fitness watch.

The quality of the offers varies, and some can be found elsewhere. But it’s a nice perk to something you’re paying for anyway.

Anytime I use third-party discounts like these, I check my credit cards for additional deals. For instance, Chase, Citi, and Amex credit cards have offer portals with tons of retailer discounts or rebates. I add these discounts to my card before using the third-party links to stack deals. And, of course, I always choose the best rewards card for the job.

2. Lower home utilities

Getting out of the house is a solid hack to lower your utility bills, since you can knock your thermostat pretty low — don’t go below 55℉ to avoid plumbing issues — when you aren’t at home (provided you don’t have pets). You can do more than save on heat, though; a hot shower at the gym after your workout means you won’t need to pay for all that hot water at home.

3. Better mental health

Alright, so we know that regular exercise has long-term health benefits that can decrease your healthcare costs across your entire lifetime. But it’s not just your physical health it helps. Exercise is proven to help your mental health, too.

No, I’m not saying your gym membership is going to make your therapist suddenly superfluous. However, studies have proven that physical activity improves your cognition, reduces symptoms of anxiety and depression, and leads to better sleep.

You don’t specifically need a gym membership to get these benefits. You don’t even need a home gym. Any physical activity you add to your life can increase your mental health, including walking around the neighborhood, doing jumping jacks at your desk, or adding a bit of yoga before bed. Just get moving.

4. Free personal training and classes

Depending on your gym, a membership may include free access to fitness classes, either one-on-one or with a group. For instance, my gym offers half-hour blocks of personal training for free for all members — all you need to do is sign up.

If you’re socially-minded — or not, but trying to be — group fitness classes can be a great way to make working out more fun. They can also offer different types of workouts and help you find what exercises you most enjoy doing.

Personal training can easily cost $50 an hour or more. And fitness classes can start at $15 but can get much higher, depending on the type. Having these included in your monthly membership fee can offer big savings.

5. Free tanning and/or massage

Larger gyms tend to offer amenities beyond fitness. These can include everything from tanning beds to steam rooms to massage chairs. If you’re someone who would pay for these services anyway, then you could save a lot of money by bundling them into an affordable gym membership. (Ever looked into those massage chairs? They start at $1,000, even at Costco.)

6. Better WFH productivity

This ties in a bit with the mental health point a bit, but I feel like it deserves its own callout. If you work from home, getting out of the house becomes important. Add in that most work-from-home jobs are fairly sedentary, and you’ve got a dangerous combination for both your physical and mental health.

A happy brain is a productive brain. Exercise makes the brain happy. Make your brain happy, be more productive, and earn more money. Everybody wins.

Joining the gym not only gives you somewhere to go to get you out of the house, but it also provides a great way to exercise all year long. Plus, the fact that you’re paying for the membership may make you more motivated to actually go. If nothing else, you have to go down there to cancel it — so you may as well just work out when you get there, huh?

Gym memberships aren’t necessarily cheap, but they’re hardly the most expensive thing we could spend our money on. Indeed, most of us pay just as much, if not more, for our favorite streaming services. In addition to the obvious offering of somewhere to exercise, a gym membership can have a lot of perks that offer more value than your Netflix subscription ever will.

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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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The wrong tax moves could cost you big time. Read on to learn which ones you’re better off avoiding this year at all costs. 

Paying taxes is a part of life for all of us. And unfortunately, mismanaging your tax situation could result in a hit to your personal finances. So could falling victim to certain blunders on your tax return. With that in mind, here are three mistakes to steer clear of in 2024.

1. Submitting an inaccurate return

Between now and mid-April, you’ll probably spend some amount of time working on your 2023 tax return. Coming up with all of the right details for that return might be more time-consuming than, say, guessing at different numbers or doing your best to estimate them off the top of your head. But the latter might cause you a serious headache — and cost you money at the same time.

Mark Steber, Chief Tax Information Officer at Jackson Hewitt Tax Services, says, “I see many people assuming if they’re ‘close enough’ that it won’t cause any issues, but that couldn’t be further from the truth. Accuracy matters. This is especially true when reporting income, either from W-2, 1099s, or any other documentation because not only is the company sending you this tax form, but it’s also being sent to the IRS. If it doesn’t match what is in their system, it could cost you via penalties and interest.”

So, let’s say you remember earning about $3,000 from a freelance client you did work for. Don’t just put “$3,000” on your taxes and assume that’s good enough. If you earned $3,024, that’s the number you need to report. Period.

Similarly, if you earned exactly $421 in interest income from your savings account, you need to say so. If your bank doesn’t send you a 1099 form with that number, log into your account to see if there’s a form waiting or call your bank and ask for help.

2. Not tracking the freelance income you earn or related expenses

If you’re self-employed, whether on a partial or full-time basis, you’re required to report all of your income. And it’s on you to track your earnings and make sure you’re giving the IRS a complete picture.

Don’t just rely on your various clients to send you a 1099 form when they’re supposed to. Instead, come up with a record-keeping system that allows you to track your earnings carefully.

At the same time, some work expenses you incur as a freelancer could serve as a tax deduction when you file your return. Track those carefully, too, so that you know what you’re able to claim. And hang onto all of your receipts, as you may need those to back up your claims.

3. Waiting until the last minute to file taxes

Taxes are due this year on April 15, though the IRS will allow filers to submit their returns as early as Jan. 29. You don’t necessarily have to file your taxes at the end of January. And that may not be feasible if, come that point, you haven’t received all of your tax forms. (Companies and institutions are supposed to issue 1099s by the end of January, but compliance is a different story.)

But one thing you definitely do not want to do is wait until, say, April 12 to start working on your taxes. If you find yourself having to rush through the process, you could end up missing out on valuable tax breaks you were entitled to claim.

Take a look at your calendar and carve out some time in February or March to start working on your tax return. That way, you’ll also have ample time to follow up if you find that you’re missing key forms.

The wrong tax moves on your part could end up costing you money. So do your very best to avoid these three this year.

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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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