Money Management

The start date for filing your taxes is going to be at the end of January. Learn the benefits of filing as soon as possible. 

Filing your taxes isn’t something most people look forward to doing thanks to all of the paperwork involved. But, while it can be a hassle, there are also benefits to getting your tax return in — especially if you are eagerly awaiting a refund from the IRS.

So when can you start to file your 2023 taxes? Here’s what you need to know.

This is when the IRS will begin accepting tax returns

When you file your taxes for 2023, you’ll actually be submitting the forms in 2024. Since you submit your returns after the year ends, that’s always the way things work. You have to submit your paperwork after the year has come to an end, since you’re taxed on all the money you made over the course of the prior year.

The IRS has indicated that it will officially open the 2024 filing season some time in late January, although the exact date has not been announced yet. In 2023, tax-filing season opened on Jan. 23, though, and in 2022, it opened on Jan. 24. So, it is very likely that the IRS is going to open up the door to accepting 2023 returns somewhere around those dates, perhaps as early as Jan. 22 if they stick with the theme of Mondays.

This doesn’t necessarily mean you actually have to wait to hit the submit button until then, though. The IRS also made clear that if you send in your return before the filing season opens officially, it will simply be held until the IRS gets its computers up and running and updated to begin processing the forms.

Should you get your tax return in early?

Getting your tax return sent in early can be a smart move. For one thing, if you are in line for a refund, then submitting your forms ASAP can mean the IRS processes them sooner and deposits your refund in your checking account at an earlier date.

If you send your forms in early, you also reduce the chances of identity theft — which could happen if someone submits a fake return on your behalf — since you’ll be more likely to send in your real 1040 form before a thief can send in a fake one and try to claim a refund they aren’t owed.

You do need to make sure that you’re ready to actually send in your paperwork, though. The IRS deadline for companies to send out important tax forms, like W-2s and 1099s declaring your income, is not until Jan. 31. If you don’t have some of the documents that you need, like information about your income or about deductions you’re eligible for, then you have to wait. Otherwise, you might have to amend your tax return if these forms arrive later on.

Once you have all of the information you need, though, there’s no reason not to get your taxes done and submitted as soon as possible after the January deadline. Just watch for exactly when that deadline is, but expect it to be sometime during that fourth week of January, just as it has been in recent years prior.

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Want to reduce your taxable income? Itemized deductions let you save money on taxes. Find out how! 

If you have a high enough income and enough deductible expenses to qualify, itemizing your deductions can be a great way to save money on taxes. But many Americans do not itemize. About 87% of tax returns take the standard deduction instead, according to IRS data.

For most of these people, the standard deduction is clearly the better choice; you should always reduce your taxable income by the largest amount possible. Good tax software can help you figure this out. But depending on your tax situation, you might be able to itemize with just a few simple money moves. If you are right on the borderline of having enough itemizable deductions to be bigger than the standard deduction, it might be time to get strategic about your tax planning.

Let’s look at what it means to itemize, and discover the best thing you can do to optimize your itemized deductions.

Itemized deductions: What are they?

Not every type of tax deduction is an itemized deduction. To be an itemized deduction, your expense must fall into one of these categories:

State and local income taxes and real estate taxes: These are included in the $10,000 SALT deduction cap.State and local sales taxes: You have to choose whether to deduct your state and local income taxes or sales taxes — but you can’t deduct both. Most people are probably better off deducting state and local income taxes. But use tax prep software to double-check!Personal property taxes: This might include your annual fees for vehicle registration.Mortgage interest: This can include your primary home, a second home, home equity loans, or home equity lines of credit (HELOCs), as long as you are using the mortgage to buy, build, or improve a home.Disaster losses: If you have suffered personal casualty losses or theft losses in a federally declared disaster, and the losses are more than 10% of your adjusted gross income (AGI), you can deduct them.Some medical and dental expenses: To deduct these healthcare costs, your expenses must be more than 7.5% of your AGI, and you can only deduct that extra portion.Gifts to charities: Donations of cash, check, or property to qualified tax-exempt nonprofit organizations can be tax deductible, but only if you itemize.

If all of your itemizable deductions add up to more than your standard deduction amount — which in 2023 is $13,850 for single filers and $27,700 for married couples filing jointly — then you should itemize. But if not, take the standard deduction.

Basically: If you can itemize, you can get extra tax deductions, above and beyond the standard amount. Not everyone has the right mix of expenses to be able to itemize. But if you have some financial flexibility, you can make strategic tax moves to boost your deductions enough to itemize and reduce your taxable income.

How to get extra itemized deductions: Donate to charity

If you’re almost in range of going over the standard deduction, the easiest way to itemize is to make extra charitable donations.

For example, if you’re a single person who lives in Texas (a state with no income tax), and you pay $6,000 of home mortgage interest and $5,000 of local property taxes per year, that makes $11,000 of itemizable deductions. If you give another $3,000 to charity, you’ll be able to claim $14,000 of itemized deductions — saving you more money on taxes.

Or, let’s look at another example: You’re a married couple filing jointly in California (a place with relatively high state income taxes), and you own your home. You’re paying $10,000 of state income taxes and property taxes, $10,000 a year of mortgage interest, and $3,000 of medical expenses (above 7.5% of AGI). This makes $23,000 of itemizable deductions — leaving you $4,700 below the standard deduction.

But what if you could give more money to charity? If you give $392 to charity per month, you’d have $4,704 of annual charitable donations — and that amount would put you over the top for a total of $27,704. Now you can itemize deductions. And the more you give to charity beyond this level, the more you save on taxes.

Bottom line: Not everyone has enough financial flexibility to make strategic tax planning moves. Most taxpayers are better off with the standard deduction. But if you have some extra cash in your bank account, or extra room in your budget, donating to charity can help you exceed the standard deduction and itemize. Claiming itemized tax deductions is the only way to get charitable giving tax write-offs.

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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.Discover Financial Services is an advertising partner of The Ascent, a Motley Fool company. The Motley Fool recommends Discover Financial Services. The Motley Fool has a disclosure policy.

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You should always aim to pay your credit card bill on time. Here’s what to watch out for if you can’t make the due date. 

When you get your credit card bill in the mail, you should try to do everything you can to pay it by the due date listed on the bill. Unfortunately, this isn’t always possible. You might simply forget to make a payment sometimes, which isn’t a good thing — but we’re all human. Or you may not have the money in your checking account to cover the minimum payment when the bill comes due.

If you are going to be late on a credit card payment, there are consequences. But the good news is you may have a little bit of time before you face real trouble. Here’s how late you can be before problems start.

Here’s when your credit score is affected

Credit card companies report late payments to the credit bureaus. Even a single late payment could cause your score to drop by around 60 to 110 points, depending on how solid your credit record was prior to the missed payment. Those who previously had a better score will see a bigger decline.

The good news is that card companies don’t report your late payment until you are 30 or more days late. So you have a month before you need to worry about your credit score being damaged.

Here’s when interest kicks in

Credit card companies offer you a grace period before you start having to pay interest on purchases. Usually, this is about 21 days between the time that you get your monthly card statement and the time your payment is due. So, if you pay your payment by the due date during that grace period, you will not owe any financing charges.

Once you’re late with your payment, though, then you start owing interest on any charges you made during the course of the month. Interest is accrued daily, which means that interest is calculated for each day you have a card balance. That day’s interest charge is added onto what you owe, so the next day, the balance you’re charged interest on is a little higher.

Credit card interest rates are high, with the Federal Reserve reporting the average rate was 21.19% as of August 2023. Add that to the fact that interest compounds daily so your balance is constantly growing, and you end up paying a lot more for purchases. If you want to avoid this, you’ll not only need to make your payment on time but will also need to pay the entire full balance by your bill’s due date.

Here’s when you get stuck with a late payment fee

Credit cards can charge late payment fees as soon as your payment is not delivered on time — even if it is only a day late or a few hours late — because it comes after the close of business on the day it is due.

Card issuers can charge you up to $30 for your first late payment and up to $41 for any additional late payments. That can get expensive quickly.

So, as soon as you are even a few hours late, you’ll face added costs of fees. Interest charges will also start to accrue right away. While your credit score won’t be damaged immediately, these consequences are still serious and it’s always best to try to pay on time if you can. Aim to set up an automatic payment for at least the minimum due, so accidentally forgetting to make a payment won’t hurt your finances.

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

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When you buy a house at auction, you’ll most likely have to pay cash for it. Learn how to reach homeownership by buying a foreclosed home. 

If a home goes into foreclosure, it is typically sold at an auction. The process by which this happens can vary slightly from state to state, but there are some common things that you can expect no matter where you live if you’re buying a foreclosed home at an auction.

Here’s what you need to know about how the process works.

The basics of a foreclosure auction

Often, properties are sold at a designated time on the courthouse steps, although sometimes the auction can take place online. While anyone can attend these auctions, you’ll usually have to register in advance if you want to place a bid on a home that’s up for auction. And you will typically need to provide proof that you’d have the funds to pay for the house if you won the auction.

Auctions sometimes don’t happen at the planned date, or are canceled because the homeowner finds the money or challenges the legal process by which the auction was scheduled. So you can’t necessarily count on the property you want to purchase being sold at the designated time. You’ll want to keep tabs on what’s happening to the home, which you may be able to do using public records.

At the auction, you’ll be bidding against others who also want to buy the property. The lender who foreclosed can be one of those bidders. Whichever qualified buyer has the highest bid will win the auction.

But there are a few more details to be aware of as you go into this process.

You probably won’t get to inspect the house first

You typically cannot inspect a foreclosure before buying it at auction. Homeowners or tenants may be living in the property and disturbing them would be considered trespassing. You can drive by the property if you want to, and usually should.

You can also review public records to see if there are liens (competing claims) on the property. The liens may not disappear if you buy the house at a foreclosure auction, so you could find yourself responsible for paying back that debt if you buy the property. You can do a public records search or pay for a title search from a company that performs them. Title searches are designed to look for competing claims on the title (which shows ownership of the home).

You’ll most likely have to pay cash for the house very soon after winning the auction

When you buy a house at a foreclosure auction, you are most likely not going to be able to get a mortgage loan to finance the purchase. Mortgage lenders want appraisals, inspections, and proof there are no liens, so they aren’t going to give you a loan to buy a house at auction.

You usually have only a short time to pay cash for the property when you make the winning bid. Sometimes, you have to pay the same day or by the next morning. If you can’t pay, you could lose any deposit you put down that was required to bid. So, be sure you have the money in your bank account.

If you learn about how foreclosure auctions work and you’re prepared to buy a house that may not have been well taken care of or that may come with various debts you have to pay, then buying a foreclosure could be a good way to get a deal on a house. Just make sure to learn the ins and outs about how these auctions work, so you don’t find yourself bidding on a property and regretting it in 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.The Motley Fool has a disclosure policy.

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Some cold medications have been removed from CVS because of questions about their effectiveness. Read on for some alternatives that may be better options. 

When you get sick, the last thing you need is to waste your hard-earned money on a cold medicine that doesn’t work.

Unfortunately, millions of people may have been doing just that, thanks to some potentially ineffective products that have been sold for decades and that have become trusted household names during that time.

The good news is, CVS has now pulled those medications off the shelves because of new concerns about their effectiveness. Of course, this now means you’ll need to figure out what to buy instead. Here’s what you need to know to choose cold medicines that work.

Here’s why CVS pulled some cold medications off its shelves

In mid-September, the Food and Drug Administration (FDA) announced some troubling news about common cold medicines. According to the release, a panel of advisors to the FDA unanimously determined that oral phenylephrine isn’t effective at fighting congestion if you take the pill by mouth — which is what pretty much everyone does with over-the-counter cold meds.

Oral phenylephrine is the main active ingredient — and is sometimes the only cold-fighting ingredient, in at least some varieties of popular medications, including:

Advil Sinus CongestionBenadrylDayquilLusonalMucinexSinexSudafed PETylenol Sinus

The 16 members of the FDA advisory panel unanimously agreed that the active ingredient in these medicines was not able to do its job and provide the effective relief from nasal congestion that patients were looking for.

Now CVS has removed products that contain only phenylephrine as the active ingredient, even though the FDA has not issued an official ruling yet that the drugs should be pulled from shelves. This decision is good news for consumers, who don’t need to be pulling out their credit cards to buy drugs most experts say don’t work.

Here’s what you should be buying instead

For those who are used to using the removed drugs to help treat their cold and sinus issues, it can be confusing to find the items they usually buy absent from the shelves — even though it’s better for their bank accounts not to waste money on ineffective drugs.

The good news is, there are plenty of other options out there. A different drug, pseudoephedrine, is proven effective at fighting congestion and is found in a huge number of different drugs available without a prescription.

The catch is, products with this drug are kept behind the counter and you have to show ID to buy them because of concerns they could be used to make methamphetamine. If you are buying a reasonable quantity of these drugs and not using them to manufacture illegal narcotics, the fact you have to produce a driver’s license to buy them shouldn’t be a big deal. And there’s no added risk to using them — they are kept behind the counter only because of the connection to illegal drugs.

Nasal spray antihistamines, corticosteroids, and saline products are an alternative as well, although you may have to get used to using a nasal spray if you’ve only ever taken pills for cold symptoms before.

Ultimately, it’s important to be an informed consumer when it comes to foods and medications that you’re buying so you don’t waste money and impact your personal finances. While CVS is taking these medications off store shelves due to their ineffectiveness, they’re still available for sale elsewhere, and you likely don’t want to buy any cold meds that have only phenylephrine in them as an active ingredient.

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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.
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The amount of interest you can earn depends on the rates your savings account offers — but it can add up if you have a high-yield savings account. Here’s how. 

Putting money in a savings account allows you to have funds available for emergencies or to save for short-term purchases. You can also earn interest when you invest your money in a savings account, though.

Let’s say you have a pretty good balance — around $10,000 — in your savings account. Here’s how much you might earn with this much cash in savings.

Here’s what your returns on a $10,000 balance could look like

If you have $10,000 in savings, the amount of interest you can earn on that balance is going to depend on the annual percentage yield (APY) your savings account pays. The FDIC reports that the national average interest rate on savings accounts is 0.46% as of mid-December 2023. However, if you have a high-yield savings account, you could earn up to 5.30% APY.

The table below shows the amount of interest you could earn over time both if you had an account at a bank paying the national average rate and if you found a competitive high-yield savings account paying 5.30%, assuming interest is compounded annually.

As you can see, you can earn a pretty substantial amount of interest — especially over a long time period — but you’ll need to find the right bank account in order to make that happen. You should also know that savings account APYs aren’t fixed — they change over time. If rates go down in 2024, as many people expect they will in the new year, you may not get that 5.30% APY. But the rates on a high-yield savings account are always going to be higher than the national average rate.

Take the time to find the right savings account to maximize your interest

When you put your money into a savings account, your potential returns are always going to be more limited than if you invested in a brokerage account and put your money into the stock market. That’s because you are not taking on any risk of loss, up to FDIC insurance limits, as long as your account is FDIC insured.

That doesn’t mean the account you pick doesn’t matter, though. A high-yield savings account should provide the same safe place to put your money as a savings account paying a much lower APY does, as long as you make sure that your account has FDIC coverage. And, like a savings account paying a much lower rate, your money should still be accessible, so you can withdraw it whenever you want.

The big difference, though, is that the high-yield account is going to give you the chance to earn a lot more interest. You can earn more in a single year than you would after a decade if you find an account paying 5.30% instead of 0.46%. Of course, you will want to consider factors like customer service, fees, and the process of transferring funds — but plenty of great accounts offering impressive yields also excel in other aspects of the customer experience.

The more money you have in savings, the more it matters that you find the right account — but even if you have much less than $10,000 set aside, it’s worth taking the time to try to maximize your returns. That’s especially true as you have a lot to gain and nothing to lose if you just take the time to look for an account offering the most competitive rates.

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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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