Money Management

A membership hike could be in the cards. 

Shopping at Costco tends to save consumers money. If it didn’t, they wouldn’t be willing to pay their membership fees, which are currently $60 for a basic membership and $120 for an executive membership.

It’s been more than five years since Costco raised its membership fees, so members are actually due for a hike. And thanks to recent sales figures, that hike might have to happen sooner rather than later.

Costco sales disappointed

Costco recently reported sales information for its second fiscal quarter. All told, the warehouse club giant took in $55.3 billion in sales, which sounds like a lot of money. But actually, that figure was $300 million less than what analysts were expecting.

Fee hikes could help compensate

Costco, like many retailers, has seen its margins impacted due to inflation. And so between higher operating costs, disappointing sales numbers, and the fact that membership rates have stayed the same for over five years, it wouldn’t be so surprising to see the cost of a Costco membership increase before 2023 comes to an end.

In fact, on the company’s most recent earnings call, Chief Financial Officer Richard Galanti confirmed that June 2023 would be Costco’s sixth anniversary of the last time it raised fees. And he also said that with regard to fee hikes, “It’s a question of when, not if.”

Should consumers worry about higher Costco fees?

At a time when inflation is forcing many consumers to raid their savings accounts and rack up debt just to stay afloat, any added expense is apt to be a point of concern. But if Costco does opt to raise membership fees in 2023, it’s unlikely to raise them to an extreme.

We might see the cost of a basic membership increase to $65 and the cost of an executive membership rise to $130. But these are annual increases, so when we spread those added costs over 12 months, it doesn’t seem so extreme.

It’s also important to remember that it’s the revenue Costco collects in membership fees that allows it to offer such competitive prices. So while consumers may not be thrilled with a fee hike, the reality is that they’re apt to reap a lot of savings even when paying more for a membership.

Now that said, it’s important that those paying for a Costco membership actually get their money’s worth. If you’re not sure if a Costco membership is worth it, especially with a cost increase possible, then it’s a good idea to take a look at your credit card bills from last year and see how much Costco shopping you did.

If you only visited Costco on a handful of occasions, then it may not be worth it to pay up for a membership, especially at a higher price point than what you’re looking at today. But if you visited Costco pretty consistently, then chances are, you saved enough money to make that membership worth it. And chances are, if you keep your membership, you’ll continue to do the same.

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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 and Gala. The Motley Fool has a disclosure policy.

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In many cases, no — but you’ll still get a notice from the IRS. 

Filing taxes can be stressful enough in its own right. Throw in the idea of getting audited, and you might really be filled with dread.

Now, the good news is the IRS audits less than 1% of tax returns each year. So all told, your chances of getting audited aren’t very high to begin with. But there are certain red flags that have a tendency to trigger an audit. Math mistakes, however, generally don’t fall into that category.

What happens when you botch your math on your tax return?

The IRS will generally try to correct math errors on tax returns rather than audit or reject them. This might delay your refund, if you’re due one, but it could save you a hassle.

However, a series of math errors, or an innocent math error that comes across as a questionable deduction, could be enough to trigger an audit. So it’s best to avoid math mistakes to your best ability.

If the IRS does spot a math error on your return, it will often send you a notice in the mail proposing an adjustment to your taxes based on correct math. You may need to sign that letter agreeing to the proposed adjustment for the IRS to process your refund, or to bring the matter to a close.

In some cases, the IRS might ask for supporting documentation because your math doesn’t make sense. This doesn’t mean you’ll get in trouble for incorrect math. In this situation, you’ll have an opportunity to respond in writing to the IRS explaining the situation. You can simply tell the IRS where your numbers went wrong and present the correct ones.

What mistakes might lead to an audit?

If you transpose numbers or add up figures incorrectly, it may not trigger an audit. But if you miscalculate deductions to the point where they don’t make sense, that’s a different story.

In this situation, you’re not necessarily in trouble with the IRS. You just need to remedy the situation.

Let’s say you’re self-employed with an income of $70,000, and you meant to claim a $14,000 deduction on your tax return but instead claimed $41,000 because you transposed your numbers. That’s likely to trigger an audit simply because a $41,000 deduction against a $70,000 income looks disproportionate. But in that case, you’d just respond to the IRS letter you receive with an explanation and change your deduction to a lower amount.

How to avoid math errors on your tax return

One of the easiest ways to avoid math mistakes on your taxes is to file electronically. Using software will generally prevent addition and subtraction mistakes, though software won’t prevent issues with you copying over the wrong numbers from your tax forms.

Just as importantly, refunds for electronically filed returns are commonly processed in half the time it takes to do so for paper returns. So if you’re eager to see your refund hit your checking account as quickly as possible, then it pays to rely on electronic software rather than paper, a pen, and your own imperfect math skills.

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Image source: Getty Images
What happenedInternational investment banking giant UBS agreed on Sunday to buy Credit Suisse for 3 billion Swiss francs (around $3.2 billion). The Swiss government and central bank pushed for the deal in order to restore confidence in the national economy and the wider banking system. The merger, which does not need shareholder approval, is expected to be finalized by the end of the year, if not before, per a Credit Suisse press release.So whatThe Swiss government sweetened the deal by committing billions of dollars in guarantees, in addition to extensive liquidity backstops from the central bank, according to Bloomberg. Nonetheless, Swiss Finance Minister Karin Keller-Sutter insisted it is, “A commercial solution and not a bailout.”
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For American consumers, the big question is whether the deal will be enough to restore confidence. Authorities worldwide want to prevent further banking contagion following the collapse of Silicon Valley Bank. Recent moves include:A Federal Reserve promise to make extra emergency money available to other struggling banks.A joint deposit from 11 top banks of $30 billion with First Republic in an effort to shore up the ailing bank’s reserves.Now whatThe issues in the banking industry have spooked both consumers and investors. If you’re worried about the safety of money, know that FDIC insurance will protect you for up to $250,000 per person, per account. If you have more deposited in a single bank account, take steps to protect any cash that’s not covered. The government guaranteed uninsured deposits with SVB, but there’s no guarantee it will do so again.Confidence is crucial for the banking industry. If people don’t believe their money is safe, they start to pull their deposits. Even in a healthy bank, this can cause problems as it means it would have less money available to underpin its lending. In a worst case scenario, widespread withdrawals can cause a credit crunch — which is what authorities and banking leaders want to avoid.Here are three ways you can prepare your finances for a credit crunch:Beef up your emergency savings: If you don’t have cash stashed away in a savings account to see you through a financial emergency, prioritize this above other financial goals.Take steps to improve your credit rating: In a credit crunch, banks may be less able to make loans, so you may need a higher credit score to qualify. Make sure you pay bills on time and see if you can reduce your credit utilization ratio. Both factors are key to calculating your score.Pay down debt: A credit crunch could make borrowing more expensive. The more debt you can pay down now, particularly of the credit card variety, the less you’ll pay in interest and the more disposable income you’ll have to handle any economic difficulties.These savings accounts are FDIC insured and could earn you 14x your bankMany people are missing out on guaranteed returns as their money languishes in a big bank savings account earning next to no interest. Our picks of the best online savings accounts can earn you 13x the national average savings account rate. Click here to uncover the best-in-class picks that landed a spot on our shortlist of the best savings accounts for 2023.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. 

What happened

International investment banking giant UBS agreed on Sunday to buy Credit Suisse for 3 billion Swiss francs (around $3.2 billion). The Swiss government and central bank pushed for the deal in order to restore confidence in the national economy and the wider banking system. The merger, which does not need shareholder approval, is expected to be finalized by the end of the year, if not before, per a Credit Suisse press release.

So what

The Swiss government sweetened the deal by committing billions of dollars in guarantees, in addition to extensive liquidity backstops from the central bank, according to Bloomberg. Nonetheless, Swiss Finance Minister Karin Keller-Sutter insisted it is, “A commercial solution and not a bailout.”

For American consumers, the big question is whether the deal will be enough to restore confidence. Authorities worldwide want to prevent further banking contagion following the collapse of Silicon Valley Bank. Recent moves include:

A Federal Reserve promise to make extra emergency money available to other struggling banks.A joint deposit from 11 top banks of $30 billion with First Republic in an effort to shore up the ailing bank’s reserves.

Now what

The issues in the banking industry have spooked both consumers and investors. If you’re worried about the safety of money, know that FDIC insurance will protect you for up to $250,000 per person, per account. If you have more deposited in a single bank account, take steps to protect any cash that’s not covered. The government guaranteed uninsured deposits with SVB, but there’s no guarantee it will do so again.

Confidence is crucial for the banking industry. If people don’t believe their money is safe, they start to pull their deposits. Even in a healthy bank, this can cause problems as it means it would have less money available to underpin its lending. In a worst case scenario, widespread withdrawals can cause a credit crunch — which is what authorities and banking leaders want to avoid.

Here are three ways you can prepare your finances for a credit crunch:

Beef up your emergency savings: If you don’t have cash stashed away in a savings account to see you through a financial emergency, prioritize this above other financial goals.Take steps to improve your credit rating: In a credit crunch, banks may be less able to make loans, so you may need a higher credit score to qualify. Make sure you pay bills on time and see if you can reduce your credit utilization ratio. Both factors are key to calculating your score.Pay down debt: A credit crunch could make borrowing more expensive. The more debt you can pay down now, particularly of the credit card variety, the less you’ll pay in interest and the more disposable income you’ll have to handle any economic difficulties.

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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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It may be time to call it quits. 

If you picked up a side hustle last year, you weren’t alone. In 2022, 40% of Americans had a second job, according to data from Zapier.

Now, the reality is that holding down a side hustle can lead to numerous financial benefits. For one thing, earnings from a side job could make it possible to build some savings if you’re lacking in that department. A side hustle could also make it easier to pay off nagging credit card debt or save for big goals, like buying a home.

But not every side hustle works out so well. And if these signs apply to you, it may be time to ditch your side hustle and replace it with another one.

1. You’re not earning anywhere close to what you expected

Some people hold down side hustles more for the fun of it, and they don’t really care if they don’t earn a lot of money. But if your goal in getting a second job is to boost your income substantially, and that hasn’t been happening, then it may be time to call it quits.

Let’s say you’ve gotten hired to tutor students for $50 an hour. At first, that may have seemed like a great gig with a great hourly rate. But if you’re spending an hour on the road just to get to each student, you’re actually only earning $25 an hour. And if you’re also spending $10 on gas, then your earnings are whittled down to $15. That’s not nearly the same as the $50 you might’ve expected.

2. It’s impacting your productivity at your main job

Not every side hustle is one you can do after hours or on weekends. It may be that you’ve gotten a gig designing websites for small businesses. But if those clients keep calling or emailing you with requests during the day, and you have to keep stepping away from your office to deal with that, it’s apt to impact your ability to do well at your main job. And that could put your primary job at risk.

3. You’re struggling with a lack of free time and sleep

Working a side hustle is going to mean giving up some of your downtime. But if it’s taking up all of your spare time, that’s not a good thing, as it might easily lead to burnout.

What’s more, if you’ve been forced to cut back on sleep due to having a side hustle, that’s really not a good thing. Not sleeping properly could negatively affect your health, not to mention leave you groggy and grumpy every morning. So if your side hustle has effectively taken over your life, and there’s really no way to cut back your hours, then it may be time to find another gig.

If your side hustle isn’t working out, it doesn’t mean you have to give up on earning an extra income. But you may need to make some changes to the type of work you’re doing. The good thing, though, is that you can learn from a failed side hustle attempt and avoid a repeat during your next go-round.

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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 quick answer? It depends on whether you owe money or not. 

Taxes are due this year on April 18. Normally, they’re due by April 15, but when that day falls on a weekend, the filing deadline is pushed to the next business day. Only this year, April 17 is Emancipation Day, a Washington, D.C. holiday, so tax filers get until April 18 to get their returns over to the IRS.

Now, you may be aware of this year’s tax-filing deadline, but you might still miss it regardless. And you may be wondering what happens if your tax return arrives late.

The answer is that you might lose out financially in any scenario. But the extent of that financial hit will hinge on whether you owe the IRS money from 2022 or whether you’re due a tax refund.

When you’re owed money from the IRS

The IRS can’t process your refund until it receives your tax return. So if you’re late in filing yours, you’ll have to wait that much longer for your refund to hit your bank account.

That, however, is the only real penalty you’ll face in that situation, if you even want to call it a penalty. The IRS isn’t going to penalize you further for being late with your tax return because it gets to keep your money for longer. So it benefits, and you don’t.

When you owe the IRS money

When you owe the IRS money and are late with a tax return, that’s when you’ll be assessed actual penalties. The way the IRS sees it, you underpaid your taxes in 2022, and now the agency wants its money as soon as possible. And it also wants to see how much you owe as soon as possible, which is why it needs your tax return.

If you’re late with your filing in this scenario, the penalty can be pretty steep. That’s because you’ll be charged 5% of your unpaid tax bill for each month or partial month your tax return is late, up to 25%.

So let’s say you owe the IRS $1,000 from 2022 and are a month late filing your return. That means you’ll be penalized $50.

Get an extension if you need more time to file

If you’re running into the April 18 tax-filing deadline and don’t have your return ready, it’s really important to file an extension. That will extend your personal filing deadline by six months.

One thing an extension will not do is give you more time to pay your tax bill. If you don’t pay yours in full by April 18, you’ll accrue interest and penalties on the sum you owe. But because you’ll get extra time to file, you won’t be penalized separately for being late as long as your return is in by October 16.

If you’re not sure whether you owe the IRS money from 2022 or are owed money, just file that extension so you don’t end up taking chances. You don’t have to come up with a creative excuse for needing more time. All you need to do is submit Form 4868 by April 18, and that extension will happen automatically. It really is that simple.

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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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