Make your forgotten and undesired plastic into something useful. doganaliceylan / Shutterstock.com
We’ve all received gift cards we’ll never use for holiday gift exchanges, birthdays and other celebrations. Maybe your brother gave you a gift card to a restaurant way across town. Or your crafts-loving mom gave you a craft store gift card but you didn’t inherit the crafty gene. Whatever the case, if you have a drawer full — or even a handful — of unused or partially used gift cards…
Your degree isn’t a guarantee for lifelong employment, but certain fields do seem to improve your odds. Mix and Match Studio / Shutterstock.com
College can get expensive, so choosing a major that can help you get a job — and potentially make money — is a big part of getting the most out of the experience. The Federal Reserve Bank of New York recently released a report on the labor market for recent college grads, including what types of degree most frequently lead to work and what typical early career and mid-career income looks like for…
There may be other options to consider.
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If you’ve ever had a medical bill wreak havoc on your finances, you’re certainly not alone. An estimated 23 million Americans owe more than $250 in medical bills, according to the Kaiser Family Foundation. And many people owe a lot more than that.
If you’re faced with a medical expense, your first inclination may be to put it on a credit card and do your best to pay it off as quickly as you can. But here are a couple of options to pursue that might cost you less money in the long run.
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It’s not unheard of for patients to receive a medical bill they can’t pay in full right away. The good news is that many medical facilities will put you on a payment plan that gives you extra time to pay off your medical bills if you ask for one. And often, you’ll be eligible for 0% interest.
A credit card, by contrast, is going to charge you interest the moment you carry your balance forward, unless you happen to have a 0% introductory APR. And avoiding interest charges on your medical bills could make them far less expensive to pay off.
If you have money in a health savings account (HSA) or a flexible spending account (FSA), then it pays to use those funds before resorting to swiping a credit card. In fact, FSAs force you to spend down your plan balance every year or risk forfeiting your money, so there’s no reason not to swipe an FSA card if there’s a balance on it.
Now HSAs are a little bit different. Because HSA funds never expire, and because these accounts allow you to invest money you don’t need to withdraw right away, there are benefits to leaving your HSA alone and paying your medical bills out of pocket if you can afford to do so. But if given the choice between dipping into your HSA and racking up credit card debt in the course of covering a medical expense, the former is really your better bet.
Getting a large medical bill can be stressful, no matter what payment method you use to take care of it. But before you pay that bill, look it over carefully. It’s not all that uncommon for medical bills to contain errors, so it’s worth giving yours a close read before handing over money in any form.
Also, you shouldn’t hesitate to negotiate medical bills that are a burden to pay. In some cases, your provider might cut you a break, such as if you’re paying for a service your health insurance company wouldn’t pick up the tab for.
In a worst-case scenario, you can always swipe a credit card to cover medical treatment you need. But before you go that route and rack up interest charges in the process, see if there’s a less costly way to tackle your healthcare expenses.
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When it comes to insurance, it pays to plan for the worst.
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Imagine you’re on your way to work on a snowy day. The highway is packed, but most drivers are taking it easy. Suddenly, a giant SUV slams into the car behind you, pushing your car into the vehicle ahead of you, and a chain reaction begins. When it’s all over, your car looks like an accordion, and your insurance company totals the vehicle.
A car is considered a total loss, or “totaled,” when the insurance company decides it’s not worth the money it will cost to fix. Many states have a formula insurers use to determine when to declare a vehicle totaled.
For the sake of this illustration, assume that your car has an actual cash value (ACV) of $10,000. ACV is not the amount you paid for the vehicle or even the amount still owed on the auto loan. It’s the amount the car would be worth if you sold it for cash. You can find that number on Kelley Blue Book’s website, for example.
In your state, let’s say that a car is totaled when the cost to make repairs exceeds 80% of the vehicle’s value. Unfortunately, the insurance company estimates it will cost $8,500 to make all necessary repairs. Since the car has an ACV of $10,000, the cost of repairs exceeds 80%, and the vehicle is deemed totaled.
Once a car is deemed a total loss, the insurance company will cut you a check for the car’s ACV. In return, you provide the insurer with the car title.
Unfortunately, you still owe $15,000 on a vehicle worth only $10,000. You provide the insurance company with the title to the car, and the insurance company cuts a check for $10,000 and sends it directly to the lender. You’re now on the hook for the balance of $5,000.
Insurance companies normally auction off totaled cars to car dealers or scrap companies that want them for parts. If you decide to keep the totaled car and make repairs yourself, you’ll have to pay the insurance company the amount it would have made by auctioning it off.
While you can negotiate with your lender to decrease your balance, you’re unlikely to be successful. And if the lender does settle for less than you owe, the settlement will show up on your credit report and cause your credit score to drop.
The best way to avoid this situation is to carry gap insurance. Gap insurance is an optional coverage that pays off your auto loan when your car is totaled or stolen and you owe more than the ACV. In the scenario above, the full $15,000 you still owe on the vehicle would be paid off instead of only $10,000.
When buying a car, it’s common for the dealership or lender to ask if you’d like to buy gap insurance and roll it into the loan amount. While this may seem like a convenient way to buy coverage, it’s likely to be the most expensive. Once it becomes part of your loan, you’ll pay interest on the gap coverage.
A better option is to add gap coverage to your new or existing insurance policy. The add-on is likely less expensive through your insurer, and you won’t have to pay interest on the coverage. If you need clarification on whether you currently carry gap coverage, call your agent or insurer to learn how much it would cost to add it.
If you’ve just been in an accident and owe more on your vehicle than your insurer says it’s worth, we realize that advice to buy gap insurance comes too late.
However, it is possible to advocate for yourself, even after the insurance company’s decision comes in. If you believe that the ACV assessment is too low, Kelley Blue Book advises that you negotiate the payout. You do that by presenting evidence as to why your car is worth more than the insurer says. For example, if you’ve upgraded basic components, added expensive wheels, or in any way enhanced the vehicle, let the insurance company know.
Hopefully, you’ll never need gap coverage, but it’s nice to know it’s there if you do.
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It’s an issue that may have impacted you in the past.
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Many people get excited about the idea of a refund when they file their taxes. And why wouldn’t they? For a lot of folks, that’s money that can be used for things like paying off credit card debt and covering upcoming bills.
In fact, many tax filers are extremely reliant on the money they receive in tax refund form. And so they can’t afford to wait to see it hit their bank accounts.
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But the IRS has been notoriously late in sending out refunds for paper returns over the past few years. And now, that issue has been flagged in a new report by the Taxpayer Advocate Service, which highlights various problems the agency needs to address.
In 2020, the IRS made the decision to shut down its field offices in response to the COVID-19 pandemic. This wasn’t an unreasonable thing to do. In fact, many government agencies, including Social Security, made their offices inaccessible to the public for a period of time as the nation attempted to cope with a major health crisis.
The problem, though, is that many taxpayers still file their returns on paper. And those paper returns need to be processed manually.
By the time the IRS was able to get workers back into its offices, it already had a massive backlog of paper tax returns to go through. And that backlog hasn’t really gotten much better. In fact, the Taxpayer Advocate Service says that delays in issuing refunds is the No. 1 most serious problem with the IRS today.
For the past 2.5 years, the agency has forced millions of filers to wait longer than usual to get the money they’re entitled to. And while the agency does have plans to ramp up hiring (thanks to an uptick in funding from the Inflation Reduction Act), it may take a while for the IRS to improve its turnaround time for processing paper returns and issuing refunds.
Given the way inflation is surging these days, money has gotten tight for a lot of people. And you may not be in a position where you can afford a delayed tax refund. If that’s the case, there’s one important thing you need to do this tax season — submit your taxes electronically rather than on paper.
Electronic returns don’t have to be processed manually, and the IRS typically issues refunds for electronically filed returns within three weeks. But the normal turnaround time for refunds stemming from paper returns is six weeks — and that’s during periods when the IRS isn’t trying to dig its way out of a hole.
All told, the IRS clearly has some work to do to improve the customer experience for taxpayers. But if you don’t want to risk a delay in your refund this tax season, make a point to file your taxes electronically — even if you’ve always filed on paper in the past.
And if you’re worried about messing up, fear not. Today’s tax software is extremely easy to use. And it may even reduce your chances of making an error, at least with regard to math.
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Make sure you’re taking advantage of every tax break you’re entitled to.
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Being self-employed can be a mixed bag. On the one hand, you get to run your own show and maintain a work schedule that’s good for you. On the other hand, you might struggle with inconsistent payments and the fact that you have to manage your taxes yourself rather than having them taken out of your earnings.
Now there are certain expenses you might incur in the course of becoming self-employed. But the good news is that many of them can serve as a tax-write off. So if you took the leap into self-employment in 2022, here are some write-offs to look at claiming when you file your tax return.
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If you’re self-employed, you can claim a home office deduction provided you have an area of your home used solely for work purposes, and that office is your primary place of business. There are two options for calculating your home office deduction. The first is to simply claim $5 per square foot of office space, up to 300 square feet. The second is to figure out what percentage of your home your office constitutes, and then claim a proportionate deduction based on your home expenses.
Here’s how this might work in practice. Say your home office takes up 200 square feet. The simplified deduction would give you a $1,000 write-off. But let’s say your total home square footage is 2,000 square feet, and you spent a total of $20,000 in 2022 on expenses like heat, electricity, and property taxes. In that case, you can claim 10% of that total, or $2,000, for your deduction.
One downside of being self-employed is losing access to employer-sponsored health insurance coverage. If you had to buy your own health insurance last year, it may have put a strain on your budget. But you can generally write off the cost of your health insurance premiums on your taxes.
When you’re self-employed, you’re required to hand over 15.3% of your earnings in the form of self-employment taxes. That 15.3% breaks down into a 12.4% tax rate for Social Security and a 2.9% tax rate for Medicare. Half of that sum, however, is deductible on your taxes, so don’t neglect to snag that write-off.
Remember, when you’re a salaried worker, your employer covers half of your self-employment tax bill. When you work for yourself, you have to fork over that entire sum. So it makes sense that you’re allowed to deduct half of it.
There may be supplies you need to keep your business running and your records organized. When you buy things like filing folders, cabinets, flash drives, and pens, those are expenses you should be able to claim on your tax return — provided you’ve retained your receipts and know what sum to deduct.
Self-employed people have plenty of opportunities to lower their taxes. But if you’ve recently switched over to self-employment and this is the first time you’re doing your taxes since then, you may want to consult a professional this time around. A professional may know of write-offs you’re not aware of, so hiring one could result in a larger refund or a lower IRS 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.
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