There are lots of things Uncle Sam can’t touch — so long as you play by the rules. Andrey_Popov / Shutterstock.com
Just because you’ve stopped working doesn’t mean you’re done paying taxes. Much of the income you receive in retirement, even if it’s not directly from employment, can still be taxable. But not all of it is subject to federal taxes — especially if you play your cards right. You can or might be able to avoid paying federal income taxes on the following types of retirement income.
Now that’s a pretty rare opportunity.
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The investments you hold in your brokerage account no doubt have a purpose — to help you make money. But what if there were a way to make money while also promoting a cause you support, like the green movement?
Actually, there is. And if you’re willing to do some research, you might be able to help the planet in the course of growing your own personal wealth.
If fighting climate change and supporting the green movement are things that are important to you, then you can allocate your investment dollars accordingly and give yourself something to feel good about. Different financial institutions offer ETFs, or exchange-traded funds, that focus on clean energy. But in some cases, you may be able to buy bonds issued by your own state, or an entity within your state, that support green initiatives locally.
In Connecticut, for example, there’s the Green Liberty Bond, whose proceeds will be used to fund eco-friendly projects at the local level. And if more states start issuing their own green bonds, it could pave the way for investors to make money while helping to clean up their own cities and promote more eco-friendly infrastructure.
The idea actually isn’t such a strange concept. States and cities have long issued bonds, known as municipal bonds, to fund public projects. What makes these bonds appealing is that they’re commonly backed by the full faith and credit of the issuing state, thereby minimizing the risk involved.
A city, for example, might issue bonds to improve a school district, clean up a park, or build a new roadway. As a bondholder, you get to benefit from regular interest payments until your bond matures, at which point you also get your principal investment back. So it’s not such a stretch for cities or states to issue bonds that work the same way whose purpose is to promote green initiatives.
Finding opportunities to invest in green bonds isn’t always easy — namely, because in many cases, they’ll only be issued in limited quantities, and you’ll need to know they exist to get your hands on them. Unlike stocks and ETFs, these types of bonds don’t trade publicly, so you may need to buy them directly from their source, such as an issuing bank.
But in this regard, a little digging and Google searching could go a long way, as it could be your ticket to unveiling similar opportunities to Connecticut’s Green Liberty Bond (whose next offering happens to be scheduled for April). But even if buying green bonds proves difficult, a simple search for “climate change ETFs” could leave you with a host of options to put your money into.
The iShares Global Clean Energy ETF is just one example, and there are many more like it. So if you’re serious about saving the planet while growing wealth, then it definitely pays to do your share of research.
We pored over the data and user reviews to find the select rare picks that landed a spot on our list of the best stock brokers. Some of these best-in-class picks pack in valuable perks, including $0 stock and ETF commissions. Get started and review our best stock brokers.
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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.Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Citigroup is an advertising partner of The Ascent, a Motley Fool company. Maurie Backman has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
Don’t put these tasks off for too long.
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Divorce takes a financial toll as well as an emotional toll. There’s a lot to sort out when separating a couple’s assets, and while lawyers can be a big help, there are still plenty of tasks that newly divorced individuals have to take care of on their own. That includes most insurance-related matters.
They may not be on the top of most people’s post-divorce to-do list, but the following three tasks definitely deserve a place on there. Make time for them as soon as possible to avoid gaps in coverage or other headaches.
Many people choose their spouse as their primary life insurance beneficiary, but when a couple gets divorced, they probably don’t want their ex to inherit the death benefit if they were to pass unexpectedly. However, that’s exactly what will happen if they don’t update their beneficiaries.
It’s usually not too difficult to do this. If the life insurer doesn’t permit the policyholder to make this change online, they can do so by contacting the company directly. For couples with children, naming them the new beneficiaries is often the easiest solution. Otherwise, the policyholder can choose a different family member or friend. And if they don’t feel they need a life insurance policy anymore, they can always cancel it instead.
Newly divorced people will have to purchase their own home and auto insurance coverage to replace their previous shared coverage. Often, this is as simple as getting new quotes and choosing the company that offers the best deal. But it may require a little more thought for some.
It might be possible to get by with less coverage in some cases. For example, if the couple’s homeowners insurance policy included an endorsement for one spouse’s expensive jewelry, the other spouse may not need this on their new policy. Similarly, if one person is moving from a home to an apartment, they may be able to ditch their homeowners insurance for a much more affordable renters insurance policy.
It’s important to note that each company weighs the various factors in an insurance application differently, and some couples might see their premium costs rise a little compared to when they were married. Many auto insurers, for example, give discounts to married couples because they’re perceived as less risky drivers.
Normally, it’s only possible to get a new health insurance policy during the open enrollment period at the end of the year. But divorce qualifies people for a special enrollment period. This enables newly single adults to choose a new policy to cover them after they lose their existing health insurance.
As with home and auto insurance, shopping around is the best way to find a great deal. Compare plans on more than just cost. Eliminate those that don’t cover needed prescriptions or nearby hospitals to reduce the risk of surprise out-of-pocket bills. And consider opting for a higher deductible to keep premium costs down.
If it feels too overwhelming to do all these tasks at once, split them up. Focus on one at a time, but don’t put them off for too long. Accidents can happen at any time, and having the wrong insurance can make handling it much more complicated.
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.
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If the money is yours, why not make the most of it?
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While it may be tough to believe, some people still have not received the stimulus checks they were eligible for in 2020 and 2021. It’s such an issue that the IRS has published directions for anyone who missed one or more stimulus checks during that period. There are rules, though.
According to the IRS, anyone missing the first or second stimulus check can only claim the money by filing a 2020 federal tax return. Those missing the third stimulus check must claim the funds via a 2021 federal tax return.
If you’re not sure which check or checks you’re missing, these reminders may help:
Eligible tax-paying adults received a check of up to $1,200.Eligible dependents under 17 received $500 (a maximum of three dependents could be claimed).The first stimulus checks hit bank accounts nationwide the weekend of April 11 and 12, 2020. Economic Impact Payment (EIP) cards were sent out in late May or early June.
Eligible adults received a direct stimulus payment of up to $600.Dependents aged 16 or under also received $600.Checks were issued between Dec. 29, 2020, and Jan. 15, 2021.
Eligible adults received a check of up to $1,400.Families of eligible dependents received an extra payment of $1,400 per dependent (with no limit on the number of dependents)The first wave of third-round checks arrived by direct deposit on the weekend of March 13 and 14, 2021.
If you did not file a tax return for 2020 or 2021, you’ll need to file now, even if you’re generally not required to file a return.
If you did file a return for one or both of those years but did not claim the Recovery Rebate Credit (the credit claimed by those who did not receive their stimulus payment), you must file an amended tax return.
Don’t assume the IRS will automatically send the money owed. Whether you wrote nothing on the Recovery Rebate Credit line or marked the box with 0, it was treated as a decision not to claim the credit.
If the IRS does fix the issue, it’s because they suspect you made a mistake. Let’s say your household was eligible for a direct stimulus payment of $2,800, but you marked the Recovery Rebate Credit line as $1,400. The fact that you filled out that line indicates that you intended to request the credit. The IRS says it will automatically calculate the correct amount you’re owed and reprocess the return.
It’s still possible to trace a missing payment. You do so by accessing your online IRS account. Once you’ve logged in, check the amounts on the Tax Records page. It will indicate how much you were sent.
If the IRS site indicates that it issued you a check that has yet to arrive, call the IRS at 1-800-919-9835. Investigating and responding will take the revenue service up to six weeks.
You now have until April 15, 2024, to claim the first two checks with a 2020 tax form and until April 15, 2025, to claim the third with a 2021 tax return.
Considering the level of buzz surrounding stimulus payments, the number of people who did not receive what was rightfully theirs is surprising. As late as last fall, the IRS sent letters to more than 9 million taxpayers who appeared to qualify for the 2021 Recovery Rebate Credit but still needed to claim it on their tax return.
If you’re one of those people, now is your chance. Even if you don’t need it to cover bills, the money can help you build an emergency fund, pay down a high-interest debt, or invest in your future.
If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.
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You could effortlessly improve your finances with this Dave Ramsey tip.
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If you’re like many people and you find managing every aspect of your finances to be stressful and confusing, finance expert Dave Ramsey has a helpful tip for you. His suggestion could both simplify the process of managing your money and increase the chances you’ll be successful at accomplishing important financial goals.
Here’s what Ramsey suggested you do, along with some advice on why following this tip could be extremely helpful to your overall financial situation.
Ramsey offered a “helpful tip” on the Ramsey Solutions blog, which relates to putting money away for financial goals.
“Set up a direct deposit for your savings,” he suggested. “If you’re putting money away for your emergency fund or retirement investments, it makes life a whole lot easier if you set up a direct deposit. No moving money over (and maybe forgetting about it). Just a streamlined, organized process for getting ahead on your savings goals!”
This advice is really easy to follow. If you’re saving money for emergencies or for purchases you’ll need to make in the next five years or so, you can sign into the website for your online savings account and arrange to have a set amount automatically transferred into your accounts on the day you get paid (or shortly after). If you’re saving for retirement, you can do the same with your brokerage accounts.
The money will move automatically to where it needs to be in order for you to accomplish your objectives and it will do so before you get the chance to use it for anything else. So, you can rest assured you’re on track for your goals as you won’t ever miss an automated contribution.
Ramsey’s advice is really great on this issue. Automating your savings really does make your life a lot easier, and it also makes it far less likely you’ll be derailed from your goals.
The reason is simple. Most people just stick with the status quo. If you’ve set up an automated investment to your savings account and your brokerage account, it takes a lot more work and effort to cancel that transfer and not contribute. Chances are very good you aren’t going to want to go through the hassle — especially since you’ll have lots of time during the process of changing your contributions to think about how doing so will cause you to get off track from your objectives.
It’s also pretty easy to get used to living on what you have left in your checking account if you’ve automated the process of saving for retirement, emergencies, and other purchases. You’ll just know you can spend whatever is left on other things and won’t have to worry about trying to save enough to move money to your brokerage or savings accounts at the end of the month.
If you haven’t already followed this Ramsey advice, do it now. Figure out what you need to invest and save to accomplish your objectives, and set up your automated transfers today. You’ll be very glad you did as you see your brokerage and savings account balances growing.
If you’re using the wrong credit or debit card, it could be costing you serious money. Our experts love this top pick, which features a 0% intro APR until 2024, an insane cash back rate of up to 5%, and all somehow for no annual fee.
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Using a credit card for everyday purchases can be a good idea.
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Tori Dunlap is a money coach who hosts the Financial Feminist podcast. She discusses money management tips and helps her listeners feel more confident about their finances. Dunlap is a fan of using credit cards instead of debit cards because of their many benefits. Here’s why she pays all her bills with a credit card and how to decide if you should ditch your debit card.
Dunlap explains in the podcast episode titled “I Don’t Have a Debit Card” that debit cards aren’t as secure as credit cards. If you’re a victim of debit card fraud, the funds in your bank account are at risk. Using credit cards can be a safer choice. That’s because the money in your bank account isn’t linked to your credit card, so you won’t be out of cash while you await a fraud investigation to be completed. A credit card fraud investigation can also be faster and more straightforward.
Save: This credit card has one of the longest intro 0% interest periods around
More: Save while you pay off debt with one of these top-rated balance transfer credit cards
Dunlap also prefers using credit cards because she can earn credit card rewards. You can earn cash back and other valuable rewards using rewards credit cards. Most debit cards don’t offer rewards; if they do, they’re minimal. Using your credit card to cover everyday purchases is an excellent way to boost the rewards you earn.
Another reason Dunlap uses credit cards frequently is to build credit. Using debit cards won’t improve your credit. But when you use credit cards with care, you can build credit. By making responsible credit card choices, like paying your bills each month, you’ll show creditors that you know how to manage credit and pay back your debts. A good credit score can help you take advantage of future financial opportunities, so working to build your credit is essential.
Dunlap also finds it easier to track her monthly spending when using credit cards. That’s because your card issuer will categorize your transactions for you. Looking at your monthly credit card statement makes for a simple way to see where your money is going. Many credit cards will also give you a yearly summary of your spending, which could help you minimize overspending on things that don’t matter to you.
While credit cards can be a valuable financial tool, you should use them carefully. You want to avoid making costly mistakes, like accumulating credit card debt. Try the following tips for more success:
Pay off outstanding credit card debt: If you have existing credit card debt, you should work to pay your debt off first. Don’t continue to use credit cards until you pay off your debts. Otherwise, you put yourself at risk for an even bigger debt problem.Only charge what you can afford: Don’t spend money you don’t have. Only use your credit card for purchases that you can pay off in full so you can avoid costly interest charges. Make sure that you have enough funds in your bank account to cover your entire credit card bill.Budget to avoid overspending: Overspending with credit cards can lead to a debt problem. Learning to budget can help you avoid overspending. Budgeting apps are one tool that may make it easier to follow a budget and improve your money management skills.
Are you considering applying for a new credit card? Review our list of the best credit cards to learn more about their benefits.
If you have credit card debt, transferring it to this top balance transfer card secures you a 0% intro APR for up to 21 months! Plus, you’ll pay no annual fee. Those are just a few reasons why our experts rate this card as a top pick to help get control of your debt. Read our full review for free and apply in just 2 minutes.
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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