Money Management

The IRS isn’t allowed to just sit on your tax refund. Read on to see what the rules are when your refund is late. [[{“value”:”

If you file your taxes and realize you owe the IRS money from the previous year, you’re required to send in your payment by April 15, or whatever the official tax-filing deadline is (it’s sometimes a bit later than April 15th if that date falls on a weekend). If you’re late submitting your tax payment, you’re required to pay the IRS interest and penalties on that sum — even if you’re only late by a matter of days.

But what if the IRS is late paying you your refund? Does the IRS have to pay you interest, and does the agency get penalized in some way?

The answer to the second question is no. Penalties apply to taxpayers only. But in some cases, the IRS may have to pay you interest on your tax refund if it’s delayed to a substantial degree.

It’s a matter of circumstances

It typically takes the IRS 21 days to issue a refund following receipt of an electronically filed tax return. However, there are certain factors that can delay a tax refund. These include:

A tax return that contains errors, like the wrong Social Security number or missing informationA tax return with the wrong bank account information for direct depositA tax return that’s submitted on paper (these commonly take longer to process than electronic returns)

The IRS isn’t responsible for paying interest on tax refunds that are delayed to a mistake on your part. But if your tax return is error-free, then the IRS is obligated to issue your refund in a reasonable amount of time, defined as 45 days.

If the IRS doesn’t issue your refund within that time frame, then the agency is required to pay you interest on your overdue refund. Usually, that interest is calculated starting from the day the IRS received your return.

Better yet, if the IRS owes you money for an overpayment on your part in 2023, and your refund is delayed, the interest rate the agency will be subject to is 8% through September of this year. So while you may want your tax refund as soon as possible, a delayed refund may actually put a nice amount of extra money in your pocket.

How to check on the status of your refund

If it’s been more than 21 days since you submitted your taxes electronically, you may be eager to find out what the status of your refund looks like. And there’s an easy way to go about that.

Just use the IRS’s “Where’s My Refund” tool. To get an update, you’ll need:

Your Social Security numberYour tax-filing statusThe exact amount of your refund

This system should give you an update as long as it’s been 24 hours since you submitted your taxes electronically. But if you filed your return on paper, you may need to wait four weeks to get an update.

All told, the IRS usually does its best to issue tax refunds quickly. But if your refund is delayed through no fault of your own, you may get some extra money from interest as a result.

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CD interest rates are high right now, but that doesn’t make them the right investment for you. See one type you should definitely steer clear of. [[{“value”:”

With certificate of deposit (CD) rates beginning their long-awaited descent, many people are rushing to lock in a high annual percentage yield (APY) while they still can. Today’s rates could earn you hundreds of dollars in as little as a year, but that comes at a price.

That price is enough to keep a lot of people from ever opening one of these accounts. But if you’re thinking of giving CD investing a shot, there’s one type you definitely ought to steer clear of.

The price you pay when opening a CD

CDs promise guaranteed profits with no monthly maintenance fees, but they make your money virtually untouchable during the CD term. This could be anywhere from a few months to a few years.

You’re technically able to withdraw your cash whenever you want. But you must take it all out in a lump sum, and an early withdrawal typically triggers a penalty equal to several months of interest payments. It’s possible to lose some of your principal this way if you change your mind shortly after opening the CD.

Long-term CDs — those with terms of over a year — generally have the highest earning potential, but that’s a long time to give up control of your cash. It could prove problematic if unexpected costs arise. You might be forced to accept the early withdrawal penalty to get the money you need unless you have a separate emergency fund.

They’re not always good investments

Even if you can leave your cash alone for the entire term, you could still short-change yourself. The best 5-year CD rates right now are close to 4.00%. That could make you $221 on a $1,000 initial deposit. But if you’d invested that $1,000 and it earned a 10% average annual return, it’d be worth $1,611 after five years.

Also, we have no way of knowing what CD interest rates will look like in a few months, let alone a few years. It’s reasonable to assume they’ll go down at some point since they’re high right now. That’s why many see now as a good time to lock in a high rate.

But that’s also what makes long-term CDs such a bad investment for most people most of the time. There’s always a chance that rates could increase down the road. If you lock in a lower rate now, you’re stuck there until the CD term ends unless you pay the early withdrawal penalty.

Forget long-term CDs: Try these instead

Rather than tie up your cash for years, consider putting your cash in one of these accounts.

High-yield savings account

The top high-yield savings accounts have interest rates close to 5.00% right now, and they don’t prevent you from withdrawing your cash like CDs do. But their interest rates aren’t locked in. When they dip, your monthly interest payments will be lower. However, they can also climb when bank interest rates go up.

Short-term CD

Short-term CDs typically have lower APYs than long-term CDs, but that’s not what we’re seeing now. The best CD rates today come with CDs with 1-year terms.; these are still hanging around 5.00%. That’s enough to earn you $51 on a $1,000 initial balance. Plus, your money won’t be tied up for as long.

CD ladder

A CD ladder is where you split your money between CDs of different lengths — for example, a 1-year CD, a 2-year CD, and a 3-year CD. When the term ends on your first CD, you can either spend the cash, move it to a savings account, or invest it in a new CD. Then, you do the same thing with each of your other CDs as they mature.

This gives you access to some of your cash every year. It also gives you plenty of chances to shop around for the best CD rates at the moment, so there’s a smaller chance of short-changing yourself than there would be if you sunk all your cash in one long-term CD.

You can also spread your money around between several of these options if you prefer. Think about what matters most to you — a high interest rate or easy access — and let this guide your decision.

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It pays to open a CD in the very near future if you have the funds. Read on to find out why. [[{“value”:”

I don’t know about you, but I love the idea of getting to earn a risk-free 5% on my money, which is something certificates of deposit (CDs) allow for today.

Sure, the stock market has historically paid more. But with stocks, I’m running the risk of losing money. With a CD, my principal deposit is fully protected as long as I stick to an FDIC-insured bank and limit my balance to less than $250,000. And, well, let’s be real — most of us don’t have anywhere close to that amount of money in the bank.

Meanwhile, many CDs today are paying somewhere in the ballpark of 5% for shorter-range products — meaning 12-month terms or less. So to me, opening a 12-month CD is an easy call if you have the cash. Why not score a risk-free 5% for the next year and then reevaluate your options once it matures?

But if you’re interested in opening a CD, I would highly suggest doing so before June 11. Beyond that point, you may not get the great CD rate you can snag today.

Why it pays to open a CD before June 11

June 11 is when the Federal Reserve is next set to meet. And in the course of its two-day meeting, the Fed may decide that it’s ready to start lowering interest rates.

You may be thinking, “Who cares? Let the Fed do what it wants.” But one thing you should realize is that the whole reason CDs are paying what they are today is due to the Fed’s 11 rate hikes between 2022 and 2023.

The Fed has signaled that it plans to start cutting rates this year as inflation cools. The latest Consumer Price Index puts annual inflation at 3.4%, which is above the 2% inflation rate the Fed likes to target. But the central bank may decide that enough progress has been made in slowing inflation to allow interest rates to come down.

Interest rate cuts can benefit borrowers in a really big way. Once rates come down, personal loans and mortgages, for example, could get less expensive to sign. But interest rate cuts on the Fed’s part could also drive rates on savings accounts and CDs downward. So if you’re eager to snag a fantastic rate, don’t wait — open your CD before the Fed meets next.

Make sure it’s a good idea to tie up your money

CDs don’t offer the same flexibility as savings accounts for accessing your money. If you cash out a CD before its maturity date, you’ll generally face a penalty, the exact amount of which will depend on your bank and CD term.

So while you may be eager to lock in a great CD rate now, first make sure you don’t need your money for another purpose. For instance, if you don’t yet have cash for at least three months’ worth of bills in your emergency fund, then it’s probably best to hold off on opening a CD and instead reserve your spare cash for unplanned expenses or a potential period of unemployment. And if you’re not sure whether you’ll be in a position to buy a house in the next year, but you think it may be possible, then you don’t want to tie up your down payment funds for 12 months.

But if you have the money to spare, definitely spend a little time comparing CD rates from different banks and open one in the next few weeks. That way, you won’t have to worry about what the Fed decides to do in mid-June.

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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 positions in Target. The Motley Fool has positions in and recommends Target. The Motley Fool has a disclosure policy.

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Starting a business isn’t always a rewarding experience. Read on to see what you can do if you regret that decision. [[{“value”:”

It’s easy to see why the idea of owning a small business holds so much appeal. When you own a business, you get to call the shots — and you get to benefit financially if your venture does well. When you work for an employer, you can hustle your hardest and produce great results, but you might still wind up with the same monthly paycheck regardless of how hard you try.

A 2023 Incfile survey reveals that 90% of respondents prefer to be their own boss than work for an employer. And if you felt similarly, you may have gone out and started your own business not so long ago.

But what if you’re now regretting that decision? First of all, don’t beat yourself up for that, because it’s totally understandable. Running a business is a lot of work, and there can be a lot of stress, heartache, and financial upheaval involved. But if you’re not feeling good about your business, here are some options to consider.

1. Rethink your approach to running your business

If you’re bemoaning your decision to start a business because you’re suffering from serious burnout, then it may be time to make changes to the way you run things. First, if you’ve taken on too many tasks, see if it’s possible to get help. For example, if you decided you’d invest in some accounting software and do your own bookkeeping but it’s not working out, try hiring a professional with experience in that area and see if it helps.

Similarly, you may need to outsource other tasks to not only free up some of your time, but help ensure that they’re being done correctly and effectively. For instance, if you’re not great with social media marketing, hiring a consultant to maintain your business’s page could not only free up some of your time, but drive more customers to your website.

2. Reset your expectations

It takes the average business two to three years to become profitable, according to FreshBooks. So if you regret starting your own business because you’ve been at it for 12 months and are still in the red, don’t panic or assume you’re doing a poor job running it. It may just take time for the numbers to start working out in your favor.

That said, if you’re running out of cash in your personal savings account and are on the verge of taking on costly debt to pay your bills while your business grapples with growing pains, then you may need to consider shutting down or seeing if it’s possible to take on work on the side to cover your expenses. Waiting things out another year or so really only works if you can cover your personal expenses during that time without racking up thousands upon thousands of dollars in credit card debt.

3. Sell it and move on

Maybe you really aren’t enjoying being a business owner and the math isn’t working out in your favor. If so, it’s OK to walk away and do something else. So don’t feel bad if winding down operations is your best route.

Of course, you’ll need to do so methodically. This includes:

Giving your employees notice and figuring out if you owe them any separation payReviewing your books and settling all accounts receivables and payableWorking with a tax or legal professional to formally terminate your businessInforming your customers that you’ll be closing down and tying up loose ends

It’s easy to see why you might get to a place where you regret going into business on your own. In some cases, it pays to power through. But if not, there’s nothing wrong with determining that being a small business owner just isn’t right for you.

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Passive income is an ideal way to build wealth, and CDs are about as passive an income source as they come. Learn how to get started here. [[{“value”:”

Income streams that don’t require regular active involvement are typically dubbed “passive income.” CDs (certificates of deposit) are an excellent example of passive income since you don’t need to touch them at all once they’re established.

Indeed, if you set up your CDs right, you can enjoy a stable, consistent, relatively low-risk source of income that requires only minutes of your time once or twice a year.

The key? Laddering.

Ladder your CDs for consistent earnings

Good passive income sources are long-term and consistent. The best way to get this with CDs is to build a CD ladder. This is when you have a variety of CDs that mature at different times — ideally, at regular intervals — to give you reliable income for years to come.

Suppose you have $10,000 to invest. A good laddering strategy might look like this:

$2,000 into a 12-month CD$2,000 into a 2-year CD$2,000 into a 3-year CD$2,000 into a 4-year CD$2,000 into a 5-year CD

When the first short-term CD matures, you can roll it over into a new 5-year CD. Do this each year going forward. You’ll wind up with a CD that matures each year, not only freeing up cash if you need it but also letting you benefit from compound interest.

Why use long-term CDs?

You may wonder here why I don’t suggest investing the full $10,000 into a single 1-year CD, then just rolling that over as you go. This is definitely a viable strategy, especially right now when CD rates are so high.

However, if your goal is passive income, long-term CDs require way less maintenance. More importantly, though, long-term CDs lock in interest rates much longer. So if rates drop over the next few years — which is predicted to happen, though it’s hard to say when — your longer-term CDs will keep on truckin’ for at least a few years before you have to deal with the lower rates.

Rollover maturing CDs as rates/needs warrant

As each CD matures, you’ll have the option to withdraw your money and do something else with it or to reinvest it into a new CD. Many CDs will roll over automatically, offering a brief grace period after maturity to withdraw your funds before they’re rolled into a new CD.

If you’re using your CDs for passive income, you may choose to withdraw your interest earnings while reinvesting the original principal into a new CD. If you don’t need the income at that time, you could reinvest it all and let it continue to grow. Or, if you need the funds, you can simply withdraw it all.

When rates are high, like now, CD earnings can definitely make up a larger portion of your passive income. If rates go down, you may want to consider if there are other, more profitable, options.

Part of a complete portfolio

CDs can be a great part of a balanced, diverse portfolio. They are simple to set up, require minimal maintenance, and can offer consistent, low-risk income. You’ll need fairly substantial investments to actually live off of that income, but it’s definitely possible if you build up your savings and take advantage of high-yield CDs.

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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.Brittney Myers 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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