The standard deduction for married couples filing jointly for tax year
2021 is increasing to $25,100, up $300 from the previous year. Filers age 65 and older get an additional amount of $1300.
For single taxpayers and married individuals who file separately, the standard deduction is increasing to $12,550 for 2021, up $150.
For heads of households, the standard deduction will be $18,800, up $150.
Remember that the personal exemption was eliminated as part of the Tax Cuts and Jobs Act of 2017.
Now that you've filled out the FAFSA (free application for federal financial aid) it's time to tackle the College Scholarship Service Profile (CSS Profile) for non-federal financial aid.
Be ready to provide your home's purchase price, year of purchase, current value (check your property tax bill) and current debt to determine your home equity.
Schools that require the CSS treat home equity very differently, ranging from including 100% of equity in parents' assets (Boston College) to not considering home equity at all (Stanford). Cornell factors in 50% of equity. You aren't necessarily expected to tap home equity to pay for college but it is used to determine how much parents should be able to pay. If you own more than one home or other real estate assets, expect to disclose this information on the CSS profile.
Parental contributions are typically 5% of their assets. Also factored in are the number of siblings attending college and many other factors.
So, how colleges treat home equity has "an Enormous impact on what parents" are expected to pay.
When borrowing against home equity to pay for college, avoid a home-equity loan because the entire amount available to you is considered an asset. A better choice is a home-equity line of credit.
Lots to consider when comparing the cost of various colleges!
And Covid-related financial set-back such as job loss further complicate the analysis.
Thanks to Beth DeCarbo, writing for The Wall Street Journal, 10/4/19.
Detroit residents aren't the only Americans who have to worry about lead in their drinking water. Lead, a toxic metal, is common in houses built before 1986.
Radon is a naturally occurring radioactive gas released from the ground and the second most common cause of lung cancer after smoking.
A variety of DIY testing kits are available online and in home improvement stores.
Even if your annual municipal water supply report claims no lead in the drinking water it supplies, your dwelling may have lead pipes or lead-soldered plumbing.
Virginia tech doctoral student Rebecca Kriss tested DIY lead kits ($13-$40) and found them effective. after letting the cold water run briefly, a test strip is left in a water sample which then provides positive or negative results. A positive results means your water exceeds the federal 15 parts per billion threshold.
Approximately 1 in 15 homes test high for radon. You can buy a test kit that measures the radon level in the basement or ground floor of your home over 90 days. Then it is mailed to a lab for analysis. If results show radon levels at or above 4 picocuries per liter of air, consult a certified professional about mitigation strategies. Mitigation costs vary.
Radon testing should be done every 2 years because radon levels can fluctuate.
Be sure to test after major home-improvement projects that involve the soil surrounding the house, especially when converting a basement to living space.
When buying a home be sure to have it tested for radon and lead levels.
Many thanks to Beth DeCarbo writing for The Wall Street Journal, October 23, 2020.
But, use caution: " Such options often come with other requirements, like a minimum credit score, or bring their own disadvantages, like a longer period of interest accrual."
"For consolidation and refinancing, be aware that doing so could potentially pull you out of the forbearance period."
Call your loan servicer today to ask about repayment options. Don't wait until December when servicers may be overwhelmed with calls
"Claiming Social Security Widow(er) Benefits: It's Complicated" by Joe Elsasser | October 07, 2020 describes why widow(er)s should consult an expert (in addition to a Social Security representative) to ensure they get the full benefits they deserve. Saying "it's complicated" is an understatement!
"the widow(er) benefit is calculated based on both when the deceased claimed Social Security and when the survivor claims."
"The benefit is limited to the higher of 82.5% of the deceased’s full
retirement age (FRA) benefit or the amount the deceased was actually
receiving at the time of their death. If the deceased was born between
1943 and 1954 and claimed benefits at age 62, and the surviving spouse
reached full retirement age by the time of the deceased’s death, the
surviving spouse will actually receive more than the deceased was
receiving (82.5% of the deceased’s FRA benefit rather than 75%)." Different birth years mean different outcomes.
Elasser goes on to explain the options in more detail and offer some examples, convincing this reader that making the decision for the survivor about when to claim SS benefits merits very careful consideration with an experienced advisor.
Roberta W. McCain, maverick mother of Sen. John McCain, dies at age 108!
She took to the presidential campaign trail at 96 on behalf of her son, Sen. John McCain of Arizona.
One of the founders of REI equipment coop lived to age 107.
Are you considering the impact of living much longer than you planned for your retirement? Roberta McCain is a great example of the value of single premium immediate annuities to insure against running out of money before running out of breath.
The latest news on consumer fraud from The New York Times:
"In the pandemic, people have flocked to instant payment apps like Cash App, PayPal’s Venmo and Zelle as they have wanted to avoid retail bank branches and online commerce has become more ingrained. To encourage that shift, the payment apps have added services like debit cards and routing numbers so that they work more like traditional banks."
"But many people are unaware of how vulnerable they can be to losses when they use these services in place of banks. Payment apps have long had fraud rates that are three to four times higher than traditional payment methods such as credit and debit cards."
The apps are so easy to use... for fraudsters as well as consumers. and because transactions are instantaneous there is less time to identify fraudulent transactions.
Fraud problems are especially common for users of Square’s Cash App.
https://www.nytimes.com/2020/10/11/technology/fraud-payment-apps.html
"We may live in a digital world but old-fashioned paper cheques are still in use, and, for the scammers, they present an opportunity to steal your money"
"Of the many scams that are prevalent in today’s society, fake cheque scams target consumers of all ages, and worryingly, they’re on the rise."
"In this guide, we’ll provide you with the latest information on how to spot, avoid and report fake cheque scams to help you get one up on the scammers."
Check it out: https://www.businessexpert.co.uk/fake-cheque-scams/
The IRS has extended the deadline for individuals to claim their Economic Impact Payment (EIP). The IRS’s Non-Filers tool will be available through November 21, 2020.
While most people who regularly file a tax return or receive federally administered assistance, like social security, were automatically sent their EIP, several million people have not yet received their payment. Most of these people have no tax filing obligation because they make too little income to file federal taxes.
The Consumer Financial Protection Bureau has created a handful of resources to help:
Are you prepared if a loved one becomes incapacitated or dies? What if you are the one to check out? Writing for The Wall Street Journal, 10/5/20, Glenn Ruffenach explains why and how to let your family know your final wishes and how to deal with your financial affairs.
"I assume you already have an estate plan with all the necessary documents (a will, power of attorney, etc.). If so, you can move to, first, writing down the steps your family should take if something happens to you and, second, listing all the pieces and people—assets, accounts, insurance policies, bills, debts, credit cards, passwords, bankers, lawyers and the like—that are part of your financial life."
"If you search online (example: what my family needs to know free pdf), you’ll find numerous worksheets that you can print at no cost and fill out. In particular, check out Everplans, which offers (in addition to an online planning service) more than a dozen free checklists to get you started. (At everplans.com, under Resources & Guides, search for: downloadable checklists."
A book: “Get It Together: Organize Your Records So Your Family Won’t Have To” by Melanie Cullen with Shae Irving. "Don’t be put off by the length: more than 400 pages. The authors cover just about everything a caretaker or survivor might need to know."
Get started today!
