COVID-19 vaccine scams

As the COVID-19 vaccine roll-out continues, it’s important to be on the lookout for scams. The Financial Crimes Enforcement Network (FINCEN) recently issued a new warning about vaccine scams:

• Beware of scams offering early access to vaccines for a fee.
• Keep an eye out for phishing scams where scammers email or text you with phony vaccine information.
• Steer clear of scammers trying to sell fake versions of vaccines.

Here are the facts:

• You can't pay to get early access to the vaccine.
• Medicare covers the cost of the COVID-19 vaccine. COVID-19 vaccines are also free to others throughout the country, although providers may charge an administration fee.
• Don't share your personal or financial information if someone calls, texts, or emails you promising to get you the vaccine for a fee.

For the latest vaccine updates, check with the Centers for Disease Control & Prevention (CDC). To learn more about how to manage your finances during the pandemic, visit consumerfinance.gov/coronavirus. For tips on how to avoid common scams, check out the CFPB’s fraud prevention resources.

Qualified charitable distributions that save retirees on their income tax bill

Consider Giving Your Required Minimum Distribution to Charity

"If you're over 70½, you can give up to $100,000 each year tax-free from your IRA to a 501(c)3 charity, called a "qualified charitable distribution" or QCD. The gift counts as your required minimum distribution but isn't included in your adjusted gross income. (Even though the minimum age for RMDs rose to 73, it's still 70½ for QCDs.)" Source: Start Planning for Your 2021 RMDs Now by Kimberly Lankford, USNWR, https://money.usnews.com/money/retirement/iras/articles/start-planning-for-your-rmds-now

QCDs can come from a TRADITIONAL IRA, not a Roth IRA because you've already paid taxes on the contributions to your traditional IRA but not your Roth.

You must be at least 70½ at the time of the distribution. A QCD can be made after age 70½ even if you're not subject to RMDs yet (because you're under age 73, as of 2024).

RMDs are required because you took advantage of a tax break while savings for retirement; check out my blog posts on required minimum distributions.

This can be especially helpful if you don't itemize your income-tax deductions and wouldn't be eligible for much of a tax break for your charitable contributions. Keeping the donation money out of your AGI can also help you avoid the Medicare high-income surcharge and may reduce the portion of your Social Security benefits that is subject to income taxes. Medicare participants who earn a high income have to pay an IRMAA, an extra charge on Medicare Parts B and D. The fee kicks in if you make more than  $103,000 in 2024 or if you and your spouse collectively earn over $206,000 in 2024).

Far fewer tax payers itemize their deductions now that the standard deduction is $29,200 for married couples filing jointly. The standard deduction for a single person will be $14,600 in 2024 (for income earned in 2024 and tax returns filed in 2025).

• If you are 65 or older, single, married filing separately, or head of household, you may increase your standard deduction amount. If you are a single senior taxpayer, you can claim an additional standard deduction of $1,950, married seniors are entitled to an additional $1,550.

• If both of you are 65 or above, the increase in the standard deduction is equal to $3,500.

Qualified charitable distributions are probably the best tax break available for retirees and are underused. Donate the money from your IRA to charity before making other kinds of charitable contributions. Ask your IRA administrator for the procedure – the money must be transferred directly from your IRA to the charity for it to stay out of your AGI.

Note that the charity will send you a charitable donation receipt BUT you cannot claim a charitable deduction for a QCD. So be sure to keep track of which donations were made through a QCD. Your IRA custodian has no way of knowing if a particular distribution meets all the requirements for a QCD.  

Combatting nursing home neglect and abuse

If you have a loved one living in assisted living or a nursing home, you should be aware of the potential for abuse.  

"Nursing Home Abuse Justice was founded to shine a light on the widespread abuse and neglect that occurs in nursing homes and assisted living facilities. Some statistics indicate that 1 in 10 Americans over the age of 60 have experienced some form of elder abuse. Our mission is to educate seniors and their loved ones on the appropriate actions they can take to help protect yourself or the people you love."

Check out: https://www.nursinghomeabuse.org/nursing-home-neglect/

The Power of Compound Interest

One of the most basic economic concepts that affects personal financial decisions is compound interest, the idea that savings and investments grow based not only on contributions but is enhanced by interest earned on contributions and previous interest. Conversely, compound interest hurts borrowers, especially on high interest loans like credit cards.

Get informed with this helpful website with its easy to use caculator:

The Power of Compound Interest: Guide & Calculator

https://www.moneygeek.com/compound-interest-calculator/

 

Other useful calculator tools: 

Cost of Living Calculator - https://www.moneygeek.com/cost-of-living-calculator/ 

Mortgage Calculator - https://www.moneygeek.com/mortgage/mortgage-calculator/

 

 

 

Think Twice Before Refinancing a Federal Student Loan

 Don't be tempted by super low interest rates to refinance FEDERAL student loans that are subsidized by taxpayers with a private lender. Especially now when payments have been suspended through January and may be extended again. If you are working and can afford to repay your federal student loans, go ahead and keep paying so you will be free of this debt sooner.

It is critical to understand the difference between federally subsidized student loans and loans from non-federal sources like banks and credit unions. (This also applies to obtaining loans in the first place.)

Federal loans come with a array of special protective benefits for borrowers that would be lost by refinancing in the private sector, including: 

• consumer protections
• repayment options, including income-driven repayment plans
• loan forgiveness

If you plan to take out student loans, educate yourself with this blog by searching for student loans and student debt. If at all possible, consider limiting your borrowing to federally subsidized student debt. If you already have loans, review the source and provisions, including interest rates, on your loans. Avoid private lenders if at all possible; while the rates may be low now, variable rates will likely increase in the future and you won't have access to the many benefits of federal loans. 

A great resource is the federal Consumer Financial Protection Bureau: https://www.consumerfinance.gov/consumer-tools/student-loans/

Thanks to Cheryl Winokur Munk for her article "Think Twice Before Refinancing a Federal Student Loan" in the 1/1/21 Wall Street Journal.

Coronavirus Relief Resources from Consumer Financial Protection Bureau

Relief for renters
A new law provides relief for renters and extends the CDC’s Order to protect many people who can’t pay their rent from eviction through January 31, 2021.

Updates to unemployment benefits
Congress passed legislation providing an additional $300 per week to all workers receiving unemployment benefits. The supplement begins after December 26, 2020 and ends on March 14, 2021.

Mortgage relief deadlines extended
Some homeowners struggling to pay their mortgage now have a little extra time to seek help.

Student loan relief
Interest and monthly payments on federally-held loans are suspended through January 31, 2021.

For information on the second round of Economic Impact Payments visit IRS.gov.

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What to do if you can’t pay your mortgage

If you are struggling to pay your mortgage help may still be available.

5 steps to ask for forbearance If the coronavirus has made it difficult to pay your mortgage, contact your mortgage servicer immediately. You may be eligible for forbearance, which temporarily pauses or reduces your monthly mortgage payments. View video

Get more details at our housing assistance site. Help paying bills If you are struggling to pay your bills we’ve got tools to help you make these tough decisions, like prioritizing bills or dealing with a debt collector.

Five tips for when you can’t pay your bills Having trouble paying your bills? We have tools that can help you evaluate your finances and make decisions about your budget. View video View video in Spanish