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Choosing a financial advisor is a big decision. Being aware of these seven common blunders when choosing an advisor can help you find peace of mind, and avoid years of stress. 1. Hiring an Advisor Who Is Not a Fiduciary By definition, a fiduciary is an individual who is ethically bound to act in another person’s best interest. This obligation eliminates conflict of interest concerns and makes an advisor’s advice more trustworthy. If your advisor is not a fiduciary and constantly pushes investment products on you, it's time to find an advisor who has your best interest in mind. 2. Hiring the First Advisor You Meet While it’s tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you. 3. Choosing an Advisor with the Wrong Specialty Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor’s strengths and weaknesses - before signing the dotted line. 4. Picking an Advisor with an Incompatible Strategy Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style. 5. Not Asking about Credentials To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP. 6. Making Assumptions When They are Affiliated with a Reputable Brand An advisor might appear qualified and professional due to an association with a major firm like J.P. Morgan or Morgan Stanley. Working with an advisor from a reputable firm can lead to stability and better tools and information. However, choose an advisor because they are the best fit, not because of their branding. 7. Not Understanding How They are Paid Some advisors are "fee only" and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them. Source: SmartAsset

Joe and Jo Ann Paszczyk, of Chicago, love unique travel adventures. Over the past decade, the couple has taken about 25 trips with educational organizations. “We have many interests—science, astronomy, history, nature,” says Joe, a former TV producer. Adds Jo Ann, a retired human resources manager: “These are not your normal souvenir shopping trips. You’re in small groups with curious people who like to learn.” In the past three years, they have gone on trips led by Chicago’s Field Museum to Madagascar, India and Tanzania. The expert guides “were always pointing out details that you would otherwise miss,” says Jo Ann. Like the Paszczyks, an increasing number of travelers age 50 and older want to combine learning more about a place or a passion with visiting new destinations. They are selecting trips sponsored by a university, museum or other nonprofit educational organization. Led by experts, from professors to scientists to museum curators, these trips offer special access, such as private tours of historic sites and in-depth lectures. “We have seen a healthy increase, with our programs doubling in size in the last five years,” says Karen Ledwin, vice president of product management at Smithsonian Journeys, which leads 300 trips a year on every continent. The vast majority of Smithsonian clients—90%—are age 50 and older. “These are travelers seeking enrichment. Sitting on the beach is not for them,” Ledwin says. On a Smithsonian Journeys trip to Italy, Jo Ann Paszczyk recalls her group getting a private tour of the Uffizi Gallery in Florence, on a day it was closed to the public, and a private night tour of Basilica di San Marco in Venice, including a special lighting of the ceiling’s Byzantine mosaics. While in India on a Field Museum trip, a field biologist pointed out tiger paw prints and explained what scientists learned from them. “It was a magical moment for me,” Jo Ann says. “It felt like I was driving into a page of The Jungle Book.” Says Erica Au, Field’s manager of donor relations and major and planned giving: “Traveling with our experts, who have spent their careers studying a topic and can explain it in a meaningful way, adds an extra level.” For example, in summer 2020, the museum will take its annual two-week safari to Tanzania, hosted by their manager for mammals. It costs about $11,000 per person plus airfare. The group will visit the Serengeti to experience the wildebeest migration. They will take game drives to see black rhinos, cheetahs, gazelles, flamingos and hyenas, including a nighttime game drive to see nocturnal mammals, such as genets. Get Smart With a Bevy of Travel Options With so many educational organizations offering trips, at every price point, and by land, rail and boat, the choices can be overwhelming. Even the New York Times has gotten into the act, leveraging its journalists as expert guides. These trips can run from one-day city tours to 15-day or longer luxury vacations, in categories including sports, history and culture. This year, cookbook author and NYT contributing writer Joan Nathan will lead an eight-day trip exploring Jewish food and heritage in Florence, Siena and Rome for $7,490 plus airfare. Highlights include a visit to Europe’s only kosher winery in Tuscany and an evening of music and food at the home of a Libyan Jewish chef in Rome. History buffs may want to check out a six-day trip led by foreign correspondents that explores the fall and rise of Berlin from the World Wars to today. The trip costs $5,595 per person plus airfare. If you feel strongly about saving the planet, you could consider taking a sustainable trip. The World Wildlife Fund offers about 80 “conservation travel” trips a year, which feature “sustainable travel that supports the protection of nature, wildlife and local communities,” says Jim Sano, the nonprofit’s vice president for travel, tourism and conservation. “We educate travelers about environmental and conservation issues, and all of our guides are trained by us in basic natural history.” Additionally, all emissions from trips are 100% carbon-offset. In July 2019, the organization is offering its first “Zero Waste Adventure,” a six-day trip to Yellowstone country for 14 guests, for about $5,700 plus airfare per person. The goal of the trip is to “fit all waste produced into a single container,” says Sano. Highlights include exploring the northwest sector of the Greater Yellowstone ecosystem and a stay at a safari-style luxury camp. Another good source of educational trips is alumni associations of universities and colleges. You don’t always need to be a graduate of the school to sign up. For example, in November 2019, Stanford University offers a two-week trip called “Unseen Japan,” led by a lecturer in international policy. At $9,695 per person plus airfare, the trip includes visits to temples in Kyoto, a tour of I.M. Pei’s Miho Museum and an overnight stay at an inn in the hot springs town of Matsuyama. These trips can be expensive, so compare what’s offered before you sign up. For example, does the price cover most meals and drinks, tips for guides and drivers, special excursions, and medical, accident and evacuation insurance? Also, check to see if a professional tour manager will accompany the group to handle logistics and iron out any problems. Smithsonian Journeys always sends its own experts, Ledwin says. Select a trip according to whether you seek an active adventure or a more leisurely pace, says Jo Ann Paszczyk. Most trips are rated by activity level. African safaris tend to be more sedentary because you sit in a vehicle all day, while other trips require a lot of uphill hiking. “We are clear on expectations,” says Au, of the Field Museum. “Our Mexico trip featured horseback riding and hiking uphill in altitudes over 10,000 feet. But our Greece trip was geared to anthropology and you are on a cruise ship with some walking during the day.” Another benefit to traveling with a local institution is that it often creates a bond between travelers and the organization that extends beyond the trip. “We’ve made some new friends and become more part of the Field community,” says Joe Paszczyk. To him and his wife, that’s a gift that keeps on giving. Source: Kiplinger    

When you’re choosing a health plan for the year -- whether you get coverage through your employer or on your own -- one option may be a high-deductible plan that makes you eligible to contribute to a health savings account. Weigh this option carefully. There are a lot of misconceptions about how HSAs work. Health savings accounts offer a triple tax break -- contributions aren’t taxed, the money grows tax-deferred, and it can be used tax-free for eligible medical expenses at any time. Here, we take a look at several of the most common HSA myths -- and the reality. Myth: You Must Use HSA Money by Year-End This is the biggest misconception about HSAs. Unlike flexible spending accounts, HSAs have no use-it-or-lose-it rule. You can use the money tax-free to pay eligible medical expenses at any time. The money can pay current medical expenses -- such as your insurance deductible, co-payments for health care and prescription drugs, and out-of-pocket costs for vision or dental care -- but you’ll get the biggest tax benefit if you keep the money growing in the account and withdraw it for medical expenses much later, such as in retirement. You can withdraw HSA money tax-free, for instance, to pay Medicare Part B, Part D and Medicare Advantage premiums after you turn age 65. Most HSAs let you invest the money in mutual funds for the long term. Myth: You Can Only Get an HSA Through Your Employer Although many employers pair an HSA with a high-deductible health insurance plan, anyone with an HSA-eligible health insurance policy can contribute to an HSA. (HSA-eligible policies must have a deductible of at least $1,350 for single coverage or $2,700 for family coverage in 2019.) Many banks and other financial institutions offer health savings accounts. You can find HSA administrators at www.hsasearch.com, where you can compare fees and investing options. If your employer does offer an HSA, however, that’s usually your best option because many employers contribute money to employees’ HSAs (an average of $500 per year for individuals and $1,000 for families), and employers tend to cover most of the fees for employees’ HSAs. Also, contributions made through payroll deduction are pre-tax, avoiding federal and Social Security taxes. If you contribute to an HSA on your own, your contributions are tax-deductible. Myth: You Can’t Use Money in the HSA After You Sign Up for Medicare You can’t make new contributions to an HSA after you enroll in Medicare, but you can continue to use the money that’s already in the account tax-free for out-of-pocket medical expenses and other eligible costs that aren’t covered by insurance, such as vision, hearing and dental care and co-pays for prescription drugs. You can also take tax-free withdrawals to pay a portion of long-term-care insurance premiums based on your age, ranging in 2018 from $410 if you’re 40 or younger to $5,110 if you’re 70 or older. And after you turn 65, you can use HSA money to pay premiums for Medicare Part B, Part D or Medicare Advantage. You can even withdraw money from your HSA to reimburse yourself if your Medicare premiums are paid directly out of your Social Security benefits. “You just need to keep your payment notification from Social Security in your tax records, and you can reimburse yourself dollar for dollar,” says Steven Christenson, executive vice president at Ascensus, a benefits consultant. Myth: You Can’t Contribute to an HSA After You Turn 65 Eligibility to make HSA contributions stops when you enroll in Medicare. That’s not necessarily when you turn 65. Some people who keep working for a large employer at age 65 choose to delay signing up for Medicare Part A and Part B so they can continue to contribute to an HSA (especially if their employer contributes money to the account, too). However, you can only delay signing up for Medicare at 65 if you have health insurance from a current employer (or if you have coverage through your spouse’s employer); the employer generally must have 20 or more employees. Otherwise, you generally have to sign up for Medicare at 65. If you are eligible to delay signing up for Medicare, be sure to enroll within eight months of losing your employer coverage so you won’t have a late-enrollment penalty. You can make pro-rated HSA contributions for the number of months before your Medicare coverage takes effect. If you sign up for Medicare Part A after age 65, your coverage takes effect retroactively six months before you enrolled. Myth: You Must Get Permission From HSA Administrators to Withdraw Money Unlike with an FSA, which usually requires you to gather receipts and get permission from the administrator to make withdrawals, you can withdraw money from your HSA whenever you want. Many HSAs have debit cards that make it easy to use the account for eligible expenses, but you can also withdraw money on your own and keep the records in your tax files to prove that the withdrawals should be tax-free. “FSAs require the administrator to substantiate the claim, but with HSAs, there is no substantiation requirement -- you just have to keep the receipts,” says Steve Auerbach, CEO of Alegeus, which provides technology for HSAs. Myth: You Must Use HSA Funds Within a Certain Time Period After You Incur Medical Bills One quirk of the HSA rules is that there’s no time limit for using the money after you incur an expense. Say you have knee surgery and pay a $1,000 deductible in cash. As long as you had the knee surgery after you opened an HSA, you can withdraw that $1,000 tax-free from the account anytime -- even years later. You just need to keep track of your receipts for the HSA-eligible expenses. Many HSA administrators make it easy to import medical claims-payment records from your health insurance to your HSA and keep track of whether you paid the bill with your HSA or with cash. “We store all of those claims and receipts for you. If, say, in two years you want to take the money out, it can come out tax-free because you’ve already incurred those expenses,” says Auerbach, of Alegeus. Myth: You Can Only Invest the HSA Money in a Savings Account HSAs have savings accounts, so you know the money will be there if you plan to use it for current expenses. But many HSA administrators also let you invest the money in mutual funds for the long term. The fees and investing options vary a lot by company -- some offer low-cost funds from Vanguard, Fidelity and other well-known fund companies. You can compare fees and investing options at www.hsasearch.com. Some HSA administrators charge extra fees unless you maintain a minimum balance. Myth: Your Spouse and Kids Can Only Use HSA Money If Covered by Your Health Plan The rules for contributing to an HSA are different than they are for using the money. For 2019, you can contribute up to $3,500 to the account if you have health insurance coverage on you only or up to $7,000 if you have family coverage. You can also contribute an extra $1,000 if you’re 55 or older. But no matter whether you have individual or family health insurance coverage, you can use the HSA money tax-free for qualified medical expenses for yourself, your spouse and your tax dependents -- even if those family members are covered under a different policy, says Roy Ramthun, CEO of HSA Consulting Services. Myth: You Can’t Use the HSA After You Leave Your Job Here’s another way that HSAs differ from FSAs: You can keep the HSA even if you leave your job. You can usually maintain the HSA through the current administrator or roll it over to a different one (similar to an IRA rollover). And if you have an HSA-eligible high-deductible policy -- whether through a new employer or on your own -- you can continue to contribute to the HSA. Myth: It Doesn’t Make Sense to Have an HSA-Eligible Policy If You Have a Lot of Medical Expenses Some people are reluctant to choose a high-deductible health insurance policy if they have a lot of medical expenses. But you need to do the math and compare the overall costs. In some cases, the premium savings by choosing the high-deductible policy rather than a lower-deductible plan may cover most of the difference in the deductible. And if you have employer coverage, your employer may contribute to your HSA to help close the gap. The employer contribution is generally seed money rather than a match. Many employers deposit a fixed amount of money into the account at the beginning of the year for anyone who has an HSA-eligible policy, says David Speier, managing director of benefits accounts at Willis Towers Watson, a benefits consultant. Add up the difference in premiums, deductibles and other out-of-pocket costs for your regular medical expenses, as well as any employer contribution, when deciding on a policy. Many employers are introducing decision-making tools to help with the calculations, says Speier. Source: Kiplinger

No one wants a visit from the Internal Revenue Service. But if you get too generous with your calculations, you may need to back up your tax return. “For individuals, it usually comes down to being too overly aggressive with tax deductions or benefits that could invite the IRS in,” says Logan Allec, a certified public accountant and owner of the personal finance site Money Done Right. In most cases, you’ll receive a request for more information if your return falls under review. In tax year 2017, seven in 10 of the agency’s return examinations were conducted by correspondence rather than in person. Still, if you receive a notice from the IRS, take it seriously. Respond quickly with the documentation that the agency requests, such as letters from charities or bank statements. “If you’re not responding or not giving what the IRS feels is adequate documentation, then it could become a full-fledged audit,” Allec says. Here’s what could trigger an audit or review: 1. Too-high deductions Certain deductions you take can’t be fudged without raising some eyebrows at the IRS. For instance, the IRS receives information on the mortgage interest you paid, so you can’t inflate that figure. Others – such as charitable contributions – are easier to overstate, since the IRS doesn’t get documentation from charities on your donations. But the agency does use statistical algorithms to make sure the deductions you claim are in line with your total income. If they’re too high, the IRS may request documentation to back up your claims. 2. Missing income If you’re tempted to "forget" to include income from a side gig or contract work, don’t. The IRS receives copies of your W-2 and 1099 forms from companies you worked for. It will match the information it has against your tax return. If that data doesn’t line up, your return will be flagged for review. 3. You have foreign accounts If you have a foreign financial account – such as a bank account, brokerage or mutual fund – you may need to report it to the IRS when you file your taxes. For single taxpayers, you must file Form 8938 if the total value of your foreign assets is more than $50,000 ($100,000 for joint filers) on the last day of the tax year or more than $75,000 ($150,000 for joint filers) at any point during the tax year. If you fail to do this, you could be fined $10,000. If you don’t file within 90 days after the IRS sends you a notice, you can be assessed an additional $10,000 for each 30-day delay, up to $50,000. 4. Earning a lot of money “Simply earning a lot of money can be a red flag for an audit,” Allec says. For instance, the IRS examined 0.5 percent of all individual returns for the 2017 tax year. The examination rate increased to 0.8 percent for non-business filers reporting $200,000 to $999,999 in income, and 4.4 percent for individual returns with $1 million or more in income. “Once you cross that $1 million income threshold, your tax return is more complex,” Allec says. “There are more places for the IRS to poke holes in.” 5. Inflated business expenses There is much wiggle room when it comes to reporting business income and deductions on Schedule C, so it can be easy to misstate – or inflate – information to your benefit. This is what the IRS looks for: Claiming more deductions than profits Reporting round numbers for income and expense values Reporting a business loss for too many consecutive years Writing off 100 percent of an item as a business expense that is often used personally, such as a car or cell phone The IRS scrutinizes cash businesses, such as taxis, bars, hair salons and restaurants along with those in the sharing gig economy like Uber or Lyft drivers, says Mark Jaeger, director of tax development at TaxAct, a tax preparation software company. “If the IRS has reason to believe you aren’t being truthful, they will start questioning things,” he says. Wrongly claiming a child If you don’t file taxes with your child’s other parent, you both can’t claim the child as a dependent. This also can become confusing if a grandparent or other relative lives with or helps support the child. While this is usually an honest mistake, it could still trigger an IRS review or letter if the same dependent is claimed twice. Generally, the child must be younger than 19 and live with you for more than six months of the year. There are exceptions for older children who are full-time students. For divorced students, use the “tie breaker rules” found in IRS Publication 501 to figure out who can claim the child. Rental losses There are special rules that allow you to deduct rental real estate losses against your regular income. First, you can deduct up to $25,000 in losses if you actively participate in the renting of your property. That phases out if your income exceeds $100,000 and vanishes when it reaches $150,000. You can still write off these losses if you are considered a real estate professional – someone who spends more than half of their working time and 750 hours a year in real estate. If you claim yourself as a real estate pro, the IRS could take a microscope to your return, Allec says. Make sure to document the hours you spend on your real estate business in case you’re fingered for a review. Source: Yahoo Finance

If you work for a living, you know that your wages are taxable, and you’re probably aware that some investment income is taxed, too. But the IRS doesn’t stop there. If you’ve picked up some extra cash through luck, skill or criminal activities, there’s a good chance you owe taxes on that money as well. Here are 10 things you may not know are taxable. Buried Treasure If you unearth a cache of gold coins in your backyard or discover sunken treasure while deep-sea diving, the IRS wants a piece of your booty. Found property that was lost or abandoned is taxable at its fair market value in the first year it’s your undisputed possession, the IRS says. The precedent for the IRS’s “treasure trove” rule dates back to 1964, when a couple discovered $4,467 in a used piano they had purchased for $15. The IRS said the couple owed income taxes on the money, and a U.S. District Court agreed. Scholarships If you receive a scholarship to cover tuition, fees and books, you don’t have to pay taxes on the money. But if your scholarship also covers room and board, travel and other expenses, that portion of the award is taxable. Students who receive financial aid in exchange for work, such as serving as a teaching or research assistant, must also pay tax on that money, even if they use the proceeds to pay tuition. Stolen Property If you robbed a bank, embezzled money or staged an art heist last year, the IRS expects you to pay taxes on the proceeds. “Income from illegal activities, such as money from dealing illegal drugs, must be included in your income,” the IRS says. Bribes are also taxable. In reality, few criminals report their ill-gotten gains on their tax returns. But if you’re caught, the feds can add tax evasion to the list of charges against you. That’s what happened to notorious gangster Al Capone, who served 11 years for tax evasion. Capone never filed a tax return, the IRS says. Gambling Winnings What happens in Vegas doesn’t necessarily stay in Vegas. Gambling income includes (but isn’t limited to) winnings from lotteries, horse races, casinos and sports betting. The payer is required to issue you a Form W2-G (which will also be reported to the IRS) if you win $1,200 or more from bingo or slot machines, $1,500 or more from keno, more than $5,000 from a poker tournament, or $600 or more at a horse track if it’s more than 300 times the amount of your bet. Even if you don’t receive a W2-G, the IRS expects you to report your gambling proceeds on your tax return. Proceeds From Fantasy Sports Your winning football (or baseball) team may be imaginary, but if your brilliant lineup helped you win real money, it’s taxable. If you won $600 or more and played through a commercial website, you should receive a 1099-MISC reporting your earnings. The IRS will receive a copy of this form, too. Even if you won a private fantasy league among friends, your winnings are considered taxable. The rules for fantasy football fortunes are the same as those for gambling income. You can deduct your losses (including entry fees in leagues where you didn’t win) against your gains, as long as they occurred in the same year. Payment for Donated Eggs Every year, thousands of young, healthy women donate their eggs to infertile couples. Payments for this service generally range from $6,500 to $15,000, according to Egg Donation, Inc., a company that matches donors with couples. Those payments are taxable income, according to the U.S. Tax Court. Fertility clinics typically send donors and the IRS a Form 1099 documenting the payment. The Nobel Prize If you were selected for this prestigious honor—worth about $995,000 in 2018—you must pay taxes on it. Other awards that recognize your accomplishments, such as the Pulitzer Prize for journalists, are also taxable. The only way to avoid a tax hit is to direct the money to a tax-exempt charity before receiving it. That’s what President Obama did when he was awarded the Nobel Peace Prize in 2009. If you accept the money and then give it to charity, you probably will have to pay taxes on some of it because the IRS limits charitable deductions to 60% of your adjusted gross income. Gifts from Your Employer Ordinarily, gifts aren’t taxable, even if they’re worth a lot of money. But if your employer gives you a new set of golf clubs to recognize a job well done (or to persuade you to reject a job offer from a competitor), you’ll probably owe taxes on the value of your new irons. More than 50 years ago, the Supreme Court ruled that a gift from an employer can be excluded from the employee’s income if it was made out of “detached and disinterested generosity.” Gifts that reward an employee for his or her services don’t meet that standard, the court said. Gifts that help promote the company don’t meet that standard, either. Bitcoin While you can use bitcoin to purchase a variety of goods and services, the IRS considers bitcoin—along with other cryptocurrencies—to be an asset. If the bitcoin you used to make a purchase is worth more than you paid for it, you’re expected to pay taxes on your profits at capital gains rates—just like stocks and bonds. If your employer pays you in bitcoin or some other virtual currency, it must be reported on your W-2 form, and you must include the fair market value of the currency in your income. It’s also subject to federal income tax withholding and payroll taxes. Bartering When you exchange property or services in lieu of cash, the fair market value of the goods and services are fully taxable and must be included as income on Form 1040 for both parties. But an informal exchange of similar services on a noncommercial basis, such as carpooling, is not taxable. If you exchanged property or services through a barter exchange, you should expect to receive a Form 1099-B (or a similar statement) in the mail. It will show the value of cash, property, services, credits or scrip you received from bartering. Source: Kiplinger.com

You can tap an HSA to pay the premiums for a long-term-care insurance policy, but the amount you can withdraw tax-free depends on your age. Question: Can I take out money tax-free from my health savings account to pay my long-term-care insurance premiums? If so, how much is tax-free? Answer: Yes, you can use money from your HSA tax-free to pay your long-term-care insurance premiums, with the maximum annual tax-free amount based on your age. If you’re 40 or younger, you can withdraw up to $420 tax-free from an HSA in 2019 to pay the premiums; if you’re age 41 to 50, you can take out $790; if you’re age 51 to 60, $1,580; if you’re age 61 to 70, $4,220; and if you’re age 71 or older, $5,270. If you and your spouse both have long-term-care policies, you can each use money tax-free from your HSA to pay premiums, up to the aged-based maximum for each of you (based on your ages by the end of the year). These limits increase slightly each year for inflation. To qualify, the long-term-care policy must cover only long-term-care services. And it must pay out if you need help with at least two activities of daily living or have cognitive impairment. Most traditional long-term-care insurance policies qualify. If you’re not sure, ask your insurer if your policy is “tax-qualified.” Source: Kiplinger.com

You finally finished your taxes and are learning the ins and outs of the new law. But wait, the law isn’t done with you. There’s another complication coming out later this year: The Internal Revenue Service is changing how you adjust your paycheck withholdings, and early indicators show it won’t be easy. The agency plans to release a new W-4 form that better incorporates the changes ushered in by the new tax law so that the amount held back for taxes in each of your paychecks is more accurate. The agency’s goal: A taxpayer shouldn’t owe or be owed come tax time. But the changes won’t be simple, says Pete Isberg, head of government affairs at ADP, the payroll and human resources company. Filling out the new form will be a lot like doing your taxes again. “It’ll be a much bigger pain,” he says. “The accuracy will be 100 percent, but the ease-of-use will be zero.” What's changing? While the new form hasn’t been released yet, the IRS last summer put out a draft version and instructions seeking feedback from tax preparation companies and payroll firms. Instead of claiming a certain amount of allowances based on exemptions – which have been eliminated – the draft form asked workers to input the annual dollar amounts for: Nonwage income, such as interest and dividends Itemized and other deductions Income tax credits expected for the tax year For employees with multiple jobs, total annual taxable wages for all lower paying jobs in the household “It looked a lot more like the 1040 than a W-4,” Isberg says. The new form referenced up to 12 other IRS publications to fill it out. It was so complex and different from the previous W-4 form that Ernst & Young worried employees would struggle to fill it out correctly and employers may need to offer training beforehand. Why is it taking so long? The tax and payroll community expressed many concerns about the draft form aside from its complexity. Many cited privacy issues because the form asked for spousal and family income that workers might not want to share with their employers. Other employees may not want to disclose they have another job or do side work outside their full-time job. To avoid disclosing so much private information, taxpayers instead could use the IRS withholding calculator, but it’s “not easy to use and the instructions are confusing,” according to feedback from the American Payroll Association. In September, the IRS scrapped plans to implement the new W-4 form for 2019 and instead is planning to roll it out for 2020. What to expect Another draft version of the new W-4 is expected by May 31, according to the IRS, which will also ask for public comment. “We encourage taxpayers to take advantage of that opportunity and send us comments on the redesign,” says agency spokeswoman Anny Pachner. The IRS will review the comments and plans to post a second draft later in the summer. The final W-4 version will be released by the end of the year in time for the 2020 tax year. Once it arrives, you’ll probably need the following information on hand, says Kathy Pickering, executive director of H&R Block’s Tax Institute. That may mean lugging in past 1099 forms, paystubs or last year’s tax returns to fill it out correctly. Your filing status Number of dependents Information about your itemized deductions such as home mortgage interest, state and local taxes, and charitable deductions Earnings from all jobs Information about nonwage income such as business income, dividends, and interest. “If you’re married, and both you and your spouse work, it will also be helpful to know information about your spouse’s income,” she says. You may also need to fill out a new state income withholding form. Many states use the current W-4 for withholding, but they may need to release their own forms, too. While these new forms may be more accurate, it looks like they are going to be a pain to use. Watch for the forms coming out this May, so you can make comments on the redesign.  Source: Finance.Yahoo.com

If you leave your job while you have an outstanding 401(k) loan, Uncle Sam now gives you extra time to repay it -- thanks to the new tax law. The new tax law changed the deadline for repayment after you leave your job starting in 2018. In the past, you generally had only 60 days to repay the loan or else you’d have to pay income taxes on the money as if it was a withdrawal (and a 10% early-withdrawal penalty if you left your job before age 55). But under the Tax Cuts and Jobs Act, you don’t have to pay taxes or the penalty if you repay the loan by the due date of your tax return for the year when you leave your job (including extensions). For example, if you leave your job in 2019, you’d have until April 15, 2020, to repay the loan (or October 15, 2020, if you file an extension). However, taking advantage of this extended time frame to repay could lead to complications if you’d like to roll over your 401(k) balance to a new employer’s plan, says Michael Weddell, director of retirement at benefits consultant Willis Towers Watson. You can generally borrow up to half of your 401(k) balance, but no more than $50,000. Most plans charge the prime rate plus 1 percentage point for the loan, which as of mid-February would add up to 6.50%. You generally have five years to pay back the loan while you’re still working for that employer or longer if the 401(k) loan is to buy your primary residence. Most plans give employees 10 to 15 years to repay a loan for a primary residence, although some plans have deadlines as short as five years or as long as 30 years, says Weddell. If you do take a 401(k) loan, try to keep contributing to your 401(k) while you’re paying back the loan so you can continue to receive any employer match and to minimize the hit to your long-term savings. You borrow your own money and pay the interest back into your account. But you will lose the opportunity for investment gains on the borrowed money while it’s out of the account. Just because you had to take a loan, Weddell says, is no reason to give up on saving for retirement and earning an employer match. Source: Kiplinger.com

Your car insurance bill is probably one of your largest monthly expenses, especially if you have teenage drivers. To lower your premium, ask your insurer for a list of discounts, and let the insurer know if you qualify. For instance, some insurers offer discounts of 10% to 15% for those who make a living at certain profession, such as educators, lawyers, accountants, physicians, and law-enforcement personnel. You could also get a 10% discount for belonging to an alumni association or another organization. You may also receive a discount for carpooling or for having a hybrid car. Pay Your Bills Differently One of the easiest ways to reduce your premiums is to find out if your insurer will give you a break for paying your bill in a lump sum rather than monthly payments. Paying for the full policy term (usually six months) rather than monthly can reduce your rates by 5% to 10%. You may also get a discount if you set up automatic payments from your credit card or checking account. You could also save 3% to 5% on premiums if you sign up to receive bills and other information online instead of in the mail. Boost Your Deductible Increasing your deductible from $250 or $500 to $1,000 can reduce your premiums by up to 20%. It can also prevent you from filing small claims that could lead to a rate increase or jeopardize a claims-free discount. Add some money to your emergency fund so you’ll have cash to pay the deductible if anyone in your family gets in an accident. Bundle Up Buying your car insurance from the same company that provides your home or renters insurance can cut your rates by 5% to 20%. You may also get an extra discount if you add an umbrella policy with the same insurer, too. Get Good Grades Most insurers offer a discount of 15% to 25% for young drivers who maintain at least a B average in high school or college. To qualify, the driver usually has to be a full-time student younger than age 25. Also, tell your insurer if your child moves more than 100 miles away from home for college and doesn’t take a car. Your premiums could drop by 20% or more, but your child will still be covered when home from college. Sign Up for Data Tracking If you drive few miles and have safe driving habits, you could save money by participating in a data-tracking program, such as Progressive’s Snapshot, State Farm’s Drive Safe & Save, or Allstate’s Drivewise. You use an app on your smartphone or plug a device into your car that tracks how many miles you drive, how often you drive late at night, and if you have potentially dangerous driving habits, such as braking hard and accelerating rapidly. The average premium savings for participating is 10% to 15%, although discounts can be as high as 50%. Some insurers will raise your rates if you show risky behavior, but you can usually review your results online so you can improve your habits before your rate is set each term. See How Tracking Rewards Good Drivers for more information. Shop Around Car insurance premiums can vary quite a bit by each company. It’s a good idea to shop around for car insurance every few years, or more often if you’ve had any big life changes, such as getting married, moving, or having a teenager driving. The insurer that had the best rate for a married couple may charge some of the highest rates when you add a teen driver. You can compare rates from several insurers at Insurance.com or InsuranceQuotes.com. You could also get help from an independent insurance agent who works with several companies. Ask Your Insurer for a Rate Cut If you find a better rate from another insurer, let your current insurer know before switching. The insurance company may match the rate in order to keep you as a customer. Drop Certain Types of Coverage on Older Cars Collision coverage pays to fix your car's damages if caused by a collision with another car or object. Comprehensive coverage pays for damages caused by other covered events, such as theft, natural disasters, collision with an animal, or if an object falls on your car (such as a tree). Even if your car is totaled, the most you’ll usually get is the replacement cost for a car of its age. If your car is only worth a few thousand dollars, you may be paying more in premiums than you could ever get back from the insurer after paying your deductible. Compare the premiums for keeping the coverage with the cost to replace the car. An indivdiual can go to KBB.com to estimate their car’s replacement cost. Take a Driver-Safety Program Drivers younger than age 21 who take an approved drivers education course may get a discount. Some insurers even offer their own driver-safety programs that can save you extra money. State Farm’s Steer Clear program, for example, can cut premiums by up to 15% for drivers younger than 25 who have had no accidents and participate in the training program. (The program requires drivers to watch safe-driving videos, take quizzes, and record their trips, all on the Steer Clear app.) Some insurers give discounts of 5% to 15% for drivers age 60 or older who take an accident-prevention class. Watch the Clock After an Accident or Ticket In most states, tickets and at-fault accidents remain on your driving record for three or five years. Longtime customers with good driving records may not get a rate hike at all. Many insurers check motor vehicle records every 12 to 18 months. If your rate does rise, shop around. Some insurers care less about accidents or tickets than others. When an accident or ticket drops off your motor vehicle record, ask your insurer to remove the surcharge and then re-shop your policy. Get a Safe Car Before you buy a vehicle, find out how much it costs to insure. You can find out if a car tends to have higher or lower insurance costs by using State Farm’s vehicle rating tool and checking out a car’s safety ratings from the Insurance Institute for Highway Safety. Improve Your Credit Score In most states, insurers can use your credit score when setting your insurance rates. Check your credit report free at AnnualCreditReport.com, and make sure there aren’t any errors that could hurt your score. Paying your bills on time, limiting new credit, and keeping your charges low in relation to your available credit can also help you improve your score. See the credit-education page at MyFico.com for more information about factors that can affect your score. Source: Kiplinger.com

When completing your 2018 tax return, turn some attention to your tax plans for 2019. Although tax reform triggered major changes in 2018, the landscape has settled in 2019. Tax rules in 2019 will look very similar to 2018. Once your 2018 taxes are done and you have determined how the new rules affect your personal tax situation, get a jump-start on trimming your 2019 tax tab. Learn how about trimming your 2019 tax tab by reading below. Adjust for Inflation The IRS now uses the chained consumer price index (rather than the traditional consumer price index) to calculate inflation adjustments for various income thresholds and limits. Chained CPI accounts for the fact that consumers change their spending patterns as prices rise, making inflation appear lower. Although inflation adjustments will be smaller, you’ll still find increases across the board. (See the 2019 tax brackets.) Reminder: The standard deduction rises to $12,200 for single filers and $24,400 for married couples filing jointly. The extra standard deduction for those age 65 and older is $1,300 per person for joint filers and $1,650 for single filers. If you were on the edge of taking the standard deduction for 2018, consider whether those higher amounts may close the door on itemizing in 2019. The income threshold for the 0% capital-gains rate also rises to $39,375 of taxable income for single filers and $78,750 for joint filers. Plan Charitable Giving Determining whether or not you itemize could help you decide on other tax moves, especially charitable giving. Itemizers can deduct charitable contributions, but non-itemizers, and even some itemizers, may want to consider a different approach: an IRA qualified charitable distribution. Traditional IRA owners age 70½ or older can directly transfer up to $100,000 a year from their IRA to charity. You don’t get a charitable deduction by doing this, but the money is excluded from your adjusted gross income and can count toward your IRA required minimum distribution. To have a QCD do double duty as your RMD, make sure to do the QCD before taking out the full RMD amount. For example, let’s say your total RMD is $15,000. You can transfer $5,000 directly to charity and take $10,000 out of the IRA by year-end. That satisfies your RMD but only $10,000 will be taxable and included in your AGI. Of course, you can also do QCDs (up to the $100,000 annual limit) in excess of your RMD amount. Review Health Care Expenses New for 2019: The penalty for not having health insurance is zeroed out. If you go without coverage, there is no longer a cost at tax time. The threshold for deducting medical expenses has climbed for 2019. Taxpayers can now only deduct medical expenses that exceed 10% of AGI. Adjust Withholding Look at how your 2018 withholding stacked up against your actual 2018 tax tab. If you got a big refund and expect your tax situation to be similar in 2019, adjust withholding so you hold onto more money throughout the year. If you didn’t withhold enough, increase withholding in 2019. You can have money withheld from various retirement income sources, such as IRA distributions, annuity payments, and Social Security benefits. Pay Estimated Tax You can also make estimated quarterly payments to cover your 2019 tab. Paying estimated taxes can be a pain but not paying estimated taxes is even worse because you may face tax penalties. One way to avoid underpayment penalties is to pay at least 100% of last year’s tax bill (or 110% for higher-income taxpayers) through withholding, estimated tax payments, or both. The first estimated tax payment for 2019 is due Monday, April 15. Source: Kiplinger.com