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How to Cope with Financial Stress During a Quarantine

Families across the country are feeling the stress of the pandemic and subsequent quarantines affecting much of the country. There are children at home, people are trying to get the hang of work and school from home and the little normal things of life, like sports, have gone by the wayside (for now). On top of all of this, the cycle of bills keeps moving like usual, causing the potential for major financial stress. However, there are some things to keep in mind to help you get through any added worry about money during the craziness of a quarantine.


Cancel Payments For Things That Can’t Be Used

The current quarantine crisis has caused lots of businesses to temporarily close their doors as they are unable to provide their services. In many cases, this includes gyms, children’s lessons (like swim or gymnastics), and plenty of other services. While many local businesses will ask you to keep your subscription active to help keep their business afloat during the quarantine (something highly recommended, if you are able), canceling these payments can certainly alleviate some of the financial crunches. Another thing to check for is the option to get refunds for travel plans or other prepaid items that can no longer be used and get some positive cash flow back into your bank account.


Be Aware of Developing Relief Programs

Both public and private entities are taking actions to help provide financial relief and ease the stress of the quarantine. Some of these, like the anticipated stimulus payments, may not require any other action, but others may require you to be proactive. If you have student loans, ensure that they are federally backed and are eligible for some of the programs. Some mortgage companies are offering payment deferments or other relief. If there are any bills you are concerned about, it never hurts to reach out and ask.


Don’t Spend Your Money Hoarding Supplies

As we’ve all become aware, there are some people who are reacting to the current situation by hoarding items. Right now, the supply chain for items is perfectly intact, so there is no need to hoard items. Not only does this prevent a proper flow of goods, but it involves spending a substantial amount of money upfront for products that don’t need to be purchased immediately, and it can lead to waste. Making sure that you are only buying what you will actually use can keep the spend down and keep the shelves stocked for others also.


While no one will say that quarantine and the current situation is easy, going into it with a clear eye on smart financial decisions will help you come out the other side without undue stress. If you have questions, or are looking for assistance in dealing with financial stress, please contact us today.

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Ten Smart Ways to Spend Your Tax Refund

Tax refund season is coming! For many of us that means we begin dreaming of vacations, new cars, or other extravagant items that we may not normally spend money on. However, instead of viewing this as throw away money, you should consider using one of these smart ways to use your refund.  

Spending your Tax Refund Wisely

 
  1. Put into savings for a rainy day – It might not seem like a very fun thing to do with your tax return, but adding money to your rainy-day fund can be a very smart option. You never know what might occur in the future, and having some funds to fall back on can be a saving grace. Whether you need money while recovering from surgery, emergency car repairs, or other hardships that can occur, having a small nest egg will be a huge help.
  2. Pay off credit card debt – Paying down your credit card debt can help boost your credit score. Keeping those balances low will only increase the ratings that you will get from the credit agencies. By paying down or eliminating credit card debt, you can begin working toward buying a house, a new car, or other large purchases that you might be considering down the road.
  3. Pay down student loan debt – No one loves student loans. These are the dreaded loans that we know are going to be with us for many years to come. However, by putting a decent amount of money into one or more of your loans, you can pull that principal balance down (or pay it off entirely), giving you significant savings on the interest. One piece of advice – find your lowest balance and put money on that first. Once it is paid off, move to your next lowest balance.
  4. Invest – By using your tax refund to invest, you can begin to build a more substantial retirement fund. If you are not familiar with the stock market or are not sure where to begin, you can get with a broker who can advise and guide you to making the best decisions for your family and your money.
  5. Begin thinking about retirement – While we already touched on this with investing, retirement can sneak up on you. If you are not properly prepared for retirement, you might find that your monthly income is not enough to continue the lifestyle you want. Create a list of what your goals for retirement, and figure out what monthly income you are going to need to supply that. Along with investing, and interest-bearing bank accounts, you can begin to build a better retirement fund, and ensure that after you are finished with active service, your family is still maintained and cared for.
  6. Add or buy life insurance – Life insurance is not one of the areas we care to think about, but it is important. The amount of life insurance that you have should be able to pay off any large debts, send children to college, and help maintain a family if something should happen to you or your spouse. These needs are going to change depending on circumstances. Will you need to hire long-term child care? Pay off remaining college debt or mortgages? Will the amount be able to maintain your family while they adjust and move forward? These questions are not fun, but they are necessary. Adding to your current policy, or purchasing a new one can give some peace of mind to the “what if” questions that no one wants to think about.
  7. Put toward long term goals – Are you saving for a house or new car? You can put your tax return to work by finding either short or long-term interest-bearing bonds or savings accounts to help grow your money. Long-term goals, such as that retirement travel fund, or planning on the eventual upgrades of vehicles and lodgings, these interest-bearing accounts can help you grow your money faster.
  8. Use your money toward certifications or higher education – Investing in certifications or higher education courses can help move your career, both in the military and the civilian sector forward. Instead of taking out student loans, you can use your tax return to pay for a couple of classes or certifications for your chosen career field. Whether a college or trade school, these classes can help build your skills and portfolio, making you a stronger candidate as you move forward in your occupation.
  9. Renovate or update your home – We know in the military that you are never in one place for long periods of time. Eventually, you are going to come up on orders to move. If you own your home, using your tax return to renovate or update sections on your home can make it easier to sell when the time comes. Kitchens, bathrooms, flooring, and paint are some of the first things that are noticed when homes become available. By presenting your home, updated and current, the chances of selling or renting faster become stronger.
  10. Pay down a car or mortgageDebt is hard to have, but by paying it down with your tax return, you are reinvesting your already hard-earned money in your daily life. Pay ahead on your mortgage or knock that car payment down faster. Once they are paid off, that is just extra money in your bank account each month. With the new funds, you can add to any of the above options that you have, or look to begin investing for your future.
 

Smart Moves and Money

  We all want to get the most for our money. By using the ten smart ways to spend your tax refund, you can make your return go a little farther. Instead of that new phone or television, these tips can help decrease your debt, or help get set up for life insurance or retirement. Getting started is often the hardest part. Contact us today and find the answers to all of your questions! Make this tax season your best yet, and let your tax refund help make some smart moves this year.    

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How to Prepare for the Upcoming Tax Season

April 15 is inching closer, which means Tax Day is almost upon us! There are a handful of things that you can do in order to prepare for the upcoming tax season. Stay less stressed, be better prepared, and kick headaches away as the day draws closer.  

Prepare for the Upcoming Tax Season

Now obviously, everyone wants to play it safe when it comes to tax season. With the many different write-offs that are available, you want to be sure that you are getting everything that you are entitled to in your return. With that in mind, here are a few things to consider as we move closer to April 15:
  • Sit down with a tax preparer – By sitting down with a tax professional before turning over your documents can help get any questions you might have answered. If you are not sure on documentation needed, or what you are able to write-off, it is smart to be prepared before you prepare your return.
  • Use a seasoned professional – finding someone who knows how to prepare tax returns for military personnel can alleviate any headaches that might arise. You don’t want to wait until the last minute, and then encounter issues.
  • Have all documents ready – If you are single, then it should be fairly easy to prepare your return. If you are married and filing jointly, then there will be some further documents needed. Add children, other income, 1099s, and more into that, and it can get murky fast. Having all your documents together and accounted for ahead of time will help to speed the process, and ensure that you are leaving nothing out.
  • Be honest with earnings – If you have 1099s, or 1099Ks, it can be easy to leave off some income, especially if you are being paid through a third party site. Account for all earnings, to ensure that it does not come back on you later.
  • Getting a second look – this last one is very important, especially if you prepare your own taxes. Having a second look at your return can find and rectify any mistakes that might have slipped past. If you are preparing your own taxes, it is worth having someone take a look at your final results, to ensure that you claimed everything, and got your best return.
  Learning how to prepare for the upcoming tax season does not have to be stressful. You spend your days defending America, don’t spend your off time anxious over taxes. Contact us, and allow us to help ease your mind, answer your questions, and help you feel more prepared for this upcoming tax season!

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5 Tax Mistakes to Avoid in 2020

Tax season is slowly approaching, and no one wants to get hit with any penalties. By finding the tax mistakes that you can avoid in the 2020 season, you can feel more prepared and confident. No one wants to end up owing money, but there are some huge mistakes that can cost you more in the long run. By avoiding these five tax mistakes, you can be confident in your return when you submit.  

1. Don’t Wait To File Until The Last Minute

When you file a late return, there are penalties and fees that can be accrued if you owe money to the IRS. If you are not sure you can get your tax return finished and submitted by the 15 April deadline, go ahead and file for an extension. This will help protect you in a late filing.  

2. Be Sure To File If You Make More Than The Standard Deduction

Knowing what the standard deductions are can save you a lot of grief. This will differ for those who are single or married, if you are the head of household, or if you are married and filing jointly. Knowing what these baseline figures are can help to determine IF you need to file.  

3. Do NOT Hide Any Income

We cannot stress this one enough! If you are getting paid for some things under the table, accepting cash instead of trackable income, this still has to be reported. There are instances where some income does not have to be claimed, such as some military benefits, but your tax accountant can help you determine these. If you hide income and are found out, the penalties can be very severe. In addition to having to pay late fees for an amended return, interest will be tacked onto that fee, which will drastically raise the amount you owe.  

4. To Trash or Keep Your Documents

When in doubt, hold onto everything. When it comes to documents that you are using for your returns, such as write-offs, W-2s, 1099s, and donation slips, keep it all! A good rule of thumb to follow is to keep everything for at least five years. This way, in case an issue arises, or amendments have to be made, you have the documents to back up your return. Without these documents, you could incur a penalty if there are questions about your return. It is better to be over-prepared, rather than not having your documents together.  

5. Be Sure to Claim All Eligible Deductions and Credits

Each year, many Americans leave money on the table that they could claim. Knowing what you are able to deduct, such as childcare credits and education, can help to ensure that you are getting the maximum return. These credits and deductions could be the difference in getting a return and owing money when you file. If you are in doubt of the available deductions and credits, the tax professional that you are using can help to determine what you can and cannot claim.   Tax season should not be a stressful time. Being prepared and informed can keep you from making the five tax mistakes that lead to a stressful 2020 filing season! If you have any questions, we have the answers! Please reach out, either online or over the phone, so that we can help you!

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What’s your financial big picture?

As a military member, you may already have a basic plan laid out for your future. You may be planning to start a family, purchase a home, or shop for a new vehicle. Either way, the best financial plans start with a big picture. With 2017 already in full swing, take the time to reflect on your specific goals, outside of how much they may cost or how limited you may feel your resources are.

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Tax Treatment of Travel Expenses

If you are self-employed, you may be able to deduct the ordinary and necessary expenses of traveling away from home for your business. If you are an employee and incur unreimbursed travel expenses while traveling from your “tax home,” these expenses are deductible as miscellaneous expenses subject to the 2 percent of adjusted gross income floor (if you itemize your deductions on a Schedule A). These expenses can include the cost of transportation, lodging, and/or meals.

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Tax Credits: Child and Dependent Care Credit

If you have a child or other dependent and work outside the home, you may need to pay someone to care for your loved ones. Fortunately, the child and dependent care credit may provide some financial relief. The child and dependent care credit is an income tax credit for up to 35 percent of certain expenses you paid to provide care for your dependent child, your disabled spouse, or a disabled dependent while you worked or looked for work.

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Adjustments to Income and Itemized Deductions: Members of the Armed Forces

As a taxpayer, you may be able to subtract certain amounts from your gross income to arrive at your adjusted gross income (AGI). Further, you may then subtract from your AGI the greater of either your standard deduction (which is based on your filing status) or the total of your itemized deductions. As a member of the U.S. Armed Forces, you may find the following considerations of particular interest to you.

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Taxable vs. Nontaxable Income: Members of the Armed Forces

If you’re a member of the U.S. Armed Forces on active duty, you’re generally not required to pay federal income tax on all the income you receive. What’s taxed and what’s not taxed depends on what form the income takes and, in some cases, where the income is earned. Generally, basic pay, special pay, and bonuses are taxable (unless they’ve been earned for service in a combat zone), while in-kind benefits, reimbursements, and allowances are not taxable.

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