Latest Newsletter Edition
At what age should you stop financially supporting your children?
According to a survey from savings.com, 45% of parents are currently supporting at least one adult child. The monthly price tag for this works out to be approximately $1,400 a month. Some of the main contributors to this dollar amount are things like car payments/insurance, cell phone bills, subscription services (cable/internet, Netflix, etc.), credit card bills, groceries, and a large one being housing cost (mortgage/rent). Many individuals will support their children through their younger years and lose sight of the many things they are paying for or adopt the mentality that paying the way for their children will put them ahead in life.
Supporting your children for a long time truly is a double-edged sword. On one side, it is consuming money that you could be investing or using for your own leisure, and on the other side, it is preventing the children from learning fundamental money management skills. One issue often seen is that there comes a time where the parents either do not want to or cannot support the children anymore. When this occurs, the children are cut off cold turkey and do not know where to begin on making ends meet. Although there is no set age when you should have your child fully supporting themselves, a general rule of thumb would be that as soon as they start making money, you should be forming financial goals with them and having them help out. One of the main goals should be to gain financial independence, and working towards that will allow a smooth transition from being supported to being independent.
Is your credit score hurting or helping you?
Credit scores are something we here all about. The concept is frequently advertised on TV and brought up whenever looking to purchase larger items or open a credit card. What exactly is a credit score and why is it important? Put simply, a credit score is a number that provides information on a consumer’s creditworthiness. According to Kiplinger, this number will typically range between 300 and 850. Most lenders use the FICO scores, and some may additionally take into consideration the VantageScore. If an individual is borrowing money or opening a credit card, a good credit score will allow for significantly better rates which leads to saving money in the long term.
For the FICO score, above 670 is good, above 740 is very good and above 800 is excellent. To achieve these numbers and continue the pursuit of bettering your score, you can start by utilizing these four simple tips. The first would be to pay your bills on time and if possible, in their entirety. Although this may seem obvious, plenty of people forget the due date or struggle to pay the bill in full. The second tip is to keep your credit usage low, ideally, under 30%. Increasing the credit limit on a card may initially impact your score negatively, but will quickly recover if you use that increase to keep your usage lower. Third, do not close old credit card accounts out. If you find yourself “stuck” with an annual fee, contact the company and see if they will roll the account into one similar that does not have a fee. Even if your card has no activity, that will be significantly better than closing it out. Finally, periodically check your credit score, many apps, such as credit karma, will inform you of what your score is and on ways to improve or maintain your score.
Will you need to report your income from third party apps like Venmo and Cash App? :
Initially, it was anticipated that for tax year 2022, any income over $600 would need to be reported on the IRS Form 1099-K for payments made to you through apps such as Venmo, PayPal, Cash App, Square, etc. According to Kiplinger, just prior to year-end, the IRS delayed the “$600 rule” back to tax year 2023. What does this mean for you? The threshold for reported income of these apps will remain at $20,000. If you received income over this dollar amount, you are required to report it.
The $600 threshold will very likely take place in 2023 so it is crucial to be informed about the Form 1099-K and plan your taxes accordingly. It is important to differentiate between what does and does not qualify. The form 1099-K for those over the threshold is sent to you and the IRS so it is important to claim the qualifying taxable income as it will likely be flagged if you do not.
Filing Extensions and Minimizing Penalties – Did You Know?
Taxpayers who request an extension to file their 2022 federal income tax returns may file anytime up until October 16th, 2023. Remember, however, that an IRS extension is only an extension to file tax returns, …
Tax Refund Myths and Realities
Taxpayers who are owed a 2022 tax refund naturally want to know how quickly that refund will come. Unfortunately, a lot of myths and half-truths about IRS refunds circulate online, giving people false expectations or …
Upcoming Tax Deadlines
Employers – Federal unemployment tax. Deposit the tax owed through March if more than $500.
Employers – Social security, Medicare, and withheld income tax. File Form 941 for the first quarter of 2023. Deposit or pay …