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Liz Weston

Tuesday’s need-to-know money news

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Today’s top story: Credit cards that help authorized users build credit. Also in the news: Taking control with advance medical directives, why you don’t need 20% down to buy a home, and why wealthy college students are getting more financial aid.

Which Credit Cards Help Authorized Users Build Credit?
Building your credit with a little help.

Take Control Now With Advance Medical Directives
Creating a living will and other advance directive documents may be easier, and cheaper, than you think.

Why You Don’t Need 20% Down to Buy a Home
Many lenders don’t require 20% down. But read the fine print.

Why do wealthy college students get more financial aid?
Rich students are getting more scholarship aid.

“Where’s My Refund?”

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If you’ve been waiting months for your tax refund, you’re not alone.

Many people who filed paper tax returns — and even some who filed electronically, but whose returns were flagged because of problems — have yet to see their money. Some are growing desperate, since they rely on refunds to pay bills or cover medical care.

Few can get through to anyone who can help. The IRS closed its processing centers, local offices and taxpayer help lines because of COVID-19 lockdowns, prioritizing the stimulus payments authorized by the CARES Act.

As I wrote in a previous post, taxpayers are reaping what their lawmakers have sowed:

“Over the last decade, Congress has cut the IRS’ budget by more than 20% after factoring in inflation, even as the population grew and tax law got ever more complicated. The agency was limping along with ancient technology and too few people to help the public even before the pandemic sent most of its workers home, without the ability to telecommute.

The agency has been trying to recall its workforce as quickly as it can, but there is a truly massive backlog of paper returns that has yet to be processed. Sending out stimulus relief checks has taken priority, and that Herculean effort is still in process.”

Processing centers in Kentucky, Texas and Utah opened this week. Re-openings are planned for June 15 in Georgia, Missouri, Michigan and Tennessee. Processing centers are scheduled to open June 29 in Indiana, Ohio, California, Puerto Rico and Oregon.

It’s unclear how long it will take employees to clear the massive backlog they’re facing. NerdWallet has some suggestions for workarounds, including contacting the Taxpayer Advocate Service, although that service is overwhelmed as well.

Please don’t re-file your tax return, as that won’t help and makes the backlog worse. If you’re still working, consider adjusting your withholding to increase your paycheck. (It’s far better to keep your own money than to make an interest-free loan to the government, which has no obligation to pay you back in a timely manner.) If you’re struggling, you may be able to find food banks,  and other resources to help you at 211.org.

Is your target date investment letting you down?

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Target date investments are supposed to be an easier way to invest, and they’re a popular choice in 401(k) plans. But the recent market downturn showed that some target date strategies suffered much bigger losses than others, especially for investors nearing retirement.

In my latest for the Associated Press, how to be sure the investment strategy you’re using still makes sense, especially if you’re close to retirement.

Monday’s need-to-know money news

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Today’s top story: Scaling back spending yields unexpected benefits. Also in the news: A new episode of the SmartMoney podcast on charitable donations and new baby expenses, a travel expert shares his tips for traveling during a pandemic, and who needs to request a Coronavirus relief payment before October 15th.

Scaling Back Spending Yields Unexpected Benefits
Look for the silver lining.

SmartMoney Podcast: Make Your Donations Go Further; Plan for New Baby Expenses
Giving strategically.

Ask a Points Nerd: How Can I Travel This Summer?
An expert shares his tips after traveling up the West Coast.

Here’s Who Needs to Request a Coronavirus Relief Payment Before October 15
See if you’re on the list.

Q&A: Picking your estate’s executor

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Dear Liz: One issue in a recent column was about a sibling who did not follow the will. As executor, the sibling took two thirds of the estate instead of the will’s specification of half.

This is why, when my wife and I had our estate plan created, we told the attorney that none of the beneficiaries should be the executor of our wills and none should be a trustee of our trusts. Indeed, our trusts — which own almost our entire estate — cannot have the spouse, child, parent or in-law of a beneficiary as a trustee.

Answer: Yours is certainly one solution, if you can find the appropriate people to serve. But naming an heir as executor or trustee doesn’t have to be a disaster, as long as you name the right person — someone who is honest, dependable and able to serve with integrity.

Q&A: Social Security spousal benefits count as yours

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Dear Liz: My husband is 69 and taking his Social Security benefit. I will be 62 in November and would like to ask if I can take half of his amount when I turn 62 and let mine grow until my full retirement age of 66 and 8 months? Or am I only able to collect mine at 62?

Answer: You can’t take a spousal benefit and let your own retirement benefit grow. When you apply for Social Security, you will be “deemed” to be applying for both benefits and you’ll get the larger of the two. You won’t be able to switch later. Applying at 62 means accepting a permanently reduced benefit. Some people don’t have much choice, but if you can continue working or tap other retirement funds, waiting is usually the better option.