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Liz Weston

Tuesday’s need-to-know money news

March 24, 2015 By Liz Weston

scamToday’s top story: How to spot a credit repair scam. Also in the news: Using the home office tax deduction with a mortgage interest rate deduction, a costly tax trap older Americans need to avoid, and answers to embarrassing money questions.

Top 4 Ways to Spot a Credit Repair Scam
If it looks too good to be true, it usually is.

How the Home-Office Deduction Works With the Mortgage-Interest Deduction
Don’t pay more than you have to.

Don’t Get April-Fooled by This Very Costly IRS Tax Trap
An important reminder for older Americans.

3 Money Questions Everyone’s Too Embarrassed to Ask
Remember…there are no stupid questions.

Filed Under: Liz's Blog Tagged With: credit repair scams, home office, home office deduction, money questions, tax deductions

Monday’s need-to-know money news

March 23, 2015 By Liz Weston

1403399192000-retire-workToday’s top story: Tips on cutting your tax bill. Also in the news: How to get a retirement match from the IRS, money-management tips for the self-employed, and what you need to consider before making a risky investment.

7 Ways to Cut Your Tax Bill
Keep more of your hard-earned money.

Get a $1,000 Retirement Match From the IRS
Introducing the Saver’s Credit.

9 money-managing steps every self-employed person should take
Tips for the 1099ers.

The Factors to Consider Before Making a Risky Investment
Look before you leap.

Filed Under: Liz's Blog Tagged With: Investments, IRS, Retirement, self-employed, Taxes, tips

Q&A: How to help family while on a limited budget

March 23, 2015 By Liz Weston

Dear Liz: My son, who is almost 50, is mentally and emotionally challenged. He has been unemployed and homeless for years. Although not a criminal, he’s been in jail a few times because of his explosive, combative nature. There seems to be no help for him in the state where he lives. I do send a few dollars for his basic needs when I can, but must be careful with my budget. Do you have any tips that might be helpful in this situation?

Answer: You’re living with a heartbreaking situation. You want to help, but given your age and financial circumstances your ability to do so is limited. Unless you set some boundaries, you could run through your savings and possibly wind up homeless yourself.

You’ll find some helpful resources at the National Alliance on Mental Illness (www.nami.org), which offers information and, in many locations, support groups for families. Another place to find comfort, insights and suggestions would be a 12-step group for co-dependency, such as Co-Dependents Anonymous (www.coda.org), Al-Anon (www.al-anon.org) and Nar-Anon (www.nar-anon.org). Substance abuse often accompanies mental illness, so you may find it helpful to talk to others who have dealt with problem drinkers (Al-Anon) or addicts (Nar-Anon).

Every state has at least some resources for the mentally ill. You can start your search at MentalHealth.gov to see what might be available where your son lives and let him know the options. But as the members of any support group will tell you, you cannot fix another human being or force him to change. What you can do is to take care of yourself.

Filed Under: Q&A, The Basics Tagged With: family and money, mental health, q&a

Q&A: Rolling traditional IRA to a 403(b)

March 23, 2015 By Liz Weston

Dear Liz: My husband and I both have employer-sponsored 403(b) retirement plans. We each also have a Roth IRA, and I have a traditional IRA that I started in the 1980s before I started work with my current employer. I do not actively contribute to this traditional IRA as I am contributing the maximum amount allowed into both my Roth IRA and my 403(b) plan. My husband is also maxing out on his Roth and 403(b). We are both in our 50s. Should I contribute anything into my traditional IRA? Should I see if I can roll it into my 403(b)? Or roll it into my Roth? Our adjusted gross income is high enough where I would not be able to take the deduction if I did start contributing. Your thoughts would be greatly appreciated.

Answer: If you can’t get a tax deduction for your contributions, then putting the money in a Roth IRA is usually the better option — assuming, of course, that your income is under the Roth limits (which it sounds like it is). Nondeductible contributions reduce the income taxes owed on any withdrawals from a traditional IRA, but withdrawals from a Roth can be entirely tax-free.

If you have a good, low-cost 403(b), rolling your traditional IRA into it could be a good choice. It would be one less account for you to have to monitor and coordinate with your other savings.

You won’t be able to roll your traditional IRA into a Roth without triggering a (possibly hefty) tax bill. The older you are, the harder it is to make a good argumen

Filed Under: Investing, Q&A, Retirement Tagged With: Investing, q&a, Retirement

Q&A: Social Security solvency

March 23, 2015 By Liz Weston

Dear Liz: Can you tell us what the status is of the Social Security system? Will the money that I and my employers have paid into the system be there for me when I need it in 15 or 20 years?

Answer: The money you pay into the system provides benefits for current retirees. When you’re retired, other workers will provide the money for your benefits. It isn’t a retirement plan where you contribute money that you later withdraw. It’s an insurance fund to protect you against poverty in old age.

The Social Security system isn’t about to disappear. The depletion of its trust funds is expected in 2033, but that doesn’t mean Social Security will go out of business. The system will continue to receive enough in payroll taxes from current workers to pay 77% of promised benefits. So even if Congress doesn’t get its act together to make necessary and sensible reforms, you’ll still get a check. If Congress does get its act together, the reforms probably will affect younger workers more than those close to retirement.

For more on how Social Security works and its benefits, read “Get What’s Yours: The Secrets to Maxing Out Your Social Security” by Laurence Kotlikoff, Philip Moeller and Paul Solman.

Filed Under: Q&A, Retirement Tagged With: q&a, Retirement, Social Security, solvency

Friday’s need-to-know money news

March 20, 2015 By Liz Weston

847_interestrates1Today’s top story: Why the Fed’s rate changes won’t immediately impact your loans. Also in the news:Why all credit checks aren’t created equal, how to avoid an IRS audit, and the four pillars of building wealth.

Why Fed Moves Won’t Hugely Affect Your Loans Anytime Soon
A slow creep instead of a dramatic jump.

Do All Credit Checks Hurt My Credit?
Not all credit checks are created equal.

How to avoid an IRS tax audit
Avoiding an unpleasant experience.

No Matter What, Building Wealth Always Comes Down to These Four Pillars
The four constants.

Target to Settle Data Breach for $10 Million
One of the largest breaches in retail history.

Filed Under: Liz's Blog Tagged With: building wealth, credit checks, data breach, interest rates, IRS, Target, tax audits, tips

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