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This week’s money news

November 28, 2022 By Liz Weston

This week’s top story: 5 tax moves to consider before year-end. In other news: Wells Fargo could face over $1B in fines, 4 ways savings vaults can help you manage holiday spending, and when student loan payments resume.

5 Tax Moves to Consider Before Year-End
Careful tax planning can mean fewer surprises when it comes time to file. Here are a few tips to consider before the year winds down.

Wells Fargo, Back in the Hot Seat, Could Face Over $1B in Fines
The nation’s third-largest bank has for years been embroiled in investigations and ethical breaches.

4 Ways Savings Vaults Can Help You Manage Holiday Spending
With these mini accounts, you can organize your spending this holiday season without going over budget while also earning interest.

When Do Student Loan Payments Resume?
The White House has extended payment forbearance into 2023. With forgiveness in doubt, use this extra time wisely.

Filed Under: Liz's Blog Tagged With: 2022 taxes, managing holiday spending, student loan forbearance, Wells Fargo

Q&A: Multiple payments may help credit scores

November 28, 2022 By Liz Weston

Dear Liz: You recently wrote that using more than a small percentage of your credit cards’ available limit can hurt your credit scores, even if you pay your balances in full. I pay my credit cards in full each month and I also make several payments (via my bank’s online payment service) during the month. Do these multiple payments hurt or help my credit score?

Answer: They probably help. The balance that matters for credit scoring purposes is the balance that’s reported to the credit bureaus, and that’s typically what you owe on your statement closing date. Making multiple payments before the statement closing date should lower that balance. Just remember to make a payment between the statement closing date and before the due date to avoid late fees.

Filed Under: Credit Cards, Q&A

Q&A: When an online shopping money-saving scheme is tax evasion

November 28, 2022 By Liz Weston

Dear Liz: My father lives in Washington state. He often purchases higher-priced items online, has them shipped to relatives living in Oregon and picks them up later. That way he doesn’t have to pay sales tax. Is this a form of tax evasion? Does he need to pay a “use tax”? Could he (and the Oregon relatives) possibly be in any kind of legal danger? He claims it’s perfectly fine to do this because Washingtonians “do it all the time” by driving down to Oregon to do their shopping.

Answer: Yes, people do this “all the time” but it’s still a form of tax evasion.

Washington and other states with sales taxes typically have laws requiring people to pay a use tax when they bring home goods purchased in another state that either doesn’t charge sales tax or charges less. People may also owe use taxes when they purchase something from an individual who doesn’t collect sales tax. An example might be furniture purchased from a Craigslist ad.

But these laws can be difficult to enforce. While businesses can be subject to sales and use tax audits, individual taxpayers are unlikely to face the same scrutiny.

Filed Under: Q&A, Taxes

Q&A: Divorce complicates retirement benefits

November 28, 2022 By Liz Weston

Dear Liz: I was told by Social Security that because I remarried at 60, I could still collect half of my ex’s benefits once he died. He has just died, and half of his benefit is greater than my own retirement benefit. My current husband has not started benefits. If I collect half of my ex’s benefit but want to later switch to collecting benefits on my current husband’s record (once he starts to collect) or to survivor benefits should he die before I do, can I do that?

Answer: The short answer is yes, although you’ve confused divorced spousal benefits with divorced survivor benefits.

While your ex was alive, you might have been eligible for a divorced spousal benefit if you had remained unmarried. That benefit would have been up to 50% of your ex’s primary insurance amount (the amount he would receive at his full retirement age).

The rules changed once your ex died. As a divorced survivor who remarried after age 60, you are entitled to up to 100% of what your ex was receiving. The survivor benefit will be reduced if you haven’t yet reached your full retirement age (which is currently between age 66 and 67).

Survivor benefits also offer more flexibility to switch later than other types of benefits. If you choose to begin receiving a surviving divorced spouse’s benefit now, you can switch to your own benefit at any point through age 70, if your benefit is higher, says William Meyer, founder of the Social Security Solutions claiming strategies site. You also can switch to receiving spousal benefits from your current spouse’s record once he starts collecting, if that benefit is greater than what you’re receiving from your former spouse’s record.

Figuring out the right way to claim can be tricky, so consider consulting an advisor or using claiming strategy software to determine what’s best in your situation.

Filed Under: Divorce & Money, Q&A, Social Security

How to take a career break

November 21, 2022 By Liz Weston

Back in 2016, Jamie Clark of Seattle was a software engineer who planned to take a year off of work to finish a master’s degree in computational linguistics. One year turned into three and a career change into financial planning.

Nowadays, Clark, who uses they/them pronouns, believes the experience makes them a better advisor – particularly since their career break didn’t turn out as originally planned.

“Part of our job as financial planners is to help people be prepared,” says Clark, now a certified financial planner who recently launched their own firm, Ruby Pebble Financial Planning. “And I want to help people build that flexibility.”

Career breaks are extended and usually unpaid stretches of time off work. Such breaks can be aspirational — giving you time to travel, pursue a degree, change careers or launch a business. Or, they can be prompted by life events, such as caring for a child, nursing a family member or dealing with an illness or burnout. In my latest for the Associated Press, learn some planning can help you make the most of your break.

Filed Under: Liz's Blog Tagged With: career break

This week’s money news

November 21, 2022 By Liz Weston

This week’s top story: Smart Money podcast on crypto crash, and growing money fast. In other news: Timeline, fallout and what investors should know about FTX crash, the new reality of a $700 monthly car payment, and 5 key numbers to know about CDs.

Smart Money Podcast: Crypto Crash, and Growing Money Fast
This week’s episode starts with an explainer on the collapse of the FTX crypto exchange.

FTX Crash: Timeline, Fallout and What Investors Should Know
Crypto exchange FTX crashed this week, tanking major tokens in its wake. Here’s what it means for U.S. investors.

The New Reality: A $700 Monthly Car Payment
Monthly car payments continue to climb, thanks to rising interest rates and record-high car prices.

Want 4% on Your Savings? 5 Key Numbers to Know About CDs
The best CD rates are stellar right now. But consider CD terms, penalties and minimums too.

Filed Under: Liz's Blog Tagged With: CD, crypto, FTX crash, Investments, monthly car payments, Savings

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