Q&A

Q&A: Where should I keep money after selling my home?

July 21, 2026 By Liz Weston Leave a Comment

Dear Liz: I’m a widow about to go into independent living which means I will be selling my home. I need to find the best place to park my money to have payments to me but still earning on the balance. What would you suggest?

Answer: FDIC-insured savings accounts at online banks can earn a higher interest rate than typical brick-and-mortar banks while still giving you instant access to your money. Currently such banks are offering 3% to 4% annual percentage yields, compared to traditional banks which offer as little as .01%.

Q&A: Are businesses allowed to charge me to use my credit card?

July 21, 2026 By Liz Weston 1 Comment

Dear Liz: Lately, I’ve encountered businesses charging a fee to use a credit card either online or at the point of service. This practice seems to be steadily increasing, as I have been hit with fees to use my credit card at my car repair shop, gym and restaurants. Gas stations have been doing this for years. The IRS also has a fee to pay taxes online with a credit card. Is there a federal or state law that prohibits this? Is it the banks that are reaping these fees from the consumers who use their credit cards to pay for goods and services? The fees are 1.5% to 3% of the total amount paid, but it is starting to add up.

Answer: Federal law doesn’t prohibit credit card surcharges. Some states do, including California, but California’s law was found to be unconstitutional and so is not enforced.

(Visa and MasterCard used to ban surcharges in their merchant agreements, but the card networks dropped that restriction in 2013 as part of a lawsuit settlement.)

These fees aren’t a profit grab by the banks but a way for merchants to recoup the costs of accepting credit cards. Merchants have to pay interchange fees to the bank that issued the card as well as payments to the credit card network and the company processing the transaction. Those costs typically equal 1.5% to 3.5% of the transaction.

Federal law does prohibit surcharges on cash, prepaid and debit card transactions, however. If you want to avoid the fees, you can opt for one of those methods or look for businesses that don’t add such surcharges.

Q&A: Can I collect my ex-spouse’s Social Security survivor benefit if he remarries?

July 13, 2026 By Liz Weston Leave a Comment

Dear Liz: I was married 37 years. I claimed Social Security at 62 because I needed the monthly income. I learned too late that if I had waited a few more years, my payment would have been much better. They did tell me that if my ex died before me, I would be entitled to have my amount increased to what he was collecting. He probably will die before me due to some serious health problems. He has since remarried to a widow who is receiving Social Security. Does she become the one who collects my ex’s monthly amount if he dies before her, which would mean she would be collecting two checks a month? And I would lose my ability to have my amount increased? I just want to be prepared for what I can expect when/if he departs before me.

Answer: When people qualify for multiple benefits from Social Security, they get the largest of the amounts available to them. So if your ex’s wife is currently receiving her own or a survivor’s benefit and your ex’s benefit is bigger, she would get this larger check as her survivor’s benefit after his death. She wouldn’t be able to collect on two husbands’ earnings records at the same time.

And what she gets doesn’t affect what you get. Since your marriage lasted at least 10 years, you should be eligible for a divorced survivor benefit of up to 100% of your ex’s benefit. Your survivor benefit would only be reduced if you started it before your own full retirement age.

Got a question about money? You can submit it here.

Q&A: Should I make my kids beneficiaries of my IRA?

July 13, 2026 By Liz Weston Leave a Comment

Dear Liz: Since retiring, I’ve been converting a traditional pre-tax IRA to a Roth IRA. I’ve got another small pre-tax account that I could do the same with. My reason for converting is that my spouse has a very large pre-tax IRA that probably won’t be used up in our lifetimes, and I don’t want my adult children to face a large tax bomb when we both are gone.

Is there any downside to including our kids as beneficiaries for that account, say 10% each? That way, if he dies before I do, some of the pre-tax account will be delivered to the kids (starting the 10-year distribution clock), and then they’d have another 10 years to withdraw (and pay taxes on) whatever remains at my death. I could foresee adding grandkids as beneficiaries as they approach adulthood.

Is this a bad idea? Would it be better to continue whittling down the pre-tax accounts by converting them to Roth accounts?

Answer: Last week’s column covered some of the hazards of leaving retirement accounts to minor children. If the account was owned by anyone other than a parent, distributions would need to start immediately and likely would be subject to the parent’s tax rate. Plus, handing a big wad of cash to a teenager or young adult often isn’t advisable. You can control the distributions by creating a trust, but that has its own tax implications.

Including your adult children as beneficiaries isn’t as fraught with peril, but you do lose some flexibility. The surviving spouse is allowed to treat an inherited IRA as their own, which may allow them to delay distributions. Plus if the kids are in their peak earning years when they inherit, they could wind up paying taxes at high rates.

Continuing with the Roth conversions may be a better way to defuse the tax bomb, particularly if your tax rate is lower than theirs and you’re willing to foot the tax bill. You’re reducing the size of the taxable IRA while creating a tax-free pot of money for your heirs. Obviously you’ll want to discuss all this with your tax pro and your estate planning attorney before proceeding.

Q&A: When to report an unresponsive accountant

July 6, 2026 By Liz Weston

Dear Liz: In a previous column, you answered a question from someone dealing with an unexpected bank levy by a state tax agency. The accountant who prepared the tax returns wasn’t responding to emails or calls. If an accountant ignores a client, then a complaint should be filed with the state’s board of accounting. If the accountant is licensed, the state board will likely follow up.

Answer: That’s a good suggestion. As mentioned in the previous column, many tax pros struggle to keep up with client communications during the busy tax season and may back-burner questions they don’t see as urgent. But if the ignored client still hasn’t heard back from their tax pro at this point, making a complaint to the board of accounting could be a reasonable response.

Q&A: How the kiddie tax can derail your inheritance tax strategy

July 6, 2026 By Liz Weston

Dear Liz: I’m about 50 and have two early elementary school children. I make really good money and with the combination of all taxes the last dollar I make is taxed at about 50%.

I stand to inherit about $5 million from my parents. The problem is that about $3 million of that is in retirement funds. If those funds go to me, over the next 10 years I will have to take them as income and will lose half to taxes. I’m considering asking my mother to leave $1 million to each grandchild so that they can take it as income at a much lower tax rate, possibly saving $300,000 per kid. The problem is I am not sure I want my kids to have access to a million dollars the second they turn 18.

Is there any way I can avoid either giving them a ton of money when my parents die or me paying a ton in income taxes? Both kids already have 529s that will be filled in three to five years, so that is already out.

Answer: Not only is giving a million bucks to a teenager a bad idea, but the tax savings you’re hoping for may not materialize thanks to the kiddie tax.

Basically, unearned income above $2,700 a year is taxed at the parents’ rate, not the child’s, says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. Unearned income includes interest, dividends, capital gains and taxable distributions from retirement accounts.

The kiddie tax can apply to offspring up to the age of 23 depending on their circumstances.

Minors who inherit a retirement account from a parent are required to take small distributions based on their own life expectancies until they turn 21. After that, they typically have to drain the accounts within 10 years. The 10-year clock starts immediately, however, when minors inherit a retirement account from anyone who is not a parent.

Another issue is that your parents’ retirement accounts don’t get the valuable step-up in tax basis at death that their taxable accounts would get, says Jennifer Sawday, an estate planning attorney in Long Beach. The step-up insures that no capital gains taxes are owed on the appreciation that occurs during the original owners’ lifetime. If your parents want to maximize the inheritance they leave, it would make sense to preserve those taxable assets as much as possible and spend down the retirement accounts, Sawday says. Another option is converting some of their retirement money to Roth IRAs, especially if their tax bracket is lower than yours and they’re willing to pay the taxes on the conversions. You’d still have to empty the Roths within 10 years of their deaths, but the withdrawals would be tax free.

Properly drafted trusts are another option to consider if your parents want to skip you and get money directly to their grandkids, Sawday says. Trusts allow distributions at specified ages (such as 25, 30 or even later). But trusts have complex rules and can have high tax rates. Your parents need to consult an experienced estate planning attorney as well as a tax pro before taking any of these actions.