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Q&A: IRS changes on required withdrawals

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Dear Liz: When informing me of my required minimum distribution for 2022, my brokerage has apparently used a distribution period that differs from the one used in past years. This results in a distribution amount that’s noticeably smaller. I recall there was some talk of revising the IRS tables, but has this been done?

Answer: Yes. The IRS has updated the life expectancy tables used to calculate how much people must withdraw from their retirement accounts to reflect longer lifespans. That’s good news for people who withdraw only the minimums each year, since their required distributions will be smaller and the rest of their balances can continue to grow tax deferred.

Friday’s need-to-know money news

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Today’s top story: Don’t let your first car be a $30K mistake. Also in the news: House Democrats push Treasury, IRS for repeal of rule blocking state and local taxes cap workaround, should you use a reverse mortgage to pay for long-term care, and the easiest way to make your cell phone bill cheaper.

Don’t Let Your First Car Be a $30K Mistake
Buying your first car right now isn’t easy, but with the right prep you can find a car that won’t become a burden.

House Democrats push Treasury, IRS for repeal of rule blocking state and local taxes cap workaround
Three House Democrats are still pushing for relief on the $10,000 limit on the federal deduction for state and local taxes, known as SALT.

5 ways to get around high credit card interest rates
Credit card interest rates have started going up.

Should you use a reverse mortgage to pay for long-term care?
Someone turning 65 has nearly a 7-in-10 chance of needing long-term care in the future, according to the Department of Health and Human Services.

The Easiest Ways to Make Your Cell Phone Bill Cheaper
Your attention span is already prisoner to your phone; your wallet doesn’t have to be, too.

Thursday’s need-to-know money news

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Today’s top story: How to keep your tax return from getting hung up. Also in the news: Why you might be rewarded if you can afford to wait to buy a home until late in the year, what to know before your business adds buy now, pay later, and how an airport car rental is more expensive than an off-airport car rental.

How to Keep Your Tax Return From Getting Hung Up
There may never be a good time to draw the IRS’ attention, but this year you really want to avoid extra scrutiny.

The Property Line: Higher Rates May Slow Down Rising Home Prices
Buyers who exercise patience might face less competition for homes later in the year.

What to Know Before Your Business Adds Buy Now, Pay Later
Here’s how much buy now, pay later costs, how it could impact your business and what to look for in a provider.

Is It Cheaper to Rent a Car at the Airport?
Fees charged to rental companies by the airport get passed on to consumers, often making on-site rentals pricier.

Q&A: Reporting caregivers’ pay to the IRS

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Dear Liz: We have a gardener, pool man and caregivers. We pay the gardener, pool man and some of the caregivers directly, while we pay an agency for the other caregivers. Do we have an obligation to report payments to the IRS?

Answer: As an individual taxpayer, you typically don’t have to report payments to businesses. Your gardener and pool cleaner probably either are self-employed or work for a company that takes care of reporting requirements for its workers. Likewise, the caregiving agency should handle reporting requirements for its employees.

The caregivers you pay directly, however, are generally considered your household employees. That means you may be responsible for reporting their wages to the IRS and paying their employment taxes. That responsibility kicks in if a caregiver receives at least $1,000 in any calendar quarter or at least $2,400 per calendar year for 2022 (or $2,300 per calendar year for 2021), says Mark Luscombe, principal analyst for Wolters Kluwer Tax & Accounting. IRS Publication 926, Household Employer’s Tax Guide, has details.

Friday’s need-to-know money news

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Today’s top story: A financial checklist for quitting your job. Also in the news: Is it better to reprice or refinance a loan, how to talk to a real human being at the IRS.

A Financial Checklist for Quitting Your Job
Plan your exit to maximize the time and money you’ve put in over the years.

Is It Better to Reprice or Refinance a Loan?
Repricing is often faster – and cheaper – than refinancing.

How to Talk to a Real Human Being at the IRS
Because continuously screaming “Agent” doesn’t always work.

Tuesday’s need-to-know money news

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Today’s top story: IRS scraps plan to use ID.me selfies for account verification. Also in the news: How to approach taxes if you traded cryptocurrency in 2021, only 23% of investors align their investments to their values, and how to choose the right cryptocurrency wallet.

IRS Scraps Plan to Use ID.me Selfies for Account Verification
The IRS walks back a directive that would have required taxpayers to submit a video selfie to access their online accounts.

Traded Cryptocurrency in 2021? Here’s How to Approach Taxes
With the tax-filing deadline just a few months away, those who traded cryptocurrency last year should understand their tax liability.

Survey: Just 23% of Investors Align Most Investments to Their Values
Socially responsible investing is gaining in popularity, but there’s a pronounced gap between those who value it and those who actually invest this way.

How to Choose the Right Cryptocurrency Wallet
All your cryptocurrency has to be stored somewhere—here’s how to choose the right crypto wallet for your needs.