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Taxes

Thursday’s need-to-know money news

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Today’s top story: How to choose the right health plan. Also in the news: Your data is out there: how to take action, 7 retirement savings mistakes financial advisors see too often, and what to do if you haven’t filed your taxes in years.

How to Choose the Right Health Plan
Open enrollment season is here.

Your Data Is Out There: Don’t Freak Out, Do Take Action
Taking preventative measures.

7 Retirement Savings Mistakes Financial Advisors See Too Often
How they help their clients recover.

What to Do If You Haven’t Filed Your Taxes in Years
Time to come clean.

Q&A: Don’t keep a mortgage just for the tax deduction

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Dear Liz: Does the new tax law, with its increased standard deduction, change the calculus of maintaining my mortgage? I owe about $250,000 at 3.25% on a 30-year mortgage. I no longer itemize, so I don’t get the benefit of the tax deduction for the interest. My payments are about $1,500 a month, but I could easily pay it off.

Answer: It never made much sense to keep a mortgage just for the tax deduction. The tax savings offset only a portion of the interest you pay. (If you’re in a 33% combined state and federal tax bracket, for example, you’d get at most 33 cents back for every $1 in mortgage interest you paid.)

A more compelling reason to keep a mortgage would be if you were able to get a better return on your money by investing it, or if you didn’t want to have a big chunk of your wealth tied up in a single, illiquid asset.

Thursday’s need-to-know money news

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Today’s top story: Moving to escape taxes? Make sure it’s a clean break. Also in the news: 4 smart ways to split bills with friends while traveling abroad, 5 auto-buying tips from a former undercover car salesman, and 7 tips for becoming an ethical shopper.

Moving to Escape Taxes? Make Sure It’s a Clean Break
You could face a residency audit.

4 Smart Ways to Split Bills With Friends While Traveling Abroad
Thinking outside the app box.

5 auto-buying tips from a former undercover car salesman
Don’t get taken for a ride.

7 tips for becoming an ethical shopper
Finding companies that align with your values.

Moving to escape taxes? Make it a clean break

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Breaking up can be hard to do if the other party doesn’t want to let you go. People who move out of high-tax states may learn this the hard way — through a residency audit.

States such as New York, California and Illinois use the audits to claim that your recent interstate move was just a tax dodge and that you still owe their state income taxes. Proving you’ve actually moved and plan to make the new place your permanent home — yes, the burden of proof is on you in a residency audit — often requires far more than flashing your new driver’s license or spending a certain number of days outside the old state. In my latest for the Associated Press, how to prepare for a residency audit.

Q&A: Unloading a timeshare

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Dear Liz: How can a timeshare owner get rid of the timeshare and claim the loss on taxes?

Answer: Timeshares typically are considered a personal asset, like a boat or a car, so the losses aren’t deductible. The best way out of a timeshare is often to give it back to the developer, if the developer will take it. You also could try to sell it on sites such as RedWeek and Timeshare Users Group. Unless your timeshare is at a high-end property, you are unlikely to recoup much and may have to pay the buyer’s maintenance fees for a year or two as an incentive.

Monday’s need-to-know money news

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Today’s top story: Your guide to earning bonus miles with airline promotions. Also in the news: 4 important features to finding the perfect home, why some people don’t mind overpaying the IRS, and this cash-envelope budgeting system turns back-to-school shopping into a money lesson.

Your Guide to Earning Bonus Miles With Airline Promotions
Check out these limited-time offers.

Look for these 4 important features to find the perfect home
Sometimes good enough is perfect.

Here’s why these people don’t mind overpaying the IRS
They’d rather get a refund.

This cash-envelope budgeting system turns back-to-school shopping into a money lesson
Letting your kids make the decisions.