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Money Pilot Financial Advisor Podcast
Hosted by Kathleen "Katie" Cannon · EN
Financial life advice serving military and government employees.
87episodes
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Episode 46 FERS Retirement Date
May 19, 202100:11:05Tap to summarizeToday we're going to talk about what age to retire if you're a FERS federal employee. There are several key ages to consider. The first is when will you reach your minimum retirement age (MRA). Depending on when you were born your MRA is from 55 to 57 years old. If you have at least 30 years of service, you can retire at your FRA and start receiving your pension immediately. If you have more than 20 years but less than 30, you are eligible for a full pension, but you won’t begin get your first pension payments until you are 60 years. If you have 10 to 29 years federal service, you are eligible for a retirement at your full retirement age, but your pension payments will be permanently reduced. This means you’ll have a gap where you won’t have your federal salary or a pension for a few years. Or you could retire early and start a pension immediately, but you payments will be permanently lower. The next key age is what we call the “magic 62”. You'd be eligible to begin receiving your Social Security at age 62. I don't usually recommend you do that. But it's an option, it gives you flexibility if you need it added income right away. In general, your Social Security full retirement age is between age 65 and 67, depending on when you were born. That’s about 10 years after your FERS minimum retirement age. Retire before you Social Security full retirement age and you will get a permanently reduced benefit. On the other hand, if wait until you are 70 to start Social Security you will get 8% more in your paycheck for each year past full retirement age. Another reason to wait until at least magic 62 to start your FERS retirement is a boost to your FERS pension. If you're a FERS employee with more than 20, but less than 30 years of service, you get an extra bonus by waiting to 62. Your yearly pension is calculated by multiplying your average high-three yearly salary, times 1%, times your years of service. But if you wait until you're at least age 62, with 20 years or more of service, you use 1.1% in the formula instead of the 1%. YAnother great benefit of waiting to age 62 is that's that’s the age when your regular FERS retiree Cost of Living Allowances (COLA) begin. COLA is a yearly automatic increase in your retirement pension based on inflation. If you retire before age 62, you miss out on those COLAs. The buying power of your pension will go down because of inflation until age 62. You never get a catchup for those years.So again, getting that COLA boost every year right from the start is another plus for waiting till you're age 62. All right. Now there also are general benefits of retiring later. The longer you work, the better off you are financially, because you're saving longer, earning a higher FERS and Social Security pension, and putting off spending your retirement savings until you're older. It helps you build a cushion. And, of course, there's the Thrift Savings Plan. You FERS employees are getting that 1% contribtion from Uncle Sam no matter what. And then if you're contributing to TSP you get up to a 5% salary match. If you're contributing the max $26,000 a year when you’re 50 or older, with your match, that's an extra $31,000 a year in TSP for every extra year you work, and that can add up fast as well. So in deciding when to retire, are you enjoying your work, how’s your health, and how much do you need for a pension to have the retirement that you want. You can run the numbers and find the best plan for you. Look at your possible income sources like your federal pensions, Social Security, and Thrift Savings Plan and the costs and benefits of tapping each one at different ages. Everybody's situation is unique. But it’s good to remember and consider the benefits of that waiting until your are 62 or later to start retirement.
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Episode 45 Rebalance
May 11, 202100:16:27Tap to summarizeToday were going to talk about rebalancing. An investment portfolio is a group of assets you own. Ideally you have plan based on what you want that money for, when you need it, and how much risk you are willing to take in order to grow your investment. This investment plan typically includes asset allocation, which is the balance of different types investments you plan to use to achieve your goals. Invest according to your plan and you can think of your investment portfolio as “in balance”.There are two main things that can throw your investment allocation out of balance. First, your needs and goals may change and you realize your original allocation plan doesn’t fit your new situation. You may discover you need a different portfolio allocation than you have now. You are out of balance.One of the most common ways a good asset allocation gets out of balance is when one asset grows faster than another. Investment allocation is done by percentages. Let’s say based on your specific needs and tolerance for risk, you set your asset allocation at 50% of your investment dollars in a US Stocks, 25% in an International Stocks, and 25% in a US Bonds. Over time as your some investments grow faster than others, your allocation may drift to 55% invested US stocks, 25% International stocks, and 20% in bonds. To get back in balance, you would sell enough of your US stocks and using that to buy more bonds to bring your asset allocation back to your specific goal of 50/25/25. Keeping your risk at a level appropriate for you is the biggest benefit. Periodic rebalancing may also you earn a higher overall return. You’re selling relative winners to buy losers. And in this way you are following the mantra of successful investing – buy low and sell high. One of the easiest ways to is to invest in a target date fund, or if your in the Thrift Savings Plan, TSP Lifecycle Funds. Typically set up in retirement accounts, all you do is choose a fund that matches the year you plan to retire. Everyone’s investment in the fund will be allocated as part of a set plan, depending on how much time you have left to retirement. The fund will do the rebalancing for you to keep your asset allocation on target. The target date fund will also gradually shift you from a relatively risky allocation to less risky allocation percentages over time. Or you can rebalance yourself. With TSP you just is enter in your desired asset allocation percentages and TSP will do the rest. Outside TSP you may need to do some math to figure how much in dollars you need to buy and sell to get back to your target percentage. Some companies offer rebalancing tools to help you. Some offer mutual funds that maintain set asset allocations and rebalance automatically for you. Financial advisors can also help with this.Beware, there may be tax consequences. First, if you rebalance inside a retirement account like IRAs, TSP, and 401k you don’t pay any taxes on these trades until you pull the money out, usually in retirement. But if you are rebalancing a taxable investment account, you will owe capital gains tax on investments you sell. It’s a good time to go back and listen to Episode 44 of my podcast on Capital Gains Tax. And watch the Wash Sale tax rule. It’s a bit complicated, but in general if you buy and sell the same, or nearly identical, asset within 30 days, it is also not taxed favorably. Rebalancing less often will help you avoid this altogether. And epending on where you invest, you may have to pay fees when you buy and sell. The costs can mount up. How often? Setting time, like yearly is simplest. A second method is using tolerance bands. You do nothing when your investment allocation varies within a set range or band, like guardrails. If one asset gets out of bounds, it’s time to rebalance. This helps minimize unnecessary trading, but does require you to monitor your investments regularly.
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Episode 44 Capital Gains Tax
May 4, 202100:18:11Tap to summarizeProfits on investments can be taxed as regular income or at a lower long-term capital gains tax rate. Capital assets are things you buy, hold, and then sell, like stocks, bonds, mutual funds, Exchange Traded Funds (ETF), collectibles, and real estate property. Its increase in value is called gain. Capital gains are taxed when they are sold. You calculate gain by subtracting what you paid, called basis, from what you sell it for. To be long term you have to hold it for one year or more. If you buy a capital asset l, hold it for one year or more, then sell it for more than you paid for it, you have a long-term capital gain. You will owe tax on it, but the tax rate you pay will be lower than regular income tax.Long term capital gains (LTCG) are taxed at 0%, 15%, and 20%. In 2020, if your total income was up to $40,000 if you’re single, or $80,000 MFJ your LTCG are taxed at 0%! Over that up to $400,000 plus you’re LTCG will be taxed at 15%. If you are expecting a drop in income that would put you in the 0% LTCG tax bracket, like taking some time off from work after transitioning out of the military, retiring early before you are eligible for a pension or social security, or are between jobs, this may be a good time to realize a LTCG. If you sell while you are in the 0% LTCG bracket, you pay no tax on it. You can reinvest it in something else and reset your basis, paying less tax overall than if you let that initial investment ride. Even if you won’t be in the 0% LTCG bracket, the LTCG rate is always lower than your federal income tax bracket, with a couple of exceptions that I’ll cover below.Here are a few things that are NOT long-term capital gains. Regular dividends and interest from investments you own are taxed as regular income. If you sell an asset you held for less than one year, it is a short-term capital gain and will be also taxed at your higher regular income rate. If you sell an asset for less than you paid for it, it is a capital loss. You can subtract your losses from your gains in the same year to determine your tax. If you have an overall gain, you pay tax on the difference. If you have an overall loss of, you can deduct up to $3,000 of it from your regular taxable income. The rest of your losses have to be “carried over” to the next year. A special category is the sale of a your home. Up to $250,000 of gain if you are single, $500,000 of gain if married is not taxed if you lived in your home for 2 of the last 5 years before you sold it. Our military can have up to 10 years to meet the requirement if you PCS . And federal employees suspend the 5-year clock while they on government orders overseas . .There’s not enough time today to go into the sale of a rental property which is also subject to LTCG tax. But know that improvements to the property are added to basis. And when sold you will pay a special 25% capital gains tax on all the depreciation deducted from your taxes over the years, called unrecaptured depreciation. The last special rule is the LTCG rate for some assets are taxed at a flat 28% , no matter your income . This includes collectibles like art, stamps, coins, cards, comics, other rare items, and antiques, as well as precious metals in any form. If you are a high earner in the 32%, 35%, 37% income tax brackets, the LTCG tax rate of “just” 28% is still a good deal. But for most Americans, the 28% LTCG rate for this special category of assets is HIGHER than your regular income tax rate. Lastly, keep detailed records of how much you pay for your assets. If you are buying and selling assets with a broker-dealer, bank, or mutual fund they will issue you a FORM 1099-B each year that will list the sales details and basis and you just plug that into your tax return IRS Topic No. 409 Capital Gains and Losses https://www.irs.gov/taxtopics/tc409
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Episode 43 Save More
Apr 27, 202100:17:00Tap to summarizeIn Episode 39 Stash the Cash we talked about different cash accounts you can use for short term savings goals, like savings accounts, CDs, and money market accounts. Today, we’ll ask What Account Should I Consider If I Want To Save More. I put a free, handy checklist that you can download from my website at www.moneypilotadvisor.com. Healthcare savings plans offered by employers. These aren't available to our military service members insured with TRICARE. These special savings accounts allow you to put pre-tax dollars in them directly from your pay check. And as long as you use the funds to pay eligible medical expenses, you won’t pay tax on the money when you draw it out either. With the Flexible Savings Account (FSA) you and your employer can make contributions. But remember to spend the money in your FSA each year because you can't carry it over. Health Savings Account (HSA) You can only use one if you have a high deductible health plan. Again, not available with TRICARE. Many civilian employers and FEHB do offer them. It is like an FSA but you can carry over your balance from year to year. If you still have money in your HSA at age 65, you can withdraw it for any reason tax free. It's the Triple Crown of tax free. Consider keeping at least that max out-of-pocket amount in your HSA and/or emergency savings to cover you if you have a big expense. Retirement savings accounts like a 401(k), 403(b), or the Thrift Savings Plan (TSP). Contribute enough to max out any match offered by your employer. For FERS employees and BRS military service members that's at least 5% of your pay. CSRS feds and non-BRS military don’t get a match. Everyone else check with your employer. Everyone with earned income contribute to an Individual Retirement Account (IRA) and if you’re a couple with only one income, you can still save up to the max for each of you. This is a great way for a non-working spouse to build up retirement savings. There are regular r and ROTH IRAs. There’s a lot to it. Learn more in my Podcast Episodes 28, 29, and 30 . 529 College Savings Plans. 529s are offered by almost every state. Withdrawals are tax-free if used for qualified education expenses. And you can change always the beneficiary if needed. Many states also offer other incentives that sweeten the 529 pot so it's worth checking out the details for your state. Tax Deferred Insurance either an annuity ora cash value life insurance policy, like whole life or universal life Insurance. I feel like both of these though should come with a warning label. They're not necessarily bad saving vehicles. But they often offer large commissions to the agent that sells them and all too often our sold to people when they are not appropriate. So if you're considering an annuity or cash value life insurance, this would be a great time to get a second professional opinion from a financial planner to see if other savings vehicles and or cheaper term life insurance may better fit your particular needs. Lastly, consider a taxable brokerage account. Generally, you can take your money and use it when and where you want without a penalty. These accounts are good if you are willing to take some risk, plan to leave the money there for at least a year, and want would like to earn more return than cash accounts. Setting up these accounts doesn't have to be intimidating. You can usually set up an account online with a low fee mutual fund company like Vanguard, or Betterment which helps you invest in low cost ETFs. Even bigger name brokerage houses like Charles Schwab have some simple, low fee options. If you want someone else to handle it all for you or advice on what to invest in, this is another good time to call on a fee-only financial planner or advisor.
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Episode 42 Post-COVID Habits
Apr 20, 202100:12:05Tap to summarizeToday I thought we'd talk about post-COVID spending and savings habits. An article popped up in my inbox this week by Samantha Lamas, a content author at Morningstar on this topic. I'll put a link to the article in the show notes. We'll take a look her thoughts and see how they can help us maintain some of the good habits we may have developed during the COVID restrictions. COVID may have helped you build some good money habits Now, as restrictions are being lifting, ti may be some of us ditch good new habits, and go back to spending more and saving less again. As Samantha pointed out, making a new habit stick depends on how difficult is it to maintain better behavior, what’s your environment, and what incentive is there to maintain the new behavior? During the pandemic, COVID restrictions acted as sort of environmental fix where you were shielded from temptations of overspending at, in-person settings. Not being able to spend as much, no matter how much you missed it, may have helped you save money during COVID for other goals that are also important to you. If you who would like to continue curb your spending and build your savings, there's three areas to explore. Identify the good behaviors you've picked up during the past year. Write down those you'd like to stick with in the future and why this is good for you. You’re What and you’re Why. If you like to stay in shape and go to sports events with friends and saved money on gym membership because it’s closed, you’re exercising outside, and training at home. Would you like to continue that money saving habit? Skip the gym membership and use that money to buy tickets to a few games . Link that healthy, free exercise habit you want to maintain to the goal of attending some sporting events with friends again. TThe second step is to prepare. It's important to acknowledge that this COVID environment may have helped us stick to our new spending and savings habits. Try to think what's important to you about these behaviors you want to curb. Then come up with a new strategy to meet those needs .Say you enjoyed going out and eating with friends fefore and didn't mind spending on an expensive dinner,you really enjoyed it. But you would like to save for another priority. Thiink about what it is you really loved about that dinner out? What need does that meet for you? Is it the food itself? The service? Or was it you just really enjoy spending time with your friends? If its seeing friends, maybe get together just as often, but at budget friendly restaurants or invite friends over for a home cooked meal instead. Is it the food and atmosphere you love? Maybe you enjoy that experience a little less often in order to save for something else. Okay, so third thing mentioned in the Morningstar article is called the block to help prevent that is to literally create a barrier to the action you're trying to avoid. An example of a block, could be you implement a three-day wait rule, where you agree to wait for three-days before acting on a money decision. This might help you from making spontaneous purchases that you then have buyers regret about later and give you some breathing room to think about your Why. And when you finally can get back out there again have fun and love life, with no regrets. Some content from “How to Help Clients With Their Post-Pandemic Spending and Savings Plans”, Samantha Lamas, Apr 19, 2021, Samantha Lamas is a content author at Morningstar https://www.morningstar.com/articles/1034108/how-to-help-clients-with-their-post-pandemic-spending-and-savings-plans?utm_medium=referral&utm_campaign=linkshare&utm_source=link
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Episode 41 Inflation
Apr 13, 202100:12:46Tap to summarizeInflation makes things you buy cost more. That dollar buys you less than it did before. Of course, if your income grows as fast as inflation, you won’t feel the pinch. Our active duty military and federal employees get yearly adjustments to your pay based on the Consumer Price Index (CPI) which is one way of measuring inflation. This really helps the buying power of your paycheck keep up with rising prices or inflation. However, most of our other listeners don’t receive automatic boosts to their pay check. Eventually pay often catches up, but you’ll feel that lag where your pay doesn’t buy what it used to. Inflation can hit retirees especially hard. Traditional pensions from companies are often set when you retire, and remain the same amount the rest of your life. If you enjoy a long life, that set monthly payment will cover less and less of your daily needs as time goes on. When military retire from active duty you continue to get yearly Cost of Living Adjustments (COLA). This is HUGE because most military retire in your 40s and 50s and odds are you will live another 40 years or more. You CSRS federal employees will also get yearly automatic COLA . Unfortunately, FERS employees get what I call diet-COLA. With diet COLA you get a full COLA for inflation up to 2%. When inflation for the year is between 2 and 3%, you COLA is fixed at lower 2%. For years where inflation is 3% or higher you receive the CPI minus 1%. So if inflation is 3.5% your COLA would be 2.5% that year. This isn’t horrible, but you will see a gradual erosion of your retirement pay buying power over time. So what to do? Try to continue to increase you pay faster than inflation while you are still working. If you are covered under a pension, this will help you receive a higher pension when you retire. Higher pay will give you more opportunity to save and invest for retirement. Also invest your long-term savings in a way that will grow faster than inflation, increasing you future buying power. The G Fund which is an investment option available to military and federal employees in their Thrift Savings Plan, which is like a workplace 401k. The G fund is guaranteed not to lose money and is considered the “safest” place to invest your TSP dollars. Your 401k plan may have a similar short-term government bond option. But calling them safe doesn’t really tell the whole story. You won’t lose money, but it is not guaranteed to keep up with inflation And the power of those savings may not keep up with rising costs of what retirees spend on, especially healthcare and medicine. Taking some calculated risk in hopes of being rewarded with more growth over time can help. That means investing at least some of you retirement funds in stocks and/or bonds issued by companies. These investments are more risky. Their value swings much higher, and lower than those “safe” investments. If you have to cash out when the market is down , you can lose money. But saving money in a well-diversified selection of investments can help smooth the roller coaster a little and in the long run has a higher probably of beating inflation and maintaining your buying power down the road. Alright at the beginning of the podcast I mentioned that inflation can be both good and bad. If you have a long term loan, like a mortgage and there s inflation, the dollars you pay the loan back with in later years are worth less than the dollar in you pocket now. Your lender feels the inflation pinch instead of you. This can be a double benefit of refinancing your mortgage when interest rates are very low, like they are right now. Inflation is also very low right now. But with a fixed rate mortgage, the interest rate you pay on the loan will stay that low rate. But inflation is not fixed. If inflation raises during the life of your loan, which could be decades, you will be paying it back with cheaper dollars.
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Episode 40 Withholding
Apr 6, 202100:12:31Tap to summarizeWithholding estimator https://www.irs.gov/individuals/tax-withholding-estimatorWritten instructions How to Use the IRS W4 Tax Witholding EstimatorStep-by-step video https://www.youtube.com/watch?v=1AidmxJ1O9UMyPay website (feds and military submit Form W-4 here) https://mypay.dfas.mil/Well today we’ll talk about how we determine withholding, and more importantly we’ll talk about how to do your withholding right. First, what is withholding? Federal taxpayers, like you and me, are required to pay income tax throughout the year on our taxable income. If you earn a paycheck working for an employer like a business or the government, they are required to withhold federal income tax from your pay and submit it to the IRS on your behalf. They use the IRS Form W-4, Employee's Withholding Certificate. Your employer usually fills out the W-4 automatically and has you sign it when you first start work. This mandatory withholding only applies to income you earn from an employer and pensions. If you are self-employed, earn money as a contractor that is reported on a Form 1099, earned interest on bank accounts, have rental income or other business income, or have dividends or capital gains from investments, you need know that there is no automatic income tax withholding for this income. You still OWE tax on it. But no one else will withhold it for you.You are required to submit those taxes either by submitting them yourself quarterly directly to the IRS or you can have extra income taxes withheld from you paycheck with your employer. You can have that extra tax withheld each pay period by filing an updated Form W-4. Most of you who are single with income almost entirely from a paycheck will find that the automatic W-4 that your employer provided does a pretty good job of withholding. What we are finding are these automatic W-4’s are now coming up short if you have more than one job, if you’re a couple with very different incomes, or if you’re couple with more than two or jobs or other sources of income. Before you start the IRS’s new online W-2 tax withholding estimator, pull together your and you spouse's most recent pay statements or leave and earnings statements. Gather information for other sources of income you may have, including rental property, interest on savings, or dividends and capital gains from taxable investments. A great place to start is your 2020 income tax return. And make adjustments for changes you expect in 2021. I highly recommend you watch the IRS step-by-step tutorial video on how to use it before you start. To locate just the amount of your government or military pay that is taxable, look on your LES in the section called Federal Tax. In that box you should see wages this period and wages year to date. You’ll need both numbers. To calculate you annual taxable income, multiply your wages this period by the number of pay periods in the year. The estimator will also ask for your wages to date and federal tax withheld year to date. Both are also found in that federal tax section of our LES. Print out the info from the estimator and use the results to complete a new Form W-4, Employee's Withholding Certificate. Then submit the completed Form W-4 to your employer. All military members, military retirees and federal civilian employees using myPay can update their IRS Form W-4 on line at myPay. If you have any feedback or would like to have you question answered on a future podcast, you can always reach me through my website moneypilotadvisor.com. Talk with you next week.
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Episode 39 Stash the Cash
Mar 30, 202100:12:21Tap to summarize20210330 Stash the Cash Hello and welcome back to the podcast. Often in financial planning, we are planning for the future and managing finances can help you make that dream future a reality. But sometimes you have a need or goal and you’ll need pay for relatively soon, like in the next year or so? This may be for a house down payment, next year’s tuition, or to cover a gap in income while you take time off to care care of a newborn or right after retirement. If you’ve got more than pocket change your saving, I recommend a bank. You don’t trust a bank? The Federal Deposit Insurance Corporation (FDIC) insures your deposits up to $250,000 per FDIC-insured bank per person per ownership category. It covers checking and savings accounts, CDs, money market accounts. Single accounts and joint accounts are separate ownership categories. More details at the FDIC. https://www.fdic.gov/deposit/covered/categories.html You can split the money among more than one FDIC insured bank. Your deposits are insured up to the limit at each bank.Checking accounts provide quick easy access to your money . Savings accounts usually pay more interest but have a limit of six withdrawals per month by law. There are exceptions, and withdrawals and deposits can be for any amount. Would like to earn more interest? Then Certificates of Deposit (CD) or a Money Market Account may be for you. CDs are offered provide a specific interest rate in exchange for you agreeing to leave a lump-sum deposit with them untouched for a set amount of time. At the end of the term they return your deposit with the interest to you. CDs are a good option when you know when you may need a set amount of money. You can count on the guaranteed interest. Match the amount of the deposit and time to withdrawal to your future need. Money Market Accounts are also offered by banks and credit unions, and generally pay higher interest rates than savings accounts. They often come with debit cards and check writing privileges similar to a checking account, but like savings accounts you are limited on the number of withdrawal you can make each month. If you think interests rates may rise, the money market account may earn more than a long term CD. If you think interest rates will fall, locking in a set interest rate with a CD may be better.On thing I really want to stress here is that a Money Market Account and a Money Market Fund are NOT the same. A money market fund is an investment sponsored by an investment fund company. There is no guarantee of principal, that means you can lose money you deposit with them. And they are not insured by the FDIC.For all these accounts, shop around. The interest rates offered by different banks and credit unions vary widely. Check out online banks. Because they don’t have costs like a brick and mortar bank, they often offer some of the highest interest rates. And some may offer incentives, or special features. If you have more to deposit than the $250,000 FDIC per person, per account limit, considering splitting up your deposit between more than one bank or credit union. And remember you’re not going to get rich on the interest these accounts earn and it will likely not even keep up with inflation, so they are not very good long term investments. The ARE safe places to stash your cash so that you can be sure that it is available when you need, no gut wrenching roller coaster ride.
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Episode 38 Tax Drama
Mar 24, 202100:08:58Tap to summarizeHi everyone and welcome to tax season. A few days ago, the Internal Revenue Service announced that the federal income tax filing due date for individual 2020 returns and payment of income tax has been automatically extended from April 15 to May 17, 2021. You get an extra month to file and pay your federal income tax. They are now both due on May 15. But this does NOT mean that your State income tax filing deadline is automatically extended (if you’re state has an income tax). Some states already have deadlines later than May 17, and MAY not be affected. The rest of the states are deciding what to do and have been making announcements. California, Virginia, North and South Carolina, are among the states that have already extended their deadlines to May 17th and more are making the decision. Check with your state for the latest specifics. The states I mentioned have also said the deadline to pay the state income tax was also extended, but don’t assume that is true for all states. Double check.In another late minute change, if you received unemployment income in 2020 and your AGI was below $150,000 , you won’t pay federal income tax on the first $10,200 of unemployment you received. If this affects you, but you have already filed your 2020 tax return, do not file an amended return just for that. The IRS put out guidance that they will re-figure your taxes using the excluded unemployment amount and adjust your account accordingly. The IRS will send any refund amount directly to you. If this affects you, you haven’t filed yet, and you live in a state with a state income tax, may want to wait a few days or a week. Tax preparation software is rapidly catching up with the states’ changes as they are announced. But we noticed an anomaly on Saturday in the in software we use where the fix for the federal returns, inadvertently caused an error in the calculation of the state return. If you are doing your own tax prep, give the software a bit of time to make the changes and be sure to update it the software before you send in your electronic return. If you use a tax preparer they should be on top of this already.Should you wait until May 17 to file? if you don’t have a compelling reason to put it off and you are expecting a refund filing sooner will mean you get your refund faster.Even with the extensions to file your federal tax return, will you be unable to pay your taxes on time? FILE anyway. Remember the penalty for failure to PAY your taxes is 0.5% per month plus interest. The penalty for failure to FILE by the extended deadline is 5% per month. Yes the penalty for not filing on time is 10 times more than the penalty for not paying your on time. Do you have special circumstances and you can’t file on time? No problem, before the new May 15 deadline, file for an extension with IRS FORM 4868. Individual taxpayers can request a penalty free-extension before the filing deadline and then actually file your return by October 15. But understand the deadline to pay your taxes will not be extended past the May 17. And again if your state has an income tax, check with your state for any special rules or extensions.One special note, especially for our listeners who pay quarterly estimated taxes. Your 2021 estimated tax payments did NOT get an extension. If you're required to make estimated quarterly tax payments to the IRS because you are self-employed, have rental property, or have investment income or other reasons, you still need to make those payments at the normal times which is still April 15 for 1st quarter 2021 and June 15 for the second quarter payments. This is different than last year when they were extended. So remember get those estimated 1st quarter payments in by 15 April as normal.Hope this has cleared the air a bit and we’ll speak with you next time.
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Episode 37 Favorites
Mar 16, 202100:07:17Tap to summarizeHi and welcome back to the podcast. I’m so glad to let everybody know that last week I passed the Certified Financial Planner exam. It’s been a long road and I spent most the last few months studying nonstop. It feels great to get my life back and catch up on work. Thank you so much to all you out there – my husband Rob, family, my friends and especially clients. Your support and encouragement made all the difference. And I’m really excited to put all this hard work to good use and provide the best, fiduciary financial planning advice for you everyday.Today I thought I share some my favorite financial resources with you, like websites and podcasts. Check out my Money Pilot Financial Advisor podcast. It comes out weekly and I try to tackle wide variety of financial topics with plain English in easy to chew 10-15 minute episodes. This is the 37th episode, so you can go back and listen to previous shows that pique your interest. You can subscribe on most popular podcast apps or go to my host site at buzzsprout.com https://www.buzzsprout.com/934996Another one of my favorite podcasts is The Military Money Show with host Lacey Langford. Lacey is an Army brat, military wife and veteran and tackles the financial craziness military life with expertise and a big dollop of humor. Her podcast runs weekly and always has great guests. I always laugh and learn something. Dial in, have fun, and get great military life coping hacks.https://laceylangford.com/podcast/Looking for reading material, too? Here area few websites I often use. Websites:For my military listeners out there your first stop should be the MilitaryOneSource.mil Financial and Legal page. There’s lots of detailed information on where to go for help on post, online, even by phone or from overseas.https://www.militaryonesource.mil/financial-legal/For military and government employees, serving or retired, the TSP.gov website is your authoritative source for your Thrift Savings Plan. And if you go to TSP.gov/forms they’ve got great, detailed booklets and fact sheets about all things TSP that you can download.https://www.tsp.gov/https://www.tsp.gov/forms/I recommend all my federal employees out there check out FEDweek.com. They have great information on federal employee benefits, retirement, financial information and more. They published some fantastic handbooks that you can buy on their website. I keep copies of their handbooks on my desk. https://www.fedweek.com/https://www.fedweek.com/store/If you are a military member looking to go the extra step and hire a professional a financial advisor who understands military life, check out the Military Financial Advisors Association. This group believes military and veteran families deserve access to genuine, affordable, fiduciary financial advice. They have a Meet Our Advisors page where you can browse different profiles to find advisors to contact and interview for your best fit. I’m proud to say I’m a member of MFAA. http://militaryfinancialadvisors.org/The XY Planning Network.has a great Personal Finance blog and a Find an Advisor page as well. Like MFAA, they have an open door and welcome you no matter where you are in life or how much you’ve saved. https://www.xyplanningnetwork.com/https://blog.xyplanningnetwork.com/consumer-blog
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