How to spend FSA money before the deadline
Do you have FSA funds left in your Flexible Spending Arrangement? If you overestimated your medical expenses for the year, you might lose that money under the use-it-or-lose-it rule. That means you have to spend all your FSA money by Dec. 31 unless your plan allows you to carry over a small amount into the next year.
The maximum you could have put toward a flexible spending arrangement is $2,550 for 2016, the same amount as 2015. The FSA maximum amount for 2017 is expected to rise $50 to $2,600.
It used to be really easy to do until a couple of years ago. In January 2011, a sweeping change made to FSAs went into effect which made it a lot more difficult to spend FSA dollars in a pinch. As a result, many FSA users have become a lot more careful about the amount they put into their account.
Open Enrollment dates and how to shop for health insurance
Have you started shopping yet? No, I'm not talking about shopping for the holidays; I'm talking about something more important — your health insurance.
It's that time of year when many employers have their open-enrollment period and the federal and state health insurance marketplaces are open for business. Open enrollment is your annual opportunity to review and make changes to your health insurance plan so you end up with the best plan for your needs. Continue reading...
Year-end tax planning checklist
Know your taxes! I am a big fan of the philosophy: No one cares more about your money than you do. Even if a professional prepares your taxes every year, learn to do it yourself. Aside from what you'll save in fees, here are two benefits of learning to prepare your taxes yourself:
- By doing your taxes on your own, you can learn quite a bit about your finances and get a lot of ideas on how to make your money work more for you.
- Sometimes a professional might not ask the right question because they don't know everything that went on in your life this year. If you learn to prepare your taxes yourself, you will become more aware if a professional is missing any deductions.
Educate yourself. This is an excellent place to start — IRS tax tips.
If a professional prepares your taxes…
Set up a meeting with your accountant/tax adviser.
How much to save for retirement in your 30s? (and other burning questions)
Your 30s are a big deal. You may be starting a family or planning to make major purchases, such as a home. It's also a time when many begin to ask this critical question: How much to save for retirement in my 30s?
The short answer is most experts say you should be socking away 15% of your gross income by your 30s -- that's your income before taxes and other deductions. But before you max out your company 401(k) or fund an IRA, it's also critical that you set aside cash for emergencies, at the very least $1,000 but preferably three months of living expenses. Going without this cushion could force you to turn toward debt during a financial setback. Becoming a steady and determined saver will also put you ahead of the pack when it comes to home-buying and college savings.
The sharing economy and taxes
Etsy, TaskRabbit, Uber, Airbnb, and numerous other technologies make earning a little extra income (or even a full-time income) easier than ever. Almost anyone can be a micropreneur these days, even if they started out just pursuing a hobby.
The sharing economy or peer-to-peer economy is growing at a record pace by leveraging disruptive technologies. But a lot of people don't seem to understand how the sharing economy can impact their taxes, and the IRS has never issued any official publication regarding how to deal with the income and expenses from these new ventures.
I can't cover every single aspect of tax law and how it applies to the sharing economy in this article, but here are some tips to get you started in the right direction.
10 tax deductions and tax credits for young adults
When I was in my 20s, I was single, without kids, renting, had graduated from college, working at my first job and no interest whatsoever in taxes. My feeling was, Why should I waste time thinking about taxes? As a single, renter with no kids, I would get absolutely no deductions or credits -- and in addition to that, I had nothing to itemize. That meant I should have just filled a 1040EZ and been done with it, right? Right?
That is why I decided to write this post, focusing on people in their 20s -- to get their attention and to tell them there are reasons to take a second look at their taxes (though taxpayers of any age can equally take advantage of these deductions/credits).
Why we spend: Are you falling for these costly biases?
Until a few years ago, I used to frequent a store that gave $10 (technically a credit of $10 toward future purchases, but it wasn't cash) back for every $50 purchase. Whenever I got to $40 in purchases, I would add unplanned items to bring the total up to $50 as I couldn't leave the "free" $10 on the table. My rationale was that these items were technically free. But in reality, the rationalization is nonsensical because: (1) The $10 credit was only applicable for purchases made weeks after my original visit and, by the time it became eligible, I had invariably forgotten that I had the credit and so it naturally would expire; and (2) I only needed $40 worth of items, so even though I could get $60 worth of items for $50, I paid $10 more than I intended to and I ended up with $20 worth of stuff that I didn't need. It took me a while to stop this behavior.
We all make money mistakes, and some of us make more than others. But most of time the mistake isn't obvious to us because we also have a lot of biases that prevent us from making rational decisions. Here are some of the biases that cloud our judgment:
1. Status quo bias
In general, peo
30 days to better finances
Learning to manage your finances isn't something most people would put at the very top of their "most fun thing to do" list, but we all know that we ignore money and budgets at our peril. Having a strong handle on what money is going in and what money is going out is an essential first step. But you don't have to be overwhelmed. By setting aside between five and 30 minutes each day, you can transform your finances dramatically in 30 days. Here's one such plan:
Day 1: Compile all your expenses and income. Bucket them by categories such as Savings (retirement accounts, emergency fund), Mortgage/Rent, Household Expenses (food, utilities, heating oil, etc.), Commuting (tolls, commuter rail cards), Debt Repayment (student loans), Entertainment. It doesn't have to be perfect, just complete. Use a service like Mint, software like Excel or even just good old pen and paper -- whatever you are comfortable with. Yearly budgets are more accurate because you will see irregular expenses like property taxes or gifts.
Related >> Building a budget on variable income
