With a potential economic downturn in the wings due to COVID-19, being debt-free is a worthwhile goal. Unfortunately, between mortgages, car loans, credit cards, and student loans, this is unrealistic for most people - especially those of pre-retirement age. Instead, it's better to start by focusing on managing debt. When you handle debt wisely, you won't have to shell out every cent of your hard-earned money to your lender or feel like you're always on the verge of bankruptcy.
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According to the Treasury Department, more than 159 million individuals have already received their Economic Impact Payments; however, a recent audit found that the IRS sent $1.4 billion in stimulus checks to deceased individuals. As such, many people may have received a payment for a deceased family member or another taxpayer who is not eligible to receive a payment and may have questions about what to do. Here are some answers:
Topics: Personal Finance
If you live or work outside the United States, you generally must file and pay your tax in the same way as people living in the U.S. This includes people with dual citizenship. Due to the coronavirus pandemic, people who live and work abroad have until Wednesday, July 15, 2020, to file their 2019 federal income tax return and pay any tax due. The deadline is normally June 15.
Individuals with significant assets who want to transfer wealth to heirs tax-free, as well as minimize estate taxes, should take advantage of proven tax strategies such as gifting and direct payments to educational institutions; however low interest rates and a volatile stock market are creating additional opportunities. Let's take a look at some of the strategies available:
Offering to lend money to cash-strapped friends or family members during tough economic times is a kind and generous offer, but before you hand over the cash, you need to plan ahead to avoid tax complications for yourself down the road.
The Coronavirus Aid, Relief, and Economic Security (CARES) Act, the stimulus bill that was signed into law on March 27, 2020, contains legislation to stabilize the economy during the coronavirus pandemic. These measures include economic recovery checks for taxpayers, as well as several other tax provisions affecting individuals.
If you haven't contributed funds to an Individual Retirement Account (IRA) for tax year 2019, or if you've put in less than the maximum allowed, you still have time to do so. You can contribute to either a traditional or Roth IRA until the April 15th due date, not including extensions.
The Further Consolidated Appropriations Act, 2020, signed into law on December 20, 2019, extended a number of expired tax provisions for business and individuals through 2020. It also included several retirement plan changes and repealed three health care taxes. Here's what you need to know:
Many taxpayers opt for the standard deduction because it is easier, but sometimes itemizing your deductions is the better choice - often resulting in a lower tax bill. Whether you bought a house, refinanced your current home, or had extensive gambling losses, you may be able to take advantage of tax breaks for taxpayers who itemize. Here's what to keep in mind:
If you are having trouble paying your debts, it is important to take action sooner rather than later. Doing nothing leads to much larger problems in the future, whether it's a bad credit record or bankruptcy resulting in the loss of assets and even your home. If you're in financial trouble, then these steps will help you to avoid financial ruin in the future.