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Monthly Archives: April 2019
Tax Refund Touchdowns
So, you got a tax refund – now what? While you might have morphed into a human version of the “money-mouth face” emoji (🤑), fight the urge to treat yourself. Unless you’re debt free and have a nice chunk of change in your savings and retirement accounts, getting financially fit should be your priority over splurging on big-ticket items.
Here are five ways to use your refund responsibly:
Tackle your debt. If you’re carrying high-interest debt, paying it off should be your top priority. Paying interest sucks, and if you’re carrying a large balance on a credit card but only making the minimum payment each month, you may never feel like you’re getting ahead. Use your tax refund to pay off any debt you have. If your refund doesn’t cover everything, it’s time to figure out a debt-payoff plan.
Save it. More than half of Americans don’t have enough in savings to cover a $1,000 emergency, according to Bankrate. If you’re just starting out, money might be a little tight, making it even harder to build up your savings. Think about tossing your tax refund into your savings account so you’re better prepared for life’s little surprises. If your emergency fund already has enough money to cover at least 3–6 months of expenses, consider setting up another savings account for a specific goal, such as a travel fund or a down payment for a new car.
Donate it. Helping others gives us the warm-and-fuzzies, so why not use your refund for good? When your budget is tight, it can be hard to find extra money throughout the year, so donating the cash from your refund is a perfect opportunity to make a difference. Plus, your charitable donation could be tax-deductible next year.
Spend it (on something you need). The keyword here is need. If you’ve been putting off car repairs or minor medical or dental procedures, your tax refund could help you cover these larger, but necessary, expenses.
Spend it (on something you want). Okay, okay…I know I cautioned against splurging, but if you’ve stuck to your budget, saved, and stayed out of debt all year, you’ve earned the right to buy yourself something nice. Just don’t get carried away, of course!
I didn’t get a huge refund. Did I do something wrong? Nope, not at all! Your tax refund isn’t free money; it’s money you overpaid to the government over the course of the year. If you owe money on your taxes, it means you didn’t pay enough out of each check. Take the time to periodically check your withholding and adjust if necessary (the IRS has a handy calculator on their website that can help you out). Paying attention to your withholding is important for two reasons: 1) if you don’t pay enough from each paycheck over the year, you could face an unexpected bill when you file your taxes, and 2) if you normally get a large refund, you can opt to have less withheld up front—your paychecks will be a little higher, giving you more flexibility each month.
Q&A with quarterback Matt Ryan
Quarterback Matt Ryan has a pretty impressive resume. He got his start playing football for William Penn Charter School in Philadelphia and went on to play for Boston College before being drafted by Atlanta in 2008. Ryan was named MVP in 2016, the same year he led Atlanta to the big championship game.
As part of our 85 Acts of Kindness for our 85th anniversary, Georgia’s Own gave 85 lucky members the opportunity to meet Matt Ryan, and Ne[x]t Magazine took the opportunity to ask him a few questions. Check it out below!
What’s your favorite thing about Atlanta?
My favorite thing about Atlanta is the local community. The people in this city have been so incredibly warm and welcoming—they truly are the epitome of southern charm and hospitality.
What do you do in your free time off the field?
I’m a proud, full-time dad of twin baby boys, Johnny and Marshall, so any chance I get, I love spending time with them and my wife, Sarah.
What’s the biggest lesson being a professional athlete has taught you?
The biggest lesson is learning from every experience. Being a professional athlete, you have your incredible highs and lows. No matter what you are going through, it is about just taking it day by day, learning from every moment, and preparing for the next.
What keeps you motivated day to day?
My biggest motivation is my family, especially my wife, Sarah, and twin boys, Johnny and Marshall.
What players influenced you as an athlete?
Brett Favre was definitely an influence—I was a huge fan of his growing up.
What’s your favorite memory from your time at Boston College?
My favorite memory at Boston College was in 2007 when we faced Virginia Tech. Through the first three quarters, we were falling behind, but in the last few moments of the game, everything clicked, and we ended up making a comeback from behind to win in the last few minutes of the game.
Who first started calling you Matty Ice?
It started in college by a couple buddies outside of football.
What kind of music are you listening to pre-game?
I love the early 2000s Atlanta rap era with T.I.
Do you have any pre-game/in-game rituals?
I always ride to the game with our other quarterback Matthew Schaub; it’s sort of our bonding time to talk about the game ahead.
What do you like to do after a good performance or win?
It’s great to celebrate a win, but you have to shift focus pretty quickly to prepare for the next game ahead.
Other than a home game, where do you like playing the most?
Green Bay is pretty special. I grew up watching Brett Favre at Lambeau and love being able to get out there myself.
What advice do you have for young athletes?
No matter what, prepare for the situation ahead. I live by the mantra, “By failing to prepare, you are preparing to fail,” and I always try to teach younger athletes to really incorporate preparation into their game plan.
Did you have any jobs growing up? If so, what was the first or most interesting?
Like every kid growing up, I had a lemonade stand. But certainly, the most interesting job I’ve ever had is the one I have now.
What is the best (or worst) purchase you’ve ever made?
Did you see the three-piece sweater-vest suit I wore to the draft? That is certainly the worst.
What advice would you give to someone just starting out?
Make sure the team around you off the field is as solid as the play you want to have on the field. Your team’s guidance is invaluable.
Just for fun—what’s something many people might not know about you?
I don’t think many people would know that I’m a pretty good golfer!
Four things to think about if you’re ready to start investing
Saving and investing are two of the best ways to build wealth. For many people, though, the leap from saving to investing is a big one. In fact, a recent survey commissioned by Ally Financial reported that 70% of Americans age 18 to 39 know they need to become more financially secure, but don’t know how to go about getting there.
If you’re saving, you’ve already taken the first and most important step. But, we know that investing can be intimidating, especially if you don’t know where to start. Keep in mind that accumulating wealth is a gradual process and not something that happens overnight.
It can be, however, virtually painless and help create additional funds for retirement, recreation, education, or whatever other investment goals you have. It can help you start a business, send your kids to college, buy a beach house, travel around the world, or spend more quality time with your grandchildren.
Need more concrete encouragement? $1,000 invested at the stock market’s historical return rate for 20 years would grow to almost $6,000. Apply that to 30 years, and it would leap to $15,000. Now, with every investment, you assume some level of risk, and past performance doesn’t guarantee future performance, but you can see the possibilities.
If you’re ready to start investing, here are some steps that will help you identify the most appropriate products and investments to help you reach your financial goals.
Determine your investment goal
What financial goals do you want to achieve by investing? It may be to simply start accumulating wealth, or you may have a specific goal in mind. It could be to buy a home, pay for a wedding, go on a vacation, or fund your child’s education. Goal-based investing is a process that helps ensure that you have enough money when you plan to spend it in the future. It impacts the type of investments you might choose and whether their strategy is growth, income or stability focused.
Determine your investment budget
Regular and systematic investing is the easiest way to invest your hard earned dollars. That means that a percentage of your income is automatically invested into an account every month. It effectively allows you to leverage the long-term benefits of dollar-cost averaging (DCA) and helps to better manage short-term investment volatility.
Creating a monthly budget and earmarking funds for investment helps separate them from your spending dollars. When you “pay yourself first” by treating your investment account as an expense, you’re more likely to make smarter financial decisions with your remaining monthly funds. And, it helps ensure you stay on track with your investment plan.
Determine your risk tolerance
Every investment comes with some level of risk and generally, the more risk, the greater the potential return. It’s pretty safe to say that most people want to make money as quickly as possible, but if your risk tolerance isn’t up for the challenge, the anxiety it brings will never be worth the chance of realizing the reward.
Be honest about the amount of risk you’re comfortable assuming. Most investment plans are designed for long-term growth. If you’re checking your account balance on a daily basis and you’re riding a rollercoaster of emotional highs and lows as a result, your investments are not in line with your risk tolerance. Investing doesn’t have to be scary. There are options for every type of investor.
Determine your time horizon
Your time horizon is the amount of time you have until you need to withdraw your funds. With a long time horizon, you can afford the privilege of slow and steady gains that limit your risk. For example, if you begin saving for retirement at age 20, you have 45 years to weather the ups and downs of the market. If you begin at age 35, you’ve lost 15 years of compounding growth and need to earn more money in less time, which, to accumulate the same amount, might entail more risk. If you begin saving for your child’s college education when they’re born, you have a lot more time than starting when they turn 10. To offset a short time horizon, you can consider increasing your investment dollar amount or possibly assuming more risk for the chance of a higher potential reward.
Most investors begin with a company-sponsored retirement plan or an IRA. There are typically a limited number of investment options and the plans generally lean toward conservative investing, although there are exceptions.
If you’re new to investing, don’t rule out the help of a financial advisor. You don’t have to be a financial guru, especially when you’re smart enough to leverage the expertise around you. They can help you sort through some of the ideas above and work with you to establish a solid financial plan for your future.
How will the new tax bill affect your bottom line in 2019
Monday, April 15, 2019, is tax day for most of the United States. Fun fact, though, if you live in Maine or Massachusetts, it’s April 17th. That’s because Patriot’s Day is a legal holiday in those states and apparently, you can’t do your taxes and celebrate at the same time.
Logically, the deadline should be moved to Tuesday, April 16th, but to complicate things further, that’s Emancipation Day in Washington, D.C., so the federal government won’t be there to accept them. Voila! Two extra days.
The Tax Cuts and Jobs Act (TCJA)
It seems that each year, there are more changes to the tax code and keeping on top of them can be quite the challenge. If you remember, President Trump signed the Tax Cuts and Jobs Act into law in December 2017. For the most part, the bill didn’t affect individual income taxes until the 2018 tax year, which brings us to today.
The good news about the new plan is that, among other things, it was designed to simplify the tax system. How it will affect your individual return depends on your income, the deductions you take and your filing status. Here’s what you need to know:
Originally, the proposed new tax plan called for a reduction in the number of tax brackets. The final number of brackets remained at seven, but the rates were changed. The new tax brackets are 10%, 12%, 22%, 24%, 32%, 35%, and 37%. They’re important because they affect the amount of income you receive during the tax year and help calculate the amount of your annual tax bill.
The standard tax deduction for all filers was nearly doubled under the new tax plan, but they’ve also eliminated the personal exemption. For single or married taxpayers who are filing separately, the 2018 standard deduction is now $12,000. If you’re filing a joint return, it’s $24,000 and heads of household qualify for an $18,000 deduction.
Child tax credits
Under the new plan, the child tax credit (CTC) was raised from $1,000 to $2,000 per child under the age of 17, and the qualifying taxpayer income limit for the tax credit was raised to $200,000 (or $400,000 for joint filers). It’s also introduced a new $500 deduction for non-child dependents.
Another beneficial change is that if the CTC reduces your tax liability to zero, you’re now eligible to receive a refund for the credit up to $1,400. The adoption credit remains the same and is worth up to $13,750 per child.
For the tax year 2018 (and retroactive to 2017), you can deduct qualifying medical expenses that exceed 7.5% of your adjusted gross income (AGI). But, beginning January 1, 2019, you may only deduct the amount of the total unreimbursed allowable medical care expenses that exceed 10% of your AGI. Also, beginning in 2019, individuals who choose to go without healthcare coverage will not be subject to any tax penalties.
Mortgage interest deductions
Homeowners can still deduct their mortgage interest payments, but for 2018 and beyond, the new limit was reduced to $750,000 from $1 million. If you’re married and filing separately, the deductible mortgage interest limit is $375,000. Also, the interest deduction on home-equity loans has been eliminated.
In previous tax years, taxpayers were able to deduct state and local income and property and general sales tax payments on their federal tax returns. As a result of the new tax law, your total state and local tax (SALT) deductions are now capped at $10,000.
Other deductions that are going away
Aside from the changes we mentioned above, here are some other deductions will be no longer apply to your 2018 tax filing:
- Casualty and theft losses (except those attributable to a federally declared disaster)
- Other miscellaneous deductions previously subject to the 2% AGI cap
- Tax preparation expenses
- Unreimbursed employee expenses
- Moving expenses
- Alimony payments
- Certain school donations
When President Trump signed the tax reform bill into law, it made major revisions to the tax code. In fact, the bill represents the most significant tax changes in more than 30 years. For the comprehensive list of changes, click here.