5 of the Best Cities to Buy a Home in 2024
Do You Have to Pay Tax on Interest From High-Yield CDs?
Certificate of deposit (CD) accounts have become far more popular over the past couple years, and it’s easy to see why. As the Federal Reserve has hiked the benchmark federal funds rate in an effort to combat inflation, CD yields have risen sharply. It is now possible to get a 1-year or 2-year CD with a yield significantly greater than 5% — a solid return for a risk-free investment.However, with many people adding CDs to their saving and investing strategies for the first time, it’s important to know what it could mean for your tax bill.Is CD interest taxable?The short answer is yes. Interest you earn from a CD, is considered “interest income” in the eyes of the IRS, and is therefore subject to federal income tax.Not only that, but interest income is taxed as ordinary income. While capital gains and qualified dividend income is taxed at preferential rates in most cases, interest income is taxed according to your marginal tax rate.One important point is that CD interest is taxable in the year it was paid even if you leave it in the account. It doesn’t necessarily need to be paid directly to you, or even be available for withdrawal without penalty. In other words, if you have a 5-year CD, you’ll have to report the interest you earn every year.CD interest tax reporting requirementsTechnically, you are supposed to report every dollar of taxable income to the IRS. But for practical purposes, the IRS sets minimum thresholds of income that banks, employers, and other entities are required to report.In most cases, if you have earned more than $10 in interest during a single year, the bank or credit union that paid the interest is required to send you a tax document known as a 1099-INT statement. And all taxpayers should know is that if you receive a tax document, it’s a safe assumption that the IRS received a copy as well and knows about the income.Even if your bank doesn’t send you a 1099-INT, or you simply don’t receive one in the mail for one reason or another, you’re required to report interest income of $10 or more. This is a fairly low threshold, and it means that if you owned a CD with at least a few hundred dollars in it during 2023, there’s a strong probability you’ll have reportable interest income.Can you avoid paying tax on your CD interest?There are some situations where you might be able to reduce your tax bill, or even avoid taxes on your CD interest entirely. As one example, if you pay an early withdrawal penalty for taking money from a CD early, it can be deducted from your taxable income, even if it exceeds the interest income you earned.Another way to avoid taxes on CD interest is to use a tax-advantaged retirement account, such as a traditional or Roth IRA. Many banks allow customers to open an IRA, and many of the top online brokerages offer a selection of CDs issued by several different banks. For the 2023 tax year, you can contribute as much as $6,500 to IRAs, or $7,500 if you are 50 or older, and you might even be able to deduct the amount of money you put into the account and avoid taxes on interest income. Keep these tips in mind if you’re hoping to lower your tax bill for the CDs you own.
Is It Worth Buying a Drink Package on a Carnival Cruise?
If you want to do the math and calculate your savings potential, ask yourself how many of each category of beverage you’d likely order in the average day. Add up the prices and compare it with the per-day cost of the CHEERS! program for your cruise to see if the cost is justified.Of course, there are other benefits of the CHEERS! program to consider. For example, you can order a drink or specialty coffee you aren’t sure you’ll like — and if you don’t like it, simply order another one without wasting any money. And since bottled water is included, you can simply ask for one every time you order a drink and carry them with you throughout your trip.The bottom line is CHEERS! can certainly be worthwhile on your next Carnival cruise, even if you don’t plan to drink a lot of alcoholic beverages. But it depends on your preferences, budget, and how much you’ll utilize the various beverage options that come with it.
7 Habits of the Super Rich You Can Adopt Today
By: Chris Neiger |
Updated
– First published on Nov. 13, 2023
There’s always room for improvement in life, and when it comes to personal finances, there are plenty of lessons all of us could learn from the super rich.Whether you’re looking for a few tips to help you earn more money or are looking for good habits to improve your life, here’s how the ultra-wealthy spend their time and use their money, according to financial planners.1. They set goals for their dreamsTom Corley, an accountant, financial planner, and author of Rich Habits: The Daily Success Habits of Wealthy Individuals, says that one thing wealthy people do nearly every day is setting goals for things they want to achieve. Corley says that 80% of the wealthy people he interviewed spent an hour a day doing this.Sitting down and putting your ideas down on paper is not only easy to do, but you’re also 42% more likely to achieve your goals if you write them down, according to research from Dr. Gail Matthews.2. They stay out of debtCertified Financial Planner Faron Daugs told CNBC a few years ago that his wealthy clients — who didn’t inherit money — avoid debt and try to pay off what they owe quickly. This may mean avoiding high-interest credit cards and other forms of consumer debt.America’s credit card debt topped $1 trillion recently, indicating that many of us would benefit from developing a strategy to consolidate debt and eliminate it.3. They learn new thingsMost rich people Corley wrote about took an hour daily to learn something new or perfect a skill enough to be proficient. It doesn’t have to be related to your job, either. For example, billionaire and Facebook founder Mark Zuckerberg has learned jiu-jitsu and competes in tournaments.4. They have emergency fundsWhile most financial experts recommend having three to six months’ worth of expenses in a savings account, the wealthy have six to nine months saved up, according to Daugs. If you need help starting your emergency fund, open up a high-yield savings account and aim to save $1,000.5. They exerciseWhile it may not benefit your bottom line — unless you’re a YouTube workout influencer — getting regular exercise is good for your physical health, reduces stress, and helps your mental focus. You don’t need an expensive gym membership either; you can easily meet your fitness goals on a budget.6. They build relationshipsCorley’s research found that 90% of rich people he spoke with spend 30 minutes per day building relationships. Some of it was networking, but others simply made sure to make contact with the people they knew, whether it was for a life event or just to say hello.7. They have additional income streamsThe super rich invest their money and diversify their income streams, such as by owning rental properties. You can start following in their footsteps by buying a few stocks, renting out a room in your home, or starting a side hustle.The super rich take practical stepsYou might have noticed that none of these habits are earth-shattering. Much of the super rich’s habits are just simple, practical steps toward improving their lives.And while most of us don’t have access to the same resources as the ultra-wealthy, it doesn’t mean we can’t learn a few good habits from them. For example, I’ve been considering signing up for an online learning platform, like MasterClass, just for fun. When I came across the research about the super rich learning new skills, it reminded me I should follow through with the idea.There’s likely one habit on this list you might not be putting into practice that you can learn from. I chose learning something new because it was already on my mind…and, maybe, because exercising is hard.
Costco Just Dropped More Early Black Friday Deals. Here Are 3 You Should Check Out
By: Maurie Backman |
Updated
– First published on Nov. 13, 2023
Black Friday is almost here, and that’s something you may be pretty excited about. But the reality is that you don’t necessarily have to wait for the day after Thanksgiving to arrive to score some great deals at Costco. The warehouse club giant has already released a string of pre-Black Friday deals so you can begin saving right away. Here are three you may want to check out.1. $130 off the Samsung 32″ Class ViewFinity UR90 4K UHD Curved MonitorIf you’ve been looking to upgrade your monitor, now’s a great time to do it. This discounted Samsung model comes with four times more pixels than Full HD for a crisper image on screen. The curved nature of this monitor not only looks sleek, but lends to a better viewing experience to boot.Plus, when you buy electronics from Costco, you get a second year warranty included with your purchase. You also get free tech support should you need it. And if you’re self-employed and are buying this monitor to improve your efficiency at work, you can ask your accountant if it’s possible to write it off as a business expense.2. $100 off the Vitamix E520 Blender BundleIf you’re not familiar with the Vitamix, think of it as a super blender. This model comes with 10 variable speeds plus a pulse feature when you need a lighter touch. The blender also comes with three program settings — smoothies, hot soups, and frozen desserts. The Costco bundle that’s on sale includes a 64-ounce low-profile container and two 22-ounce tumblers with stainless steel straws.If you’ve been looking to buy a Vitamix, now’s a good time to reap some savings. But you should know that this model is a member-only item. Some online Costco deals are made available to non-members, but this isn’t one of them.3. $50 off a two-pack of Oral-B Genius Rechargeable Electric ToothbrushesMany dentists will tell you that brushing with an electric toothbrush is a great way to maintain solid oral health. If you’ve been looking for a pair of electric toothbrushes, consider this bundle from Costco. It features two travel cases and two charging stations. Each brush also comes with six different brushing modes.If you have a flexible spending account you haven’t used up yet, you may be thinking of buying this toothbrush two-pack to spend down your balance in time for the new year. Unfortunately, though, electric toothbrushes are not considered an FSA-eligible expense. Similarly, if you have money in an HSA (health savings account), you should know that an electric toothbrush will not be considered a qualifying medical expense, either.These three items are just a sampling of the pre-Black Friday deals Costco has available online and in stores. It could pay to head over to your local Costco in the next week and see what other deals you can spot. In-store prices are often lower than the prices you’ll see online. So if you want to save the most cash on your pre-Black Friday shopping, that’s really the way to go.
Will SNAP Benefits Increase in 2024?
By: Chris Neiger |
Updated
– First published on Nov. 14, 2023
The Supplemental Nutrition Assistance Program (SNAP) is a federal initiative to help families cover their monthly food costs. SNAP has some specific income and work eligibility requirements, but in general, the program can significantly help lower-income families who need extra help buying food.More than 22 million U.S. households — 12.5% of the population — receive SNAP benefits, according to Pew Research Center. The program is especially important right now as elevated inflation, rising interest rates, and the generally high cost of nearly everything have strained many Americans’ personal finances.Each year, the government decides how much SNAP benefits should increase for the next fiscal year, which begins on Oct. 1, and in 2024, the amount has gone up slightly, but not by much.SNAP benefits have increased for 2024The U.S. The Department of Agriculture (USDA) recently announced that it will increase the SNAP maximum benefits for a family of four in 2024 to $973. And while the increase is likely welcomed by those using the program, it’s also a relatively modest increase of 3.6% from the previous year’s maximum benefits of $939.The USDA makes an annual cost-of-living adjustment for SNAP benefits, but the problem with this year’s increase is that it’s not keeping up with the rapid rise in food prices. The USDA cites on its own website that food prices are up by 5.8% on average this year, above the historical average. For example, in 2020, food costs increased by about 3.4%.The USDA may have made the SNAP benefits adjustment based on food cost predictions for 2024 — which are estimated to rise by 2.1%, instead of looking back on food prices from the previous year. The agency says the average monthly cost for a family of four, using the USDA’s strictest food budget, is $974.Still, the increase to $973 per month may not go far enough to help some families, especially given the fact that inflation has soared over the past couple of years. If you want to sign up for SNAP benefits, you can do so through your state. You can find local SNAP offices, contact information, eligibility requirements, and online applications on the USDA website.Food is just one part of a monthly budgetWhile receiving any type of food assistance is likely welcomed by some families, there’s no getting around the fact that most Americans’ monthly budgets are strained right now. The latest Consumer Price Index figures show how much prices have risen in the following categories over the past year:Shelter costs are up 7%Gas prices are up 3%Electricity prices have risen 2.6%Transportation services are up 9.1%With all those expenses rising, it’s unsurprising that Americans aren’t feeling optimistic about their finances right now. Nearly 70% of Americans say the economy is getting worse and not better, according to a recent Suffolk University and USA Today poll. And 49% say rising food prices are one of their biggest concerns.Keeping track of a month’s worth of expenses is complicated enough on its own, and it’s even harder when prices rise. A budgeting app can be a helpful tool to track where your money is going and even to track how much your spending in specific categories has changed.There’s no telling what will happen with the economy in 2024. Right now, the job market remains strong, and thankfully, inflation is slowing. But many Americans’ budgets will likely remain strained as their savings rate has fallen and credit card debt has topped $1 trillion.That may keep demand for SNAP benefits elevated, and it remains to be seen whether the latest increase in benefits for 2024 will be enough.