Take a look at the 2020 Survey of States regarding personal finance education in the United States. See how your home state compares to others.
Status of Personal Finance Education Across the Nation 2020
April 2022 Questions and Answers
QUESTION:
What is blockchain technology?
ANSWER:
Blockchain is a digital ledger that is used to record transactions and track various assets. The information is distributed on a business network and can be accessed only by permissioned users. Unlike regular databases, information in the blockchain format cannot be altered, deleted, or destroyed, making it a trustworthy source of information. Once recorded, the information is irreversible and can be seen by all users. Blockchain is also known as distributed ledger technology (DLT).
Although it’s widely used in the cryptocurrency sector, it has many uses, including cross-border payments, contract management, real estate transactions, supply chain management and healthcare.
April 2022 ClientLine Newsletter
Trusts and Your Estate – a trust can offer additional benefits to you and your family
IRS Audit and Your Business – knowing what to expect from an IRS audit may help settle your nerves
Qualifying Business Leads – the process of identifying, organizing and nurturing incoming leads so you ca focus your efforts on prospects best suited for the products and services your business offers
Stand Out in a Crowded Market – your clients want a positive experience when interacting with your company, its services and its products
Surviving a Bear Market – keep these tips in mind to navigate an extended decline
April 2022 Questions and Answers
Getting FIRE’D – regardless of your target retirement date, this movement focuses on some smart financial strategies
Status of Personal Finance Education Across the Nation 2020 – survey of states
Are You Above Average
Here’s a snapshot of the average U.S. household’s finances. See how your finances compare.
- Gross Household Income: $87,864
- Checking Account Balance: $10,618
- Monthly Spending: $5,102
- Household Debt: $145,000
- Social Security Monthly Retirement Benefit: $1,514
- Credit Card Debt: $6,194
- FICO® Score: 711
- Savings Rate: $13.7%
Average 401(k) Balance: $106,478
BY AGE GROUP:
- Under 25: $5,419
- 25-34: $26,839
- 35-44: $72,578
- 45-54 $135,777
- 55-64: $197,322
- 65+: $216,720
Average Retirement Savings: $407,490
BY GENERATION:
- Gen Z $35,197
- Millennials: $166,430
- Gen X: $568,750
- Baby Boomers: $1,029,840
March 2022 Question and Answer
QUESTION:
How do I report my fantasy sports league winnings?
ANSWER:
With the Super Bowl over and March Madness in full swing, winning the betting pool means paying taxes. Gamblers must report all winnings as taxable income. That includes the fair market value of any prizes won, such as cars or trips. Generally, you’ll receive an IRS Form W-2G if your winnings are at least $600 and the payout is at least 300 times the amount of your wager.
If you itemize deductions on your taxes, you can deduct any gambling losses incurred during the year on Schedule A. But you are limited to deducting only to the extent you have winnings. So if you won $1,000 from your fantasy football team but lost $1,500 on your basketball brackets, you’ll only be able to deduct $1,000 of those losses.
Hiring Your Kids to Lower Company Taxes
If you are self-employed, hiring your children as legitimate employees is a tax-saving strategy.
IT’S STANDARD
The standard deduction for 2022 is $12,950, which means the first $12,950 your child earns is tax-free. So you can shift income from you to your child, who is likely in a lower tax bracket than you.
Go one step further and insist your child contribute the majority of earnings to a college fund.
EMPLOYMENT TAX WIN
Children under age 18 are exempt from federal unemployment tax (FUTA) and FICA tax. Once they turn 18, you’ll be responsible for paying the employer portion of FICA, but the children remain exempt from FUTA until they turn 21. That means if you pay your 17 year old $12,950 a year to run your social media marketing, you’ll save over $1,400 a year in employment taxes.
CAVEATS TO KEEP IN MIND
Your child must be an actual employee doing necessary work for your business, and must be paid a reasonable salary. Also, you’ll need to onboard your child as you would any other employee. That means having them complete Form W-4 and I-9, sending them a Form W-2 at year-end, and having them fill in timesheets if they’re being paid hourly.
Understanding Inflation
Inflation affects all aspects of the economy, from consumer spending, business investment and employment rates to government programs, tax policies, and interest rates.
PRICE INCREASES
It’s normal in a stable economy to see various price increases. However, inflation happens when prices continue to increase over a sustained period. When the demand for products and services exceeds availability, producers increases prices.
DOLLAR VALUE DECLINES
Because the amount of goods and services a given amount of money can buy falls with inflation, the dollar is less valuable. Commonly known as the time value of money, inflation decreases the value of the dollar over time, making what you have today worth less in the future.
STEALTH THREATS
Inflation poses a hidden threat to investors because it chips away at investment returns. Fixed income securities are especially vulnerable since the interest or coupon payment generally stays the same until maturity. That decreases the purchasing power of the interest payments as inflation rises. For example, an investment that returns 2% before inflation in an environment of 3% inflation will actually produce a negative return (-1%) when adjusted for inflation.
The True Cost of The Great Resignation
- 38% of employees leave their jobs as a result of inadequate salary and benefits.1
- Replacing an employee can cost between 50% – 60% of that employee’s salary with overall costs ranging anywhere from 90% – 200%.2
- Salary accounts for 70.1% of total employee compensation.3
March 2022 Client Profile
Barry is looking for creative solutions to recruit and retain employees. What are some helpful ideas?
The first step is to identify the real cause of your staffing shortage. Are you paying competitive salaries and providing reasonable pay increases? Is there too much time between promotions?
Once you have identified any blind spots, you can likely identify employees who are most likely to leave and intervene with a targeted retention campaign. New hires are likely to be attracted to your newly revamped benefits, too.
Some popular perks to consider include: additional paid vacation days, educational opportunities, alternative schedules that allow employees to work early or late shifts, or even four 10-hour days, which promotes work-life balance.
The pandemic brought to life a new popular benefit—remote work. Some employees may be more productive in their quiet home office, saving you office space costs. Some may appreciate a hybrid approach, working remotely certain days of the week. Your research with current employees will provide information to make informed decisions.
Client Profile is based on a hypothetical situation. The solutions discussed may or may not be appropriate for you.
How Are Social Security Benefits Taxes
While the general rule is that Social Security benefits are taxable, things like filing status and other sources of income determine how much tax you’ll pay.
OTHER INCOME
Those with little or no additional income outside of Social Security typically won’t pay any taxes on those benefits. Income from wages, self-employment income, and investment income, including tax-exempt interest, are all factors for determining how much of your benefits are taxable.
FILING STATUS
If you’re married and file a joint return, you and your spouse must combine your incomes and Social Security benefits when figuring the taxable portion of your benefits.
TAX CALCULATION
You’ll never pay taxes on more than 85% of your Social Security income. How much you’ll pay depends on your total combined retirement income, calculated as half of your Social Security payments plus all of your other income.
The limit for singles and heads of households is $25,000, and joint filers have a $32,000 limit. If you exceed these limits, between 50% and 85% of your Social Security benefits will be taxable. The calculation is not straightforward, so be sure to speak with your tax professional if you’re expecting to start receiving Social Security soon.
STATE TAXES
Along with federal taxes, some states also tax Social Security benefits.
PAYING TAXES
If you owe taxes on your Social Security benefits, you can pay them when you file your tax return in April, just like you did when you were working.
Alternatively, you can make estimated payments throughout the year to avoid a big expense at tax time. You can also elect to withhold taxes from your payments by completing Form W-4V (voluntary withholding) and sending it to the Social Security Administration. You can opt to have between 7% and 22% withheld.