Some types of insurance coverage are essential, such as auto insurance if you drive a car or a homeowner policy if you own a home. But other types are strictly a matter of priorities and depend on factors such as your age, health, and family members. How can you begin to sort it out?
Charitable giving is often rewarded with federal income tax breaks. Recent legislation includes four temporary expansions of the breaks for individuals and businesses that donate to qualified charities through the end of 2021. Here’s an overview of these provisions, which Uncle Sam hopes will encourage you to make additional charitable contributions during the COVID-19 pandemic.
Required minimum distributions (RMDs) from qualified retirement plans and IRAs were suspended for the 2020 tax year under the CARES Act. But the reprieve was only temporary. So, people who previously took RMDs must resume distributions in 2021, while anyone who turned 72 last year or will turn 72 this year must start taking RMDs. Here are answers to common questions about the RMD rules.
Do you have a traditional IRA? You may have wondered whether you should take money out of it when financial needs come up. If you are under age 59 1/2, there’s generally a 10% penalty for early withdrawals — in addition to any regular income tax on the amount. However, there are exceptions to the penalty, as explained in this article, plus a note about retirement plan loans related to COVID-19.
If you have a child in college, it’s generally a good idea to complete the Free Application for Federal Student Aid (FAFSA) each year, even if you don’t expect to receive any need-based assistance. This form is used to qualify for federal direct loans and state financial aid programs. Plus, many universities rely on information provided on the FAFSA when offering financial aid to students. Here’s an overview of how this form is changing with the times.