Happy Summer! This might be the perfect year to use your staycation to keep your financial house in order.
Tax Deadline Approaching
The Department of the Treasury and IRS announced this week the tax filing and payment deadline of July 15 will not be postponed. Individual taxpayers unable to meet the July 15 due date can request an automatic extension of time to file until Oct. 15. However, the IRS urges people who owe taxes, even if they have a filing extension, to carefully review their situation and pay what they can by July 15 to avoid penalties and interest.
Rollover Relief from RMDs
The 60-day rollover period for any RMDs already taken this year has been extended to August 31, 2020, to give taxpayers time to take advantage of this opportunity. The CARES Act enabled any taxpayer with an RMD due in 2020 from a defined-contribution retirement plan, including a 401(k) or 403(b) plan, or an IRA, to skip those RMDs this year. This includes anyone who turned age 70 1/2 in 2019 and would have had to take the first RMD by April 1, 2020, as well as IRA owners and beneficiaries who received distributions equal to the RMD amount.
Tax Deduction Maximization Strategies
If you have not paid taxes yet, there’s still time to contribute to your IRA for tax year 2019. For those that have already filed, you can still add up to $6,000 into your Roth IRA. Health Savings Accounts can be opened for those with high deductible health plans. Contributions are tax deductible at the maximum amounts of $3,500 and $7,000 for a family. HSAs grow tax free and there are no levies when funds are withdrawn for qualified medical expenses. Have you contributed the maximum state-tax-deductible amount to your 529? Rhode Island, Massachusetts, and Connecticut, along with 31 other states, provide state income tax benefits up to $1,000 (RI) or more (MA, CT).
Mortgage Rates Still Low
For those with mortgage interest rates at 3.5% and above, you may want to consider a mortgage refinance. We are still seeing fixed rates available as low as 3.0% for 30 years and 2.5% for 15 years at certain Rhode Island and Massachusetts institutions.
Continue Student Loan Payments
Under changes made by the CARES Act, Federal student loan payments may be deferred until September 30, 2020, during which time interest will not accrue. Payments until then apply to loan principle.