Money Kuel Category Expert: Joy Alford-Brand
Welcome to 2021! If you are anything like me, and I’m pretty sure you are, I can’t tell you how happy I am that the new year is finally here. Last year was a real treat, wasn’t it?
The “twin-demic” really hit everyone hard in every possible way. However, I have high hopes that things will start looking up in 2021. It may take a few months for our situation to turn around, though. To kick things off, I thought I would do a sort of “state of the wallet address,” to get a general idea of where things stand with our personal finances for 2021.
Stimulus For The Rest Of Us!
“every adult will receive $600 with an additional $600”
First of all, the most recent stimulus package finally passed Congress and has been signed into law. That means you should be receiving your stimulus funds within the next two weeks. According to the legislation, the funds have to be sent out by January 15th. So, if you qualify for stimulus money you should be getting it soon. You will qualify if you make $75,000 or less. As I understand it, every adult will receive $600 with an additional $600 for each qualifying child. I have heard that some people already received their stimulus funds by direct deposit. If you want to read more about it, check out my latest blog post here.
There is a lot more in that package than just a one-time stimulus payment, which affects our personal state of the wallet for 2021. There is funding for unemployment, testing and vaccine distribution, broadband infrastructure, eviction moratorium extension, rental assistance and so much more. The legislation is combined with an appropriations bill that will keep the government funded into 2021 so, the whole bill is 5,500 pages long. As much as I thoroughly enjoy reading legislation (ahem), I chose not to read the whole thing. I do hit the highlights in my January blog post so you don’t have to read it either! My holiday gift to you.
It’s Tax Season:
“stimulus funds are not considered taxable income”
Second on the list of things to discuss is, you guessed it, tax time. It turns out that while things really should start looking up in 2021, it will take a few months to turn that corner. We still have a fair amount of work to do starting with filing our taxes. Yes, it is that time again. Tax time is rapidly approaching so if you haven’t begun getting your financial information together, now is the best time to do it. The best way to accomplish this task is to work on it throughout the year. It isn’t fun work, that’s true. However, if you do a little of it as you go, it makes things a whole lot easier come tax time.
There are a couple of quick things to keep in mind as January kicks off and tax time approaches. First, stimulus funds are not considered taxable income. They are basically tax credits that are given out early so, they shouldn’t affect your tax refund.
Second, if your employer did not withhold payroll taxes after the executive order suspending them was signed by the President, you will have to pay that money back by April 30th. That likely means you will get double deductions taken out of your paycheck from now until then. I hate to be the bearer of bad news but I did do an article for Kuel Life on that topic that you can find here.
Student Loans – They’re Back:
Third, and this one will hurt a few people, federal student loan payments will be resuming as of February 1st. Borrowers have had a nice long break from making their payments AND accumulating interest on their federal loans. I really hope that folks have had a chance to save and get ready to make bulk payments on their high interest loans but I know that is not the case. I think folks have had enough of a hard time just keeping their heads above water, let alone trying to plan ahead and save for student loan payments.
The only saving grace is that interest should be waived on qualifying federal student loans. This will help folks who got hit the hardest economically by the pandemic and couldn’t afford to make their student loan payments. Let’s hope they are able to get back to work so they can begin to make their loan payments again! If you need help with your student loans, check out my federal student loan debt webinars by clicking here.
Last Minute Tax Planning:
“get your FREE Financial First Aid Kit here in the store on Kuel Life”
Finally, I want to end on a high note by telling you that you still have time to fund your IRAs or SEP IRAs for 2020. This is critical for the state of the wallet for 2021. For IRAs, you typically have until April 15th to make a contribution for the prior year. For SEP IRAs, the rules are a bit different. Those accounts give you until the date your return is due, including extensions. If you have questions, check with your tax professional to make sure you are making the most of the tax savings aspect of your retirement accounts.
Don’t forget, I have created a FREE Financial First Aid Kit that you can find in the store here on Kuel Life. This Financial First Aid Kit is intended to help people who are in an immediate financial crisis and need help figuring out how to get stable. Once you are stable, you will have achieved financial empowerment. You will have the security and peace of mind you need to respond to any situation free from worry or concern about what the future holds. Be safe and stay healthy!
About the Author:
Joy Alford-Brand is an author, public speaker and attorney. She graduated with Bachelor’s Degree in History from Wright State University in Dayton, Ohio in 1994 and she received her Juris Doctor from Ohio State University College of Law in 1998. Her main area of practice is Bankruptcy. She is admitted in North Carolina where she lives and works. Joy founded newcashview.com in 2015 as a platform through which she could help others work toward financial freedom and peace of mind! For more information, check out newcashview.com.