The Bottom Line
Small business is important to Central Oregon, and to Mid Oregon. Find tips and resources for business, and information about Mid Oregon’s commercial services and business members.
Simple Tax Tips to Get You Started
Yes, it seems like we just finished filing our taxes. With the April 15 deadline coming right on the heels of last year’s pandemic-delayed deadline, it might be difficult to get motivated to work on your taxes. Here are some simple tax tips to get started. Plan now to get as much back as possible.
Consider itemizing
The standard deduction is $12,400, so it’s tempting to claim it rather than tracking down receipts and tax forms so you can itemize your deductions. But it might be worth it if you are a homeowner with a sizeable mortgage, gave money and “stuff” to charity (remember all that quarantine cleaning?), or paid points when you took out your mortgage. Tax tip for educators: Don’t forget to deduct up to $250 of school supplies even if you don’t itemize.
Claim credit for your “full house”
If your adult children, their significant others, and friends have come to live with you, here’s a helpful tax tip. You may be eligible to claim a $500 tax credit for non-child dependents you support if their income is less than $4,300. You can claim the credit for parents you support, even if they don’t live with you.
Update your information with the IRS
Many of us learned this lesson the hard way with the federal stimulus payments. A simple tax tip is to ensure the account information you have with the IRS is current—and all tax filers on your return are joint owners on the account where you want your tax refund deposited. If the information isn’t consistent, your tax refund can be returned or delayed.
File early
You can’t get a refund until you file. Even if you don’t need to file because your income is low, file anyway to claim a refund for taxes withheld and any credits you might be entitled to. Plus, it prevents any potential identity thieves from filing fraudulently in your name.
Get digital tax statements
Most financial institutions offer digital tax statements. Mid Oregon Credit Union members can login to our Digital Banking and to set up E-Statements. Once you’re inside the widget, you can click the dropdown menu to find tax statements for all your accounts.
Last among our tax tips, when it’s time to file your taxes, consider TurboTax®. From simple to complicated taxes, getting your biggest possible tax refund has never been easier. Mid Oregon Credit Union members can save up to $15 on their federal return using TurboTax—and don’t have pay until they file. Visit midoregon.com/turbotax to get started!
The information in this article for general educational purposes and not intended to provide specific advice or recommendations. Please discuss your particular circumstances with an appropriate professional before taking action.
Retirement Savings—Start Early
Start Early, Earn More
Retirement—it’s not a word you think much about when you’re young. After all, that’s something that happens when you get old. Don’t wait until you are older to think about it: when it comes to your retirement savings—start early!
But You Have Social Security!
You might think Social Security will be all you’ll need, but it was designed to supplement your retirement savings. You can’t rely on it entirely. You’ll need some other source of income to pay for your living expenses.
The younger you are when you start your retirement planning, the better off you’ll be financially when you retire.
So how should you start?
The first thing to do is see if your employer offers a 401(k) program. Basically, a 401(k) is a retirement plan your employer sponsors. Money is deducted from every paycheck, on a pre-tax basis, with the purpose of having it to use when you retire. If you’re lucky, your employer will also contribute and/or match your contributions up to a certain limit. The money is invested for you and earns compound interest, meaning you earn interest on the interest. The sooner you open a retirement account, the longer you have to make affordable contributions to it, and the more compound interest it earns.
Start an IRA
Whether or not your employer offers a 401(k) program, you might also consider starting an IRA, or an Individual Retirement Account. There different types of IRAs, but the most common are a Traditional and a Roth. The biggest difference between them is how each one gets taxed.
Traditional IRAs/401(k) are pre-tax contributions; you will be taxed when it is time to withdraw funds.
Roth IRAs/401(k) are post-tax contributions; since you already paid taxes on the contributions, you will receive tax-free withdrawals when you retire.
There isn’t any one right way to invest money for your retirement, so it’s worth looking into the different options to see which you like best. You don’t need a lot of money to make money. You just need a lot of time. Your youth gives you that advantage.
Give Yourself The Time
The earlier you start saving, the more time your money has to accumulate interest. The more time you have it invested, the more time you have to figure out what system works best for you. So it makes sense when it comes to retirement savings—start early!
If you have questions about retirement products, talk to Mid Oregon Wealth Management. They’ll be an excellent source for more detailed information.
Check In On Your Finances
By Jean Chatzky *
It’s time to check in on your finances, including emergency funds and budget plans.
This end-of-the-year financial assessment can help you get back on track in 2021
Budgets and cash reserves aren’t just for corporate America. As the COVID-19 global pandemic keeps going (and going) it’s time to figure out exactly where you are with your personal finances so you can create a plan for how to best move forward in 2021. Across the United States and the world, it’s been a challenging year on many fronts with millions of people facing a much different economic outlook than they did just 12 months ago.
“This year showed the exact reason why you need an emergency fund,” says Tanner Bortnem, CFP, JD, owner of Harmoney Wealth, PLLC. “I’ve had some clients who used almost all of theirs.”
If your budget took a hit, or you want to protect yourself from losses in the future, now is the time to get back on track or be more strategic with savings in the new year. Here are some areas to consider as you assess your finances.
Did you spend your savings?
If you depleted your emergency fund, building it back up is priority number one, Bortnem says. The goal is to have enough saved to live on for three to six months. Make sure the money is in a separate account from your regular checking, but still easy to access in a bank or credit union savings account.
If you took a financial hit and are unsure about how to start saving again, Bortnem suggests several strategies, including asking for more hours or overtime at work, taking an extra part time job and/or cutting back on some expenses, such as premium movie and streaming services, until your savings have been restored. If you are out of work, finding new employment is, of course, the most important goal to accomplish.
Do you have the right amount of life insurance?
When it comes to protection such as life insurance, Bortnem says, some people may have more than they need. It’s wise to review your policy and premiums to see if you can get by with less coverage, at least for a while. For example, someone who earns $100,000 a year may have been advised to be insured for 10 times that much, which is $1 million.
Whether you really need a million dollars in life insurance depends on what you want to achieve with those funds, Bortnem says. Many people want life insurance to pay off a mortgage, or pay for a college education, and to make sure a spouse has several years of income if the other spouse dies. When you consider what that will really cost, it could be much less than $1 million.
If you decide $500,000 in life insurance coverage is adequate for the near future, you can take the savings from what you would have paid in higher premiums and plug that money back in to your emergency fund or other savings.
Are you following a budget?
If you’ve never lived on a budget, or recently fell off the budget bus (it happens), there’s no better time to start following a spending plan than today. Being aware of where your money goes (restaurant take-out and Amazon?) can help you reign in your spending. There are plenty of apps and online websites such as Mint and YNAB (You Need A Budget) to help track where your hard-earned money goes. Your credit union or local bank may have resources as well.
Have you automated your savings?
Life is tough enough. Make saving for the future a little easier by automating the process. If you don’t already do online banking, work with your bank or credit union to set up an electronic transfer from your checking account the day after you typically get paid to streamline your savings plan. On a tight budget? Start with a small amount and gradually increase your transfers over time. You won’t regret it!
* This guest article, “It’s time to check in on your finances, including emergency funds and budget plans”, is from the “Your Money Blog” in Mid Oregon’s digital banking Credit Savvy resource. “It’s time to check in on your finances, including emergency funds and budget plans” is made possible by Savvy Money. The article first appeared in December, 2020.