Author: Jenny Smedra

Our To-Do List Before Filing Taxes

What's on Your To-Do List Before Filing Taxes?

Well, it’s here…tax season is finally upon us. It’s that dreaded time of year that many of us have actively tried not to think about for the last few months. However, I’ve learned from experience that procrastinating only makes things worse. That’s why my husband and I have created a to-do list before filing taxes to make it as easy and stress-free as possible.

Our T0-Do List Before Filing Taxes

Ever since I was a student, I had a horrible habit of putting things off until the last possible moment. After a few self-induced panic attacks and deadlines that were cut a little too close, I decided it was time to make a change. Whether it was school work, chores, or financial responsibilities, I started keeping to-do lists to ensure deadlines no longer snuck up on me. If you are like me and tend to self-sabotage with the same bad habits, here’s our to-do list before filing taxes that could make the process a whole lot simpler.

1. Make a checklist.

When it comes to filing your taxes, most of the work comes down to locating all the documents you will need when the time comes. As I’ve learned, it can be a nightmare if you wait until the last minute.

Several years ago, I realized that I didn’t have everything I needed a few days before the deadline. So, my priorities immediately shifted. I spent hours searching through stacks of mail for the paperwork. I also discovered how painful it is trying to contact your employer and financial institutions during one of the busiest times of the year. Luckily, I got everything to finish my return on the last day to file.

Now, I start this process months in advance. It starts with a checklist of what we need to do and setting deadlines to keep us ahead of procrastination.

2. Take inventory of all your documents.

Thinking ahead and staying organized can prevent a lot of headaches. The checklist provides a good reference to make sure you don’t miss anything. However, I take it one step further to take inventory of all the documents so I can watch for them in the mail and gather them for when we need them. This usually includes W-2s, 1099s (including 1099-K, 1099-MISC, and 1099-INT), and personal receipts for itemized deductions. Since my husband and I file jointly, this means there are two sets of documents to collect.

While you can start from scratch, I found it helpful to look at past returns to save time. All statements must be sent out by January 31. So if you haven’t received them yet, you should probably contact the people responsible for preparing them. You may also be able to access them online. Amending returns can cost you time and money, so it’s best to make sure you have everything you need to complete your return accurately.

3. Upload digital copies for our CPA.

Even before we got married, my husband and I both realized that our taxes were too complex to handle on our own. Therefore, we have both used tax professionals to help us stay on top of things. Now that we file jointly, we use the same CPA to ensure we maximize our return every year.

Not only are tax professionals more experienced, but they also have better knowledge of the tax codes so we don’t miss any deductions. We have a great working relationship with our CPA. Part of this is because we try to prepare months ahead of the deadline to beat the rush. To make it easier, we upload the digital copies of our documents through his firm’s portal at least two weeks before our appointment to give him time to prepare everything. This greatly reduces the amount of time we spend in his office reviewing all our information and helps us get our return faster.

4. Make sure we have maxed out contributions to retirement accounts.

Once the paperwork has been taken care of, the next step is to see if we have maximized all possible deductions, including contributions to our retirement accounts. These accounts offer a huge advantage by reducing your taxable income and lowering your bill to the IRS. However, many people don’t realize that you can still make contributions for the previous year up until the filing deadline.

The first step is to verify the income limits for each type of account you hold (IRAs, 401(k)s, HSA, etc.) Then, you need to check how much you have contributed to each one for the year to see if you have any room to invest. However, if you found that you put in too much, you have time to withdraw excess contributions and avoid taxes and penalties.

5. Decide whether you need an extension.

In the past, I have experienced several hiccups when filing taxes, especially when I lived overseas. There was one year it was impossible to get everything together in time. Rather than incur penalties, I filed for an extension to give myself more breathing room.

If you are waiting on amended documents or having difficulty obtaining what you need, this may be a wise decision. Most tax preparers would agree that it’s better to wait until you have what you need rather than submit an incomplete return and have to amend it later. Those who file for an extension will have until October 16 to file their 2022 tax returns.

Important Things to Remember When Filing Taxes for 2022

Although this to-do list for filing taxes has been helpful, there are still surprises that come up. Here are a few important things to remember for this fiscal year:

  • The last day to file or request an extension is April 18th.
  • The tax brackets have changed.
  • You should be thinking now whether you will hire a tax professional or use tax software to save money. If you choose to file yourself, this guide can help you choose the best software for you.

Staying ahead of deadlines can make things simpler. But, smart strategizing can save you valuable time and money, optimize your return, and help you get closer to your financial goals. Are you ready for the 2022 tax season?

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5 Regrets Many Homeowners Face

5 Regrets Many Homeowners Eventually Face

Buying your own home is a huge financial decision and an important milestone in life. If you hope to own a home someday, it will require a lot of time and planning to get there. However, it will also become a crucial asset and key component in your retirement planning. Making a large investment like this will always come with doubts. While this is normal, you want to do everything you can to ensure you make the right decision. Since your home will likely be the most expensive purchase you ever make, you don’t want to look back and have regrets. Unfortunately, these are 5 regrets that many homeowners face, and often wish they could go back in time to correct.

5 Regrets Many Homeowners Eventually Face

According to a recent survey, 70% of people who bought a home have at least one regret about their home-buying experience. The harsh reality is that current market conditions have led to some fierce competition for real estate. Many people have been caught up in bidding frenzies, unseen buyers, and large cash offers. While cost-based regrets dominated the feedback, here are 5 regrets that many homeowners face.

1. Paying way more than they had planned.

If you have been paying attention over the last few years, then you already know that it has been a seller’s market. People who hadn’t even thought about selling their homes put them up for sale because of the massive equity gains. And, most people are flooded with offers within the first few days, driving offers way above the asking price.

Unfortunately, this makes it difficult for first-time buyers on a limited budget and nearly impossible without good credit. Those who are set on buying a home are sometimes forced to spend more than they had planned. Others decided to postpone their search altogether. In the survey, 22% of people felt they overpaid while another 18% said they underestimated the costs of home repairs. These are the types of expenses that could set your financial planning back several years.

2. Compromising on important features of the home or contingencies of the sale.

With the higher price of homes, you can’t get as much for your money nowadays. But if you can’t compromise on price, then you have to sacrifice important features or contingencies to stay under budget.

If the price is the most important factor, then you will likely have to make compromises on the age, condition, location, size, layout, number of bedrooms and bathrooms, outdoor space, proximity to necessities, school districts, or other important features. Sadly, this often means settling for less than you had hoped for from your home.

Others have adjusted their timelines to accommodate the sellers, even going as far as agreeing to rent back options. Many people also reported that they offered larger down payments, didn’t ask sellers to handle repairs, skipped inspections, or sent personal letters and gifts to win them over. When homes are scarce, people are willing to take extreme measures to get what they want.

3. Not refinancing when interest rates were low.

For those who own their home, their mortgage is probably the biggest expense in the budget. Your home will be a top financial priority. But, it will require a large portion of your income for decades of your life.

Therefore, you should seize opportunities to reduce your monthly payments by refinancing your mortgage rate. You can monitor market conditions to determine when interest rates drop. And if you have a good credit score, you may qualify for a lower interest rate. This will allow you to pay off your mortgage faster and keep more of your income. But before you refinance, make sure to compare rates and terms between lenders to get the best deal.

4. Delaying home improvement projects.

Home repairs and maintenance come with the responsibilities of owning a home. However, many people put them off because of the expense and inconvenience of living in a construction zone. If you have this view, you may want to reconsider your perspective.

Although it can be expensive, it is better to address issues before they become bigger problems that will cost even more. Plus, it will add value to your home.

Unfortunately, my parents learned first-hand the cost of delaying necessary repairs. They had several projects around the house that had been neglected for years. After the pandemic began, materials costs skyrocketed. It also became more difficult to find contractors and required longer wait times to get the work done. Eventually, waiting was no longer an option as some things had become a safety hazard. So, they were forced to eat the cost.

Rather than procrastinating on necessary repairs, a home improvement loan can provide the capital you need. And, you can ensure you don’t miss out on a good opportunity when the time is right.

5. Not having a home warranty.

Every lender will require you to have homeowner’s insurance to cover losses and repairs resulting from damage. A basic policy will protect you against fire and smoke damage, weather damage, theft, and vandalism to your home, outbuildings and outdoor spaces on the property, heating and cooling systems, large appliances, furniture, and clothing. It will also provide living expenses if you need alternate lodging during repairs.

However, you should carefully read the details of your policy to ensure you have the coverage you need. And if you need extra coverage, a home warranty can insulate your finances against surprise home expenses. While homeowner’s insurance will cover many things, you may be stuck footing the bill for plumbing and electrical issues, water damage, mold, foundation repairs, roof replacement, etc.

If you purchase a supplemental home warranty, they have hotlines that offer 24/7 assistance. They will help you handle problems quickly without depleting your financial resources.

Buying Too Quickly

Based on the survey responses, it seems that one of the greatest regrets homeowners face is rushing into a decision. Nearly 20% of respondents felt they decided too quickly. Had they spent more time searching, they may have been able to find the perfect home within their budget. Although there are no guarantees, especially in today’s market, you don’t want to have these regrets. If you are facing too many obstacles, it may be wiser to wait for conditions to improve.

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7 Frugal Reasons Why You Should Vacuum Seal Your Fruits and Vegetables

7 Reasons Why You Should Vacuum Seal Your Fruits and Vegetables

Those who enjoy cooking and grilling are probably already familiar with vacuum sealing. But, have you ever given it a try for yourself? Although I was initially intimidated by learning how to use a new appliance, it’s a lot simpler than you might think. And in addition to the health benefits, it comes with some significant financial ones as well. If you are thinking about investing in one, here are 7 frugal reasons why you should vacuum seal your fruits and vegetables.

7 Frugal Reasons Why You Should Vacuum Seal Your Fruits and Vegetables

1. It keeps your food fresher, longer.

The most obvious financial advantage of vacuum sealers is that they will make your food last longer. Since your produce is less likely to go bad, there is less risk of you wasting money by throwing it away. Fresh items that would normally start to turn within a week can last up to 2-3 weeks with vacuum sealing. And freezing them can extend their shelf life to 2 years or more.

When you look at the time frame of normal freezing vs vacuum sealed freezing, the savings become even more apparent.

  • Normal Freezing / Vacuum Sealed Freezing
    • Ground Meat (4 months / 1 year)
    • Meat (6 months / 2 years)
    • Fish (6 months / 2 years)
    • Fruits and Vegetables (8 months / 2 years+)

The reason for this is that vacuum sealing removes the oxygen from the packaging. Oxygen is a necessary component of bacterial growth. So, less oxygen means slower fungal and bacterial growth. Ziploc bags and containers can prolong the life of your fruits and veggies as well. But, they still allow a fair amount of air to seep into the packaging. Vacuum sealing will better preserve the flavor, texture, and quality of your food.

2. Vacuum sealing can prevent freezer burn and chemical reactions.

In addition to preserving them longer, vacuum sealing can also prevent freezer burn and chemical reactions that ruin the texture and freshness of your frozen food items. Freezer burn occurs when the cold, low-humidity climate of your freezer removes the moisture from your food and oxidizes it, covering the item in ice crystals. Fruits and vegetables are even more susceptible to it since they consist of 90% water, sometimes more.

However, tightly wrapping your food with plastic wrap and aluminum foil and removing the oxygen from the packaging can prevent this. Not only will it keep the moisture in your food, but it also keeps bacteria out that can cause food to spoil faster. While other containers can protect your food, vacuum sealing it will preserve your food 3-5 times longer and ensure it doesn’t taste strange or develop a mushy texture.

3. It allows you to save your leftovers longer.

Coming from a big family, I have gotten used to making large portions. But now that it’s just my husband and me, we always have leftovers. And though I enjoy them, I can’t eat the same meal for days on end. This usually leaves us with a lot of uneaten food which pains me to waste.

So, another benefit of vacuum sealing is that you can store your favorite dishes in the freezer and enjoy them again later on, without all the prep work. This has been a great solution and a huge money saver when we don’t want to cook or spend money on delivery services.

4. You can buy in bulk.

Another frugal reason to vacuum seal fruits and vegetables is that it will allow you to buy in bulk. Most budgeters already know and practice this tip. But, it’s a bit more complicated with fresh produce. If you don’t use them right away, they will probably end up in the garbage.

I think about this every time I go to Costco. And, I hesitate to buy fresh produce for this very reason. But thanks to a vacuum sealer, you can divide them into smaller portions and save them for later.

5. It makes organization easier.

My mom has frozen her leftovers for years. But, I cannot fully describe how much I hate digging through the freezer and having to try and guess what is stored in each container. Not only is it time-consuming, but the oddly shaped packages take up more space than necessary.

Vacuum sealing will make organization much faster and allow you to fit more in your freezer. Since the bags for the vacuum sealer are approximately the same size, it’s much easier to stack and store each package.

6. The vacuum-sealed bags are more durable.

In addition to preserving your food longer, the vacuum-sealed bags themselves are more durable than your standard freezer bags. Therefore, there is less chance that they will tear. This also eliminates the need to pre-wrap your items and double-bag them before freezing. And of course, it’s more cost-effective to store your food this way since it reduces the chances of losing items to freezer burn.

7. The initial investment will pay for itself.

Many people choose to stick with other methods because the initial investment is substantial. If you look online, you will find dozens of models that cost hundreds of dollars. However, it is an investment that will pay for itself in time. When you do the math, you can see that it will easily save you more in the long run by preserving your food and preventing waste. What you save in unused produce will cover the cost of the appliance.

If you decide to purchase a vacuum sealer, you want to make sure that you invest in a quality product. Buying the most economic option may save you a few bucks up front, but it could cost you more in repairs and replacements later on. So, it’s wise to do your research and read consumer reviews before you buy anything. Not only will this help you find something that is built to last, but it may also help you find a better deal on specific brands and models.

Have you used vacuum sealers to preserve your food? Share your experiences in the comments below!

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