Advance Child Tax Credit Payments in 2021

There has been Important changes to the Child Tax Credit  that will help many families get advance payments of the credit starting this summer. The IRS will pay half the total credit amount in advance monthly payments beginning July 15. You will claim the other half when you file your 2021 income tax return. These changes apply to tax year 2021 only.

To qualify for advance Child Tax Credit payments, you — and your spouse, if you filed a joint return — must have:

  • Filed a 2019 or 2020 tax return and claimed the Child Tax Credit on the return; or
  • Given us your information in 2020 to receive the Economic Impact Payment using the Non-Filers: Enter Payment Info Here tool; and
  • A main home in the United States for more than half the year (the 50 states and the District of Columbia) or file a joint return with a spouse who has a main home in the United States for more than half the year; and
  • A qualifying child who is under age 18 at the end of 2021 and who has a valid Social Security number; and
  • Made less than certain income limits.

The IRS will use information you provided earlier to determine if you qualify and automatically enroll you for advance payments. You do not need to take any additional action to get advance payments. The IRS also just started an online tool that will allow families to tell the agency they don’t want to receive advance monthly payments from the enhanced child tax credit, scheduled to start next month. For more information, head directly to the IRS website here. We will continue to follow and report on any further information released about the matter. If you have any questions for us and your particular situation, reach out to your tax professional or please email us at info@shermanwealth.com. 

 

Here’s How You Will Be Able to Locate Your Lost 401(k) Accounts and Pensions

Did you lose your company 401(k) when switching jobs? Well, you may be in luck.   There is a proposed retirement legislation that’s pending in Congress that will be proposing a “lost and found database to help locate those accounts”. 

As people change their jobs from one company to another — “the average is 12 jobs, according to one government study”,  they tend to lose their company retirement plans. “More than 16 million accounts of $5,000 or less remained in workplace plans from 2004 through 2013″, according to a report from the Government Accountability Office

The provision in the congressional proposal would create “an office at the Pension Benefit Guaranty Corp. to oversee and administer the lost and found program”. It would accept account transfers of under $1,000 from plans and would try to locate the owner. They also mentioned that people would have the ability to search for their missing plans in the database as well. 

“If the company has moved to South Carolina or New Zealand or wherever, or is now Company Z not Company X, the lost and found will have that information,” said Karen Ferguson, president of the Pension Rights Center, a consumer advocacy group. 

If you have an old 401(k) account or pension you are unable to track down, you first should contact your former employer to see if you can track it down. Hopefully soon this new plan pending in Congress passes in order to help millions across the country stay on top of their hard earned money. If you have any questions about your 401(k) and how to take the next steps if you have started a new job, please let us know at info@shermanwealth.com or schedule a complimentary 30-minute call here.

Financial Checklist for Newlyweds

Just tied the knot? Or getting ready for the big day? Well, no matter the situation, you are about to take the next step with your partner and should probably start thinking about next steps for your financial future. 

Below we will list some newlywed topics to think about when taking those next steps with your significant other.

  1. Changing Your Name 

Changing your name is a big step. But whatever you decide, you’ll need to make your new name legal as one of the first tasks of married life. If you do decide to change your name, it’s important hen changing your name, 

    2. Combining Your Money

Once you’ve taken care of any necessary name changes, it’s time to make some decisions about how your new household will merge and manage finances. It is important to communicate to understand who will be assuming responsibility for certain things and who will be contributing to the finances. 

    3. Think About Combining Insurance Plans

When discussing merging finances, remember insurance. Now that you are married, consider adding your spouse to your insurance plan to make it cheaper for the both of you. 

   4. Deicide Who Your Beneficiaries Are

Now that you are married, you probably will want to update the beneficiaries on all of your accounts, such as 401(K)’s, IRA’s , and bank accounts.

  5. Smooth Out Property Titles 

Now that you are married, are you moving in together? Did you purchase a house? Make sure to put each-other on the title of the house to represent that you both have ownership.

  6. Budgeting 

Communication is key. We have long talked about the importance of communicating with a spouse, especially when it comes to budgeting and spending. If you and your significant other are not on the same page when it comes to budgeting and spending, you may not be headed towards a solid financial future. 

While these are only a few of the topics you should incorporate into your financial conversations, the best place to start is establishing strong line communication. Communication is key in understanding each other’s views and building a strong foundation together. We recently recorded a podcast with psychotherapist and consultant, David Pearl, discussing how to have uncomfortable and oftentimes difficult money conversations with your spouse. For any questions or direction on your newlywed financial situation, reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute meeting here.

When Student Loan Payments Restart

We know the past year and a half has been quite the whirlwind, and as we approach summer and the economy continues to re-open, we want to bring light to some financial stress individuals may be facing. 

Federal student loan payments are set to resume on October 1, after an unprecedented 19-month suspension that was put in place to provide financial relief to borrowers during the pandemic.Borrower balances have paused now for over a year, with no payments required on federal loans since March 2020. 

The pause on payments was originally supposed to be in place for only two 7 months, but it was extended by both of the presidents administrations. We are unsure if it will be extended once again, but will continue to follow it for all of you with student loans who may have been partaking in this extension.  We have been following the recent news of proposals to President Biden to cancel debt for American’s and will continue to report as we learn more; however, for those with student loan repayments starting up soon, its important to start thinking about your financial situation and how that will change as you begin this repayment. For questions about your financial situation or advice on tools to help organize and automate your finances, reach out to us at info@shermanwealth.com or schedule a complimentary 30-minute conversation here.

How American’s Became 401(K) and IRA Millionaires A Year After The Pandemic

Even though the coronavirus pandemic over, retirement accounts are thriving. Retirement account balances, which took sharp declines almost exactly one year ago, have now bounced back entirely, according to the latest data from Fidelity Investments, the nation’s largest provider of 401(k) savings plans.

“Despite recent losses in the market, from January 2020 to the beginning of May, the S&P 500 has had an annual return of more than 20%, Fidelity Reported. ” This data shows record levels that surpasses previous highs pre-pandemic. As we can see from these statistics, during this time, many more people contributed to their investment accounts and enrolled in company retirement accounts, leading there to be more retirement millionaires in our midst. 

The picture above shows how much wealth you can build over time if you contribute from a young age and consistently over time. We are thrilled to see an increase in funds and savings amongst Americans especially given the hard year we have had.  If you have any questions about how to better your personal financial situation, please let us know at info@shermanwealth.com or schedule a complimentary 30-minute consultation here

Here’s How the Pandemic Changed Charitable Giving In 2020

Despite the pandemic, do you still find yourself being charitably inclined? Most affluent Americans — about 90% — gave to charitable causes in 2020, with a third of them giving more than in the past to organizations focused on meeting basic needs, according to research from the Bank of America and the Indiana University Lilly Family School of Philanthropy

There were some shifts in charitable giving, the bank found. More wealthy donors supported local community needs than usual, and there was an increase in unrestricted gifts — those that the nonprofit can use how it sees fit instead of for a specific purpose required by the donor.

As we continually discuss, donor advised funds are a great way to support your charities of choice and make a strong impact in the world, while also benefiting your tax situation. Check out our recent podcast with Elizabeth Goldstein at the Jewish Federation of Greater Washington as we discuss everything you need to know about donor advised funds. At Sherman Wealth, we are honored to be able to give back to the local community, including organizations such as So What Else, Nourish Now, A Wider Circle, and The Jewish Federation Of Greater Washington. What local charities are near and dear to your heart? Let us know at info@shermanwealth.com.

Here’s What Americans Say is Their Biggest Financial Regret

The coronavirus pandemic sent Americans’ financial situations into a whirlwind. A recent Bankrate survey found that the crisis actually caused many consumers to re-evaluate how much money they plan to save in their emergency fund. The coronavirus pandemic also led many people to think about financial regrets and mistakes they’ve made in the past and plan to improve on in the future. 

Bankrate’s May 2021 Financial Security poll found that Americans’ biggest financial regret is not saving enough for emergencies. In addition, building a better emergency fund is what most respondents said they would do differently with their finances after the outbreak, at 26 percent.

It’s clear that the deep recession caused by the coronavirus pandemic has proven the importance of having a sufficient emergency fund and being prepared for the unexpected. 

Bankrate also captured Americans’ biggest financial regrets, according to their survey:

When the respondents were questioned about how they plan to alter their financial habits based on their earlier responses, they said this:

  • 26% said they will save more for emergencies
  • 21% said they will spend less
  • 16% said they will carry less debt
  • 12% said they will find more stable income
  • 12% said they will save more for retirement
  • 8% said they plan to make no changes
  • 2% said they will do something else

This financial data drives home important financial concepts and habits such as building an emergency fund, starting early, contributing to your retirement, establishing and maintaining a good credit score, and more. You never know what curve balls life will throw your way, so it is always important to be prepared for the unexpected and be ahead of the game when it comes to your financial and financial future. If you have any questions about how to improve your financial habits or how to repair some financial regrets you have, contact us at info@shermanwealth.com or schedule a complimentary 30-minute introductory call here

Here’s Why Millennials Need To Get Started Early Financially

Are you young and jump starting your career? Heading up the corporate/financial ladder but still worried you will not reach your financial goals? Don’t fret, many others out there are in the same boat, especially millennials. We have been writing about millennials and their increasing wealth in previous blogs, however, we have yet to touch on how those individuals feel about reaching their financial dreams. 

According to a survey by Broadridge, “of the 39% of millennials not using a financial advisor, the majority (65%) plan to begin using one in the next two years.” They found that “the demographic is more comfortable with investing than the total population, with 65% of millennials using self-directed brokerage accounts, compared with 52% of all investors surveyed.” 

At Sherman Wealth, we work with millennials, regardless of their financial status or assets, and help them reduce their financial stress and meet their financial goals. Our team works diligently to provide our clients with state-of-the-art technology that is well built for tech savvy millennials and helps them view all their finances in one place. With the overflow of social media and conflicting sources in the media, as a young individual, it’s very easy to get swept up in fads and social media trends, resulting in poor financial decisions. Given the data listed earlier, this is a real opportunity for you to let us help you get started at a young age and try to hit those goals you have set for yourself and your future. If you have any questions or are interested in learning how we can help you, reach out to us at info@shermanwealth.com or schedule a 30-minute complimentary consultation here.

Together Let’s Help So What Else

So What Else needs your help! 2020 was an unbelievably difficult and challenging year for most of us. Beginning on March, 9 2020, So What Else (SWE) began a tremendous undertaking and started one of the most successful emergency hunger relief and support programs in the Greater Washington Area. Food was donated to us from partner organizations and local businesses without restriction and given to anyone in need, to the tune of 9 million meals from March 2020-March 2021.

Food is continuously being donated from every source imaginable. But, the warm summer months are fast approaching, and the SWE Team is in serious need of purchasing a refrigerated box truck to store perishable food arriving from multiple sources. The need for supplying food has only increased since the pandemic began. SWE is requesting a one time donation in order to purchase a refrigerated truck to store perishables such as produce, eggs, dairy, poultry and other products that need to be refrigerated during transportation in the upcoming summer months. 

Almost every week since the inception of this highly accessible program, the need for free food has increased. The So What Else team feels it is critical to have a refrigerated truck in order to continue to support children and families that are in dire need of food. We are hoping you will agree that this need is critical as is our desire to continue the food donation line to help serve those in need. Will you help SWE by supporting this special request?

Your generous donation means the world to Sherman Wealth and So What Else and will continue to support their mission to help serve our community. We thank you in advance for your donation and support to meet our community’s needs. So What Else has received rave reviews for their service to our community and hope you will see the total benefit to obtaining a refrigerated truck in order to continue to support everyone in need of food donations throughout our community.

Currently SWE serves 68 sites per week with a total of 110,000 meals a week directly to children and families. Again your help means the world, especially to the children who rely on SWE for most of their meals every week. For questions about the donation, email us at info@shermanwealth.com

The refrigerated box truck costs approximately $60,000. SWE currently has $12,500 committed from a generous donor. Will you help us raise the remaining $47,500?

Click here to donate to a great cause to help our community and a wonderful organization. https://www.gofundme.com/f/refrigerated-truck-fund?member=10610365&utm_medium=email&utm_source=customer&utm_campaign=p_email%2Binvitesupporters

Tax Break Adds Perk To 529 College Plans

529 plans are not only a great estate-planning tool way to save for your children or grandchildren’s’  college tuition, but they have another added bonus too. Under this new tax law, individuals can make a lump-sum 2021 gift of up to $75,000 to fund a 529 college savings account for a child or grandchild and claim a federal gift tax exclusion for the full amount. 

“This accounts for five years’ worth of the standard $15,000 annual exclusion that normally applies to 2021 gifts,” according to the IRS. We have found that many people are not aware of this tax break and how they can benefit from this, which is why it’s important to share the knowledge. 

Another interesting point to note is that the Tax Cuts and Jobs Act of 2017 now applies to tuition for grade K-12, which is useful for those who decide to send their children to private school. 

It’s important to note that grandparents can really benefit from contributing to a 529 plan, as it removes assets from taxable estates in large sums and the money is invested to grow and earn income tax-free. If you are currently contributing to a 529 plan or are considering opening one, we are happy to discuss your situation and more of the benefits involved. If you have any questions or would like to discuss these plans, please feel free to contact us at info@shermanwealth.com or schedule a 30-minute complimentary meeting here