RETIRING DURING A RECESSION 3 GUIDELINES TO ENSURE A STABLE FUTURE
A few months ago, several news sources confirmed what savvy American businesspeople already suspected: The United States is currently in a recession and has been since February 2020. While a recession isn’t good for anyone, it’s especially concerning for those nearing retirement age. Those who were planning on retiring this year might be having second thoughts — for good reason. Rest assured, however, that if you’ve had fears about retiring this year, you can still go ahead with your plans as long as you keep a few things in mind. DON’T LET EMOTIONAL ATTACHMENT GUIDE YOUR DECISIONS. Saving for retirement is almost inherently tied with joyful thoughts of
financial stability in your golden years. So, when something like a recession threatens that security, it’s easy to react irrationally. Before deciding what to do with your retirement funds, make sure your decisions are rooted in logic, not fear or anxiety. If you don’t know where to start, contact a financial advisor for guidance. DON’T WORRY ABOUT WHAT YOU CAN’T CONTROL. Even for financial experts, the markets are notoriously hard to predict. Rather than expend energy wishing you could sway the market, focus on making changes where you have control. You can control where your assets are invested, when you claim Social Security, and how you spend your money,
among other things. Think about how you can change these factors in your favor and don’t worry about the rest. STRESS-TEST YOUR FINANCES. While conducting a stress test might sound a little abstract, it’s something that many financial advisors can help you do with your retirement accounts. Stress-testing your finances can help you determine if now is the right time to retire or if it’s better to wait just a little bit longer. Even if things look bad right now, that could change in a year or two. As the market recovers, so do your chances of a peaceful retirement.
NEW TO THE GIG ECONOMY?
Don’t Let the Job Mess With Your Taxes!
1. YOU SHOULD ALWAYS KEEP RECORDS OF YOUR INCOME. To make filing your tax return easier, always keep your receipts and records of your income. This is particularly important if you’re paid in cash or don’t have a traditional pay stub. TAXABLE. Part-time work, temporary jobs, side gigs — income from all of them is taxable under IRS rules, even if it’s not reported on an information return form like a 1099-K, 1099-MISC, or W-2. This is true even if you’re paid in cash, property, goods, or digital currency. 3. YOUR WORKER CLASSIFICATION 2. GIG ECONOMY INCOME IS MIGHT HAVE CHANGED. Gig workers can be considered employees or independent contractors, and each classification comes with different tax rules and benefits. To figure out your classification, visit the worker classification page on IRS.gov.
4. INDEPENDENT CONTRACTORS CAN DEDUCT BUSINESS EXPENSES. This means that depending on the current tax limits and rules, you may be able to deduct things like auto mileage, meals, and travel expenses on your tax return. 5. INDEPENDENT CONTRACTORS SHOULD PAY THEIR TAXES THROUGHOUT THE YEAR IF POSSIBLE. As an independent contractor, you should make quarterly estimated tax payments so you will not get hit with a large tax bill when you file your income tax return. This will also eliminate or limit penalties for failing to make proper estimated tax payments. If you’re new to gig work, hang on to these tips, and if you know a friend in the business who could use this advice, pass this article on! You can learn more by visiting the IRS’s Gig Economy Tax Center at IRS. gov/businesses/gig-economy-tax-center, and of course, I’m always here to answer any questions you might have about gig work and your taxes.
As the COVID-19 pandemic continues, more and more people are turning to gig economy jobs like delivering for DoorDash or Instacart or doing freelance work to pay the bills. These jobs can be a great way to make ends meet when times are tough, but they do have their challenges. One of those is that gig work is tricky to navigate when it comes to paying taxes. In June, the IRS released some brand-new tax tips for workers in the gig economy. Out of that list, here are my top five:
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