Tax Law Updates & Newsletter

 

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Client Update Newsletter: September 2024

Reducing the amount of interest you pay over the life of a mortgage can yield huge savings! This month's newsletter provides an illustration of just how much you can save, even with as little as $10 a month.

Also in this edition, find out how cancelled debt may leave you holding a bigger tax bill, why banks won’t always come to the rescue if you get scammed, and how to protect your valuables before thieves decide to pay your home or apartment a visit.

As always, feel free to pass this information on to anyone that may find it useful and please call if you have any questions or concerns.

Contents

Banks Won't Always Save You from Scams

Banks Wont Always Save You from Scams imageIt's easy to feel secure about the money you deposit with a bank you’ve come to trust. After all, most banks and credit unions offer certain levels of protection against fraudulent transactions.

Banks, however, won’t protect you against all types of fraud.

Here’s a look at the protections that banks and credit unions usually provide to their customers – and which situations where you’ll likely be on your own.

When a Bank Usually Protects You

For credit cards, banks usually provide zero liability on any unauthorized charges.

Debit cards also provide protection against fraudulent purchases, but there may be limitations depending on which financial institution issued your card. According to federal law, here is the maximum amount of fraudulent transactions you'll be responsible for depending on when you notify your bank that your card is lost or stolen:

  • Immediately notify your bank before any unauthorized charges are made: Zero liability
  • Within two business days: Up to $50
  • After two business days but within 60 days: Up to $500
  • Fail to notify within 60 days: Unlimited

When a Bank Usually WON’T Protect You

Unfortunately, there are many types of scams that banks won’t reimburse you for if someone steals your money. Here are some of the more common scams:

  • You are scammed into moving money out of your account and into another person's account.
  • A hacker uses lies to convince you to make a bank transfer into a cryptocurrency wallet.
  • You liquidate your retirement funds and send the money to someone else for any reason, even if you were conned into it.
  • You make a person-to-person transfer to another individual using an online payment app, and that transfer doesn't come with any type of purchase protection.

How to Protect Yourself from Common Banking Scams

Here’s how to protect yourself from getting scammed:


Early Mortgage Payoff: Small Payments Can Save You Big Money

Small payments can save you big money when paying off your mortgage.

With 30-year fixed rates reaching levels not seen in 25 years, adding even just a little extra to your monthly payment can significantly cut down on the interest you pay over the life of your mortgage.

Here are several different scenarios to illustrate how much interest you can save by slightly increasing each monthly payment.

Base scenario and assumptions

Here’s the assumptions used for this base scenario:

With no additional money tacked on to your monthly payment, you would pay $574,583 in interest over the course of your 30 year mortgage in this base scenario.

To buy this house for $420,800, you would end up paying just shy of $1 million after adding $574,583 of interest charges!

None of us wants to pay $1 million for a $420,000 house. So let’s take a look at the following scenarios to find out how much interest expense you can save by increasing your monthly payments by a small amount.

Here's a summary of the base scenario's assumptions compared with how much interest you can save, and how much faster you'll pay off your mortgage, in each of the following examples.

Early Mortgage Payoff Small Payments Can Save You Big Money image

Example #1: An Extra $100 Per Month

Adding an extra $100 to your monthly mortgage payment would save you $81,902 in interest expense and cut down on the time to pay off your mortgage by 3½ years.

Example #2: An Extra Lump-Sum at Years 5, 15 & 25

In this example, let’s assume you make an additional lump-sum payment of $5,000 in years 5, 15, and 25 of your mortgage.

While you wouldn’t save that much extra time paying off your mortgage in this scenario, you’ll still end up pocketing nearly $37,000 just by making three lump-sum payments over the course of your mortgage.

Example #3: An Extra $200 Per Month

If you can afford an extra $100 per month to put towards your mortgage, why not try for $200 a month? This is where the math starts to get fun. Adding $200 a month helps pay off your mortgage 6 years sooner and saves you $140,000 in interest expense.

Every little bit helps

Even adding an extra $10 per month can save you nearly $10,000 over the course of your mortgage. That’s a lot of money that goes into your bank account instead of your bank’s bank account!

Paying off your mortgage early and cutting down how much interest you pay over the course of your mortgage doesn’t require a lot of money. Whether it’s $100 or $10 a month, every little bit can help on your quest towards a better financial future for you and your family.


Debt Relief and Taxes

What everyone should know

Negotiating to decrease or zero out a credit card bill or other loan balance can help relieve a tough financial situation, but it can also give way to an unexpected tax bill. Here's a quick review of various debt cancellation situations and how they impact your your taxes.

Each of these themes have one thing in common – the tax laws can be complicated and you will probably need help navigating your situation.


Protect Your Valuables BEFORE Thieves Arrive

If you are concerned about protecting your valuables, here are several suggestions to consider for protecting them from would-be thieves:

Be prepared if a theft does occur

Thieves can still unfortunately steal your valuables despite multiple layers of protection. Here are some suggestions to prepare you if any of your valuables go missing:



Newsletter Archive

Please note: Some material may be time-sensitive and may no longer apply.
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