Author: Service2Client

How to Navigate Money Before Saying ‘I Do’

How to Navigate Money Before Saying 'I Do', wedding finances, marriage finances,According to a Bankrate Financial Infidelity Survey, 28 percent of couples said they considered financial cheating as bad as physical cheating. Furthermore, money is one of the top reasons for divorce, says Rahkim Sabree, counselor and financial therapist with the Financial Therapy Association. With these facts in mind, it makes good sense to get all your financial cards on the table (literally and figuratively) before you tie the knot. Here are a few ways to navigate this often thorny subject and create a healthy relationship with money as a couple.

Have a Money Date

Be intentional and carve out dedicated time to discuss the big issues that you both might have questions about.

  • How will we handle student loans?
  • How many children will we have, if any? Will they go to public or private schools?
  • Where will we live? Close to or far away from family?
  • Where would we like to be in our careers in 5, 10, or 20 years?
  • When do we want to retire? How will we spend our retirement?

If talking about these things is difficult, you might consider premarital financial counseling. When you can get on the same page before you get that other page – your marriage license – you’ll be way ahead of the game.

Set Up a Financial Plan, Pre-Marriage

While this conversation probably won’t be romantic with flowers and candlelight, it’s a time where you can share the excitement of your future. While you may not see eye-to-eye on everything, set up short-term goals, long-term milestones, and seek the middle ground when disagreements arise. Remember, life happens. Goals may change. There will be job losses, health issues, and unexpected expenses like HVAC going out or plumbing problems. The idea is to remain flexible and tuned in to each other’s spending habits by using apps like YNAB (You Need a Budget), Empower, or Tiller. When you’re transparent and can see who is spending on what, you can maintain an open dialogue about your cash flow.

Decide if You Want a Prenup

Depending on your resources and if you have children from a previous marriage, you might want to consider a prenuptial agreement. Again, it’s not the most comfortable topic to discuss because it implies that there’s an end to what is ostensibly just beginning. That said, it can pre-empt future problems that might otherwise cause a divorce. It’s also important in the case of death because if you don’t have a prenup, a judge, not the couple, gets to decide who gets what, which might result in an unsatisfactory distribution.

Figure Out Your Checking Accounts

Joint or separate? This is totally up to you, but according to Bankrate, 24 percent of couples have separate accounts; 38 percent have both joint and separate; and 39 percent have a joint account. This topic should be part of your money date.

Consolidate Debt

If you both have debt, consolidate and start paying it off. If you’re thinking about buying a home, lenders will look at debt-to-income ratio to see how much of your total income is being used to pay off debt. If your debt is too high, you might have trouble getting a mortgage. Be honest about it. Have the tough conversations before you say, “I do.” You probably don’t want to surprise your future spouse when you’re in the already emotional process of putting a bid on a house.

Bottom line, figuring out a financial plan for your marriage can be challenging, if not downright tough. But the best time to sort through all of this is before you walk down the aisle. When you have a roadmap, the chances for a successful financial future together increase exponentially.

Sources

Money And Marriage: What To Consider Before Tying The Knot | Bankrate

How New Grads Can Master Their Finances

How New Grads Can Master Their FinancesCollege graduation is a huge milestone. You’ve completed one chapter and are on the precipice of the next. While exciting, it can also be daunting – you have a whole new set of responsibilities in front of you. But take heart, we have some tips to help you navigate.

  1. Look back to look forward. Take some time to examine your money habits. Do you have a tendency to overspend? Reward yourself with dinners out or a little retail therapy after a stressful event? Neither of these things is good or bad. They’re just choices. However, if you intentionally monitor your behavior and make necessary changes, you’ll learn how to budget early in your life. This way, you’ll set yourself up for success in the future. The truth is, a little self-awareness can go a long way.
  2. Create a budget and stick to it. Don’t think of this as limiting. It’s simply a way to get a hold of your money and learn to live within your means. One smart way to begin is using the 50/30/20 rule: You allocate 50 percent of your earnings to your basic needs, 30 percent to your wants, and 20 percent to your savings. You can also set up short-term and long-term goals. Do you want to save for a vacation? New furniture? A new car? No matter what, start by listing ALL your expenses and then breaking them out into categories. See what you’re spending and make adjustments. To get started, here’s a free budgeting calculator.
  3. Start saving. Right now, you might be feeling immortal. You’re young and just beginning your life. But someday, you’ll be older and need resources to live. So instead of thinking of this as taking away from your fun, think of it as paying yourself first, your future self. Whether for a getaway, an emergency, or whatever, regularly set aside some cash. But there’s more. Take advantage of savings accounts that will help you save on taxes, such as an individual retirement account (IRA) or a 401(K). Many employers offer these and even match your contributions, so don’t miss out. You want your money to work hard for you.
  4. Pay back your student loans. It might be very tempting just to kick this to the curb. Warning: Don’t do it! Even if you have a six-month grace period. Find out what kind of loan you have: Federal or private? Subsidized or unsubsidized? If you can’t afford to pay large chunks, contact your lender and work out a plan. Another important thing is to find out whether you can deduct a portion of your student loan interest payments on your taxes. And finally, you can even investigate consolidating, refinancing, or whether you qualify for loan deferment. Just handle it. You’ll be so glad you did.
  5. Know your worth when job hunting. Do research and find out the salary range for your level in your chosen industry. You should also examine companies. What are the benefits? If the perks are exceptional, it might be worth taking a slightly lower-paying job, depending on your situation. If you can’t negotiate your salary, ask to see if they have other perks, like helping with student loans. Another exercise is to create budgets around net salaries to get a sense of what managing your money looks like.
  6. Vet your health insurance. Some of you might be covered on your parents’ policy until age 26. Or you might be covered by your employer. If you have insurance through your job and are in good health, a plan with a higher deductible may be a smart move. You’ll save on monthly payments and have more cash for after work.          

When it comes to handling your money, all it takes is a little practice. And baby steps. Sure, you’re going to make mistakes. But jump in. Learn the ins and outs. In the end, it’s going to determine whether you remain a student or become a responsible adult.

Sources

https://www.investopedia.com/top-7-finance-tips-for-new-grads-5248426 

 

Deepfake Detection in Voice and Video

Deepfake Detection in Voice and VideoDeepfakes are becoming more convincing than ever. Whether manipulated media or entirely generated by artificial intelligence (AI), deepfakes can now realistically alter faces and clone voices. They can even fabricate entire scenarios across video, audio, and text. Unfortunately, these developments now create significant challenges, and people can no longer trust what is presented online. Methods that have in the past been used to detect less-perfect deepfakes are becoming obsolete. There is now an urgent need to develop more effective detection solutions.

The Escalating Threat

Deepfakes are being actively used in malicious ways. It is being used to fuel misinformation, enable new forms of fraud, and erode the foundations of digital trust. An Identity Fraud Report 2024 by Sumsub noted a four times increase in the number of deepfakes detected worldwide from 2023 to 2024. A research study by iProov tested 2,000 UK and US consumers, revealing that only 0.1 percent of the participants accurately distinguished between real and fake content. These are only a few statistics on the severity of the deepfake problem.

Limitations of Current Detection

There are various tools and technologies available for detecting deepfakes, ranging from manual forensic analysis to automated AI-based solutions. These methods rely on identifying issues such as inconsistencies in blinking patterns, facial warping, extra limbs, or audio glitches. However, new AI models creating deepfakes have advanced to minimize these problems.

Therefore, relying on known flaws to detect deepfakes is not a sustainable strategy in an ever-evolving landscape.

Innovations in Detection Modalities and Speed

Innovation in deepfake detection requires an approach that will address the complexity and diverse nature of modern synthetic media. The new innovations must move beyond analyzing just one type of media.

  • Multi-Modal Detection – The latest deepfakes are multi-modal and can manipulate video, audio, and even accompanying text simultaneously. Therefore, detection software must have the capability to analyze these elements together.
  • Focus on Voice and Audio – This is especially crucial in detecting sophisticated voice deepfakes used in scams. New software is being built to analyze subtle vocal characteristics, background noise inconsistencies, and even speech patterns in combination with any available video to verify authenticity.
  • Real-Time and Scalable Solutions – There is a need for advanced systems that can detect deepfakes quickly and efficiently in livestreams and large volumes of content. Detection system developers must develop algorithms and infrastructure capable of this speed and scale.

Advancements in AI for Deepfake Detection

AI is playing a major role in the development of next-generation detection software that is beyond simple artifact detection to more sophisticated analysis.

  • Leveraging Foundation Models – Researchers are exploring large, pre-trained AI models that are behind many generative tools. Since these models are trained with vast amounts of data, they understand natural media. They can be fine-tuned and incorporated into detection software to help spot deviations that indicate synthetic origin.
  • Proactive and Generative Approaches – Some innovations are proactive, where generative models are being used to understand how fakes are made. This will allow detectors built into software platforms to anticipate and identify novel manipulation techniques even before they become widespread.
  • Towards more Robust and Explainable AI – Software development is also focusing on robustness against adversarial attacks. New training methods are being implemented to make detection software more resilient to deliberate attempts at evasion. There is also a push for Explainable AI (XAI) within detection software. This will help users understand why a piece of media was flagged.

Authentication and Verification Beyond Pure Detection

Advanced detection is bound to be challenged; therefore, next-generation solutions are incorporating methods for authentication and verification built into software systems.

  • Blockchain and Media Provenance – Exploring how blockchain technology can be utilized to create immutable records of media origin and any subsequent changes.
  • Human Element and Crowd-Sourcing – Integrating human expertise as a judgment of human expertise will help in complex cases. Crowd-sourcing expertise is also being explored as a way for platforms to scale human review.
  • Detecting Deepfakes in New Frontiers – As digital interactions move into new spaces like virtual worlds and the metaverse, detection software for these platforms is also necessary. This will help identify manipulated avatars and synthetic content within the immersive environments.
  • International Collaboration and Standards — fighting deepfakes is a global challenge, as synthetic media can easily spread worldwide. Therefore, collaboration among international researchers, governments, and technology companies is crucial. To accelerate the development and deployment of effective countermeasures, the involved parties can share data on new deepfake techniques and detection methods, as well as common technical standards.
  • Public Awareness and Digital Literacy – educating the public on how deepfakes are created and what to look for empowers them not to be duped by fakes. Promoting digital literacy helps people evaluate online content more skeptically and understand the importance of verified sources.

Conclusion

The race between deepfake generation and detection will undoubtedly continue. The ongoing development and deployment of sophisticated detection software is an important step toward safeguarding the integrity of digital media and preserving trust in everyday digital interactions. To deal with the escalating deepfake threat, passive defense is insufficient. Therefore, it is recommended to prioritize adopting integrated, next-generation detection software and verification methods to safeguard operations and trust.

Cash Flow Available for Debt Service (CFADS)

Cash Flow Available for Debt Service (CFADS)When it comes to the risk of default, Moody’s found that during COVID-19, American businesses had a 7.8 percent chance of defaulting. This is compared to a low of 4 percent in 2021, but lower than the current 9.2 percent risk of default, according to a March 2025 report by the rating agency.

Also known as cash flow available for debt service, CFADS determines how much cash is available to service debt obligations. It looks at different cash inflows/outflows to show both internal (owners and managers) and external audiences (investors) how efficient (or not) a business is in its ability to produce cash flows and manage its debts without defaulting.

While one method businesses use is balancing client sales, it is also common to look at various accounting entries, including Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA). The results of CFADS are often used by financial analysts when creating coverage ratios, including the project life coverage ratio (PLCR), the debt service coverage ratio (DSCR), and the loan life coverage ratio (LLCR). It can sometimes take the place of EBITDA in certain circumstances. It’s important to note that the three coverage ratios show how well a plan is able to service and not default on debt throughout the entire project’s period.

For example, the DSCR = CFADS / Scheduled Debt Service (Interest + Principal Obligations)

Once this is calculated based on the company’s project specifications, if the result is greater than 1, then it signifies and gives greater confidence to internal and external audiences that the company will be able to meet its milestones and final payments.

The most efficient formula for calculating CFADS is as follows:

EBITDA – Taxes – Positive or Negative Result of Working Capital – Capital Expenditures for Maintenance Only

$200,000 (EBITDA) – $30,000 (Taxes) + $20,000 (assuming there’s a negative $20,000 change in working capital) – $40,000 (assuming the capital expenditure investing in maintenance)

CFADS = $150,000

Sometimes the calculation includes dividends, which need to be factored into the calculation. This example assumes it is not part of the calculation.

Interpreting Results

It’s important to understand that a more detailed analysis helps all audiences determine if the projected cash flow is available for different claimants of the business. While most of the calculations are done via the waterfall model, it’s important to analyze it based upon senior and junior debt, along with equity. If a company declares bankruptcy, senior debt holders are the first priority to be made whole (or as whole as possible, depending on the circumstances). Senior debt is collateralized or secured with company assets that are sold off during bankruptcy. From there, junior debt holders are next in line, followed by convertible note holders, then preferred stockholders, and finally common stockholders.

While this calculation is only one part of the way internal and external stakeholders can measure a company’s financial health, with the chance of more firms defaulting on debt, it’s another tool in a financial analyst’s toolbox.

Rolling Back Regulations, Proving Citizenship Birth for Voting Rights, and Blocking Nationwide Injunctions

Rolling Back Regulations, Proving Citizenship Birth for Voting Rights, and Blocking Nationwide InjunctionsProviding for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Department of Energy relating to “Energy Conservation Program: Energy Conservation Standards for Consumer Gas-Fired Instantaneous Water Heaters (HJ Res. 20) – The House and Senate both passed a resolution negating a previous rule mandating that tankless gas-fired water heaters meet certain criteria (less than 2 gallons capacity and greater than 50,000 Btu/hour) for efficiency standards, which would have phased out non-condensing technologies. Introduced by Rep. Gary Palmer (R-AL) on Jan. 15, the resolution is awaiting signature by the president.

A joint resolution disapproving the rule submitted by the Bureau of Consumer Financial Protection relating to “Overdraft Lending: Very Large Financial Institutions” (SJ Res 18) – This joint resolution, introduced by Sen. Tim Scott (R-SC) on Feb. 13, reverses a federal regulation governing overdraft fees charged by large banks. The previous rule limited overdraft fees to one of the following options: $5, cap the fee at an amount that covers costs and losses, or disclose the terms of their overdraft loan to give consumers choices for opening a line of overdraft credit, shopping for comparative loans, and determining a payment plan. The resolution passed in the Senate and the House on April 9 and presently awaits signature by the president.

SAVE Act (HR 22) – Introduced by Rep. Chip Roy (R-TX) on Jan. 3, this legislation passed in the House on April 10 and is currently under consideration in the Senate. This bill would amend the National Voter Registration Act of 1993 to require proof of United States citizenship to register to vote in elections for Federal office. The Safeguard American Voter Eligibility Act mandates that U.S. citizens present proof of citizenship in-person to election officials when registering to vote; making changes to their voter status (i.e., address change, party change); or the state election authority requests proof of citizenship when reviewing the integrity of current rolls. Voters must show both a valid ID and documentation that indicates the applicant was born in the United States, such as a passport or birth certificate. However, should the name on the ID and birth certificate not match, the applicant would also have to present legal documentation verifying the reason, such as a marriage certificate or other legal name change certification.

NORRA of 2025 (HR 1526) – Also referred to as the No Rogue Rulings Act of 2025, this legislation would restrict district court judges from issuing nationwide injunctive relief in cases only applicable to the district court. Cases involving two or more states would be referred to a three-judge panel, which would determine whether to issue a nationwide injunction. This bill was introduced by Rep. Daryll Issa (R-CA) on Feb. 24, passed in the House on April 9, and is under consideration in the Senate..

Clear Communication for Veterans Claims Act (HR 1039) – Introduced on Feb. 6 by Rep. Tom Barrett (R-MI), this bill would direct the Veterans Affairs (VA) to partner with an outside communications agency to make benefits communications more concise and easier for veterans to understand. The bill passed in the House on April 7 and is currently under consideration in the Senate.

Vietnam Veterans Liver Fluke Cancer Study Act (HR 586) – The purpose of this bipartisan bill is to authorize the VA to study and report on the prevalence of cholangiocarcinoma in veterans who served in the areas of conflict during the Vietnam War, including South Vietnam, North Vietnam and surrounding areas like Laos and Cambodia. The study would include identifying the rate of incidence of cholangiocarcinoma from the beginning of the Vietnam era to the date of enactment of this act. The bill was introduced by Rep. Nicolas LaLota (R-NY) on Jan. 21, passed in the House on April 7 and currently lies with the Senate.

Strategic Roth IRA Conversions: Maximizing Retirement Income While Minimizing Taxes

Strategic Roth IRA ConversionsFor many high-income earners and those approaching retirement, a Roth IRA conversion represents a strategic financial move that can significantly impact long-term wealth preservation. This approach allows you to restructure your retirement savings in a way that could potentially reduce your overall tax burden while creating more flexibility in your golden years.

Understanding Roth IRA Conversions

A Roth IRA conversion is when you transfer funds from traditional tax-deferred retirement accounts – such as a 401(k) or Traditional IRA – into a Roth IRA. While this transaction triggers an immediate tax obligation on the converted amount, it eliminates future taxation on both the principal and all investment growth, provided you follow IRS guidelines. The IRS website offers comprehensive information on the specifics of this process.

The primary advantage lies in strategic tax planning: paying taxes now at a potentially lower rate than you might face in the future.

Traditional vs. Roth: Understanding the Tax Timing Difference

When saving for retirement, the choice between traditional and Roth accounts fundamentally comes down to tax timing:

Traditional 401(k): Contributions reduce your current taxable income, increasing your take-home pay today. However, all withdrawals in retirement will be subject to ordinary income taxes, potentially at higher future rates.

Roth 401(k): Contributions are made with after-tax dollars, reducing your current take-home pay. The significant benefit comes later: tax-free withdrawals throughout retirement.

To illustrate, consider a $10,000 contribution while in the 24 percent federal tax bracket:

With a traditional 401(k), your take-home pay only decreases by $7,600 because you save $2,400 in immediate taxes.

With a Roth 401(k), your take-home pay decreases by the full $10,000 as you’re paying taxes upfront.

While traditional accounts offer immediate tax relief, Roth accounts provide tax-free income during retirement and important flexibility that extends beyond just avoiding income taxes.

The IRMAA Factor: A Hidden Retirement Expense

One often overlooked aspect of retirement planning is IRMAA – Income-Related Monthly Adjustment Amount. This Medicare surcharge applies to higher-income retirees, increasing their Medicare Part B and Part D premiums substantially.

For 2025, married couples filing jointly with income exceeding $206,000 could face premium increases of hundreds of dollars monthly. By strategically converting traditional retirement funds to Roth accounts before retirement, you can potentially keep your future taxable income below IRMAA thresholds, avoiding these additional healthcare costs entirely.

The Long-Term Impact: Required Minimum Distributions

Without implementing Roth conversions, retirement accounts can accumulate substantially larger taxable balances. By age 75, Required Minimum Distributions (RMDs) from traditional accounts can be three times higher than for those who gradually converted assets to Roth accounts.

These larger RMDs can create cascading financial challenges:

  • Pushing income above Medicare IRMAA thresholds
  • Significantly increasing Medicare premiums by thousands annually
  • Creating higher tax burdens for surviving spouses who must file as single taxpayers

Early Roth conversions – performed strategically during years with stable tax rates – can dramatically reduce future taxable income while creating greater financial flexibility throughout retirement.

Legacy Planning Benefits

Roth IRAs offer substantial advantages for estate planning. The accounts pass tax-free to heirs (provided the five-year holding requirement is met). For surviving spouses, Roth IRAs provide financial security without RMD concerns. When both spouses have passed, beneficiaries inherit completely tax-free income.

Is a Roth Conversion Right for You?

While powerful, Roth conversions aren’t universally beneficial. Consider this strategy if:

  • You anticipate higher tax rates in your future
  • You have several years before RMDs begin (typically at age 73)
  • You have sufficient savings to cover the conversion taxes without depleting the retirement accounts themselves.
  • You want to minimize potential IRMAA surcharges or tax implications for a surviving spouse.

Conversions tend to be most advantageous when you can maintain a reasonable tax bracket (24 percent or lower) during the conversion process.

Conclusion

When approaching Roth conversions thoughtfully and as part of a comprehensive retirement strategy, you can potentially create more tax-efficient income streams, avoid Medicare premium surcharges, and leave a more valuable legacy for your loved ones.

Financial Implications of Marriage

Financial Implications of MarriageMarriage isn’t just about two people who fall in love and choose to spend the rest of their lives together. It is also a contract. And while that contract might not be forever binding, marriage does come with certain financial and familial obligations regardless of whether the couple stays married or not.

That is why it is critical for couples to discuss their finances and goals early in the game. In fact, the best time to begin this conversation is actually before they begin making wedding plans. That’s because weddings can be very expensive. If the couple bears this expense, they will remove funds from their future plans and opportunities, which they should consider carefully before designing a wedding budget.

However, many times the parents of a couple will pay for the wedding. In this scenario, the newlyweds should consider how the cost of an expensive wedding would impact the paying party’s long-term financial situation. This is important because bankrupt parents could lead to a potential live-in caregiving situation once they are too old to take care of themselves. That’s quite a trade-off for a $100,000 wedding.

Takeaway: Regardless of who pays for the wedding, moderation is perhaps both prudent and considerate.

Partners also should share information about their earnings, assets, debts, and credit reports before getting married. They should discuss their career goals, preferences for children, type of housing, living location(s), and any big-ticket dreams, such as an expensive vacation or starting their own business. Together, the couple should consider each other’s goals and develop a plan to achieve those goals given their combined financial situation.

Takeaway: Note that while each spouse retains their own credit score and liability for debts prior to the marriage, joint debts acquired during the marriage are recorded on both credit reports.

Once married, couples often assume respective responsibilities, such as household earner and bill payer, while the other is a homemaker and primary child caregiver. From a financial perspective, this is not wise. It’s better for the marriage when each spouse takes turns managing finances, including paying bills, learning about investing and working with a financial advisor if they have one, being on all the joint accounts (home deed, insurance policies, etc.) and even each having their own retirement account (e.g., IRA, employer-sponsored retirement plan).

Takeaway: A collaborative approach to finances enables transparency so each spouse is aware of the other’s spending habits and bill-paying discipline.

The relationship tends to have more balance if each spouse has their own money, even if they do not work outside the home. If both spouses work, they could each have a checking account for their own personal expenses as well as a joint account used to pay for communal expenses like rent/mortgage, utilities, food, and upkeep.

Takeaway: A higher-earning spouse may contribute to a lower/no-earning spouse’s Roth IRA so that person has income to manage as they see fit.

Shared finances among married couples do offer certain benefits, such as lower costs for housing, health, long-term care, and auto insurance premiums. With particular regard to health insurance, consider if one spouse should join the other’s plan and how that might impact premiums, deductibles, and out-of-pocket expenses.

Takeaway: Find out if either spouses’ employer offers an incentive for declining coverage. This bonus income provides a good reason to join the other spouse’s plan.

Couples also have the option to compare the advantages of filing joint or separate tax returns, which may be impacted by one partner’s medical expenses or student loan debt. Also, be aware that no matter what time of year you have your wedding, as long as you are married as of Dec. 31, the IRS considers you married for the whole year for tax-filing purposes.

Takeaway: If one spouse is on an income-based student loan debt repayment plan, be aware that filing jointly with two incomes may result in higher payments than if they file separately.

Right after the wedding, there are several actions most couples should take. For example, report any name changes to the Social Security Administration; update any address changes with the Postal Service, employers, and the IRS; and supply your employers with a new W-4 withholding form.

Takeaway: If you’re taking an extended honeymoon, you might want to complete some of these tasks before your wedding day.

7 Ways to Teach Your Kids to Save

7 Ways to Teach Your Kids to SaveOf all the things you teach your kids when they’re young, saving money just might be one of the most important. Teaching them to delay gratification could help them avoid unnecessary spending and help them learn to value controlling their money. Here are some tips you can use to educate them about this crucial life skill.

Discuss Wants Versus Needs

Often, when your child says, “I need this” he really means “I want this.” Should you hear this, think of it as an opportunity to help him understand the difference between the two. You might explain that a need includes food, shelter, and clothing, while a want is an extra like candy, video games, or the latest pair of sneakers. You can even quiz children at home by pointing out things and asking them if they are needs or wants. This tool can work wonders.

Allow Your Kids to Earn Money

Whether it’s raking leaves or cleaning the house, chores are one of the best ways to teach young ones both the value of work and the value of money – and saving it.

Create Savings Goals

Telling kids that saving money is important might fall on deaf ears. That’s why helping them decide on a goal to work toward is a great way to demonstrate how saving works. It can be a bike, a phone – anything that they want. Helping them track their money can build motivation to continue their chores, with the pot at the end of the rainbow in sight.

Set Up a Savings Place

For younger kids, a piggy bank or mason jar is perfect. For older kids, a savings account or debit cards are smart ideas. To get a feel for what’s out there, here’s a list of the best high-yield savings accounts. If a debit card works better for you, check out FamZoo, Greenlight, or gohenry. All of these apps will even notify you when a purchase is made!

Offer Incentives

Let’s say your child wants to buy a $400 tablet. Offer to match a percentage of what they’ve saved. Or you can offer a $50 bonus when they reach a milestone number, like $200. When they know this up front, there’ll be no stopping them.

Become Their Creditor

If your kid really, really wants something and is too impatient to wait, lend them the money and charge them interest. This way, they learn a valuable lesson: Saving means delaying gratification for a longer amount of time, but if you wait, the item you want to buy will end up costing less.

Let Them Make Mistakes

Putting your kids in charge of their money allows them to make mistakes and learn from them. While you might want to take control and prevent a costly mistake, it might be better to use the error as a teachable moment.

The takeaway from all these saving tips is teaching kids to live within their means. In our day and age, when prices keep going up, it’s one of the best gifts you can give them.

Sources

10 Tips to Teach Your Child to Save Money

As Tax Season Opens, We Must Stay Alert to Rising Scam Threats

IRS Scam Threats, IRS IRS Scams As tax filing season begins, scammers are ramping up efforts to steal taxpayers’ personal information through increasingly sophisticated schemes. Below, we discuss the latest scam, what to look out for in general, and what to do if you suspect something malicious.

New Scam of the Season

The U.S. Treasury Inspector General for Tax Administration (TIGTA) recently issued an alert about a prevalent scam involving Economic Impact Payments.

In this scheme, taxpayers receive texts claiming they’re eligible for a $1,400 Economic Impact Payment, requesting personal information and bank details for deposit. While the IRS is indeed processing some legitimate Recovery Rebate Credit payments from 2021 tax returns, they will never request personal information via text or social media. These legitimate payments will be automatically distributed by late January 2025, either through direct deposit or paper check, with official notification letters sent separately.

Detecting Scam in General

The cybersecurity firm Guardio reports a 77 percent increase in IRS-related spam messages, highlighting how scammers exploit taxpayers’ fears of making mistakes on their returns. Common manipulation tactics include urgent messages claiming:

  • Tax return errors requiring immediate action to avoid penalties
  • Unexpected tax refund eligibility requiring verification
  • Account flags demanding immediate information verification to prevent legal action

These fraudulent messages typically contain malicious links designed to steal sensitive information like Social Security numbers, banking details, and payment credentials. They often masquerade as official IRS forms or legitimate tax advisory companies.

Key Warning Signs of Tax Scams:

  • Requests for sensitive personal or financial information
  • Links to suspicious websites (legitimate government sites end in .gov)
  • Misspellings, grammatical errors, or inconsistent formatting
  • Fuzzy or distorted official logos
  • Initial contact via email, phone, text, or social media instead of postal mail

What to Do if You Receive a Suspicious Message

If you receive a suspicious message, don’t engage with it. Never click links or provide personal information to unknown sources. Report potential fraud by forwarding the message to phishing@irs.gov or filing a report with TIGTA. If you’re uncertain about correspondence claiming to be from the IRS, verify it by calling 800-829-1040 or visiting IRS.gov. Your online IRS account will display any official notices mailed to you.

If you’ve accidentally engaged with a scam:

  1. Immediately close any suspicious website tabs
  2. Change passwords for potentially compromised accounts
  3. Contact your bank or credit card provider to monitor for fraudulent activity
  4. Report the incident to the IRS and file an identity theft report with the Federal Trade Commission
  5. Consider notifying local law enforcement

When searching for tax-related information online, only use official sources like IRS.gov or the official IRS app. Be wary of sponsored ads and search results that might lead to fraudulent websites. Consider bookmarking official sites for quick, secure access.

Conclusion

Remember, the IRS will never initiate contact through email, text, or social media. When in doubt, assume it’s a scam and verify through official channels. Keeping your personal information secure requires constant vigilance, especially during tax season when scammers are most active.

 

Understanding IRS Forms 1099 for Lawsuit Settlements

Understanding IRS Forms 1099 for Lawsuit SettlementsThe Basics of Tax Reporting in Legal Settlements

When you collect a settlement for a lawsuit, you’ll likely also receive a Form 1099 from the IRS. This form serves as a reminder to pay taxes on your settlement; copies are sent to both you and the IRS. These forms match reported income for income tax purposes, making them critical for accurate tax filing.

In lawsuit contexts, two common forms 1099 are issued:

  • Form 1099-MISC: This version can include various types of settlement payments, often termed other income
  • Form 1099-NEC: Used specifically for non-employee compensation

Understanding the Difference Between Forms

The distinction between these forms is significant. A Form 1099-NEC informs the IRS that taxes for self-employment should be collected in addition to income taxes. This form is appropriate if you were a non-employee contractor suing for unpaid compensation.

However, in cases like wrongful termination or emotional distress claims, you’ll want the non-wage portion reported on Form 1099-MISC instead of Form 1099-NEC to avoid unnecessary self-employment taxes. Pay close attention because filing an incorrect form can be difficult to correct later.

Double Reporting: When 100% Becomes 200%

A surprising aspect of legal settlement tax reporting is that defendants often issue forms 1099 totaling 200% of the actual settlement amount.

  • The plaintiff receives a 1099 for 100% of the settlement
  • The plaintiff’s attorney receives a 1099 for 100% of the settlement

This duplicate reporting occurs because the IRS requires defendants to report the full settlement amount to both parties when payments are made jointly or through the attorney’s trust account. This is done because the defendant may not be aware of how the money is ultimately divided between client and attorney.

Legal Fees and Tax Treatment

The U.S. Supreme Court decided in the case Commissioner v. Banks that gross income for a plaintiff typically includes the part of the settlement paid to their attorney as legal fees. This means you might be taxed on money you never actually received.

To address this issue, plaintiffs should understand when they can deduct legal fees:

  • Plaintiffs in employment cases, civil rights cases, and most whistleblower cases qualify for deductions
  • Legal fees must typically be paid in the same year as the settlement (as in contingent fee arrangements)
  • Outside these case types, deducting legal fees becomes much more difficult
  • Even in personal physical injury cases, complications arise if punitive damages or interest are awarded

Tax Planning Before Settlement

It’s best to deal with tax reporting before finalizing your settlement agreement. Consider these strategies:

  1. Include specific provisions about which forms 1099 are to be issued
  2. Specify the recipients, amounts, and even which boxes should be completed on the forms
  3. For physical injury cases that should be tax-free, get written commitments about tax reporting
  4. Consider separate checks to lawyer and client when appropriate (though this may not fully prevent attribution of legal fees to plaintiffs)

Without express provisions in your settlement agreement regarding tax forms, correcting any errors later becomes extremely difficult.

Tax-Free Settlements

Some settlements can be totally free of taxation, such as cases where compensation is granted as damages for physical injury. In typical injury cases like auto accidents, damages should be tax-free, but only if there are no punitive damages and no interest as part of the settlement.

Even when you believe your settlement qualifies as tax-free, securing written confirmation about tax reporting in your settlement agreement provides important protection.

Conclusion

Understanding the tax implications of your lawsuit settlement before signing an agreement can save significant headaches and potentially reduce your tax burden. Consulting with a tax professional who specializes in legal settlements is advisable for complex cases.