Liz Weston: Property proprietor considers paying taxes with bank card to earn rewards factors

4 mins read

Expensive Liz: I’m promoting a rental property that I’ve owned for a number of years. I do know I may do a 1031 trade, which might enable me to place off the tax invoice by investing in one other industrial property. However I simply need out. I’ll pay the capital good points tax and make investments the remainder of the proceeds. I’m contemplating paying the taxes by bank card and taking over the three% premium to get rewards factors provided by the cardboard issuer. Is that this a dumb thought, or does it have some benefit?

Reply: The businesses that course of federal tax funds have processing charges of just below 2%, not 3%. You’ll nonetheless wish to be sure you get extra worth out of your rewards than you pay in charges, and that’s not a given. In case your card affords just one.5% money again, for instance, charging your taxes doesn’t make a number of sense. However the math modifications if you will get greater than 2% in rewards, or if you happen to may use the cost that can assist you meet the minimal spending necessities for a brand new bank card with a beneficiant sign-up bonus.

For those who do cost your taxes, you’ll clearly wish to pay the stability in full earlier than incurring any curiosity.

Expensive Liz: I’m scripting this e mail on behalf of my 88-year-old dad. He wished to ask you this query: “My spouse handed away Jan. 7, 2020. In submitting my 1040 revenue tax for 2020, am I allowed to file as a married couple or required to file as a single particular person?”

Reply: Your dad can use “married submitting collectively” along with his deceased partner for the yr of her dying, assuming he didn’t remarry in that yr.

In case your dad claimed a number of qualifying dependents — a baby, stepchild or adopted little one — he would possibly be capable of file as a qualifying widower for the next two years so long as he paid greater than half the price of sustaining his residence and it was the primary residence of the dependent or dependents. Most individuals your dad’s age now not stay with their children or declare them as dependents on their tax returns. But when he did, this might protect the bigger customary deduction and different advantages of submitting collectively for one more couple of years.

Expensive Liz: I flip 70 in July. Will I want to attend to begin my Social Safety advantages till 2022 to obtain my full profit, or can I begin them in August 2021?

Reply: There’s no want to attend to say your advantages as soon as they max out at age 70. For those who did apply late, you may get a most of six months of retroactive advantages however no extra.

Liz Weston, licensed monetary planner, is a private finance columnist for NerdWallet. Questions could also be despatched to her at 3940 Laurel Canyon, No. 238, Studio Metropolis, CA 91604, or by utilizing the “Contact” kind at

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