Planning for 2022 and Beyond

A new year provides many of us with the opportunity to try something different or reflect upon what we accomplished during the previous year, but it is also a great time to revisit our plans for the future. This could not be more relevant for my family as we have spent the past week mourning the loss of a loved one, while concurrently going through the painstaking process of executing a will, finding proper long-term care for a disabled surviving spouse, and carrying out final wishes for a family spread out all over the country.

And while this certainly is a difficult time, I cannot express how much easier it has been due to the basic estate planning conversations we coincidentally had earlier in 2021. Talking about the end of life’s journey is never fun; however, we were able to take care of a lot over the past few days because of these prior conversations, and with very little legal assistance.

I encourage you to take action soon to ensure that you have made appropriate preparations for your own death, as well as to encourage or assist those you care about to do the same. At the bare minimum, the following documents should be in place for each individual:

  • Advance Medical Directive – this allows a person to decide in advance who will make health care decisions for them if they become incapacitated and are unable to make their own decisions.
  • Durable Power of Attorney – in this document, the writer appoints an individual he/she trusts to make other legal decisions, primarily financial, on their behalf if they become incapacitated.
  • Last Will and Testament – this document provides key information and instructions regarding the distribution of assets, disposition of remains, and other final wishes on behalf of a deceased individual. It also can include instruction on who should be the guardian of any minor children of the individual who has died.
  • Beneficiary Designations – perhaps the simplest part of the estate planning process, setting up beneficiaries for life insurance policies, retirement accounts, etc. allows account owners to predetermine the distribution of those assets after their death, and also to avoid the probate process for those assets.

This is not meant to be an exhaustive list of things that need to be taken care of; however, having the above protections in place ahead of time will save your loved ones a lot of time, money, and stress when the unfortunate time of a loved one’s passing ultimately arrives. You can learn more by visiting the Iowa Legal Aid website, or by attending one of the many Iowa State University Extension and Outreach programs available for Aging and Caregiving. The Iowa Concern Hotline (800-447-1985) has an attorney on staff who can provide information on legal topics as well.

Ryan Stuart

Ryan is a Human Sciences Specialist in Family Wellbeing and an Accredited Financial Counselor®. He focuses on educating and empowering all Iowans to independently make positive financial decisions throughout their life course.

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The App Economy and Your Taxes

Like everything else, the pandemic also shifted how individuals earn income through various “side hustles.” Uber, Lyft, and other commonly used digital services took a temporary break during the shutdowns, while newer app-based options such as Robinhood (investing), Coinbase (cryptocurrency), and FanDuel (sports betting) – just to name a few – gained more and more attention. Much of that attention was focused on the ability to make money without ever leaving your couch; however, one little important detail is often left out – you will likely be responsible to pay taxes on some, or all, of that potential income. If you think you might be in that boat for 2021, then keep reading!

  • Investment and speculation apps have been significantly increasing in popularity, but the tax implications are among the least understood. The taxes are very similar whether you are dabbling in individual stocks, ETFs, or Bitcoin, with the big one being capital gains and losses. Other taxes may be due on investments that produce interest and dividends, or hold collectibles, real estate, and foreign property as the underlying asset. You may receive the proper tax forms if you use a more traditional brokerage company; however, you may be responsible for keeping track of your own cryptocurrency transactions.
  • Gambling and sports betting is not a new phenomenon; however, a recent Iowa law permitted the use of online sports betting apps without the need to visit a casino. This change increased sports betting across the state, but consumers may be unfamiliar with the tax consequences of betting on their favorite teams.

Always be sure to check with a tax professional, or contact your local VITA tax site, if you participate in the App Economy and are unsure about the tax implications!

Reminders: 1) If you have a sizable amount of income for which taxes are not withheld, you are supposed to pay quarterly installments to the IRS, and may face a penalty if you have not submitted enough tax payments throughout the year; and 2) For income earned from independent work, your earnings will be subject to self-employment tax as well as income tax.

Ryan Stuart

Ryan is a Human Sciences Specialist in Family Wellbeing and an Accredited Financial Counselor®. He focuses on educating and empowering all Iowans to independently make positive financial decisions throughout their life course.

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