Each Monday from 5:00-6:30 p.m. on NBC3 we answer your live questions in our "Ask the Experts" phone bank and online chat.
On March 28, our panel of Certified Financial Planners included:
Grace Ghezzi, Benefit Consulting Group
Ted Sarenski, Blue Ocean Strategic Capital
Sue Hansen, Hansen's Advisory Services
Among the questions we answered:
>What if you cannot pay taxes?
File your return on time, and remember a filing extension does not extend the time to pay your bill.
Getting your return in and making the biggest partial payment you can will save on interest and penalties. The Failure to File penalty is 5% a month on what you owe. By contrast, the Failure to Pay penalty is .5% per month.
In addition, interest will be charged on what's owed, and if you miss estimated payments, there will be another 3% over the short term interest rate.
Options:
a. Borrow money (relatives or friends, probably the 'cheapest' money source).
b. Credit cards. Three companies (Official Payments Corporation, 888-872-9829, Link2Gov Corporation, 888-729-1040, and RBS WorldPay, Inc 888-972-9829) are authorized service providers and will take credit card charges from either electronic or paper filers. Check the interest rates!
c. Installment agreement request. The IRS Form 9465, or online application, will set up your agreemnt with the IRS, and could include payroll deductions or direct debit. If you ask for installment payments, you can avoid the IRS starting collection processes against you, however there is a fee for the arrangement.
>What documents do you have to keep, for taxes?
You need to keep 7 years of tax returns and supporting documents (year-end statements, proofs of charitable deductions, W2 forms, etc)
Keep W-2 forms until you start Social Security, as proof of income.
IRA form 8606 and 5498 should be kept as proof of IRA/Roth contributions and deductions.
Keep final notices of loan payoffs.
Annually, you can throw out checking and credit card statements (keep year-end summaries!) as well as utility bills.
Keep paperwork/deeds on what you own (homes, cars, etc)
Keep 'life' records: birth, marriage and death certificates, divorce papers, military discharge records
>How to figure retirement income:
You can calculate how much you have, and how much interest it earns (three- or four % is a good rule of thumb), and if you could live on that interest. .
Remember you'll add in Social Security payments too.
Figure your 'livestyle' needs and see if the income and outgo are close...you can add to your savings now, if needed.
There are dozens of retirement calculators online, most for free--find one that's comfortable for you.
>The market and crises:
The Japan Disaster saw markets drop, but now they're up again, and that's a 'normal' trend: preoccupation with major news short-term, but then returning to see how companies are performing. The lesson for investors: don't panic and sell when stocks are dropping, chances are they'll recover quickly. However, if the fluctuations make you nervous, it's probably time to evaluate whether you want to be in such a risky place with your investments.
Click on the widget below to see the online discussion for Monday, March 28. You can also email your questions in advance to money@cnycentral.com.
