gas prices
Estimated Tax Payments Are Due April 18
Under our country’s “pay as you go” tax system, Uncle Sam wants to collect his cut periodically throughout the year as you earn income. In most cases, the required taxes are paid through paycheck withholding (your employer sends in the payments). But if you’re self-employed or don’t have taxes withheld from other sources of taxable income (e.g., interest, dividends or capital gains), then quarterly estimated tax payments to the IRS are typically required.
- SEE MORE Most-Overlooked Tax Deductions and Credits for the Self-Employed
Estimate tax payments for the first quarter of 2022 are due April 18. That’s for income earned from January 1 to March 31. And if the government doesn’t get paid on time, you could be looking at a stiff IRS penalty â so make sure you get your payment in on time.
If you didn’t have any taxable income in January, February and March, you don’t have to make an estimated tax payment on April 18. Just make sure you make an estimated payment later in the year for any quarter that you do have income that wasn’t subject to withholding.
If at least two-thirds of your gross income is from farming or fishing, you don’t have to make a payment on April 18, either. Instead, you can make just one estimated tax payment for the 2022 tax year by January 17, 2023. Or, if you file your 2022 tax return by March 1, 2023, and pay all the tax you owe at that time, you don’t even need to make a payment next January.
Victims of certain natural disasters don’t have to make estimated tax payments on April 18, either. Instead, their due date is extended to either May 16 or June 15, depending on the applicable disaster (see our 2022 Tax Calendar for more information).
Estimated Taxes Due Date for Maine and Massachusetts Residents
The due date for the first quarter estimated tax payment is normally due on April 15 each year. However, because the Emancipation Day holiday in Washington, D.C., falls on April 15 this year, federal law requires that the due date be moved to the next business day â which is April 18.
- SEE MORE 10 Tax Deadlines for April 18 (It’s Not Just the Due Date for Your Tax Return)
For most people, that’s also the case for the deadline to file your 2021 federal income tax return. It was moved from April 15 to April 18 because of Emancipation Day. But for people who live in Maine or Massachusetts, the federal tax return filing deadline isn’t until April 19. That’s because April 18 is a state holiday â Patriot’s Day â in those two states. However, the first quarter estimated tax payment date is not moved to April 19 for residents of Maine and Massachusetts. The estimated payment is due on April 18 for them, too.
Calculating and Paying Your Estimated Taxes
Use Form 1040-ES to calculate and pay your estimated taxes. There’s a worksheet in the form instructions that will walk you through the calculation. If the estimate turns out to be either too high or too low, you can make adjustments when you send another quarterly payment for the 2022 tax year.
- SEE MORE Pros and Cons of Getting a Tax Extension
The various payment methods are described in the instructions for the form. They include payment by electronic means as well as by check, cash, or money order.
Penalties for Failure to Pay Estimated Tax
If you owe at least $1,000 in tax for the year, you could be hit with a penalty if you don’t pay enough estimated tax throughout the year. However, the penalty won’t apply if the combined amount of your withholding and estimated tax payments for the 2022 tax year equal at least 90% of your 2022 tax liability, or 100% of the tax shown on your 2021 tax return (110% if your 2021 federal adjusted gross income was more than $150,000).
State Estimated Tax Payments
Also, unless you live in a state with no income tax, you might owe state estimated taxes, too. Check with the state tax agency where you live for state estimate tax payment due dates.
- SEE MORE Will a Gas Tax Holiday or Suspension Lower Gas Prices Near You?
Which of the 3 Financial Phases Are You In?
Every year we see the same months, holidays and seasons â itâs all pretty predictable. While you may not know when a winter storm will hit, you can usually count on chillier weather come winter. The same can be said for financial phases. While not always easy to predict, you can find patterns if you look for them.
But how does knowing a financial phase pattern help? When it comes to financial planning, the answer is a lot.
What are financial phases?
There is a natural ebb and flow to money habits throughout the year. For example, most of us tend to spend more around the holidays because of gifts and parties. When January hits, people take a look at their budget, set goals for the year and attempt a financial diet. The same can happen in the summer as people splash out on vacations or enjoy a plethora of activities with their families.
- SEE MORE Financial Advice for Millionaires: 5 Strategies for 2022
Patterns can also occur throughout, showing up in spending and savings habits. Recent college grads probably live on a tight budget with less savings, whereas an established professional might be more focused on long-term goals, such as buying a home or saving for retirement.
Is it the same for everyone?
While the year can offer similar periods of spending and saving, each individual has their own plans, priorities and habits that make them unique. If you enjoy saving, maybe you take vacations during shoulder seasons to take advantage of lower hotel and airfare prices or you sign up for a credit card (of course, paying it off every month) that supports your travel habit â think free rooms, reduced flights, etc. Or if you always go big on your birthday each year, you create a plan to automatically save money every month into a âbirthday fundâ so when the time comes each year youâre ready.
The same is true when looking at life patterns or saving and investing. If you land a well-paid job out of college, perhaps you spend more lavishly than the average early 20-something would. Or someone who joined the FIRE movement would contribute to their retirement and save differently since they have a different goal. Itâs important to understand that each person has their own goals and priorities, and sometimes life gets in the way with unexpected obstacles.
How does knowing this help?
Knowing the patterns can help you plan for the future. If flying home for the holidays with a Santa sack of gifts is your pride and joy, you can plan ahead by only eating in or cutting back on entertainment a few months in advance. When you know something happens annually that you want to enjoy to the fullest and not worry about your cash flow, you can budget it in fun ways beforehand.
For example, if you love having happy hour with friends every week, maybe offer to host it at your house for one month. Rotate who brings the drinks and apps each week, and what you spend in one month can easily be equal to what you spend in one week out on the town.
Taking the time to write down important things to you, both annually and in the bigger picture, is a great starting point. If some of these items have regularly occurring dates, like holidays or birthdays, you can build specific timelines around when you need to focus on saving.
Sometimes there are unplanned events, like weddings or concerts, but you can find ways to save all year round so you have a sturdy fun fund waiting for you when you need it. (Of course, you should only build a fun fund after you have a solid emergency savings fund.)
What phase am I in?
The economic life phase youâre in isnât necessarily tied to your age, as many people assume. Weâve uncovered that the phases actually better reflect where you are in your life, which is split into three different phases: (1) build and grow, (2) transition (3) and finally, distribute and deploy. For example, a 35-year-old in the FIRE movement and a 68-year-old late saver for retirement can both be focused on their transition into retirement.
Assessing your stage and adjusting your plan should be an ongoing process, but you can only know the phase you are in after you articulate your goals.
Financial phase No. 1: Build and grow
During this phase, decide on your long-term goals and plan for them. Is saving for retirement a top priority? Work toward maximizing your contributions to your 401(k) plan. (A tip I learned early on: When you receive raises, save more and live off of the amount you were already comfortable with.) Or, is buying a home a priority? Then figure out a savings plan for a deposit, mortgage and other expenses that is realistic and build on it.
- SEE MORE Why Are Gas Prices So High If the U.S. Is Energy Independent?
The build and grow phase is also about protecting your future earnings. This is a good time to look at life insurance and create an estate plan for you and your family. Iâm currently in this phase and wanted to ensure that (as scary as it is to think about!) my husband and boys would be OK if something were to happen to me. We bought term life insurance for each of us and created an estate plan to dictate what would happen if something were to happen to me or my husband. This gave us both peace of mind.
Financial phase No. 2: Transition
During this phase, itâs important to understand what youâve built during your years of saving. Itâs also the time to figure out how you want to live once you decide to leave full-time employment. Working with a financial adviser to do a financial goal assessment is important to project how well youâve saved.
If you havenât done a budget yet, itâs critical to understand your spending so you know what you will need to live off of.
During this phase, itâs important to factor in possible moves â do you want to stay in your home, downsize or even upgrade? Are there any plans to buy a second home to travel to since youâll have more time? These are factors to take into account.Â
Itâs also critical to assess how much risk youâre taking in your portfolio â this is the time to really have a good plan for protecting your assets. If something big happens in the market, it would be terrible to lose a large amount of money and delay your plans to make this transition.Â
Financial phase No. 3: Distribute and deploy
In this phase, understanding where and how you are going to pull from your assets is crucial. There are important strategies to think about and tax consequences to consider.Â
If you are well-funded and have excess assets, thinking about how you are going to leave your legacy is also important. There are many ways to give, including charities, foundations and personal gifts, and these can be structured to be given while you are alive or after you pass. The beauty of it is, itâs all your choice as long as you have a good plan.
No matter what financial phase you are in, planning and preparing for the next step will always yield positive results. The better you articulate your goals, for both the short and long term, the more likely it becomes you can achieve them.
- SEE MORE The Financial Implications of Fluffy: Costs of Becoming a Pet Owner
Use These Grocery Savings Tips to Fight Rising Costs
Itâs not your imagination. Groceries are getting more expensive. Here are some tips for getting more bang for your buck at the grocery store.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Are the Housing Bears Being Too Rational?
Now that 30-year fixed mortgage rates are flirting with 5%, thereâs been quite the uptick in housing bubble chatter. The basic reasoning is because interest rates are higher, the balloon that is inflated home prices must certainly pop. On the surface, itâs a seemingly logical argument. The financing cost has gone up substantially, so the… Read More »Are the Housing Bears Being Too Rational?
The post Are the Housing Bears Being Too Rational? appeared first on The Truth About Mortgage.
Rideshare Drivers Are Getting a Little Help With Soaring Gas Prices
When it comes to gas prices, weâre in uncharted territory. According to AAA, the average price of gas in the United States reached $4.33 on March 11 â the highest in history. GasBuddy says the weekly rise of 49 cents per gallon in early March was the second highest week-to-week increase on record, second only [â¦]
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
Will a Gas Tax Holiday Lower Gas Prices Near You?
Gas prices are going through the roof. Right now, the average price for a gallon of regular unleaded gas in the U.S. is well over $4 per gallon ($4.27 per gallon on March 18). And that’s a national average â prices are much higher in some parts of the country (averaging well over $5 per gallon in California). Plus, there’s no sign of a retreat any time soon, so who knows how high gas prices will go. The Biden administration is looking for a way to help reduce the pain at the pump â but the options are limited. Encouraging greater oil production and tapping the nation’s Strategic Petroleum Reserve are certainly on the table, but what about a gas tax holiday?
- SEE MORE Gas-Saving Tips That Actually Work
Temporarily suspending the 18.4¢ per gallon federal gas tax would certainly put a dent in higher gas prices. Even though it wouldn’t come close to wiping out the entire price increase we’ve experienced lately, it’s one tool at the federal government’s disposal. In fact, a bill has been introduced in Congress that would reduce the federal gas tax to zero for the rest of the year. And while the Biden administration is concentrating more on increasing the global oil supply, it hasn’t ruled out the possibility of a fuel tax holiday.
State gas tax holidays are also possible. In fact, they could help reduce gas prices even more because state gas taxes are higher than the federal tax in all but one state (Alaska). A number of governors and state lawmakers from around the country are publicly supporting fuel tax holidays in their state. And leaders in at least one state have already agreed to a temporary suspension of their fuel tax and are working on legislation to finalize the deal. Expect more state governors and legislators to follow their lead.
Will the Federal Gas Tax be Suspended?
At this point, a federal gas tax holiday seems unlikely. First, it wouldn’t save people all that much money. For example, a person who drives 12,000 miles a year in a car that averages 25 miles per gallon would only save about $70 if the federal gas tax was suspended for the rest of 2022. But the overall loss of tax revenue would be high â estimated to be about $20 billion. That’s money that wouldn’t be available for road repairs and other needed infrastructure projects. The cost-benefit analysis doesn’t favor a gas tax holiday in many people’s minds.
- SEE MORE What the Russia Oil Ban Means for Stocks
There’s also some concern that the oil companies wouldn’t pass along all the savings to consumers if the federal gas tax was suspended. The current bill in Congress addresses this concern by stating that the “policy of Congress” is that “consumers immediately receive the benefit of the reduction in taxes” and that “transportation motor fuels producers and other dealers take such actions as necessary to reduce transportation motor fuels prices to reflect such reduction.” However, the policy has no teeth. There’s only a weak enforcement clause that permits the U.S. Treasury Department to “use all applicable authorities to ensure that the benefit of the reduction in taxesâ¦is received by consumers.” There are no specific fines or other penalties for failing to abide by the law.
Finally, because of the concerns noted above, there isn’t enough support on Capitol Hill to suspend the federal gas tax. Some Congressional Democrats are certainly interested in the idea. Sen. Chris Murphy (D-Conn.) hopes there’s “renewed interest on measures like a gas tax holiday, given the fact that energy prices are likely to head up for the foreseeable future in part because of the restrictions on Russian oil.” But there doesn’t appear to be much support, if any, among Republicans on the Hill. There were no Republican co-sponsors of the federal gas tax holiday bill currently before Congress (and, frankly, only a few Democrats signed on). When asked if he supports a gas tax holiday, Sen. John Kennedy (R-La.) called it a “gimmick” that’s “not going to make any difference.” He also said that Senate Republicans “haven’t talked a lot about it.” In a letter to President Biden, Sen. Mark Lankford (R-Okla.) said a gasoline tax holiday “would do precious little in the short run and nothing in the long run.” Without some bipartisan support, a gas tax holiday cannot get through the Senate.
All of this could change if gas prices get high enough or drag on for an extended period of time. But at present, the odds of seeing a federal fuel tax holiday are slim.
State Gas Tax Holidays are More Likely
You’re much more likely to see your state gas tax suspended. One reason being that many states can afford a tax cut right now because they have budget surpluses, due to recent economic growth and/or federal pandemic-relief funds.
- SEE MORE 10 States with the Highest Gas Taxes
Maryland was the first state in the country to suspend its gas tax this year â but only by a nose. Gov. Larry Hogan (R) signed a bill on March 18 that authorizes a 30-day gas tax holiday, which will save Marylanders about 36¢ per gallon at the pump for gasoline (approximately 37¢ per gallon for diesel). Later the same day, Georgia Gov. Brian Kemp (R) put his name on a bill that will suspend his state’s motor fuel excise tax until the end of May (the prepaid local sales tax is not suspended). The Georgia tax is about 29¢ per gallon for gasoline (just under 33¢ per gallon for diesel).
Other governors and lawmakers from around the country have also suggested a gas tax holiday or other fuel tax relief measures for their state. States where gas tax relief of one form or another is currently being pushed by the governor or considered in the legislature include:
- Alaska â Gov. Mike Dunleavy (R) asked state legislators to suspend the state’s gas tax until the end of June 2023.
- California â Gov. Gavin Newsom (D) has suggested delaying an upcoming gas tax increase or establishing a gas tax rebate, while a bill introduced in the legislature would suspend the gas tax for six months. (Note: The California gas tax holiday bill is stalled. Republican lawmakers recently failed to force a vote on the bill to move it forward.)
- Colorado â Gov. Jared Polis (D) proposed delaying a gas tax increase set to take effect in July.
- Connecticut â Gov. Ned Lamont (D) recommended suspending the 25¢ per gallon excise tax on gasoline through June 30 (the separate 10.75¢ per gallon petroleum products gross earnings tax would still apply).
- Florida â A budget bill passed by the state legislature includes a one-month fuel tax holiday in October. Gov. Ron DeSantis (R) earlier proposed a five-month suspension.
- Idaho â A bill before the state legislature would reduce the state’s gas tax for two years.
- Illinois â Gov. J.B. Pritzker (D) wants to delay the annual gas tax increase, while some state legislators would rather cap the state’s gas tax at 18¢ per gallon.
- Maine â A bill has been introduced in the legislature to suspend the state’s gas tax until the end of the year.
- Michigan â The state legislature passed a bill that would impose a six-month suspension of the gas tax (although it wouldn’t start until next year). Gov. Gretchen Whitmer (D) is expected to veto the bill.
- Minnesota â A group of lawmakers have proposed a gas tax holiday from Memorial Day to Labor Day.
- Mississippi â A six-month gas tax holiday has been added to a larger tax bill that’s working it’s way through the state legislature.
- Missouri â Proposed legislation that would allow a six-month fuel tax holiday has been introduced in the state legislature.
- New Jersey â A bill introduced in the state legislature would provide an immediate $250 or $500 tax rebate to help cover the higher cost of gas and other items.
- New York â Multiple bills are being considered by the state legislature that would suspend the gas tax for different time periods (e.g., for a year, through 2022, or until September). Gov. Kathy Hochul (D) is lukewarm about the idea. Another proposal before the state legislature would cap the state gas tax at 25¢ per gallon.
- Ohio â A bill before the state legislature would reduce the gas tax for five years, but Gov. Mike DeWine (R) is skeptical.
- Pennsylvania â Bills to temporarily cut the gas tax or suspend it through the end of the year have been introduced in the state legislature.
- Rhode Island â A bill before the state legislature would suspend the state’s gas tax for the rest of the year.
- Virginia â Gov. Glenn Youngkin (R) is pushing for a three-month gas tax holiday â May to July â and then phase the state’s gas tax back in slowly in August and September.
It’s hard to say if any other states will ultimately enact a gas tax holiday or other gas tax relief. From the list above, Florida is very close to finalizing a deal, but it’s too difficult to predict what other states will do. The situation is also very fluid across the country, so don’t be surprised if the fuel tax holiday movement gains traction in other states as well. This is especially true if gas prices continue to remain high, which is expected.
Sean Lengell, Kiplinger Associate Editor and Congressional Reporter, contributed to this article.
- SEE MORE 10 States With the Lowest Gas Taxes
Maryland Suspends Gas Tax to Offset Inflation at the Pump
As gas prices surge across the country, the federal government and various states are considering gas tax holidays â that is, temporarily suspending gas taxes to help bring down the price of fuel for consumers. On March 18, Maryland became the first state in the country to actually enact a gas tax holiday this year, which takes effect immediately and will last for 30 days.
- SEE MORE Gas-Saving Tips That Actually Work
According to AAA, the average price for a gallon of regular unleaded gas in Maryland on the first day of the state’s gas tax holiday was about $4.17 per gallon. Suspending the state’s fuel taxes will save Marylanders 36.1¢ per gallon on purchases of gasoline, and the 36.85¢ per gallon for diesel fuel.
Before signing the bill, Gov. Larry Hogan (R) noted that, “as Marylanders face the impact of surging inflation, with the average price of gas rapidly rising, this bipartisan action will provide some relief from the pain at the pump.” But there are questions across the country concerning exactly how much relief gas tax holidays actually provide, and whether the level of savings per person justify the overall loss of revenue.
- SEE MORE Gas Prices Around the World
A Marylander who drives 12,000 miles a year in a car that averages 25 miles per gallon will save a less than $15 in gasoline taxes during the 30-day suspension. On the other hand, according to the governor’s office, the suspension is expected to cost the state close to $100 million, which will be covered indirectly by the state’s record budget surplus.
The governor is also backing legislation that would suspend automatic increases in the state’s gas tax. So, more gas tax relief may be on the way for Marylanders.
Georgia also enacted a gas tax holiday on March 18. It will last until the end of May. Whether gas-tax relief measures to offset inflation at the pump move forward in other states remains to be seen. Florida may be the next state to enact a gas tax holiday. The state legislature passed a bill that would suspend the state’s fuel tax for 30 days â but not until October. On the federal level, efforts to suspend the national 18.4¢ per gallon gas tax appear to be stalled.
- SEE MORE 10 States with the Highest Gas Taxes
The Fallout From Ukraine
You donât need us to tell you that Russiaâs invasion of Ukraineâand Western sanctions on Russiaâare playing havoc with your finances. Youâre reminded of the pain afflicting your pocketbook every time you fill your gas tank. But the impact doesnât end there. Americans are spending more at the supermarket, mortgage rates are higher, and investors have experienced big losses in their portfolios
Sanctions on Russia will exacerbate already high inflation, which reached 7.9% in February. Russiaâs main contributions to the world economy are commoditiesâoil, gas, wheat, nickel, aluminum, palladium. To the extent that sanctions cut off those exports, prices will climb still higher. For the global economy, this is the biggest hit since the onset of COVID-19. How bad will it get?
The Hit to Household Budgets
The average price of a gallon of regular gas breached $4 in early March, and gas prices were quickly heading higher. To add even more price pressure, on March 8, President Biden said he was banning all imports of oil and natural gas from Russia. The United Kingdom also announced a ban on all Russian oil products by the end of the year. European Union officials unveiled a separate plan to cut Russian gas imports by about two-thirds this year. Replacing all those lost barrels of Russian oil and refined fuels probably canât be done, at least in the near term, because Russia is the worldâs third-largest oil producer after the U.S. and Saudi Arabia.
- SEE MORE Gas-Saving Tips That Actually Work
How high will the price at the pump go? No one knows for sure, but count on it rising further. Continued gains in crude oil and gasoline futures contracts will keep filtering through to the gas pump. Prices have surpassed AAAâs record average high of $4.11 per gallon, set in 2008âalthough to top the 2008 high in todayâs (inflation-adjusted) dollars, the national average price for regular unleaded would have to reach $5.25 per gallon. But if the conflict in Ukraine continues to worsen, and oil prices keep rising as a result of it, that figure could be in play this spring.Â
Some food prices have also spiked, and they will continue to. Russia and Ukraine together account for about 20% of global corn exports and 25% of wheat exports, as well as the vast majority of the worldâs sunflower oil. Russia is also a top supplier of fertilizer.
What the Ukraine War Means to Your Investments
Stocks have gone up and downâbut mostly downâsince the invasion. In late February, the broad stock market, as measured by the S&P 500 index, fell into correction territory (typically defined as a drop of 10% to up to 20%) for the first time since 2020, and by early March, as Vladimir Putinâs troops made greater incursions into Ukraine and captured nuclear facilities, the tech-heavy Nasdaq entered a bear marketâmore than 20% off its peak.
- SEE MORE What the Russia Oil Ban Means for Stocks
But stock investors would be wise to keep calm and carry on, market strategists say. History shows stocks usually take global saber-rattling events in stride. And a well-maintained portfolio should weather such storms over the long haul, especially if you remain patient while also taking advantage of the opportunities that the market offers.
Inflation Will Be Hard to Avoid
For the Federal Reserve, a tough job just got a lot tougher. Rising energy and agricultural prices exacerbate worries about inflationâa top-of-mind anxiety for Main Street, Wall Street and the Federal Reserve alike. The Fed needs to rein in already-high inflation, which would mean raising interest rates aggressively to counteract the inflationary effects of the Ukraine invasion. But the central bank might be loath to raise rates too quickly, especially during times of geopolitical turmoil, lest it choke off economic growth and push the U.S. into a recession. Kiplinger expects the Fed to lift rates, but more cautiously than it had intended. That raises the risk of even worse inflation in coming months.Â
Look for U.S. inflation to stay higher for longer than initially expected, ending the year at a still-high 6.5%. Food and energy will likely be the main culprits.
Why Are Gas Prices So High?
If you filled up at the pump lately, you probably experienced a bit of sticker shock. Gas prices are soaring across the country, and while most people assume this increase is due to the Russian invasion of Ukraine, the answer…
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