The market had a three-day winning streak to finish up for both the week and the last three months. Next week, the Fed will receive a final round of monthly inflation numbers before their meeting. Analysts are expecting a 50 to 75-point increase in interest rates later this month. Every “point” is one-one hundredths of a percent. So a 50 point increase is one-half of a percent.
September 15th is the deadline to claim a Maryland state income tax credit for student loan relief. If you attended a Maryland institution, originally took a loan of $20,000 or more, and still owe at least $5,000, you can receive a tax credit of up to $1,000. Remember that a tax credit is a dollar-for-dollar reduction in taxes owed. A deduction reduces the amount of your taxable income.
Another Maryland program that may be of interest is the SmartBuy home buyer assistance program. This allows first-time home buyers in the state of Maryland to eliminate up to $50,000 in student loan debt when purchasing an eligible home. You can learn more about this and other programs for home buyers at mmp.maryland.gov.
The final details of federal student loan forgiveness are not available, and the program is being challenged in court. In the meantime, if your loans are in forbearance, use the money you would have been paying towards the loans to build your emergency savings and pay down credit card debt.
If you have young children, now is the time to save for their education. The Maryland 529 plan provides a state income tax deduction of up to $2,500 per parent, per child, or a match of up to $500, depending on your income. Grandparents can also open accounts and receive the matching funds for their grandchildren. And if your children go to an independent school, up to $10,000 a year can be funded from the 529.
Parents often ask what happens if the child doesn’t go to school, or if they receive a full scholarship. If your child doesn’t go to college or a trade school, you can transfer the funds to another child, or take out the money, subject to taxes and a 10% penalty on the gains – the money you’ve made in the account.
If your child receives a scholarship, you can still take the full cost of education from the 529; the scholarship becomes taxable income to the student.
Your action item this week is to open an account at SSA.gov. To save money, Social Security has stopped mailing your statement to you annually. Check your list of annual earnings and make sure it’s accurate. Fixing an error now is much easier than fixing it in 10 or 20 years.
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Investment advice offered through Great Valley Advisor Group, a Registered Investment Advisor.
All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested into directly.
The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which strategies or investment(s) may be appropriate for you, contact the appropriate qualified professional prior to making a decision.