By: Julia Bellotti
You’re buying a fancy new TV at Best Buy and the associate asks if you want to add the extended warranty. What do you say? If you’re honest with yourself, you probably have no idea whether or not it’s a good idea.
The general consensus? It's not.
The purpose of an extended warranty is to protect your purchase even after the standard warranty ends. This can be offered by the manufacturer of your purchased item, the retailer, or a third party. While this sounds like a great idea, more often than not, it's not worth it – and here's why:
Products That Break Do So Within Warranty
If a product is going to break because it was poorly manufactured, it's likely to break within the first 6 months to a year. The standard warranty would cover you in that case.
Those That Don't Break Within Standard Warranty Usually Aren't Covered
Warranties generally don't cover the cost of replacing the item due to an accident, which is the likely cause of you needing it replaced after that first year. This is why it's important for you to read the fine print of an extended warranty. If you're buying a new phone, you might think the extended warranty will replace your phone if you accidentally drop it and the screen breaks. That rarely happens. Consumer Reports states that "only 15 percent of products in our survey were covered by the manufacturer’s regular warranty when they broke, and about 10 percent were under a service contract or extended warranty." Even then, there's no guarantee you'll get a completely new item. You may have to have it repaired, leaving you without that device for a week or two.
If You Bought the Item With a Certain Credit Card, You May Automatically Have an Extended Warranty
Many US credit cards offer extended warranty as a benefit. For example, Visa Signature cards automatically extend the standard warranty one whole year (with exception to vehicles). Therefore, even though you may not need it, you're already getting an extended warranty by simply purchasing the item with that credit card. American Express, Discover, and MasterCard also offer extended warranties – read your benefits guide for their specific coverage.
Tech Products Advance Quickly
When considering an extended warranty for a phone, tv, or laptop, it may not be all that worth it because you'll likely want to buy a new one in a couple of years. With the rapid advancement in technology, newer models with enhanced features are constantly available; if you think you'll buy a new phone after 12 or 18 months, an extended warranty isn't necessary. However for an item like a washing machine which lasts for many years, you could consider an extended warranty after studying that model's reliability and reading the warranty's fine print.
US News Money recommends instead of buying an extended warranty, you should take the money that you would've spent on it and set it aside for repairs/replacement if/when needed. In the event that you will end up needing a repair, you'll already have money allocated for it.
Overall, don't stress about the extended warranty! If spending that extra $100 will make you sleep easier at night, then buy the coverage. But do know that for the vast majority of products, you won't end up needing it.
By: Kirsten Petriches
Prices are an interesting part of life as they serve to tell us, as consumers, how much we ought to pay for a certain good or service. However, they aren’t always set in stone. In fact, they are often far from concrete. Whether there be sales or coupons that can change the price, or the opportunity to actually negotiate (haggle) for a better price, you can almost always buy something for less than its asking price. The question is, when and how do you haggle? That's what I’m here for.
Buying a Vehicle:
Purchasing a vehicle is one of the best opportunities to haggle prices in order to save a lot of money; however, it is also one of the most difficult. Car salespeople know what they are doing and they are pretty darn good at it!
The single most important thing a consumer can do when haggling with a car salesperson is to be prepared. There are three main things you should know before you walk into the dealership.
Finally, If you don’t understand something, or if something feels off, ask questions. Demand thorough explanations. It never hurts to ask, but it can hurt to not know.
Getting a Mortgage for Your Home:
Purchasing a home is a huge investment, but did you know you can often haggle on costs throughout the process? With a high credit score, you have a strong case in negotiating a lower interest rate. Always look out for processing fees or closing fees that you can haggle to be lowered or completely eliminated. Some examples include: application fee, appraisal fee, credit report fee, wire transfer fee, document preparation fee, underwriting fee, loan processing fee, mortgage rate lock fee, etc. Bonus tip: the same goes for title fees – some of those fees can be haggled away as well!
The best way to ensure you get the best deal is to request a “good faith estimate” from the mortgage lender. This is a document that will outline all the costs associated with securing a mortgage through them. You can even request this from more than one company and compare!
Real Estate Services:
Also related to the home purchasing or selling process is the use of real estate agents who charge a certain percentage as commission. The percent that you will pay them can be negotiated, however do keep in mind that sometimes you get what you pay for, so don't be too cheap in this regard. Certain situations provide plenty of ammo for the consumer to negotiate:
Buying A House:
You can most certainly haggle when buying a house – actually, you will likely have to! Your realtor can help walk you through this (unless you haggled your realtor too low and he/she hates you now) but there are a few important considerations when haggling during the home buying process.
Always, always, always try to haggle prices related to weddings. So many of these companies jack up the prices so much simply because it’s for a wedding. You could even get super sneaky and have services such as catering, flowers, make-up, etc. quoted out “for an event” rather than “for a wedding.” They may push you to find out more about the event and may even get angry if they find out it’s for a wedding later, but it doesn’t hurt to try. Just be aware that there are huge-mark ups in this industry so you, as the consumer, carry some power to haggle prices.
This is worth its own post, which will come in time, but I wanted to be sure to remind you to always haggle (professionally speaking, negotiate) when it comes to your salary. If you don't do this, you are losing out on money that was probably
You can often haggle the hourly rate or costs associated with obtaining legal services. Keep in mind any work that may be done by an associate or a legal aid instead of the primary lawyer. Also pay attention to make sure you are not being billed for inflated hours.
Furniture & Electronics:
I’m putting these together not because they are related in any way physically, but rather the haggling technique is similar! The price tags on these types of items can be haggled a bit, particularly when the salesperson is commission-based; however, where the real haggle-worthy tip comes into play is the approach of focusing on floor or display models. You can typically haggle the price more if you are purchasing the display model in either of these categories. Also look for cosmetic damage or dings that can knock even more off the price. You certainly don’t want to pay for a product that isn’t high quality, but a scratch on a couch or a ding on the back of a TV can save you lots of money if they don’t bother you!
Some people have the luxury of super amazing health insurance that leaves them with zero worries or care about their medical bills. Then, there is the rest of us. If you have high deductibles or not great coverage, consider having a conversation with your medical service provider as you may be able to haggle prices. Let them know your situation and see what/how they can work with you. If you already had a procedure done and are having trouble with the bill, you can also try to haggle the price afterwards. Keep in mind, they would rather get SOME money than no money or have to deal with going through collections. You could offer to pay 30 or 40 percent of the cost if they are willing to write-off the rest. It’s a risk and they may say “no”, but it doesn’t hurt to try!
Especially if you are at a department store with salespeople who make commission, you may be able to haggle on prices. They may not be able to arbitrarily change the price tag, but they may have access to secret coupons or discounts that they can extend to you if they think they will lose the sale.
Many prices will be set in stone, but you can certainly haggle service fees or even the type of services you are getting. It is common to go in for a simple part or fix and have several additional service suggestions made to you. Haggling with auto repair may be more about haggling over what services you really need and what can wait. Be honest about your situation and push them to really tell you what you need today to safely drive your vehicle and what can wait.
The “Necessities” of Life:
Of course I’m talking about insurance, cable, internet, etc. There will always be a competitor with a lower price or better deal – use it as leverage. Always know the “going rate” and if you are paying too much, call and haggle for a better price. Make sure you are equipped with the proper information and accurate comparisons because you may just haggle yourself out of your current service! I once called my cable company threatening to switch to a competitor who was offering x, y, and z. They said “ok, sorry to see you go, I will cancel your account right away.” Oops! I still ended up saving money so it was fine, but I wasn’t actually prepared for that response!
Credit Card and Banking costs/fees/interest:
Especially if you are a loyal customer with a positive track record, you can haggle for lower interest rates, lower fees, or forgiveness on late payments. Credit card limits are also haggle-worthy and if done correctly can even help increase your credit score! (Be careful: higher credit limits do not mean you need to spend more and max out your card!).
Now that you know some of the things that you can haggle, let’s explore some tips to help you successful complete “the haggle”.
By: Lis Huber and Julia Bellotti
It's that time of year, the dreaded date of April 16th is next Sunday and you still haven't filed your taxes. Procrastination isn't just for students, it seems.
A few weeks back you asked us questions about taxes and we (finally) answered them. We did the research so you don't have to. Now, after reading our answers, all you have to do next is sit down and do it to it. Let's get it started:
What do I do if I have had A BUNCH of different jobs in the last year? Like a job at my university, my new post-grad job? How do I handle the taxes for multiple jobs?
Julia: Each job should send you a W-2 form at the end of the year or the beginning of the new year. Save these W-2 forms!! You will need to submit all of them when you do your taxes (before or by April 16th). See this article for information on how to enter multiple W2s in TurboTax.
Do I get a tax credit for adopting a dog?
Lis: Unfortunately, there are currently no tax credit options for adopting a dog. But, you may be able to claim tax credits for your dog(s) in other ways such as if they are guide dogs, if you moved with your dog, or if you fostered dogs. See this article for more specifics on dog-related tax credits.
Someone told me that scholarships and stipends are things that they charge you taxes on, is that true?
Julia: “A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution,” – a quote from an article on the IRS website. See here for what makes an institution eligible for tax free grants.
I'm a training consultant with clients around the US; last year was my first year. When filing my taxes, do I need to file everything in my home state like I used to or now do I need to do taxes for each state individually?
Lis: The complicated answer is, it depends on your company and how said company handles its finances. From what it sounds like, you will likely need to file for the state in which your company's headquarters reside, as long as you reside in the same state. However, like I said, it depends. Below are a few articles that might be helpful in answering your question.
How do you handle state taxes when you’ve moved different states within the year?
Julia: From how I’ve done it with TurboTax, you file in both states and then you’ll end up being deducted for the time you didn’t live there.
Lis: I just filed my taxes today via TurboTax after moving from VA to FL in the last year. It was pretty easy – I just had to file my taxes for each state individually, which was relatively simple due to my two W-2's coming from each respective state. Note: you can potentially receive tax deductions for moving expenses, so make sure to keep good track of your expenses when you move. See if you're eligible for moving expense deductions here.
How do you handle state taxes when you work remotely and your company’s headquarters are in another state?
Lis: Unless you live in the following states, you will likely need to do taxes for the state in which YOU reside, not the one in which YOUR COMPANY resides. Your company handles the taxes for that state, you need to handle your taxes for your state.
See this article for more information.
What are some expenses that are tax deductible that one wouldn't really think of?
Lis: Like I mentioned, moving expenses are something that many may not realize can be tax deductible. There is also the aforementioned article about tax deductions for owning certain types of pets. You can also get tax deductions for charitable donations, so make sure to keep your receipts from Goodwill when you do your spring cleaning this year! Below are a few articles that might offer some more suggestions.
Can I write off my commute/mileage driving to and from work or is that only for people who drive for a living/always on the road and don't have an actual daily office?
Lis: This one was a bit difficult to answer so I might be wrong here; feel free to correct me if I am. It seems like you might be able to receive tax deductions for mileage in the following situations: if you're self employed, if you drove somewhere for charitable work, if you had to drive somewhere for medical reasons, or (again) if you moved in the past year. In the latter three situations, you need to make sure to itemize these deductions for them to be useable. Note: a daily commute is NOT eligible for a deduction, but you CAN deduct mileage for travel to/from off-site meetings, conferences, training sessions, and even when you're searching for a new job. This article Everything You Need to Know About Deducting Mileage on Your Taxes explains all of this and more in further detail.
If I NEVER get a tax return (I ALWAYS owe the government at least like $200), am I doing it wrong?
Lis: Well...the typical answer is back. It depends, mainly on your paycheck, your housing situations, and your dependent(s) or lack thereof. Check out the above answers for resources on things you might not think of to deduct from your taxes. Check out the below articles for reasons why you may be owing the IRS some money.
I got divorced and my ex and I both claim one of our children, as a head of household. How do we deal with child care expenses, which we split not half and half, when it comes to taxes? I use a pre-tax dependent care account. Can I report expenses paid for the child that I don't claim on my taxes but for whom I pay child care expenses?
Lis: This one is tricky to answer, so I would therefore suggest consulting a professional about it as I don't want to give the wrong advice. The short of it is, only ONE PERSON can claim his/her child as a dependent, even in the case of divorce. Generally the rule is, the custodial parent is the one who claims said child on their taxes. I did find some resources for you that could be useful to read through prior to reaching out to someone, but I don't feel qualified to give any further advice and highly suggest that, in complicated situations like this, you file taxes through a professional.
I bought a condo last year and had some work done on it. What should I be tracking to deduct?
Lis: Depending on what work it was you did to your new condo, you might be able to get some benefits out of it in the future. Home REPAIRS are unfortunately not eligible for any benefits, however home IMPROVEMENTS could be. This is because, unlike repairs, which simply keep your home in working order, home improvements actually increase the value of your house. Note: No matter what work it was that you did on your house, you can't get a tax deduction from it, but it could qualify for benefits when selling this house in the future. See this article for more information.
On the other hand, buying a condo/house most definitely makes you eligible for tax deductions. There are a lot of ways to go about this, so I'm just going to provide some articles that you can use for reference.
What are the differences between taxes married and unmarried and with or without dependents?
Lis: The short of it is, if you are married and/or if you have dependents, you qualify for more tax breaks. If you are single and/or have no dependents, you qualify for less tax breaks.
Upon exchanging your "I Do's" (if it is done before or by December 31st of the filing year) your filing status changes from the single life to "Married, filing jointly" (recommended), or "Married, filing separately." For example, if you got married on December 29th, 2016, you would be filing under "Married." However, if you were married on January 1st, 2017, you would be filing as Single (but not looking). Typically, based on this H&R Block article, you want to file your taxes jointly when you're married as it qualifies you for the most tax breaks.
Also make sure to read through our article on filing taxes for married couples here for some of our tips.
Regarding dependents, if you have a child, a family member, a spouse, or a significant other (who qualifies for the below conditions) that you take care of, you qualify for tax breaks. This is because the income you receive and that is taxed by the government is not all spent on yourself; instead at least half of your dependent's living expenses were paid for by you.
Can you claim your non-married live-in significant other as your dependent? When is this acceptable?
Julia: Yes, but they have to meet 3 conditions.
Read here for more.
What is the difference between exemptions and credits?
Lis: Tax deductions and exemptions reduce your taxable income, while credits reduce your tax itself, dollar for dollar.
See here for more.
If your college student works a part-time job while in school or has enough investment income to necessitate filing a return, is it worth the additional work to compare claiming the child as a dependent versus foregoing the exemption to allow the child to claim an education credit on his or her own return?
Julia: From my experience, yes, it is worth the extra work. This actually happened with my family. There was one year where it made more sense for my parents to claim me as a dependent even though I ended up owing the government a significant amount of money. It saved my family much more money in the larger picture despite the tough hit to my wallet at the time.
What does it mean exactly to claim yourself or not? On a lot of employment forms I’ve been asked to register as 0 or 1 and to be honest I have no idea what that means.
Lis: If you claim yourself on your taxes, it means you are saying that you provide for more than half of your daily living expenses. You are I-N-D-E-P-E-N-D-E-N-T (do you know what that means)?
If your parents pay for more than half of your living expenses, it means you are their dependent. You rely on them for lots of financial things, such as rent, food, clothes, education, etc.
Ultimately, if you're supporting yourself you put 1, if your parents are supporting you, put 0.
When is it smart to see a tax accountant vs. doing taxes on your own (through TurboTax, for example)?
Lis: If your taxes are relatively uncomplicated, it likely makes more sense to simply file on your own. For example, in the eyes of the IRA I'm "single," have no kids, have one job, don't own a house, etc. My taxes are therefore quite easy to get through, so I've always filed through TurboTax and have honestly been 100% happy with the result. There are two things I do want to note about doing taxes on your own through methods such as TurboTax:
1) You could potentially be missing something essential (such as a lost W-2 form, for example) that could bite you in the back later on. This is why I suggest only using this method if your taxes are relatively uncomplicated, as there is less that you are likely to miss in this regard.
2) You might be missing out on exemptions or deductions that you wouldn't have thought about by utilizing this method.
On the other hand, if your taxes are complicated, like in the case of the divorced parent earlier, I would HIGHLY suggest filing them through a professional. This is because these things can be tricky, and you'd rather be safe than sorry. Nobody wants to sleep with one eye open, worried about the IRA coming and knocking on your door. Besides, professionals often say that they can get you back more money than you paid for their services anyways, so in that case it's worth it in the long run.
Why would I buy the boxed TurboTax when there’s a free one?
Julia: I believe the boxed version is better if you’re trying to do more than the standard deduction – i.e., deducting specific line items.
Lis: My understanding is that there isn't actually a free one, but maybe I'm wrong. From my experience, you're able to go through the motions via TurboTax online, but when it comes to actually filing you have to pay. I might have been missing out on a free option all of this time, though!
Addendum: Not only is there a free version, but there are also options to file your taxes through your airline rewards program (for free) so you can get free miles! See Julia's comment at the end of this article for her experience. We all learn something new every day, and Lis will make sure to not pay for TurboTax in the future.
Should I really be saving my receipts when I make donations to Goodwill and other charities? What kind of difference does that make monetarily unless I’m making a considerable donation?
Lis: If you want to get tax deductions for your charitable donations, definitely save and itemize your receipts. Ultimately money saved is money saved; even if you don't get a whole lot out of it these savings, a little can certainly go a long way. Just like you'd be disappointed if a $5 bill was taken from your pocket, you wouldn't want to miss out on some cash money that can go towards your favorite lunch order at Chipotle (or, even better, towards your savings).
What did you think? Do you have further questions? Was there anything we missed? Let us know in the comments.
By: Olivia Cunningham DiAgostino
You know that filing taxes is going to be a struggle when your tax preparer continuously shakes their head and says things like “This is very complicated,” “I’ve never seen this before,” and “I’m going to have to make a spreadsheet.”
In all fairness, my taxes were especially difficult this year: after five years of simply filing online, I found myself married and dealing with the paperwork from six jobs, three states, and two universities. Throughout this, though, I’ve learned a lot, and I’m here to share the rundown on how to file taxes as a newly married person - especially if there are other complicating factors, like graduate school or a move.
Decide how to file
The first step is deciding what “category” to file your taxes as. Your tax status is determined by your marital status as of December 31 – so January marriages don’t count, even if you’re filing in April! You and your partner can choose to file as married filing jointly or married filing separately. According to Turbotax, in almost all situations filing jointly with your spouse will be more advantageous than filing separately – it’s easier to qualify for certain deductions and credits this way. You also have to decide who will be the primary filer; it’s best if this person is the same year-to-year; in our case, that person is me because my work schedule is more flexible.
Should you itemize?
In my opinion, the single biggest thing to figure out whether you’re doing your taxes on your own or through a service like H&R Block, is whether you’re going to take a standard deduction ($12,600 for a married couple filing jointly in 2017) or itemize your deductions.
Whichever number is bigger will be subtracted from your income, so the higher the deduction, the less taxes you’ll pay. In general, couples will claim a standard deduction until they own a house, since that’s likely the first big purchase that will push you over the standard amount. Things that can be itemized include:
If you’re itemizing, though, you’ll have to prove that you spent the money as you claim, so save your receipts throughout the year!
Whether you decide to DIY, use a tax software, or talk to a professional, get organized before you even begin. Around the end of January, you should start receiving W2 forms from your employer, as well as documentation from freelance work, side hustles, health care, and educational institutions, if applicable. Collect this all in one place; this year, since things were extra-complicated, I made a checklist (suggested items you’ll need are available online, such as this list from H&R Block) and taped it to a folder, where I collected the items as they came in. Some institutions may provide tax forms online only, so you’ll need a printed paper copy if someone else is helping you file.
When to find a professional
While it can be cheaper and more convenient to do your taxes on your own using an online tax-preparation software, when things get complicated, it can be absolutely worth it to defer to a professional. An accountant or tax preparer will be able to help you maximize your return and can provide helpful financial suggestions for the future.
Remember, getting a small return is actually a good thing: More of your money has been going right into your pocket throughout the year. Due to complications with my freelance work and my husband’s interstate move, our taxes aren’t quite done yet. But I’ve learned a lot about personal finance and I’m confident that working with a professional will pay off.