The Emergency Fund

If you were faced with an emergency, would you have the funds to cover it? Emergencies may vary from needing a new roof for the house to unemployment. An emergency fund with cash and cash equivalents in low-risk investments provide easy access to money should you need it. For more information on how much you should have in your emergency reserve, read this Financial Strategy.

What to Do if You Cannot Pay Your Taxes

If you owe taxes this year and cannot afford to pay the full amount, there are options that you can take to ensure that you will not incur late filing penalties. The best option is to pay as much as you can by the deadline. While you will still incur late payment fees, you will not be penalized for filing late. For more information about this option and to learn more about the possibility of an Installment Agreement, read this C.P.A Insight.

Municipal Bonds

Municipal bonds are issued by a city or other local government, such as counties, redevelopment agencies, special-purpose districts, school districts, public utility districts, publicly owned airports and hospitals and any other state government entities. Also known as “munis,” municipal bonds are attractive to many investors within taxable accounts, because the interest income is exempt from federal income tax, and in many cases, state and local taxes as well.

Your Credit Report is Important

Your credit score is usually based on the FICO model that weighs reported credit activity in five categories, which consist of payment history, debt-to-credit ratio, length of credit history, new credit applications and types of credit used. For more information on how your credit score is used and how your credit activity is ranked, read this Financial Strategy.

Exceptions to the 10% Early Distribution Penalty

If you take a distribution from a retirement account before you reach the age of 59 1/2, generally, you will have to pay a 10% early distribution penalty. However, if you take an early distribution to pay for unreimbursed medical expenses or qualified higher education expenses, you may be able to avoid the early withdrawal penalty. For other common exceptions in which you may not be subject to the 10% penalty, read this C.P.A. Insight.

SEP-IRA vs. Safe Harbor 401(k) Plan

Both SEP-IRAs and Safe Harbor 401(k) plans allow small-business owners to provide a qualified retirement saving option to their employees while saving a significant amount for their own retirement. These plans have different funding rules, and should be looked at closely by a business owner. For more information on the differences between SEP-IRAs and Safe Harbor 401(k)s, read this Financial Strategy.