Personal Finances – Debra Newby Watkins CPA

Student Debt Options

Bankruptcy cases do not often include student debt because of the extra filings needed and the rate at which they are discharged. According to Tara Siegel Bernard for the New York Times, a new, more streamlined process for bankruptcy is making it easier to claim student debt and actually have it forgiven. Many jurisdictions utilize the Brunner test for those claiming student debt and the new approach to filing makes it easier to pass that test:

Can you currently maintain the loans and maintain a minimal standard of living?
Is your situation likely to persist for a significant portion of the repayment period?
Have you made a good faith effort to repay the loans?

By satisfying this test, borrower’s cases may be reviewed by the Justice Department and recommendations of discharge made to a bankruptcy judge.

Credit Card Debt Assistance

This month we’re looking into specific personal finance related links that may help our customers best manage their money. As we near the holidays, it’s always tempting to spend just a little extra on credit but it pays to beware of interest rates and fees. These can make it way less fun in the future when all the bills come due. Worried about your spending or find yourself in significant credit card debt?

Sign up for Life Kit’s Credit Card Debt Newsletter and learn tips and tricks to both avoid and deal with credit card debt.

Newly Wed Tax Implications

Getting married this wedding season? Be prepared from a tax standpoint and know what paperwork you will need to complete within ten days of your nuptials. Learn this and more at the IRS website where they have all kinds of tax information and a great FAQ for just about any question. Still have more tax questions? Contact Debra Newby Watkins, CPA, 512 900-8952.

Tax checklist for newlyweds

Paying in Cash?

How would you feel if your service employees asked to be paid in cash? Would you suspect that they were trying to shave a little off of their taxes? Is it your job to “police” the people you employee for various jobs around your home? Many couples face this dilemma and may not be in agreement with each other. The Ethicist addresses this question and details why it is best to report all income when filing taxes, in his April 9, 2025 response, Our Gardener Wants to Avoid Taxes. Should We Pay Him in Cash?

1099-Ks for Online Sales and Money Aps

If you have sold items online this year and/or received money through an Ap such as Venmo or Cash Ap, you may receive a 1099-K form. The federal threshold for these types of sales in tax year 2024 is $5000 and will reduce each year until it reaches $600 in 2026. The income that these forms represent may be from online clothing sales, tickets sales, or even gig jobs. The IRS is making an effort to collect taxes from workers or online businesses who do not traditionally report their income. This article stresses that personal payments between friends and reimbursements are not taxable. If you feel you’ve received a 1099-K in error, there is a place on your 2024 tax forms to report the money as not income. Read more here: Did You Sell Concert Tickets or Clothes? You May Owe Taxes.

Small Things Add Up

Are you aware of the offers your bank gives for certain types of accounts? Do you know how much interest your regular or high-yield accounts pay? Have you ever felt confused by the information you bank sent about interest or ways to save?

These questions and more are currently at the forefront of the banking industry and have brought to light certain practices that institutions may be using to mislead their clients. Capital One was sued by the consumer bureau over advertising meant to deceive customers.

The article advises consumers to be diligent and pay close attention to “deals” when they come from their banks. These could help your money earn more. Read Here: Why Banks May Be Hoping You’re Not Paying Attention

Preparing to File Your Taxes

What are your tax prep best practices?

With the start of a new year, many begin thinking about filing taxes. The IRS offers simple tips and best practices for getting all of your paperwork in order to make the process go smoothly. This article is especially helpful for those who worry they may not be paying enough and want to take advantage of available deductibles. Read more here: Be ready to file taxes next year

New Ways To Save

As we enter the season of gift giving, it’s time to watch budgets even closer. Explore these sites recommended by ThePennyHoarder.com, The Dumbest Things We Keep Spending Too Much Money On, to save on your monthly bills and other needed household items such as:

Car Insurance
Amazon
Credit Card Interest
High Speed Internet
Movies and More

Leave yourself more money for the fun things in life during the holidays.

$15/Hour Minimum Wage?

Living wage, minimum wage, fair wage… There are many views on what these phrases mean and how best to apply them in the United States. On Friday, 20 states and 32 cities and counties will raise their minimum wage. In 27 of these places, the pay floor will reach or exceed $15 an hour, according to a report released on Thursday by the National Employment Law Project, which supports minimum-wage increases. How will these increases affect small businesses and workers who may actually stand to lose their jobs because of the new rules? Read more here, Once a Fringe Idea, the $15 Minimum Wage Is Making Big Gains.

Employer-Paid Tuition Assistance

Does your employer offer tuition assistance? If so, you may also be entitled to a tax write-off from these loans as well. Eligible expenses often include, books, tuition and fees, as well as supplies and equipment. If you receive more than $5,250 in a year, you must include the excess amount in taxable income. Also, qualified expenses used to justify your employer tuition assistance may not be used toward any other federal education tax benefits. For more information about these benefits, read: Employer-Paid Tuition Assistance.