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How to Fill Out a W-4 Form

MoneyWise / Rob West and Steve Moore
The Truth Network Radio
March 8, 2023 7:11 pm

How to Fill Out a W-4 Form

MoneyWise / Rob West and Steve Moore

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March 8, 2023 7:11 pm

If you’ve already filed your 2022 taxes, maybe you weren’t happy with the results. Maybe too much, or too little, was withheld from your paycheck. But there’s an easy fix for either scenario. On today's Faith & Finance Live, host Rob West will explain how you can fill out a new W-4 form with your employer to change the amount of taxes they withhold from your paycheck. Then he’ll answer your calls on various financial topics. 

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Moonie Radio's Spring Share event has officially ended, but we could still use your help. Will you partner with us in our mission to be bold for the Gospel in 2023?

To see our impact or partner with us, visit Maybe too much or too little was withheld from your paycheck. Hi, I'm Rob West. The solution is to fill out a new W-4 form with your employer. Now, a lot of folks would rather have a cavity filled, but the process is easier than you think. I'll take you through it today, and then it's on to your calls at 800-525-7000.

That's 800-525-7000. This is Faith and Finance Live, biblical wisdom for your financial decisions. Well, as followers of Christ, we are to pay what we fairly owe in taxes.

Jesus Himself said in Matthew 22 21, render to Caesar the things that are Caesar's, and to God the things that are God's. So we must pay our taxes, but we also don't want to overpay. That means having enough withheld from your paycheck to avoid getting hit with a penalty. It also means not having too much withheld.

Both are forms of overpayment. The W-4 form determines how much the IRS will withhold from your paycheck and will affect the amount of your refund, if any. Ideally, you want to come close to having only what you'll owe in taxes withheld. You don't want a big refund because that's essentially an interest-free loan to Uncle Sam.

And as I said, it's a type of overpayment because you're denied use of that money. And again, if too little is withheld, well, you'll pay a penalty. Now, when filling out the form, you'll need to account for all jobs for you and your spouse if you're married, plus any additional income credits and deductions available to you. By the way, you can download a blank W-4 form at Now, here's how you fill out the form. Step one, enter your personal information, including name, address, social security number, and tax filing status.

You can choose from single, married filing separately, married filing jointly, qualifying widow, or head of household. You can actually stop after this and let your employer fill out the rest with default levels, but that probably won't give you as accurate a result as you'll get by filling in the rest. Step two is to list all of your income for you and your spouse, including self-employment.

Here you have three options. You can use an online estimator. There's one available at and many other places. This works best if you have income from self-employment because it allows for those taxes, both halves of FICA, in addition to income taxes. Or you can use the worksheet attached to the W-4 form. This or the estimator are often preferred if you have multiple jobs and you'd rather not give your employer information about the other income. Or you can just check the box to have your employer withhold at the default rate. That seems easy, but it may result in too much taken out of your checks and a big refund check.

Again, you don't want that. So you probably want to go with the online estimator or the worksheet to get the best results. Remember, the whole idea is to maximize your paycheck amount while still covering your tax liability for the year. Now, step three, you want to claim your children and other dependents.

Make sure that only one spouse claims child-related tax credits on the W-4, and those credits should be claimed by the spouse with the greater income. Otherwise, too little will be withheld. After you complete this step, your employer should know exactly how much to decrease your withholding to allow for your children, other dependents, and any other tax credits. Now, for step four, here you list any other items that will affect your withholding, such as income apart from your job that you expect to receive that won't have withholding. Listing this will increase your withholding. Also, deductions, other than the standard deduction that you expect to claim, these would lower your withholding. And finally, extra withholding.

You can specify how much extra you'd like withheld for any reason, but again, don't go overboard. Now, just as with child tax credits in step four, only one spouse should claim additional income and deductions. And last, step five, you've done the hard part. Now all you have to do is sign and date your new W-4 form and hand it in to your employer. So those are the steps to filling out your new W-4 form. We hope it gets you very close to hitting the nail on the head with your withholding for 2023.

Again, a reminder, the reason you don't want that big check, I want it in your monthly budget so you can attach a name to it and get it where you need it to go so that you can have margin to save for your goals that align with your values and your priorities. All right, we're going to take your calls next. The number to call is 800-525-7000.

That's 800-525-7000. I'm Rob West and this is Faith and Finance Live. We'll be right back after this.

Stay with us. Thankful to have you with us today on Faith and Finance Live. I'm Rob West, your host. All right, we're taking your calls and questions now on anything financial. The number to call is 800-525-7000. We've already got some great questions lined up, but room for a few more or a testimony if you'd like to share something with us today about God's faith and finance. All right, we're taking your calls and questions now on anything financial. The number to call is 800-525-7000. We've already got some great questions lined up, but room for a few more or a testimony if you'd like to share something with us today about God's faithfulness in your financial life.

800-525-7000. Let's head to Fort Lauderdale. Hi, Shay. Thanks for being on the program today. Go ahead. Good afternoon.

I am reaching out to stand out. I have a newborn while he's eight months old and I was trying to figure out what is the best way to start a bank account of savings for him as long as I'm paying a mortgage on my condo and I want to know what is the best way to move that property to him in the event of my passing. In case I pass when he's a minor, how does that work? Yes. Very good.

So a couple of great questions. I love that you're planning in advance. And by the way, congratulations on that new one month old.

What a blessing from the Lord. A couple of things first related to that savings account. I think the first question you have to decide is control. Do you want to save in an account that you would have control over when it becomes his asset in a custodial account? It becomes his asset at the age of majority regardless of his spiritual and financial maturity and ability to handle these funds. In an account you control, you would decide when that becomes his asset. And then secondly, I would ask whether you want to earmark this specifically for retirement, excuse me, college, not retirement, college or if you want it more widely available.

So give me your thoughts on those two. I definitely want to be in control of it because I know typically children are not ready at 18. Yes, I agree. So I definitely want to make sure that I want to make sure that he is ready spiritually and more mature in order to take that over as well as I want it to be widely available. So if you want to utilize it for college or if he, you know, at 25, if he wants to purchase a home or whatever the case may be.

Yeah, very good. Okay. So in that case, then I would open an account in your name or in the name of you and your husband. So you would control that and you could decide to gift it to him at any point down the road, whether he's still a minor or beyond age 18. And I would do it in just a really a brokerage account, probably at Fidelity or Charles Schwab. Are you comfortable investing this money given that the time horizon is likely more than 10 years? Possibly, yes. So low to moderate.

Yeah. So what I would do is probably look at one of two options. You could head to and our friends at SMI could help you with some mutual fund suggestions.

You would be able to open the account again in your name or jointly held with any of the major brokerage firms like Fidelity or Schwab. And then they would give you a mutual fund recommendations that are high quality that could just grow over a long period of time. And you could set up an automatic transfer of whatever amount into that account every month so you could build it over time systematically.

The other approach is what's called a robo advisor. This is just more of an automated approach to investing that uses an algorithm and it's very low cost. And every time you make a deposit, it reinvest the amount you're depositing into some broad market, what are called indexes. So you would capture the big broad moves of the stock and bond market over time. And, you know, that can be a very efficient and cost effective way to invest. And by investing every month, you're doing what's called dollar cost averaging, which just means whether the market's down or the market's up. You're just systematically investing in at different points in the market's trends. And over time, it's a great way to build wealth or to grow a portfolio for a specific purpose like saving for a child. So a good example of that would be what's called the Schwab intelligent portfolios.

You would answer a series of questions. They would build a portfolio that's very low cost and then you would automatically reinvest it every time you made a deposit. Another more kind of modern approach to that is something in what's called the FinTech space. And it'd be a smartphone application that you'd find in your app store called Betterment. So whether it's Betterment or the Schwab intelligent portfolios, I think that would do what you're looking for.

And based on the way that you answer the questions about your risk tolerance, your time horizon, your goals and objectives, you could dial that portfolio down to be as conservative as you want it to be. But the good news is it's not sitting there in savings, where even though it might get a little bit of interest, you're barely if at all going to outpace inflation, and therefore you're really not growing it. Whereas if you invest it, you at least have the potential over a long time horizon to see this money grow in addition to the contributions that you make. With regard to your house, the best way to handle that is through just a basic will. Now that would make sure that it's passed to your heirs at your death. And the benefit is there's what's called a step up in basis, which just means when the inheritance is received, the new cost basis for the home is not what you paid for it, but it's the new higher value as of the date of death.

And the benefit there is that if it's sold, then there's no capital gains tax essentially on that inheritance because they're selling it for the same thing the cost basis is because that was stepped up. Now, you mentioned the ability to pass that to him, even if he's still a minor and something were to happen to you, and you'd probably want to talk to an estate planning attorney about a trust. What would happen is you'd create a trust, a living trust, it'd probably be somewhere around fifteen hundred to two thousand dollars, and then you'd retitle the house in the name of the trust. The benefit of that is you would have the ability, even if you passed away prior to your son reaching adulthood, or if you were incapacitated, you would have a trustee named that would handle the distribution of your estate and this home. And it would happen according to your wishes. So you could put certain provisions in the trust documents that say, for instance, you know, he's not to receive it until a certain age or he's to receive it over time, you know, throughout his life or something like that to make sure that he's provided for beyond your life.

So I would say the next steps for you are to determine how much you want to put away in this account for him, set up an account, Charles Schwab or Fidelity, and use either Betterment or the Schwab Intelligent Portfolios or, and then make an appointment with an estate attorney to make sure you update your will, which you want to do anytime you have a major life event change, like having a child, and then ask about a living trust specifically for your house and other assets. Does that make sense? That is wonderful information. Thank you so much.

Okay, very good. Well, listen, congrats again, Shay on this new little one in your home. I know that's, it's an exciting time there. We appreciate your call today very much. You know, folks, we've got a lot of ground still to cover today. We've got two lines open.

The number to call is 800-525-7000. We'll be going to Indiana and Florida for Carol and Norma, plus perhaps your question, but let's take a quick email before we head to our first break today. This one comes into us at askrob at, and we hear from, let's see, Wanda. She writes, when I give to some ministries, I've received free gifts in the past. The retail price of those gifts is taken out of my donation. Well, I don't need the gifts and don't want that money deducted from my donation.

What do I do? And what I would say, Wanda, is that it's wonderful that you don't necessarily want to be compensated in any way, including with a gift for your giving. So first thing I would do is ask the ministry not to send you the gift. Oftentimes when you make a gift, they will have right there, for instance, if it's an online forum where you check a box that you either want it or you don't want it, I would obviously indicate you don't want it. And then you'll get the full amount of the deduction. Or you could call the ministry and say, listen, I want to go ahead and give this gift, but I'd like for you not to send the gift back in exchange.

And they should be able to honor that. So I would just communicate with the ministry and make sure that they honor those wishes. Thanks for writing to us. We're going to take a quick break. Back with much more on Faith and Finance Live. Stay with us. Thankful to have you with us today on Faith and Finance Live.

I'm Rob West, your host. You know, we started today by talking about the W-4, how you can fill out that form to ensure that you're not having any extra withheld from your paycheck resulting in a higher refund than you should receive. And here's why. We don't want that windfall. We want that money in your check so you can allocate it according to your values and your goals and priorities. But if you are thinking about your taxes and perhaps this is a season where you're dreading that tax bill every year. Well, one way to think about our taxes, I think biblically, is, first of all, that taxes are symptomatic of income, God's provision. So therefore, and this might come as a surprise to you, we can pay our taxes with gratitude because, again, they're symptomatic or evidence of, you might say, God's provision in your life. And of course, in exchange for that, we receive benefits. Now, we may disagree on how the government uses our money. We may feel that some of it's wasted or maybe even some is used in contradiction to our values. But what we can be assured of is that it's God ordained, that we've been told in the scriptures to honor the authority God has ordained in Luke 20 and Romans 13. So perhaps we ought to shift our thinking and think about not paying any more than we owe by any means, but with what we owe, paying it with thanksgiving to the Lord and thanking him for his gracious provision in our lives.

Think about that today. And let's head back to the phones. We've got two lines open, 800-525-7000. Speaking of W-4s, Crystal, I understand you have a question there in Hammond, Indiana. Go right ahead.

Hi, yes, hi. My daughter just turned 18 December last year, and as far as putting her as a dependent on my W-4, for what am I still allowed to do that? And also, my whole life I've always claimed zero, which I am now learning is the wrong thing to do. But how many, what all can I claim? Do I claim one for myself? Do I also claim one for my daughter? And so on. Yes.

Well, a couple of thoughts. Number one, just specifically related to your daughter, you can claim your 18-year-old child as a dependent if she's lived with you for more than six months and you provide more than half of her support. And if the answer to that is yes, then absolutely you can do that. With regard to how you would approach the W-4, you really just need to follow the instructions on the form. It's going to ask you to list all of your income, including self-employment. There's an online estimator at that you can use, or on the W-4 itself, there's actually a worksheet. But in addition to listing your income on that worksheet from all combined sources, you'll want to claim your children and other dependents, including that 18-year-old daughter, if the answer to those items that I just mentioned were yes. And then any items affecting your withholding, so income apart from your job that you expect to receive that won't have any withholding, things like that. Also any deductions other than the standard deduction that you expect to claim.

So it will all be laid out there for you and at the end, when you sign and date that and turn it into your employer, that will give them all the information they need to know how much to withhold so we can get as close to zero as possible. Certainly without you owing anything, but without you getting a big refund check back. Okay, that's wonderful. Thank you so much. Can I squeeze in one more question?

Yes ma'am, go ahead. Okay, I live in Indiana, but I work in Illinois. Now, my employer says that since Indiana is not a reciprocal state of Illinois, they don't have an agreement that they're not obligated to withhold my taxes, that I have to figure that out for myself.

Is that true? How do I go about doing that? Yeah, you can make those estimated payments. I think the key is that you know exactly what you should be withholding to cover those state taxes at the appropriate level.

This is where a CPA is going to be really helpful to you, Crystal, to be able to help you do some tax planning given this unusual situation where that is not automatically withheld given the difference in the resident state versus the state you're working in. To make sure that you're doing that on your own to do that withholding and making those estimated payments so you don't have any penalties or interest. And certainly you don't want that to catch you by surprise at the end of the year. So if you previously haven't used a CPA, I think this is certainly the time to do it to go and do some planning to make sure you're covering 2022.

But then also moving forward, you know the appropriate amount to withhold in the future. So I would reach out to a Godly CPA if you don't have one. You could contact a certified Kingdom advisor and ask for a referral. You'll find a CKA on our site at That's

Just click find a CKA. Thanks for your call today. God bless you.

To Florida. Hi, Norma. How can I help you? Thank you for taking my call. I'm calling because I have grandchildren that I would like I was going to I have an IRA and I was going to put them on there. But I called the company and the they told me they would advise me to go to a different different banks because they would only be getting 1% from them.

If something would happen to me or my husband right now, I'm going to put my husband on because I didn't even realize he wasn't on. So I have the form. So I wanted to put my other grandchildren just in case, you know, he passes. So what's your advice? I have one more quick question.

Sure. Well, with regard to the IRA, you certainly want to maintain up-to-date beneficiaries. And so if your husband's not currently listed, you'd want to make that change immediately. You could list your grandchildren in whatever breakdown you want as contingent beneficiaries if something were to happen to you and your husband. With regard to you saving for them, if you wanted to put some additional money aside for college, I would use what's called a 529 education savings plan. It's just a basic account based on the tax code that allows you to put in money. It's after tax dollars that go in, but it grows tax free. So long as you use it for qualified educational expenses, you could open one for each child and put in basically as little or as much as you want and let that grow between now and college.

To learn more about that, go to a website called saving for college dot com. It'll help you figure out which 529 is the best one for you and then go and get those beneficiaries updated. Thanks for your call. We'll be right back.

Grateful to have you with us today on faith and finance live. I'm Rob West. Let's go back to the phones. We've got all the lines full with some great questions coming up to Florida.

We go Triva. You're next on the program. Go ahead. Yes. Thank you for taking my call. Can you hear me OK?

Yes, ma'am. OK. My mother just recently passed away and she had her home and her house paid for her car. So, of course, it has to go to probate because it wasn't in my sister's or my name. But my question is, once that all sells, what's the best way to use the money that we get? I have a car payment. I don't know.

Should I pay the car off even though I'm it's not a problem to make my car payment? Yeah. All right.

Very good money. My husband and I are old. I'm obviously 60.

You know, you want to have some cash. Yeah, sure. You said your age is 60.

Is that right? I'm 61 this month. OK. And so are you and he working or one of you? I work full time and he has his own business, but he'll probably be retiring soon.

Well, I'm so sorry to hear about your mom's passing. How much do you think you'll receive when the estate's settled? I'm thinking close to at least 60,000.

It's split three ways. So her home should be, well, at least 150 plus the cars work 15. And she just had a small insurance policy.

Yeah. So you you'll receive about 60,000. Let me just kind of run through a few questions about your financial situation. Do you all have what I call an emergency fund of maybe three to six months worth of expenses and savings? Yes, I have about 9000 in savings. OK. What do you all spend on a monthly basis, roughly?

I only spend maybe 1500 because I think I clear close to 2000. I live pretty modestly here. OK. But do you and your husband kind of separate the bills or is that everything? He draws his security so that covers our house payment. So really, all I have is my car and my regular electric water, that kind of thing.

OK. So you feel like 9000 is enough for your emergency reserves. Beyond that, do you all feel like you're on track in terms of retirement savings? You know, when you both fully retire, other than your Social Security, do you have enough in the way of assets to supplement that?

I don't think so unless we were to sell our house because my husband always owns his business, so he never had a retirement plan. OK. Very good. And so does the business have value? Would it be sold when he's retiring?

He's actually a horse trainer, so not really. OK. All right. Yeah, no problem. So that would be one option is for you all to try to put as much of this away into retirement accounts as possible. I do also like the idea of paying off the car. So that would be one option. How much is left on the balance of that car note? About $26,000.

I just got it. OK. Yeah. So you could wipe that out. That would obviously free up more on a monthly basis that you could plow back into additional savings. If you want to do any giving on this, you could do that. And then the balance, perhaps you'd fund Roth IRAs. That would be retirement accounts individually. And you could put in over the age of 50, $7,500 this year. And so you could put in $7,500 for each of you or a total of $15,000 between the two of you. And before you file your 2022 return, you could actually go ahead and fund last year's at $7,000 apiece. So you could put in $14,000 for 2022 and then you could turn around and put in another $15,000 for 2023. So between the two of that, that would get you about all of this money allocated because you'd have $29,000 going into Roth IRAs that you could then invest and grow for the future. So you'd begin to build a little bit of a nest egg that would supplement Social Security in addition to now having your car paid off, which gives you more margin on a monthly basis. How does that sound?

It sounds good. Other than we've already submitted our taxes because my husband's business, we have to file by the 15th of March. Okay, so you could put at least $15,000 into 2023 Roth IRAs and that would get a good bit going there. And then you could either put the rest of that in savings or as a sole proprietor, essentially you could open what's called a SEP IRA, S-E-P IRA. And that would allow you to put in a good bit more, up to 25% of his compensation or north of $50,000. And that would give you a current year deduction on the amount going in and then it could be invested and grow for the future.

So those could be great options as well. I think you guys, if you've never spent any time with an advisor doing some planning, I think that might be helpful for you as well. Just to look at all of this in light of a financial plan, both looking at retirement, what are your income needs going to be down the road?

What about your insurance, your estate plan and wealth transfer plans, as well as kind of how to deploy this additional money you're going to be receiving. And if you're interested in connecting with an advisor, I'd reach out to a certified kingdom advisor there in Florida. You can find a CKA on our website at Just click find a CKA.

But apart from that, I think a SEP IRA or two Roth IRAs would be great options in addition to paying off the car. Alright, thank you so much. Okay. Thank you, Treva. Glad you called today. God bless you.

800-525-7000 to Huntington, Indiana. Hey, Ed, thanks for calling. Go ahead. My question is, okay, my wife and I, I've been saving for longer than her. I've been saving for retirement since I have been working full time when I was about 20. And after my wife and I married, I helped her set hers up and she's been saving a 401k as well.

Okay. During the over the years, because of the recession and different things, we've changed jobs. I currently have two separate 401ks because I did not roll the one over into the other. And my wife has three and we are still currently working, although she is only a couple of years away from retiring. She's a little older than I am. And I was looking at combining her two into a local institution retirement plan so that. I just want to make it easier for her to be able to go in and talk to somebody about if something should happen to me.

Sure. Where she can go in and say, hey, I need I need to raise how much I'm getting out of my retirement plan or something like that. And at the same time, then I was going to roll the one that I am no longer contributing to into a plan at the same place so that she could have access to that.

And the reason I'm saying this is because my dad's side of the family is notorious for not having a long lifespan. Yeah. Let me weigh in on this because I've got to hit a break here in just a second.

I totally agree. I think rolling this into two IRAs, so reducing the number of overall accounts will simplify things. The key is to find that trusted adviser. If you've got somebody locally, great. If not, you could find a certified kingdom adviser two or three to interview on our Web site at

Just click, find a C.K.A. You could do some planning, build a relationship that she could continue if you pass away before her, but also have that one IRA for each of you that is the recipient of these rollovers to get things a lot more simplified and invested together. We'll be right back on Faith and Finance Live. Stay with us. Grateful to have you with us today on Faith and Finance Live, where we recognize God owns it all and we're stewards and money is a tool to accomplish God's purposes. And when we make pursuing the kingdom our aim, well, money is not an end. It's a means to an end. And we apply biblical principles in our daily financial decisions as we work out our finances. But really, we're working out our faith because we're making a daily demonstration of what's most important to us and where we placed our trust.

And ultimately, that's how we should view our finances. Back to the phones to St. Louis. Hey, Doug, thanks for your patience. Go ahead. Hey, thank you so much. Enjoy the show. Thank you. Hey, I have a question about I have some insurance settlements coming and I am on disability. Can you tell me or do you have any really good information on how I should proceed with these insurance settlements versus my disability? It's not enough to offset the disability totally.

I'll probably live longer than that. But it's certainly going to have some implications. I appreciate your help. Thank you. Yeah.

In terms of what specifically are you trying to solve for here? Well, I understand the insurance settlements or tax not tax deductible. That's great. It's not taxable. If it's a personal injury claim, it would not be taxable at the federal or state level.

Okay. So would that have any implication on disability at all? And am I not going to have to file tax returns that I've got up now? All of a sudden, a bunch of money and now I'm going to be disqualified from disability. Yeah. No, there shouldn't be. I mean, if you still qualify as being disabled and unable to work, I don't see any reason there. You could certainly check with a CPA just to be sure in your specific situation. But I don't not hearing anything that would cause any problems there.

Gotcha. And a CPA should be able to cover any kind of investments or suggestions on what to do proceeding. Yeah, I think for that you would want an investment advisor, somebody who could really take a look at your overall financial picture and help you build an investment strategy to deploy this money in a way that makes sense for you and your goals and objectives. If you don't have an advisor, you could find a certified kingdom advisor there in St. Louis on our website at Just click find a CPA.

I think this is a great opportunity for you, Doug, to seek some wise counsel, both on the tax side as well as the the investing side, just so you've got somebody walking alongside you to help you make some really wise decisions. So hope you're OK in the at the end of the day. And I'm sorry to hear that you're you're going through this, but I appreciate your desire to be a faithful steward of these resources. And I think getting some competent counsel could really help you. Appreciate your call today, sir.

To Cleveland. Hi, Kathy. How can we help you? Hi.

Thank you for taking my call. I have three three retirement accounts. One that I started when I found out my employer didn't have a Roth option and and then a second one. That's my normal 401k that now does have a Roth option. So I've stopped contributing to the first one and just mostly going through my 401k. And then the third is an annuity that I rolled over from previous employers.

So the total of all three of them is around two hundred eighty two thousand. And when I talked to the financial advisor with Fidelity, that says my 401k, I thought I could roll over that. So the Roth that I set up and I found out I can't. So after meeting with him, I just all of a sudden thought the amount that's sitting there is about what I owe my house. So I owe about twenty seven thousand.

There's thirty two thousand sitting there. I'm looking at retiring in four to six years. And so I was kind of excited to think I'm just going to cash that in since I'm over forty or fifty nine and pay off my house. And when I called the financial advisor, he's advising me, oh, you don't want to do that. He said you don't come into lump sums of money like that too often.

So you should let it grow since you're only paying four percent or four and a quarter percent on your mortgage. Yeah. And so you said how much is the balance in all of these combined? The total combined right now is two eighty two.

And the one. So I have thirty two. That's in this account. I'm talking about 180 and my fidelity and thirty six in prudential. That's the annuity. But the thirty six is actually going to jump to one hundred thousand once once I don't touch it for 20 years. There's some kind of little note in there that says if you don't touch this account for 20 years, it it quadruples. So.

OK, so the thirty two thousand is a is a Roth IRA. Yes. OK. Yeah. So you could pull that out.

It wouldn't be taxable. And you said you balance on your mortgage is only twenty nine. Twenty seven. Yes.

Twenty seven. OK. Yeah. I mean, I would go I could go either way on this. I mean, obviously the point of these investments is for them to grow. And the Roth is a great option just because you've got that money in there growing tax free, which is a huge benefit in the sense that, you know, even once you retire, you still have, if you're in good health, a decades long need for this money to last. So this would be a part of your overall investable assets that could help to offset your income needs in retirement beyond what Social Security will cover, which was never intended to cover more than 40 percent. So I think what your adviser is saying is, man, as much as I hear you that you'd like to be debt free, I'd love to keep these assets growing and compounding for you, especially while the market's down right now, letting this recover and moving to higher ground. And and then you just make a goal out of your current cash flow to get that mortgage paid off by the time you retire. And if you do that, now you're entering retirement debt free, which keeps your lifestyle as low as possible, but you're maximizing your investable assets.

So you've got more to draw from down the road. So that's the financial case for it. What that's not counting, though, said Kathy, is just the peace of mind of you knowing that you've paid off your home and that it's free and clear. And if you feel like you have a leading from the Lord or a conviction to be debt free or that would just give you a greater peace of mind.

I don't have any problem with that. I mean, it's tax free money. You've already paid the tax on it.

As you said, you're not going to pay a penalty. And although you're only paying four percent or so on it, I think the non-financial benefit of you being unencumbered and knowing that you're completely debt free and now you've got this extra money now on a monthly basis, you could give away or sock into savings. I think that's a great idea. So, again, I could and I know I sound like I'm talking out of both sides of my mouth, but I think at the end of the day, you could do either one from purely a financial standpoint.

It'd probably be better to leave that money in the Roth and just let it grow and just keep paying that mortgage as much as you can and get it paid off by the retirement. But if you feel like you'd rather have your home free and clear, I'd say go for it and don't look back. Does that make sense? It does. And you're almost repeating word for word what the advisor said, so that gives me kind of confirmation. And I am paying extra toward my mortgage, so I'm on track to have it paid off in four years.

So there's not really a concern there. There was just that one moment that I thought I could do this. And one thing the advisor said is you could do it next year, too.

You know, anytime you want to do it, so I don't have to rush into it. Exactly. And if you waited till next year, you're probably going to let this 32,000 recover to maybe 35 or 36 or maybe higher than that as the market recovers. And then again, you could come in and wipe it out at that point. So I think that's good counsel. I just want to leave room for the Lord to lead you to do something that he wants you to do or that you feel compelled to do around paying off debt.

And if that was the case, I wouldn't want to stand in the way of that by any means. Absolutely. All right. Thank you very much. I really appreciate it. All right, Kathy, thanks for your call today. Let's finish in Florida.

Hey, Tom, what can I do for you, sir? I'm one of many that have bad damage to their home from the hurricanes or various storms and so forth. My question is, is surely I would guess that the insurance settlement would not be as income for tax purposes. That's correct. Your insurance settlement isn't taxable because it only replaces what you lost. However, it could be partially taxable if you've already claimed the cost of the damage as a deduction on your tax return. In that case, part of the settlement could be considered taxable. So I would check with the CPA. But if not, it would not be taxable because, again, it's it's replacing what you've lost. And so it's really not not income in that sense. Does that make sense?

Yes. But my question is, is that there's a difference between the settlement and the actual repairs. And a lot of times the the insurance settlement no way covers the the cost of the repairs. Is there any reason that that's going to be between you and your insurance company? And so that would be something I would take up with them. Obviously, Florida is in a really tough situation with regard to the state of the insurance environment.

And so you're going to have to go back to your insurance company and hopefully through documentation, you can help them to get to a number that's actually going to cover the cost of of the repairs. We appreciate your call today. Quickly to Trent in Indiana. Trent, I understand your father in law bought some I bonds and you're wondering about an additional five thousand through a tax refund. Is that right? Yes. Yeah.

Real quick, I'm calling behalf of my father law and mother law. I helped them set up their accounts to get the ten thousand dollar electronic version. To my understanding, is there an ability to get the five thousand dollar paper version? And if so, my research shows that you would have to do that through your tax return.

You're exactly right. That's the only way you can do it. So you have to buy the paper I bonds with a tax refund. You'd use the IRS form 8888 when you file. So just have them check with their CPA or if you do their return, you could do it for them. And you'd specify the numbers of bonds you want to buy and the denominations up to five thousand dollars. So that allows you to buy an additional five thousand beyond the ten thousand.

You can normally buy an electronic bonds, but it's only available through a tax refund. So you're exactly right. It would be a great option for them if that's what they're looking at doing. Hey, thanks for checking with us today, sir. That's going to do it for us today, folks. So thankful to have you along with us. I'm grateful for my team today.

Tahira, Amy and Jim. Money wise, excuse me, Faith and Finance Live is a partnership between Moody Radio and Faith. I hope you have a great rest of your day. Come back and see us tomorrow. We'll see you then. Bye bye. Moody Radio Spring Share event has officially ended, but we could still use your help. Will you partner with us in our mission to be bold for the gospel in 2023 to see our impact or partner with us? Visit spring share dot org.
Whisper: medium.en / 2023-03-24 12:32:26 / 2023-03-24 12:48:56 / 17

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