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Op/Ed

A welcome sight: Good news for standard deduction on your taxes!

(OPINION / EDITORIAL) The Standard Deduction is going up in 2021! Let’s find out why this is a good thing, and how this is getting 2021 off to a good start

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Hands on calculator and notebook while calculating standard deduction in taxes.

I know it’s a bit early to start thinking about this, but I do have some good news regarding taxes to pass along – the standard deduction rate is going up in 2021! If you’re a bit unsure how that’s beneficial, let’s take a quick look into what this means and how it helps you keep a little extra money in your pocket.

Crash Course in Taxes
Very, VERY quickly: The amount you owe in taxes is a function of your income minus several deductions to arrive at a number that is then multiplied by a percentage (your tax bracket). After applying any credits, this final figure is what is paid to the government. The general rule is higher earners are taxed more.

A bit more detail
When calculating annual taxes to be paid to the IRS, there’s a lot of different numbers involved to consider. At its core, taxes function in relation to income, and earners must pay an amount that correlates to their adjusted gross income (AGI), which is your gross (or “total”) income minus some deductions (paying into a 401k, student loan interest payments, and others).

After doing this, earners can choose to do a standard or itemized deduction. This value is subtracted from the AGI, and effectively lowers taxable income. The standard deduction is a set amount that is applied without any calculation needed; it is always $X. An itemized deduction requires filling out forms that show a collection of deductions – payments to charities, state income tax, etc. – that are totaled and then applied, and thus can be more or less than the standard deduction.

Following these calculations, there was a time when additional personal exemptions were allowed, but this was phased out after the Tax Cuts and Jobs Act of 2017.

At this point, a percentage is applied against the number to determine how much is owed. This is known as a tax bracket; higher incomes are taxed at greater percentages. There’s a bit more nuance than “earning more = paying more,” but for the sake of this article, we’ll leave it at that.

Finally, tax credits – if applicable – can be applied, and reduce the pure amount owed on a dollar-per-dollar basis. This is slightly different than deductions, which reduce the amount of taxable income. In both situations, larger deductions and/or credits result in fewer taxes that must be paid.

Why a larger standard deduction in 2021 matters
Starting in 2021, the standard deduction will increase across the board for individual filers, married couples, and heads of household. Individuals will increase from $12,400 to $12,550 (adding $150), married couples from $24,800 to $25,100 (adding $300), and head of household from $18,650 to $18,800 (adding $150). This is also higher for persons over 65 and/or blind individuals. Here’s the IRS link directly for 2021.

An increased standard deduction – which is generally utilized over itemized for the majority of tax brackets – means that most earners will end up with a lower taxable income amount. This translates to fewer taxes owed and thus more money retained. In effect, this means more cash in pockets across the nation, which can help bolster the economy, increase savings, and otherwise benefit consumers across the board.

It is worth noting that the Tax Cuts and Jobs Act of 2017 increased the standard deduction and is generally seen as having simplified the tax code to the benefit of most Americans.

Should I take the standard deduction over itemized?
While this question is a bit tricky and should be considered on a case-by-case basis and I strongly encourage speaking with a CPA for a definitive answer, the standard deduction is substantial, requires far less paperwork, and does prevent miscalculation (in the sense that it doesn’t require additional math, and thus lowers the probability of making a mistake). As such, it makes the most sense for the average person.

You should consider the itemized route if you think that the total amount of deductions is more than the standard deduction. If so, you’ll want to itemize, as this results in a lower amount of taxable income; this will of course translate to less taxes owed and thus more money saved.

Examples of itemized deductions include interest on mortgages, charitable contributions, high medical expenses, and/or a large amount of state and local taxes paid.
It should be noted that the number of people who go with the itemized approach tends to increase in the upper echelons of income. Myself – having not yet reached these levels – can only guess as to why this is; hopefully you can check back with me in the next ten years for an answer, which I’ll preferably deliver poolside while sipping margaritas.

Here’s a good starting primer with regard to taxes in 2020, and here’s another.

Remember: This is for 2021
This may be obvious, but for the sake of being clear, the increased standard deduction is for 2021. I know – again – that’s obvious, but I want to clarify simply because this means it won’t kick in until next year in 2022. When taxes are filled out this year in 2021 for earnings in 2020, the standard deduction will still be the current rates (e.g., $12,400 for individuals).

In other words, the benefit won’t be seen until next year with regard to tax refunds and so on. But hey! It’s something to look forward to, and every little bit helps. The general advice is that you – as an individual – should take all reasonable steps to maximize the amount of your income that you take home. And next year, you’ll get that additional bump.

Conclusion
The big takeaway here is that the standard deduction is increasing for our upcoming year of 2021, and we’ll see the benefit of that when we file taxes in 2022. While this won’t affect individuals who go with an itemized deduction, it will help the majority of earners.

So let’s take the wins as they are given to us – we all deserve some.

Robert Snodgrass has an English degree from Texas A&M University, and wants you to know that yes, that is actually a thing. And now he's doing something with it! Let us all join in on the experiment together. When he's not web developing at Docusign, he runs distances that routinely harm people and is the kind of giant nerd that says "you know, there's a King of the Hill episode that addresses this exact topic".

Op/Ed

Morning rituals of highly successful people – do you have one?

(EDITORIAL) Success looks different for everyone. But even as an individual, there are some patterns you can incorporate in your morning routine that can get you started on the right foot. Let’s take a look at what successful people do in their morning rituals.

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realtor working

Fleximize took a look at the morning habits of 26 of the country’s most successful individuals to include the President of the United States Barrack Obama, Arnold Schwarzenegger, Steve Jobs and even Oprah Winfrey.

What was discovered? Well, each of the men and women on their chart start their day early with time blocked out for exercise and meditation, breakfast and family. In short, things that are important!

Someone, somewhere coined it best: “If it has to happen, then it has to happen first!” Everyone has an “it.” Anyone who has managed to find professional success is surely embracing this philosophy. The first hour(s) of the day are used doing whatever is one’s top-priority activity. And no sooner do you start you risk the priorities of everyone else creeping in.

Interestingly enough, exercising in the morning is one of the group’s top priorities. It’s been said many times that exercise helps keep productivity and energy levels up and better prepares us for the everyday challenge of achieving all we can.

From start to finish, the daily life of each successful person is very much dictated by their family and job. But there are definitely some patterns that we can all incorporate into our own lives to achieve higher success and order.

An Insider article found that “the most productive people understand how important the first meal of the day is in determining their energy levels for the rest of the day. Most stick to the same light, daily breakfast because it works, it’s healthy for them and they know how the meal will make their mind and body feel.”

The Fleximize chart demonstrates that successful people consider the quiet hours of the morning an ideal time to focus on any number of things: important work projects, checking email, meditation. And what’s more, spending time on it at the beginning of the day ensures that it gets complete attention before others chime in.

So check the chart and find someone you can relate to.

BI points out that planning the day, week, or month ahead is a crucial time management tool designed to keep you on track when you’re in the thick of it. Using the mornings to do big-picture thinking helps you prioritize and set the trajectory of the day!

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Op/Ed

If ‘likes’ are dead and no longer matter, what does?!

(OPINION / EDITORIAL) Social media likes don’t equal people ‘Like-liking’ you. What should you measure instead?

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likes in social media

What is “like”? Baby, don’t hurt me… but it’s the same as what it “meant” in middle school.

As in, it could mean any number of things, most of which aren’t as deep as you were lead to believe.

A lot of us are still hanging on to a like count translating directly to how many sales we’ll make, or how valuable our presence online is, and news like Instagram shutting down like counts threw people who land between the extremes of gas station flip-flop brands and Nike on the ‘How well are we known, and how much does it matter’ spectrum for a serious loop.

Well, this is where you exit the loop, because the likes are made up and the counts don’t matter.

That’s a bit harsh, let me try that again…the amount of likes you get on something doesn’t matter as much as you think it does.

Take YouTube’s interface for example. You can like a video to show your support, or dislike it because you disagree or think it sucks. Here’s the twist: it doesn’t actually matter how much a video was liked or disliked. YouTube just sees people interacting with the content, and doesn’t discriminate between fame and infamy when it bumps things up the lines for more people to view.

If any given shoe company shared a video of grade-school age kids working on our athletic wear, it’s highly likely that there’d be a lot of comments, a lot of likes, and a wave of dislikes.

Are the likes edgelords agreeing just to ‘own the libs’? Do they like the production values? Do they like the company values? Do those likes belong to repeat customers or not? Are they being liked because the person behind the account gave herself tendonitis being on her phone all day for a solid week, and selecting which playlist to put it in was too painful, so she just added it to her liked videos to save it for later because the Advil is too far away?

You have no idea.

And the same goes for any and every other platform out there. Ergo, strategy, presentations, and investments based on number of likes are all castles built on shifting sand.

I still remember a long form content-style commercial for some…keto…thing? With a witch in it, and she got her revenge body, and…stuff? Slapped a like on it. Did NOT buy that keto stuff. I couldn’t even tell you if it was a drink, powder, bar, or a gym at this point. We’ve come back full circle to the era of people remembering fun commercials, but not moving past that.

So what DOES matter?

Comments: Kind of.

You actually have to read these to see what’s valuable. There’s nothing sadder than having an alert go off with ‘10 new comments!’ but all of them are ‘I made 10k in a week working from my moonbase’ type spam.

Moreover, if all of the comments are negative, you’re doing great as far as eyeballs on all the ads you have supporting your site, but not so great on actually spreading what’s going to get you paid paid.

Shares: Sort of.

Have you ever seen a ‘hate share’? Those shares where your friends put a poor horrifically abused animal on your feed for NO GOOD REASON other than to show how much they hate the person that did it? Your brand content is not immune.

And not everyone’s settings will let you see the spirit in which something was shared. They could be buying. They could be outraged. The important thing here is that you monitor as much as possible, and don’t fall for the ‘no bad publicity’ line. You’re not the late Anna Nicole Smith (…right?). You’re a business owner.

Purchases: Mostly.

This always bothered me back in other places I worked. We’d huddle up, and cheer over an email generating loads of opens and buys—woo, we did it troops, we’re on the way up, and so forth.

The catch was usually that this email was about a giveaway, or a huge sale.

When we used the same formula in titling, formatting, and getting hyped about other emails that offered products at full price? Crickets. And now that you can purchase through new social media integrations, we’re facing the exact same potential for premature e-celebration with old new media.

If no one’s willing to buy your product/service at full price, purchases during sales periods are nothing to get super excited about.

We’ve gone through a lot of caveats here, good job following it all! This is where we get to the positive part.

Follows are something you can reliably keep track of!

It’s confusing since Facebook uses the same verb for inviting a page into your life, and doing whatever with an individual post, and also you can follow without liking, or still like a page but unfollow it, so I’ll call the phenomenon of clicking a button that will put your content into people’s feeds free of charge (somewhat) ‘follows’.

Follows are people saying ‘I need you by me, beside me, to guide me.’

It’s someone being totally willing to let your company be a part of their day. It’s a reliable stop-gap measure between awareness and purchasing! Hate-follows are ‘a thing’, but unless your brand pages are set to follower-only (which…WHY), you’re more likely to know that the folks following you like-like you, and you can adjust your focus accordingly!

This whole article can be summed up as ‘You can’t make quantitative data the only thing you look at.’ Even going by follows, if you have high follows, but low purchases, it’s probable that the people you’re pitching to don’t have the capital you’re actually aiming for. Not to get woo on this, but a human-focused, holistic approach to analyzing your social presence’s performance is your only option for success.

Whether or not you include bells and incense is up to you.

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Op/Ed

Working harder isn’t always financially smarter (there’s a better financial path)

(FINANCE) Getting that pay increase can cause you to spend a little extra money on the things you like, but trying to keep that level of comfort is hard.

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money pile

One summer I was a lifeguard. I earned $2.70 an hour. My first check was around $250. I was so money! I hit Contempo Casuals and I was able to buy an entire outfit and have a few bucks left.

My income was increasing and so was my taste. It’s called lifestyle creep and it happens to hard-working folk when they aren’t paying attention. Workers start out earning minimum wage, get a raise, then move on to a better paying job. Repeat.

As you earn more, you spend more and sometimes your PBR lifestyle is replaced with a craft beer attitude.

Whether you are a broker or have multiple side hustles, working harder to make more money isn’t always the answer, according to finance experts.

As Peter Dunn, aka Pete the Planner explains, the only thing better than a lot of money, is not needing that money.

Lifestyle creep happens when people have more income and they reward themselves, maybe buying a fancier car, buying nicer furniture, dining out at nicer restaurants, taking expensive trips. You get the picture.

But, as The Motley Fool, explains, rather than saving that extra money you are making, you have spent it. Should an emergency happen, or your income takes a dive, you will have a hard time going backward. And, you probably don’t have the income set aside for an emergency situation.

“When your lifestyle creeps up with your income, you’ve just become more and more dependent on your income,” according to Dunn’s blog.

But, you say, wait a minute! I’ve worked hard and I deserve that nice car and those fancy meals and drinks out at the hot spots.

Ok. First, you need to have a budget and, according to experts, save at least 20% of what you earn. As The Motley Fools lays it out, if you can buy the item and still reach your savings target, you are good.

You should also ask: Does the expense improve your life enough to justify the purchase?

How to know if those purchases are worthwhile? Be intentional about what you buy. See something you really want. Write it down, wait 30 days. Still can’t get it out of your head. Buy it. As Money Under 30 suggests, create a fun fund. Have your savings automatically deposited and determine how much can go toward fun each month.

Avoiding the “creep” is important if you are thinking long-term and considering what retirement will look like. If you can stick to your savings goals and manage your spending in the years leading up to retirement, Dunn says, adjusting to a lower income won’t be as challenging.

“Retirement planning is so focused on saving money,” Dunn says in his blog. “Yet, breaking your dependence on your income is a huge part of retirement success.”

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