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The Ultimate Guide to Saving on Summer Music Festival Tickets, Food and Travel

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Source: Kellye Greene

Spring marks a time for many music and arts fans to prepare for the summer festival season. As they should. Music festivals like Coachella, Bonnaroo, Burning Man and Electric Zoo are famously possible among young people all over the world, but they are also infamous for being ridiculously expensive. Without proper planning, you could easily find yourself in a mountain of debt to see your favorite artists.

A general admission pass to three days at Coachella in 2018, for example goes for $429, plus any applicable taxes and fees. VIP passes start at $999. That’s before figuring out the cost of food and drinks while at the festival, getting there and where you’ll stay … but we will get to those figures later on.

For the average American, struggling to save $400 — in an emergency fund — let alone spend close to $1,000 to attend a music festival when it’s all said and done isn’t feasible. For the young person saddled with sky-high rent, low-paying jobs and student loan debt, seeing their favorite musician at a music festival can seem like only a dream funded by credit cards or very generous benefactors (read: parents).

“It’s not even the tickets to the festivals that gets expensive, it’s everything else.” said Kellye Greene, 30, a freelance software engineer in New York. “After college, I was not working the best job because of the recession back in 2009. I had to find a way to have these experiences or do these things. Finding all of these little hacks help me offset the cost of participating.”

MagnifyMoney spoke with Greene and a few regular festival goers to learn their best tips for saving money and still having a good time.

The tickets

Source: Kellye Greene

Volunteer

If you are willing and able to work for your entrance, volunteering at a festival is a great way to save money on tickets. There are dozens of different organizations you can volunteer with and various things you could do as a volunteer. You’d work a number or shifts in exchange for entrance to the event and still get to enjoy the festival.

Greene, also the regional director and president of New York chapter of DanceSafe, has been to about 36 festivals over the past eight years. At many of them, she volunteers with DanceSafe, a nonprofit organization focused on harm reduction at nightlife events and music festivals by passing out free condoms, ear plugs and information on alcohol and other drugs.

Greene usually has her entrance covered, and if she needs to travel she may get a travel stipend in exchange for working a number of shifts at the event. For example, when she went to Shambala in Canada, Greene says she worked a minimum two shifts and those guaranteed her ticket would be covered for the four-day event. This year’s pass runs around $325.

Like Greene, you could do something you’re passionate about. For example, an organization called Headcount requests volunteers to help register people to vote at music events, or you could volunteer as an ambassador with Paradocs, a service that brings in doctors, nurses, EMTs and paramedics, and offers free health care at events.

Or you could simply volunteer to help out. This year, Bonnaroo requires its volunteers, called C’roo members, to work three six-hour shifts. In exchange, they get a T-shirt, free showers, a meal token for every shift they work and access to enjoy the festival when they’re not working. That’s a decent trade-off, as a four-day general admission pass to the festival runs $325 plus taxes and fees.  You’ll want to sign up to volunteer as soon as you hear the opportunity is available, as volunteer opportunities may go quickly.

Work for pay

In a few cases, you could work for the festival for pay and get to enjoy some of the main event. Festivals generally hire a crew of workers to help on the day of the event. You may work the ticketing gates, security or possibly be part of the cleanup crew. These positions are hard to come by and generally require you to directly contact the festival coordinators to ask about work opportunities or apply online.

Events promotions company, Live Nation, generally posts paid positions available at its events on its website and other job sites. As of this writing, there’s an open ground control festival team member application listed on Glassdoor for Electric Forest 2018, hosted by Live Nation in Rothbury, Mich. The festival kicks off June 21.

Again, in this situation, you would work a few hours and generally be able to enjoy some of the music while you’re working or be let go early enough to enjoy some of the festival when you’re finished. In addition, you’d get a check in the mail in a few weeks that may ultimately offset auxiliary costs like food and lodging.

Buy your tickets early

Most festivals release a limited number of “early bird” tickets first that are generally priced lower than the regular ticket prices.

“If you plan ahead, the same ticket will cost less than if you wait until the last minute,” said Tucker Gumber, 30, aka The Festival Guy and founder of FestEvo, a company that creates tools for festival goers. Gumber has been to more than 130 festivals over the past seven years. He authored The Festival Goer’s Guide, and says early bird tickets are a simple way to save.

Beware: Some popular festivals may allow early-bird ticket purchases before releasing their lineup or the names of the headliners, so you may not yet know who you’re paying to see. For example, early bird tickets for The Peach Music Festival in Scranton, Pa., went for $99. Early bird tickets went on sale Dec. 21, 2018, before the initial lineup was released in January 2018.

“If the event has been running for multiple years you can look at previous years to see what kinds of bands have performed before,” said Greene. “You can save 100s of dollars. And if you decide you don’t want to go, you can resell the ticket.”

Festivals may also tier their ticket pricing based on the number of tickets already sold or certain cutoff dates for pricing. For the Peach Festival, there was a second tier of limited early bird passes that went for $135. After that, there are three tiers of regular advance passes at $165, $190 and $210. There is a final tier of passes, a last chance ticket for late birds, is priced at $245.

If you’re a loyal attendee, some festivals even offer early access to cheaper tickets if you’ve gone to a previous year’s festival. Again, they may be limited and may come out before the lineup is announced.

Wait for single-day tickets to go on sale

If you can’t swing the cost to attend all of the days a festival is held, you may be able to save by only paying to attend the days that have the artists you are truly dying to see and getting single-day tickets.

For example, a one-day pass to Panorama (plus fees) in 2018 is $125, a two-day pass is $215 and a pass for all three days of the music festival is $295.

Single-day passes are generally cheaper than purchasing passes for the entire duration of the festival, but they may not go on sale until later. As of this writing, four-day passes to Lollapalooza are available for $335, but single-day tickets are not yet on sale.

If there are only one or two artists in the lineup you’re dying to see, single-day tickets may be worth the wait.

Use the payment plan

You may not have the cash on hand to pay for a full-priced ticket when tickets come out. But you don’t want to run the risk of saving up only to watch tickets sell out. Most events offer payment plans for these cases. The plans allow you to break up the full cost of the ticket into more affordable payments.

For example, if you want to purchase a ticket to Governors Ball 2018, hosted by Front Gate Tickets, you would need to make a minimum purchase of $71 to qualify for the layaway plan. Passes start at $115 for the event, plus $20 fee, plus $15 in shipping which comes up to $150, so that’s easy to make.

The Governors Ball plan splits your payment into two. You’d pay 50% of your package and all fees associated, then have the other half automatically deducted from your account in April, two months before the event kicks off on June 1. If you miss the second payment, your Layaway Plan will be canceled, and you’ll be refunded all but the fees associated with your purchase, according to a Front Gate Tickets representative. For a $350 three-day pass, that’s $30 in applicable fees.

Firefly Music Festival in Dover, Del., has a similar payment plan option but only offers weekend passes. General admission weekend passes for the event beginning on June 14 start at $329, plus $29.99 in fees. Firefly’s EZ Pay payment plans are available for up to 7 months and you are automatically charged the same day as your original purchase date each month. The number of payments you are allowed will depend on how many months in advance you make your initial payment. If you bought a ticket in March, you’d get a two-part payment plan. So, you’d pay $179.50, and be charged the other half in April.

Travel and Lodging

Source: Joe DeIuliis

Stay with friends or family

You could save on lodging just by knowing someone in the area and asking if you could stay with them during the event.

“I very rarely have to worry about lodging because I try to go places where I know people,” said Greene. “If I don’t know people, I try to make friends.”

She says having friends nearby can make traveling alone a much better experience. Use your connections.

“Every single time I go to another city, I find another harm reduction group and befriend them. Most of the time I end up going to festivals I didn’t plan on going to,” said Greene. She linked with one group while visiting Amsterdam one year. “I just showed up and they provided me lunch, and I could hang out at the festival.”

You may also elect to use a peer-to-peer service like Airbnb if it’s a more affordable alternative compared with a hotel stay.

Use credit card rewards programs

If you’re savvy and budget-conscious, you could cover most of your travel and lodging expenses with rewards credit cards, like Joe DeIuliis, 28, in New Haven, Conn. DeIuliis has been attending about three to four festivals a year for nearly 10 years. At first, he was spending a lot of money.

“I was living at home and spending all of my money on just like traveling and going to festivals,” said DeIuliis, who was a student at the University of Pittsburgh at the time. After school, he moved away from home, got married and accepted a job in the pulmonary research lab at Yale.

“When I moved and accrued all of these other bills that real adults have, I had to figure out a way to still do this. I thought there has to be an easier cheaper way to do this,” said DeIuliis.

So he started reading up on how he could use airline miles and credit card rewards to pay for all of the auxiliary costs around the festivals to cut down the overall cost of the events.

Now, DeIuliis uses credit card rewards points to cover hotel stays, rental cars, flights and most other transportation expenses for both him and his wife, Rachel, to attend festivals like The Dirtybird Campout and Holy Ship! He’s been doing so for about four years and says he now pays for maybe 10% of their transportation cost out of pocket. They use their savings to have a better festival experience, overall.

“Camping is fun and if you have friends there you can stay with them but the comfort of being able to get in a rental car, and go to the hotel and get a hot shower is great,” said DeIuliis.

If you try this tip, make sure your bill is paid in full each month, otherwise high interest rates can offset any rewards you earn. You can use an online budgeting tool like Mint or You Need A Budget to stay on top of your bills. In addition, you should avoid opening cards for the bonus points only to cancel the cards later, as that could harm your credit score.

Camp (if it’s cheaper)

“A lot of times your cheapest option for lodging will be to camp,” said Greene, as its usually cheaper than a hotel or Airbnb.

Weekend (Thurs.- Mon.) car camping and tent camping passes at Coachella each run $113, for instance. As of this writing, hotel rates for the second weekend of Coachella (April 19-23) range from around $410 to more than $500 per night per room to accommodate two adults, according to Google Maps.

“It’s a cheap option but it’s not luxurious in any kind of way,” said Greene. She says to avoid festivals in remote areas if you’re not a camping kind of person. “If its way in the middle of nowhere you’re not gonna have many hotel options.”

Generally, campgrounds will have some amenities like public showers, charging stations and lounges with Wi-Fi. Sometimes festivals will provide “glamping” options like a cabin or tents for you.

Glamping (glamorous + camping) is a little fancier. They are pre-made camping options with some amenities, depending on how much you pay. Coachella’s glamping options started around $2,458 for two, plus two general admission tickets. A four-person tent with 4 VIP passes cost $5,600.

Plan to go with a group

You could roll solo to a festival and have a great time making new friends, but it may be more cost-effective to go with a group.

“Try to reduce the amount of money it costs to get to the venue by carpooling,” advised Gumber.

Not only would you cut your overall cost in gas, but you may save on lodging, too. To purchase a single-car camping pass for Bonnaroo 2018, you’d pay $59.75 per car, not per person, so you may be able to split the cost among a car pool of friends.

If you don’t happen to know enough people to form a group and are open to meeting new people, you may be able to find a Facebook group of fans planning to attend the festival, and coordinate with some folks to go together.

Choose a festival nearby

You don’t have to cross the country for the festival experience. There are so, so many music and arts festivals that there is likely one in your state or region of the country.

Choose a festival that will require you to travel the least to help save some money on travel. The Music Festival Wizard website has an interactive map you can use to check for festivals nearest  you.

If you live in New York City, for example, the map shows five music festivals within the five boroughs. You’ll likely be able to take public transit and walk to most festivals in the Big Apple.

Food and Drink

Source: Joe DeIuliis

Festival food is notoriously pricey and festivals typically start around noon and end after midnight, according to Greene.

“It’s harder to avoid eating inside when you are at most non-camping festivals because they don’t allow re-entry so you can’t leave for food,” said Greene. “Save a lot of money or at least be prepared to deal with the eating situation.”

Vendors know your options are limited, too. You may be there for 12 hours and if re-entry isn’t allowed or the line is very long, you may not want to leave and waste some of your expensive ticket.

“Put money aside to feed yourself. If you’re at a festival and you’re going to be purchasing food it’s not going to be cheap,” said Collin Molina, a 25-year old aspiring musician in Philadelphia.

If you have some time between purchasing your ticket and going to the festival, do your best to set aside money to buy food at the event. Molina says budgeting to spend about $20 per meal should be sufficient.

Compare options and make sure you know what you’re eating, Molina advises. He says to try to get something filling, like a high-protein meal that will keep you feeling fuller longer, so you don’t have to buy too many meals.

Always bring a water bottle (and snacks, if you can)

Most festivals allow you to bring in an empty, reusable water bottle and provide free water refill stations. Take advantage of that perk and always bring a water bottle so you can keep yourself hydrated for free and have something to drink with meals.

Many non-camping festivals don’t allow you to bring in food, but If you are allowed to take snacks into the festival with you, you should bring some.

Eat something before you get in

“Eat before you get into the venue and pre-plan your meals to save money on concessions,” said Gumber.

Greene says she also would boil eggs to eat just before she walked into the festival. You can help keep hunger at bay by keeping yourself well hydrated throughout the day or using stimulants, too.

“Stimulants like coffee and energy drinks will suppress your appetite as well. Some people are smokers so nicotine does that, too,” said Greene.

Plan out your meals

Planning your meals can help you shave down some of your cost regardless of whether you’re camping and bringing your own food, or planning to purchase food from vendors on festival grounds.

If you’re camping, you’ll generally be able to cook and leave and return to the festival, so that may help cut the cost to feed yourself while there.

“We would just make a trip to the grocery store and figure out what would be good to cook,” said Molina of the times he would camp at festivals.

“It’s a different kind of shopping, almost like survival shopping,” Molina added. He recommends trying to get things that are simple, easy to make and filling.

General Tips

Learn to budget

If you know ahead of time that you’re planning to attend a festival on a tight budget, you can plan to save money ahead of the event. Do the math, and budget set aside some money each paycheck to cover the cost of the event .

The last thing you want to do is rack up debt attending a music and arts festival because you didn’t take care to do at least a little financial planning. MagnifyMoney has a wealth of articles on budgeting you can use to help plan attending your next festival.

Really, don’t break the bank to go to a music festival

This tip may be a tough one to swallow, but it needs to be said because at the end of the day, you have got to look yourself in the mirror and be honest.

“Abstaining is the top way to save money. If you really can’t afford it, don’t stretch your budget,” said Molina. He says he knows he’ll likely get another chance to see most of the performers and acts that he wants to see later on. Sooner or later they will return to the venue, festival or city, and you will get another chance.

The Festival Guy signs off on this tip, too.

“If you’re not in the right place to go to the festival financially, sit this one out and plan ahead for the next one,” said Gumber. He advises anyone who loves the festival experience not to let FOMO (fear of missing out) drive them into debt or worse.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Brittney Laryea
Brittney Laryea |

Brittney Laryea is a writer at MagnifyMoney. You can email Brittney at brittney@magnifymoney.com

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Tax Reform 2019 Explained

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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As the 2019 tax deadline approaches, many Americans will feel the impact of last year’s tax tax reform for the first time. It was the most sweeping rewrite of the tax code in more than three decades, after all.

Of importance to most tax filers is the fact that the new tax law altered the federal income tax brackets, doubled the standard deduction and changed many other tax credits and deductions.

The bill, originally known as The Tax Cuts and Jobs Act, didn’t have an easy journey. It was first introduced in the House of Representatives in November 2017, and was signed into law by President Donald Trump on Dec. 22, 2017 after vigorous debate and multiple versions of the bill made their way through both the House and Senate.

With all the developments since then, you may have forgotten about these sweeping tax changes until now. But as you get ready to file your tax return this year, you should prepare for some of the changes that could affect you.

What’s changing— and what isn’t

The majority of the new tax law’s changes went into effect Jan. 1, 2018, which means people filing their 2018 taxes in 2019 will need to take these changes into consideration.

Read on or jump ahead to read about the rules you’re most interested in:

529 college savings plans

A 529 college savings plan is a tax-advantaged savings account designed to encourage saving for qualified future higher-education costs, such as tuition, fees and room and board. Your money is invested and grows tax free.

Old Rule

New Rule (Effective Jan. 1, 2018)

Previously, 529 plan savings could only be used on qualified higher education expenses.

New Rule (Effective Jan. 1, 2018)

In a major victory for wealthier families, you can now use 529 savings for private K-12 schooling.

Tax benefits are now extended to eligible education expenses for an elementary or secondary public, private, or religious school.

The new rules allow you to withdraw up to $10,000 a year per student (child) for education costs.

ACA individual mandate

The individual mandate was a key provision of the Affordable Care Act that required non-exempt U.S. citizens and noncitizens who lawfully reside in the country to have health insurance.

Old Rule

New Rule (Effective Jan. 1, 2019)

Consumers who did not qualify for an exemption and chose not to purchase insurance faced a range of tax penalties, depending on income.

New Rule (Effective Jan. 1, 2019)

The individual mandate is out.

Starting Jan. 1, 2019, consumers who do not purchase health insurance will no longer face penalties.

GOP lawmakers argue that the measure will decrease spending on the tax subsidies it offers to balance out the cost of premiums for millions of Obamacare enrollees.

However, without the mandate, experts caution that fewer healthy and young people will sign up for health coverage through the insurance marketplace, which will likely lead to increases in premium costs for those who remain the marketplace and could even induce some insurers to drop out of the market altogether. It’s a big blow to supporters of the long-embattled health care law.

Alimony

Old Rule

New Rule (Effective Jan. 1, 2019)

The individual paying alimony or maintenance payments can deduct payments from their income. The person receiving the payments includes them as income.

New Rule (Effective Jan. 1, 2019)

The person making alimony or maintenance payments does not get to deduct them, and the recipient does not claim the payments as income. This goes into effect for any divorce or separation agreement signed or modified on or after Jan. 1, 2019.

Alternative minimum tax

The individual alternative minimum tax, or AMT, often imposed on higher-income families, especially those with children, who live in high-tax states — but not necessarily the ultra rich. It requires many households or individuals to calculate their tax due under the AMT rules alongside the rules for regular income tax. They have to pay the higher amount. Whether or not a someone pays AMT depends on their alternative minimum taxable income (AMTI). AMTI is determined through a series of assessments of a taxpayer’s income and assets — the explanation of calculating AMTI takes up two pages in the tax bill, so we’re not getting into the details here.

Old Rule

New Rule (Effective Jan. 1, 2018)

The exemption amount is $84,500 for married joint-filing couples, $54,300 for single filers and $42,250 for married couples filing separately.

The AMT exemption begins to phase out at $120,700 for singles, $160,900 for married couples filing jointly and $80,450 for married couples filing separately.

New Rule (Effective Jan. 1, 2018)

The AMT is here to stay but fewer households will have to face it.

Under the new rules, which are in effect from Jan. 1, 2018 through Dec. 31, 2025, married couples filing jointly will be exempt from the alternative minimum tax starting at $109,400. Exemption starts at $70,300 for all other taxpayers (other than estates and trusts).

The exemption phase-out thresholds will rise to $1,000,000 for married couples filing jointly, and $500,000 for all other taxpayers.

Bicycle commuting

Old Rule

New Rule (Effective Jan. 1, 2018)

Taxpayers can exclude up to $20 a month of qualified bicycle commuting reimbursements from their gross income. That includes payments from employers for things like a bicycle purchase, bike maintenance or storage. Workers can claim the exclusion in any month they regularly use a bicycle to commute to work and do not receive other transit benefits.

New Rule (Effective Jan. 1, 2018)

The exclusion is suspended through 2025.

Child tax credit

Old Rule

New Rule (Effective Jan. 1, 2018)

The current child tax credit is $1,000 per child under the age of 17.

The credit is reduced by $50 for each $1,000 a taxpayer earns over certain thresholds. The phase-out thresholds start at a modified adjusted gross income (AGI) over $75,000 for single individuals and heads of household, $110,000 for married couples filing jointly and $55,000 for married couples filing separately.

New Rule (Effective Jan. 1, 2018)

The child tax credit doubles to $2,000 per qualifying child. Up to $1,400 of the child tax credit can be received as refundable credit (meaning it can go toward a tax refund). The new rule also includes a $500 nonrefundable credit per dependent other than a qualifying child.

The credit begins to phase out at an AGI over $200,000 — for married couples, the phase-out starts at an AGI over $400,000.

This rule is in effect through 2025.

Corporate taxes

Old Rule

New Rule (Effective Jan. 1, 2018)

Under a four-step graduated rate structure, the current top corporate tax rate is 35 percent on taxable income greater than $10 million.

New Rule (Effective Jan. 1, 2018)

Permanently cuts the top corporate tax rate to 21 percent.

Estate taxes

The estate tax, aka the “Death Tax” is a tax levied on significantly large estates that are passed down to heirs.

Old Rule

New Rule (Effective Jan. 1, 2018)

Estates up to $5.49 million in value were exempt from the tax.

The top tax rate was 40 percent.

New Rule (Effective Jan. 1, 2018)

Doubles the exemption for the estate tax.

Now, estates up to $11.2 million are exempt from the tax.

Gains made on home sales

Old Rule

New Rule (Effective Jan. 1, 2018)

Homeowners can exclude up to $250,000 (or $500,000, if married filing jointly) of gains made when selling their primary residence, as long as they owned and primarily lived in the home for at least two of the five years before the sale. The exclusion can be claimed only once in a two-year period.

New Rule (Effective Jan. 1, 2018)

Homeowners can still exclude gains up to $250,000 (or $500,000 if married filing jointly) when they sell their primary residence, but they have to have lived there longer. People who sell their homes after Dec. 31, 2017 now have to use the home as their primary residence for five of the eight years before the sale in order to claim the exclusion. It can only be claimed once in a five-year period.

The new rule expires on Dec. 31, 2025.

Medical expenses

Old Rule

New Rule

Taxpayers were previously allowed to deduct out-of-pocket medical expenses that exceed 10 percent of their adjusted gross income or 7.5 percent if they or their spouse were 65 or older.

New Rule

The threshold for all taxpayers to claim an itemized deduction for medical expenses is lowered to 7.5 percent of a filer’s adjusted gross income.

The change applies to taxable years from Dec. 31, 2016 to Jan. 1, 2019.

Miscellaneous tax deductions

Taxpayers can take the miscellaneous tax deduction if the items total more than 2 percent of their adjusted gross income. The amount that’s deductible is the amount that exceeds the 2 percent threshold. These are some of the major changes coming to the miscellaneous tax deduction.

Old Rule

New Rule (Effective Jan. 1, 2018)

Tax preparation: Taxpayers can today claim an itemized deduction of the amount of money they pay for tax-related expenses, like the person who prepares their taxes or any software purchased pr fees paid to fee to file forms electronically.

Work-related expenses: Under current law, workers can deduct unreimbursed business expense as an itemized deduction, like the cost of a home office, job-search costs, professional license fees and more.

Investment fees: Taxpayers can currently deduct fees paid to advisors and brokers to manage their money.

New Rule (Effective Jan. 1, 2018)

Tax preparation: Taxpayers may not claim tax-preparation expenses as an itemized deduction through 2025.

Work-related expenses: The bill suspends work-related expenses as an itemized deduction through 2025.

Investment fees: Under the new rules, the investment fee deduction is suspended until 2025.

Mortgage and home equity loan interest deduction

Old Rule

New Rule (Effective Jan. 1, 2018)

Currently homeowners are allowed to deduct interest paid on mortgages valued up to $1 million on a taxpayer’s principal residence and one other qualified residence.

They can also deduct interest paid on a home equity loan or home equity line of credit no greater than $100,000. These are itemized deductions.

New Rule (Effective Jan. 1, 2018)

New homeowners can include mortgage interest paid on up to $750,000 of principal value on a new home in their itemized deductions.

The old, $1 million caps continues to apply to current homeowners (those who took out their mortgages on or before Dec. 15, 2017), as well as refinancing on mortgages taken out on or before Dec. 15, 2017, as long as new mortgage amount does not exceed the amount of debt being refinanced.

Homeowners CAN deduct interest paid on a home equity line of credit or home equity loan, so long as the loan was used to buy, build or substantially improve your home.

These changes are set to expire after 2025.

Moving expenses

Old Rule

New Rule (Effective Jan. 1, 2018)

Current law allows taxpayers to deduct moving expenses as long as the move is of a certain distance from the taxpayer’s previous home and the job in the new location is full-time.

New Rule (Effective Jan. 1, 2018)

The new tax bill suspends the moving expense deduction through 2025. Until then, taxpayers are not permitted to deduct moving expenses.

Moving-related deductions and exclusions remain in place for members of the military.

Pass-through businesses

Pass-through businesses are generally small businesses (also some big firms) that don’t pay the corporate income tax. Instead, the owners report the corporate profits as their own income and pay taxes based on the individual tax rates along with their regular personal income tax.

Some of the common types of pass-through businesses are partnerships, LLCs (limited liability companies), S corporations and sole proprietorships.

Old Rule

New Rule (Effective Jan. 1, 2018)

All pass-through business owners’ income was previously subject to regular personal income tax.

New Rule (Effective Jan. 1, 2018)

Under the new laws, pass-through business owners can deduct up to 20 percent of their qualified business income from a partnership, S corporation or sole proprietorship.

Individuals earning $157,500 and married couples earning $315,000 are eligible for the fullest deduction.

Personal casualty or theft

Old Rule

New Rule (Effective Jan. 1, 2018)

Under current tax law individuals can deduct uninsured losses above $100 when property is lost to a fire, shipwreck, flood, storm, earthquake or other natural disaster. The deduction is allowed as long as the total loss amounts to greater than 10 percent of the taxpayer’s adjusted gross income.

New Rule (Effective Jan. 1, 2018)

The new tax bill only allows taxpayers to claim the deduction if the loss occurred during a federally declared disaster, through 2025.

Personal exemptions

Old Rule

New Rule (Effective Jan. 1, 2018)

Taxpayers can reduce their adjusted gross income by claiming personal exemptions — generally for the taxpayer, their spouse and their dependents.

Taxpayers could deduct $4,050 per exemption in 2017, though the deduction is phased out for taxpayers earning more than certain AGI thresholds. The phase out begins at an AGI over $313,800 for married couples filing jointly, $287,650 for heads of household, $156,900 for married couples filing separately and $261,500 for all other taxpayers.

New Rule (Effective Jan. 1, 2018)

Personal exemptions have been suspended through 2025.

Standard deductions

Old Rule

New Rule (Effective Jan. 1, 2018)

Taxpayers who do not itemize can claim the current standard deduction of $6,350 for single individuals, $9,350 for heads of household or $12,700 for married couples filing jointly

New Rule (Effective Jan. 1, 2018)

Standard deductions for all nearly double under the new rules.

Individuals see standard deductions rise to $12,000; forlim heads of household, it rises to $18,000; and for married couples filing jointly the standard deduction increases to $24,000.

State and local tax (SALT) deduction

Old Rule

New Rule (Effective Jan. 1, 2018)

Taxpayers may include state and local property, income and sales taxes as itemized deductions.

New Rule (Effective Jan. 1, 2018)

Taxpayers are limited to claiming an itemized deduction of $10,000 in combined state and local income, sales and property taxes, starting in 2018 through 2025.

Taxpayers cannot get around these limits by prepaying 2018 state and local income taxes while it is still 2017. The bill says nothing about prepaying 2018 property taxes.

Student loan debt discharge

Old Rule

New Rule (Effective Jan. 1, 2018)

Currently, student loan debt discharged due to death or disability is taxed as income.

New Rule (Effective Jan. 1, 2018)

Under the new tax bill, student loan debt discharged due to death or disability after Dec. 31, 2017, will not be taxed as income. The rule lasts through 2025.

Tax brackets and income taxes

Old Rule

New Rule (Effective Jan. 1, 2018)

There are currently seven tax brackets.

The rate on the highest earners is 39.6 percent for taxpayers earning above $418,400 for individuals and $470,700 for married couples filing taxes jointly.

New Rule (Effective Jan. 1, 2018)

The new rules retain seven tax brackets, but the brackets have been modified to lower most individual income tax rates. The new brackets expire in 2027.

Top income earners — above $500,000 for individuals and above $600,000 for married couples filing jointly — falls from 39.6 percent to 37 percent.

The majority of individual income tax changes would be temporary, expiring after Dec.
31, 2025.

2017 Tax Brackets

New Tax Brackets (Effective Jan. 1, 2018)

Single Individuals

Taxable Income

Tax Bracket

Taxable Income

Tax Bracket

$9,325 or less

10%

$9,525 or less

10%

$9,326-$37,950

15%

$9,526-$38,700

12%

$37,951-$91,900

25%

$38,701-$82,500

22%

$91,901-$191,650

28%

$82,501-$157,500

24%

$191,651-$416,700

33%

$157,501-$200,000

32%

$416,701-$418,400

35%

$200,001-$500,000

35%

Over $418,400

39.60%

Over $500,000

37%

Married Individuals Filing Joint Returns and Surviving Spouses

Taxable Income

Tax Bracket

Taxable Income

Tax Bracket

$18,650 or less

10%

$19,050 or less

10%

$18,651-$75,900

15%

$19,051-$77,400

12%

$75,901-$153,100

25%

$77,401-$165,000

22%

$153,101-$233,350

28%

$165,001-$315,000

24%

$233,351-$416,700

33%

$315,001-$400,000

32%

$416,701-$470,700

35%

$400,001-$600,000

35%

Over $470,700

39.60%

Over $600,000

37%

Heads of Households

Taxable Income

Tax Bracket

Taxable Income

Tax Bracket

$13,350 or less

10%

$13,600 or less

10%

$13,351-$50,800

15%

$13,601-$51,800

12%

$50,801-$131,200

25%

$51,801-$82,500

22%

$131,201-$212,500

28%

$82,501-$157,500

24%

$212,501-$416,700

33%

$157,501-$200,000

32%

$416,701-$444,550

35%

$200,001-$500,000

35%

Over $444,550

39.60%

Over $500,000

37%

Married Individuals Filing Separate Returns

Taxable Income

Tax Bracket

Taxable Income

Tax Bracket

$9,325 or less

10%

Not over $9,525

10%

$9,326-$37,950

15%

$9,525-$38,700

12%

$37,951-$76,550

25%

$38,701-$82,500

22%

$76,551-$116,675

28%

$82,501-$157,500

24%

$116,676- $208,350

33%

$157,501-$200,000

32%

$208,351-$235,350

35%

$200,001-$300,000

35%

Over $235,350

39.60%

Over $300,000

37%

Tax deductions that won’t be changing

Teacher deduction

Teachers can deduct up to $250 for unreimbursed expenses for classroom supplies or school materials from their taxable income.

Electric cars

Electric car owners who bought a vehicle after 2010 may be given tax credit of up to $7,500, depending on the battery capacity.

Adoption assistance

Adoptive parents are allowed a tax credit and employer-provided benefits up to $13,570 per eligible child in 2017.

Student loan interest deduction

Student loan borrowers may deduct up to $2,500 on the interest paid for student loans every year.

FAQ: Tax filing tips for 2019

Taxes for tax year 2018 are due to the IRS by April 15, 2019.  Some filers may face an unwelcome surprise this year if they end up owing more taxes than usual, while others may receive a nice refund they weren’t expecting.

What if I owe taxes due to tax reform?

You might have been overpaying or underpaying on your taxes in 2018, which could mean a tax bill or bigger-than-expected tax refund this time around.

To avoid confusion, consult a tax professional and consider adjusting your allowances on your W-4.

If you end up owing taxes, you’ll need to pay your bill by April 15th or contact the IRS to sign up for a payment plan. Late payments will result in penalties and additional fees.

When can I expect my tax refund?

The IRS typically sends out tax refunds within 21 days of receiving your filing. It can take longer in some occasions, depending on your situation. If you file your return electronically, you can check the status of your refund after 24 hours from filing, through the IRS’ Where’s My Refund? tool. If you mail in your return, you can check the status four weeks after mailing. You can also use your smartphone to download the IRS2Go app to check your refund status.

How should I spend my tax refund?

It’s certainly tempting to use the money to book your next much-deserved vacation. But treating yourself isn’t necessarily the best way to spend your tax refund. Instead, consider stashing it away inside a savings vehicle and forgetting you even had extra cash to spend. An easy option is to boost your emergency savings by depositing your refund in a high-yield online savings account. That will grow your refund efficiently over time and can save you some financial grief in the future. Here are some of the best savings accounts with high rates:

Institution
APY
Minimum Balance to Earn APY
Online Savings Account from Citizens Access
Citizens Access

2.35%

$5,000

LEARN MORE Secured

on Citizens Access’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations
High Yield Savings from Synchrony Bank
Synchrony Bank

2.25%

$0

LEARN MORE Secured

on Synchrony Bank’s secure website

Advertiser Disclosure.

We'll receive a referral fee if you click here. This does not impact our rankings or recommendations
A savings account can be easily accessed in case you need the funds in a pinch, unlike with a high-rate certificate of deposit. A CD works better if you need to save towards a longer-term goal, like making a down payment on a house in a few years. Once you make your deposit into a CD, it grows undisturbed for the length of its term. In exchange for leaving your deposit untouched with the bank, you get to grow your CD funds at high interest rates, resulting in some solid savings growth when the term ends. Here are some of the best one-year CD rates:

Institution
APY
Minimum Balance to Earn APY
12 Month CD from Synchrony Bank
Synchrony Bank

2.80%

$2,000

LEARN MORE Secured

on Synchrony Bank’s secure website

High Yield 12-Month CD from Ally Bank
Ally Bank

2.75%

$0

LEARN MORE Secured

on Ally Bank’s secure website

Other options include using your refund to expand your investment portfolio or placing the funds in an IRA. Investing your refund can be a riskier way to grow your money since your returns depend on the market instead of an APY. And of course, saving in an IRA is a smart way to invest in your retirement future. The IRS even allows you to split your refund between multiple accounts when you sign up for direct deposit. This makes it easy for you to save your refund in various ways.

Brittney Laryea and Shen Lu contributed to this article. 

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Lauren Perez
Lauren Perez |

Lauren Perez is a writer at MagnifyMoney. You can email Lauren here

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News

How the Next Government Shutdown May Affect Your Small Business

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

government shutdown
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When Texas business owners Veronica and Craig Bradley put together an application for a loan from the U.S. Small Business Administration, they detailed the risks big and small that could derail their startup brewery.

The couple filled a page with hypothetical unexpected events that could prevent Vector Brewing from making a profit, going so far as to include their own deaths, according to Veronica Bradley.

“The one thing we didn’t account for was a government shutdown,” she said. “Who thinks that’s going to happen?”

A partial government shutdown started Dec. 22, days before the Bradleys planned to submit an application for a $1 million SBA loan to fund the construction and operation of Vector Brewing in Lake Highlands, Texas. The SBA went dark during the 35-day shutdown, delaying SBA funding for many small business owners like the Bradleys.

The federal government reopened a record 35 days later on Jan. 25 after the House and the Senate passed a stopgap spending bill to restore operations until Feb. 15. If that deadline rolls around without a permanent funding agreement, the government could fall into a second shutdown that would impact small businesses still recovering from the first.

Negotiators in Congress have reached a tentative deal that would evade another shutdown, but it’s not yet set in stone. And although the recent shutdown was the longest in U.S. history, it was far from being the first one. There have been 21 stoppages in government funding since 1976, with three shutdowns occurring in 2018 alone.

The Bradleys aren’t waiting for the other shoe to drop — they have a contingency plan. They learned valuable lessons the first time around and are better prepared for another shutdown. We’ll help you understand the widespread impact of the shutdown and help you make your own plans for any unforeseen circumstances.

Effects of the shutdown

The partial government shutdown directly impacted 21% of business owners, creating delays and interrupting regular operations.

In addition to the suspension of SBA loan approvals, federal data services were inaccessible. The E-Verify system was suspended during the shutdown, which meant business owners could not use the platform to confirm the employment eligibility of new workers. Private-sector entities that experienced business shortages during the shutdown will likely never recoup that lost income; about $3 billion in lost GDP growth will not be recovered either.

Small government contractors were hit hard – 41,000 small business contractors lost $2.3 billion in revenue, according to data from the U.S. Chamber of Commerce. “It is really eye opening, down to the nickel and penny of what some of these small business owners lost,” said Tom Sullivan, vice president of small business policy for the U.S. Chamber of Commerce.

What would a second shutdown mean for small businesses?

Two back-to-back shutdowns could deal a major blow to small business owners who depend on the federal government, not just for data services or the loans it guarantees, but also for important federal permits. The Bradleys are among numerous brewery owners waiting for permits from the Alcohol and Tobacco Tax and Trade Bureau needed to brew and sell beer. The timing of a possible second shutdown would be another huge hit, as it could limit the scope of the IRS as tax season nears.

The threat of a second shutdown is on Bradley’s mind every time she writes a check. Until the SBA loan comes through — she and her husband were finally able to apply in late January — the Bradleys must pay business expenses out of pocket. The brewery isn’t open yet, but the Bradleys’ landlord, attorney, financial advisor, contractors and architects are waiting for payment, Bradley said.

“This has been a very scary balancing game,” she said.

Before the shutdown, her banker told her to expect to receive funding in eight to 12 weeks. Now, the SBA doesn’t know how long it will be until the loan is funded, she said.

The Bradleys’ home state of Texas is second only to California in suffering the effects of the partial government shutdown, according to research from ValuePenguin (ValuePenguin and MagnifyMoney are both owned by LendingTree). Since 2010, the SBA has issued more than $177 billion in 7(a) loans, the most common SBA loan for small business owners, with the most money going to entrepreneurs in California, Texas, New York, Florida and Ohio, per ValuePenguin. SBA loans typically range in size from $500 to $5 million. The SBA does not loan directly to business owners, instead guaranteeing loans issued by partner lenders such as banks, community development organizations and microlending institutions. Backing from the SBA reduces risk for lenders and helps business owners qualify for financing with favorable interest rates and repayment terms.

As those banks waited for SBA approvals, the money slowed, which has business owners like Bradley wondering if another government shutdown could impact business owners who rely on any type of bank financing, not just SBA loans solely. If SBA loans are off the table, she said competition could increase for other small business loans or lines of credit. A lack of access to capital has long been a complaint of small business owners.

“Everyone who wanted to go the SBA route is going to have to clamor for other sources of income,” or else wait, potentially stifling growth, she said. “This affects everyone.”

Alternative lenders are an option

Bernardo Martinez is U.S. managing director of Funding Circle, one of many online lenders serving as an alternative to brick-and-mortar banks that have long dominated small business lending. Although he is not expecting banks to retract from business lending, a pause would create an opportunity for alternative lenders like Funding Circle to serve more business owners.

When traditional financing is out of reach for any reason, alternative business lenders can provide funding solutions for small business owners. Funding Circle had strong loan originations in January, Martinez said, but the company isn’t crediting the shutdown.

“In January, we saw a good volume month,” he said. “But I do not believe we can pinpoint specifically to the shutdown.”

Like Funding Circle, many online business lenders could provide faster time to funding than traditional banks with less stringent eligibility requirements. These lenders consider factors such as customer reviews and current cash flow when approving borrowers, but rates are typically higher than other types of business loans.

Although Martinez said Funding Circle isn’t planning to target business owners affected by a government shutdown, online small business lender QuickBridge has a video on its homepage discussing the benefits of alternative lenders during unforeseen circumstances, including the government shutdown.

At Funding Circle, “that will create an opportunity, but right now we’re not thinking about it or seeing it in the market,” Martinez said.

How to prepare for the next shutdown – or any business interruption

As the possibility of another shutdown looms, Bradley is weighing her financing options for the brewery. Before deciding to pursue an SBA loan, Bradley and her husband considered bringing on investors or using online crowdfunding platforms to raise money. If their SBA loan is delayed a second time, they might return to their original strategy.

“If it stays shut down for a week, I see it staying shut down for another month,” she said. “If the government shuts down for another 30 days we can’t wait.”

Bradley is putting together materials to present to investors and considering asking her bank for a small business loan to tide them over until more financing comes through, she said. It’s important for small business owners to have a back-up plan if things go wrong, she said, even if it’s not ideal.

How to handle the unexpected

Keep communication open.
Like any relationship, you need open communication with the people you do business with, Bradley said. If you’re facing financial trouble or other issues within your business, you should inform your vendors, advisors and anyone else who interacts with your company.

Vendor relationships became imperative during the shutdown for business owners who needed to catch a break, said Sullivan at the U.S. Chamber of Commerce.

Bradley was able to work out a deal with her landlord and contractors after explaining the delay in SBA funding. Being upfront helps you maintain credibility and trustworthiness as a business owner, she said.

Track your spending.
Keep track of every penny you spend, Bradley said, especially when you’re in distress. You should keep your personal and business finances separate so you can clearly see how much you’re putting into the business. When it’s time to apply for financing, you’ll likely need to explain your business spending to be approved for a loan, she said.

Understand your financial needs.
If you need to apply for business financing to get you through a rough period, you should know the specific expenses that you need to cover, Martinez said. That way, you would be able to borrow the exact amount you need, rather than estimating too high or too low. You would have a better chance of finding the right lender if you know exactly what you need, he said.

Read the fine print.
Keep your financial documents in order so you could apply for financing at a moment’s notice. Be sure to understand each lender’s terms and conditions before applying, Martinez said, especially if you’re looking for financing from an alternative lending institution. Each lender has its own pricing structure, and you may want to talk to the lender directly to understand what’s required of borrowers, Martinez said.

Stash money in an emergency fund.
You should generally have three to six months’ worth of expenses saved in case of emergency — that would give you a financial cushion to fall back on during any kind of business interruption, such as a government shutdown. It could also be a good idea have a line of credit or credit card available as well if you don’t have enough in your emergency account.

“Whether it’s a wildfire, a flood or a government shutdown, there’s an opportunity there for small business owners to rethink their cash flow and think very seriously about creating reserve funds,” Sullivan said.

If the federal government shuts down again, even if the closure lasts a few days, the repercussions for small business owners could be monumental. You should prepare as best you can to minimize the impact on your operation.

“Those 35 days it was shut down put us at least three months behind,” Bradley said. “It’s crazy.”

This article contains links to ValuePenguin, which, similar to MagnifyMoney is a subsidiary of LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Melissa Wylie
Melissa Wylie |

Melissa Wylie is a writer at MagnifyMoney. You can email Melissa at melissa@magnifymoney.com

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