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Avoiding or Evading?

Richard Connor

Rick is a semi-retired aerospace engineer with a keen interest in finance. He retired from Lockheed Martin Space Systems after a 38-year career designing satellites. Rick is a lifelong Philadelphian with a bachelor's degree in mechanical engineering from Villanova University. He completed the Certified Financial Planner® and Retirement Income Certified Professional® programs at the American College of Financial Services. Rick and his wife Vicky have two sons and three grandsons. They recently retired to the Jersey Shore. Rick is an amateur winemaker and enjoys a wide variety of other interests, including chasing grandkids, sports, travel and reading. He's written more than 100 articles and blog posts for HumbleDollar.

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Avoiding or Evading?

Richard Connor  |  Apr 8, 2024

OUR INCOME TAX SYSTEM is based on voluntary compliance. Taxpayers are responsible for reporting all their income and paying the required taxes.
In assessing tax returns, the IRS differentiates between tax avoidance and tax evasion. Tax avoidance is “an action taken to lessen tax liability and maximize after-tax income,” while tax evasion is “the failure to pay or a deliberate underpayment of taxes.”
What are the major sources of tax evasion? Under-reporting income seems to be No.

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Owning My Mistake

Richard Connor  |  Apr 1, 2024

I RECENTLY WROTE an article about our purchase of a new primary residence, and our plans for our existing beach house. On the same day, HumbleDollar published a companion article that I also wrote. That second piece discussed the tax implications—and complications—of converting a former primary home to a rental property.
We had purchased the new home using a mortgage, and our plan was to refinance the beach house and use those funds to pay off the mortgage on our new primary residence.

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Losing Benefits

Richard Connor  |  Mar 25, 2024

SOCIAL SECURITY retirement benefits are a critical source of income for many seniors. But as I’ve discovered from preparing tax returns, there’s a lot of confusion surrounding two key issues.
The first issue: the reduction in benefits that occurs when folks claim benefits before their full retirement age (FRA) of 66 or 67, but continue to work. This is the so-called earnings test. If folks are under their FRA for the full year, the Social Security Administration will reduce their benefits by $1 for every $2 earned above $22,320,

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The Downside of Up

Richard Connor  |  Mar 14, 2024

SAVINGS YIELDS SOARED in 2023—and all that interest income is now showing up on people’s tax returns.
Forbes published historical average money-market rates based on FDIC data. The average rate in 2020 and 2021 was 0.1%. That jumped to 0.15% in 2022 and 0.59% in 2023. But remember, those are averages, and it isn’t difficult to find higher yields. For instance, interest rates on high-yield savings accounts are up sharply since spring 2022.

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Going Solo

Richard Connor  |  Feb 1, 2024

ON OUR RECENT TRIP to Alaska, I was surprised by the number of solo women passengers. It turns out I shouldn’t have been.
According to a recent report from Road Scholar, a not-for-profit travel company geared toward those age 50 and older, a quarter of its travelers were single, with 85% of them women. That group included married folks traveling solo. It’s a growing trend. The Road Scholar study reported that 60% of the company’s solo travelers in 2022 were married.

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Making Our Move

Richard Connor  |  Jan 16, 2024

VICKY AND I ALWAYS knew our retirement home would need to be near our two sons and their families, so we could be part of our grandchildren’s lives. It’s taken a few years and a pandemic, but we finally made that happen.
We purchased a new home in Monmouth County, New Jersey, in September 2023. We’ve now moved in, and we’re already enjoying more time with our grandsons. We’ve also met some very welcoming neighbors.

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Are We Qualified?

Richard Connor  |  Jan 16, 2024

WE SOLD OUR PRIMARY residence in the Philadelphia suburbs and moved to our New Jersey beach home in March 2021. The sale allowed Vicky and me to take advantage of what’s arguably the most valuable tax break available to everyday Americans: the capital-gains tax exclusion on the sale of a primary residence.
But while the tax break is valuable, it comes with strict and often-confusing rules—and those rules may work against us now that we’ve moved home yet again.

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Never Mind

Richard Connor  |  Oct 24, 2023

WHEN I LAST REPORTED on our retirement journey, we’d decided to put our search for a second home on hold. Well, in the immortal words of Saturday Night Live’s Emily Litella, “Never mind.”
We looked at many properties in several communities earlier this year, but we didn’t find anything we wanted to purchase. We decided on a cooling-off period, while we pondered what our next step should be. We kept a casual eye on properties coming up for sale,

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An Inside Look

Richard Connor  |  Oct 21, 2023

ALASKA FINALLY HIT the top of our bucket list. A number of friends had made the trip and returned with glowing reports of the scenery, wildlife and fresh seafood. Vicky and I each had our own No. 1 reason for the trip: She wanted to see whales, and I wanted to see the Northern Lights.
Alaska’s Inside Passage is often the destination for travelers headed to the 49th state. There’s a wide variety of ships that ply those waters,

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Roll This Way

Richard Connor  |  Aug 28, 2023

I THOUGHT I HAD a pretty good handle on health savings accounts, or HSAs. My wife and I contributed to HSAs over the decade before we retired. The money we accumulated has come in handy in the early years of retirement. I’ve also written several articles extolling their virtues.
But I recently learned that we missed an opportunity to further fund these accounts, while simultaneously reducing future required minimum distributions. The trick is to do a rollover from an IRA to an HSA.

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Die With Zero

Richard Connor  |  Aug 21, 2023

WHAT’S THE PURPOSE of life? Is it to die with as much money as possible or, as magazine publisher Malcolm Forbes was quoted as saying, “He who dies with the most toys, wins”? An intriguing and provocative book, Die With Zero, says no.
The book’s author is Bill Perkins, a successful energy trader. In it, he argues that the purpose of life is to accumulate as many fulfilling experiences as possible,

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What Medicare Misses

Richard Connor  |  Aug 15, 2023

ONE OF THE MORE challenging changes that comes with retirement is the loss of your employer’s health care benefits—and I’m not just talking about regular health insurance. Two other benefits that employers commonly provide are dental and vision coverage.
Traditional Medicare doesn’t cover common dental procedures, such as cleanings, fillings, extractions, dentures, dental plates and other dental devices. Medicare also doesn’t cover the cost of eyeglasses, lenses or contacts, which many of us were used to obtaining using our employer’s vision coverage.

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Cash Is Back

Richard Connor  |  Aug 10, 2023

MANY OF US ENJOY chasing discounts at grocery stores and other businesses. For instance, one of my favorite local wine shops gives discounts to club members. To sign up, all you have to do is provide your contact information.
Lately, the store has stopped requiring me to give my name when I make a purchase. Instead, employees automatically give me the discounted price. Maybe I’m buying too much wine and they recognize me.
In my area,

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Fuel or Friction?

Richard Connor  |  Jun 15, 2023

I RECENTLY LISTENED to an interesting Hidden Brain podcast discussing different ways of bringing about behavior change. The guest on the podcast was Loran Nordgren, a professor at Northwestern’s Kellogg School of Management and coauthor of a book entitled The Human Element. The discussion centered on two related concepts: fuel and friction.
Fuel is the stuff we use to motivate ourselves and the people in our lives. It can be positive or negative.

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The Journey Continues

Richard Connor  |  Jun 1, 2023

I WROTE MY ESSAY for My Money Journey 14 months ago. Since then, our family’s journey has continued apace—including rethinking where we live.
The highlight of the past 14 months was the addition of another grandchild. We now have four grandsons, ranging in age from five months to 10 years old. Last summer, our younger son and his wife purchased a home in Monmouth County, New Jersey, roughly an 80-minute drive north of us.

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