Here’s a tip for taking advantage of rising interest rates

Dear Liz: Now that interest rates on savings accounts have started to rise, I have a little advice for you: check the rate you are getting on your accounts! I found out that my online bank changed its account structure a few years ago and old high yield savings account holders were not benefiting from the recent increases. I was only earning a paltry 0.3%, while people who had opened accounts more recently were earning over 2%. I’m sure many customers like me assumed they had high yield accounts, since that’s what they originally opened, but they actually don’t get competitive rates.

Answer: Thanks for the warning. People who have certificates of deposit should also check to see if these CDs have expired. Some banks renew CDs at competitive rates, while others funnel the proceeds into a low-rate account. A little vigilance can help you get a much better rate of return.

A spouse’s debt, your credit score

Dear Liz: My spouse and I added each other as authorized users on our credit cards. My spouse has more debt than me. Does this impact my credit scores?

Answer: Maybe. Credit score formulas see how much available credit is used on each account. If your spouse has higher balances than you, but also higher credit limits, your credit scores may not be affected much, if at all. If, on the other hand, your spouse is using most of their available credit, your scores could suffer.

Most services that provide credit scores (possibly including your bank and credit cards) usually offer explanations of why your scores aren’t higher. If the explanations include something about excessive credit use, you might want to consider removing yourself as an authorized user of the problematic cards.

Sort IRA Taxes

Dear Liz: My traditional IRA contains both before- and after-tax contributions. (Some years I was not allowed to deduct contributions because I participated in an employer’s retirement program.) Now I’m retired and planning to do Roth conversions from the traditional account . I confess that I was a little careless in keeping track of the total after-tax contributions. For the past 10 or so years I’ve used one of the most popular tax programs and let it track the tax base and fill out 8606 forms. I recently rebuilt all my IRA contributions since 1985 to check the base and found that the amount the software calculated was about $15,000 lower. Is it possible to fix this so that you don’t end up paying taxes on the wrong basis?

Answer: Yes, but it could be a difficult process, depending Marc Luscombe, principal analyst for Wolters Kluwer Tax & Accounting.

As you know, when you do Roth Conversions you are required to pay taxes on the portion of your IRA that represents deductible contributions plus earnings. But you don’t have to pay tax on the part of your account that represents your non-deductible contributions – this is called your tax base. A higher base means less tax, so fixing it may be worth it.

You’ll need to go back and correct each Form 8606, starting with the oldest year, Luscombe says. The corrections should reflect the traditional IRA contributions for that year, including the dollar amount, any deductions taken, and the return of any excess contributions.

Send the corrected 8606 to the same service center where you will send the tax return for conversion. If you took distributions from the account, your taxable portion calculations may also be wrong. You can correct this for the last three tax years, but you won’t be able to recover excess tax paid in previous years, Luscombe says.

Liz Weston, Certified Financial Planner, is a personal finance columnist for Nerd Wallet. Questions can be sent to him at 3940 Laurel Canyon, No. 238, Studio City, CA 91604, or by using the “Contact” form at asklizweston.com.

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