horizons - march 2020€¦ · reducing debt should always be a priority. whether you have debt from...

Horizons Insurance andFinancial SvcsMauricio GiraldoDirector10620 Griffin Road -Suite 103Cooper City, FL 33328954-862-1735925-588-4078mauricio@thehorizonsfinancial.comwww.thehorizonsfinancial.com

Horizons - March 2020Working from Home: Is It Rewarding orRestricting?Spring Cleaning Your Way to Better FinancesDo I need to purchase flood insurance even ifI don't live in a high-risk area for floods?Cartoon: Personal Financial Disorder

Horizons - March 2020Planning Your FutureDue Date Approaches for 2019 Federal Income Tax Returns

See disclaimer on final page

Dear clients and friends,We are only going into the third month of2020 and there is already so much going onthat you could think the world is going to end.Concerns about the Corona virus spreading,the stock market dropping a huge percentagein a week affecting 401K balances and marketinvestments, presidential campaign in fullgear and attacks between candidates, etc.Just remember that most of these things youcan't control, therefore, there is no point inlosing sleep over them...what you can doinstead is making sure you are taking theappropriate measures to protect you, yourfamilies, your assets. Make sure you aretaking care of your health, your nutrition,review your financial plans, make sure yourinvestments are well diversified and that yourinsurance policies are in place with thecoverage you need...most importantly, takecare of your spiritual being...think positive,have faith and do not let all these negativeenergy affect your health and well being.Mauricio G.

Tax filing season ishere again. If youhaven't done soalready, you'll wantto start pulling thingstogether — thatincludes getting yourhands on a copy ofyour 2018 tax returnand gathering W-2s,1099s, and

deduction records. You'll need these recordswhether you're preparing your own return orpaying someone else to prepare your tax returnfor you.Don't procrastinateThe filing deadline for individuals is generallyWednesday, April 15, 2020.Filing for an extensionIf you don't think you're going to be able to fileyour federal income tax return by the due date,you can file for and obtain an extension usingIRS Form 4868, Application for AutomaticExtension of Time to File U.S. IndividualIncome Tax Return. Filing this extension givesyou an additional six months (to October 15,2020) to file your federal income tax return. Youcan also file for an extension electronically —instructions on how to do so can be found in theForm 4868 instructions.Filing for an automatic extension does notprovide any additional time to pay your tax.When you file for an extension, you have toestimate the amount of tax you will owe andpay this amount by the April filing due date. Ifyou don't pay the amount you've estimated, youmay owe interest and penalties. In fact, if theIRS believes that your estimate was notreasonable, it may void your extension.

Note: Special rules apply if you're living outsidethe country or serving in the military and onduty outside the United States. In thesecircumstances, you are generally allowed anautomatic two-month extension (to June 15,2020) without filing Form 4868, though interestwill be owed on any taxes due that are paidafter the April filing due date. If you served in acombat zone or qualified hazardous duty area,you may be eligible for a longer extension oftime to file.What if you owe?One of the biggest mistakes you can make isnot filing your return because you owe money.If your return shows a balance due, file and paythe amount due in full by the due date ifpossible. If there's no way that you can paywhat you owe, file the return and pay as muchas you can afford. You'll owe interest andpossibly penalties on the unpaid tax, but you'lllimit the penalties assessed by filing your returnon time, and you may be able to work with theIRS to pay the remaining balance (options caninclude paying the unpaid balance ininstallments).Expecting a refund?The IRS is stepping up efforts to combatidentity theft and tax refund fraud. New, moreaggressive filters that are intended to curtailfraudulent refunds may inadvertently delaysome legitimate refund requests. In fact, theIRS is now required to hold refunds on all taxreturns claiming the earned income tax credit orthe additional child tax credit until at leastFebruary 15.Most filers, though, can expect a refund checkto be issued within 21 days of the IRS receivinga tax return.

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Working from Home: Is It Rewarding or Restricting?Imagine that your employer gives you thechoice between working from home orcommuting to the office throughout your workweek. You might think the obvious choice is towork from the comfort of your own home; afterall, staying in your pajamas all day and avoidingstressful commutes sound appealing. But thereare some considerations to think about beforeyou decide that telecommuting is right for you.Weigh the potential rewards...Working from home could end up saving you aconsiderable amount of money. It eliminatesthe cost of commuting by cutting down whatyou spend on gas, public transportation,parking fees, and car maintenance. Anddepending on your company's dress code, youcould save what you might spend on expensivework-related clothes.Besides reducing some of your daily expenses,working from home could provide moreopportunities and increased productivity.Telecommuting might mean you are no longertied to a single location, which could allow youto explore more flexible work opportunitieswithin the company. Working from home mayalso motivate you to use your time moreeffectively and accomplish more for yourcompany because you'll save time commuting.Balancing work and family life could be easierwhen you work from home, as well. Time thatyou might spend traveling to work,appointments, and family obligations will besaved when you no longer have to schedulearound a daily drive to and from the office.Depending on your company's flexibility and thedemands of your job, working from home mayeven eliminate or reduce child-care needs foryour children, giving you more time to spendwith your loved ones in addition to saving youmoney.It's possible that you could be healthier byworking from home. Your exposure toco-workers who come to work with a cold or theflu is reduced, which prevents you from havingto take a sick day to visit your doctor. You mayalso wind up feeling less stressed when youdon't have to worry about commuting orpotential work-life issues....against the potential restrictionsBefore you get too excited about the appeal ofworking from home, consider the drawbacks.For instance, telecommuting could affect yourwork performance. Isolation from the office may

result in your professional achievements beingoverlooked, which could potentially delay apromotion or raise. Less opportunity to interactregularly with co-workers might mean missingout on important information or a sense ofloneliness. Plus, distractions around your homecan interfere with your daily responsibilities andcould result in a negative response from youremployer.Another financial downside of working fromhome is the prospect of providing your ownoffice materials. Does your company provideyou with supplies and equipment, such as acomputer, printer, and fax machine? Will youneed to pay for office setup, postage services,scanners, and high-speed Internet, amongother items?Think about how your increased presence athome may result in higher home utility usage.Specifically, you'll probably spend much of yourtime using energy-consuming technology toperform your job. In turn, this could cause yourgas and electric bill to spike. Practicing energyefficiency may help reduce the bill, but you stillmight have to pay more than you'd like eachmonth as the cost of working from home.Additional points to considerIf your employer allows you to work from home,think about a few other things besides how itwould affect your wallet.• Consider whether your home has appropriate

space to accommodate a home office• Understand that you may need to seek

remote tech support occasionally to performyour job

• Think about whether you're self-directed andable to work well independently in a homesetting

• Set expectations for yourself• Become familiar with any company policies

that may apply to remote employeesIt's possible that you can strike a balance andchoose to work from home one or two days aweek, thereby reaping more of thetelecommuting positives than negatives. Youcould also ask to undergo a trial period to makesure that working from home is truly what worksbest for both you and your employer.

Telecommuting, or workingfrom home, is offered bymany employers to theiremployees. Find outwhether the financialadvantages anddisadvantages of workingfrom home make it a viableoption for you.

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Spring Cleaning Your Way to Better FinancesSpring is a good time to clean out the cobwebs,and not just in your home or apartment. Yourpersonal finances can benefit from a goodspring cleaning, too. Here are some questionsto ask yourself regarding your budget, debt,and taxes.Is there room in my budget to savemore?A budget is the centerpiece of any goodpersonal financial plan. After tallying yourmonthly income and expenses, you hopefullyhave money left over to save. But... is thereroom to save even more? Review your budgetagain with a fine-tooth comb to see if you mightbe able to save an additional $25, $50, $100, or$200 per month. Small amounts can add upover time. If you participate in a workplaceretirement plan, you might not even notice yourslightly smaller paycheck after you increaseyour contribution amount.If your expenses are running neck and neckwith your income, try to cut back ondiscretionary spending. If that's not enough,look for ways to lower your fixed costs orexplore ways to increase your current income.Budgeting software and/or smartphone appscan help you analyze your spending patternsand track your savings progress.Do I have a strategy to reduce debt?When it comes to your personal finances,reducing debt should always be a priority.Whether you have debt from student loans,credit cards, auto loans, or a mortgage, have aplan to pay down your debt as quickly aspossible. Here are some tips.• Credit cards. Keep track of your credit card

balances and be aware of interest rates andhidden fees; manage your payments so youavoid late fees; pay off high-interest debt first;and avoid charging more than you can pay offat the end of each billing cycle.

• Student loans. Are you a candidate forincome-based repayment? You can learnmore at the Federal Student Aid website.

• Additional payments. Making additionalloan payments above and beyond yourregular loan payments (or the minimumpayment due on credit cards) can reduce thelength of your loan and the total interest paid.Online calculators can help you see theimpact of making additional payments. Forexample, if you're halfway through a 30-year,$250,000 mortgage with a fixed 4.5% interestrate, an additional principal payment of $150a month can shave two years off yourmortgage. An extra $250 a month can shaveoff three years!

• Refinancing. If you currently have consumerloans, such as a mortgage or auto loan, takea look at your interest rate. If you're paying ahigher-than-average interest rate, you maywant to consider refinancing. Refinancing to alower interest rate can result in lower monthlypayments and potentially less interest paidover the loan's term. Keep in mind thatrefinancing often involves its own costs (e.g.,points and closing costs for mortgage loans),and you should factor these into yourcalculation of how much refinancing mightsave you.

• Loan consolidation. Loan consolidationinvolves combining individual loans into onelarger loan, allowing you to make only onemonthly payment instead of many.Consolidating your loans has severaladvantages, including saving you time on billpaying and record keeping and making iteasier for you to visualize paying down yourdebt. In addition, you may be able to get alower interest rate.

• Paying down debt vs. investing. To decidewhether it's smarter to pay down debt orinvest, compare the anticipated rate of returnon your investment with the interest rate youpay on your debt. If you would earn less onyour investment than you would pay ininterest on your debt, then using your extracash to pay off debt may be the smarterchoice. For example, let's say you have$2,000 in an account that earns 1% per year.Meanwhile, you have a credit card balance of$2,000 that incurs annual interest at a rate of17%. Over the course of a year, your savingsaccount earns $20 interest while your creditcard costs you $340 in interest. So paying offyour credit card debt first may be the betterchoice.

Do my taxes need some fine-tuning?Spring also means the end of the tax filingseason. You might ask yourself the followingquestions:• Am I getting a large tax refund or will I owe

taxes? In either case, you may want to adjustthe amount of federal or state income taxwithheld from your paycheck by filing a newForm W-4 with your employer.

• What else can I learn from my tax return?Now is also a good time to assess taxplanning opportunities for the coming year,when you still have many months left toimplement any strategy. You can use lastyear's tax return as a reference point, thenmake any anticipated adjustments to yourincome and deductions for the coming year.

When it comes to yourpersonal finances, reducingdebt should always be apriority.

All investing involves risk,including the possible lossof principal, and there is noguarantee that anyinvestment strategy will besuccessful.

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Horizons Insurance andFinancial SvcsMauricio GiraldoDirector10620 Griffin Road -Suite 103Cooper City, FL 33328954-862-1735925-588-4078mauricio@thehorizonsfinancial.comwww.thehorizonsfinancial.com

Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2020

Horizons Insurance and FinancialServices, Inc does not providelegal, tax, or variable investmentadvice.

Do I need to purchase flood insurance even if I don'tlive in a high-risk area for floods?It depends. Powerful storms,inadequate drainage, meltingsnow, and hurricanes can allcause serious flooding

damage, even if you don't live in a high-riskflood area. According to the National FloodInsurance Program (NFIP), approximately 20%of all flood insurance claims come from areasoutside high-risk flood zones. Since standardhomeowners insurance generally does notcover damage directly caused by flooding, youmay want to consider purchasing floodinsurance, especially if you live in an area ofthe country that is prone to severe weathersystems that could result in flood damage toyour home.If you plan on purchasing flood insurance, it isimportant to note that you can't simply buy floodinsurance as an endorsement to your currenthomeowners policy. Instead, if eligible, you canpurchase a separate flood insurance policythrough an insurance company that participatesin the NFIP.

A flood insurance policy can provide floodprotection for both your home and its contents.You can purchase up to $250,000 of coveragefor the building itself and up to $100,000 ofcoverage for the contents. If the value of yourhome exceeds the amount available throughthe federal program, you may be able to buyexcess flood insurance through a privateinsurer. Excess flood insurance coversamounts above the $250,000 federal limit and,unlike NFIP coverage, may cover your home forits full replacement cost.Keep in mind that even though flood insuranceoffers some degree of protection forflood-related basement damage, it doesn'tcover all types of damage. It also doesn't coverevents such as seepage or failure of a sumppump and damage caused by sewer backupsunless it is directly related to a flood. For moreinformation on flood insurance, visitfloodsmart.gov.

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