The median annual salary for a paralegal is $59,200, according to the latest figures from the Bureau of Labor Statistics. But depending on where you live, your area of expertise, and your level of experience, you could make upwards of $121,110 or more a year.
A career as a paralegal can be a fulfilling choice for those interested in the law. While the job can be demanding and the hours sometimes long, it can also provide professional satisfaction and a chance to help others in your community.
What Are Paralegals?
A paralegal works under the supervision of a lawyer and performs supportive legal tasks. Administrative duties require a knowledge of the law, but you don’t have to have a law degree or a law license.
Paralegals are often responsible for the following tasks:
• Draft motions and pleadings for an attorney and file it with the court.
• Research cases. Paralegals research current and old legal cases to help discover relative precedents and understand past rulings.
• Interview clients and witnesses involved in a case.
• Communicate with clients throughout the phases of the legal process.
• Collect documents, client testimonials, and expert witnesses on behalf of the attorney.
• Draft reports and legal documents for cases.
• Factcheck legal filings and documents for accuracy.
• Gather supporting documents that a lawyer may use or file with the court.
• Coordinate cases, including their schedules and deadlines.
• Assist and support lawyers during trials.
Being a paralegal is not a job for antisocial people, as it typically involves being a liaison between clients, attorneys, investigators, witnesses, and court officials.
💡 Quick Tip: We love a good spreadsheet, but not everyone feels the same. An online budget planner can give you the same insight into your budgeting and spending at a glance, without the extra effort.
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How Much Do Starting Paralegals Make?
Whether they’re fresh out of school or have been working for several years, paralegals can be paid hourly or earn a yearly salary. A typical rate for a brand-new paralegal is $19.20 an hour or $55,332 a year.
An entry-level salary or hourly rate for a paralegal varies by work environment. Smaller firms and nonprofits tend to pay less, while bigger corporate law firms may offer more competitive pay.
Paralegals can specialize in certain areas, including litigation, real estate, divorce, intellectual property, immigration, and bankruptcy. Honing your skills in a particular area of the law could help position you for higher-paying opportunities.
No matter the size of your salary, it helps to keep a close eye on your finances and the progress you’re making toward your financial goals. Online tools like a money tracker app can help you create a budget, monitor your credit score, and more.
Like most jobs, the amount of money you can earn as a paralegal is impacted by geography. As the chart below shows, salaries in this field can fluctuate from state to state.
The Median Salary by State for a Paralegal in 2022
State
Median Salary
Alabama
$48,620
Alaska
$61,490
Arizona
$59,050
Arkansas
n/a
California
$69,790
Colorado
$65,010
Connecticut
$63,490
Delaware
$59,660
District of Columbia
$87,610
Florida
$52,190
Georgia
$51,420
Hawaii
$58,630
Idaho
$48,500
Illinois
$60,370
Indiana
$47,710
Iowa
$52,660
Kansas
$48,490
Kentucky
$48,810
Louisiana
$50,310
Maine
$54,710
Maryland
$58,760
Massachusetts
$63,360
Michigan
$58,780
Minnesota
$60,380
Mississippi
$43,590
Missouri
$55,410
Montana
$55,270
Nebraska
$50,610
Nevada
$61,180
New Hampshire
$50,960
New Jersey
$61,040
New Mexico
$48,320
New York
$62,730
North Carolina
$51,340
North Dakota
$48,740
Ohio
$50,580
Oklahoma
$48,490
Oregon
$63,980
Pennsylvania
$62,080
Rhode Island
n/a
South Carolina
$48,190
South Dakota
$54,100
Tennessee
$48,420
Texas
$56,310
Utah
$52,820
Vermont
$60,560
Virginia
$59,500
Washington
$69,260
West Virginia
$47,990
Wisconsin
$49,970
Wyoming
$52,000
Source: Bureau of Labor Statistics
Paralegal Job Considerations for Pay and Benefits
Thinking about becoming a paralegal? Consider the following:
• Areas of interest. Paralegals can work in any number of specialties: corporate law, patent law, health care, and more. Thinking about which field best suits your interest can help guide your training and job search.
• Career goals. Is career advancement and an annual pay raise important to you? Is having a flexible schedule a priority? Discuss your options with a hiring manager before accepting a position.
• Benefits. Many full-time and part-time paralegals are eligible for benefits, including, health, vision, and dental insurance, a 401(k), tuition assistance, and paid time off.
• Time and energy commitment. Some areas of law, like litigation, are more stressful than others and may require longer working hours.
Ultimately, deciding if becoming a paralegal is a good fit depends on your interests, skills, and goals. Like any profession, working as a paralegal has its positives and negatives:
Pros:
• Salary. Paralegals stand to earn excellent pay, especially if they train for specific roles. A courtroom presentation specialist, for instance, may earn between $67,500 and $125,000 a year.
• Job outlook. Paralegals are in high demand. According to the Bureau of Labor Statistics, jobs in the field are projected to grow 4% from 2022 to 2032.
• Variety of work. On any given day, a paralegal may juggle a number of cases and assorted tasks — from paperwork to writing motions to speaking with witnesses.
• Stimulating work. Creative problem-solving skills and analytical reasoning are put to use every day as a paralegal. The job also requires staying up-to-date on new and changing laws.
• No law school. Becoming a paralegal requires much less education than is demanded of lawyers. A bachelor’s degree in any field and completing an accredited paralegal program are often all that’s needed.
Cons:
• Long hours. Paralegals often work more than the traditional 40-hour week. As deadlines and court dates approach, you may find yourself working late nights and weekends.
• High stress. In addition to assisting lawyers with complex legal issues, paralegals may work closely with demanding clients.
• Lack of autonomy. When you’re a paralegal, you work directly under and are supervised by a licensed attorney. And since you are not certificated to practice law, you cannot advise your clients on legal matters or represent them in court.
💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.
The Takeaway
While the hours can be long and the environment sometimes stressful, being a paralegal can provide you with an opportunity to help others, stay intellectually stimulated, and earn a good salary. While the average paralegal salary is around $59,200 a year, you may be able to earn more depending on your experience, specialty, and location.
FAQ
What is the highest-paying paralegal job?
One of the highest-paying paralegal jobs is a courtroom presentation specialist, which typically pays between $67,500 and $125,000 a year.
Do Paralegals make 100k a year?
Depending on how much experience you have, your area of expertise, and your employer, you could make $100,000 or more a year as a paralegal.
How much do paralegals make starting out?
When they’re just starting out, a paralegal earns an average of $19.20 an hour or $55,332 a year.
Photo credit: iStock/sturti
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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
A personal trainer earns an average of $67,012 a year, according to the latest data from Salary.com. However, salaries typically fall somewhere between $48,347 and $82,320.
How much you can make as a personal trainer depends on several factors, including where you live, who you work for, your training experience, and your areas of expertise. Let’s unpack this.
What Are Personal Trainers?
A personal trainer develops customized exercise programs for clients based on individual skill levels, health goals, physical limitations, and other considerations. These professionals work with clients of all ages and skill levels to improve strength, flexibility, and endurance; complete workouts safely and without injury; support them on their weight loss journey; and more.
Trainers are often paid hourly, but they may earn a yearly salary if they work for a gym or high-end client. How much money a personal trainer makes depends on the range of services and level of attention they provide — in general, the more, the better.
It also helps if you have good people skills, as you’ll be working closely with clients. (Not much of a people person? You may want to look into jobs for introverts instead.)
💡 Quick Tip: When you have questions about what you can and can’t afford, a spending tracker app can show you the answer. With no guilt trip or hourly fee.
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How Much Do Starting Personal Trainers Make an Hour?
The average entry-level wage for a personal trainer in the United States is $29 per hour, or $61,104 a year, according to ZipRecruiter. But depending on a host of factors, personal trainers can earn anywhere from $11.06 to $51.92 an hour.
So is it possible to make $100,000 a year or more as a personal trainer? Short answer: yes. A six-figure income may be attainable once you gain enough experience and establish a steady client base. But keep in mind that those things often take time to develop.
What Is a Personal Trainer’s Yearly Salary by State?
Location can play a major factor in a personal trainer’s income. A professional who’s established in their career may earn an average of $67,012, but as the chart below shows, take-home pay can vary significantly from state to state.
Personal Trainer Job Considerations for Pay and Benefits
When you’re just starting out as a personal trainer, there are many factors that may influence the direction of your career. For instance, working at an established commercial gym can offer an opportunity to gain experience, build up a client network, and receive job benefits.
If you’re more of a self-starter and prefer a degree of independence, working as a self-employed personal trainer might be the better fit. You’ll have the ability to set your own hours and hourly rate; however, you’ll also have to pay for health benefits and set money aside for retirement.
Here are some questions to ask yourself when starting a career as a personal trainer:
• How many hours are you willing to work?
• Would you rather work for someone else or be your own boss?
• Do you need health insurance benefits?
• Where do you see yourself in five to 10 years?
• What type of clients do you want (ex. senior citizens, athletes)?
• Are you willing to commute or relocate?
• What additional certifications might you need?
• What are your financial goals?
Establish what you need to earn as a personal trainer in order to cover your expenses and maintain the lifestyle you want. It can help to sit down and create a budget.
As your personal trainer career gets going, you can lean on financial tools like a money tracker app to help you monitor your spending and saving.
Tips to Increase a Personal Trainer’s Salary
Clients can come and go for a number of reasons, but there are some things you can do as a personal trainer to keep the ones you have and attract new ones. Here are some strategies to consider:
• Listen to your clients, and be willing to adapt to their needs.
• Sharpen your motivational skills. Pay attention to other successful trainers and how they inspire their clients.
• Be empathetic. Many clients may struggle during their workouts, both physically and psychologically. Empathy can go a long way in maintaining healthy client relations.
• Go where you’re needed. Investigate niches where your expertise can be of use, be it an elderly care center, health center, or a new neighborhood gym.
• Network and market yourself. Chat up members at your gym and discuss their fitness goals. You can also promote your own fitness journey and methods on social media.
• Earn new certifications. Get certified in CPR, yoga, Pilates, and nutrition. The more you know, the more in-demand you may be.
Pros and Cons of Being a Personal Trainer
As with any job, there are pluses and minuses to working as a personal trainer. Here are some of the benefits and challenges of the field:
Pros:
• Flexible hours. You can often schedule clients when you want to.
• Professional control. You’re able to build up your business through marketing and networking, adding clients as you raise your earning goals.
• Staying physically fit. You’ll have to practice what you preach. Staying in shape is a job requirement.
• Personal satisfaction, especially when you help a client meet their goals.
Cons:
• Fluctuating income/job security. There’s no way to predict how many clients you may have month-to-month or year-to-year.
• Lack of benefits. Many personal trainers work for themselves and have to pay for their own health and dental insurance, plus save for retirement.
• Nontraditional work hours. Although you have the ability to make your own schedule, most of your working clients will likely request early morning, evening, or weekend sessions.
• Shorter career lifespan. Even the most in-shape trainer ages, and there may come a day where you struggle to physically keep up with your clients.
💡 Quick Tip: Income, expenses, and life circumstances can change. Consider reviewing your budget a few times a year and making any adjustments if needed.
The Takeaway
A personal trainer’s salary can rise and fall with the ebb and flow of clients, but there is also no limit to the amount of money you can make. Whether you are working with a few dedicated clients or creating your own global fitness brand, being a personal trainer can be a great way to earn a salary while keeping yourself and your finance goals in shape.
FAQ
What is the highest paying personal trainer job?
Personal trainers to wealthy clients and celebrities typically command lucrative salaries. The most popular fitness influencers on TikTok and Instagram, for example, can make over $1 million a year.
Do personal trainers make $100k a year?
A well-established personal trainer can make $100,000 a year with experience, marketing savvy, good time management skills, and a loyal client base.
How much do personal trainers make starting out?
The average starting wage for a personal trainer in the United States is $29 per hour, or $61,104 a year.
Photo credit: iStock/Drazen Zigic
SoFi Relay offers users the ability to connect both SoFi accounts and external accounts using Plaid, Inc.’s service. When you use the service to connect an account, you authorize SoFi to obtain account information from any external accounts as set forth in SoFi’s Terms of Use. Based on your consent SoFi will also automatically provide some financial data received from the credit bureau for your visibility, without the need of you connecting additional accounts. SoFi assumes no responsibility for the timeliness, accuracy, deletion, non-delivery or failure to store any user data, loss of user data, communications, or personalization settings. You shall confirm the accuracy of Plaid data through sources independent of SoFi. The credit score is a VantageScore® based on TransUnion® (the “Processing Agent”) data.
*Terms and conditions apply. This offer is only available to new SoFi users without existing SoFi accounts. It is non-transferable. One offer per person. To receive the rewards points offer, you must successfully complete setting up Credit Score Monitoring. Rewards points may only be redeemed towards active SoFi accounts, such as your SoFi Checking or Savings account, subject to program terms that may be found here: SoFi Member Rewards Terms and Conditions. SoFi reserves the right to modify or discontinue this offer at any time without notice.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
If you’re like many people who are socking away money in a 401(k) retirement plan (good work!), you probably know that early withdrawal of funds can take a financial toll. There are penalties that can be assessed, decreasing what you actually receive of those funds you saved.
But sometimes, life happens. Even though a 401(k) account is designed for retirement saving, you may need extra cash ASAP before you turn age 59½. Because money in your 401(k) account is not subject to federal income taxes until distribution, your 401(k) can lead to taxes as well as an early withdrawal penalty in this situation. Therefore, it may be worth exploring other options.
To answer the question, “what is the penalty for withdrawing from a 401(k)?” read on. You’ll learn:
• How a 401(k) works
• What is the 401(k) early withdrawal penalty
• How you can access cash without using funds from your 401(k) account.
How Does a 401(k) Work?
A 401(k) is an account designed to hold money and investments for retirement. Why does it have such a funky name? Well, it’s named after a line in the tax code that gives the 401(k) its special taxation guidelines. It can be a reminder that rules regarding 401(k) accounts are set by the IRS and generally have to do with taxation.
Essentially, the IRS allows investors to stash a certain amount of money away each year for retirement, without having to pay income taxes on those contributions.
Currently, that contribution maximum amount is $23,000 per year, with additional catch-up contributions of up to $7,500 allowed for those 50 and older. Additionally, the investments within the account are allowed to grow tax-free.
401(k) participants can’t avoid paying income taxes forever, though. When retirees go to pull out money in retirement, they must pay income taxes on the 401(k) amount withdrawn.
So, while you have to pay income taxes eventually, the idea is that maybe you’ll pay a lower effective tax rate as a retired person than as a working person. (Although, none of this is guaranteed because we can’t predict future tax rates.)
The IRS classifies 59½ as the age where a person can begin withdrawing from their 401(k). Before this age and without an exception, it is not possible to do a 401(k) withdrawal without penalty.
💡 Quick Tip: Some lenders can release funds as quickly as the same day your loan is approved. SoFi personal loans offer same-day funding for qualified borrowers.
What is the Penalty for Withdrawing from a 401(k)?
When a 401(k) account holder withdraws money from a 401(k) before age 59½, the IRS may charge a 10% penalty in addition to the ordinary income taxes assessed on the amount.
Unqualified withdrawals from a 401(k) are considered taxable income. Then, the 10% penalty is assessed on top of that. This could result in a hefty penalty.
Is a 401(k) Withdrawal Without Penalty Possible?
There are some exceptions to the 401(k) early withdrawal penalty rule. For example, an exception may be made in such circumstances as:
• A participant has a qualifying event such as a disability or medical expenses and must use 401(k) assets to make payments under a qualified domestic relations order
• Has separated from service during or after the year they reached age 55
• A distribution is made to a beneficiary after the death of the account owner.
Additionally, it may be possible to avoid the 401(k) withdrawal penalty through a method known as the Substantially Equal Periodic Payment (SEPP) rule. These are also called 72(t) distributions.
• To do this, the account owner must agree to withdraw money according to a specific schedule as defined by the IRS.
• The participant must do this for at least five years or until they have reached age 59½.
• Under the 72(t) distribution, a participant will systematically withdraw the total balance of their 401(k). While this is technically an option in some instances, it does mean taking money away from retirement. Consider this while making your ultimate decision.
💡 Quick Tip: In a climate where interest rates are rising, you’re likely better off with a fixed interest rate than a variable rate, even though the variable rate is initially lower. On the flip side, if rates are falling, you may be better off with a variable interest rate.
Alternatives to an Early 401(k) Withdrawal
Because of the steep penalty involved, you may feel inclined to shop around for some alternatives to early 401(k) withdrawal.
Borrowing from Your 401(k)
Participants can consider taking a loan from their active 401(k). The money is removed from the account and charged a rate of interest, which is ultimately paid back into the account. The interest rate is generally one or two points higher than the prime interest rate set by the IRS, but it can vary.
While this loan may come with a competitive interest rate that is repaid to the borrower themself and not a bank, there are some significant downsides.
• First, taking money from a 401(k) account removes that money from being invested in the market. A participant may miss out on the market’s upside and compound returns.
• Though a 401(k) loan might seem like an easy option now, it could put a person’s savings for retirement at risk. It is easy to imagine a scenario where the loan does not get repaid. If the loan is not repaid, the IRS could levy the 10% penalty on the distributed funds.
• Money that is repaid to a 401(k) is done with post-tax money. The money that is borrowed from the 401(k) would have been pre-tax money, so replacing it with money the borrower has already paid taxes on may make a 401(k) loan more expensive than it initially seems.
• If a person were to leave their company before the loan is repaid, the loan would need to be repaid by the time you file your taxes for that year or penalty and income tax could be due. Participants should proceed down this route with caution.
Withdrawing from a Roth IRA
A second option is to consider withdrawing funds from Roth IRA assets. Under IRS rules, any money that is contributed to a Roth IRA can be removed without penalty or taxes after 5 years.
Unlike with a 401(k), income taxes are paid on money that the account holder contributes to the account. Therefore, these funds aren’t taxed when the money is removed. (This only applies to contributions, not investment profits.)
Now, the downside to consider:
• Again, common advice states that removing money from any retirement account should generally be considered a last-resort option. The average person is already behind in saving for retirement, so even Roth IRA funds should only be considered after all other options are exhausted.
Access a Personal Loan
Another option to consider could be a personal loan. An unsecured personal loan can generally be used for any personal reason.
By using a personal loan, the participant is able to avoid a 401(k) early withdrawal penalty and leave all of the money invested within the account to grow uninterrupted.
Some other aspects to consider:
• A personal loan also puts the borrower on an amortized payback schedule that has a defined end-date. Having a defined payback period may be beneficial during debt repayment — it provides a goal, and it is clear how progress is made throughout the life of the loan.
• Compare the set amortization of a personal loan to the revolving debt of a credit card, where it can be quite tempting to add to the balance, even as the person is attempting to pay it off in full.
When charges are added to a credit card, the end-date can be pushed out further, especially in the event that the borrower is only making minimum payments. This is not the case with a personal loan where a lump-sum loan amount is disbursed and paid back within a set timeframe. You may want to consider using a personal loan calculator to compare costs.
The Takeaway
If you withdraw funds from your 401(k) retirement plan before age 59½, you will likely be subject to a 10% early withdrawal penalty as well as taxes. You may have other options available if you need funds, however, such as taking a loan against a 401(k), withdrawing from an IRA account, or securing a personal loan. With all of the above options, it is recommended to map out the cost of each and/or work with a tax advisor or financial advisor to help identify the best course.Ultimately, it will be up to you to research the best option given your needs.
Think twice before turning to high-interest credit cards. Consider a SoFi personal loan instead. SoFi offers competitive fixed rates and same-day funding. Checking your rate takes just a minute.
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Non affiliation: SoFi isn’t affiliated with any of the companies highlighted in this article.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
When you’re married and are each other’s beneficiaries, it makes sense to create a single joint will, right? Not necessarily. Even if you plan to leave everything to your significant other upon death, creating this kind of legal document may lead to complications down the line.
Let’s take a closer look at the different kinds of wills married couples can create so you can decide what’s best for you. Here’s what you need to know so you can have the right legal paperwork in place.
What Is a Joint Will?
A joint will is a single shared legal document, signed by two or more people. It is relatively uncommon today, and many attorneys recommend against them. One of the motivations for a joint will is that, when one person dies, it’s nearly impossible for a surviving spouse to change the terms of the will. This can be problematic because circumstances change over time. What if the person mentioned to inherit property in the will has passed away?
That said, a joint will for a couple can seem desirable precisely because it’s not flexible. This can ensure that a child from a previous marriage, for example, inherits what is outlined in the will even if their parent dies before their new spouse does. But these sort of permanent clauses can be handled in a trust, which can allow for complex, shifting situations.
💡 Quick Tip: A trust is a customized estate planning tool that can be helpful for your heirs in addition to a will.
How Do Joint Wills Work?
A joint will for a married couple is a single document, signed by two partners. When you’re both alive, changes can be made as long as you both agree. But once a partner dies, the will becomes binding.
For this reason, a joint will for a married couple can be binding, restrictive, and not necessarily optimal for the complexity of modern-day life.
Say that the will stipulates that the house the couple owns will be inherited by their three children upon the death of both spouses. But what if the surviving spouse has a financial emergency and wants to sell the house? Or simply wants to downsize to a smaller living space? Because of the will, they could be stuck in a difficult scenario.
Also consider that a joint will doesn’t always cover the ‘what ifs’ that can come up during life. From remarriage to family disputes to having more children, a joint will can lock assets in time, making it tough for the surviving spouse to move on.
How Do Mutual Wills Work?
Fortunately, there are options for those who worry about a joint will being too rigid. A more common option that offers flexibility is what’s known as a mutual will, or mirror will. In this case, two documents are created, one for each spouse. They may be identical, but because they are two documents, separately signed, the surviving spouse can then modify their own individual will when their partner passes away.
But what if you are concerned that you might die first and your surviving spouse could, say, omit a child or other loved one from their inheritance? (Yes, that may sound odd, but life contains many complicated family situations!) In this case, lawyers may recommend a trust as an option to ensure that your own personal wishes are carried out when it comes to your property. The trust can also make sure that your directives are followed when it comes to joint property mutually owned, like real estate.
So, what are the pros and cons of joint wills versus individual (separate) wills? In general, the biggest con against a joint will may be the lack of flexibility. But for some people with relatively simple estates, this can seem like a positive.
Pros of a joint will:
• Simplicity. It’s a one-and-done proposition!
• Clarity. It ensures that both partner’s wishes, as written, will be respected, even after death.
Cons of a joint will:
• Rigidity. If a partner gets remarried or has more children, it will be complicated if not impossible to change the original will.
Pros of an individual will:
• Flexibility. After a partner dies, the surviving partner can change the will to reflect their new reality.
• Simplicity. You can create one document and each sign it separately. Each individual is then free to amend their own will.
Cons of an individual will:
• Flexibility. Yes, this is a double-edged sword. These wills aren’t “carved in stone” which can be a good or bad thing. Here’s the latter: With individual wills, the wishes of the partner who dies first may not be fully honored. These concerns may be solved by the creation of a trust.
• Maintenance-intensive. A surviving partner may want to rewrite their will over time as their life circumstances change.
Do Husbands and Wives Need Individual Wills?
In most cases, yes, it’s beneficial if husbands and wives have separate wills. The wills can be identical — also called a mutual will or mirror will — but having two distinct documents that are individually signed can help protect against what-ifs in the future. Having individual wills can give flexibility to the surviving spouse.
Let’s say that a joint will stipulates that a house owned jointly by a married couple will go to children upon the death of both spouses. That means if one spouse dies, the other spouse may not be able to sell the house that he or she lives in, even in the case of financial hardship. A joint will can lock a surviving spouse in time, despite evolving circumstances.
Instead, a couple may prefer individual wills. These can mirror each other, but the surviving spouse retains flexibility in case their needs or circumstances change after the spouse dies.
Worth noting: For some, the lack of flexibility of a joint will may be seen as positive. For example, some couples may want a joint will to ensure their children receive an inheritance, even if the surviving spouse remarries. However, some legal experts believe this goal can better be achieved through the creation of a trust.
As you think about making your will, it can be helpful to consider the pros and cons of a joint will. Getting an expert opinion can also be a smart move.
What Happens to a Joint Will When Someone Dies?
A joint will is essentially frozen in time when someone dies. The will becomes “irrevocable,” and property must be divided according to the terms of the will. If it says all assets are to be inherited by the surviving spouse, then the surviving spouse will inherit assets. But confusion may occur if and when both spouses pass away. A joint will then makes it hard, if not impossible, to reallocate property.
Let’s consider another scenario to see why a joint will can be problematic. Perhaps a joint will specifies that a certain sum of money is to go to a charity upon death. If the charity no longer exists after one spouse passes away, this may lead to complications and a legal headache.
In short: A joint will is similar to a time capsule. While its contents may make sense now, it can be helpful to consider “what ifs” that may happen ten, twenty, or fifty years in the future. This can lead some couples to decide that individual wills will work better.
It is possible to make a joint will online. But because not every state recognizes a joint will, it’s important to make sure you live in a state that does before you move forward.
💡 Quick Tip: It’s recommended that you update your will every 3-5 years, and after any major life event. With online estate planning, changes can be made in just a few minutes — no attorney required.
The Takeaway
End-of-life planning is an important way to express your wishes and protect those closest to you. A will is one key component of that, but married couples have an important choice to make when deciding whether to have joint or individual wills. Even if you and your spouse are the ultimate joined-at-the-hip lovebirds, having separate wills may be a good idea. It can often provide more flexibility and family peace in the years ahead.
When you want to make things easier on your loved ones in the future, SoFi can help. We partnered with Trust & Will, the leading online estate planning platform, to give our members 15% off their trust, will, or guardianship. The forms are fast, secure, and easy to use.
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Welcome to the wonderful world of filing taxes, a key aspect of adulting. The process can be intimidating, especially for first-timers, but you will get the hang of it. Actually, once you’ve filed a couple of times, it can get easier, because you know just which documents and numbers you’ll need to complete your forms. That applies whether you file on your own or work with a tax preparer.
So, here’s a great starting point for learning how to file taxes when you aren’t so familiar with the procedure. Read on for the details you need, including:
• What you need to file taxes
• Where you can file your taxes
• How can you pay your taxes
• Tips for first-time tax filers
• Mistakes to avoid when filing your taxes.
What Do You Need to File Your Taxes?
If this is your first time filing, it’s a good idea to gather everything you need before you sit down at a computer or with an accountant. Here’s what you’ll need:
• Social Security number: If you aren’t sure, ask your parents or legal guardians. Once you start filing taxes, it’s a good idea for you to keep your Social Security card and other important documents, like your birth certificate, instead of leaving them at your parents’ house.
• Wage and income information: For most first-time filers, this will simply be a W-2 form from your employer.
◦ If you did any freelance or contacted work, you should receive 1099 forms from each entity that paid you.
◦ If you have a bank account or investments that earned interest, and you will have received forms for those, typically a 1099-INT or 1099-DIV.
• Documentation for tax credits and deductions: When doing your taxes at a young age, it is unlikely that you will qualify for many tax credits and deductions, if any at all. And because the standard deduction has increased significantly over the years, you will likely take the standard deduction (instead of itemized), for which you won’t need any documentation.
◦ If you’re a student, also look for the form 1098-T from your school, which details tuition payments you have made and funds received (such as grants), to help you identify whether you are eligible for any deductions. In addition, be aware that some college scholarships or grants may be considered taxable income.
• Bank account info: If you expect to receive a refund and want the money electronically deposited into your bank account, you need to have your account number and routing number at the ready. If you owe money, you can pay from your bank account, a credit or debit card, or a paper check or money order.
The IRS also advises checking with parents before filing to see if they are claiming you as a dependent.
💡 Quick Tip: An online bank account with SoFi can help your money earn more — up to 4.50% APY, with no minimum balance required.
Where Can You Fill Out Your Taxes?
When learning how to do taxes for the first time, one big question is exactly where to get this done. The IRS allows you to fill out your taxes in several ways, either on paper or electronically.
Filing Online
You can file online directly through the IRS website with a tool called IRS Free File. And if your adjusted gross income (AGI) is $79,000 or less, the IRS even offers free guided tax preparation. Even if you brought in more than $79,000, the IRS makes all its tax forms available for e-file free of charge.
However, navigating tax forms can be overwhelming. Purchased tax software comes with educational resources and interactive platforms that prompt you for the correct information. Using tax software could help filers avoid math errors and find deductions and tax credits they may not have otherwise known about.
As a filer, it’s up to you to research popular tax software solutions (such as TurboTax, H&R Block, TaxSlayer, and TaxAct) and find the option that suits you best. Prices can range from about $25 to $89 and up.
Filing Manually
The old method of filing by hand with pen and paper is still possible, but the IRS has warned that returns filed on paper can take six or more months to process.
Because pen and paper can lead to more errors, it is a good idea for first-time and veteran filers to utilize free or purchased online software or even a tax professional.
Tax professionals can file manually and online, but the IRS encourages all accountants to utilize the online option. For a speedy return and fewer errors, most tax professionals will likely file electronically for you.
As a first-time filer, your tax situation will not likely be complex enough to warrant a tax professional. But as your finances become more complicated — with investments, real estate, small business ownership, and more — a tax accountant may make sense.
Another benefit of working with an accountant can be their training and knowledge. A professional may be able to help you find (legal) ways to pay less taxes.
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How Do You Pay Your Taxes?
When filing taxes for the first time, there’s a good chance you will not owe anything. In the event that you do owe the government money, however, you have multiple options for paying your taxes:
• Direct Pay: The amount owed will be debited from a checking or savings account.
• Credit or debit card: You can pay your outstanding tax balance with a debit or credit card online. This is a nice option if you have cash back rewards, but you will typically be paying a high interest rate if you carry a balance.
• Check or money order: The IRS still accepts checks in the mail, as well as money orders.
• Installment agreement: If you cannot afford your tax bill all at once, you can use the IRS Online Payment Agreement tool to apply for an installment plan.
Filing Tips for First-Timers
Feeling nervous about doing taxes for the first time? Here are some tips for making the experience easier; consider them steps for how beginners can file taxes.
1. Watch Your Income
To determine if you need to file, you can watch your income throughout the year. Once you pass a certain threshold, you will be required to file. This filing threshold can vary depending on your situation, so you’ll need to check out the IRS filing requirements .
If you know that you will make enough money to pay taxes, it’s a good idea to ensure your employer is withholding the proper amount of money from each paycheck for federal, state, city, and even school district taxes. If you believe your employer is not withholding enough (or is withholding too much), the IRS recommends filling out a Form W-4 to change your withholding.
Tax documents will start arriving in the mail or digitally early in the new year, typically near the end of January or in early February. As these documents come in, it’s wise to store them in a safe place, like a manila folder in a fire safe or an encrypted folder on your computer. When it’s time to file, you’ll be able to access all your tax forms quickly and easily, rather than hunting all over for them. Being organized this way can also help you be aware of any missing tax documents.
If your tax situation is more complex — for instance, if you are self-employed, receive student loans, or make charitable donations — it’s a good idea to hold on to relevant forms throughout the year. Self-employed individuals, for example, may want to save receipts for business expenses incurred throughout the year. These can help you claim tax deductions for freelancers.
3. Learn About Potential Credits
When filing taxes for the first time, you may not be eligible for many tax credits. Tax preparation software, a tax professional, or even the IRS’s guided filing tool may be able to help you find out which credits you qualify for.
Before filing on your own, it could be wise to review the IRS list of tax credits for individuals to see if any apply to you.
4. Understand Potential Deductions
Similarly, most first-time filers will want to take the standard deduction instead of itemizing because it may offer the larger discount. However, the IRS does offer itemized deductions for student loan interest and work expenses, if you are self-employed.
You can familiarize yourself with IRS deductions, including tax deductions for college students (if that applies) before filing to determine if itemizing deductions is right for you.
5. Hit Your Deadlines
Tax Day in the United States is traditionally April 15, but if that date falls on a Saturday, Sunday, or legal holiday, the tax deadline moves out to the next business day.
If you owe estimated taxes each quarter (say, if you are self-employed), you will need to pay taxes four times a year. Working with a tax accountant may be in your best interest. Members of the Armed Forces may have special rules governing the due date of their taxes.
Individuals can also apply for a tax extension; this extends the due date of filing, but not the due date of payment. That means you might get a six-month extension to file the paperwork, but if you have not paid what you owe by April 15, you could be subject to late penalties.
Do You Need to File Taxes Every Year?
Not everyone is required to file tax returns every year. It all comes down to your unique tax situation and how much you earned. However, if you earn income throughout the year, there is a good chance you will need to file. It’s a good idea to review the IRS filing requirements or speak with an accountant if you are not sure.
Tax Filing Mistakes to Avoid
Working with tax preparation software or an accountant can help avoid some common mistakes when filing taxes, but familiarizing yourself with some of the most common errors can be helpful, no matter how you’re filing:
• Forgetting about state and city. We often think about federal income taxes, but your city and state (and maybe even school district) could also have their own taxes that you are required to pay.
• Not filing. Income thresholds can change each year. It’s always a good idea to check whether you are required to file taxes for a given year even if you didn’t have to for the previous year.
• Not checking with parents. If you are filing taxes for the first time, your parents are likely used to claiming you as a dependent. Talking with them about dependent status before filing could be a smart move.
• Filing without all your forms. Getting taxes over with early can relieve a lot of stress (and means you can get your tax refund early), but if you have any tax form stragglers, like a 1099, that appear in the mail after you’ve completed your taxes, you might land in trouble with the IRS.
• Entering in the wrong info. Tax preparation is not something to speed through. Even though e-filing helps avoid simple pen-and-paper mistakes, it’s still possible to incorrectly enter things like your birth date or Social Security number. Slow and steady — with lots of double- and triple-checking — wins the race.
The Takeaway
Filing taxes as a beginner can be intimidating, but if you put some time and organizational effort into the process, it can go smoothly. You’ll also be better prepared for next year’s Tax Day once you’ve filed. Whether you do your own taxes or work with a tax professional, it’s wise to gather the necessary paperwork, understand your potential credits and deductions, and file on time and precisely.
The fastest way to get a tax refund, if you’re due one, is a direct deposit into your bank account. If you’re a first-time filer, it’s wise to have an account ready to receive any funds heading your way.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
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FAQ
What happens if you make an error on your taxes?
As soon as you realize you have made a mistake on your taxes, you can amend it with Form 1040-X or by calling the IRS at 800-829-1040. In general, the IRS does not consider mistakes to be tax fraud, though you may end up paying late penalties. If you have intentionally made errors and the IRS catches you, you could be charged with a tax crime.
How much income do I need to make in order to pay taxes?
The amount of income that you need to make to pay taxes can fluctuate each year and depends on your filing status (single; head of household; married, filing jointly; married, filing separately; qualifying widow/widower). For the most recent tax season, a single filer under 65 needed to make $13,850 or more to file.
What is the deadline for filing taxes?
In general, the tax deadline in the U.S. is April 15. If this date falls on a weekend or legal holiday, the deadline shifts to the next business day. Members of the military may have special rules affecting their deadline, and self-employed individuals typically must pay quarterly estimated taxes throughout the year.
How can I avoid tax scams?
The best way to avoid tax scams is to educate yourself on what they look like. The most common tax scams are email phishing scams and phone scams. Remember that the IRS will never email you requesting personal or financial information nor will the IRS call you and threaten legal action or leave pre-recorded, urgent messages.
SoFi members with direct deposit activity can earn 4.50% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.50% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.50% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 8/27/2024. There is no minimum balance requirement. Additional information can be found at http://www.sofi.com/legal/banking-rate-sheet.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
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Tax Information: This article provides general background information only and is not intended to serve as legal or tax advice or as a substitute for legal counsel. You should consult your own attorney and/or tax advisor if you have a question requiring legal or tax advice.
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