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Many millennials are itching to become homeowners — here are the 17 best cities to put down roots

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pittsburgh pennsylvania

  • More than 80% of millennials say buying a home is a priority for them.
  • Homeownership is more attainable in some cities than others, especially if you're a first-time buyer.
  • Texas is home to six of the top-20 best cities to buy your first home, while Pittsburgh, Pennsylvania, took the No. 1 spot.

 

Home prices are up and supply is down across the US, but buying a house isn't as tough as it may seem. You just have to know where to look.

More than 80% of millennials say becoming a homeowner is a priority for them, according to NerdWallet's latest homebuyer report. Many are considering it "the next step in my life" and plan to buy within the next five years.

Affordable real estate is hard to come by in America's coastal cities. Migrating to the Midwest or the South is a smart bet if you're looking to put down roots at an affordable cost.

That's evidenced by SmartAsset's annual list of the best places for first-time homebuyers. SmartAsset gathered housing data for 64 metros (the US cities with a population over 300,000) related to securing a loan, the value of the average home, stability of the housing market, and affordability.

Each city was ranked in seven categories, and then given an average score. We narrowed down the list to feature the cities with a total score of 55 or higher, out of a possible 100. 

Below, check out the top 17 best places for first-time homebuyers.

SEE ALSO: Forget San Francisco and New York: These are the 19 best places to live where the typical home costs less than $260,000 and monthly rent is under $1,000

DON'T MISS: Millennials love this new housing community in a forgotten stretch of California thanks to its ultrafast internet and dirt-cheap home prices

17. Raleigh, North Carolina

Loan funding rate: 76%

Value per square foot: $128.67

Median listing price: $347,248



16. Corpus Christi, Texas

Loan funding rate: 67%

Value per square foot: $90.33

Median listing price: $209,900



15. Denver, Colorado

Loan funding rate: 76%

Value per square foot: $322.33

Median listing price: $485,000



See the rest of the story at Business Insider

The 25 most fun cities for new college grads where jobs are abundant and housing is affordable

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Brown University graduates

  • A recent report from SmartAsset reveals the 25 best American cities for recent college graduates to live.
  • These cities are affordable, have good job opportunities, and are fun for new college grads.
  • Three Ohio cities made the list, including Columbus and Cincinnati in the top two spots.

 

Graduation is coming up and many college students may find themselves asking, Where do I go from here?

SmartAsset recently released a list of the best cities for new college grads — places with ample jobs for college-educated people, affordable housing, and a fun atmosphere.

To determine the ranking, SmartAsset looked at 10 metrics including the number of Indeed job listings, cost of living in the city, and concentration of entertainment and dining establishments.

Ohio may be the best state for recent college grads; three Ohio cities make the top 25, including the top two spots. The Midwest is responsible for six of the 10 best cities for college grads. Meanwhile, coastal cities like New York, Los Angeles, and Miami didn't make the top 25.

Take a look at the 25 best cities for new college graduates, along with each city's unemployment rate for people with bachelor's degrees, median rent, and the percentage of the city's population that is in their 20s.

SEE ALSO: Many millennials are itching to become homeowners — here are the 17 best cities to put down roots

DON'T MISS: The 50 best college majors for finding the highest-paying jobs after graduation

25. Atlanta, Georgia

Unemployment rate for bachelor's degree holders: 2.6%

Median rent: $904

Population aged 20-29: 20.1%



24. Seattle, Washington

Unemployment rate for bachelor's degree holders: 2.8%

Median rent: $1,360

Population aged 20-29: 21.3%



23. Boston, Massachusetts

Unemployment rate for bachelor's degree holders: 3.3%

Median rent: $1,369

Population aged 20-29: 24.1%



See the rest of the story at Business Insider

The 25 best places to live in the US if you're a renter

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madison wisconsin

  • Renters have more than high rent costs to think about when finding a place to live.
  • SmartAsset recently released a report on the best places to live in the US for renters based on seven metrics, from unemployment rate to average commute time.
  • The Midwest is a great area for renters — four cities made it into the top 10.

In a time when the cost of rent is so high that a minimum-wage worker needs 2.5 full-time jobs to afford rent for a one-bedroom apartment in most of the US, finding an affordable place to live can seem like an endless game. 

But renters, who spent a record amount of money on housing in 2017, don't have just costs to worry about — they also need to look at factors like distance to work and safety.

SmartAsset took all of this into consideration in its recent report on the best cities for renters. They looked at data for 96 cities, comparing them across seven different metrics: rent-to-income ratio, percent of housing stock dedicated to renting, eviction rate, density of entertainment establishments, crime rate, unemployment rate, and average commute time.

SmartAsset ranked each city in every metric, then weighted all metrics equally to calculate each city's average ranking, which determined the final list.

Turns out, the Midwest is a great area for renters, with four cities making the top 10.

Below, see the best 25 places to live for renters, ranked. All rent prices are sourced from Zillow and are the median for all rentals in the metro area.

SEE ALSO: The 25 best places to live if you want to save a lot of money

DON'T MISS: How much renters pay to live in the most expensive neighborhoods in 9 major US cities — and in the most affordable

25. Pittsburgh, Pennsylvania

Median rent: $1,350

Renters who spend 30% of income or less on rent: 58%

Unemployment rate: 5.5%



24. Los Angeles, California

Median rent: $3,500

Renters who spend 30% of income or less on rent: 42%

Unemployment rate: 5%



23. Irvine, California

Median rent: $3,350

Renters who spend 30% of income or less on rent: 46%

Unemployment rate: 3.8%



See the rest of the story at Business Insider

The 31 most underrated American cities to live in

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Charleston South Carolina

  • Smart homeowners should take out an affordable mortgage on an undervalued home, according to economists at SmartAsset.
  • SmartAsset recently found the most undervalued cities to buy a home in the US, based on value per square foot.
  • It looks like the eastern side of the US is the most undervalued area to buy a home — more than half of the top 10 cities are located there.

Becoming a homeowner is often more complicated than one expects. It's also more expensive — millennials buying their first home today will pay 39% more than baby boomers who bought their first home in the 1980s.

In today's homebuying climate, it's important to take out an affordable mortgage— and even better to do so on an undervalued home. That's according to SmartAsset, which recently released a report on the most underrated cities in the US to live in based on current vs. potential housing values.

SmartAsset created a statistical model for 200 cities investigating how housing values, represented by price per square foot, were affected by eight quality of life metrics: unemployment rates, high school graduation rates, percent of residents with a college degree, crime rate, entertainment establishment density, average days of rain, average days of bad weather, and walk score.

The model (formally, a linear regression model) shows the positive or negative impact each of those eight measures had on housing prices. To determine how overvalued or undervalued a particular city was, SmartAsset compared the model's prediction for housing prices in that city based on how the city fared on the eight quality of life measures to the actual price per square foot in the city. SmartAsset ranked undervalued cities based on how much lower their actual housing prices were than the prices projected by the model.

For example, the average home in Los Angeles, California, is worth nearly $425 per square foot, according to Zillow. But according to SmartAsset's model, it should be worth nearly $525 per square foot — so residents are saving almost $100.

More than half of top 10 undervalued cities are located on the eastern side of the US.

Below, see the best places to buy a home where the average property is worth at least $80 less than what it should to worth. 

SEE ALSO: The salary you need to afford rent in every state, ranked

DON'T MISS: What a $250,000 home looks like in the biggest city in every state

31. Columbia, Missouri

Projected value per square foot: $178.08

Actual value per square foot: $98

Savings: $80.08



30. Santa Ana, California

Projected value per square foot: $447.13

Actual value per square foot: $366.75

Savings: $80.38



29. Omaha, Nebraska

Projected value per square foot: $196.89

Actual value per square foot: $115.17

Savings: $81.72



See the rest of the story at Business Insider

34 US cities where people can barely afford homes

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los angeles homes

  • The cost to buy a home is more expensive than it's ever been.
  • SmartAsset recently released a new report ranking the US cities with the most severely cost-burdened households — households who spend at least half of their income on housing.
  • In 34 cities, at least 13% of households are severely cost-burdened — almost half of the cities are in California.

The housing market is on the climb.

The value of homes has increased by 73% since the 1960s, when adjusted for inflation, Business Insider previously reported, citing a Student Loan Hero report.

It's so expensive that, in some cities, the average home outweighs the average income by so much that it can take nearly a decade to save for a 20% down payment, according to a SmartAsset report released earlier this year.

Now, SmartAsset is back with new data that highlights the high cost of homeownership: the US cities with the most severely housing cost-burdened households (defined as households who spend more than 50% of their income on housing).

To determine this list, SmartAsset gathered US Census Bureau data for the percentage of severely housing-cost burdened households among homeowners in 167 cities, ranking each city by the amount of people spending at least half of their income on housing.

In 34 cities, 13% or more households spend at least half of their income on housing. Of these cities, 15 are in California, making it the state with the most severely housing-cost burdened cities. Florida ranks second, home to four of the most severely housing cost-burdened cities.

See which other cities made the ranks below.

SEE ALSO: Millennials are waiting longer than ever to buy homes — here's how many years it takes to save for a down payment in 25 major US cities

DON'T MISS: The salary you need to afford rent in every state, ranked

34. Detroit, Michigan

Percentage of severely housing cost-burdened households: 13.06%



33. Shreveport, Louisiana

Percentage of severely housing cost-burdened households: 13.12%



32. West Covina, California

Percentage of severely housing cost-burdened households: 13.17%



See the rest of the story at Business Insider

22 American cities where $1 million goes the furthest during retirement

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retirement vacation relaxation

  • It is getting harder to retire with only $1 million saved up.
  • SmartAsset calculated the average cost of living for retirees to see how many years $1 million would last in over 250 cities.
  • Southern states dominated the list, with Texas claiming the most spots. Major cities in Texas have affordable housing markets and the state is home to many of the best places to live in 2018, according to US News.

It is getting harder to retire with only $1 million saved up. Ten years ago, $1 million had the same buying power of just under $1.2 million, according to the Bureau of Labor Statistics inflation calculator.

In a new study, SmartAsset calculated the average cost of living for retirees to see how many years $1 million would last in over 250 big and mid-sized US cities. SmartAsset looked at average annual expenses for seniors throughout the country and applied cost of living data on housing, food, healthcare, transportation, and utilities. 

To determine how long $1 million would last in each city, SmartAsset assumed $1 million would grow at 2% rate of return (that's interest minus inflation). The sum of each annual number was divided by $1 million to calculate how many years it would last retirees. 

Southern states dominated the list, with Texas claiming the most spots. Major cities in Texas have affordable housing markets and the state is home to many of the best places to live in 2018, according to US News.

Below, check out the top 22 cities where $1 million would last retirees 28 years or more, along with the average annual expenses for housing, food, and healthcare.

SEE ALSO: How much money you need to retire early depends almost entirely on 2 factors

SEE ALSO: 5 small changes to your retirement savings that get big results

22. Salina, Kansas — 28.16 years

Housing expenses: $6,463

Food expenses: $5,214

Healthcare expenses: $5,839



21. Burlington, Iowa — 28.20 years

Housing expenses: $5,936

Food expenses: $5,493

Healthcare expenses: $6,222



20. Oklahoma City, Oklahoma — 28.24 years

Housing expenses: $6,599

Food expenses: $5,426

Healthcare expenses: $5,789



See the rest of the story at Business Insider

These are the 10 most affordable cities in the US for early retirement

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madison

  • Retiring early requires planning and preparation, and sometimes even a move across the country. 
  • Retiring somewhere tax-friendly with a low cost of living can stretch your earnings. 
  • SmartAsset compiled a list of the 10 best US cities to retire early, based on a combination of costs of living and quality of living factors.
  • Four of cities are in the South, including Lexington, Kentucky, which won the top spot. 

Who doesn't want to retire early. Getting to retire in your 50s or early 60s can mean being able to do some of the things you've always dreamed of while you still have some youthful energy. But retiring early requires a ton of planning and preparation. One great strategy for retiring early, that many financial advisors would recommend, is to retire somewhere affordable. Retiring somewhere tax-friendly with a low cost of living can stretch your earnings enough that you can retire a few years early. 

Below we look at a number of factors to rank the cities where you can retire early. In total, we compare cities across 10 factors looking at a combination of costs of living and quality of living factors. Check out our data and methodology below to see where we got our data and how we put it together to create our final rankings.

Key findings

  • The South is a good landing spot – Four of the top 10 cities where you can afford to retire early are in the South. In particular Kentucky scores well with two top 10 cities. Texas has the other two Southern cities in the top 10.
  • Retirees are making smart decisions – In past analysis we have seen that retirees are flocking to Arizona and Florida for their retirement. One positive coming out of this analysis is that it would appear retirees are getting good financial advice. Mesa, one of the most popular spots for retirees scores in the top 10, and two Florida cities also take top 15 spots.

SEE ALSO: I retired early and the freedom is priceless, but there are some downsides to early retirement that nobody likes to talk about

1. Lexington, Kentucky

Lexington, Kentucky takes the top spot where it's possible to retire early. This city ranks in the top 10 for cost of living, health care costs and housing costs as a percent of income. This city also has a fairly low rate of violent crime, a sign of how livable the city is. If you find you need to supplement your income in retirement, it should be possible to do so in Lexington. This city scores in the top 20 for unemployment.



2. Plano, Texas

Even the best retirement plans can go wrong somewhere down the line. Maybe the stock market didn't go as well as planned or maybe you couldn't save enough to contribute to your long-term investment portfolios. Because of these risks, it is a great idea to retire somewhere with a low cost of living where padding your retirement income is possible. Plano has some of the lowest housing costs relative to local income in the study. Jobs here are also plentiful: Plano ranks fourth in unemployment. Perhaps best of all, Texas is a tax-friendly retirement state and taxes no retirement income.



3. Boise, Idaho

If you are moving to a new city, it is important you can feel comfortable there. Boise scores high on livability and affordability to claim the third spot. Specifically Boise boasts some of the lowest crime rates in our study, scoring 11th and seventh in property crime and violent crime, respectively. Housing here is also affordable relative to local income. This city ranks sixth for percent of median income needed to pay for the average home. Boise is not just affordable for locals either, just about everyone should be able to afford Boise. This city has the third-lowest cost of living in our study.



See the rest of the story at Business Insider

The top 25 states to live out the American Dream, ranked

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salt lake city utah

  • The American Dream is more achievable in some states than others.
  • SmartAsset recently released a report on the best states to live for the middle class, defined as households with an income between $35,000 and $100,000.
  • Western and Midwestern states are the best places to live the American Dream, while northeastern states are the toughest.

With the cost of buying a home higher than it's ever been, it may seem like the American Dream is endangered. But in some states, it's closer within reach than it seems. 

SmartAsset recently took a look at the best states for the middle class to live by examining seven metrics related to owning a home and retiring — two classic components of the American Dream. Specifically, they looked at SmartAsset and US Census Bureau data connected to income, homeownership, and taxes across all 50 states, plus Washington DC. This included the percentage of middle-class households in each state, which are defined as households with an income between $35,000 and $100,000.

SmartAsset then ranked each state in each metric and averaged each state's ranking, giving double weight to the percentage of middle-class households.

Turns out, the best states for Americans to live out the American Dream are located in the west, closely followed by states in the Midwest. The northeast is the toughest area for the American Dream to become a reality.

"With high tax burdens, low homeownership rates, and unaffordable housing, it is not too surprising that states in the Northeast tumble down the ranks," states the report. Only two states in the northeast — New Hampshire and Maine — made the top 25.

Below, see the top 25 states for the middle class to live the American Dream.

SEE ALSO: The 31 most underrated American cities to live in

DON'T MISS: 34 US cities where people can barely afford homes

25. Colorado

Percentage of middle-class households: 44.7%

Income tax rate: 19.9%

Median home value: $314,200



24. South Carolina

Percentage of middle-class households: 44.7%

Income tax rate: 18.7%

Median home value: $153,900



23. Ohio

Percentage of middle-class households: 45.2%

Income tax rate: 18.6%

Median home value: $140,100



See the rest of the story at Business Insider

The 25 US cities where a middle-class American salary goes furthest

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des moines iowa

  • The median household in America earns $55,000 a year, which can go far depending on where you live.
  • SmartAsset recently released a list of the best places to live on a $55,000 salary.
  • Some of the best places to live on the typical American salary are located in the Midwest or are capital cities.

How far your paycheck can really go is often dependent on your geography.

A $55,000 salary — what the median American family earns, according to SmartAsset, citing US Census Bureau data from the 2016 American Community Survey 5-year estimates— may not get you very far in a big city with a high cost of living like New York or San Francisco. But it could stretch for miles elsewhere.

SmartAsset recently released a list of the best places to live on $55,000 a year. To determine this list, it found the cities with a median household income range of $50,000 to $60,000 — 126 cities, to be exact. It then ranked each city based on nine metrics with equal ranking, which it then averaged. This was the foundation for the final score.

Turns out, some of the best places to live on the typical American salary are located in the Midwest — four of the top 10 cities are located in this region. Capital cities also take up four of the top 10 spots; they have strong economies thanks to state government employment opportunities, according to SmartAsset.

Below, see the top 25 places to live in the US on the typical American salary.

SEE ALSO: 20 of the best places in the US to save up and buy your first home

DON'T MISS: The 25 best places to live if you want to save a lot of money

25. Springdale, Arkansas

Median household income: $51,152

Percent of income spent on housing: 18.2%

Average commute time: 20.1 minutes



24. New Braunfels, Texas

Median household income: $58,814

Percent of income spent on housing: 24.4%

Average commute time: 23.6 minutes



23. St. George, Utah

Median household income: $54,210

Percent of income spent on housing: 21.2%

Average commute time: 16.8 minutes



See the rest of the story at Business Insider

The top 18 states rich millennials are moving to

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rich millennials

Rich millennials are on the move.

SmartAsset recently used IRS data from the 2015 to 2016 tax year to take a look at the states wealthy millennials are moving to. It defined rich millennials as those younger than 35 who have an adjusted gross income of $100,000 or more. SmartAsset ranked each state by net migration, which it determined by subtracting the number of millennials moving out of the state from the number of millennials moving into the state.

As it turns out, rich millennials crave a coastal lifestyle — seven of the top 10 states millennials are moving to are on the East Coast or West Coast. And the Northeast isn't popular among rich millennials: Only four states in the region — New Jersey, New Hampshire, Maine, and Vermont — rank among the top states rich millennials are moving to.

Below, see the top 18 states attracting rich millennials. We arrived at this list by including all states in SmartAsset's findings that have a positive net migration — the states more rich millennials are moving into than out of.

SEE ALSO: 25 of the top ZIP codes where rich millennials are snapping up homes across the US

DON'T MISS: Here's exactly what millennials should be doing every five years to become rich, according to a financial planner

18. Kansas — Wichita has been undergoing a downtown renovation over the past decade, attracting urban-dwelling millennials.

Number of millennials moved in: 1,201

Number of millennials moved out: 1,195

Net migration: 6

Source: Smart Growth America, The Wichita Eagle



17. Vermont — Vermont recently offered Americans up to $10,000 to move to the state and work remotely.

Number of millennials moved in: 232

Number of millennials moved out: 200

Net migration: 32

Source: CNN



16. Hawaii — The Aloha State is a science hub, conducting much of the nation's climate and astronomy research.

Number of millennials moved in: 647

Number of millennials moved out: 605

Net migration: 42

Source: SmartAsset



15. Montana — Montana yields many opportunities for entrepreneurs and is close to nature, providing a lifestyle many can't find in big cities.

Number of millennials moved in: 371

Number of millennials moved out: 312

Net migration: 59

Source: ABC Fox Montana



14. Maine — Through its Educational Opportunity Tax Credit program, Maine helps college-graduate residents pay off their student debt.

Number of millennials moved in: 361

Number of millennials moved out: 264

Net migration: 97

Source: Bustle



13. New Hampshire — New Hampshire is in part attractive to young adults because of its low unemployment rates.

Number of millennials moved in: 913

Number of millennials moved out: 747

Net migration: 166

Source: New Hampshire Union Leader



12. Idaho — Idaho Falls is attracting millennials with its restaurant scene and recreational activities.

Number of millennials moved in: 614

Number of millennials moved out: 398

Net migration: 216

Source: Local News 8



11. Georgia — Atlanta has a strong startup scene, and the city has the third-largest concentration of Fortune 500 companies in the country, from Coca Cola and Delta to Home Depot and Porsche.

Number of millennials moved in: 3,834

Number of millennials moved out: 3,525

Net migration: 309

Source: Inc



10. New Jersey — Located across the Hudson River from New York City, New Jersey offers a more affordable housing alternative for those who work in the city.

Number of millennials moved in: 6,543

Number of millennials moved out: 6,197

Net migration: 346

Source: App



9. Tennessee — Nashville has become a top city for recent college grads, thanks to its growing tech industry and affordable cost of living.

Number of millennials moved in: 2,423

Number of millennials moved out: 2,033

Net migration: 390

Source: Biz Journals, WKRN



8. South Carolina — Charleston was hailed as a "millennial magnet" by USA Today because of its startup economy and arts and restaurant scene.

Number of millennials moved in: 1,695

Number of millennials moved out: 1,392

Net migration: 573

Source: USA Today



7. North Carolina — Raleigh and Charlotte, with their plentiful job opportunities and high pay, are major attractions for millennials.

Number of millennials moved in: 4,572

Number of millennials moved out: 3,786

Net migration: 786

Source: The News & Observer



6. Oregon — Portland has many neighborhoods, a relatively affordable cost of living, and a booming economy. The city offers plenty of jobs with high salaries away from the competition elsewhere on the West Coast.

Number of millennials moved in: 2,190

Number of millennials moved out: 1,304

Net migration: 886

Source: Business Insider



5. Florida — Miami, Jacksonville, and Tampa are hot cities for millennials; the latter has been dubbed a "city-on-the-rise" for its beach proximity, low unemployment rate, and beer scene.

Number of millennials moved in: 6,014

Number of millennials moved out: 5,114

Net migration: 900

Source: 10 News, Curbed, Jacksonville.com



4. Colorado — Millennials have been flocking to Denver for its numerous high-paying jobs, reasonable commutes, and activities. It also gets 300 days of sunshine a year.

Number of millennials moved in: 4,369

Number of millennials moved out: 2,863

Net migration: 1,506

Source: Denver Post, SmartAsset



3. Texas — Dallas-Fort Worth, Austin, and Houston have become magnets for millennials looking to work for small businesses.

Number of millennials moved in: 10,890

Number of millennials moved out: 9,012

Net migration: 1,878

Source: Chron



2. Washington — Home to the headquarters of Amazon and Microsoft, the Seattle metro area is a thriving tech center.

Number of millennials moved in: 5,729

Number of millennials moved out: 3,809

Net migration: 1,920

Source: The New York Times



1. California — Silicon Valley draws millennials looking to work in the tech industry. And with plenty of national parks and beaches, California has plenty to offer outdoors.

Number of millennials moved in: 17,245

Number of millennials moved out: 13,648

Net migration: 3,597

Source: SmartAsset



More rich millennials are abandoning New York than any other state — and they're not the only ones fleeing the high cost of living

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rich millennials new york

Rich millennials are over New York.

According to a new SmartAsset study, New York is the No. 1 state rich millennials are moving from. The report used data from the IRS' 2015-2016 tax year to take a look at the states wealthy millennials were moving to and from.

It defined rich millennials as people younger than 35 with an adjusted gross income of at least $100,000. SmartAsset ranked states by net migration, which it determined by subtracting the number of millennials moving out of the state from the number of millennials moving into the state.

It found that a net 4,867 rich millennials left New York during the one-year period — 10,048 moved into the state, while 14,915 moved out.

That's more than twice the number of rich millennials who, in the same time period, left Illinois, the state that saw the second-largest net decline in rich millennials (2,248). About 35% more rich millennials left New York than moved to California, which ranks as the state attracting the most rich millennials, AJ Smith, SmartAsset's vice president of Financial Education, told Business Insider.

Even their less affluent generational peers aren't drawn to New York — or at least not to New York City. A previous SmartAsset report tracked the top cities millennials were settling in, and New York City didn't even make the top 25.

Read more: New York is getting so expensive that even Wall Street bankers are bolting — and it's not the only major city the wealthy are abandoning

Rich millennials aren't the only wealthy demographic abandoning the state. New York City's high cost of living is causing multimillionaires — particularly wealthy bankers — to flee to more affordable states, John Aidan Byrne of the New York Post reported. In 2016, New York lost $8.4 billion because of residents moving to other states, according to Byrne.

According to Zillow, the city's median rent of $3,400 is twice the national median rent. The city's real-estate market has gotten so expensive that residents are living in vans or houseboats instead of traditional homes. And those who can buy are forgoing apartments in the sky for basements, where they can get more space for their money, reported Stefanos Chen for The New York Times.

SEE ALSO: The top 18 states rich millennials are moving to

DON'T MISS: Forget New York — these are the 10 surprising cities millennials are moving to

Join the conversation about this story »

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75% of Americans don't have a high-yield savings account — and they're leaving free money on the table

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checking phone money

New data shows the vast majority of Americans don't have a high yield savings account — and they're leaving free money on the table.

As part of the launch of its own high-yield savings account, Credit Karma surveyed 1,050 American adults about their savings habits and goals in August 2019. About 75% of people surveyed said that they don't have a high-yield savings account — a type of savings account with a much higher interest rate than a traditional savings account — and that means that their money isn't working as hard as it could be. 

Even for people who have a savings account, traditional savings accounts don't earn much interest: an average of .09%, according to the FDIC in November 2019.

That's nothing compared to high-yield savings.

A high-yield savings account earns up to 20 times more money than a traditional savings account

Only 25% of Americans are taking advantage of the benefits of a high-yield savings account, which offer interest rates 20 times higher than a traditional savings account, with some as high as 2%. While experts advise investing money in the stock market to get the best return over time, high-yield savings accounts are a better option for money you want to keep close, but growing, to use within the next few years.

High-yield savings accounts are not investments. They're liquid, making them great options for relatively short-term goals like saving for a down payment on a home or a car. High-yield savings accounts are also a great way to keep growing an emergency fund that you won't be touching on a daily basis, but could need at any moment. If you're saving large chunks of money for these purposes, that money could be earning hundreds of dollars in interest over time. 

The 75% of Americans who don't have one are missing out: High-yield savings accounts can grow your savings without any more effort than it takes to set up an account and initiate a transfer.

Most people think high-yield savings is more complicated than it is

According to Credit Karma's data, there's a big reason why people don't have one yet — and it's a huge misconception.

Of people who don't have a high-yield savings account, 44% said that the minimum deposit was too high. But, many high yield savings accounts actually have a very accessible minimum deposit. Two of the major players in the high-yield savings space don't require even $20 to get started. Wealthfront requires a minimum deposit of $1 to use its cash account, while Betterment requires a $10 minimum deposit. Credit Karma's own account has no minimum deposit, and requires only one cent to start earning interest.

Other reasons people chose not to open a high-yield savings account is not knowing what it is (21%), being happy with their current savings account (19%), and not wanting to switch banks (17%). And 9% said they felt that it was too good to be true, not realizing that in this case, at least, high-yield savings live up to the hype.

On the heels of a series of rate cuts by the Fed, interest rates have lowered and high-yield savings accounts are offering rates more like 1.6% to 1.9%, down from the 2% or more we saw over the summer. But as Business Insider's Tanza Loudenback reports, it's an excellent time to open a high-yield savings account for two reasons: First, 1.9% is still 19 times more interest than you'd earn in a traditional savings account, and second, interest rates fluctuate — when they go up again, you'll already have a nice chunk of cash ready and waiting to take advantage.

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The top 25 recession-proof cities in the US

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stock market wall street trader.JPG

Coronavirus has prompted new fears of a recession in the US.

The Dow plunged as much as 8% on Monday — it's biggest intraday drop since 2010. But how well you'll be able to handle a downturn partly depends on where you live.

A recent SmartAsset report determined the most recession-resistant cities in the US by looking at government data for 264 of the largest cities in the country across 3 categories: employment, housing, and social assistance. It ranked each city across 3 different metrics in each of these categories for a total of 9 metrics, then averaged the metric rankings of each category, giving each an equal weighting.

It then determined the final ranking by averaging each city's score in the 3 categories. Those with the highest ranking (close to 100) are most recession-resistant, while those with the lowest average ranking (close to 0) are the least.

Turns out, Texas is pretty recession-proof — 5 cities in the state made the top 10, including the top spot, and 3 more made the top 25.

Here are the top 25 most recession-proof cities in the US, according to the SmartAsset report.

SEE ALSO: The Great Recession split the millennial generation down the middle, creating 2 groups with very different financial habits

DON'T MISS: How the American millennial is overcoming debt, the dollar, and the economy they were handed

25. West Valley City, Utah

Employment ranking: 65.45

Housing ranking: 74.34



24. Fargo, North Dakota

Employment ranking: 97.38

Housing ranking: 93.67



23. Alexandria, Virginia

Employment ranking: 100

Housing ranking: 81.37



22. Fort Collins, Colorado

Employment ranking: 76.96

Housing ranking: 79.61



21. Oklahoma City, Oklahoma

Employment ranking: 81.68

Housing ranking: 82.07



20. Killeen, Texas

Employment ranking: 56.94

Housing ranking: 61.86

 



19. Arlington, Texas

Employment ranking: 76.31

Housing ranking: 59.05



18. Durham, North Carolina

Employment ranking: 75.52

Housing ranking: 76.27



17. Madison, Wisconsin

Employment ranking: 94.90

Housing ranking: 88.75



16. Omaha, Nebraska

Employment ranking: 81.28

Housing ranking: 85.59



15. Arlington, Virginia

Employment ranking: 99.74

Housing ranking: 94.73



14. Lincoln, Nebraska

Employment ranking: 92.02

Housing ranking: 86.29



13. Rochester, Minnesota

Employment ranking: 89.40

Housing ranking: 84.53



12. Boise, Idaho

Employment ranking: 80.63

Housing ranking: 69.77



11. Round Rock, Texas

Employment ranking: 85.34

Housing ranking: 74.69



10. Sioux Falls, South Dakota

Employment ranking: 96.99

Housing ranking: 84.01



9. Raleigh, North Carolina

Employment ranking: 73.04

Housing ranking: 90.33



8. Cary, North Carolina

Employment ranking: 91.23

Housing ranking: 95.25



7. Lubbock, Texas

Employment ranking: 80.37

Housing ranking: 67.49



6. Sunnyvale, California

Employment ranking: 76.18

Housing ranking: 94.02



5. Austin, Texas

Employment ranking: 86.26

Housing ranking: 79.26



4. Denton, Texas

Employment ranking: 78.4

Housing ranking: 71.18



3. Plano, Texas

Employment ranking: 81.41

Housing ranking: 92.27



2. Cedar Rapids, Iowa

Employment ranking: 94.76

Housing ranking: 86.29



1. Frisco, Texas

Employment ranking: 87.3

Housing ranking: 92.27



4 ways to get the most money from your savings in retirement

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Personal Finance Insider writes about products, strategies, and tips to help you make smart decisions with your money. We may receive a small commission from our partners, but our reporting and recommendations are always independent and objective.

retirement

  • When you're planning to retire, it's smart to think about the most strategic way to withdraw money from your savings, to make sure you're optimizing your withdrawals.
  • Generally, it's a good idea to start withdrawing money from your investments, move on to your retirement accounts, and delay taking Social Security as long as possible.
  • For help crafting your own retirement plan, you might want to work with a professional. Use SmartAsset's free tool to find a financial planner near you »

If you’re planning to retire within the next few years, you need to consider when you should start making withdrawals from your retirement accounts.

The order in which you withdraw from your accounts is extremely important — it could let your tax-advantaged accounts grow to their full potential, make your savings last and even save you money on taxes.

1. Start with your investments

Withdrawing from your investments first gives your retirement accounts more time to compound interest.

Whether you have mutual funds, a brokerage account, ETFs, stocks or bonds, they’re all taxable, so you’ll have to pay capital gains taxes on withdrawals. Some investments also require you to pay taxes on distributions each year, like some mutual funds.

2. Move on to your 401(k) and IRA

Once you’ve exhausted your investment portfolio, move on to your tax-deferred retirement savings accounts: your traditional 401(k) or IRA.

Unlike taxable investment accounts, you won’t be charged income tax or capital gains tax as your 401(k) account grows each year.

However, you’ll owe income taxes on withdrawals. Some 401(k) plans will automatically withhold 20% or so of your account to pay for taxes. Check with your plan provider to see how your particular 401(k) works.

Are you on track to retire when you want? Find out with this calculator from our partners:

 

3. Wait to tap into your Roth

Put off withdrawing money from your Roth IRA as long as possible.

You paid taxes up front so you can take money out of your Roth IRA and it won’t count as taxable income.

Your Roth IRA also will continue to grow tax-free as you tap into your other accounts. Since a Roth IRA holds after-tax funds and the IRS doesn’t need to tax it again, you also don’t need to take Required Minimum Distributions.

4. Stall on accepting Social Security benefits

If you want your maximum Social Security benefits, you’ll need to work until your “full retirement” age.

Benefits at age 62, 66 or 67 are not your maximum benefits. The maximum Social Security retirement benefit kicks in at age 70.

Each year after full retirement, your payout increases by a certain percentage based on specific criteria. To maximize on this strategy, we recommend holding off until you are 70 — payments will be the highest possible, increasing by 8% each year you wait.

When should you start taking Social Security? Use this calculator from our partners to find out:

 

SEE ALSO: 5 dumb decisions that put you at risk of going broke in retirement

Join the conversation about this story »

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7 of the biggest mistakes people make choosing a financial advisor

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businesswoman meeting clients exec financial advisor

  • When you need help with your money, it's tempting to hire the first financial advisor you meet.
  • But the smarter move is to choose someone who's aligned with you on your goals and priorities, and who can help you achieve what you need in the way you want to do it.
  • Looking for someone you can trust? Use SmartAsset's free tool to find a financial planner near you »

Choosing a financial advisor is a big decision. 

Being aware of these seven common blunders when choosing an advisor can help you find peace of mind, and avoid years of stress. 

1. Hiring the first advisor you meet

While it's tempting to hire the advisor closest to home or the first advisor in the yellow pages, this decision requires more time. Take the time to interview at least a few advisors before picking the best match for you. 

2. Choosing an advisor with the wrong specialty

Some financial advisors specialize in retirement planning, while others are best for business owners or those with a high net worth. Some might be best for young professionals starting a family. Be sure to understand an advisor's strengths and weaknesses — before signing the dotted line. 

3. Picking an advisor with an incompatible strategy

Each advisor has a unique strategy. Some advisors may suggest aggressive investments, while others are more conservative. If you prefer to go all in on stocks, an advisor that prefers bonds and index funds is not a great match for your style. 

4. Not checking references

Most advisors are happy to offer references to prospective clients. Calling references only takes a couple of minutes, and it can help put you at ease when handing over the keys to your bank account. 

Use SmartAsset's free tool to find a financial planner near you »

5. Not asking about credentials

To give investment advice, financial advisors are required to pass a test. Ask your advisor about their licenses, tests, and credentials. Financial advisors tests include the Series 7, and Series 66 or Series 65. Some advisors go a step further and become a Certified Financial Planner, or CFP.  

6. Making assumptions when they are affiliated with a reputable brand

An advisor might appear qualified and professional due to an association with a major firm like J.P. Morgan or Morgan Stanley. Working with an advisor from a reputable firm can lead to stability and better tools and information. However, choose an advisor because they are the best fit, not because of their branding. 

7. Not understanding how they are paid

Some advisors are "fee only" and charge you a flat rate no matter what. Others charge a percentage of your assets under management. Some advisors are paid commissions by mutual funds, a serious conflict of interest. If the advisor earns more by ignoring your best interests, do not hire them. 

Looking for someone you can trust? Use SmartAsset's free tool to find a financial planner near you »

SEE ALSO: 4 ways to get the most money from your savings in retirement

Join the conversation about this story »

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3 reasons to invest in real estate, according to a financial planner who owns 10 rental properties

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Brent Sutherland

Making money in real estate isn't for everyone. It takes grit, time, and most importantly, cash.

According to Brent Sutherland, a certified financial planner, real-estate investing is a decidedly "non-traditional" method for building wealth, but a powerful one nonetheless, he wrote in an article published on CoachCarson.com.

When he was 35, Sutherland bought his first single-family home to rent out for income. Now, less than five years later, he owns eight additional properties, plus part of a commercial real-estate project that involves four apartments, a garage, and 10 mobile homes.

After becoming a real-estate investor himself, Sutherland left traditional financial advising to coach clients on his own. The reason why, he says, is that the way advisers are paid, trained, and regulated generally inhibits them from recommending a non-licensed product like physical real estate to clients.

"How could I sit across the table from someone and talk to them about a financial roadmap and investment strategy that I was not following myself? I became professionally and morally conflicted. And that is why I ultimately branched out," he writes.

Here's why Sutherland believes real-estate investing is a valuable tool for building wealth:

1. Real estate diversifies your income

It's a common habit among financially successful people to develop and maintain multiple income streams.

"While it is certainly important to be properly diversified with your investments, it is even more important to be diversified with your income," Sutherland writes. "This is because the largest financial risk for most of you is the loss of your primary source of income, which is typically in the form of a day job."

Setting up and managing a rental property can open up a stream of steady income that doesn't require the time commitment of a full-time job.

"If you continue to expand your income streams, you eventually reach a point where you no longer need to rely on a day job (and someone else being in charge of your well-being). This is the point of financial freedom; the ultimate form of financial security!" Sutherland writes.

Need help with your investments? SmartAsset's free tool can help find a licensed professional near you »

2. Real estate produces near-immediate results

When managed correctly, rental properties can produce income quickly and consistently, he says.

"You can achieve and feel the results almost immediately. Property improvements are visible and tangible. You can cash, spend, and invest rent payments. Today! Not 30 years in the future," Sutherland writes.

"I've found that investing with near-immediate results usually generates energy and enthusiasm in a person that cannot be achieved through traditional means. Positive financial behaviors unearth themselves," he writes.

3. Passive income can help you become financially independent sooner

According to experts, a person is considered financially independent when they have 25 times their annual expenses saved. With this amount, they would be able to withdraw 4% of their investments each year and live comfortably without ever running out of money, assuming they earn the average return.

With passive income from real-estate investments, Sutherland says you can halve the amount you need invested to become financially independent. 

He explains: "If you need $40,000 a year to live, you could alternatively invest in assets that generate an 8% cash-on-cash return. This is a very reasonable assumption. And it means you would only need to save a total of $500,000 (instead of $1 million). Yet, your investments would still meet your annual household living needs." 

While returns, taxes, and inflation can, of course, affect your timeline, he says, cash-flowing real-estate is a clear asset.

Need help with your investments? SmartAsset's free tool can help find a licensed professional near you »

Join the conversation about this story »

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Citi Accelerate Savings account pays a high APY for residents of 42 US states, with no opening deposit

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Citi bank review 4x3

 
  • The Citi Accelerate Savings Account from Citibank (Member FDIC) pays a high APY and doesn't require an opening deposit.
  • Citibank offers six tiered "packages," and the package you choose will determine your monthly fees and other terms for the Citi Accelerate Savings Account.
  • If you open a Citi Accelerate Savings Account along with a checking account in an Account Package or Premier Account Package, you could earn a $400 or $700 sign-up bonus, respectively.
  • If you live in one of the 42 states where Citi Accelerate Savings is available, the account is a solid high-yield savings option.
  • See Business Insider's picks for the best high-yield savings accounts »

The Citi Accelerate Savings Account pays one of the highest rates in the banking industry right now, and it doesn't require an opening deposit. The account is a worthwhile option for people who live in one of 42 states where the account is available and for anyone who qualifies to waive monthly fees.

Table of Contents

Should you open a Citi Accelerate Savings Account?

You might like the Citi Accelerate Savings Account if you:

  • Live in a state where the account is available
  • Value earning a high APY on your savings
  • Don't have much money to open a savings account
  • Are eligible to waive monthly fees
  • Want to earn a cash sign-up bonus, AND want to open a corresponding Citibank checking account

You might not want to open a Citi Accelerate Savings Account if you:

  • Don't live in a state where the account is available
  • Can't meet qualifications to have monthly fees waived

Citi Accelerate Savings Account features

Citi Accelerate Savings Account

The Citi Accelerate Savings Account is only available for residents of certain US states. For the most part, it isn't available in states where there are physical Citibank branch locations, so it's targeted toward online customers.

The exceptions are South Dakota and certain parts of Florida — there are branch locations in these states, and you can open a Citi Accelerate Savings Account.

Here are the parts of the US where you cannot open a Citi Accelerate Savings Account:

  • California
  • Connecticut
  • Select parts of Florida
  • Illinois
  • Maryland
  • Nevada
  • New Jersey
  • New York
  • Virginia
  • Washington DC
  • Puerto Rico

If you have access to a Citi Accelerate Savings Account, you have the ability to earn one of the highest interest rates out there right now, regardless of your balance. Citibank also doesn't require an opening deposit.

Citibank divides its checking and savings account options into tiered "packages." There are six package tiers that include a checking account, savings account, or both.

Even if you don't bundle your Citi Accelerate Savings Account with a checking account, you still must choose a package. Details like monthly fees and requirements to waive monthly fees will depend on which package tier you choose.

If you choose the Account Package, you may qualify for a $400 sign-up bonus, and if you go with the Priority Account Package, you could receive a $700 sign-up bonus. You must also open a checking account in these packages to get the cash rewards. These are some of the best bonuses available for opening a bank account right now.

Read our full Citibank review »

How Citi Accelerate Savings compares

 Citi Accelerate SavingsHSBC Direct SavingsCapital One 360 Performance Savings
APY1.35% APY1.01% APY1% APY
Opening deposit$0$1$0
Monthly service fee$0-$30$0$0
Customer service24/7 phone access; online chat 6 a.m. to 10 p.m. ET24/7 live chat; call 7 a.m. to 12 a.m. ET24/7 live chat; call 8 a.m. to 11 p.m. ET

Citi Accelerate Savings vs. HSBC Direct Savings

The interest rate may affect your choice between Citi Accelerate Savings and HSBC Direct Savings. While APY is important, keep in mind that rates fluctuate, and they've been fluctuating frequently during the coronavirus pandemic— so while one bank's rate might be higher today, things could change in the next few weeks. Your rate also isn't locked in once you open an account, so if the rate increases or decreases, it will affect your current balance.

If you value banking with a mobile app, you may prefer Citibank over HSBC Direct. HSBC has a mobile app, but it has received poor reviews in the Apple and Google Play stores.

HSBC Direct doesn't charge monthly fees, so if you can't qualify to have monthly fees waived with Citi, you may prefer HSBC Direct.

HSBC Direct is available for people in all 50 states and DC, so if you live in an area where the Citi Accelerate Savings Account isn't available, HSBC Direct is the clear choice for you.

Read our HSBC Direct Savings review »

Citi Accelerate Savings vs. Capital One 360 Performance Savings

Again, the interest rate could affect your decision between Citi Accelerate Savings and Capital One 360 Performance Savings (Member FDIC), but it's important to remember that rates change over time.

Capital One 360 doesn't charge monthly fees, so you may prefer it to Citibank if you don't qualify to waive Citibank fees. Capital One 360 is also available all across the US, so if you don't live in an area where Citi Accelerate Savings is available, Capital One 360 is the way to go.

Read our full Capital One 360 review »

Related Content Module: More Savings Coverage

Join the conversation about this story »

All your questions answered about filing and paying taxes

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Tax season has been extended by three full months this year.

With the additional time to file and pay taxes — amid a global health crisis, nonetheless — comes many questions: How do I file? Am I still getting a refund? How do I pay taxes I owe? What happens if I file late?

Below, we've answered those questions and more. We've also included additional resources Business Insider put together to help readers sift through all the tax software options out there.

Table of Contents

What is the best tax software?

According to our research, TurboTax offers the widest selection of comprehensive tax software and online tax-filing options on the market right now.

That said, every American who qualifies to file their taxes for free should be able to do so without deception. A 2019 investigation by ProPublica found that Intuit, TurboTax's parent company, and H&R Block were deliberately hiding their free filing services from Google and other search engines, which led the IRS to announce early this year that the companies would be prohibited from doing so going forward.

Business Insider's 2020 picks for best tax software:

Tax SoftwareBest for...Next steps...
TurboTaxMost peopleVisit TurboTax site
H&R BlockFree filing & First-time filersVisit H&R Block site
1040.comNon-W-2 incomeVisit 1040.com
eFile.comSmall business ownersVisit eFile.com
TaxActExperienced filersVisit TaxAct site

Read our full 'Best Tax Software' guide to learn more.

Tax software reviews

Business Insider reviewed about a dozen of the most popular tax preparers at the start of the 2020 tax season to identify their top strengths and weaknesses. In case you want to dive deep into a particular tax service or software, check out our in-depth reviews:

Tax Day 2020: frequently asked questions

When are taxes due?

The filing and payment deadline for federal income taxes has been extended to July 15, 2020. This is three months later than the usual deadline of April 15. You don't have to be personally affected by COVID-19 to take advantage of the extension — it automatically applies to all taxpayers.

July 15 is also the deadline for most state taxes, although some don't collect income tax, and others have extended their due dates to May or June. See the full list of state due dates for taxes.

The extension also applies to your tax bill. If you owe taxes for 2019, your balance won't begin accruing interest until July 16.

How do I file taxes?

The IRS is not currently processing paper tax returns because its centers have closed temporarily due to the pandemic. You can still file online for free through the IRS Free File if your adjusted gross income (AGI) was under $69,000 in 2019. The portal lists nearly a dozen third-party tax preparers, including TurboTax, H&R Block, and TaxAct, that will help you prepare and file your tax return at no cost if you meet certain requirements.

If your income is above that limit, you can check out Business Insider's list of the best tax software to find an online tax prep service that will meet your needs. 

Even during normal times, the IRS strongly recommends filing electronically. Paired with direct deposit, it's the fastest way to get your refund. 

What if I already filed a paper return?

If you completed and mailed a paper tax return before social-distancing measures forced the closure of IRS processing centers, don't file a second return. The IRS is working through a backlog of millions of pieces of mail sent to offices during coronavirus shutdowns. In the meantime, the IRS is not accepting calls or written correspondence related to individual taxpayers' returns.

What is my tax filing status?

Your filing status, along with your income, helps determine your tax liability. There are five tax filing statuses: single, head of household, married filing separately, married filing jointly, and qualifying widow(er).

  • Non-married taxpayers who are not claimed as a dependent on another person's return should file as single.
  • Couples who were married by December 31 of the previous year are eligible to file a joint return for that tax year. In general, there are a few major benefits to married filing jointly, including access to valuable tax credits, a larger standard deduction, a larger capital loss deduction, and combined incomes, potentially bringing a higher earner into a lower tax bracket.
  • Married filers can file separate tax returns (married filing separately) where they report only their own income, deductions, and credits. But they're still connected in some ways. For instance, if one spouse itemizes deductions, the other must, too.
  • Non-married individuals may choose to file as head of household if they have a qualifying child or dependent.
  • An individual whose spouse dies is still able to file jointly for the year of death if they do not remarry. Then, in the two years following, they are entitled to file as a qualifying widow or widower as long as they claim a dependent child, stepchild, or adopted child.

If you're still unsure, the IRS also offers a handy questionnaire that takes about five minutes to fill out.

Do I have to file taxes? 

Not everyone has to file taxes. If your annual income was less than the standard deduction for your age and filing status, you probably aren't required to file a tax return.

For 2019, the standard deductions for taxpayers under age 65 are $12,200 for single filers, $18,350 for single parents, and $24,400 for joint filers. If you're over age 65 and filing single or head of household, the standard deductions increase to $13,850 and $20,000, respectively. If you or your spouse is over age 65 and you file jointly, the standard deduction is $25,700.

Even if you have no tax-filing obligation, you may want to file a return to claim refundable credits, such as the earned income tax credit (EITC) or the child tax credit (CTC), or to receive a refund of any tax that was withheld from your paycheck by an employer throughout the year.

Can I file taxes for free?

If you earned less than $69,000 a year, then you have access to free tax prep for your federal, and possibly state, returns through the IR' Free File program.

Some tax preparers don't list the Free File option clearly on their websites, so it's best to go through the IRS website if you know your AGI is under $69,000. Most of these tax preparers allow active members of the military to prep and file their returns for free, too.

If you earn more than the income limit for the IRS Free File program, you may still be able to file your taxes for free. Two of our top picks for best tax software, H&R Block and TurboTax, offer free tax filing for very simple tax situations, regardless of your income level. Credit Karma Tax completely free federal and state tax filing with no income restrictions. FreeTaxUSA offers free federal filing, but charges an additional fee for state returns.

These online services help you prepare your tax return step by step and are typically easy to navigate. Some also offer free filing for state income tax returns, while others charge a fee. 

How much does it cost to file taxes online?

If you don't qualify for free filing, you can expect to pay anywhere between $25 and $120 or more to prepare and file your federal return using an online service. State returns often cost an extra $25 to $60 each.

How much you pay depends on the complexity of your tax situation, including whether you have self-employment income, own a home, care for dependents, or have investment income. Generally, the more tax forms you need to file, the more expensive it will be.

It may be worth it to hire a pro if your financial situation is complicated or you don't have the patience to prepare your return. A CPA can offer professional insight, find ways to save you money, and help with future tax planning strategies.

How should I pay my tax prep fee?

Most online tax preparers will offer to deduct your prep and filing fee from your refund but they'll charge an extra fee between $25 and $40.

If you can, use a rewards credit card to pay for online tax prep and filing instead of deducting the amount from your refund. There's usually no service charge to pay via credit card; you'll be able to earn rewards points or cash back, depending on the card you have; and you'll get your tax refund in full.

The IRS called or emailed me. What should I do?

Don't answer — it's probably a scam.

If the IRS needs to get in touch with a taxpayer, it sends a letter— not an email, not a phone call, and definitely not a message over social media. Especially when it's investigating cases of tax fraud or performing an audit.

Never return a phone call from someone claiming to be with the IRS. Instead, individuals should call the IRS directly at 800-829-1040, and businesses should call 800-829-4933.

The US Department of Justice says the IRS never discusses personal tax issues through unsolicited emails or texts, or over social media. Always be wary if you are contacted by someone claiming to be from the IRS who says you owe money.

If you receive an unexpected and suspicious email from the IRS, forward it to phishing@irs.gov.

How do I get a tax extension?

If you don't think you can get everything together in time to file by July 15, consider getting an extension to push your deadline back to October 15. Here's how you can do it:

  • File for an extension online for free, regardless of your income, with the IRS free filing partners, including H&R Block, TurboTax, and TaxAct.
  • Use IRS Form 4868 to send in your extension request by mail (as of mid-April, the IRS is inundated with mail due to office shutdowns, so this isn't your best option).
  • Make a payment on the IRS website that covers all or part of your estimated tax bill — it will automatically process an extension for your tax return.

Remember, though, that an extension will only postpone your filing due date, not your payment due date if you owe money.

Am I still getting a tax refund?

The IRS is still processing electronic returns and paying out refunds on schedule. If you're expecting to get a refund, you should file as soon as possible.

Keep in mind that if you're getting a stimulus check, it won't lower your tax refund. You'll still get your full tax refund next year (and this year too, for that matter) as long as you file a tax return.

Your refund this season might be bigger than expected — the IRS says it's paying interest on delayed refunds. Here's how it works: Taxpayers with a refund issue date between April 15 and June 30 earn an annual interest rate of 5%, while taxpayers issued refunds between July 1 and September 30 earn an annual interest rate of 3%. All interest is compounded daily, and accrues between April 15 and the day the refund is issued. It may be sent as a separate payment.

Should I do direct deposit or get a check in the mail?

The IRS says the fastest way to get your tax refund is the method already used by most taxpayers: filing electronically and selecting direct deposit. Most people who e-file and opt for direct deposit get their refund within 21 days of filing.

The IRS says direct deposit — which the government also uses for Social Security and Veterans Affairs payments — is "simple, safe, and secure."

Where is my tax refund?

You can check the status of your tax refund using the IRS return-tracking service 24 hours after filing your tax return online or four weeks after mailing a return.

States that tax income also issue refunds, and you can check the status of your refund on your state's government website.

What if I owe money?

If you end up owing money, your 2019 tax bill is due July 15, regardless of when you file. You can file early and schedule a payment for that day (or anytime before) if you aren't quite ready to pay.

The IRS accepts payments via debit and credit cards, Direct Pay from a checking or savings account, wire transfer, check or money order, cash, and electronic funds withdrawal from your bank (only available if you use an online tax preparer).

What happens if I pay or file taxes late?

If the July 15 tax deadline comes and goes and the IRS hasn't heard from you at all, you can expect to pay a penalty. 

The good news is that if you're expecting a tax refund and don't file your federal income tax return on time, there's no late charge. The bad news is that you won't get your refund until you file.

But if you owe taxes and fail to file your return, the IRS essentially starts a running tab in your name. Every 30 days, you'll be charged 5% of any unpaid tax you're required to report on your return. Even if you file within a few weeks of the deadline, the full month penalty still applies.

When your return is filed more than 60 days after the due date, it's subject to a minimum penalty equal to the lesser of 100% of the tax required to be paid on your return or $435, according to current IRS rules. There will also be interest accruing on your balance.

What if I owe back taxes, or I can't afford to pay this year?

If you can't afford to pay your tax bill in full on the deadline, don't pull out your credit card or ignore the situation.

The IRS offers reasonable payment plans at much lower interest rates than most banks. You may even be able to settle the bill for less than you owe, called an offer in compromise, or request a deferment until you can make a payment. Offers in compromise and requests for deferment require additional paperwork and must be approved by the IRS.

Do I really have to pay taxes on my side job?

Yes, if your net income (gross income less deductible expenses) was more than $400 from side jobs in 2019 then you're responsible for reporting it on your tax return. This includes income from any on-demand work, like food delivery services, ride-sharing, renting out property, running errands, and selling products online. 

That's because the IRS requires that anyone earning non-W-2 income from a job be classified as an independent contractor, even if they also hold a job as a W-2 employee. These workers often must pay estimated quarterly taxes on their additional income.

The business(es) that paid you for on-demand work may send forms to the IRS to report those payments, depending on how they classify and pay workers, including forms 1099-MISC, Miscellaneous Income and 1099-K, Payment Card and Third Party Network Transactions.

If you don't receive these forms, you'll need to rely on your own payment records to report all net income earned from temporary or part-time sources — including cash — on your tax return if it is more than $400.

Check out the Gig Economy Tax Center on the IRS website for more information.

When are estimated quarterly taxes due?

There are four deadlines for estimated tax payments throughout the year. If the income tax withheld from your paycheck is not enough to cover your tax liability, you are self-employed, or your income includes interest, dividends, alimony, or capital gains, you may have to pay estimated taxes.

Due to the coronavirus, the new due dates are as follows:

  • Estimated payments for the first quarter (January 1 to March 31) are due on July 15
  • Estimated payments for the second quarter (April 1 to May 31) are due on July 15
  • Estimated payments for the third quarter (June 1 to August 31) are due on September 15
  • Estimated payments for the fourth quarter (September 1 to December 31) are due on January 15, 2021 

Can I still contribute to my IRA for 2019?

The extended tax deadline also applies to contributions to an IRA or health savings account (HSA). That means if you didn't hit the annual limit for these accounts in 2019, you can keep contributing until July 15. 

To make additional contributions to your IRA for the 2019 tax year, you should contact the brokerage where your IRA is held to make sure any funds you add to your account are filed correctly. The maximum annual contribution is $6,000, plus an extra $1,000 if you're over age 50, and is combined for traditional and Roth IRAs.

You must be currently enrolled in a high deductible health plan to contribute to an HSA. If you're single, you can save a maximum of $3,500 for the year, and if you have a spouse or dependents on your health plan, you can save up to $7,000 for 2019. There's also an additional $1,000 catch-up limit for savers 55 and older.

Can I take a tax deduction for working from home?

If coronavirus social-distancing measures have forced you to temporarily work from home, you may be wondering whether there's a tax deduction available to you. There is indeed a tax deduction for home offices, but it's only available to self-employed people.

If you aren't an employee of another company and you use your home "regularly and exclusively" for business, you might be entitled to a partial deduction for household expenses like utilities, mortgage interest, depreciation, and insurance.

Can the government tax my Social Security?

No matter a person's income, 15% of their Social Security benefit is tax-free. The rest, however, is subject to taxation depending on your larger financial picture.

How much your Social Security benefits are taxed depends on your provisional income, or the sum of all earnings in a given year, plus half of your Social Security benefits. Here's the formula:

Provisional income = adjusted gross income (AGI) + non-taxable interest + 50% of annual Social Security benefits.

That total is then applied to the following income limits to determine the tax rate:

  • If provisional income is $25,000 or less for a single filer, or $32,000 or less for joint filers, no tax is owed on Social Security benefits
  • If provisional income is between $25,001 and $34,000 for a single filer, or $32,001 and $44,000 for joint filers, 50% of the Social Security benefit may be taxed at the filers' marginal tax rate
  • If provisional income is $34,001 and above for a single filer, or $44,001 and above for joint filers, 85% of the Social Security benefit may be taxed at the filers' marginal tax rate

Can the government tax my unemployment benefits?

Unemployment insurance is a joint state-federal program. If you're getting benefits from either government, it counts as income in the eyes of the IRS.

You have to report any unemployment compensation you receive on your federal tax return and potentially your state return as well. The money will ultimately be included in your gross income and taxed at your ordinary income rate.

There are two ways you can be taxed on your unemployment benefits:

  • Withholding: If you want your taxes automatically taken from your benefit check or direct deposit before you get paid, like they would be from a traditional paycheck, then you need to file Form W-4V (Voluntary Withholding Request). This will instruct the payor — most likely your state government — to withhold 10% of each payment for federal income taxes. It will also take a portion of the money for state taxes, if applicable.
  • Estimated tax payments: Make quarterly payments directly to the IRS for the amount you estimate you'll owe. Keep in mind that this method requires doing some calculations, meeting payment deadlines every three months, and may result in a penalty charge if you underpay.

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10 cities in the US where the American Dream is alive and well

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  • The American Dream includes homeownership, economic opportunity and diverse communities.
  • To find US cities with these characteristics, SmartAsset used five metrics to rank over 200 cities: homeownership rate, diversity rate, upward mobility rate, median home value and unemployment rate.
  • Key findings include the fact that six of the 10 cities remain the same as the 2017 ranking, and half of the cities in the top 10 are in Texas.

It is difficult to come up with any one definition for the American Dream that every American will agree on.

But certainly for many people, it includes homeownership, economic opportunity and diverse communities. For these people, they need to live in a city where homes, and mortgages, are affordable and where it’s possible to climb the economic ladder. Below we look at this special combination of traits to rank the best places for living the American Dream.

In order to rank the best places for living the American Dream, we looked at data on five metrics. Specifically we looked at the homeownership rate, diversity rate, upward mobility rate, median home value and unemployment rate.

See the methodology for this ranking.

Key Findings

  • The dream endures. Six of last year’s top 10 found themselves in the top 10 again this year. Those repeat cities are: West Valley City, Utah; Midland, Texas; Aurora Illinois; Round Rock, Texas; Aurora, Colorado and Rochester, Minnesota.
  • Texas is where the dream lives. Half of the cities in our top 10 are located in Texas. Cities in Texas tend to have affordable homes and plenty of good jobs, driving down the unemployment rate and improving upward economic mobility.

This is the 2018 edition of this study. Check out our 2017 version here.

Read on for the 10 cities where the American dream is still alive and well:

SEE ALSO: 16 signs you've 'made it' in America

10. Rochester, Minnesota

Our list ends in Rochester, Minnesota, one of the best cities for working women. Rochester ranks well thanks to high upward mobility and high homeownership rates. In those metrics, Rochester ranks 11th and 22nd, respectively.

In fact, if it weren’t for the lack of diversity (Rochester ranks 235 out of 256 in diversity), this city would rank higher.



9. Amarillo, Texas

Amarillo jumped up nine spots from last year’s study to take ninth this year. Like other Texas cities, Amarillo residents enjoy a plethora of available jobs. The city has an overall unemployment rate of only 3.2%.

It is also one of the friendliest home-buying markets in the country, judging by the homeownership rate. Over 60% of households in Amarillo own home. For most residents, homeownership should not be an unattainable goal, either. The median home in Amarillo is worth less than $127,000.



8. San Jose, California

San Jose scores very well in all metrics bar two — both related to housing. Unfortunately the majority of residents in San Jose are largely unable to afford the median home. According to our data, the median home in San Jose is worth over $800,000 by far the most in our top 10 and one of the highest in the study.

Balancing out those unaffordable homes however are a low unemployment rate, high amounts of diversity, a lot of economic upward mobility and rising incomes.



7. Aurora, Colorado

Another city named Aurora, this time the one in Colorado, finds itself in the top 10. Aurora, Colorado owes its place in this top 10 to the availability of work. This city has an unemployment rate of only 3.2%.

But many cities have low unemployment rates and do not end up in our top 10. Aurora is also fairly diverse with a good amount of upward mobility, which gives it the edge over other cities. Aurora ranks in the top 25% for both diversity score and upward mobility.



6. Fort Worth, Texas

Fort Worth is one of the most affordable cities in our top 10. Many residents in this city should be able to afford a home. The median home here is worth only $151,000, which is well below the national average. However, the homeownership rate is slightly low for our top 10 suggesting it takes more than affordable homes to encourage people to buy vs. rent.

Fort Worth is let down by its mobility score, however. This city ranks 132nd out of 250 cities in upward mobility for its residents.



5. Round Rock, Texas

Texas’ strong showing continues with Round Rock in fifth. This city scores in the top third of cities in four out of five metrics. In particular the economic conditions in this city are good for anyone trying to live the American Dream.

This city has a fairly high upward mobility rate and a low unemployment rate. Overall data from the Bureau of Labor Statistics shows that only 3.1% of residents in Round Rock are unemployed.



4. Aurora, Illinois

Aurora, Illinois is the most diverse city in our top 10. It has a diversity score of 0.35, putting it in 22nd place in the study for that metric. Aurora also has an upward mobility score of 49, the fifth-highest in our study.

If Aurora wants to jump into the top three spots, it will need to improve its unemployment rate. Our data shows that Aurora has an unemployment rate of 4.5%, putting it in the bottom half of our rankings for that metric.



3. Midland, Texas

Midland, Texas is another upwardly mobile city with a low unemployment rate. In both our mobility and unemployment rankings, Midland comes in third.

While those economic indicators are good for the American Dream in Midland, the city could improve on its homeownership rate, which is currently only 59%.



2. Odessa, Texas

Last year, Odessa ranked 24th but jumped an impressive 22 spots to secure the second spot this year. One reason for the improvement is the large drop in the unemployment rate. Last year, Odessa had a 5.8% unemployment rate but this year, the unemployment rate is only 3.8%.

Odessa also continues to be the most upwardly mobile city in the study.



1. West Valley City, Utah

Once again West Valley City, Utah takes the top spot.

West Valley City has an unemployment rate of only 2.9%. Only 11 other cities can boast of having a lower unemployment rate. Of course having plenty of jobs available is one thing, but a main tenant of the American Dream is upward mobility. West Valley City ranks 22nd in upward mobility, putting it in the top 10% of all cities.

One metric where West Valley City fell short is its diversity score. It ranks 94th in that score.



Cincinnati is the most affordable US city for renters living alone, a new report shows. Here's how the top 10 stack up.

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Summary List Placement

SmartAsset compared the 100 largest US cities.

The financial-advice company analyzed the cities based on five metrics: the percentage of housing units with fewer than two bedrooms and the average price of these, median earnings for full-time workers, unemployment rate, and cost of living.

It then ranked 10 most affordable cities for solo renters.



1. Cincinnati, Ohio

Cincinnati claimed the top spot for the fourth year in a row.

Average rent for a one-bed unit is $612 per month, the fifth-lowest of the 100 cities in the study, and it has a relatively low cost of living at $22,721 per year, putting it in the top ten, SmartAsset said.

Insider's Liz Knueven reported that her grocery bills were nearly cut in half when she moved from Seattle to Cincinnati, and dining out and transport suddenly became a lot cheaper, too.

Cincinnati also came in the top 20 for its April 2021 unemployment rate, at 4.6%, and the proportion of occupied housing units that have fewer than two bedrooms, at just over 28%, per SmartAsset's report.



2. Minneapolis, Minnesota

Minneapolis' average rent and living costs both ranked towards the middle of the 100 cities SmartAsset analyzed, but the city scored well on the other three metrics.

Its April unemployment rate was 4.2%, compared to a national average of 6.1%, nearly a third of occupied housing units in the city have one bedroom, and average earnings for full-time workers in 2019 were almost $56,500.



3. Omaha, Nebraska

Omaha's April unemployment rate was less than half the national average, at just 3%, putting it joint second-lowest in the study. It also has a relatively low cost of living and average rent, SmartAsset found.



4. St. Louis, Missouri

Nearly a third of occupied housing units in St. Louis have one bedroom, SmartAsset said in its report. It also ranked in the top 20% of cities that SmartAsset analyzed for both average rent and cost of living.



5. Lexington, Kentucky

Lexington's unemployment rate in April was well below average, at just 3.2%. The city also has low living costs and average rents, SmartAsset found.



6. Lincoln, Nebraska

Lincoln had the lowest April unemployment rate of the 100 cities in the report, at 2.2%. It also has below-average rent and living costs, SmartAsset said.



7. Pittsburgh, Pennsylvania

Pittsburgh has the 17th-lowest estimated annual cost of living of the 100 cities SmartAsset analyzed, at $23,463 per year. It also ranked within the top 30 for its average earnings for full-time workers, at $51,328 per year.



8. Louisville, Kentucky

Louisville, Kentucky ties in eight place with Tulsa, Oklahoma. It ranks in the top 15 of the 100 cities SmartAsset analyzed for three metrics: cost of living, April unemployment rate, and average rent for units with fewer than two bedrooms, where it came in at just $676 per month.



8. Tulsa, Oklahoma

Tulsa ranks within the top 10% of the cities SmartAsset analyzed for two metrics: average rent for units with fewer than two bedrooms, at $658 per month, and annual cost of living, at $22,786 – the second-lowest in the study.

The city is offering $10,000 to out-of-state remote workers to relocate there as part of a program aiming to help fuel Tulsa's growth.



10. Boise, Idaho

Boise had the joint second-lowest April unemployment rate of the 100 cities in the study, at 3%. It also came 10th for cost of living, at $23,123 per year.







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