# April 2021 Update

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It’s official! This is the first year I’ve filed for a tax extension.

Every year I use the FreeFillableForms to fill out and submit my taxes. I was slightly concerned that I’d have to restart the process to file the extension. That was until I saw the nifty “File an Extension” button in the upper left hand corner that takes you to a digital copy of form 4868, where you can then pay your estimated tax for 2020. No need to start over. Now I have until October 15th to complete my taxes.

Why did I file for an extension? I did it to prepare for the off chance that there are any future pandemic shenanigans played by Congress. The steep cliff kept us out of the third stimulus, and while I have no idea what will happen in the next 6 months, there seems to be little risk in delaying my filing.

Technically, I could have waited until May 17th to file for the extension. Sadly, ,I have a habit of doing things earlier than I should.

## Switching Child Roth IRAs to VTSAX

When my oldest became a lifeguard at the local pool, I incentivized her to start a Roth IRA. Unfortunately, the first year she didn’t have enough earned income to reach the minimum investment amounts for VTSAX at Vanguard. However, we could still open an IRA for her at Vanguard. So we directed it to VTI, the ETF-equivalent of VTSAX. At the time, we could only purchase whole shares, meaning there was always a residual amount of cash left over.

Now, she and her sister both have IRA balances that exceed the minimum investment in VTSAX. Earlier this month, I sold their VTI holdings and bought VTSAX. Now they are 100% invested with no residual cash hanging around.

## Switching 401(k) Contributions Back To Traditional

Back in January, I wrote about switching from Traditional contributions in my 401(k) to Roth contributions. I also slowed down my front-loading strategy.

Why? In late-March, thanks to Frugal Professor, I found out about the additional, temporary child tax credit boost for 2021. Finding out that every dollar increase in my AGI would decrease that credit, I switched back to Traditional from Roth. I’d originally switched to Roth because I was worried that tax changes to the Traditional tax deduction could happen in 2021. In hindsight, switching to Roth will probably cost me ~$562 on child tax credit benefits. On the plus side, my soon-to-be 17 year-old should get one more year of eligibility as a child dependent. Oh, and my DumpsterFire Inc shares that were sold in January as part of my covered calls experiment will likely cost me another ~$800 of lost child tax credit

I really shouldn’t be complaining. I’m still employed and doing well enough to disqualify for these tax savings. But these last minute tax audibles Congress is making are annoying, to say the least.

## Charitable Contributions

This is a catchup year on our charitable contributions. At the beginning of this month, I started the transfer of appreciated shares, most of which I bought close to the bottom last March. The shares have appreciated on average 80% since then.

In the past, Vanguard required a copy of their form to be mailed to them, adding a week or two before the gifted shares were actually received by the recipient. This year, the process was completely in Docusign and no mailing needed. Shares were transferred in one or two days instead of in a week or two.

At this point, I’m all caught up for 2020. I’ll repeat the process later in 2021. I am tempted to do it sooner, in part to (a) atone for delaying a year of contributions and (b) to reset my cost basis by buying replacement shares for my gifts.

## Other Odds and Ends

• My March Madness bracket finished 6th of 22 entries in my extended family’s pool. Not bad for just following 538’s recommendation. I chose Gonzaga to take the tournament, which needless to say, did not happen.
• I tend to leave my blog settings untouched, which is why it was odd that earlier this month I stopped getting emails. I checked the settings, but everything looked great. Then I found out that Gmail has been sending them all to the spam folder. I really appreciate how effective Google’s spam filter is, but lately it seems to be a little too aggressive. Glad I figured it out. Sorry for the delay in my response to your comments.
• Our mortgage service changed this month. After we refinanced in March 2020 with FirstIB, it was shortly after transferred to SLS for servicing. Now, a year later, we’re on to our next servicer, PNC, where I expect it to stay for at least a couple years.

## From the Bookshelf

I usually have four books going at a time. This month I finished the following:

## Conclusion

How was your April? Read anything interesting this month? I’d love to hear about it in the comments.

Hasta luego!

## 6 thoughts on “April 2021 Update”

1. How did the first year of college go for your oldest? That’s great that she’s back home! We’re 4 years off from sending our oldest off. That sure came quick!

What was the actual bill for the first year of college, if you don’t mind me asking?

We use the Fidelity Roth IRA for FC1. $1 minimum for the 0% ER FZROX + FZILX. We’re happy. I’ve stopped receiving emails from wordpress comments in my gmail as well, though I don’t even see them in my spam/trash folders. Not sure where they are going, but it’s annoying. When you say you switched from Roth to Trad, are you referring to a 401k or IRA? 1. She loved it. Between having her coming home the week before Thanksgiving (silver lining to COVID) and staying here all summer, she’ll have stayed with us for 6 of her first 12 months in school. She had so many “adulting” moments, which has been another great aspect of her college education. Total tuition paid was$6k and housing/board in the dorms was $7.5k. She was responsible for paying for her own books, so I’m not sure how much that was exactly, around$200? She’s living off campus in the fall at around $400/month so depending on what she eats and my plan on paying 75% of what it would be to live in the dorms, she could again come out with me paying everything. Sounds like Fidelity has a good IRA. I chose Vanguard because I really wanted to get them started at Vanguard. We also have accounts at Fidelity, so that could have worked as well. Sorry I wasn’t clear on the Roth/Trad switch. It was for my workplace 401(k). My IRA’s are 100% Roth, either through direct contributions when I was younger, or through backdoor contributions in more recent years. And sometimes a mix of both, depending on my taxes. 1. Frugal Professor says: Glad to hear that your daughter had such a great time at college! And thanks for sharing the actual costs!$13.5k isn’t too bad!

$200 for the total annual price of textbooks?!?!? The going rate for a single textbook can be well over$200! During college I would always buy the older versions of the texbook which sell for a tiny fraction of the current version’s price. I encourage my students to do the same.

Thanks for clarifying the Roth/Trad switch. The 5% bump in implied MTR this year isn’t trivial. I’m in the 100% Trad camp (with the exception of the backdoor Roth which I’m compelled to do) until I stop working. I can’t really envision any future scenario where I come out behind (e.g. https://www.gocurrycracker.com/go-curry-cracker-2020-taxes/).

1. Many of her books were digital textbooks, where the license expired at the end of the semester, not resell-able. But they were cheaper than a full textbook.

2. I envy your four books at a time ability! I am actually reading two at a time myself right now, which is very rare for me. Sounds like a productive April!

1. What books are you currently reading?

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