Day: February 28, 2020

Investors unable to access investment accounts amid coronavirus-driven market fears

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For the third time in just over a week, some customers had troubles with access to their investment accounts — and some of these locked-out investors shared their fury on Twitter.

Fidelity Investments, TD Ameritrade AMTD, -4.02% and Vanguard were responding to customers on the social media site Friday morning. Complaints included lack of access to their online accounts, as well as problems trading investments. Others said they could not see their account balances.

The technical difficulties come only days after financial firms including Fidelity, TD Ameritrade and Charles Schwab, experienced similar issues, and a little more than a week after Fidelity customers were stressing about seeing their 401(k) plans had no money in them (it was a glitch, the company says).

The lack of access and trouble trading also comes during a stressful week for investors. The Dow Jones Industrial Average DJIA, -2.45%  was off 3.7% on Friday, and the S&P 500 SPX, -1.98%  was down 3.4%. The Nasdaq Composite Index COMP, -1.26%  fell 2.8%. All three benchmark stock indexes are near correction territory, which is when an investment declines between 10% and 20% from a recent peak.

See: Coronavirus fears are clobbering the stock market — is it doing the same to your retirement?

Vanguard is experiencing “higher-than-normal phone and web traffic given the steep declines in the global stock markets,” a spokeswoman said. The company had a two-minute web outage earlier in the morning, and clients reported slow response times to log in. “We are working to correct the reported connectivity issues, and thank clients for their patience at this time,” she said.

TD Ameritrade said client trades were and are being processed as usual but the company did experience slowness in reporting trade confirmations because of “heavy trade volumes,” a spokeswoman said. “The issue has been resolved.” Fidelity has not yet responded to a request for comment.

The coronavirus is partly to blame for the deep dips in the stock market, with investors worrying about what the impact of the spreading of the disease will have on global supply chains and economics.

Fidelity was responding to customers saying the site had experienced technical issues early in the morning, but the platforms were running smoothly now. TD Ameritrade said mobile app updates may have been to blame and to restart or update the service.

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Deep Dive: Why Netflix has escaped the carnage engulfing other FAANG stocks

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This has been a very rough week for U.S. investors, who had gotten used to a steady bull market. The S&P 500 has plunged 12% from its last closing high on Feb. 19 through Feb. 27, with most of the losses coming this week.

The S&P’s SPX, -1.92% information technology sector has been the second-worst-performing sector after energy, skidding 15% during that time. The communications services sector, which includes technology and social media companies, such as Facebook FB, -0.52% and Alphabet GOOG, -1.24% GOOGL, -1.27%, slumped 11.5%. But one of those stocks — Netflix NFLX, -1.82% — barely budged.

Here’s a summary of how the sectors have performed during this downward spiral, along with a list of the worst 30 performers overall.

Tesla TSLA, -4.00%  is another big decliner but isn’t included in the list because the company hasn’t yet met S&P Dow Jones Indices’ requirements to be included in the S&P 500. The electric car maker’s shares plummeted nearly $100, or 13%, on Feb. 27 to close at $679. The stock has collapsed 26%, or $238, since it set a closing record of $917.42 on Feb. 19.

The flip side of all this carnage? Just seven S&P 500  stocks have risen in the six sessions through Feb. 27.

How the FAANGs have fared

The stock market on Friday is once again being battered, and Microsoft MSFT, +1.35% — the largest S&P 500 company by market capitalization — is in bear-market territory as of late morning, down 23%. Apple AAPL, -1.00% was briefly down more than 20%, the conventional definition of a bear market..

Here’s how the popular FAANG stocks — Facebook, Apple, AMZN, -1.61%, Netflix and Google holding company Alphabet — plus Microsoft — performed from Feb. 19 through Feb. 27.

Company Ticker Price change – Feb. 19 through Feb. 27 Price change – 2020 Decline from 52-week high Price change – 2019
Netflix Inc. NFLX, -1.82% -3.7% 14.9% -5.4% 20.9%
Facebook Inc. Class A FB, -0.52% -12.8% -7.6% -15.4% 56.6% Inc. AMZN, -1.61% -13.2% 2.0% -13.8% 23.0%
Alphabet Inc. Class C GOOG, -1.24% -13.7% -1.4% -14.0% 29.1%
Alphabet Inc. Class A GOOGL, -1.27% -13.8% -1.8% -14.1% 28.2%
Apple Inc. AAPL, -1.00% -15.5% -6.9% -16.6% 86.2%
Microsoft Corp. MSFT, +1.35% -15.5% 0.3% -17.1% 55.3%
Source: FactSet

You can click the tickers for more about each company.

So Netflix has been the glaring exception, with no obvious problems springing from the outbreak of the COVID-19 strain of coronavirus.

Only two of the companies have commented on the impact coronavirus could have on its business.

Apple doesn’t expect to meet its second-quarter estimates, because final assembly of iPhones takes place at factories in China operated by Foxconn Technology FXCOF, +0.00%.  

Read: Apple’s coronavirus warning wasn’t a total surprise, but magnitude rattles Wall Street

Microsoft warned that it didn’t expect to hit financial targets for its third fiscal quarter because “the supply chain is returning to normal operations at a slower pace than anticipated.”

Analysts’ opinions

Leaving the companies in the same order, here’s a summary of analysts’ ratings and price targets as of the close on Feb. 27. Be cautious: It is possible that a significant number of analysts haven’t yet updated the financial assumptions that support their price targets (and therefore their ratings), in light of the quick flow of information related to the virus outbreak and supply-chain difficulties. So as always, do your own research if you see anything interesting.

Company Ticker Share ‘buy’ ratings Share neutral ratings Share ‘sell’ ratings Closing price – Feb. 27 Consensus price target Implied 12-month upside potential
Netflix Inc. NFLX, -1.82% 66% 24% 10% $371.71 $378.32 2%
Facebook Inc. Class A FB, -0.52% 84% 12% 4% $189.75 $249.58 32% Inc. AMZN, -1.61% 92% 8% 0% $1,884.30 $2,411.59 28%
Alphabet Inc. Class C GOOG, -1.24% 89% 11% 0% $1,318.09 $1,612.89 22%
Alphabet Inc. Class A GOOGL, -1.27% 89% 11% 0% $1,314.95 $1,614.91 23%
Apple Inc. AAPL, -1.00% 59% 34% 7% $273.52 $329.53 20%
Microsoft Corp. MSFT, +1.35% 91% 9% 0% $158.18 $196.97 25%
  Source: FactSet

Despite the continued majority “buy” ratings for Netflix, the stock also has the highest percentage of “sell” ratings among the group, and the analysts as a whole believe the stock is now fairly valued.

Don’t miss: These are the only 7 stocks in the S&P 500 that rose while the market plunged

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TaxWatch: There’s about to be a new watchdog for taxpayers at the IRS

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The IRS has a new head for an independent internal agency that speaks up for taxpayers.

A longtime accounting executive and former IRS lawyer has been picked to lead the internal IRS watchdog agency that speaks up on behalf of taxpayers.

Erin Collins will serve as the National Taxpayer Advocate, according to a Treasury Department announcement Thursday in which Secretary Steven Mnuchin called Collins “the ideal candidate to help the IRS modernize and improve service for American families and businesses.”

Collins comes to the role after more than 20 years as a managing director for KPMG’s Tax Controversy Services practice, according to the announcement. Before joining the prominent accounting firm, Collins worked as a lawyer inside the IRS’ Office of Chief Counsel for 15 years.

The National Taxpayer Advocate flags problems that can potentially make life difficult for people paying their taxes or who are trying to resolve a problem with their taxes. The advocate has previously looked at lengthy phone wait times, potential barriers for free filers and problems with the IRS’ own equipment and technology.

“I will work every day to be a strong and effective representative of American taxpayers,” Collins said in a statement.

Collins will replace Bridget Roberts, the acting National Taxpayer Advocate who was serving as the interim head. Roberts stepped in after the previous National Taxpayer Advocate, Nina Olson, retired in 2019 after 18 years of service.

In one of her outgoing acts, Olson devised a “roadmap” to help taxpayers understand the complexity of the system and call attention to the need for simplification.

Upgrade: I’m 33, and my fiancée and I plan to save 20% of our $195,000-a-year income. Can we afford to retire before age 60?

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It takes a pile of money to retire in New York City.

Dear Catey,

I’m 33, have no debt and a net worth of $700,000, with $600,000 of that invested (95% in stocks; 5% in bonds), $50,000 in an emergency fund and $50,000 sitting in a bank account so I can invest it later this year if we get a selloff. My fiancée is 30, also has no debt and has a family trust worth $100,000 that’s also invested.

I earn $130,000 a year and am eligible for a $30,000 a year bonus; she earns $65,000 a year and is eligible for a $10,000 bonus. We plan to save 20% of our base salary and half (posttax) of any bonuses we get.

Our question is this: Will we be able to retire — in New York City, where we live now — before age 60?


Dear M.C.,

First of all, congratulations on having amassed a $700,000 net worth at the fairly young age of 33. Compared with your peers, you’re doing very well.

Add to that your hopes of saving 20% a year of both you and your fiancée’s salaries, as well as half the bonus, and you’re likely to be far ahead of your contemporaries in terms of retirement savings — assuming, among many other things, that you invest the money well.

But will that be enough for you two to retire before 60 — and in pricey New York City? That depends on a number of factors, including how lavish of a lifestyle you want to live in the Big Apple. Here’s what experts shared.

On paper — and if all goes according to plan — you guys likely can retire before 60 and in New York City, financial planners tell MarketWatch. “In the plain vanilla projection, yes, you will get there — but that’s with no gray areas,” says certified financial planner Dennis Nolte of Seacrest Investment Services in Winter Park, Fla. “That probably isn’t realistic.”

Here’s how the math might work out for you to retire by 60, explains certified financial planner John Carbonara of NXT Phase Financial Services in Jericho, N.Y. Assuming you and your fiancée have a total of $750,000 invested (that’s everything except the emergency fund) and get a roughly 6% return on that over the next 27 years (when you hit age 60), you’d have more than $3.6 million invested the bank. Now if you add in annual savings)— let’s assume you two save $65,000 a year for 27 years and earn 6% — that could add up to more than $4.1 million.

“Between the current growth of assets and the growth of future savings, there is the possibility they could accumulate $7.57 million by age 60,” explains Carbonara. “If we applied a 4% distribution rate rule to the accumulated amount, someone could draw $310,000 gross annually. Tax rates at retirement would also have to be applied to come up with a net income number.”

Carbonara points out that this is all just hypothetical: “These are big assumptions as bonuses are not guaranteed, we don’t know his tax rate, and we don’t know whether the family could maintain that savings.”

Indeed, you have to factor real life into the equation — including taxes, such as the income tax you might pay withdrawing from your retirement fund and the tax penalties if you need to withdraw pretax retirement funds before 59½, Carbonara says. Nolte notes that you should think about whether or not you will have kids (which can be very expensive) and factor that in, as well as how much you will really need to live on in New York City in retirement.

Certified financial planner Larry Heller, the president of Heller Wealth Management in New York City, adds that housing is another factor to consider: “Will they be purchasing an apartment in NYC or will they be renting? Housing costs in NYC can be very expensive. Purchasing a home could drastically reduce their investible assets,” he explains. “Also, what will they do about health insurance until they are eligible for Medicare?”

These are just some of the things you two need to consider — you may want to talk to a financial planner to go through all the details — but take heart in this: You’re in a very good spot, especially if you tweak as you go.

“They can make changes to the original assumptions along the way and continue to monitor their progress toward a future value goal,” says Carbonara.

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Deep Dive: These are the only 7 stocks in the S&P 500 that rose while the market plunged

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In any market environment, there are exceptions to the trend. But there aren’t many this time.

Since the S&P 500 SPX, -3.39%  hit its last closing record on Feb. 19, the index has skidded 12% — and only seven of the component stocks haven’t declined through the close on Feb. 27. See the list below.

Before you get there, here’s a list of stocks in the index that took the worst beatings, along with a summary of how the 11 sectors performed.

It might surprise you that Tesla TSLA, -7.14%  isn’t on that list of decliners, but the electric car maker hasn’t yet met the requirements to be included in the S&P 500. Before the outbreak of the coronavirus strain known as COVID-19, it appeared likely to be added to the index by the end of 2020. Tesla’s stock was down nearly $100 (13%) on Feb. 27 to close at $679. The stock was down $238 (26%) since it set a closing record of $917.42 on Feb. 19.

Read: Tesla’s stock tumbles toward biggest-ever weekly drop

So here are the exceptions — seven S&P 500 stocks that rose in price between Feb. 19 and Feb. 27:

Company Ticker Industry Price change since Feb. 19 Price change – 2020 Decline from 52-week high Price change – 2019
Gilead Sciences Inc. GILD, -6.72% Biotechnology 7.9% 11.8% -7.9% 3.9%
Regeneron Pharmaceuticals Inc. REGN, -2.06% Biotechnology 7.7% 14.9% -8.2% 0.5%
Clorox Co. CLX, -5.96% Household/Personal Care 2.3% 9.9% -3.1% -0.4%
E-Trade Financial Corp. ETFC, -2.94% Investment Banks/Brokers 2.3% 1.3% -19.8% 3.4%
CME Group Inc. Class A CME, -5.12% Investment Banks/Brokers 1.4% 4.8% -6.6% 6.7%
Newmont Corp. NEM, -7.26% Precious Metals 0.8% 7.1% -9.4% 25.4%
Cboe Global Markets Inc. CBOE, -3.63% Investment Banks/Brokers 0.7% 1.0% -5.2% 22.7%
Source: FactSet

You can click the tickers for more about each company.

• Gilead Sciences GILD, -6.72%  has announced two Phase 3 clinical studies to measure the effectiveness of its Remdesivir medication in countering COVID-19 infections. The company’s Feb. 26 press release has more details. Jefferies analyst Michael Yee rates Gilead a “buy,” but wrote in a note to clients on Feb. 26 that although he is pleased that fighting the virus is a ‘very high priority” for Gilead’s management, “the financial implications are modest (pricing, one-time use, no tail).”

• Regeneron Pharmaceuticals REGN, -2.06%  ws upgraded to a “Buy” by Jefferies analyst Biren Amin on Feb. 25, because he believes competitive risk to the company’s Eylea macular degeneration therapy has been minimized because of safety concerns over Novartis AG’s NVS, -2.63% NOVN, -5.06%  Beovu medication.

• Clorox CLX, -5.96%  is an obvious defensive stock during a time when people are concerned about the spread of a deadly virus and reaching for bleach. But Charles Lemonides, founder of ValueWorks LLC in New York, argued that for long-term investors, Clorox’s high valuation to earnings actually makes it a risky stock.

• E-Trade Financial ETFC, -2.94%  agreed on Feb. 20 to be acquired by Morgan Stanley MS, -2.80%  in an all-stock deal valued at $58.74 a share at that time. E-Trade’s shares closed at $45.95 Thursday. The deal calls for an exchange of 1.0432 Morgan Stanley shares for every E-Trade share. Morgan Stanley’s shares closed at $45.41 on Feb. 27, so based on those numbers, E-Trade’s takeout price would be $47.37.

Create an email alert for Philip van Doorn’s Deep Dive columns here.

TaxWatch: Here’s what the Democratic presidential candidates want to do to your taxes

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MarketWatch photo illustration/Getty Images, iStockphoto
Democratic candidates have varying approaches when it comes to tax policy.

Taxes are at the heart of the Democratic presidential race.

As candidates focus on growing income inequality and propose large scale health and higher education plans to address the problem, more taxes — for corporations and the rich — are the way they want to underwrite their proposals.

For example, Sen. Bernie Sanders and Sen. Elizabeth Warren have proposed wealth taxes, an added levy on millionaires and billionaires, to pay for expanded health care and student loan cancellation.

Meanwhile, former Vice President Joe Biden wants to limit how much taxpayers can use deductions to reduce tax liability to raise revenue to address climate change, infrastructure, health care and higher education.

Sen. Amy Klobuchar wants to tax capital gains as ordinary income and raise the rate for the top income bracket to help fund paid family leave, free community college and other programs.

The competing tax proposals come three years after President Donald Trump overhauled the tax code to reduce income tax rates for individuals and businesses. One provision lowered the personal income tax rate for top earners to 37% from 39.6% and another provision reduced the corporate income tax rate to 21% from 35%. Trump is expected to reveal another round of tax cuts later this year.

Every Democratic presidential hopeful says Trump’s tax cuts went too far, and they are all vowing to raise taxes on the rich and corporations. Aside from that, there are differences in the candidates’ proposals and the extent of taxation they say they want.

Here’s how the plans stack up against each other:

Sen. Bernie Sanders of Vermont

Income Taxes: Sanders plan would maintain the lower six income brackets at their current rates and raise the 35% income bracket to 40%, according to the Tax Foundation, a right-leaning think tank focused on tax policy. (The current 35% rate applies to a married couple making between $408,201 and $612,350, and $204,101 to $510,300 for singles.)

Sanders would add three more brackets, which apply rates of 45% for households making between $500,000 and $2 million, 50% for households making between $2 million and $10 million and 52% for household making above $10 million, the Tax Foundation noted.

Sanders would also apply a 12.4% payroll tax on wages above $250,000, the Tax Foundation said.

Wealth Tax: In addition to a 52% top rate, Sanders proposes a 1% tax on net wealth above $32 million, 2% on $50 million and up to 8% on wealth above $10 billion. The proposal is a tax on what Sanders calls “extreme wealth.”

Estate Taxes: The current federal estate tax of 40% applies to estates worth more than $11.58 million in 2020. Sanders seeks an estate tax rate that starts at 45% for estates worth $3.5 million. It ranges up to 77% for estates valued above $1 billion.

Sanders would also end the so-called “Step-Up in Basis,” a provision that restarts asset appreciation, for capital gain tax purposes, upon inheritance.

Corporate Taxes: Sanders would return to the Obama administration-era 35% income tax rate.

Capital Gains Tax: The IRS taxes the sale of an asset that’s grown in value over time, such as a stock. Taxpayers making at least $78,750, and filing single, are taxed at 15%. With some exceptions, single taxpayer earning above $434,550 face a 20% capital gains tax. Sanders’ capital gains tax rate would be the same as the income tax rate for households making over $250,000.

Financial Transactions Tax: Sanders would tax stock trades at .5% (50 basis points), bond trades at .1% (10 basis points) and derivatives transactions at .005% (5 basis points).

Former Vice President Joe Biden

Income Taxes: Biden is proposing to revert the top income tax rate back to 39.6% for earnings above $510,000. Biden would also limit itemized deductions to a reduction of 28% of tax liability. Biden would apply a 12.4% payroll tax on wages above $400,000.

Wealth Tax: None.

Estate Taxes: Biden would eliminate the step up in basis.

Corporate Taxes: Biden would bring the corporate income tax rate to 28%.

Capital gains: Biden would tax capital gains at the same rate as ordinary income for households making over $1 million — in other words, at 39.6%.

Financial Transactions Tax: None specifically proposed, but Biden has said he supports the concept.

Former South Bend, Ind. Mayor Pete Buttigieg

Income Taxes: Buttigieg is proposing to revert the top income tax rate back to 39.6%. He would broaden eligibility for the Earned Income Tax Credit, a long-standing tax credit for low-income working families. He would repeal the $10,000 State and Local Taxes deduction cap for households earning less than $400,000. He would also assess a 12.4% payroll tax on wages above $250,000.

Wealth Tax: None proposed.

Estate Taxes: Buttigieg would eliminate the step up in basis.

Corporate Taxes: Buttigieg would revert the corporate income tax rate back to 35%

Financial Transactions Tax: Buttigieg is proposing a 0.1% financial transactions tax on all securities trades.

Capital Gains Tax: Buttigieg would tax capital gains at the same rate as ordinary income for the top 1% of households — i.e. at 39.6%. As the consulting firm Andersen notes, Buttigieg would also implement “mark to market” taxation, where the top 1% of taxpayers would pay a yearly tax on the appreciation of their assets. Assets like stocks are now taxed only at the time of sale.

Senator Amy Klobuchar of Minnesota

Income Taxes: Klobuchar would bring the top income tax rate back to 39.6% and apply a 30% minimum rate on taxpayers with adjusted gross income above $1 million. She also wants to expand the Earned Income Tax Credit. She would boost the maximum credit by approximately 30% and widen eligibility.

Wealth Tax: None proposed.

Estate Taxes: Klobuchar says she will end “trust fund loopholes that allow the wealthy to avoid paying taxes on inherited wealth.”

Corporate Taxes: Klobuchar would increase the corporate income tax rate to 25%.

Capital Gains Tax: Klobuchar would tax capital gains at ordinary income tax rates for households making more than $400,000.

Financial Transactions Tax: None proposed.

Michael Bloomberg, businessman and former New York City Mayor

Income Taxes: Bloomberg would bring the top income tax rate back to 39.6%. He would also broaden eligibility for the Earned Income Tax Credit.

Wealth Tax: Bloomberg is proposing a 5% additional tax on household incomes above $5 million.

Estate Taxes: Bloomberg would eliminate the step up in basis.

Corporate Taxes: Bloomberg would increase the corporate income tax rate to 28%.

Capital Gains Tax: Bloomberg would tax capital gains at ordinary income tax rates for households making at least $1 million, which is 39.6%.

Financial Transactions Tax: Bloomberg is offering a phased-in tax that will eventually result in a 0.1% tax on all stock, bond and derivative trades. The tax would start at 0.02%.

Senator Elizabeth Warren of Massachusetts

Income Taxes: Warren would bring the top income tax rate back to 39.6%, and assess a 14.8% high income social security tax on the top bracket.

Wealth Tax: Warren’s wealth tax starts at 2% for income above $50 million, escalating to 6% for income above $1 billion.

Estate Taxes: Warren would eliminate the step up in basis.

Corporate Taxes: Warren would restore the corporate income tax rate to 35%.

Capital Gains Tax: Warren would tax capital gains at ordinary income rates for the richest 1% of households. The consulting firm Andersen noted that Warren would also implement “mark to market” taxation, where the top 1% of taxpayers would pay a yearly tax on the appreciation of their assets.

Financial Transactions Tax: Warren would implement a 0.1% tax on financial transactions.

Tom Steyer, businessman

Income Taxes: Steyer would send the top rate back to 39.6%, applying to individuals making above $418,000 and married couples making more than $470,000. Steyer would reduce tax rates by 10% for families making less than $250,000 and individuals making $200,000 and below. He would also broaden eligibility for the Earned Income Tax Credit.

Wealth Tax: Steyer proposes a wealth tax that starts at 1% for income above $32 million and caps at 2% for income above $1 billion.

Estate Taxes: Steyer supports raising the estate tax, a spokeswoman said.

Corporate Taxes: Steyer would bring the corporate income tax rate back to 35%.

Capital Gains Tax: Steyer would tax capital gains at ordinary income tax rates.

Financial Transactions Tax: Steyer supports a financial transactions tax, a spokeswoman said.

Rep. Tulsi Gabbard of Hawaii

Income Taxes: Gabbard has not proposed income tax changes, but she would propose an increase in payroll taxes to go towards Social Security, according to the Urban-Brookings Tax Policy Center, a left-leaning think tank focused on tax policies.

Wealth Tax: None proposed.

Estate Taxes: No proposed changes.

Corporate Taxes: Gabbard would increase the corporate income tax rate to 24.5%

Capital Gains Tax: No proposed changes.

Financial Transactions Tax: No proposed changes.

More from MarketWatch This is when student loan lenders can take your tax refund

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Federal student loans have some of the most forgiving repayment options. If you can’t make student loan payments because of financial issues, you may be able to pause those loans via a deferment. But if you default on your student loans and you have serious student loan debt, collectors can take numerous actions against you—including taking your tax refund.

How do I know if my student loan will take my tax refund?

Your loan servicer won’t just take money from your tax return automatically. First, you must have one or more federal student loans that are in default. For Direct Loans, this means you have been in past-due status on the loan for 270 days or more. Other loans, such as Perkins loans, may go into default even faster.

If you’ve received notification that your federal student loan is in default, there’s a good chance the lender may move to garnish your tax return. You will receive an offset notice before this occurs. That provides you some time to attempt to resolve the issue before tax returns are filed.

Also on MarketWatch: Lawsuit: Department of Education is making it ‘nearly impossible’ for defrauded students to cancel their student loans

What happens when student loans take my tax refund?

The lender must go through the Treasury Offset Program, or TOP, to garnish your tax refund. Garnish means that part or all of the tax refund owed to you is used to pay toward your debt. TOP will review the request and divert funds from your tax refund to pay your student loan creditor if you appear to owe them money. And the consequences can go beyond this—defaulting on a student loan can have dire consequences on your credit score.

Can they take all your taxes for a student loan in default?

TOP will garnish all of your return if you owe that much or more in defaulted student loans. For example, if you owe $1,000 and your return is $900, all of it can be garnished. If you only owe $500 and your return is $1,000, you will receive the remaining $500 after your debt is covered.

Also read: I took out $50K in student loans, but now I’m living on disability. Is my spouse responsible — and will my family have to pay off my student debt if I die?

What can you do if your refund was seized?

If an offset has already occurred and your tax refund has been seized, you may have a few options for getting the refund back.

If you have repaid the loan or some other error has caused it to be shown in default by mistake, you can contact the Department of Education. You may be able to get the tax return refunded once any errors are corrected.

Spouses who have had their refunds claimed because of their partner’s debts may be able to file an injured spouse claim. This typically requires the insured party to not know the default and its impact on tax returns.

If you were in default but you simply can’t afford not to receive your tax return because of financial hardship, you can apply for a hardship refund. Unfortunately, tight finances aren’t enough to receive this reprieve. Some situations that will qualify you include:

  • Being in active bankruptcy that includes the student loan
  • The loan doesn’t belong to you to begin with
  • You’re permanently disabled
  • The loan isn’t actually enforceable

Ask your lender for a student loan tax offset hardship refund form or call the Treasury Offset Program at 800-304-3107 to begin this process.

How can I stop student loans from taking my refund?

Your best chances of keeping your tax refund comes when you take action before the money is seized. Since your loan service provider must notify you that it plans to proceed with an offset, you usually have time to do so. Here are some steps to take.

1. Request a copy of your loan file. You must do so within 20 days of receiving the offset notice. Request in writing and consider sending it certified mail for documentation purposes.

2. Challenge the offset if you have reason to believe it is incorrect. Reasons include that you are not in default or did not receive the money because the school didn’t pay you a refund that was owed. You must make the challenge in writing within 15 days after requesting the loan file or 65 days after the offset notice, whichever comes first.

3. Contact the loan provider or Department of Education and set up a payment arrangement. If you can get current on your loan or get out of default before tax returns are filed, you may be able to avoid offset.

4. Adjust your withholdings on your W2s. This doesn’t change the past, but it can ensure you receive more in your paychecks going forward and have less tied up in a tax refund. That helps reduce the hit if you’re unable to remedy the default before the next tax refund.

Avoiding default situations to begin with

Of course, the best way to stop your tax return from being seized because of student loans is to keep from defaulting in the first place. Consider some of the student loan forgiveness options and whether they can help you clear these debts.

If a loan forgiveness program isn’t an option, try to manage your budget to cover some extra payments on your student loans. You can also consider a debt consolidation loan. You may be able to group all your student loans together for easier management or clear up some credit card debt that’s making it hard for you to cover other payments.

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NerdWallet: Thinking of sharing a credit card? Ask these 5 questions first

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This article is reprinted by permission from NerdWallet.

For Mike Caligiuri and his fiancée, buying a house together inspired them to also share a credit card.

“We were going to be paying the same mortgage, and we had a lot of joint expenses. So just for administrative purposes, it made sense,” says Caligiuri, a certified financial planner and founder of Ohio-based financial planning firm Caligiuri Financial.

While that sounds like it’s more about logistics than romance, he does acknowledge that love also plays a role: “You want to show the other partner that you trust him or her, and one way to do that is through joint finances,” he says.

While many card issuers don’t allow joint accounts or co-signers on credit cards, it is usually relatively easy to add someone as an authorized user, which is what Caligiuri and his fiancée did. (She added him to her existing card.)

If you’re thinking of sharing a credit card with a loved one, addressing certain hot topics in advance — such as spending limits, who’s in charge of paying the bill and what the rewards strategy is, for starters — can help prevent disagreements later.

Here are five conversations to have before sharing a credit card with your partner:

1. What’s your credit history?

If you have credit card debt or have struggled with it in the past, it’s important to let your partner know before you start sharing a credit card so you can avoid surprises later, suggests AnnaMarie Mock, a CFP based in Wayne, New Jersey. “It’s vital that both partners understand the gravity and cost of credit card debt because it can evolve into a large financial burden,” she says.

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That conversation isn’t always easy. According to a recent NerdWallet survey, about 1 in 5 Americans have lied to a significant other about having credit card debt or about the amount of debt. Still, more than 2 in 5 believe it’s important for a couple to discuss their credit scores before moving in to together, and the vast majority of those who combine finances with their significant other — 86% — say all married couples should combine at least some of their finances.

2. Who is going to pay the bill?

If one partner is the primary cardholder and the other is the authorized user, then ultimately the primary cardholder is responsible for paying the bill. Paying it off in full and on time each month means you can avoid paying interest and late fees. If you are opening a new credit card together, you can decide which person will take on that role.

Caligiuri and his fiancée, for example, decided she would continue to be responsible for paying the card off each month. (She tells Caligiuri how much to transfer into their joint checking account before making that payment.)

3. What type of spending needs to be discussed in advance?

While everyday expenses like coffee or groceries probably don’t require a detailed discussion, Mock suggests deciding what level of spending does.

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One person probably shouldn’t splurge on a $500 airline ticket without first checking with the other person, for example. Large purchases could strain the card’s credit limit or make it hard to pay off the bill in full at the end of the month, which could trigger interest charges.

4. How will problems be addressed?

If you rack up a bigger monthly bill than expected, or you get hit with a late fee or two, it’s a good idea to have a communication plan in place, says Taylor Venanzi, a CFP and owner of Philadelphia-based firm Activate Wealth.

He suggests setting up regular meetings once a month to review the card, spending habits and savings goals.

5. How will you share rewards?

Credit card rewards can be part of an overall strategy to help fund vacations, and couples can accrue points more quickly if they share cards, says Eric Simonson, certified financial planner and owner of Minneapolis-based firm Abundo Wealth. If travel isn’t in your plans, you can also use rewards to earn cash back or points to go toward shopping or gift cards, among other options.

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“Our clients love to travel, and a huge part of that is helping them leverage credit card rewards,” he says. Some cards, he points out, even give you bonus points if you add an authorized user. In such a scenario, you’re essentially getting paid to share a credit card.

More from NerdWallet:

Kimberly Palmer is a writer at NerdWallet. Email: Twitter: @kimberlypalmer.

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