NerdWallet's Smart Money Podcast - Tips to Save on Groceries and Navigate Tax Season

Episode Date: March 4, 2024

Learn about savvy grocery saving and expert tax filing tips to bolster your budget and ease tax season stress. 1:14 This Week in Your Money: How can you slash your grocery bills and still eat healthy foods amid rising costs? What’s new for this year’s tax season? Hosts Sean Pyles and Sara Rathner discuss saving money on groceries and simplifying tax filing to help you understand how to eat smart, save big, and conquer tax season with ease. They begin with a discussion of frugal grocery shopping, with tips and tricks on comparing unit prices, the benefits of curbside pickup, and incorporating a plant-based diet. NerdWallet’s Alana Benson joins Sean and Sara to explain how she saved $800 on groceries over 5 months, highlighting the financial and health benefits of a plant-based diet and giving practical tips for those who are interested in cutting costs. 10:33 Today’s Money Question: Bella Avila from NerdWallet’s tax team joins Sean and Sara to discuss IRS updates for this tax season, including the new Direct File tax filing software and an update to standard deductions. They also demystify tax brackets, explain how to get your tax refund faster, and weigh the pros and cons of consulting with a professional advisor for personalized financial guidance. In their conversation, the Nerds discuss: tax filing, grocery shopping hacks, grocery bills, tax season, plant-based diets, money saving tips, tax refunds, IRS Direct File, standard deductions, tax brackets, healthy eating, tax filing deadline, tax updates, tax software, student loan interest deduction, curbside pickup, vegetarian meals, tax returns, frugal food shopping, maximizing your return, tax preparation, financial savings, navigating taxes, budgeting tips, tax filing tips, comparing prices, direct deposit, IRS updates, lentils and legumes, affordable eating, tax deductions, and tax rates. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Hey, Sarah, what is your go-to tip to save money on groceries? So when you're at the store and you're looking at the price of an item on a shelf, also look at the price per ounce or price per unit. That's the smaller number on that label on the shelf. In some cases, it might be cheaper to buy two smaller containers and have the same amount of an item versus buying one bigger one. Good tip. What about you?

I'm all about curbside pickup. That saves me time. And it also stops me from buying random groceries that I do not need. That's great because time is money. Absolutely. Well, this episode, we are going to help our listeners save money on their groceries. Welcome to NerdWallet's Smart Money Podcast, where our goal is to help you make smarter financial decisions, one money question at a time. I'm Sean Piles. And I'm Sarah Rathner.

This episode, we are going deep into tax season 2024, answering questions like, what's new about filing this year? When will I get my refund? And do I have to? The answer to that last question is sadly yes, because as we know, death and taxes are the two things no one can avoid. But before we get into that, we're going to go grocery shopping, which is a much more lighthearted topic usually. And we're going to help you save some money while we do so. Yeah, this is not exactly a supermarket sweep, but it's as close as we're going to get on smart money. We're talking with NerdWallet writer Alana Benson about how she saved $800 on groceries over five months by changing the way she shops. Alana, welcome back to Smart Money.

Hey, happy to be here. So Alana, we usually have you on here to talk about investing, but you recently wrote an article about how you saved some serious cash by shopping for groceries in a new way. So what's your secret? It's funny because I'm already such a bargain hunter, you know, like I have all the coupon apps in my phone and I follow all the coupon apps and my phone and I follow all the little advice for saving money at the store. But this one just kind of fell into my lap and I never really like heard about it before. And the secret was just eating

like way more plants. And this all started because I was having some health issues and my health care provider just recommended increasing my veggie intake. And after a couple of months, I was like, huh, my grocery bill is like way lower than it used to be. And I just I hadn't even thought about the potential financial savings at the beginning. Yeah. OK, so how exactly is shopping for more veggie focused meals more affordable? Were you just buying lentils in bulk? Yeah, pretty much, honestly, lentils and chickpeas. And turns out they are just way more affordable than meat. So my focus was never really on cutting anything out of my diet. I tried to just focus on adding in a bunch of plants. But one thing that made it easier was just swapping things in, like lentils and black beans for ground beef and tacos,

for instance. And, you know, you add the same spices, you have guac, chipotle aioli, and it honestly felt pretty similar, except for the cost. And as time went on, I ended up just saving more and more money. And apparently that's pretty typical. So 2021 study from Oxford University found that vegan diets reduce food costs by as much as one third. And if you think about it, it makes a lot of sense. So in October of 2023, the average cost of a pound of ground beef was over five dollars. And if you replace that meat with chickpeas, you can expect to pay around a dollar for a 15 ounce can. So if that's the only change you're making, and even if you just do it a couple of times a week, it can end up saving you a lot of money in the long run. That's really interesting. So I want to go more into the health benefits that inspired

this change in your diet and had these great financial outcomes for you. Can you talk with us more about that? Sure. And before we get into this, I just want to say I am I'm not a doctor. I'm not a nutritionist. And this is solely based on my personal experience. And food is a very, very personal thing. And I just want to make it abundantly clear that we are not recommending any way of eating here. But as you were saying, yeah, I'd been dealing with some pretty intense stomach problems for a while. And I heard about a podcast where there was a specialist talking about how a plant-based diet could help with my condition. And I had a family member who also saw a lot of health benefits doing a similar thing. So I figured it was just worth a try. And at that point, I was like three years into trying

to fix my stomach problems and I hadn't had any success with traditional medicine. So I sort of figured just why not try it? Yeah. I mean, like you said, you were adding and not subtracting and subbing out ground beef or chickpeas wasn't really going to like make your situation worse. So sure, absolutely. Why not? Yeah, exactly. The naysayers might say that vegetarian diets are not exactly known for being exciting. If you've ever seen a bag of like tan lentils, it's like the most boring looking thing of all time. And I say this as somebody who has tan lentils in like my cabinet in my kitchen right now. And also many people might think that not eating meat, especially if you cut it out of your diet entirely means that you're depriving yourself of not just nutrition, but also delicious meals. So how did you work through these challenges

and make yourself both delicious and nutritious meals? Yeah, there's a lot there. So I have always been a foodie. One of my favorite things when I'm traveling is to just go super hard on the local cuisine, if that's cheese, wine, meat dishes, whatever it is. I love that. And I've always kind of hated vegetables, like steamed broccoli is the most disgusting thing in the universe to me. Yeah, cosine. So at first, it was definitely a challenge. And I wasn't sure how it was going to go, but I started out really, really slow. So the first thing that I did was about a year ago was to cut out dairy after I'd been adding in some vegetables. And it turns out that I'm very lactose intolerant.

So as much of a bummer as that was, I did actually feel like quite a bit better really fast. And so it became like, okay, do I want to feel pretty sick from eating this? Or, you know, do I want to feel better? And for me, that just personally, that that was like a choice that became pretty easy. And then I kind of just started going to the grocery store. And I challenged myself to just pick out one new vegetable that I'd never tried before, and add it into my existing meals. So one day I try a Romanesco and then I try to kohlrabi and I just sort of figured out what I liked, what I didn't like, and kind of how to prepare these vegetables that felt like a little

avant-garde to me, you know? And that just felt like a fun exploration instead of cutting stuff out. And it was a gradual change. And over time, honestly, my tastes change. And so once I realized the savings potential, that was a big thing too. And I still eat meat. I just do it a lot less often than I used to. Yeah, I really like your spirit of exploration with this because I also eat a mostly vegetarian diet. I'm not super strict because absolutism is just not how I live my life. But when I was re-getting into a vegetarian lifestyle, because I did this in college as well, what helped me was finding fun recipes to try out. Yes. So I got a good cookbook that had pretty

accessible recipes and I just dove in and I was like, okay, I am going to make that lentil soup to start with. And then I'm going to branch out and make was like, OK, I am going to make that lentil soup to start with. And then I'm going to branch out and make this really wild pasta that I'd never even imagined before with chickpeas and all sorts of fun spices in it. And that just opened up my world to new ways of eating. And I also saved a decent amount of money while I was doing that. Yeah, there's a lot of ways to find that inspiration. I found a lot of really great recipes on TikTok. And, you know, on TikTok, you can see them in action, you know, you see the sauce and everything. And so it makes

it feel really enticing. And I started picking up magazines again with recipes like the physical ones. And for some reason, that was helpful. Another trick is to think of international cuisine or global cuisine, and look at recipes from regions that kind of naturally gravitate towards more meatless dishes or dairy-free dishes just because in those parts of the world, dairy or meat isn't as popular or accessible. So those are the kinds of things if they're just naturally not in that recipe, you don't really have to worry about subbing things in or having it not taste quite like it's supposed to because they just naturally don't have those ingredients. Yeah. And I'd say like I love to cook. I am pressed for time with cooking now that I have a baby.

And when he gets home from daycare, I don't have infinite time to throw meals together. But just like adding that challenge has made me get more creative in terms of like the recipes that I do decide to make during the weekdays. What can I meal prep early in the day? You know, if I have a little break during the day, can I dice an onion and put it in a container in the fridge? Can I dice a few other vegetables? Can I start a recipe early? Can I do something in the crockpot, throw it in in the morning, let it cook all day so I have dinner ready by 6 p.m. So really just like rethinking not just what I cook, but how I cook and what's realistic for my lifestyle right now. And I feel like a lot of people who are listening might be feeling the same. Like there's nothing there's something so exhausting about realizing every day that you have to keep feeding yourself and it takes effort.

You're like, again, I just did that. It's like I just ate like now I have to make more food, you know, and it's it's exhausting. And so honoring where you are and if you're having a day where you can do something elaborate, great. But if you're having a day where you just want to like let something simmer on the stove and then like mix it up and then pour it into some bowls, that's also valid. And that is something that keeps cooking sustainable for me and keeps me from getting more takeout, which is really expensive. Yes. Getting takeout for two, even from a pretty simple place, is 30 bucks.

And doing that a few nights a week really adds up. So just being honest with yourself about how much effort you're willing to put in and just finding recipes that actually match that level of effort really helps. Yeah. Totally. So Alana, you saved $800 over five months by switching up your diet. I need to ask, what did you do with that money? That's obviously such a classic nerd wallet question. I actually didn't do anything very responsible with it, but I did put it towards a vacation in Costa Rica, which kind of felt like a little reward for, you know,

being so focused and strategic with my vegetable eating. Yeah, I'm going to call that trip self-care. And thus it is responsible and money well spent. Yeah, totally. Yeah, that money was definitely invested. Yes. Not into a brokerage account, but into you. And I love that.

Into me, into my well-being. Well, Alana, thank you so much for joining us. Thanks for having me. This episode's money question is coming up next. Stay with us. We're back and answering your real world money questions to help you make smarter decisions about your money. And this episode, we are digging into tax season 2024.

That is you filing your 2023 taxes this year, which is 2024, in case anyone was confused about that. So to help us answer all sorts of questions about filing your taxes this year, including what's different this year, when you might get your refund and how to actually go about filing your taxes, we are talking with Bella Avila from NerdWallet's tax team. Bella, welcome to Smart Money. Thanks so much for having me. So before we get into questions, a quick note that Bella, Sarah, and I are not tax pros. This is not financial advice, just some nerdy food for thought as you, dear listener, think about your own taxes this year. So with that out of the way, Bella, let's start off with a question that might be on a lot of people's minds, especially if they are inclined to procrastinate. What is

the tax filing deadline this year? It's April 15th this year. And if they are inclined to procrastinate. What is the tax filing deadline this year? It's April 15th this year. And if that date seems to be creeping up on you a little bit, remember that you can always apply for a six month extension, which extends your deadline to October. This gives you more time to file your taxes, but it doesn't actually give you more time to pay them. So another important date people may want to know when you get that refund money, assuming you get it. When can people expect to receive their tax refunds after they file? That's a little bit of a tricky question because it really depends on how you file your taxes rather than being a specific date. Filing your taxes online is definitely a way to get your

refunds sooner. Usually you can expect your refund about 21 days after you file your return. If you filed online, your return was error-free and you chose direct deposit as your refund method. But mailing a return means the IRS could take up to four weeks just to process it. And you could wait up to six months to get your refund. And if people want to check where their refunds are, there is an app for that. The IRS has an app called IRS to go. That's the number two in there where you can see when your refund should arrive. Also, if you don't want to download an app, you can also just use the where's my refund tracker on the IRS website. That's like tracking a package if a package was full of your own money back. So not too bad. So with all that in mind, let's talk about what's new this year.

And by this year, I mean for 2023 tax-wise. What should people be aware of? Some good news is that the IRS increased the income threshold for its free file program. And for those of you who might be unfamiliar with that, each year the IRS gives taxpayers access to brand-name tax software for free. Some software partners even let you file federal and state returns at no cost. So anyone who made $79,000 or less in 2023 is eligible for the program this year. And then a brand new thing for 2024 is that for the first

time ever, the IRS created its own free tax filing software called DirectFile. DirectFile is being rolled out in phases, so it's still in its early stages, and it's only available in 12 states. It can't be used to file business or self-employment income. You have to take the standard deduction, and you can't claim certain credits

that you might otherwise be able to. And then it's also worth noting that DirectFile doesn't prepare state returns. Sean, I know your state, Washington, is one of the 12 where you can use direct file. So are you going to use it this year? I was going to, but then I looked at my tax situation and I realized it is a little bit complicated. So I'm going to hire a CPA to do my tax return this year, which is a first for me, but maybe in the future if my taxes become simple

again, we'll see. So if you live in one of the 12 pilot states and you have a simple return and you had already planned to take the standard deduction, this could be an option to consider. Okay. And speaking of the standard deduction, that got an update this year. What's happening there? That's right. So when filing, people can choose either the standard deduction

or they can itemize the deductions. The standard deduction is definitely more popular because it's easy and it benefits most people. It's also indexed for inflation, so that basically just means the amount you can deduct gets bigger each year. For this filing season, the standard deduction has increased to $13,850 for single people and those married filing separately. It's $27,700 for people married filing jointly and qualified widows or widowers. And then finally, it's $20,800 for heads of household.

So last year, a number of people had to restart paying their student loans. Sorry, everyone. But there is at least one bright side of that, other, you know other besides your student loan balance starting to go down again. And that is potentially being able to write off student loan interest when you do your taxes. So what should folks who have student loans know about that? There's something called the student loan interest deduction that can shave off up to $2,500

from your taxable income for interest you paid on federal student loans in 2023. So this can be interest you paid on a student loan for yourself, for a spouse, or a dependent. There are some stipulations though because it is the IRS. You can't claim this deduction if you're married filing separately, if your modified adjusted gross income is above a certain amount, if you're a dependent among other things. But there is one nice thing about this, which is that you don't have to itemize your deductions to take this. I'd recommend reading IRS publication 970 for all the details. And for those who might be curious, how do you know what your tax rate is and how is it calculated? Because there's always

people who are like, oh, I don't want to get a raise because then it's just going to completely get eaten up by taxes, which is not true. So how do tax rates and tax brackets work, essentially? Yeah, that is a common misconception. There are actually seven federal tax rates and portions of your income could be subject to different rates depending on which brackets you're in. A bracket divides income into chunks so that it's not taxed at that one rate. And then of course, filing statuses come into play here too. If this all sounds really complicated to you, don't fret. I'll show you how it all plays out with an example. So for tax year 2023, which is the taxes we're filing this year, if you're a single filer who

made say $70,000, the highest tax rate you're subject to is 22%. But you want to note that I said highest. That's a key word here. Not all of your income is taxed at the same rate. The first $11,000 of your income is taxed at 10%. The next chunk up to $44,725 is taxed at 12%. And then it's only that last chunk of your income that's taxed at 22 percent. But to see how this all shakes out for your specific tax situation, you can visit our tax brackets and rates page. Now let's talk about the process of actually filing your taxes. Many will be debating whether to use the IRS's direct file if they live in one of those 12 eligible states. There's also free file and folks might want to use the tax software they've been using for years. And then if they're like me, they might be hiring

someone to do this work for them. So let's talk through the pros and cons of each option. How you file your taxes is very individual. It depends on what your needs and priorities are. So some people might want to file as cheaply as they can. Some people might want to file in a way that saves them the most time and the list goes on. There are three main ways that people file though. You can file on paper, you can use tax software, or you can work with a CPA or another kind of tax preparer, but I'll run you through each option. You can file an individual income tax return on paper by filling out a 1040 and then mailing it to the IRS. This isn't necessarily recommended, though, because as I mentioned before, if you are owed a refund, it can take quite a while to get to

you. Yeah, I'm guessing most people aren't going to go the paper route. And instead, they'll opt for something like tax software, because that's a little bit more user friendly and a little bit faster, of course. So what should they know about using tax software? There are a lot of really great tax software options out there to choose from. As mentioned, the IRS runs the free file program, and then there's the new direct file option. And then, of course, there's your big name tax software companies like TurboTax and H&R Block that also offer free filing for simple tax returns and then paid packages for more complex returns. Most of these online tax software are user-friendly. They ask questions

in a Q&A style and then fill out all the forms you need in the background for you. With some of these packages, you can also upgrade if you want extra help from a tax pro along the way, but that'll usually bump up the cost of your prep. And a quick note for listeners that TurboTax and H&R Block are nerd wallet partners. So Bella, how does hiring a CPA fit in? Can you describe who this is best for? People who have more complicated tax returns, like maybe someone who's self-employed or has tricky investing income might choose to get hands-on help from a tax pro. But there aren't rules around who can and can't work with a tax preparer. If you have a simple return, but you just want the extra assurance, hiring a pro could make sense for you. But just be sure to check the credentials of whomever you work with.

I'll say that after many years of waffling on whether to hire a CPA or not, I had a bit of sticker shock when I found out how much it was going to cost me hundreds of dollars, really. But that said, my tax situation is a little bit complicated this year. I'm trying to harvest some losses with investments. So hiring an accountant is simply the best way to go for me right now. And it's worth it for the peace of mind. Yeah, I used to do my own taxes. And then when I got married, not only was I filing jointly for the first time, but at the time my husband was self-employed, later I was self-employed.

Now neither of us are self-employed, but we've just really enjoyed passing the bulk of this task on to somebody who knows a lot more than we do about taxes. It's probably some of the best money we spend all year. It's worth it to not feel stressed and to not have another task to accomplish, right? Yeah. Well, hopefully you all have been,

all of you who are listening have been saving up if you think you might owe money, extra money in your taxes this year. But if you didn't and you find yourself in a bit of a bind because you have a big tax bill, what are some options that are out there? Can people make a deal with the IRS?

Are there any payment plans available? Does it go on your credit report? What can people expect if they have a huge tax bill? It's definitely a reality that some people might not have the needs to pay a huge tax bill they were expecting and a big lump sum. But I'm here to ease people's worries a little bit. As you mentioned, the IRS has payment plans and requesting one does not go on your credit report. There are long-term and short-term payment plans and which one is right for you really just depends on your specific tax situation.

Long-term payment plans can work for individuals who owe $50,000 or less and short-term payment plans can work for individuals who owe less than $100,000. On a long-term payment plan, you pay in monthly installments and you get up to six years to pay off your debt. On the other hand, short-term payment plans have to be paid off within 180 days. Make sure you read the fine print when applying for payment plans, as there may be extra fees for setting up the plan for card payments, etc. All right. So, Bella, as a tax nerd, do you have any final words of wisdom for our listeners as they embark on tax season 2024? Taxes can definitely be an intimidating topic,

but there are so many great resources out there to help you navigate its complexities. Prep by researching different filing options, payment plans if you need one, credits and deductions, and more to set yourself up for stress-free filing this year. Great. Well, Bella, thank you so much for talking with us. Thank you for having me. And that's all we have for this episode. Remember, listener, that we are here for you and we want to hear your real-world money questions

because our job is to make you smarter about your money and help you make good decisions. So turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com and visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast. This episode was produced by Sean Piles, Kevin Barry, and Tess Bigland help with the

editing. Sarah Brink mixed our audio and a big thank you to NerdWallet's editors for all their help. And here's our brief disclaimer. We're not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.